Image source: The Motley Fool.
Date
Wednesday, November 5, 2025 at 5 p.m. ET
Call participants
Interim Chief Executive Officer — Tom Evans
Executive Vice President and Chief Financial Officer — Bradley Thomas Camden
Executive Vice President and President, Kemper Auto — Matthew Andrew Hunton
Executive Vice President and President, Kemper Life — Christopher Flint
Executive Vice President and Chief Investment Officer — John Bischelli
Need a quote from a Motley Fool analyst? Email [email protected]
Risks
Interim CEO Evans said, "Our results this quarter were disappointing," citing shortcomings in operational execution and external challenges.
Specialty Auto Segment — Bodily injury claim severity exceeded internal forecasts, particularly in California, leading to a $41 million after-tax reserve strengthening.
Competitive pressures intensified, especially in key auto markets, contributing to elevated claims severity and pricing difficulties.
Runoff of the preferred business resulted in a $22 million expense from the write-off of internally developed software, impacting non-core results.
Takeaways
Net Loss -- $21 million or $0.34 per diluted share, impacted by adverse development, restructuring charges, and the write-off of software assets.
Adjusted consolidated net operating income -- $20.4 million or $0.33 per diluted share, reflecting core operating results after adjustments.
Return on Equity -- Negative 3% for the quarter, signifying below-target profitability.
Book Value Per Share Growth -- Increased 4.8% year-over-year to $585 million, approaching an all-time high for the company.
Underlying Combined Ratio (P&C Segment) -- Rose six percentage points sequentially to 99.6%, affected chiefly by California bodily injury claim severity and competition.
Personal Auto Combined Ratio -- Increased to 102.1%, reflecting higher loss trends in bodily injury coverages.
Commercial Auto Combined Ratio -- Held relatively stable at 91.1%.
Policies in Force -- Increased 0.6% year-over-year, while interim premium grew 10.7%.
Reserve Strengthening -- $51 million pretax, $41 million after-tax in Specialty Auto, driven primarily by adverse development in commercial auto for accident years 2023 and prior.
Restructuring Charge -- $16.2 million after-tax recognized, with expected annualized cost savings of approximately $30 million.
Preferred Business Runoff Expense -- $22 million related to the write-off of internally developed software, with 90% of this business now run off.
Operating Cash Flow (Trailing Twelve Months) -- $585 million, described as near an all-time high and supporting capital flexibility.
Available Liquidity -- Over $1 billion at quarter-end, demonstrating balance sheet strength.
Debt-to-Capital Ratio -- 24.2%, in line with the company's stated long-term target.
Net Investment Income -- $105 million this quarter, up $9 million sequentially, driven by improved performance in alternative investments.
Share Repurchase -- 5.1 million shares repurchased from July to October at an average price of $52.65, totaling $266 million and including completion of a $150 million accelerated program.
Life Segment Operating Earnings -- $19 million in the quarter, attributed to favorable claims experience and disciplined expenses.
Florida and Texas Segment Update -- Policies in force down about 7% year-over-year, attributed to competitive market dynamics.
Management Actions -- Leadership changes in claims and IT reported as part of ongoing restructuring to improve execution and drive efficiencies.
Non-Rate Actions -- Underwriting tightened, agent management sharpened, and billing features adjusted to address risk and expected losses.
Summary
The leadership transition, with Tom Evans as interim CEO, coincides with substantive restructuring measures targeting $30 million in annual expense reductions and reinforcing operational discipline. Large reserve strengthening in the Specialty Auto segment, driven by heightened bodily injury severity in California and commercial auto adverse development, produced significant earnings headwinds. Book value per share growth, robust trailing operating cash flow, and over $1 billion in liquidity reflect ongoing balance sheet strength despite disappointing quarterly results. Share repurchase activities continued at scale, totaling $266 million and reducing outstanding shares during the quarter. Policies in force and premium growth remained modest as pricing and underwriting changes responded to evolving claims costs and intensifying competition in key markets.
