Q3 2025 Kemper Corp Earnings Call

Speaker #3: Good afternoon , ladies and gentlemen , and welcome to Kemper's third Quarter 2020 Earnings Conference Call . My name is Constantine , and I will be your conference coordinator for today .

Speaker #3: At this time , all participants are in listen only mode . Later , we will conduct a question and answer session and instructions will follow .

Speaker #3: At that time . As a reminder , this conference is being recorded for replay purposes . I would now like to introduce your host for today's conference call , Michael Marinaccio KEMPER Corp , Vice President of Corporate Development and Investor Relations , Mr. Marinaccio , you may begin .

Speaker #4: Good afternoon , everyone , and welcome to Kemper's discussion of our third quarter 2025 results . This afternoon . You'll hear from Tom Evans , Kemper's , interim CEO , Bradley Camden Kemper's Executive Vice President and Chief Financial Officer , Matthew Hunton Kemper's , Executive Vice president and president of Kemper Auto .

Speaker #4: And Chris Flint , Kemper's executive vice president and president of Kemper Life . We'll 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 .

Speaker #4: Our presenters will be joined by John Boschelli Kemper'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 published our earnings presentation and financial supplement .

Speaker #4: You can find these documents in the investor section of our website , KEMPER Corp . 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 .

Speaker #4: These statements include , but are not limited to , the company's outlook on its future results of operations and financial condition . Actual future results and financial condition may differ materially from these statements .

Speaker #4: For information on additional risks that may impact these forward looking statements , please refer to our 2024 form 10-K and our third quarter earnings release .

Speaker #4: 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 .

Speaker #4: 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 Corp .

Speaker #4: Com all comparative references will be to the corresponding 2024 period , unless otherwise stated . I'll now turn the call over to Tom .

Speaker #5: 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 Corp interim CEO .

Speaker #5: Over the past 33 years , I've had the privilege of serving in a variety of roles at Kemper . Most recently as general counsel .

Speaker #5: During this time, I've gained a deep understanding of our business and, just as importantly, our people. I believe strongly in this organization.

Speaker #5: 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 .

Speaker #5: 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 .

Speaker #5: 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 .

Speaker #5: Our results this quarter were disappointing . Today we'll address what happened , why it happened , and above all , what we're doing about it .

Speaker #5: 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 .

Speaker #5: 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 are capable of .

Speaker #5: To that end , the board and leadership team have taken significant steps , including recent changes in leadership and restructuring initiatives to improve execution and accountability , and ensure that we deliver on our strategic priorities .

Speaker #5: This isn't about changing our direction , it's 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 .

Speaker #5: With that , I'll now provide some context around the key drivers of our performance . And then Brad , Matt will provide more detail and commentary on each .

Speaker #5: 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 .

Speaker #5: 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 .

Speaker #5: And that dynamics 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 .

Speaker #5: 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 .

Speaker #5: 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 1st changes to minimum financial responsibility limits are showing up in our results .

Speaker #5: 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 .

Speaker #5: Matt will provide further detail later . As for the litigation environment , whether you call it social inflation or legal system abuse , the effect is the same upward pressure on lost costs and overall claims .

Speaker #5: Inflation . Ultimately , this leads to increased customer premiums and prolonged claims resolution processes . As I stated earlier , we believe on our strategy and we remain committed to it .

Speaker #5: We know what we have to do. We're taking actions to enhance our competitive advantages, improve profitability, and achieve consistent growth. We're in a solid financial position and are confident these actions will help us succeed.

Speaker #5: With that , I'll turn it over to Brad .

Speaker #6: 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 , were implementing a targeted restructuring initiative , taking segmented pricing actions , and making operational improvements .

Speaker #6: Additionally , we made some changes in our senior management team , including new leadership and claims and information technology , which were designed to accelerate and enable these efforts .

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: These results generated a -3% return on equity and year over year book value per share . Growth of 4.8% . Our trailing 12 month operating cash flow remained strong at 585 million .

Speaker #6: Holding near our all time high and our PNC segment , the underlying combined ratio increased six percentage points sequentially to 99.6% , reflecting elevated California bodily injury claims severity and competitive pricing pressure .

