PROTECTIVE LIFE CORP - FORM 8-K - EX-99.2

Attached files

file	filename
8-K - 8-K - PROTECTIVE LIFE CORP	a11-5474_18k.htm
EX-99.1 - EX-99.1 - PROTECTIVE LIFE CORP	a11-5474_1ex99d1.htm

Exhibit 99.2

Draft 2/9/2011

Supplemental Schedules

Fourth Quarter 2010

Draft 2/9/2011

Page 1

Quarterly Financial Highlights

(Dollars In Thousands)	4TH QTR		1ST QTR			2ND QTR		3RD QTR		4TH QTR			12 MOS
(Unaudited)	2009		2010			2010		2010		2010			2009		2010

Pre-tax Operating Income (Loss) *

Life Marketing	$	31,593	$	40,678		$	35,755	$	30,868	$	40,169		$	137,826	$	147,470
Acquisitions	32,037		31,369			30,190		27,866		21,718			133,760		111,143
Annuities	19,647		18,187			605		22,704		12,405			56,642		53,901
Stable Value Products	10,441		11,027			10,979		8,339		8,862			61,963		39,207
Asset Protection	6,562		13,067			6,616		5,154		5,060			23,229		29,897
Corporate & Other	104,405		(16,132		)	377		405		(9,703		)	81,980		(25,053		)
Total Pre-tax Operating Income	$	204,685	$	98,196		$	84,522	$	95,336	$	78,511		$	495,400	$	356,565

Balance Sheet Data

Total GAAP Assets	$	42,311,587	$	43,617,727		$	44,576,236	$	45,932,314	$	47,566,378
Total Protective Life Corporation’s Shareowners’ Equity	$	2,478,821	$	2,821,033		$	3,085,599	$	3,571,392	$	3,331,087
Total Protective Life Corporation’s Shareowners’ Equity (excluding accumulated other comprehensive income (loss))**	$	2,799,990	$	2,876,749		$	2,908,109	$	2,969,428	$	3,037,833

Stock Data

Closing Price	$	16.55	$	21.99		$	21.39	$	21.76	$	26.64
Average Shares Outstanding
Basic	86,491,754		86,500,199			86,562,379		86,603,569		86,600,622			80,488,694		86,567,069
Diluted	87,459,899		87,551,386			87,666,035		87,701,592		87,781,602			81,249,265		87,675,857

* “Pre-tax Operating Income (Loss)” is a non-GAAP financial measure. “Income (loss) Before Income Tax” is a GAAP financial measure to which “Pre-tax Operating Income” may be compared.

See Page 6 for a reconciliation of “Pre-tax Operating Income” to “Income (loss) Before Income Tax”.

** “Total Protective Life Corporation’s Shareowners’ equity excluding accumulated other comprehensive income (loss)” is a non-GAAP financial measure. “Total Protective Life Corporation’s Shareowners’ equity” is a GAAP financial measure to which “Total Protective Life Corporation’s Shareowners’ equity excluding accumulated other comprehensive income (loss)” may be compared.

See Page 5 for a reconciliation of “Total Protective Life Corporation’s Shareowners’ equity excluding accumulated other comprehensive income (loss)” to “Total Protective Life Corporation’s Shareowners’ equity”.

Draft 2/9/2011

Page 2

Financial Strength Ratings as of December 31, 2010

	A.M. Best	Fitch	Standard & Poor’s	Moody’s
Legal Entity

Insurance companies:
Protective Life Insurance Company	A+	A	AA-	A2
West Coast Life Insurance Company	A+	A	AA-	A2
Protective Life and Annuity Insurance Company	A+	A	AA-	—
Lyndon Property Insurance Company	A-	—	—	—

Draft 2/9/2011

Page 3

GAAP Consolidated Statements of Income

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	698,061		$	628,772		$	679,241		$	640,265		$	677,116		$	2,689,699		$	2,625,394
Reinsurance Ceded	(422,865		)	(305,829		)	(379,729		)	(334,040		)	(388,742		)	(1,527,053		)	(1,408,340		)
Net Premiums and Policy Fees	275,196			322,943			299,512			306,225			288,374			1,162,646			1,217,054
Net investment income	402,251			411,997			422,500			429,548			419,631			1,665,036			1,683,676
RIGL - Derivatives	23,145			(23,072		)	(119,888		)	(94,034		)	98,745			(177,953		)	(138,249		)
RIGL - All Other Investments	8,662			47,899			67,704			110,787			(72,024		)	300,194			154,366