Management emphasized maintaining "disciplined underwriting and driving profitable growth" according to Tom Evans in the face of increased market pricing pressure.
Camden confirmed, "Approximately 90% of this business has now run off," signaling near completion of the exit from that segment.
Shareholder capital deployment prioritized organic growth, financial flexibility, and then distributions, with a significant amount remaining in the $500 million authorization for future repurchases.
Hunton explained that higher attorney involvement and legal system abuse accelerate claims costs with "attorneys attach to claim files much earlier in the process."
Ongoing technology and claims management integration aims to leverage "that into claim to help us process more effectively sort of next best action, drive some automation, leverage AI," as stated by Hunton.
Industry glossary
Bodily Injury (BI) Severity: The average cost per claim paid for bodily harm, often influenced by legal, medical, and social inflation factors.
Combined Ratio: Insurance measure of claims and expenses as a percentage of premiums earned, with ratios above 100% indicating underwriting losses.
Policies in Force (PIF): The total number of active insurance policies at a given point in time.
Social Inflation: Rising insurance costs due to increased litigation, larger jury awards, and broader legal definitions of liability.
Preferred Business Runoff: The process of discontinuing and allowing an insurance line to expire as existing contracts mature without renewal.
Full Conference Call Transcript
CEO, Bradley Thomas Camden, Kemper Corporation's Executive Vice President and Chief Financial Officer, Matthew Andrew Hunton, Kemper Corporation's Executive Vice President and President of Kemper Auto, and Christopher Flint, Kemper Corporation's Executive Vice President and President of Kemper Life, will make a few opening remarks to provide context around our third quarter results, followed by a Q&A session. During the interactive portion of the call, our presenters will be joined by John Bischelli, Kemper Corporation's Executive Vice President and Chief Investment Officer. After the markets closed today, we issued our earnings release, filed our Form 10-Q with the SEC, and our earnings presentation and financial supplement. You can find these documents in the Investors section of our website, kemper.com.
Our discussion today may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the company's outlook on its future results of operation and financial condition. Actual future results and financial condition may differ materially from these statements. For information on additional risks that may impact these forward-looking statements, please refer to our 2024 Form 10-Ks and our third quarter earnings release. This afternoon's discussion also includes non-GAAP financial measures we believe are meaningful to investors. In our financial supplement, earnings presentation, and earnings release, we've defined and reconciled all non-GAAP financial measures to GAAP where required in accordance with SEC rules.
You can find each of these documents in the investor section of our website kemper.com. All comparative references will be to the corresponding 2024 period unless otherwise stated. I'll now turn the call over to Tom.
Tom Evans: Thank you, Michael, and good afternoon, everyone. First, I'd like to begin by introducing myself. I'm Tom Evans. And as many of you know, three weeks ago, the board of directors asked me to step in as Kemper Corporation's interim CEO. Over the past thirty-three years, I've had the privilege of serving in a variety of roles at Kemper Corporation, most recently as General Counsel. During this time, I gained a deep understanding of our business and just as importantly, our people. I believe strongly in this organization, its purpose, its potential, and the exceptional talent of our team.
We are united by a commitment to serving markets that are often overlooked by other carriers, and I'm proud to be part of a company that embraces that responsibility with integrity and focus. As you know, our Board has commenced a search to identify our next CEO, and I'm confident they'll find the right person to lead us through the next chapter of our story. We'll provide an update on the search when we have more information to share. Let's begin the substantive portion of this call with a straightforward comment. Our results this quarter were disappointing. Today, we'll address what happened, why it happened, and above all, what we're doing about it.
Without question, we continue to believe strongly in both our strategy and our opportunities, but it's clear our execution has fallen short at times. Some of the challenges we faced were driven by external conditions, but others were within our control. We know that we need to be better operators to deliver the consistent results that investors expect and that we know we're capable of. To that end, the board and leadership team have taken significant steps, including recent changes in leadership and a restructuring initiative to improve execution and accountability and ensure that we deliver on our strategic priorities. This isn't about changing our direction, but about reinforcing the disciplines that drive performance.
