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 subsidiaries 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 $250 million 6.0% unsecured senior notes due 2015 and $360 million 6.0% unsecured senior notes due 2017 of Kemper Corp. In addition, A.M. Best has affirmed the indicative ratings of “bbb-” on senior unsecured debt and “bb” on preferred stock in the automatic shelf that expires November 3, 2013 of Kemper Corp. The outlook for all ratings is stable, with the exception of Reserve National, which is negative. At the same time, A.M. Best has withdrawn the FSR of A- (Excellent) and ICR of “a-” of Response Indemnity Company of California (Response Indemnity). All companies are headquartered in Chicago, IL, unless otherwise specified. (See link 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 its adequate risk-adjusted capitalization and balance sheet liquidity, historically profitable earnings, diverse business profile and the continual actions being taken to improve earnings, reduce exposure to catastrophic loss and manage risks. This includes increasing rates, enhancing risk selection, reducing exposure in catastrophe-prone areas, discontinuing certain unprofitable business produced by the Kemper Direct business segment and further developing a formal enterprise risk management program. The P&C Group, which ranked 49th in the United States based on 2012 direct premiums written, 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 significant underwriting losses each of the last two years, which has contributed to its below average operating performance. In addition, underwriting and investment markets are challenging, underwriting leverage ratios are above average and operating cash flows were negative each of the last five years. 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. Also, surplus growth has been hampered by stockholders’ dividends. The P&C Group faces challenges by strong competitive market pricing in its main private passenger auto lines of business, potential catastrophic losses from a trend of increased severity of weather events and continuation of low interest rates and equity market volatility putting pressure on investment returns. However, despite deterioration in its underwriting performance, the P&C Group was able to improve capitalization.