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| | Is Kemper Going Down for the Count?
By Robert Warne - May 9, 2003
Could clouds over Kemper in Illinois bring thunder and lightning to California?
A recent article in Crain’s, a Chicago business publication, May 9, highlighted some elements of the pending storm looming over big Kemper.
First of all, the article focused on former Il Governor, Jim Edgar’s recent decision to not run for the U.S. Senate. Edgar had served on Kemper’s board of directors for four years and by opting out of the race he would avoid having to answer tough questions about why Kemper has recently pulled the plug on much of its business.
Of Kemper’s 7,000-person workforce nationwide, Illinois has absorbed the brunt of the insurer’s decision to shut down its commercial property and casualty business, which has already claimed close to 1,900 jobs.
A recent wave of layoffs was prompted when a deal to sell the remaining portion of its P&C business went bad with Swiss Re. But on the flipside, a deal announced today to sell a portion of its renewal business with The St. Paul saved some jobs.
And for the 3,800 employees nationwide affiliated with Kemper’s claims administration and servicing business the future appears solid for some time because this is the direction the company is headed. And no matter what happens to the insurer, claims professionals will be needed to assist in the massive unwinding of Kemper’s remaining claims.
The viability of Kemper’s future though took a hit recently when it defaulted on $700 million in bonds. The company’s current condition has Illinois’ State Fund sweating because it knows how much of a burden Reliance has been on Pennsylvania.
Kemper agrees with industry observers that it made a mistake during the 1990s with its high growth strategy away from its middle-market core business in the midst of a soft market. But the insurer credits unpredictable asbestos claims as the real source for its undoing.
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