Mitch Rubin

CFO said discipline is broad-based across multiple carriers, though some more than others. Carriers pivoting from rate adequacy to competing for profitable policy growth, adopting more measured approach to maintain flexibility throughout the year.

CFO explained $38.4M non-cash one-time benefit from DTA valuation allowance release, driven by sustained profitability enabling NOL utilization. Common occurrence for companies transitioning to sustained profitability.

CFO noted headcount up 10% with flat OpEx, reflecting efficiency gains. CEO gave examples: AI bidding automating traffic operations, Smart Campaigns reducing carrier team workload, engineering copilot adoption, voice agents in call centers. Systematic function-by-function GenAI automation continuing into 2026.

CEO said California is top 3-5 state by spend in Q3 but not yet proportional to its potential as largest state. Expects meaningful upside remaining with steady-state environment sometime in 2026.

CFO noted home had 23% YoY and sequential growth in Q2 as underwriting improved after Q1 cat losses. Relative proportion reflects how fast auto has grown from its trough.

CFO confirmed opportunistic approach, no predetermined quarterly cadence. Reflects confidence in business and cash flow generation.

CEO described data-performance-budget-traffic flywheel working as intended. Smart Campaigns driving wider adoption. CFO noted 13% sequential growth was favorable versus competitors.

CFO expects VMM in high 20% range for the year, with possible dips above 30% in some quarters. Not a seasonality dynamic but reflection of advertising environment.

Cash OpEx stable at ~$25M. Expected to increase modestly in Q2 and more in H2 with tech/AI investments, but disciplined to maintain EBITDA margins near 12-13%.

CFO confirmed EBITDA-to-cash conversion near 100%, with taxes modest (~5% last year, potentially high single digits). Working capital is the main quarterly swing variable.

CFO reiterated unchanged capital hierarchy: legal entity capital first, organic growth second, inorganic third (explicitly not on table), shareholder returns last.

President detailed pilot results: production lift in line with expectations, 30 points more competitive through better segmentation. Florida partially approved, Texas working through forms. Goal to launch next few quarters.

CFO detailed three buckets: organizational restructuring, process efficiencies (lower commissions, print/postage, bad debt), and strategic investment changes. $16.2M charge yields $30M annual savings.

President listed underwriting aperture tightening, agent capacity management, and billing feature adjustments as key non-rate levers to manage profile and expected losses.

President of Kemper Auto attributed declines to competitive markets softening and deliberate pricing discipline. Product changes and restructuring savings being redirected to Florida/Texas growth.

President of Kemper Auto gave state-by-state breakdown: California retention holding with limited supply, Florida seeing modest PLE decline as agents re-shop, Texas stable with less shopping.

CEO noted impact consistent with Q1 and now largely worked through the 6-month policy book. Could not provide exact number, offered to follow up.

Andy confirmed gross leverage target of 0-3x EBITDA (net 0-2.5x), expects to be back in range within 12-18 months. 10-year average 2.2-2.3x, natural deleveraging of 0.25-0.5 turns per year.

Andy described ongoing data analytics and customer experience investments since 2016 infrastructure overhaul. Innovation council sharing best practices across organization. Declined to quantify 2026 run rate.