Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Equity [Abstract]

Stockholders' Equity

NOTE 9. SHAREHOLDERS’ EQUITY

Kemper is authorized to issue 20 million shares of $0.10 par value preferred stock and 100 million shares of $0.10 par value common stock. No preferred shares were issued or outstanding at December 31, 2011 and 2010. There were 60,248,582 shares and 61,066,587 shares of common stock outstanding at December 31, 2011 and 2010, respectively. Common stock outstanding included 289,659 shares and 218,156 shares at December 31, 2011 and 2010, respectively, that have been issued, subject to certain vesting and other requirements, in connection with the Company’s long-term equity compensation plans. See Note 10, “Long-Term Equity-based Compensation,” to the Consolidated Financial Statements for an additional discussion of the restrictions and vesting provisions.

On August 4, 2004, the Board of Directors declared a dividend distribution of one preferred share purchase right for each outstanding share of common stock of Kemper, pursuant to a shareholder rights plan. The rights have a term of 10 years. The description and terms of the rights are set forth in a rights agreement between Kemper and Computershare Trust Company, N.A., as rights agent.

Kemper repurchased and retired 0.9 million shares of its common stock in open market transactions at an aggregate cost of $27.4 million in 2011. Kemper repurchased and retired 1.4 million shares of its common stock in open market transactions at an aggregate cost of $34.4 million in 2010. Kemper did not repurchase any of its common stock in open market transactions in 2009. Common Stock, Paid-in Capital and Retained Earnings were reduced on a pro rata basis for the cost of the repurchased shares.

Various state insurance laws restrict the amount that an insurance subsidiary may pay in the form of dividends, loans or advances without the prior approval of regulatory authorities. Also, that portion of an insurance subsidiary’s net equity which results from differences between statutory insurance accounting practices and GAAP would not be available for cash dividends,

NOTE 9. SHAREHOLDERS’ EQUITY (Continued)

loans or advances. Kemper’s insurance subsidiaries paid dividends of $70.5 million in cash to Kemper in 2011. In 2012, Kemper’s insurance subsidiaries would be able to pay approximately $175 million in dividends to Kemper without prior regulatory approval. Fireside Bank previously agreed not to pay dividends without the prior approval of its regulators, the FDIC and CDFI. Following approval from its regulators, Fireside Bank distributed $250 million of its capital to its parent company, Fireside Securities, in October 2011. Fireside Securities, then in turn, distributed the same amount to its parent company, Kemper. Fireside Bank had capital of $16.1 million at December 31, 2011. Fireside Bank will be able to distribute its capital without regulatory approval on April 1, 2012.

Kemper’s insurance subsidiaries are required to file financial statements prepared on the basis of statutory insurance accounting practices which is a comprehensive basis of accounting other than GAAP. Statutory capital and surplus for the Company’s life and health insurance subsidiaries was approximately $475 million and was $400.1 million at December 31, 2011 and 2010, respectively. Statutory net income for the Company’s life and health insurance subsidiaries was income of approximately $115 million, was income of $80.4 million and was income of $79.9 million for the years ended December 31, 2011, 2010 and 2009, respectively. Statutory capital and surplus for the Company’s property and casualty insurance subsidiaries was approximately $815 million and was $905.0 million at December 31, 2011 and 2010, respectively. Statutory net income for the Company’s property and casualty insurance subsidiaries was income of approximately $33 million, was income of $117.3 million and was income of $75.0 million for the years ended December 31, 2011, 2010 and 2009, respectively. Statutory capital and surplus and statutory net income exclude Fireside Bank and parent company operations.