If we do those things, we can better leverage our scale and our capabilities to improve efficiency, broaden our reach across markets, and deliver more stable, sustainable results. With that, I'll now provide some context around the key drivers of our performance, and then Brad and Matt will provide more detail and commentary on each. We'll also get a quick update from Chris, who leads Kemper Life, about what's going on in that business. I'd like to start by discussing the broader specialty auto environment, which in 2025 has rapidly evolved. Historically, it's always been a more sensitive, fast-moving segment, with shifts often appearing there before becoming visible in the broader auto insurance space.
And that dynamic certainly held true this year. One of the most notable developments here has been the sharp increase in competition, particularly over the spring and summer. In several of our key markets, we've seen other carriers aggressively pursue market share through pricing tactics. While we're responding to these pressures, we won't abandon our underwriting standards, and we remain committed to disciplined underwriting and driving profitable growth. In addition to competitive pressure, we're seeing elevated severity trends due to medical cost inflation and higher attorney involvement in claims.
The impact of bodily injury severity has been especially pronounced in our largest market, California, where the January 1 changes to minimum financial responsibility limits are showing up in our results more significantly than initially anticipated. We had expected adjustments to be needed once real claims experience began to emerge, and we're actively making those adjustments. Matt will provide further detail later. As for the litigation environment, you could call it social inflation or legal system abuse, the effect is the same: upward pressure on loss costs and overall claims inflation. Ultimately, this leads to increased customer premiums and prolonged claims resolution processes. As I stated earlier, we believe in our strategy, and we remain committed to it.
We know what we have to do. We're taking actions to enhance our competitive advantages, improve profitability, and achieve consistent PIF growth. We're in a solid financial position and are confident these actions will help us succeed. With that, I'll turn it over to Brad.
Bradley Thomas Camden: Thank you, Tom, and good afternoon, everyone. Before diving into the presentation, as Tom mentioned, our financial results this quarter fell short of expectations due to a combination of factors, including intensified competition, elevated severity trends in claims, and a handful of infrequent items. In response, we're implementing a targeted restructuring initiative, taking segmented pricing actions, and making operational improvements. Additionally, we made some changes in our senior management team, including new leadership in claims and information technology, which were designed to accelerate and enable these efforts. Our immediate priority is to enhance execution, improve profitability, and position the company for growth. Let's now turn to Slide five to discuss our financial results in more detail.
For the quarter, we reported a net loss of $21 million or $0.34 per diluted share, and adjusted consolidated net operating income was $20.4 million or $0.33 per diluted share. These results generated a negative 3% return on equity. Our trailing twelve-month operating cash flow remains strong, and year-over-year book value per share growth of 4.8%, $585 million, holding near our all-time high. In our P&C segment, the underlying combined ratio increased six percentage points sequentially to 99.6%, reflecting elevated California bodily injury claim severity and competitive pricing pressure. Policies in force and interim premium grew 0.6% and 10.7% year-over-year, respectively. Matt will discuss this in detail later.
Our Life business delivered solid results this quarter, supported by favorable mortality trends and disciplined expense management. These fundamentals continue to reinforce the segment's reliability and stable contribution to overall earnings and cash flow. Chris will briefly discuss this later in the call. Additionally, our balance sheet is strong, with substantial capital and liquidity positions, providing financial flexibility. This strength enables us to support organic growth, invest in strategic initiatives, and distribute capital to shareholders. From July to October, we repurchased a total of 5.1 million shares at an average price of $52.65 for a total cost of $266 million. This activity includes the $150 million accelerated share repurchase program announced in August, which was successfully completed in mid-October.
