On Mar 19, Zacks Investment Research downgraded Kemper Corporation (KMPR) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Kemper witnessed sharp downward estimate revisions after reporting disappointing fourth-quarter 2012 results. Shares of this multi-line insurer dipped 1.8% from Feb 8 through Mar 19.
On Feb 7, Kemper reported a fourth-quarter 2012 loss per share of 6 cents, missing the Zacks Consensus Estimate by 250%.
Total revenue slid 2.7% year over year to $596.6 million on lower earned premiums. Planned reductions at Kemper Direct largely induced the lower earned premiums. The expected long-term sales growth is estimated to be negative 3.6%.
Net investment income in the fourth quarter declined 3.2% year over year to $72.9 million, attributable to lower yields on fixed maturity investments and higher investment expenses.
Moreover, total expense increased 3.5% to $602.2 million mostly due to policyholders’ benefits and incurred losses and loss adjustment expenses.
Cash balance at the end of the quarter plunged 62% year over year to $96.3 million.
The Zacks Consensus Estimate for 2013 decreased 18.8% to $1.75 per share over the last 60 days as 3 of 4 estimates moved south. For 2014, 2 of 4 estimates were revised downward over the last 60 days, sinking the Zacks Consensus Estimate by 14.1% to $2.13 per share.
Other Stocks to Consider
Not all multi-line insures are performing as poorly as Kemper. Assured Guaranty Ltd. (AGO) with Zacks Rank #1 (Strong Buy) and Assurant Inc. (AIZ) and Cigna Corp. (CI) with Zacks Rank #2 (Buy) are worth considering.
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