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STATE OFO OREGONOREGONDEPARTMENTDEPARTMENT OFOCONSUMERCONSUMER && BUSINESSBUSINESSSERVICESSERVICESDIVISIONO FINANCIALINANCIALDIVISION OFREGULATIONREGULATIONREPORTREPORT OFO FINANCIALINANCIAL EXAMINATIONOFOVALLEY PROPERTYVALLEYPROPERTY && CASUALTYCASUALTY INSURANCEINSURANCE CO.MPANYCOMPANYSALEM,SALEM, OREGONOREGONASOFASODECEMBERDECEMBER 31,31, 2018
A TE OFSTATEO OREGONOREGONDEPARTMENT OOF CONSUMERAND BUSINESSBUSINESS SERVICESDEPARTMENTCONSUMER ANDSERVICESDIVISIONOF FINANCIALREGULATIONDIVISION OINANCIAL REGULATIONREPORT OFEXAMINATIONREPORTO FINANCIALINANCIAL EXAMINATIONOFOVALLEY PROPERTYCOMPANYVALLEYRO ERTY && CASUALTYCASUALTY INSURANCEINSURANCE COMANYSALEM,OREGONSALEM, OREGONNAICCOMPANYANY CODECODE 1069810698NAIC COMASOFAS ODECEMBER 31,DECEMBER31, 20182018
TABLE OFO CONTENTSCONTENTSSALUTATION. 3SALUTATION.3SCOPE OOF EXAMINATION.4EXAMINATlON . 4SCOPECOMPANY HISTORY.5HISTORY . 5COMPANYCORPORA TE RECORDS.RECORDS . 55CORPORATEAND CONTROL.CONTROL . 66MANAGEMENT ANDMANAGEMENTINTERCOMPANYAGREEMENTS . 9INTERCOMPANY AGREEMENTS.9INSURANCE . 12FIDELITYBOND ANDIDELITY BONDAND OTHEROTHER INSURANCE.12TERRITORYAND PLANPLAN OOF OPERATION. 13TERRITORY ANDOPERATION.13GROWTHTHE COMPANY. 14GROWTH OFO THECOMPANY.14REINSURANCE . 14REINSURANCE.14RECORDS . 17ACCOUNTS ANDACCOUNTSAND RECORDS.17STATUTORY DEPOSIT.17DEPOSIT . 17STATUTORYCOMPLIANCEWITH PRIORPRIOR EXAMINATIONEXAMINATION RECOMMENDATIONS.17RECOMMENDATIONS . 17COMPLIANCE WITHSUBSEQUENTEVENTS . 17SUBSEQUENT EVENTS.17FINANCIAL. 17INANCIAL STATEMENTSSTATEMENTS.17ASSETS. 19ASSETS.19AND OTHEROTHER FUNDS. 20LIABILITIES, SURPLUSLIABILITIES,SURPLUS ANDUNDS.20STATEMENTINCOME . 21STATEMENT OFO INCOME.21NOTES TO. 23NOTESTO FINANCIALINANCIAL STATEMENTSSTATEMENTS.23Assets . 23Note 11 -InvestedInvested Assets.23Note2-ActuarialReserves . 23Note 2 Actuarial Reserves.23SUMMARYAND RECOMMENDATIONS.24RECOMMENDATIONS . 24SUMMARY OFO COMMENTSCOMMENTS ANDCONCLUSlON . 2424CONCLUSION.ACKNOWLEDGMENT . 25ACKNOWLEDGMENT.25VlT . 2626AFFIDAAIDAVIT.ValleyCasualty InsuranceValley PropertyProperty && CasualtyInsurance CompanyCompany
SALUTATIONMay2020May 15,15,2020HonorableAndrew Stolfi,Honorable AndrewStolfi, DirectorDirectorDepartment of Consumer and Business ServicesDivision of Financialinancial RegulationState of Oregon350 Winter Street NESalem, Oregon 97301-3883Dear Director:DearDirector:In accordance with your instructions and guidelines in the National Association of InsuranceCommissioners (NAIC) Examiners Handbook, pursuant to ORS 731.300 and 731.302,respectively, we have examined the business affairs and financial condition ofVALLEYVALLEY PROPERTYRO ERTY && CASUALTYCASUALTY INSURANCEINSURANCE COMPANYCOM ANY4263 CommercialCommercial Street,Street, SuiteSuite 400400Salem, Oregon 97301NAICNAIC CompanyCompany CodeCode 1069810698Hereinafter referred to as the "Company." The following report is respectfully submitted.Valley PropertyProperty && CasualtyCasualty InsuranceValleyInsurance CompanyCompany
OF EXAMINATIONEXAMINATIONSCO E OFWe have performed our regular, multi-state, full-scope examination ofValleyof Valley Property & CasualtyWeInsuranceCompany.Insurance Company.Theunction with the coordinatedThe examinationexamination was conducted in conjconjunctionexaminationexamination of the Kemper Insurance Group, with the State of Illinois as the lead state. The lastexamination ofthis propertyproperty and Casualty insurer was completed as of December 31, 2013. Thisexaminationof thisexaminationperiod ofJanuary2014, to December 331,l, 2018.examination coverscovers thethe periodof January 1,1,2014,We conducted1)Weconducted ourour examinationexamination pursuant to ORS 