Revenues

Total revenues were $596.6 million for the fourth quarter of 2012, compared to $613.3 million in 2011, driven by lower earned premiums. Earned premiums decreased predominantly from planned reductions at Kemper Direct, which declined by $14.1 million.

Net investment income was $72.9 million in the fourth quarter of 2012, a $2.4 million decrease from 2011, driven by lower yields on fixed maturity investments and higher investment expenses, offset by higher returns on equity investments. The portfolio generated a pre-tax equivalent annualized book yield of 5.4 percent for the fourth quarter of 2012.

Segment Results

Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior year development includes both catastrophe and non-catastrophe losses, (iii) catastrophe losses exclude the impact of prior year development and (iv) underlying loss ratio includes loss and loss adjustment expenses. The impact of current year development is included in the underlying combined ratio. Current year development represents prior quarter development for a given current accident year.
   
Three Months Ended Year Ended
(Dollars in Millions) (Unaudited) Dec 31,2012   Dec 31,2011 Dec 31,2012   Dec 31,2011
Segment Net Operating Income (Loss):
Kemper Preferred $ (19.7 ) $ 12.7 $ (11.2 ) $ (17.6 )
Kemper Specialty (2.8 ) 4.4 1.2 19.8
Kemper Direct 1.8 (17.1 ) (0.9 ) (27.5 )
Life and Health Insurance 24.3   31.2   90.8   98.9  
Total Segment Net Operating Income 3.6 31.2 79.9 73.6
Corporate and Other Net Operating Loss (7.0 ) (7.1 ) (26.1 ) (26.5 )
Consolidated Net Operating Income (Loss) (3.4 ) 24.1 53.8 47.1
Net Income (Loss) From:
Net Realized Gains on Sales of Investments 3.6 3.9 42.5 21.9
Net Impairment Losses Recognized in Earnings (1.9 ) (3.0 ) (4.5 ) (7.3 )
Income (Loss) from Continuing Operations $ (1.7 ) $ 25.0   $ 91.8   $ 61.7  
 

Kemper Preferred reported a net operating loss of $19.7 million for the fourth quarter of 2012, compared to net operating income of $12.7 million in 2011. The current quarter results included $27.8 million of catastrophe losses and $2.8 million of adverse prior year reserve development, compared to the fourth quarter of 2011, which included $4.2 million of catastrophe losses and $2.4 million of favorable prior year development. The underlying combined ratio was 98.6 percent in the fourth quarter of 2012, compared to 96.6 percent in 2011. Higher severity-driven loss ratios in both auto liability and non-weather related homeowners, were partially offset by a lower expense ratio.

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