Michael Marinaccio - Vice President of Corporate Development and Investor Relations Joe Lacher - President and Chief Executive Officer Jim McKinney - Senior Vice President and Chief Financial Officer Duane Sanders - Property & Casualty Division President John Boschelli - Senior Vice President and Chief Investment Officer Mark Green - Life & Health Division President.

Matthew Carletti - JMP Securities Paul Newsome - Sandler O'Neill Bob Glasspiegel - Janney Montgomery Scott Gary Ransom - Dowling & Partners Katelyn Young - William Blair.

Good afternoon, ladies and gentlemen, and welcome to Kemper's First Quarter 2018 Earnings Conference Call. My name is Cole and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, the conference is being recorded for replay purposes. I would now like to introduce you to your host for today's conference, Mr. Michael Marinaccio, Kemper's Vice President of Corporate Development and Investor Relations. Mr. Marinaccio, you may begin..

Thank you, Cole. And good afternoon everyone, and welcome to Kemper’s discussion of our first quarter 2018 results. This afternoon, you’ll hear from Joe Lacher, Kemper's President and Chief Executive Officer, Jim McKinney, Kemper's Senior Vice President and Chief Financial Officer and Duane Sanders Kemper’s Property & Casualty Division President.

We will make a few opening remarks to provide context around our fourth quarter results and then we will go through the details of our planned acquisition of Infinity Property & Casualty before opening up the call for our question and answer session.

During the interactive portion of the call, our presenters will be joined by John Boschelli, Kemper's Senior Vice President and Chief Investment Officer, and Mark Green, Kemper's Life & Health Division, President.

We will make a few opening remarks to provide context around our first quarter results and then we will open up the call for a question and answer session.

Turning into active portion of the call, our presenters will be joined by John Boschelli, Kemper’s Senior Vice President and Chief Investment Officer and Mark Green, Kemper’s Life & Health Division President.

Before the markets opened this morning, we issued our earnings release and published our first quarter earnings presentation and financial supplement. In addition, we filed our 10-K with the SEC. You can find these documents on the Investors section of our website, kemper.com. Our discussion today may contain forward-looking statements.

Our actual results may differ materially from these statements. For information on potential risks associated with relying on forward-looking statements, please refer to our 2017 Form 10-K, as well as our first quarter 2018 earnings release. This afternoon’s discussion includes non-GAAP financial measures that we believe are meaningful to investors.

In our financial supplement, presentation and earnings release, we have defined and reconciled non-GAAP financial measures to GAAP where required in accordance with SEC rules. And finally, all comparative references will be to the first quarter of 2017 unless we otherwise stated. Now, I’ll turn the call over to Joe..

Thank you, Mike. Good afternoon, everyone and thank you for joining us on the call today.

Before walking through our quarterly results, I want to take this opportunity to provide an overview of Kemper for the benefit of Infinity stakeholders who may be on the line with us for the first time and we remind those of you that have been with us previously of the transformation that has taken place over the last couple of years.

As you can see on page four, Kemper is a national line multi-line insurer providing specialty auto preferred home & auto, basic life in action and health products. We distribute our products to the combination of 2,200 career agents and over 20,000 independent agents and our insurance subsidiaries have been issuing policies for more than a century.

Over the last two years, we’ve defined our strategy, made progress on its execution and reinvigorated the story brand. Our success to date is evidenced by the quality of leadership we’ve attracted and a significant turnaround in our non-standard auto business.

The pending Infinity acquisition will further solidify our leading position and commitment to that sector. I’ll provide more information on the strategic benefits of the combination shortly.

Now turning to page five, our long-term perspective continues to remain focused on building Kemper’s overall value and our strategy was formulated with that in mind. We’ll continue to leverage our competitive advantages while building core capabilities in order to maximize the value we delivered to all of our stakeholders.

In 2016, we described a broad array of strategic initiatives to unlock the embedded value within Kemper. At that time the Company was in a turnaround position.