Moving to Slide six. Here, we take a look at the key sources of earnings volatility during the quarter. These include a restructuring charge, the write-off of internally developed software, and adverse prior year development. I'll provide some additional color on each. During September, we initiated actions to drive operational efficiencies and reduce costs. These initial actions are expected to generate approximately $30 million in annualized run savings. We continue to look across the business to identify additional expense savings opportunities focused on enhancing cost discipline and organizational effectiveness. These savings are intended to do two things: First, improve our combined ratio, and second, to support growth in specialty personal auto business and accelerate geographic diversification.
As a result of these actions, we recorded a $16.2 million after-tax restructuring charge in the quarter. In Kemper Corporation's preferred business, which is reported below the line in non-core operations, we lost $21 million, primarily due to a $22 million expense related to the write-off of internally developed software. Approximately 90% of this business has now run off, as a result in expense recognized this quarter, and all remaining software amortization has been completed. And finally, we strengthened our reserves by $51 million pretax, $41 million after-tax in our Specialty Auto segment.
The vast majority of the adverse development was concentrated in our commercial auto business, primarily from bodily injury and defense costs related to accident years 2023 and prior. As Tom noted and consistent with broader industry trends, we continue to see elevated bodily injury severity. This is caused by several factors, including rising medical care costs, increased use of innovative treatments, and higher attorney involvement rates. In response, we've taken proactive steps to address these challenges, including rate and non-rate actions and further enhancements to our claim management processes. Turning to Slide seven. Our balance sheet remains strong and provides financial flexibility. As of quarter-end, we maintained over $1 billion in available liquidity, and our insurance subsidiaries remain well-capitalized.
Our debt-to-capital ratio stands at 24.2%, near our long-term target and reflective of our disciplined capital management. Notably, we generated $585 million in operating cash flow over the past twelve months, remaining near an all-time high for the company, underscoring the resilience of our business model and the consistency of our cash flow generation. Moving to Slide eight. Quarterly net investment income totaled $105 million, up $9 million sequentially, driven by improved performance in our alternative investment portfolio. We maintain a high-quality, well-diversified investment portfolio that demonstrates thoughtful asset allocation and prudent risk management.
As the portfolio grows and benefits from favorable new money rates, we anticipate net investment income will continue to trend upward over time, contributing meaningfully to overall earnings. In summary, our disciplined approach to capital deployment, strong balance sheet, and resilient cash flow generation position us for success. With initiatives underway to improve profitable growth and operational discipline, we're well-equipped to navigate evolving market conditions and deliver value to our stakeholders. I'll now turn it over to Matt to discuss the Specialty P&C segment.
Matthew Andrew Hunton: Thank you, Brad, and good afternoon, everyone. Turning to Slide nine, the Specialty P&C segment produced an underlying combined ratio of 99.9% this quarter. Personal auto's combined ratio increased to 102.1%, while commercial remained relatively stable at 91.1%. The increase in our personal auto underlying combined ratio was driven primarily by bodily injury loss trends. While we're observing signs of elevation across all geographies, it is particularly evident in California. As you will recall, on January 1, the industry-wide mandatory increase in state minimum limits went into effect. This change doubled the BI limit from 15/30 to 30/60 while also increasing physical damage from 5,000 to 15,000.
At the time of our initial rate filings for the new limits, our pricing analysis was based on our California loss experience, complemented by our experience with similar limit increases in non-California markets. Our selected pricing factors were on the higher end of the actuarially supported range. With that said, our early read of actual post-change severity has come in higher than forecasted. BI is a long-tail coverage, and a three-month evaluation is only about 35% developed. Also, severe higher-cost claims, which have a greater propensity to reach policy limits, tend to be resolved sooner. Therefore, we move quickly to take rate and non-rate actions to ensure pricing meets lifetime targets.