731.300 and in accordance with ORS 731.302(731.302(1)which allowsthe guidelines and procedures in the NAIC Financialwhichallows thethe examinersexaminers toto considerconsider theConditionExaminers Handbook.Handbook.Condition ExaminersThe handbook requires that we plan and perform theexaminationexamination to evaluate the financial condition, assess corporate governance, identify current andprospectiverisks of the Company and evaluate system controls and procedures used to mitigateprospective risksthoseAn examinationthose risks.risks. Anexamination also includes identifying and evaluating significant risks that couldcauseinsurer's surplusto bebe materiallymaterially misstatedcause anan insurer'ssurplus tomisstated both currently and prospectively.All accountsAllaccounts andand activities of the Company were considered in accordance with the risk-focusedexaminationprocess. Thisexamination process.This may include assessing significant estimates made by management andevaluatingevaluating management's compliance with Statutory Accounting Principles. The examinationdoesIt during thedoes not attest to the fair presentation of the financial statements included herein. If,course of the examination an adjustment is identified, the impact of such adjustment will bedocumented separately following the Company's financial statements.documentedThisThis examination report includes significant findings of fact, as mentioned in ORS 731.302 andgeneral information about the insurer and its financial condition. There may be other itemsValleyProperty &Insurance CompanyCompanyValley Property& CasualtyCasualty Insuranee4
e.g., subjective conclusions, proprietaryidentified during the examination that, due to their nature ((e.g.,information, etc.), are not included within the examination report, but separately communicated toother regulators and the Company.COMPANYCOM ANY HISTORYHISTORYThe Company was incorporated in Oregon on December 5, 1996, received a Certificate ofAuthority to act as a property casualty insurer on December 30, 1996, and commenced businesson Februaryebruary 2, 1997.CapitalizationCapita izationThe Company is a for-profit stock insurer. As of December 31, 2018, the Company'sCompany’s Articlesauthorized 100,000 shares of common stock, with a par value of 280 per share. The Companyreportedand outstanding.Insurance Company,reported 12,55012,550 sharesshares currentlycurrently issuedissued andoutstanding. TrinityTrinity UniversalUniversal InsuranceCompany,the Company'sCompany’s direct parent, owns 100% of the issued and outstanding shares as of December 31,2018.2018.Dividends toto StockhoStockholdersand OtherDistributionsDividendsders andOther DistributionsDuring the period under examination, the Company did not declare or pay any dividend to itsstockholder or make any distribution.CORPORATE RECORDSCOR ORATEBoard MinutesMinutesBoardIn general, the review of the 2018 Board meeting minutes indicated that the minutes support thetransactions of the Company and the actions taken by its directors and officers. The minute booksalso contained accompanying documentation that supported the minutes. A quorum, as definedValley Property& CasualtyCasualty InsuranceValleyProperty &Insurance CompanyCompany5