We’ve made great strides in advancing these initiatives and appropriately have shifted our focus from turnaround mode to building a growing franchise that delivers value, strong value for all our stakeholders. As you’ll see on page six, we took the next step in our journey with our announced acquisition of Infinity.

We remain extremely excited about this highly strategic transaction, both within our specialty auto business and more broadly, at Kemper as a whole. With the strong growth and earnings momentum in both businesses, we believe this is the right time for the combination of our two companies.

This quarter, our non-standard auto earned premium increased 23% or the underlying combined ratio improved to 93.2%, this resulted in a net operating profit of $21 million.

The acquisition of Infinity should accelerate our progress towards becoming the premier specially auto franchise, one that consistently delivers exceptional value for customers, and at the same time, strong financial results. Within specially auto, we are creating a focus and scale player in a traditionally niche market.

Given our complementary footprints, this transaction will allow Kemper to reach a broader, customer base and will strengthen our relationships with agencies. From a Kemper corporate perspective, a larger especially auto business further enhances our overall brand and customer value proposition.

Additionally, we expect to benefit from the financial flexibility and capital generation provided from increased and more diversified earning sources across our business lines. We are currently in the process of seeking regulatory and shareholder approval and anticipate that transaction will close in the third quarter of 2018.

Now let’s turn to page seven and look at some of our first quarter’s highlights. Overall, we had a strong quarter reporting a net income of $53.8 million leading to significant increases in earnings per share and adjusted consolidated net operating earnings per share. Earned premiums increased 8% in the quarter to $610 million.

In the P&C segment, strong topline growth was driven primarily by policy growth and higher average premium rates in the non-standard auto business, which posted an 18% increase in policies in force and a 23% increase in earned premiums. In addition to strong growth, the P&C segments underlying performance is significantly improved.

The underlying combined ratio improved 2.7 percentage points in the quarter, largely driven by the non-standard auto business, which improved by 4.7 points and contributed a greater percentage of premiums to the segment. Our Life & Health segment continues to provide a stable source of earnings with strong and predictable cash flows.

Net operating income increased $2 million in the quarter. Our core investment portfolio continues to be strength, delivering a consistent and predictable revenue stream. In this quarter, we reported net investment income of $79 million. Our balance sheet and capital levels remain strong.

We had approximately 570 million of parent company liquidity, consisting of over a $180 million of cash and investments at the holding company, plus borrowings available under the revolving credit agreement and from our subsidiaries.

We have over 225 million of excess capital on our operating companies and our debt-to-capital ratio improved to a very manageable 22.3%. Given all the positive progress we’ve made, Kemper continues to attract quality leadership. During the first quarter, Duane Sanders joined the organization as our President of the P&C Division.

Duane’s a proven leader with more than 30 years of P&C experience in numerous executive roles. He’s an excellent addition to our leadership team, enhances the depth of our capabilities and will accelerate the value we are able to provide to all of our stakeholders.

Additionally, Bob Otis recently joined Kemper to lead our Preferred Home and Auto business. Bob’s also a proven leader with approximately 30 years of P&C experience in numerous executive roles and will add significant value in moving this business toward achieving long-term profitable growth.

With that, I’ll hand the call over to Jim to discuss our consolidated financial results in more detail..

Thank you, Joe and good afternoon. I’ll start on page eight and review our consolidated first-quarter results and then briefly touch on our Life & Health results. Overall, we had a strong quarter; net income was $54 million or $1.02 per share. This is up from a loss of 300,000 or $0.01 per share in the first quarter of 2017.

Adjusted, consolidated net operating income was $58 million or $1.10 per share for the quarter compared to a loss of $4 million or $0.08 per share. Earned premiums increased over 8% from last year or $46 million in the quarter to $610 million.

Our investment portfolio continues to provide us with consistent returns with a pretax equivalent annualized book yield of 5% delivering $79 million of net investment income in the quarter. Book value per share excluding unrealized gains on fixed maturities ended the quarter at $36.35 up 4% from $34.81 last year.