Speaker #6: Policies in force and earned 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 .

Speaker #6: These fundamentals continue to reinforce the segment's reliability and stable contribution to overall earnings and cash flow . Chris briefly discussed this later in the call .

Speaker #6: 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 .

Speaker #6: From the beginning of July through the end of October , we repurchased a total of 5.1 million shares at an average price of $52.65 , for a total cost of $266 million .

Speaker #6: 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 .

Speaker #6: 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 .

Speaker #6: These initial actions are expected to generate approximately 30 million in annual run rate savings . We continue to look across the business to identify additional expense savings opportunities , focus on enhancing cost discipline and organizational effectiveness .

Speaker #6: 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 .

Speaker #6: As a result of these actions , we recorded a 16.2 million after tax restructuring charge in the quarter . In Cooper's preferred business , which is reported below the line in non-core operations .

Speaker #6: 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 , an expense was recognized this quarter , and all remaining software amortization has been completed .

Speaker #6: And finally , we strengthened our reserves by 51 million pre-tax , or 41 million after tax on 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 .

Speaker #6: Years 2023 and prior . As Tom noted , and consistent with broader industry trends , we continue to see elevated bodily injury severity .

Speaker #6: This is caused by several factors , including rising medical care costs , increased use of innovative treatments , and higher attorney involvement rates .

Speaker #6: 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 .

Speaker #6: Turning to slide seven . Our balance sheet remains strong and provides financial flexibility as of quarter end . We maintained over 1 billion in liquidity and our insurance subsidiaries remain well capitalized .

Speaker #6: 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 12 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 .

Speaker #6: Moving to slide eight . Quarterly net investment income totaled 105 million , up 9 million sequentially , driven by improved performance in our alternative investment portfolio .

Speaker #6: We maintain a high quality , well diversified investment portfolio that demonstrates thoughtful asset allocation and prudent risk management as a 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 .

Speaker #6: In summary , our disciplined approach to capital deployment strong balance sheet and resilient cash flow generation positioned 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 .

Speaker #6: I'll now turn it over to Matt to discuss the specialty PNC segment .

Speaker #7: Thank you , Brad , and good afternoon , everyone . Turning to slide nine . The specialty PNC segment produced an underlying combined ratio of 99.9% this quarter .

Speaker #7: Personal autos 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 .

Speaker #7: While we're observing signs of elevation across all geographies . This was particularly evident in California as you will recall on January 1st of this year , the industrywide mandatory increase in state minimum limits went into effect .

Speaker #7: This change doubled the VI limit from 15,000 and 30,000 to 30,060 thousand , while also increasing physical damage from 5000 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 .

Speaker #7: 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 by .

Speaker #7: Is a long tail coverage , and at three month evaluation is only about 35% developed . Also , more severe higher cost claims which have a greater propensity to reach policy limits , tend to be resolved sooner .

Speaker #7: 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 .

Speaker #7: To that end , an increasingly clear driver of liability cost challenge is higher . Attorney involvement and legal system abuse . We continue to see attorneys attached to claim files much earlier in the process .

Speaker #7: 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 .

Speaker #7: 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 .

Speaker #7: 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 .

Speaker #7: 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 and priority regions where we see strong growth potential .

Speaker #7: 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 .

Speaker #7: These actions are aligned with our goal of driving profitable growth through the cycle . Our pricing actions to date in Florida and Texas have helped stabilize our In-force book .

Speaker #7: Ongoing expense efficiency initiatives and enhancements to our product capabilities are targeted at supporting profitable growth in these markets. In commercial auto, underlying margins remain strong and growth was 14%.

Speaker #7: 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 .

Speaker #7: 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 .

Speaker #7: I'll now turn the call over to Chris to cover the life business .

Speaker #4: Thank you Matt . Turning to our life business on slide ten , 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 .

Speaker #4: 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 .

Speaker #5: 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 .

Speaker #5: We reinforcing the disciplines that drive performance through management changes , restructuring initiative and a renewed focus on execution . As I said , at the top , I have tremendous confidence in this organization .

Speaker #5: 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 .

Speaker #5: Kemper a stronger organization . As we navigate this environment , we remain certain of our ability to deliver long term value to all of our stakeholders .