by the Company'sCompany’s Bylaws, metmet at all of the meetingsmeetings held duringduring the period under review. Theannualannual meeting ofof the shareholders ofof the corporation shallshall bebe held eacheach year asas designateddesignated by theBoard of Directors. TheThe Bylaws statestate that specialspecial meetings maymay bebe calledcalled atat anyany time by theby thethe membersmembers ofthe BoardDirectors.president orpresidentor byof theBoard ofof Directors.Articleso(lncorporationArtices ofIncorporationTherestated ArticlesArticles ofIncorporation werewere mostmost recentlyrecently amendedon AugustAugust 10,The Company'sCompany's restatedof Incorporationamended on10,Articles ofIncorporation conformedto theOregon InsuranceInsurance Code.Code.2007. The2007.The Articlesof Incorporationconformed tothe OregonBylawsByawsTheBylaws werewere laston AugustAugust 10,l 0, 2008.2008. TheBylaws confonnedto OregonCompany's Bylawslast amendedamended onThe Bylawsconformed toOregonThe Company'sstatutes.statutes.MANAGEMENTAND CONTROLCONTROLMANAGEMENT ANDBoard ofDirectorsof DirectorsBoardManagementand controlthe Companyis vestedvested inin aa BoardBoard ofArticle III,III, SectionManagement andcontrol ofof theCompany isof Directors.Directors. ArticleSection 22of the Company'sCompany’s Bylaws designatesdesignates that the BoardBoard shall be comprisedcomprised of not less than fivefive nornormore than eight members,members, the exactexact number thereof to be fixed byby resolution ofof the Board ofofDirectors.Directors. As ofof December 31,31, 2018,2018, thethe CompanyCompany was governedgoverned by a sixsix member Board ofofDirectors asDirectorsas follows:follows:Name andand AddressNameAddressPrincipalrincipal AffiliationAffiliationMember SinceSinceMemberJohnMichael BoschelliBoschelliJohn MichaelGeneva,IllinoisGeneva, IllinoisExecutive Vice-President,Vice-President, ChiefExecutiveChief InvestmentInvestmentOfficerOfficerKemper CorporationCorporation20092009StephneStephne Denise ChallenderChallenderSalem, OregonCasualty ManagerKemper Property & Casualty20162016ValleyValley PropertyProperty && CasualtyCasualty InsuranceInsurance CompanyCompany6
AddressName andand AddressPrincipalAffiliationrincipal AffiliationMember SinceSinceMemberTroy JohnathanJohnathan McGillMcGillTroyCrossPlains, WisconsinWisconsinCross Plains,Vice President,President, TaxViceTaxKemper CorporationCorporationKemper20172017Maxwell ThomasThomas MindakMindakMaxwellElmhurst,IllinoisElmhurst, IllinoisVice-President &Risk OfficerVice-President& ChiefChief RiskOfficerKemperCorporationKemper Corporation20132013Robert FrancisRobertrancis OtisOtisWaco, TexasWaco,TexasPresidentPresidentKemperPersonal InsuranceInsuranceKemper Personal2018201MistyDawn ZerkelZerkelMisty DawnStayton,OregonStayton, OregonSeniorManager, SpecialInvestigation UnitUnitSenior Manager,Special InvestigationKemperProperty&CasualtyKemper Property & Casualty20172017Note: NoNo Chairmanhas beenbeen designateddesignatedNote:Chairman hasUnder Oregonlaw, ORS732.305, atleast fivefive (5)the Directors,Directors, whicheverwhichever isisUnderOregon law,ORS 732.305,at least(5) oror one-quarterone-quarter ofof theDirectors mustmust bebe non-salariednon-salaried officersofficers ofoffewer,be residentsfewer, mustmust beresidents ofof OregonOregon andand aa majoritymajority ofof Directorsthe Company.The Companywas inwith thisthis statute.statute.theCompany. TheCompany wasin compliancecompliance withOfficersOfficersPrincipal officersofficers servingDecember 31,31, 2018,2018, werewere asas follows:Principalserving atat Decemberfollows:NameNameTitleTitleRobert FrancisRobertrancis OtisOtisAndrew DuncanDuncan Amy Elizabeth Pinkerman CondoNathan AlexanderAlexander SmithNathanSmithPresidentPresidentSeniorVice PresidentPresidentSenior terestConf ict ofofInterestThe Company is party to the Kemper Corporation'sCorporation’s Code of Business Ethics and Conduct, whichrequires officers, directors, and selected responsible employees to report annually any conflicts ofinterest or violations of ethical business practices to the Company. Fromthe completedrom a review ofoftheconflict of interest statements, it appeared that the affected personnel performed due diligence incompleting the statements. No material conflicts of interest were noted.ValleyValley PropertyProperty && CasualtyCasualty InsuranceInsurance CompanyCompany7