On the bottom of the slide, you’ll note that we profitably grew our P&C policies in force while improving both the underlying loss ratio and the expense ratio.

Turning to page nine, we isolated the key sources of volatility in our earnings; in the highlighted section at the bottom of the page you can see the underlying operating performance for the quarter. Quarter-over-quarter, we improved underlying performance 47% or $0.33 per share as we continue to execute our strategy.

Overall, we are pleased that our underlying operating performance remained strong. We recognized that there are and should be sources of volatility in our earnings. As such, we seek to optimally manage the risk reward trade-off on each of these items.

As mentioned on our last call, we secured an aggregate catastrophe reinsurance treaty that helps to mitigate the impact of high frequency, low severity catastrophes in a capital efficient manner for shareholders.

Recalling our 2016 strategic update, we made a commitment to improving our normalized run rate earnings by 90% or $90 million on an after-tax basis by year-end 2018. Based on the results from the most recent three quarters, we are excited to have exceeded that commitment ahead of schedule.

Our Life & Health’s division results are on page 10 of the presentation. On the top half of the page, you can see the stable revenue trend continued. Earned premiums increased $2 million to $155 million, while net operating income improved to $24 million.

This is despite increases in mortality and morbidity in the first half of the quarter that corresponded with the severe flu season. This division continues to be a stable source of earnings with strong and predictable cash flows. I’ll now turn the call over to Duane to discuss the result of our P&C Division..

Thank you, Jim. And good afternoon everyone. I’m excited to be here today as a new member of the Kemper team. I’ll begin with a discussion of non-standard auto on page 11 of our presentation.

For the past two years, and advanced with the implementation of our strategic plan, we have seen significant improvement across the entire non-standard auto business. Earned premiums increased to $266 million for the quarter, up $50 million or 23% over the first quarter of 2017, and up $69 million or 35% over the first quarter of 2016.

The top line growth was fueled by higher volume and premium rate increases. Policies in force increased 18%. More importantly, the growth was achieved profitably as reflected by the improved underlying combined ratio.

Non-standard’s auto underlying combined ratio improved nearly 5 percentage points over the first quarter of 2017 and 12 points percentage points over the first quarter of 2016, as the business benefited from rate increases as well as underwriting and claims actions.

We currently have a leading non-standard auto franchise with over 1.2 billion of annualized net written premiums and we’re focused on continuing to grow it profitably. With the combination of Infinity, we expect the specialty auto division to contribute significant value to our shareholders.

Moving onto page 12, our preferred auto business continues to show improvement, while the business is still pressured; we are seeing improved profitability working its way through the book as we benefit from rate increases and improvements in underwriting and claims practices.

Turning your attention to homeowners, the underlying combined ratio was 88% about six percentage points higher than last year. About half this increase was due to our purchase of an aggregate catastrophe treaty to reduce the impact of high-frequency, low severity events and manage loss volatility.

The remainder was largely due to an increase in severity. The team continues to focus on underwriting and claims practices to bring this business to an appropriate level of profitability. I’ll now turn it back to Jim..

Thank you, Duane. Turning to investments on page 13, this area continues to be a strength for Kemper. Our portfolio is diversified, highly rated and has performed well over time. On the bottom left of the page, we’ve broken out the portfolio by investment type and provided the fixed maturity ratings.

The portfolio is conservative in nature with more than 75% comprised of fixed maturities, and of those 90% are investment grade. Looking at the chart on the upper left, you can see our performance over the past five quarters. This quarter, we delivered 79 million in net investment income.

The core portfolio produced slightly lower net investment income, as the higher investment base was offset by an average lower rate. The alternative investment portfolio generated investment income of $11 million. Overall, in the first quarter, the portfolio delivered an attractive pretax equivalent annualized book yield of 5%.

Lastly, turning to page 14, we highlight our strong capital and liquidity position. At the end of the first quarter, we had a debt-to-total capitalization ratio of 22.3% which provides us with ample financial flexibility.