We'll continue to closely monitor severity patterns and adjust accordingly. As earlier noted, the specialty auto market tends to experience emerging patterns earlier than the standard market. With specialty auto customers being higher frequency, loss patterns become visible more rapidly. To that end, an increasingly clear driver of liability cost challenge is higher attorney involvement and legal system abuse. We continue to see attorneys attach to claim files much earlier in the process. The combination of growing medical inflation and the greater use of elective procedures is driving a more expensive treatment mix. This dynamic is not unique to our business. It's an industry-wide trend that will require more proactive and disciplined management.
With that said, 95% of our book is at state minimum limits, which places an upper bound on further cost escalation. As Brad discussed, in addition to our underwriting and pricing actions, we've launched a restructuring initiative aimed at creating a more competitive cost structure to further diversify our book. These efficiencies are supporting expansion efforts in Florida, Texas, and other non-core states. Funding market entry work, improving product competitiveness, and expanding distribution partnerships in priority regions where we see strong growth potential. Shifting to production, California moved quickly from a hard market to a more normalized market with competition intensifying. We're taking rate and non-rate actions to address liability costs to ensure pricing economics remain sound.
These actions are aligned with our goal of tracking profitable growth through the cycle. Our pricing actions to date in Florida and Texas have helped stabilize our in-force book. Ongoing expense efficiency initiatives and enhancements to our product capabilities are targeted at supporting profitable growth in these markets. In commercial auto, underlying margins remained strong, and PIF growth was 14%. The competitive market remained stable with regional nuances. Similar to our personal auto business, we continue to be aggressive on rate actions across all coverages with heightened focus on bodily injury. Our competitive advantages position us well to capitalize on these opportunities. And finally, we're focused on execution.
Rolling out new product features, improving end-to-end claim handling, and driving cost efficiencies, all to enhance price competitiveness. By strengthening operational discipline in these areas, we can grow strategically, diversify our footprint beyond core markets, and deliver profitable growth. I'll now turn the call over to Chris to cover the Life business.
Christopher Flint: Thank you, Matt. Turning to our Life business on Slide 10. The Life segment delivered solid quarterly results, with operating earnings of $19 million driven by favorable claims experience and expense levels tightly aligned with product economics. Despite a modest decline in premium volume, the business remains well-positioned to sustain strong returns on capital and robust cash generation. I'll now turn the call back to Tom to cover closing comments.
Tom Evans: Thanks, Chris. In closing, I hope we've described not only what happened this quarter and why, but more importantly, the actions we're taking to improve profitability and growth. We're reinforcing the disciplines that drive performance through management changes, a restructuring initiative, and a renewed focus on execution. As I said at the top, I have tremendous confidence in this organization, its purpose, its potential, and the talent of our people. I want to thank our entire team for their commitment and hard work to make Kemper Corporation a stronger organization. As we navigate this environment, we remain certain of our ability to deliver long-term value to all of our stakeholders. Operator, we may now take questions.
Operator: Ladies and gentlemen, we will now begin the question and answer session. If you are using a speakerphone, please make sure to lift your handset before any case. Your first question comes from the line of Andrew Scott Kligerman from TD Cowen. Please go ahead.
Andrew Scott Kligerman: Hey, thanks for taking my question. Good evening. Maybe start with the commercial auto segment. I calculate an unfavorable prior year of 18.7 points. And that follows the second quarter. Point four points of unfavorable. And if I recall the management commentary on the last call, it seemed that it had been nipped. Like, they had really captured it. We talked on the call, I think, about the social inflation environment. So what's happened between 2Q and 3Q on the commercial? And why should we not expect another unfavorable prior year development there?
Bradley Thomas Camden: Good afternoon, Andrew. This is Brad. Thank you for the question. You are correct in comments from the prior quarter. We did have adverse development in the second quarter. And we obviously, we've also had adverse development here in the third quarter. In the second quarter, we discussed the adverse development being late large loss activity. Not due to frequency, but higher severity. We've experienced the same thing here in the third quarter on large losses. So continue latent development in accident years 2023 and prior. Additionally, we're also seeing BI severity trends from social inflation and continued attorney attachments and accident and non-large losses, which is how we describe it as anything below $250,000.