Speaker #5: Operator we may now take questions .

Speaker #3: Ladies and gentlemen , we will now begin the question and answer session . If you have a question , please press star , followed by the number one on your touch tone phone .

Speaker #3: You will hear a prompt that your hand has been raised . If you would like to withdraw from the polling process , please press star followed by the number two .

Speaker #3: If you are using a speakerphone , please make sure to lift your handset before pressing any case . Your first question comes from the line of Andrew Kligerman from TD Cowen .

Speaker #3: Please go ahead .

Speaker #8: Hey , thanks for taking my question . Good evening . Maybe start with the commercial auto segment . I calculate an unfavorable prior year development of 18.7 points , and that follows the second quarter .

Speaker #8: At 8.4 points of of unfavorable . And if I , you know , and correct me if I'm wrong , but if I recall the management commentary on the last call like it , it seemed that it had been nipped like they had really captured it .

Speaker #8: We talked on the call . I think about , you know , the social inflation environment . So what what happened between two and three ?

Speaker #8: Q on the commercial and and why should we not expect another unfavorable prior year development there ?

Speaker #6: Good afternoon Andrew . This is Brad . Thank you for the question . You are correct in comments from prior quarter . We did have adverse event in the second quarter .

Speaker #6: And obviously, we've also had adverse development here in the third quarter and the second quarter. We discussed the adverse development, development being latent; large loss activity not due to frequency but higher severity.

Speaker #6: We've experienced the same thing here in the third quarter on large losses . So continued latent development in accident years 2023 and prior .

Speaker #6: Additionally , we're also seeing by severity trends from social inflation and continued attorney attachments and accident and non large losses , which is how we describe that is anything below 250,000 .

Speaker #6: So the by severity trends that Matt discussed in the in the call previously not only in in PPA is also prevalent in commercial vehicle .

Speaker #6: And it has been prevalent across the industry to date with respect to , you know , us capturing this and not being , you know , a consistent issue .

Speaker #6: We've adjusted our expectations on what each of those cases are today and what they're going to expect to develop to . And we've also adjusted what our Ebner development factors to capture what we think is probable in the future .

Speaker #6: I , 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 confident with what we have today .

Speaker #8: Okay . Thank you for that . And my follow up question shifting back to private passenger auto . Come in at an underlying combined of 102 point one .

Speaker #8: And a lot of your competitors we've seen are coming in around 90% . So so you know I guess you've got geographic differences .

Speaker #8: So I guess the question is one . What gives you confidence in your data and analytics ? Are you up to speed with that or are you in line with your peers , with your data and analytics in terms of capturing this stuff ?

Speaker #8: 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 .

Speaker #8: Do you think they'll they'll give you the the the approvals that you need ?

Speaker #5: Andrew .

Speaker #7: This is Matt. I'll start with just highlighting the nuanced difference between us and some of the mainstream competitors that we're up against.

Speaker #7: I think primarily one is we're predominantly a minimum limits customer base . We have a different frequency profile and loss profile . It's sort of the definition of non-standard .

Speaker #7: The other is , you know , 60 plus percent of our book is in California and that's that's really where the driver of the of .

Speaker #7: The inflection was in the , in the loss from quarter over quarter frequency came in line with in it was slightly elevated , but with normal sort of seasonal expectations .

Speaker #7: The driver was heightened severity . And it was really the bi PD dynamic that that's really it's not new for the industry . This has been a dynamic in the industry for the last decade or so , but it was heightened due to the the FR changes in California earlier this year .

Speaker #7: 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 .

Speaker #7: 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 .

Speaker #7: And as our California book converted over to the new limits . And as Brad mentioned with the with the latent development or the slow development of BI coverage , we observed the the the elevated paid patterns in the mid part of the third quarter and we took immediate action .

Speaker #7: 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 .

Speaker #7: Regarding the the rate to be filed that is currently filed with the CDI , that is , with the CDI , we are having proactive conversations with them .

Speaker #7: Our goal is to get the rate effective as soon as possible, and the dialogues are moving along as we expect them to.

Speaker #8: 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's willingness to to be acquired .