We expect that debt-to-total capitalization ratio to increase into the high 20s upon the close of the Infinity acquisition and to revert to current levels within a year post close. I think this is a good place to pause and highlight some items in interest and other expenses.

The largest driver of the increase in interest and other is diligence and integration cost of $6.2 million, a significant portion of the remaining difference is an increase in our pension expense. Historically, the company has had a funded status around 80%. Today, we’re about 92% funded.

This has led us to an enhanced glide path that has reduced risk associated with our go-forward funding obligations and earnings volatility while marginally increasing ongoing pension expense. In the chart in the upper left-hand corner you can see our parent company liquidity.

While holding company liquidity is slightly decreased, we have ample liquidity. At quarter end, we had a $184 million in cash and investments and $385 million in borrowings available from our revolver and insurance subs. Looking at the chart in the upper right, you can see our insurance subs remain well-capitalized.

Finally, looking to the bottom left of the page, you can see our business continues to generate substantial, operating cash flow. With that, I’ll turn the call back to Joe for some closing comments..

Thanks, Jim. So wrap up, the strong results in this quarter, demonstrated a significant progress we made on Kemper’s transformation and the effective execution of our strategy to date.

As Jim mentioned earlier, in the five years prior to this management team’s arrival, the company had been generating on average about $100 million of after-tax normalized net income. In our 2016 strategic update, we described initiatives to unlock the embedded value within Kemper.

We committed to improve that average by 90% or $90 million after-tax by the end of 2018. Based on the most recent three quarters, we are excited about delivering on this commitment ahead of schedule. That said, we’re not satisfied. Though we’ve dramatically improved our performance, we’ve not achieved our full potential.

We recognize we still have work to do to further enhance the value we provide our stakeholders and we remain excited about our continued efforts to unlock this value and are confident that the foundation we’ve built to date enables us to achieve that potential. And now, we’ll turn the call back to the operator to take your questions..

Thank you. [Operator Instructions] And the first question comes from Matt Carletti from JMP Securities. Please go ahead..

Hi, thanks good afternoon. Just had a few questions, wanted to jump in the homeowners first. You, Duane, I think you mentioned that about half of the six-point uptick in the loss ratio is related to the aggregate reinsurance contract.

Was there a topline impact there? Was that part of the drag on premiums and you talk about points more of a – as it comes out in the equation or did this just go straight to expenses?.

Yes, we’re going to tag team this one, Matt.

The -- reinsurance that comes right off the top line from the net written premium perspective, right?.

And so – is the three points just the math of the denominator shrinking and they extend their relatively level?.

Correct. When we reference that three points, it’s just the premium coming out of the denominator..

Perfect. Just want to make sure that I understand that correctly. And then kind of staying on home-owners of kind of that – that see the rest of the three points.

I mean was there anything in caps or light was non-cap weather part of the difference year-over-year on that, cause there was some stuff that went on in the country, I know some places you are particularly exposed to, but was non-cap weather any of the remaining increase there or was that really another factor?.

It’s really not much of a factor. There’s a few things in that we got, obviously a little bit of just the demand surge, a little bit impact on the claim process and then just normal volatility..

Okay. And then last piece on…..

Matt, I'm going to add a thought on that. I don’t have anything to add on the answer to it, but maybe it’s worth a point. We’ve got a modest size book and periodically people do market share, estimates.

We’ve told you guys a couple of times that we had hail storms in Dallas or something and we got sort of an outsized piece of that, market share wasn’t a good measurement. This is a quarter where we are the beneficiary of that, where some other folks were popped bigger and we didn’t, it didn’t get that.

It goes both ways, and maybe this is just a reminder when its good news, it’s sometimes we get that on that side too..

Okay, fair enough.

And then lastly, if you said any color around, I know the net development there was virtually nothing, but there was handful of points from non-cat that was offset by cat, anything in particular driving that that non-cat development in the quarter?.