So the PI severity trends that Matt discussed in the call previously, not only in PPA, it's also prevalent in commercial vehicle. And it has been prevalent across the industry to date. With respect to us capturing this and not being a consistent issue, we've adjusted our expectations on what each of those cases are today and what they're gonna expect to develop to. And we've also adjusted what our IBNR development factors to capture what we think is probable in the future. You know, we're confident in that. But as the environment remains extremely dynamic, you know, there may be further adverse development, but we're comfortable with what we have today.
Andrew Scott Kligerman: Okay. Thank you for that. And my follow-up question shifting back to private passenger auto, come in at an underlying combined of 102.1. And a lot of your competitors we've seen are coming in around 90%. So I guess you've got geographic differences. So I guess the question is, one, what gives you confidence in your data and analytics? You know, are you up to speed with that? Are you in line with your peers with your data and analytics in terms of capturing this stuff? And I suspect you know, the part b of it is, I suspect you probably need some rate and California has historically been a very tough state.
Do you think they'll give you the approvals that you need?
Matthew Andrew Hunton: Andrew, this is Matt. Start with just highlighting the nuance difference between us and some of the mainstream competitors that we're up against. I think primarily one is we're a minimum limits, customer base. We have a different frequency profile and loss profile. It's sort of the definition of nonstandard. The other is 60 plus percent of our book is in California. And that's really where the driver of the inflection was in the loss from quarter over quarter. Frequency came in line within expectations. It was slightly elevated but within normal sort of seasonal expectations. The driver was heightened severity, and it was really the BI PD dynamic that really it's not new for the industry.
This has been a dynamic in the industry for the last decade or so. It was heightened due to the FR changes in California earlier this year. Right? And so this effectively acts as a one-time step up in cost and this isn't normal. The last time California had a limit increase was in 1967. And so with California, representing the percentage of the portfolio for us that it does, naturally, it's more pronounced in our results relative to peers.
And as our California book converted over to the new limits, and as Brad mentioned with the latent development or the slow development of BI coverage, we observed the elevated paid patterns in the mid part of the third quarter, and we took immediate action. I don't think we have any concern about our analytics or insights. We have a perspective view in terms of where costs are going, and we're trying to be as aggressive as we can in achieving that. Regarding the rate to be filed that is currently filed with the CDI, that is with the CDI, we are having proactive conversations with them.
Our goal is to get the rate effective as soon as possible and the dialogues are moving along as we expect them to.
Andrew Scott Kligerman: Got it. And maybe just if I could sneak one last one in. There was a lot of discussion in the investment community about Kemper Corporation's willingness to be acquired. I know you can't be specific, but you know, what's your thinking right now on that topic? Is that something that Kemper Corporation is open to?
Tom Evans: Andrew, this is Tom Evans. That's not really something we can comment on. We're a public company. We're for sale every day.
Andrew Scott Kligerman: Okay. Very fair. And thank you for your detailed answers to my questions.
Tom Evans: You're welcome. Thanks for the questions.
Operator: Your next question comes from the line of Mitchell Rubin from Raymond James. Please go ahead.
Mitchell Rubin: Hey, good afternoon, guys. Thanks for taking my call. I wanted to ask about the restructuring. Could you please elaborate on some of the specific areas where you guys are targeting cost savings from? Thanks.
Bradley Thomas Camden: Mitch, this is Brad. Really, in three areas. One is an organizational design. We've restructured some of the reporting lines and as a result, have had some cost savings. So organizational structure. Second bucket is process efficiencies. So think about with some new product launches, we have lower commissions. With improved process, we expect to produce some print postage, some bad debt, other things. So increase overall efficiency in the organization is key and critical. And lastly, there are various one-off things that maybe we've made investments in the organization that we're looking to change on how we do business and how we operate going forward. So total as we mentioned, did a $16.2 million after-tax charge.
That's save us on a run rate basis approximately $30 million annually.
