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Sandler O'Neill says Kemper faces more challenging Q2 than expected

Sandler O'Neill analyst Paul Newsome thinks the secondquarter looks to be more challenging than previously expected for , whose stockvaluation he believes is no longer compelling enough for a "buy" rating.

Newsome downgraded Kemper to "hold" but maintainedits price target at $33.

The company has already experienced heavy catastrophe lossesin Texas, he wrote. Management said during a May 6 that it assumed itscatastrophe loss load for the second quarter would be $35 million to $45million pretax.

"[The] level of catastrophe losses that managementguided to strikes us as high considering [the quarter] is barely 40 days oldwith there being plenty of time left for the spring and early summer storms tostrike and increase the level further," Newsome said.

Further, new President and CEO Joe Lacher has delayed thetime frame of a business review for potential changes that he wanted to releaseafter looking closely at the company's units. Newsome thought results of thereview would be revealed in May or June, but Kemper's recent statements suggestthey will be released in August or September, the analyst said.

He lowered to 67 cents from $1.28 his EPS estimate for 2016and reduced to $1.80 from $2.00 his EPS estimate for 2017.