Yes, Matt. Thanks. This is Jim. High level in previous quarters we had specific amount that was kind of targeted as it related to cats. Some of the demand surge that Duane had mentioned earlier and some of that increase in severity. We've had model that coming through from our standpoint as it related to our cats.

What we're seeing is its kind of bled over and is actually more coming up into our normalize results. And so what you've seen is really just a shift in the geography and kind of a net result of the total numbers they are looking at. Its really placement versus it is, anything that actually really deviated from our expectations.

So the net-net is the same. It's just geography..

That makes sense. It's helpful. Last one just shift to high level and then switch to non-standard auto. I mean, results continue to be good. The growth is actually -- you already had strong growth and accelerated nicely.

Can you just expand a little bit on kind of what you're seeing in the market there, kind of what's continuing to drive really strong growth if anything is – and if you've seen any change in the market yet, I mean there is some I think that kind of the tax changes might show up in personal lines before they show up anywhere else, if you just update on that that's will be great? Thanks..

Yes, Matt, I think what we're seeing is a consistent strength inside our non-standard auto business. We've got a strong profitability in competitive prices, the value we're delivering is working well and some to be in this marketplace you got to have competitive prices that drives a lot of it, and we're seen a continuation of that trend.

We were the beneficiary in the quarter of on Access Insurance Company in California, was put in the liquidation and they had to non-renew their policies and move those to other carriers. But we got about 10 to 12 million a written premium in the first quarter's numbers from that item, so it's a little bit the growth there.

But I think what you're seeing is a strong position in the market and as customers are out shopping we're well-positioned on to take advantage of that and clearly the access opportunity won't be there for 12 months, but for the back end of the first quarter and the early part of the second quarter it's when we're excited about..

Okay, great. Thank you for the answers. And congrats on a really nice start to the year..

Thank you..

And the next question comes from Paul Newsome from Sandler O'Neill. Please go ahead..

Good morning.

I want to ask a couple of big questions, big picture questions about sort of a strategy for the personalized business outside the non-standard kind of what you think given the environment if you have any update?.

Paul, you're cutting out a little bit.

I heard you start to say you want to ask some high level questions on strategy, but then we loss the back half?.

So let me say it again. I like to ask about sort of the strategy for the preferred auto business as well as the life business.

If you have any updated thoughts on what you'd like to do with those businesses?.

Yes. Great question. The focus of the company is to find appropriate niches where we either target some market that's not being adequately serve, the place where we have unique skill or underwriting capability, or we're finding competitors are in the marketplace targeting that space enough and where we think we can do something unique in that.

Our life business clearly matches that from the perspective that it's dealing with very low income consumers. There aren't a lot of folks targeting that customer segment. We're serving an unmet need there and we do it very well.

Our focus there is continuing to drive the strength of profitability we have in that business and then making the appropriate investments and adjustments in your tactics that will enable us to grow that business.

Sometimes when you say, make appropriate investments that scares people, that their huge dollars associated with that, that's not in fact the case here. They're modest dollar items but it's an improvement in execution capability that will allow us to continue to grow that business.

We talked about before that a big benefit of our life business is how it fits in with the rest of the portfolio. It enables us to have the investments department we have, because we have a broader pool invested assets which lets us drive a stronger set of returns than we'd be able to drive if we were a P&C only company.

We get a capital diversification benefit, because of the different earning streams, which is a plus. There's a series of benefits that come through that. So I think its very much positive force for us and fits importantly the rest of the strategy in the organization. Its free cash flow, covers all of our interest and dividend payments.

It let us working our P&C difference -- business in a different way and when we got to do to make that work better in just old-fashioned sales management.

On the preferred auto and home side of the house, that's the case we recognize there's a lot of folks playing in that space, and what we got to do is have a capability that's different otherwise we're in a crowded space. Our job one is to fix the profitability inside of that business that's where we have the right and option to do something else.

And then beyond that we're going to focus on our packaged product and improving the strength of our property capability because we think that there is just some degree in unmet market with less focused competition that space.