Mitchell Rubin: Thank you for the color there. And my follow-up, on Page nine, of the presentation I see that policies in force in Florida and Texas came down about 7% year over year. Could you provide some color on what you're seeing in the competitive environment there?
Matthew Andrew Hunton: Yeah. This is Matt again. Look. I'll start with overall. We still are bullish on the markets that we operate in. Obviously, California being our largest. We talked a lot about California being a hard market over the few quarters as it worked its way through the pandemic. It that is normalizing. Competition's increasing on the new business side. With that said, our policy retentions are stable there, but some competitors continue to get increasingly aggressive. And as we are making the changes we're making on the pricing and underwriting side, to address the liability trends. We think those are the right changes and we're remaining disciplined as we work through the cycle.
In terms of Florida and Texas, those markets are very competitive marketplaces. I think we've talked about that for the last few quarters. We've done quite a few changes in our products from a segmentation pricing perspective that have stabilized our in-force book of business. And as Brad mentioned in the prepared comments, the restructuring and cost efficiencies that we're driving through the business, along with additional product enhancements are focused on those markets. So to accelerate growth in those markets, and help us move towards our strategic and state of being a more diversified geographic portfolio.
Mitchell Rubin: Great. Thank you. That's helpful. If I could just ask one more thing. You mentioned some non-rate actions you guys have been taking. Can you give any insight towards that?
Matthew Andrew Hunton: Yeah. Non-rate actions are effectively tightening some underwriting aperture, managing agents in terms of capacity with a bit more aggressiveness. Adjusting billing features among other things. That help us manage profile and the expected losses associated with the Thank you. Appreciate all the answers.
Operator: Ladies and gentlemen, as a reminder, if you would like to ask a question, The next question comes from the line of Brian Meredith from UBS. Please go ahead.
Brian Meredith: Yes, thanks. A couple of questions here for you. The first one, I think it's related to some runoff stuff, but I'm just curious to software, write-off in the quarter, what would the is that exactly related to? And did that have any effect or a part of your call specialty business?
Bradley Thomas Camden: Hey, Brian. This is Brad. Good afternoon. The write-off of the internally developed software is solely related to the Kemper Corporation's preferred business, which is reported below the line in non-core operations. As a result of, you know, our premium forecast and an acceleration of the runoff of that business, We determined that the premium receiving is no longer, you know, enough to support those assets. So as a result, we've written them off this quarter. It has no relation to the specialty auto business. It's solely related to 90% runoff. And the remaining policies are predominantly in the state of New York. Which we are close to working with the regulator to accelerate the runoff of that business.
Brian Meredith: Makes sense. And then my next question is, I guess the chief claims officer and the chief information officer or CIO are gone. What changes are you making with in the claims in the, information technology area?
Tom Evans: As a result of their departures. We publicly, Brian, this is Tom Evans. We've announced that Andy Ramamorthy has stepped in as chief claims officer. So that responds to that part of your question. With regard to the IT space, we currently have an office of the CIO that's comprised of three members of our executive team, Andy, who already mentioned, Matt and Brad are the other two members. And we are I'm sorry. Go ahead.
Brian Meredith: Yeah. I meant more about process. Right? Underlying process or changes that maybe that changes within claims or systems processes, not so much the new people coming in?
Matthew Andrew Hunton: Brian, this is Matt. We on the claim side, there are a few sort of process points of evolution that we're working on. And some of this has been work in process for the last few years, but the biggest one is sort of an end-to-end orientation around how we manage total cost of ownership and value generation. We worked pretty aggressively on the material damage side the last couple of years and, the efforts are paying off in terms of stemming some of the tariff pressure that I think the industry is seeing. We have been working that on the liability side, and we're accelerating some of that work so we could aggressively manage some of the headwinds.
From a liability trend perspective. That's one example. Another example is we're taking our data science capabilities that we built on the pricing front and we're accelerating that into claim to help us process more effectively sort of next best action, drive some automation, leverage AI and other tool kits to really drive efficiency in the engine. And on the technology side, similarly connecting that more to the business to drive value in a more expeditious and agile way.