HoldingInsurance Company Hodins SystemAn insurance holding company registration statement was filed by the Company in accordancewith the provisions of ORS 732.552, ORS 732.554, and Oregon Administrative Rule (OAR) 836). The following table depicts the relationships of the Company within the holding027-0020(1027-0020(1).company system (all ownership was 100 percent unless otherwise noted):KemperKemper CorporationCorporation (Delaware)(Delaware) KAHGKA.HG LLCLLC (Illinois)(Illinois)Kemper CorporateCorporate Services,Services, Inc.Inc. (Illinois)(Illinois) KemperCompany (Texas)(Texas) TrinityTrinity UniversalUniversal InsuranceInsurance CompanyProperty && CasualtyCasualty InsuranceInsurance CompanyCompany (Wisconsin)oo AlphaAlpha Property(Wisconsin)oo CharterIndemnityCompany(Texas)Charter Indemnity Company (Texas)oo DirectResponse CorporationCorporation (Delaware)Direct Response(Delaware) ResponseResponse InsuranceInsurance CompanyCompany (Illinois)(Illinois) KemperKemper Financialinancial Indemnity CompanyCompany (Illinois) ResponseResponse WorldwideWorldwide InsuranceInsurance CompanyCompany (Illinois)(Illinois) WarnerInsuranceCompany(Illinois)Warner Insurance Company (Illinois) Response WorldwideWorldwide DirectDirect AutoInsurance CompanyCompany (Illinois)ResponseAuto Insurance(Illinois)oo Financiallndenmity Company(Illinois)inancial IndemnityCompany (Illinois)oo KemperKemper GeneralAgency (Texas)General Agency(Texas)oKemperIndependenceInsurance Companyo Kemper Independence InsuranceCompany re)o Merastar Industries, LLC (Delaware)Merastar Insurance 11 MerastarInsurance CompanyCompany (Illinois)(Illinois) SecurityAgency, LLCLLC (Tennessee)Security OneOne Agency,(Tennessee)NCM ManagementManagement CorporationCorporation (Delaware)oo NCM(Delaware)oo UnionUnion NationalNational FireInsurance CompanyCompany (Louisiana)ire Insurance(Louisiana)oo UnitedCasualty InsuranceInsurance CompanyCompany ofof AmericaAmerica (Illinois)United Casualty(Illinois)York)oo UnitrinUnitrin AdvantageAdvantage InsuranceInsurance CompanyCompany (New(New York)Unitrin AutoAuto andand HomeHome InsuranceInsurance CompanyCompany (New(New York)York)oo Unitrinoo UnitrinUnitrin DirectDirect InsuranceInsurance CompanyCompany (Illinois)(Illinois)oo UnitrinUnitrin DirectDirect PropertyProperty && CasualtyCompany (Illinois)(Illinois)Casualty Company KemperKemper PersonalLnsuranceAgencyInc.Personal Insurance Agency Inc. (Texas)(Texas)oo Unitrin Preferred InsuranceInsurance Company (New(New York)o Unitrin Safeguard Insurance Company (Wisconsin)oo ValleyCasualty InsuranceInsurance CompanyCompany (Oregon)Valley Propertyroperty && Casualty(Oregon) UnitedUnited InsuranceCompanyofAmerica(Illinois)Insurance Company of America (Illinois)oo MutualMutual SavingsSavings LifeLife InsuranceInsurance CompanyCompany (Alabama)(Alabama) MutualMutual SavingsSavings Fireire InsuranceInsurance CompanyCompany (Alabama)(Alabama)o Reserve National Insurance Company (Oklahoma) SummersetSummerset MarketingMarketing CompanyCompany (Oklahoma) National Association of Self-Employed Business Owners (Oklahoma) Rural American Consumers AA National Association (Oklahoma)(Oklahoma)oo TheThe Reliable LifeLife InsuranceInsurance CompanyCompany (Missouri)(Missouri) Familyamily SecuritySecurity Funeralsunerals CompanyCompany (Texas)(Texas)oo UnionUnion NationalLifeInsuranceCompany(Louisiana)National Life Insurance Company (Louisiana)Valley PropertyProperty &Valley& CasualtyCasualty InsuranceInsuranee CompanyCompany8