Job one is improving that profitability inside a business and that's where we focused first, but we have seen the ability with the appropriate focus to profitably grow that segment of the market..

Do you think the preferred business could be in this environment as profitable as the nonstandard auto builds?.

I'm not a 100% sure, how to answer the question, Paul in this environment..

Just giving you an out?.

Yes. I think that there is – that we get an – to get an appropriate return on that business in total. I do. I think that's a possibility. I don't think you can see us try to be a preferred monoline auto player that's trying to be dominant in that space because I think they were not positioned to be a dominant player there.

Our strength is going to come leading with the homeowners and building their strength there and working around our package policy, because I think there's shelf space in agents office, there's mind share and the consumer's mind for somebody who works in that environment.

Our issues have been in some cases, self-inflicted ones that we've talked about it in the past. The system changes we put in place and that are being rollout now help us position the business better the claim changes we put in and help us position that better. So there's a variety of things that will enable us to be more successful there.

They just take longer to get to them..

That's all. Congratulations for the quarter. Thanks Lacher..

Thanks..

And the next question comes from Bob Glasspiegel from Janney Montgomery Scott. Please go ahead..

Good afternoon everyone.

Are you winning or losing more business from Access to Infinity? Have you been tracking that?.

We're not in position that we can comment on Infinity's results at this point in terms of what they are. But we're aware that both of us are strong players in the marketplace and have been successful at writing some of that business.

I'm not sure how head-to-head we would have done in individual consumer level, but I know we both been successful in the aggregate because we're both strong players in the marketplace and they have generated sales as a result..

But I think if you lose your hope you loss to them, right, I mean, because you'll be picking them up down the road. How's the transition going? You said third quarter closing.

Is there anything you're learning as you're going along?.

We're excited. We had got an early termination to the Hart-Scott-Rodino filing. The SEC approved our ability to make the S4 active in fairly brisk order, so that was effective Friday. So we're pleased with that. What we have outstanding is the shareholder vote which we expect to occur on June 1st.

And then the appropriate state-based regulatory approvals which are operating there in ordinary course, so we've seen nothing from those approval and vote perspectives than anything at this point other than positive and the balance will operate into the normal course.

As we thought about the integration effort as we work together as a team, I think we're particularly enthused about that. The teams are working well together. Our hypotheses on the culture is being been strong sets, and working well together, are moving appropriately.

We had what I would describe is a list of things that we thought were strong positive opportunities or things that that were going to be challenges, I would tell you as we worked our way through those we found more positive surprises than negative ones, and are -- as optimistic or more about how these things will come together at this point.

It's obviously still early but we're definitely feeling good about where we are..

Great.

Are you talking 3 to 5 million the mortality swing in early flue or could it be more than that?.

Yes. No. The change was about 3 million bucks..

Okay. And one last question, insurance side you're saying Gerber Life was hiring Goldman, our Nestlé was hiring Goldman to look at Gerber Life. It sounds like that would be right near Drake show, but potentially little big.

Is that the type of direct market life company that might interest you?.

Bob, we're both are doing this long enough to know that we'll never comment on M&A opportunity from anybody else..

Thank you. But I've given a try..

Good shot..

And the next question comes from Gary Ransom from Dowling & Partners. Please go ahead..

Yes. Good afternoon. I wanted to ask about lost cost trends. One of your peers more standard than nonstandard had some issues in bodily injury in California more legal representation and things just going against them.

And I don't know if you've seen anything like that? I just wanted ask if you had?.

There is – we've seen sort of scrambled through our loss cost trends and trying to isolate the California. We've seen more severity pressure than frequency pressure when you think about the components of loss cost trend.

But not so significant that we would've been swinging around to point somebody to a commentary that we thought it was particularly troubling.

Is that would be I would describe in the sort of the ordinary course trend that would be in line with what we've been doing from our pricing perspective nothing out of sorts and nothing that I would we would point to be a particular item like certain representation trends in a particular state.

