Car Insurance Rates Skyrocketing: 10 Best Stocks to Buy

8. Kemper Corporation (NYSE:KMPR)

Number of Hedge Fund Investors  in Q1 2024: 28

Kemper Corporation (NYSE:KMPR) is a Chicago based company that provides commercial and personal insurance. Its auto insurance products include both specialty and preferred insurance lines. This makes Kemper Corporation (NYSE:KMPR) one of the few auto insurance companies that provides specialty auto coverage through products for people without licenses, suspended licenses, and reconditioned vehicles. While the firm benefits from a niche market that allows it to charge higher rates, the specialty auto lines also mean that Kemper Corporation (NYSE:KMPR) is vulnerable to more frequent and more severe payouts than its auto peers. The firm also offers commercial auto insurance products for business vehicle fleets, which is an industry with greater revenue opportunities. Kemper Corporation (NYSE:KMPR) is currently exiting from its property and casualty insurance market, but it plans to keep operating in the specialty auto market. This should help it reduce costs and allow it to effectively redeploy capital in more profitable areas. The firm’s specialty P&C and commercial auto business are quite profitable too, as they had combined ratios of 98% and 93.2% in Q4 2023.

During the quarter’s earnings call, Kemper Corporation (NYSE:KMPR)’s management shared more details about its commercial business when it shared:

“Our commercial vehicle business remains a source of strength, producing an underlying combined ratio of 93.2%. We remain confident about our ability to generate long-term value in this area. Turning to production. Consistent with last quarter, we continue to observe hard market conditions, especially in California. As we renewed policies at higher rates, persistency remained in line with prior periods creating favorable premium retention. As Joe mentioned, a return to underwriting profitability is allowing us to shift our 2024 focus to what he described as the rebalancing phase. In anticipation of this shift, we selectively wrote a modest amount of incremental new business to test new customer cohort buying and claim behavior. It wasn’t a material amount for the quarter, but a good start towards re-expanding new business heading into 2024.”