Good morning, ladies and gentlemen, and welcome to Kemper's Fourth Quarter 2013 Earnings Conference Call. My name is Jonathan, and I will be your coordinator today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to introduce your host for today's conference, Ms. Diana Hickert-Hill, Vice President, Investor Relations and Corporate Identity. Ms. Hickert-Hill, you may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us. This morning, you will hear from 2 of our business executives starting with Don Southwell, Kemper's Chairman, President and Chief Executive Officer; followed by Frank Sodaro, Kemper's Senior Vice President and Chief Financial Officer. We will make a few opening remarks to provide context around our fourth quarter results. We will then open up the call for a question-and-answer session. During this interactive portion of the call, our presenters will be joined by John Boschelli, Kemper's Vice President and Chief Investment Officer; and Ed Konar, Kemper's Life and Health Group Executive. After the markets closed yesterday, we issued our press release and financial supplement. You can find these documents on the Investor Section of our website, kemper.com. Please note that our discussion today may contain forward-looking statements. Our actual results may differ materially from these statements. For information on potential risks associated with relying on forward-looking statements, please refer to our Form 10-K and 10-Q report filed with the SEC as well as our fourth quarter 2013 earnings release. We plan to file our 2013 Form 10-K on or about February 14, 2014. This morning's discussion includes non-GAAP financial measures that we believe may be meaningful to investors. In our supplement and earnings release, we have defined and reconciled non-GAAP financial measures to GAAP, where required, in accordance with SEC rules. And finally, all comparative references will be to fourth quarter 2012, unless we state otherwise. Now I will turn the call over to Don.

Thank you, Diana. Good morning, everyone, and thanks for your interest in Kemper. Today, I'll discuss our overall results for the quarter and the year, and Frank will review details on our financial results, capital and liquidity, then I'll wrap up. Before we start on the commentary, I want to mention that Denise Lynch, our Property & Casualty Group Executive, has a schedule conflict, so I'll be covering P&C results in addition to the Life and Health group results. Fortunately, those of you who will be participating in the 2014 Association of Insurance and Financial Analysts or AIFA conference in 3 weeks, will have an opportunity to see Denise in person as she will be a member of the P&C Personal Lines panel. Denise and Frank will also be participating in Kemper's one-on-one meeting to that conference. Now let's turn to our results. In total, we are very pleased with our progress in the fourth quarter, as well as for the full year. We are earned $55 million in net income in the quarter and $218 million in net income for the year. We finished the year with an ROE of more than 10%. Like others in the P&C industry, we benefited from low catastrophe levels and favorable development. But we also made significant tangible progress in our run rate. We had a very good year. I feel great about our team's results, and we are well-positioned for continued improvement in profitability. Our Property & Casualty group delivered another quarter of substantial improvement. We achieved our goal to reduce the groups underlying combined ratio by 3 to 5 points in the year, delivering a 4-point reduction in total. As Denise mentioned in past calls, we focused intently on long-term profitability even at the expense of top line in the short…

Thanks, Don, and good morning, everyone. Today, I'll cover Kemper's fourth quarter 2013 performance and parent company capital and liquidity. As Don mentioned, overall we capped of another very strong year with another solid quarter. We delivered net income of $55 million or $0.99 per diluted share, up from $2 million or $0.03 per diluted share. Results included $9 million of after-tax net investment gains in the current quarter compared to $2 million last year. For the full year, net income was $218 million or $3.80 per diluted share, more than double the $103 million or $1.74 per share we earned last year. Our net operating income was $46 million for the quarter compared to net operating loss of $3 million last year. For the year, net operating income was $159 million, up from $54 million last year. Total revenues were $586 million for the quarter, a decrease of $11 million due to lower earned premiums offset by higher net investment gains and higher net investment income. On a full year basis, revenues were just over $2.425 billion, down $36 million from 2012, driven by lower earned premiums offset by higher net investment gains and higher net investment income. The earned premiums declined -- the earned premium decline were in line with our expectations and mainly as a result of profitability improvement actions we took across our P&C businesses. Consolidated net investment income was $77 million in the quarter, an increase of $4 million driven by higher equity method investment income. These investments -- these investments earned $7 million in the quarter compared to $2 million last year. Excluding these equity method investments, net investment income decreased slightly due to lower yields, offset by higher average investment base. The fourth quarter annualized pretax equivalent book yield on average invested assets…