A description of the direct owners within the holding company system is as follows:Kemper Corporation is a Delaware domiciled publically traded insurance and consumer financecorporation (NYSE: KMPR). It is a holding company owning a number of property and casualtyand life and health insurers. ItIt would be considered the ultimate controlling entity of the Company.Trinity Universal Insurance Company (Trinity) is a Texas domiciled property and casualty insurerlicensed multiple classes of insurance in Oregon and wholly owned by Kemper. It holds l100%00% oftheand isparent.the commoncommon capitalcapital stockstock ofof thethe CompanyCompany andis thethe directdirect parent.INTERCOMPANYAGREEMENTSINTERCOMPANY AGREEMENTSThe Company was party to the following agreements with its parent and affiliatesaffdiates as of December31,2018:31,2018:GeneralAgreementGeneral ServicesServices AgreementEffective January l,1, 2009, the Company entered into a General Services Agreement with anaffiliate,affiliate, MerastarMerastar Insurance Company (Merastar).(Merastar). UnderUnder thethe agreement,agreement, Merastar agreesagrees toprovide marketing, underwriting, losses, claim expenses, attorney appointments, loss reporting andreinsurance, facilities, supplies and staffing, and accounting services. During 2018, there were noexpensesexpenses chargedcharged toto thethe CompanyCompany under thisthis agreement,agreement, sincesince expensesexpenses are net ofof reinsurance.Payments for such services and expenses shall be made within thirty (30) days after the close ofqua11er. The agreement will be in effect unless terminated by either Merastar or Companythe quarter.tenninatedupon not less than ninety (90) days prior written notice to the other. The agreement was terminatedeffective as of FebruaryI, 2019.20 I 9.ebruary 1,Valley PropertyProperty && CasualtyInsurance CompanyCompanyValleyCasualty Insurance9
AgreementServices AgreementEffective December2012, andand AmendedAmended andand RestatedDecember 31,31, 2015,December 21,21, 2012,Restated onon December2015, thethe CompanyCompanyEffectiveentered into a Service Agreement with Kemper Corporate Services, Inc. (KCS), an affiliate,affdiate,wherebyKCS providesprovides thethe companiescompanies withwith certaingeneral andand computercomputer services.whereby KCScertain generalservices.GeneralGeneralservices providedinclude, butbut arenot limitedlimited toto thethe following:reporting,servicesprovided include,are notfollowing: financialfinancial accountingaccounting andand reporting,internal audit including field audit,audit, investmentinvestment accounting,accounting, loss reserving and actuarial reports andandopinions,opinions, tax accountingaccounting and tax advice,advice, tax return preparation,preparation, and trade execution and investmentinvestmentanalysis, payroll processing and administration, purchasing and accounts payable, accountsreceivable, licensing,licensing, regulatoryregulatory andand bureaubureau reporting,reporting, realreal estatemanagement,receivable,estate andand facilityfacility management,automobile fleet management, and maintenance of financial systems, cash management and bankrelations;project reviewreview andand financialfinancial planningplanning andandrelations; corporatecorporate development;development; capitalcapital projectand evaluation,evaluation, andof operations,operations, administrationpostretirement, life andmedical benefits;benefitanalysis ofresultsanalysisofresults ofadministration ofofpostretirement,and medicalbenefits; benefitplan maintenance, reporting and suppoti,support, andand