OTTI losses	(46,706		)	(21,856		)	(36,683		)	(12,898		)	(3,904		)	(227,770		)	(75,341		)
OTTI losses/(gains) recognized in OCI (before taxes)	28,426			9,987			19,885			5,283			(1,324		)	47,725			33,831
Net OTTI losses recognized in earnings	(18,280		)	(11,869		)	(16,798		)	(7,615		)	(5,228		)	(180,045		)	(41,510		)
Other income	178,677			43,872			59,072			58,190			61,284			298,148			222,418
Total Revenues	869,651			791,770			712,102			803,101			790,782			3,068,026			3,097,755

BENEFITS & EXPENSES
Benefits and settlement expenses	474,254			507,295			525,371			549,567			507,196			1,977,979			2,089,429
Amortization of deferred policy acquisition costs and value of business acquired	94,732			81,289			23,086			42,386			62,961			345,569			209,722
Other operating expenses	62,832			66,680			61,084			65,213			65,356			213,609			258,333
Interest expense - subsidiaries	2,469			2,158			5,183			6,073			6,244			30,857			19,658
Interest expense - holding company - other debt	23,195			23,671			23,517			23,463			23,494			45,631			94,145
Interest expense - holding company - hybrid securities	9,401			9,401			9,401			9,402			9,401			37,603			37,605
Total Benefits and Expenses	666,883			690,494			647,642			696,104			674,652			2,651,248			2,708,892

INCOME BEFORE INCOME TAX	202,768			101,276			64,460			106,997			116,130			416,778			388,863
Income tax expense	71,757			31,570			23,216			36,626			37,655			145,290			129,067
NET INCOME	131,011			69,706			41,244			70,371			78,475			271,488			259,796
Less: Net Income (loss) attributable to noncontrolling interests	—			(73		)	(127		)	(77		)	(168		)	—			(445		)
NET INCOME AVAILABLE TO PLC’S COMMON SHAREOWNERS	$	131,011		$	69,779		$	41,371		$	70,448		$	78,643		$	271,488		$	260,241

PER SHARE DATA FOR QUARTER
Operating income-diluted *	$	1.51		$	0.78		$	0.62		$	0.71		$	0.62
RIGL - Derivatives net of gains related to corp debt, investments and annuities	0.03			(0.24		)	(0.52		)	(0.67		)	0.87
RIGL - All Other Investments	(0.04		)	0.26			0.37			0.76			(0.59		)
Net income available to PLC’s common shareowners-diluted	$	1.50		$	0.80		$	0.47		$	0.80		$	0.90
Average shares outstanding-diluted	87,459,899			87,551,386			87,666,035			87,701,592			87,781,602
Dividends paid	$	0.12		$	0.12		$	0.14		$	0.14		$	0.14
PER SHARE DATA FOR YTD
Operating income-diluted *	$	3.97		$	0.78		$	1.39		$	2.11		$	2.73
RIGL - Derivatives net of gains related to corp debt, investments and annuities	(1.63		)	(0.24		)	(0.77		)	(1.43		)	(0.56		)
RIGL - All Other Investments	1.00			0.26			0.65			1.39			0.80
Net income available to PLC’s common shareowners-diluted	$	3.34		$	0.80		$	1.27		$	2.07		$	2.97
Average shares outstanding-diluted	81,249,265			87,551,386			87,609,027			87,640,221			87,675,857
Dividends paid	$	0.48		$	0.12		$	0.26		$	0.40		$	0.54

* “Operating Income” is a non-GAAP financial measure. “Net income available to PLC’s common shareowners” is a GAAP financial measure to which "Operating Income" may be compared.