Thank you, Frank. As you've just heard, our capital position remains strong. Our long-term capital deployment priorities continue to include: first, funding profitable organic growth; second, strategic acquisitions; and third, returning capital to shareholders, both through share repurchases and dividends. We are achieving profitability and remain committed to further improvement. While we are selectively funding organic growth in some areas, in total, premium revenues are expected to remain flat to declining in 2014, so organic growth will not use capital this year. As results improved, we are more open to acquisitions and we intend to keep powder dry for opportunities. We have maintained our competitive dividend and continue to buy back shares opportunistically. In the fourth quarter, we repurchased $15 million worth of common stock, bringing our 2013 total to 3 million shares repurchased for just over $100 million. In 2013, we communicated our goal to achieve a double-digit ROE by the end of 2015 on a run-rate basis. And we outlined a path that had 4 main elements: one, continued improvement in our P&C combined ratio; 2, full deployment of available capital; 3, increases in interest rates consistent with the Federal Reserve base line scenario; and 4, normalized catastrophe losses. While we hit a double-digit ROE in 2013 some of the profits where of a nonrecurring nature, so we do not consider our goal to be achieved. Nonetheless, our actions and results to date are consistent with our plans to achieve double digits by the end of 2015. We do expect some volatility along the way. External factors, such as cats and interest rates affect ROE. And importantly, we will meet opportunities to fully deploy our capital. Regardless, we like our business model and our team's commitment to delivering results. So in closing, we had another very good quarter and a very good year. Our underlying performance continues to improve. Our actions are aligned to drive further progress, and we outlined a few milestones for you on this call. We are committed to delivering and we are optimistic about our prospects. With that, I'll turn the call back over to the operator so we may take your questions. Operator?

[Operator Instructions] Our first question comes from the line of Miranda Davidson from Raymond James.

Everything looked pretty good this quarter and pretty straightforward. So I though I would just revisit the Direct run-off. Is there any more color you'd like to add on the running off of the direct-to-consumer part? Or the investing back in the affinity book? And as things continue to improve, does that make selling the unit any more attractive?

Miranda, thanks for your comments and there isn't lot more color to add to run direct. It's not something that we see that we would put on a block. It's performing well. I guess the only color I would add is that the amount of development we had this year was pretty significant. And certainly wouldn't want you to build that in your models going forward.

Our next question comes from the line of Adam Klauber from William Blair. Adam Klauber - William Blair & Company L.L.C., Research Division: How is the -- in the Preferred segment, how is the standard loss ratio accident year, ex cats, this quarter versus the last couple of quarters?

You want to repeat that question, Adam? I didn't... Adam Klauber - William Blair & Company L.L.C., Research Division: Sure. I was looking for the auto, the core auto loss ratio in the Preferred business for the quarter versus what it was in the first 9 months?

Frank, you have that available?

I could take a shot at this. So auto on Preferred, we have an underlying loss ratio improvement of about 2.5 points, and that's on lower frequency, offset a little bit by higher severity. As far as compared to prior quarters, I don't have that handy. Adam Klauber - William Blair & Company L.L.C., Research Division: Okay, okay. Do you know if it's -- was it -- the 2.5 is good, do you know if it was running lower than was earlier in the year .

We'll have to get back to you on that, Adam. We can give you a call and get you that info.. Adam Klauber - William Blair & Company L.L.C., Research Division: Also could you talk about a competitive trends in the standard auto market? And what's going on in the last 6 months? Have they heated up or is it sort of status quo where we're at before?

I would say it's probably heated up a little bit. Certainly, what's going on with Travelers and Quantum is -- the jury's still out on where that's going to head but before are starting to make noises about growth and adequacy. I guess we haven't seen it quite so much in the marketplace as we've heard the noise about it, though. Adam Klauber - William Blair & Company L.L.C., Research Division: Okay. That's good. And then the last question. It looked like for the quarter, the loss ratio especially moved up. What drove that increase?

Frank, you want to take a crack at that?

