March 22, 2004

Kemper has filed a run-off plan with the Illinois Department of Insurance. The three-year plan, which was approved by Kemper's board of directors, provides background information on the company's recent history and presents initiatives designed to help Kemper meet its goal of settling valid policyholder claims in a timely manner while maximizing the value of the company's assets in order to enhance its ability to meet its obligations to other constituencies. The plan contains financial models that project positive surplus and liquidity through 2006, the last year addressed in the plan. The mission beyond 2006 will largely depend on the results of the first three years of the run off.

A town hall meeting will be scheduled for mid-April to share the major elements of the run-off plan with employees.

"An extraordinary effort was made by the people in finance, stat/actuarial, reinsurance, legal and other areas in putting this plan together," said Acting President and CEO Mike Coutu. "I want to thank them for a great job and for their many hours of toil in completing this very important guidepost for Kemper's journey forward."

The Illinois Department of Insurance will now review the plan, provide feedback and ultimately decide whether to approve it. Kemper and the Department will also share the plan with other insurance regulators in key states where Kemper has historically done a high volume of business, since a consensual approach to the run off is in the best interests of all involved.

In addition, answers are expected soon with regard to the payment of enhanced compensation due under employment contracts, enhanced severance letters and other arrangements. Further information will be shared with affected employees as soon as it is available.

Business Insurance magazine wrote a positive editorial endorsing Kemper's effort to execute an orderly, commercial run off in its March 15 edition. The editorial is entitled "Give Kemper plan a chance to work." If you would like to see a copy of the editorial or the article that appeared in the same edition, contact corporate communications.