SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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KEMPER CORPORATION
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KEMPER CORPORATION
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/X/ Filing fee of $500 was previously paid in two payments on March 24,
1994 and March 28, 1994, the latter date when the Preliminary Proxy
Statement was filed.
KEMPER CHRONICLES May 2, 1994
Kemper seeks support of major institutional stockholders
In the last issue of KEMPER CHRONICLES, the characteristics of a proxy
contest were likened to those of a political campaign.
Although there were no banner-draped platforms or babies to be kissed,
Kemper Corporation's top executives were on the campaign trail in April
seeking the support of major institutional stockholders for the
director-nominees proposed by the board.
By April 29, Dave Mathis, chairman and chief executive officer, Steve
Timbers, president and chief operating officer, and John Fitzpatrick,
executive vice president and chief financial officer, had met with 28
institutions throughout the United States and Europe. Presentations were
given to significant institutional investors. These investors' ownership
reflects more than half of the estimated 23 million shares owned by
institutions.
The objective of the meetings was to allow management to present Kemper's
three-year plan for asset management, life insurance and securities
brokerage.
Following are excerpts from the presentation.*
ASSET MANAGEMENT
Strategic
Initiatives
* Focus on new product offerings.
- - Add international and value investment expertise.
- - Launch Sterling Private Label Funds for growing bank market.
* Introduce flexible pricing structure.
- - Promote greater market share penetration and efficiencies.
* Emphasize diversified channels of distribution.
- - Exploit existing capabilities at INVEST and Kemper
Securities.
* Complete in-house transfer agency system.
1994-1996
Outlook
* Expect 25 percent to 30 percent total revenue growth from the 1993
level of $516 million, with most of the increase coming in 1995 and
1996.
- - Assumes:
- Low-teens annual growth of assets under management.
- Growth partially offset by slightly lower effective manage-
ment fees due to breakpoints and multiple class shares.
* Expect net operating margin improvement of several hundred
basis points.
- - Assumes:
- Transfer agency conversion savings of $8 million after tax
per annum commencing fall 1994.
- Operating expenses for 1993 include a $7 million after-tax
charge for the settlement of certain legal proceedings.
- Elimination of losses with exit (after-tax losses $2.0 million
1993 and $6.7 million 1992) of Selected Financial Services
on May 1, 1993.
LIFE INSURANCE
Strategic
Initiatives
* Focus sales on term life and variable annuity products.
* Introduce variable universal life products in 1994.
* Implement management agreement with Fidelity Life Association.
* Improve spreads.
- - Continue firm management of crediting rates.
- - Improve portfolio yields primarily through reduction of nonaccrual
assets.
* Leverage affiliate distribution through INVEST and Kemper Securities.
* Continue focus on reducing unit operating costs.
1994-1996
Outlook
* Expect investment spreads to about double over the planning
period from an average of 110 basis points in 1993.
- - Assumes:
- Pretax portfolio yields increase:
- More than $600 million of nonaccrual assets to be replaced
with performing high-quality assets.
- $11 million of 1993 pretax operating losses from joint
ventures to be eliminated.
- Continued firm management of crediting rates.
- $7 billion of interest-sensitive liabilities at Dec. 31, 1993.
- Interest-sensitive liabilities managed to avoid spread dilution.
* Expect fee revenues from variable products to almost double
over three years from $18 million in 1993.
* Expect continued benefits from lower unit operating costs.
* Working toward rating improvements.
SECURITIES BROKERAGE
Strategic
Initiatives
* Deliver more mutual fund and annuity assets to Kemper
subsidiaries.
* Fill excess capacity by developing package product sales
component and adding experienced brokers.
- - Expect significant net increase in sales force over three years.
* Emphasize expansion of client assets under control (currently
$34 billion) and build fee-based revenue stream.
* Resize and focus on Kemper Securities' product and support
components and continue to manage costs aggressively.
1994-1996
Outlook
* Expect modest revenue growth from 1993 level of $674
million.
- - Assumes:
- Increased productivity of existing distribution sales force.
- Growth in the number of retail and institutional brokers.
* Expect several hundred basis point improvement in net
operating margins.
- - Assumes:
- Planned reduction of production-related expenses relative
to revenue in 1995.
- Continued reduction in operating expense ratios.
- Elimination of special additions to litigation reserves, which
totaled $20 million in 1992 and $30 million in 1993.
- Reduction in normal accruals for settlement and defense
costs.
* The information in the presentation is derived from the company's plan
for the years 1994-1996. The company does not as a matter of course
publicly disclose forecasts concerning future revenues, earnings or other
financial data and does not expect to update or otherwise revise the
forecast information set forth herein or in the future disclose forecast
information. The forecast information, while presented with numerical
specificity, is based on a variety of estimates and assumptions, certain of
which are set forth herein, and which estimates and assumptions, though
considered reasonable by the company, may not be realized. Such forecast
information, estimates and assumptions are inherently subject to
significant business, economic, regulatory and other uncertainties, many of
which are beyond the control of the company. The actual results achieved
during the forecast period will vary from the forecast information, and
such variations may be material. The company therefore cannot provide any
assurances that the forecast information contained herein will be achieved.
The forecast information included herein was not prepared with a view to
public disclosure or compliance with the published guidelines of the
Securities and Exchange Commission regarding forecasts, nor was it prepared
in accordance with the guidelines established by the American Institute of
Certified Public Accountants for preparation and presentation of financial
forecasts.
Banco Santander announces support for Kemper management
On April 18, Kemper Corporation's management received a public endorsement
from one of its largest stockholders, Banco Santander.
Banco Santander, one of Spain's largest commercial banks, owns 824,000
shares, or approximately 2.5 percent of Kemper Corporation's common stock.
Its chairman, Emilio Botin, stated, "In their short tenure, David Mathis
and his management team have transformed Kemper Corporation into a dynamic
financial services company with considerable upside potential. As a
long-term investor in Kemper Corporation stock, Banco Santander strongly
believes it is in the best interest of stockholders to remain with current
management rather than be acquired at a price which does not recognize its
true value."
Nearly 12.5 percent of Kemper's stock is held in Europe.