Sure. So for the quarter, the loss ratio for special -- I'll break it down into 2 pieces -- the underlying loss on personal lines and the personal private passenger auto, was really about flat on an underlying basis. Commercial had actually a better underlying loss ratio than prior fourth quarter going from a 92.4% down to a 78%. So I know there was some noise on specialty lines for the -- because we had some inter-year development. And this is kind of a hard thing to walk through but if you want me to take a quick shot at this I can, and I'll walk from some of the numbers we've given. Starting with an underlying combined ratio, specialty overall had an improvement of about 1 point. In the current year, there was some adverse developments from the first 3 quarters of about 5 points. And if you were to look at last year, there was a similar phenomenon last year where the first 3 quarters had 3.5 points of adverse development. So on a modified basis, the underlying combined ratio actually improved about 2.5 points. So included in that, then, to get to a loss perspective, the expenses were up about a point. So all said and done, there was about a 3.5 point improvement on a modified basis for the underlying loss ratio. You might have to look at the transcripts to follow that.

Our next question comes from the line of Paul Newsome from Sandler O'Neill. J. Paul Newsome - Sandler O'Neill + Partners, L.P., Research Division: I was hoping to maybe move away from the Property and Casualty business and maybe revisit the [indiscernible] -- I just have 2 questions, both focused on Life. The first question is, if we take out the changes in interest rates and look at measurements like policy-in-force growth, total insurance value, is the Life Insurance business growing or not? And then I guess the second question is, relatedly, under what scenarios can we see higher earnings on the -- in the Life Insurance business?

I'm going to ask Ed to follow up my initial commentary. But in terms of growth, this quarter, we did see some growth in the Life Insurance business that was driven by growth in some of the new distribution efforts at Reserve Nationals. So typically, we have had a very modest decline in premiums in this business as it's a relatively mature business. Ed, you want to take a crack at rounding out that answer?

I think you got the main points. Our traditional Home Service business is kind of in a modest shrink mode, but actually pretty stable the last few years. Over on the Reserve National side, we've got some different distribution initiatives underway and the first of those sells primarily final expense, Life insurance to senior citizens. That's what's kind of fueling most of the Life Insurance growth this year, and probably into the near-term future.

Were there other elements to that question we missed? J. Paul Newsome - Sandler O'Neill + Partners, L.P., Research Division: I mean, is there a scenario where the business -- where the earnings go up?

Sure. Earnings have been growing in that business over recent years, and then there is a headwind with the climbing interest rates. So as interest rates climb back up, our reinvestment rate, even at today's rates, is lower than our portfolio rate. So they have to go up more before we start adding investment income. But we could potentially grow the profits in other ways and Ed wants to tell you about that.

I guess what I would add to that is over the last 2 years, we have taken 2 rate increases. We took one in the spring of 2012 and we took another one, the 1st of this year. And we took rate increases of roughly 5%, which when we calculate that back to what its equivalent is in terms of investment income, a 5% rate increase on a premium we charge our policy holders, is worth about 100 basis points lower investment income over the life of the policy. So over the last 2 years, we've kind of built in a lower expectation from investment income.

And the only thing I'll add to that just -- is that unlike Property & Casualty, new business pricing is on new policies only and in force products aren't affected by those rate increases that Ed talk about so it's come a little more slowly.

Our next question comes from the line of Matt Carletti from JMP Securities.

Just a couple of questions. The first one on the kind of reiterating the guidance and saying a double-digit ROE on a run-rate basis by the end of 2015. I was hoping you could clarify that a little. When you say on a run-rate basis, is that x kind of one-timers, full year '15 you expect to be in the double-digit range? Or is it that kind of by the time we get to the end of '15, say, the latter part of the year if you annualize the quarterly results, we should be on pace for a double-digit ROE?

It's the latter.

Okay, and then -- the only other question I had is some companies have given some color around January, kind of non-cat weather, the winter storms, particularly in the South. Are you able to give us any guidance in terms of what you've seen so far in your book? That would be helpful.

Sure. We've got some preliminary reserves set up for those winter storms and it's not material or we would have put something out on it. But most of our losses are freeze-related and homeowners-related. But it's certainly a noticeable uptick because of that, but it's nothing unusual for us.

[Operator Instructions] And this does conclude the question-and-answer session of today's program. I'd like to hand the program over to Don Southwell for closing comments.

Thank you, operator. I do have just a few closing comments. 2013 was a very good year, a banner year. I'm proud of the progress that our teams are making. And while we know we have more to do, this was another strong quarter and a great year for Kemper. So I want to say thank you to the Kemper team, including our agents who helped deliver these terrific results. We remain committed to fulfilling our promises to our customers and to delivering shareholder returns, the kind of returns we all seek. So thank you for your time this morning, we look forward to updating you on our progress, again at our next call.

Thank you. Ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.