Speaker #8: I know you can't be specific, but what's your thinking right now on that topic? Is that something that Kemper is open to?

Speaker #5: Andrew , this is Tom Evans . You know , that's not really something we can comment on . We're public company . We're for sale every day .

Speaker #8: Okay . Very fair . And thank you for your detailed answers to my questions .

Speaker #5: You're welcome . Thanks for the questions .

Speaker #3: Your next question comes from the line of Mike Truman from Raymond James . Please go ahead .

Speaker #9: 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 ?

Speaker #9: Thanks .

Speaker #6: Thanks , 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 .

Speaker #6: So, organizational structure. The second bucket is process efficiencies. So, you know, think about with some new product launches, we have lower commissions with improved processes.

Speaker #6: We expect to produce some print postage , some bad debt . Other things . So increased overall efficiency in the organization is is key .

Speaker #6: And critical . And lastly , as our various one off things that maybe we've made investments in in the organization that were looking to change and how we do business and how we how we operate going forward .

Speaker #6: So total as we mentioned , we just took a $16.2 million after tax charge . That's going to save us on a run rate basis , approximately $30 million annually .

Speaker #9: Thank you for the color . There . And my follow up on page nine of the presentation . I see that policies enforced in Florida and Texas came down about 7% year over year .

Speaker #9: Could you provide some color on what you're seeing in the competitive environment ? There ?

Speaker #7: Yeah, this is Matt again. Look, I'll start with overall we still are bullish on the markets that we operate in.

Speaker #7: Obviously California being our largest . We talked a lot about California being a hard market over the past few quarters as it worked its way through the pandemic .

Speaker #7: That is normalizing competitions , increasing on the new business side . With that said , our policy retentions are are stable there , but some competitors continue to get increasingly aggressive .

Speaker #7: And as we are , you know , making the changes we're making on the pricing and underwriting side to address the liability trends , we think those are the right change changes , and we're remaining disciplined as we work through the cycle .

Speaker #7: In terms of Florida and Texas , those markets are very competitive marketplaces . I think we've talked about that for the last few quarters .

Speaker #7: We've done a quite a few changes in our products from a segmentation , pricing perspective that have stabilized our In-force book of business .

Speaker #7: And as Brad mentioned in the prepared comments , the restructuring and cost efficiencies that were driving through the business , along with additional product enhancements , are focused on those markets .

Speaker #7: So to accelerate growth in those markets and help us move towards our strategic end state of being a more diversified geographic portfolio .

Speaker #9: 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 .

Speaker #9: Could you give any insight towards that .

Speaker #7: 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 the expected losses associated with the profile .

Speaker #9: Thank you . Appreciate all the answers .

Speaker #3: Ladies and gentlemen , as a reminder , if you would like to ask a question , please press star followed by the number one on your touchtone phone .

Speaker #3: If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your next question comes from the line of Brian Meredith from UBS.

Speaker #3: Please go ahead .

Speaker #10: Yeah , thanks . A couple questions here for you . The first one , I think it's related to some runoff stuff , but I'm just curious to software right off in the quarter .

Speaker #10: What would is that exactly related to . And does that have any effect or a part of your called specialty business ?

Speaker #6: Hey Brian , this is Brad . Good afternoon . The right off of the internally developed software is solely related to the Kemper preferred business , which is reported below the line in non-core operations .

Speaker #6: As a result of our premium forecasts and the acceleration of the runoff of that business , we determined that the premium receiving is no longer , you know , enough to support those those assets .

Speaker #6: 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 Kemper Preferred .

Speaker #6: I'd also like to highlight that that business is now 90% runoff . And the remaining policies is predominantly in the state of New York , which we are close to working with the regulator to accelerate the runoff of that business .

Speaker #10: Makes sense . And then my next question is , I mean , I guess the chief claims officer and the chief information officer or CIO , or are gone .

Speaker #10: What changes are you making with with in the claims in the information technology area ? As a result of the departures ?

Speaker #5: Well , we publicly , Brian , this is Tom Evans . We've announced that Andy Ramamoorthy has stepped in as chief claims officer so that responds to that part of your question with regard to the it space , we're currently have an office of the CIO .