Brian Meredith: Great. Thanks. And then, Tom, Yes. Sorry, Brian. Just gonna add one more comment is the other thing that we've done is repositioned some of the players in our claims team, particularly to respond to some of the more active, things we're seeing in the litigation environment, to better respond to those issues?
Brian Meredith: Makes sense. And then last question, I guess, for Brad. So, I'm assuming there was some kind of current year cash up in the underlying kind of loss picks in the quarter. What's the run rate underlying loss ratio right now in the third quarter ex current year development? And maybe you could break that down between personal auto and the commercial.
Bradley Thomas Camden: Great question, Brian. Well, I'll give you the details. You know, essentially, underlying loss ratio from Q2 to Q3, you know, increased six percentage points, 93.6% to 99.6%. When you think about the current year adjustments, no significant current year adjustments. What we're seeing is favorable development on comp and collision and metals coverages. And we can just see we can even see some adverse development even in the current accident year on BI. So it's a mixed development with no significant changes either in, commercial vehicle or PPA.
Operator: Your last question is from the line of Andrew Scott Kligerman from TD Cowen. Please go ahead.
Andrew Scott Kligerman: Yeah, thanks for taking one last question. On the share repurchases, you did a pretty active, think it was what? $266 million through October from July 1, and you still have about $300 million left. So maybe some color on your thoughts around share repurchase going forward.
Bradley Thomas Camden: Thanks, Andrew. You are correct with the numbers. 5.1 million shares, $266 million. You know, from a share repurchase standpoint, we continue to think the stock is attractive. That said, I will point you to our capital deployment strategy, which is first to fund organic growth. Matt talked about what we're doing there as we invest, some of the restructuring savings into Florida and Texas. So we'll make sure we have enough for, internal organic growth. Secondly, we want to make sure we have enough, you know, capital to have financial flexibility. And then third, if there's anything that's additional, we will distribute that to shareholders. So you are correct.
There's still a significant amount remaining in the authorization that was granted last quarter, that $500 million. And we'll continue to be, you know, tactical with that as we go forward.
Andrew Scott Kligerman: And maybe just as a quick follow on to that. In terms of policy in force growth, you've talked about it, Brad, that PIF would be a little lighter, maybe very low single digit in the 2025. Are you thinking just in light of all these pricing changes that you can kind of maintain that? You came in close at 0.6. And then when you get into 2026, do you feel like you could really target that? Or was it like mid single digit growth you were looking for in this next year, maybe upper mid?
Bradley Thomas Camden: Yeah. So you got the numbers correct, Andrew. We came in 0.6% year over year, down sequentially. I'll highlight that. And we talked about a lot of this a lot in the past is going from Q3 to Q4, we typically see, lower shopping activity as a result. PIF naturally declines just as result of seasonality in our business. So I would expect PIF to modestly decline maybe 1% or 2%, maybe 3% from Q3 to Q4. Then I'd expect us back to growing in the first quarter as we get into the buying season. As a reminder that buying season typically starts mid-February and goes through late April, early May.
As far as, you know, PIF growth, what we expect, you know, in the first half of next year, I think that depends on a competitive environment. As Matt mentioned, our goal is to grow profitably. And so we're gonna protect our margins and be thoughtful around growth. Particularly in some key states like California.
Andrew Scott Kligerman: Super. Thank you so much.
Operator: There are no further questions at this time. I'll hand the call over back to Tom Evans for closing comments. Sir, please go ahead.
Tom Evans: Thank you. I want to thank everybody for taking the time to join us today and to provide thoughtful questions. We appreciate everyone's continued support as we move through this transition. We look forward to speaking with you again next quarter. In the meantime, the team here at Kemper Corporation remains focused on execution and continuing to focus on delivering value for our shareholders. Thanks very much. Take care.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.