April 14, 2004
News Release

Illinois Insurance Dept. prohibits interest payments on surplus notes

Lumbermens Mutual Casualty Company
$400,000,000 Surplus Notes 9.15% due 2026 (550060AA5/550060AB3)
$200,000,000 Surplus Notes 8.30% due 2037 (550060AC1/550060AE7)
$100,000,000 Surplus Notes 8.45% due 2097 (550060AD9/550060AF4)


LONG GROVE, Ill. – Lumbermens Mutual Casualty Company received a notice dated April 12, 2004, from the Director of the Illinois Department of Insurance denying the company’s request to make (1) the June 1, 2004 interest payments on its 8.30 percent surplus notes due December 1, 2037 and its 8.45 percent surplus notes due on December 1, 2097 as well as (2) the July 1, 2004 interest payment on its 9.15 percent surplus notes due July 1, 2026.

On March 19, 2004, Kemper filed a revised run-off plan with the Illinois Department of Insurance. The Department is now reviewing the plan and providing feedback, and will ultimately decide whether to approve it.

Additional information about Lumbermens and its surplus notes can be obtained at www.bondcom.com/lumbermens or at www.kemperinsurance.com.