I'm trying to be helpful but I'm not particularly sure exactly what that commentary was..

It was Mercer's commentary, but I'll leave it at that..

Okay. Having not reviewed the results at detail, we're not seeing anything huge..

Yes. Okay.

Maybe you could just tell us what you are seeing broadly not particularly in any state if you're seeing any kind of frequency trends that have been a little more favorable as other writers have commented on?.

Yes. Again to my point, the frequency is less troubling that I had been. When you think about lost trend, it's the combination of frequency and severity. We're seeing more upward pressure on severity then we are on frequency. I wouldn't say that our frequency is declining at this point, but it's increasing at a very modest pace..

Right. Okay. And just one more -- this maybe more of a strategic question too, but thinking about where you end up after Infinity closes and gets integrated. I really can't think of anyone else that's even remotely view the same size that has in the Hispanic market that you would be. You would essentially dominate it.

Is that a fair characterization at least until some competitor tries to go after it?.

Being a large player there I'd love to say mixed dominant, but we're not dominant. I think there's a lot of people in the marketplace playing around and it’s a competitive marketplace. I think we have a significant scale and I think we're going to be particularly strong in that space.

I think we're going to have a focus on serving the Hispanic market place with a stronger set of capabilities of Spanish speaking claim reps and Spanish speaking service representatives and I think we're to be attuned and focused on that marketplace more so, but there's plenty of people who serve that marketplace now with less effective capabilities..

All right..

I hopeful they got it..

Yes. Fine. Thank you very much..

[Operator Instructions]. And our next question comes from Katelyn Young from William Blair. Please go ahead..

Hi. Good afternoon. I wanted to just go back to the standard auto lines and when we think about the improvement in first quarter and how much of that should maintain momentum into the balance of the year.

You talk about continued improvement through [underwriting and rating], what is a large driver for improving going forward? And how should we think about the first quarter trend and about itself and how much of that should push forward I guess?.

Thanks. Good question. I would tell you that generally speaking kind of the underlying results that we saw in our auto business in the first quarter are sustainable for the most part throughout the year with modeling in some elements of seasonality.

I would expect that we will continue to make progress on our claims initiatives on that upfront and so they'll be a little bit of improvement or a little bit of volatility that I would expect we'll take some steps back to take two steps back, to go three steps forward I'm sure at various places.

But all-in-all I would expect something from moreover at with modest to slight improvement to the remainder of the year adjusted for seasonality..

Great. Thank you.

And then give us an update on what level of rates are being pushed through standard and nonstandard type each?.

Yes. We don't typically, Katelyn provide specific rate actions and specific great numbers on those. As a general rule I would tell you they are in the mid-single digit range..

Thanks..

And that of course varies by state and sometimes we have multiple products in a state..

Sure.

But then on the merger, I've seen the acquisition fast forwarding in six months, how do you think about funding the nonequity peace in terms of expected liquidity at that point in time or kind of the makeup between net and debt?.

I'm sorry, I just want to make sure that I understand the question and so I'm going to answer it based on what I think I heard and if I miss it just I'll come to it and let me know where I've missed.

High level, I would expect the non-equity component to be funded through a composition of cash on hand that we have, as well as, $250 million bank loan that we'll be putting in place between now and close, which will essentially account for the non-cash or non-equity portion of the transaction.

This is in line with what we put out it our presentation last quarter when we announced the deal on as well as on S4..

That's great. Thank you.

And then what you expect your share count to be post acquisition?.

Its about – I want to say about 63.5% somewhere in there plus or minus [250,000 to 500,000 shares] there. And I say that just because there's a lot of stuff that moves around obviously marginally with stock comp but other things between now and then..

Yes. All right. Thank you very much. That's all I had..

And this concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Joe Lacher for any closing remarks..

Thank you, operator. Thanks to everybody for your time today and your interest in Kemper. We look forward to updating you again next quarter. And have a great day..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..