humanhuman resource management (including recruitment,training andand salarysalary and performance administration),administration), corporatecorporate secretarialsecretarial functions,functions, legal supportsupportand advice, and risk management, branding, communications, and media relations.Computer and InformationInfonnation Technology Services, provided include, but are not limited to thefollowing:Mainframe, midrangeminicomputer andprocessors andcontrollers,following: Mainframe,midrange andand minicomputerand otherother centralcentral processorsand controllers,dataMYS, UNIX anddata storagestorage devices,devices, cartridgecartridge andand tape drives, MVS,and otherother operating systemsystem software,database management software ((exclusiveexclusive of applications running under such software), CICS andother transaction processing software, groupware, middleware, and network software, routers andother network and telecommunications equipment and lines located at its data center facilities, andinternet and intranet access software and systems, purchase, lease, license or otherwise acquisitionValley PropertyProperty &Casualty InsuranceValley& CasualtyInsurance CompanyCompany1010
of computer hardware and equipment, licensing and/or otherwise acquisition of computersoftware, information technology consulting and related services.Invoices for services are prepared by Kemper Services and forwarded to Company no lessfrequentlythan monthly.monthly. PaymentsPayments forsuch servicesservices andand expensesexpenses shallshall bebe madewithin thirtythirtyfrequently thanfor suchmade within(30) daysafter receiptreceipt ofinvoices. Thewas terminatedtenninated effectiveas ofof February2019.(30)days afterof invoices.The agreementagreement waseffective asebruary 1,1,2019.Assignment andand ConsentConsent AgreementAgreementAssignmentEffective January 1,1, 2009,2009, the CompanyCompany entered intointo Assignment andand Consent Agreementswhereby TrinityTrinity and the CompanyCompany assignedassigned administrationadministration ofof thethe business reinsured by Trinityunder the 100%100% quota shareshare reinsurancereinsurance agreement to Merastar. Under the agreements,agreements, Merastaragrees to provide administrative services for those policies for which Trinity has assumed basedonI 00% quota shareon aa 100%share reinsurance agreementagreement enteredentered intointo by Trinity andand the CompanyCompany effectivea6rreed to pay Merastar'sperfonning theseJanuary 1, 2009. Under the Consent, Trinity agreedMerastar’s fees in performingservices.services.Theto aa generalgeneral serviceswith Trinity.Trinity. AccordingAccording toto thethe agreement,The CompanyCompany isis partyparty toservices agreementagreement withagreement.Trinityis responsibleresponsible forproviding theCompany thefollowing services:executive management,management,Trinity isfor providingthe Companythe followingservices: executivefinancialaccounting andreporting, purchasingaccounts payable,payable, financialfinancial planningplanning andandfinancial accountingand reporting,purchasing andand accountsmarketing andMIS supportand advice.analysisanalysis ofof operations,operations, marketingand actuarialactuarial services,services, andand certaincertain MISsupport andadvice.Terms of the agreement call for the Company to reimburse Trinity based on hours of servicesprovided oror onon actualactual costscosts incurredincurred forfor out ofof pocketpocket items.Information Technology Services AgreementValleyCompanyValley PropertyProperty && CasualtyCasualty InsuranceInsurance Company1111
