A.M. Best Co. has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the property/casualty subsidiary and affiliated insurance companies (P&C Group) of Kemper Corporation (Kemper Corp.) (NYSE: KMPR). A.M. Best also has affirmed the FSRs of A- (Excellent) and ICRs of “a-” of Kemper Corp.’s life/health subsidiaries, collectively referred to as Kemper Life & Health Group (Kemper L&H), and the separately rated Reserve National Insurance Company (Reserve National) (Oklahoma City, OK). Concurrently, A.M. Best has affirmed the ICR of “bbb-” and senior debt ratings of “bbb-” on unsecured senior notes and senior unsecured debt, as well as “bb” on preferred stock of Kemper, which is included in its “automatic shelf” that expires November 2, 2013. The outlook for all ratings is stable, except for the ratings of Reserve National, which are negative. All companies are headquartered in Chicago, IL, unless otherwise specified. (See below for a detailed listing of the companies and ratings.) The affirmation of the ratings for the P&C Group led by Trinity Universal Insurance Company (Trinity) (Dallas, TX) is reflective of adequate risk-adjusted capitalization and balance sheet liquidity, historically profitable earnings, diverse business profile and the actions being taken to improve the group’s earnings and manage its risks. This includes increasing rates, enhancing risk selection, reducing exposure in catastrophe prone areas and unprofitable markets and developing a formal enterprise risk management program. Kemper maintains a diverse business profile with a strong market presence, good geographic spread of risk, multi-channel distribution and long-standing agency relationships. Trinity reinsures the other members through a 100% net quota share reinsurance agreement. Partially offsetting these positive rating factors is the P&C Group’s below average operating performance, elevated expense ratios, challenging underwriting and investment markets, combined with above average underwriting leverage ratios and negative operating cash flows, each of the last four years from declining premium collections and higher claims payments. Operating performance has been below A.M. Best’s expectations in recent years due to underwriting losses attributed to more frequent and severe weather events, competitive pricing and increasing automobile liability claims in several markets. Surplus growth also has been hampered by stockholders’ dividends paid to Kemper Corp.