KM KMPR Kemper Corporation Loading... : Investor Sentiment and Bull/Bear Views

The author argues KMPR is at the trough of its cycle: bad loss ratios pushed the stock down, and California Department of Insurance approvals of roughly 6.9% Prop 103 rate increases should earn in over about 12 months on six-month policies. As the loss ratio improves, the stock should go up, with a $50 target in 12-18 months. The thesis depends on the rate approvals flowing through and the loss ratio actually improving.

The author argues Kemper is at the trough of its insurance cycle, where a bad loss ratio has depressed the stock. Filing and obtaining California Department of Insurance approvals under Prop 103 (~6.9% rate rounds) should let rates earn in over roughly 12 months on 6-month policies, improving the loss ratio and lifting the stock. The stated target is $50 within 12-18 months. The main risk implied is that approvals or rate earning do not materialize as expected.

Author projects KMPR can earn ~$1.70/share after tax from a just-approved ~7% California Infinity SPEC rate increase on a $1.8B book, assuming claims don't jump. Over 1–2 years, reaching a mid-95% combined ratio on ~$4B premium would add ~$3.40/share, which at 11–12x earnings supports ~$40, with claims/ops improvement potentially pushing the target to $45–$50. Main risks are that rate increases may not earn through or claims could rise, and the $50 scenario requires additional rate filings, volume, and claims/ops gains.