infonnation technology servicesEffective January 1, 2009, the Company entered into an informationtenns of theAgreement with UnitrinUnitrin Direct Property & Casualty Company (UDPC). Under thethe termscontract, UDPC will provide information technologytechnology services,services, suchsuch asas IT applicationsapplications andandconsulting servicesservices withwith respect to technologytechnology sharedshared amongamong thethe Unitrin, Kemper Corporationproperty and casualty affiliates. Payments for such services and expenses shall be made withinthirty (30)the closeclose ofof thethe quarter.quarter. TheThe agreementwill bein effecteffect unlessunless terminatedterminatedthirty(30) daysdays afterafter theagreement willbe inonon a datedate dete1mineddetermined by companycompany andand communicated to UDPC, oror by eithereither CompanyCompany or UDPCupon notthan ninetyninety (90)prior writtenwritten noticenotice toto thethe other.uponnot lessless than(90) daysdays priorother.Tax AllocationAgreementTaxAllocation AgreementEffectiveEffective forfor tax yearsyears ending December 31, 1999,1999, the CompanyCompany isis party to a written tax sharingsharingagreementwith KemperCorporation, andand itssubsidiaries.agreement withKemper Corporation,its eligibleeligible subsidiaries.Under thisthis taxtax allocationUnderallocationagreement,agreement, the Company files aa consolidatedconsolidated federal income tax return with KemperKemper CorporationCorporationandits eligiblesubsidiaries.and itseligible subsidiaries.Thetax sharingthat eachparticipant inshall bebe allocatedtax asas ifThe taxsharing agreementagreement statesstates thateach participantin thethe agreementagreement shallallocated taxifitfiled aa separatecompany returnreturn andthe taxtax liabilitybe nono greatergreater underunder thethe agreementagreement thanthanit filedseparate companyand theliability cancan beitwould havehave beenbeen hadhad aa separateseparate taxreturn beenbeen filedfiled forfor allall yearsthe consolidatedperiod.it wouldtax returnyears inin theconsolidated period.FIDELITY BONDBOND ANDAND OTHERINSURANCEFIDELITYOTHER INSURANCEThe examination of insurance coverages involved a review of adequacy of limits and retentions,and the solvency of the insurers providing the coverages.Kemper Corporation purchased financial institution bond coverage for itself and its subsidiaries,including the Company. This bond covers losses from forgery or alteration, securities, computerValleyValley PropertyProperty && CasualtyCasualty InsuranceInsurance CompanyCompany1212
systems, tradingtrading losses and extortion up to 20,000,000 with a 500,000 single loss deductible.deduetible.TheThe Company'sCompany’s fidelity coverage met the limits recommended by the NAIC.KemperKemper CorporationCorporation purchased other coverage for itself and its subsidiaries, including theCompany.Company. Kemper'sKemper's insurance coverages include Insurance Company Errors and Omissions,DirectorsDirectors andand OfficersOfficers LiabilityLiability Insurance, Employment Practices Liability, Property Damage,CyberCyber RiskRisk andand GeneralGeneral Liability Insurance, among other insurances. Coverages are typicallyrenewedrenewed annually.TERRITORY AND PLAN OF OPERATIONTERRITORY AND PLAN OF OPERATIONTheThe CompanyCompany isis authorizedauthorized toto writewrite property, casualty including workers'workers’ compensation, health,andand i
examination of the Kemper Insurance Group, with the State of Illinois as lead state. The last examination of this property and Casualty insurer was completed as December 31, 2013. This examination covers the period ofJanuary 1, 2014, to December 3 l, 2018. . o Kemper Independence Insurance Company (Illinois) o Merastar Industries, LLC (Delaware)