Speaker #5: That's comprised of three members of our executive team . Andy , who I already mentioned , Matt and Brad are the other two members .

Speaker #5: And we are . I'm sorry . Go ahead .

Speaker #10: I meant more about process , right ? Underlying process or changes that that maybe that changes within claims or or systems processes . Not so much .

Speaker #10: The new people coming in .

Speaker #7: Brian , this is this is Matt . We on the claims 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 .

Speaker #7: But the biggest one is sort of having an end to end orientation around how we , we , we manage total cost of ownership and value generation .

Speaker #7: 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 pressures that I think the industry is seeing .

Speaker #7: 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 perspective .

Speaker #7: 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 .

Speaker #7: Sort of next best action drive some automation , leveraging AI and other toolkits to really drive efficiency in the engine . And on the technology side .

Speaker #7: Similar similarly , connecting that more to the business to drive value in a more expeditious and agile way .

Speaker #10: Great . Thanks . And then yeah .

Speaker #5: Sorry , Brian . Just going to add one more comment is the other thing that we've done is we've 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 .

Speaker #10: Makes sense . And then a last question , I guess more from Brad . So I'm assuming there was some kind of current year catch up in the underlying kind of loss picks in the quarter .

Speaker #10: What's the what's the run rate underlying loss ratio right now in the third quarter ? X current year development . And maybe you can break that down between personal auto and and the commercial .

Speaker #6: 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 , 99 90 , 93 , 6 to 99 , six .

Speaker #6: You know , 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 the metals coverages .

Speaker #6: And we can see we continue see some adverse development even in the current accident year on by . So it's a mixed of element with no significant changes either in commercial vehicle or PPA .

Speaker #10: Okay . Thank you .

Speaker #3: Your last question is from the line of Andrew Kligerman from TD Cohen. Please go ahead.

Speaker #8: Yeah . Thanks for taking one last question on the share repurchases . You know , you did a pretty active I think it was , what , 266 million through October from July first .

Speaker #8: And you still have about 300 million left . So maybe some color on your your thoughts around share repurchase going forward .

Speaker #6: Thanks , Andrew . You are correct with the numbers 5.1 million shares , roughly 266 million . You know , from a share repurchase standpoint , we continue to think the stock is attractive .

Speaker #6: That said , I will , you 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 , you , Florida and Texas .

Speaker #6: So we want to make sure we have enough for internal or organic growth . Secondly , we want to make sure we have enough , you know , capital to to have financial flexibility .

Speaker #6: 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 .

Speaker #6: And we'll continue to be , you know , tactical with that as we go forward . .

Speaker #8: And maybe just as a quick follow on to that in terms of policy in force growth , and you've talked about it , Brad , but , you know , PIF would be a little lighter , maybe very low single digit in the back half of 2025 .

Speaker #8: 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 , and then when you get into 2026 , do you feel like you could really , you know , target that ?

Speaker #8: What was it like mid-single digit growth that you were looking for in , in PIF next year ? Maybe upper mid .

Speaker #6: Yeah . So you got the numbers correct Andrew . We came in at 0.6% year over year down sequentially . I'll highlight that .

Speaker #6: 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 .

Speaker #6: Piff naturally declines just as a result of seasonality in our business . So I would expect Piff to modestly decline maybe 1 or 2% , maybe 3% from Q3 to Q4 .

Speaker #6: And 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 , you know , mid , mid February and goes through late April , early May as far as Piff growth , the you know what we expect , in the first half of next year , I think that depends on the competitive environment as as Matt mentioned , our goal is to grow profitably .

Speaker #6: And so, we're going to protect our margins and be thoughtful around growth, particularly in some key states like California.

Speaker #8: Super . Thank you so much .

Speaker #3: There are no further questions at this time. I'll hand the call back over to Tom Evans for closing comments. Sir, please go ahead.

Speaker #5: Thank you . I want to thank everybody for taking the time to join us today . And to provide the thoughtful questions . We appreciate everyone's continued support as we move through this transition , and we look forward to speaking with you again next quarter .

Speaker #5: In the meantime , the team here at Kemper remains focused on execution and continuing , continuing to focus on delivering value for our shareholders .

Speaker #5: Thanks very much . Take care .