Draft 2/9/2011

Page 4

GAAP Consolidated Balance Sheets

(Dollars In Thousands)	4TH QTR		1ST QTR		2ND QTR		3RD QTR		4TH QTR
(Unaudited)	2009		2010		2010		2010		2010
ASSETS

Fixed maturities	$	22,830,427	$	23,203,026	$	23,687,528	$	24,838,626	$	24,676,939
Equity securities	275,497		280,703		308,951		335,151		359,412
Mortgage loans	3,877,087		4,861,699		4,905,276		4,884,102		4,891,211
Investment real estate	25,188		25,068		22,431		24,669		25,340
Policy loans	794,276		783,580		775,105		767,214		793,448
Other long-term investments	204,754		198,014		182,075		256,093		277,955
Long-term investments	28,007,229		29,352,090		29,881,366		31,105,855		31,024,305
Short-term investments	1,049,609		647,952		972,804		483,698		352,824
Total investments	29,056,838		30,000,042		30,854,170		31,589,553		31,377,129
Cash	205,325		202,934		156,524		151,340		264,425
Accrued investment income	285,350		308,779		303,916		320,668		329,078
Accounts and premiums receivable	56,216		49,941		38,817		65,948		58,580
Reinsurance receivable	5,333,401		5,445,109		5,553,385		5,563,824		5,608,029
Deferred policy acquisition costs and value of business acquired	3,663,350		3,634,057		3,671,153		3,642,484		3,855,336
Goodwill	117,856		117,081		116,307		115,532		114,758
Property and equipment, net	37,037		36,909		37,831		37,722		39,386
Other assets	176,303		168,274		188,862		207,198		169,663
Current/Deferred income tax	115,447		14,225		43,609		2,438		45,582
Assets related to separate accounts
Variable annuity	2,948,457		3,306,242		3,307,239		3,899,308		5,170,193
Variable universal life	316,007		334,134		304,423		336,299		534,219

TOTAL ASSETS	$	42,311,587	$	43,617,727	$	44,576,236	$	45,932,314	$	47,566,378

The 4Q 2010 balance sheet includes preliminary purchase GAAP accounting adjustments related to the United Investors Life Insurance Company acquisition. It is possible that these amounts may change as balances are finalized.

Draft 2/9/2011

Page 5

GAAP Consolidated Balance Sheets - Continued

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR
(Unaudited)	2009			2010			2010			2010			2010

LIABILITIES
Policy liabilities and accruals
Future policy benefits and claims	$	17,327,279		$	17,456,391		$	17,679,905		$	17,824,414		$	18,534,156
Unearned premiums	1,220,988			1,220,255			1,258,161			1,305,092			1,182,828
Stable value product deposits	3,581,150			3,453,950			3,487,963			3,105,822			3,076,233
Annuity deposits	9,911,040			10,035,799			10,309,546			10,451,322			10,591,605
Other policyholders’ funds	515,078			534,740			551,860			577,275			578,037
Other liabilities	715,110			907,330			1,059,034			1,115,755			926,201
Mortgage loan backed certificates	—			110,679			85,873			74,324			61,678
Deferred income taxes	553,062			718,070			891,177			1,113,532			1,022,130
Non-recourse funding obligations	575,000			575,000			556,600			548,000			532,400
Debt	1,644,852			1,619,852			1,474,852			1,485,852			1,501,852
Subordinated debt securities	524,743			524,743			524,743			524,743			524,743
Liabilities related to separate accounts
Variable annuity	2,948,457			3,306,242			3,307,239			3,899,308			5,170,193
Variable universal life	316,007			334,134			304,423			336,299			534,219
TOTAL LIABILITIES	39,832,766			40,797,185			41,491,376			42,361,738			44,236,275

SHAREOWNERS’ EQUITY
Common stock	44,388			44,388			44,388			44,388			44,388
Additional paid-in-capital	576,887			579,915			581,646			584,865			586,592
Treasury stock	(25,929		)	(25,997		)	(25,745		)	(26,101		)	(26,072		)
Retained earnings	2,204,644			2,278,443			2,307,820			2,366,276			2,432,925
Accumulated other comprehensive income (loss)	(321,169		)	(55,716		)	177,490			601,964			293,254
TOTAL PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY	2,478,821			2,821,033			3,085,599			3,571,392			3,331,087
Noncontrolling interest	—			(491		)	(739		)	(816		)	(984		)
TOTAL EQUITY	2,478,821			2,820,542			3,084,860			3,570,576			3,330,103
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY	$	42,311,587		$	43,617,727		$	44,576,236		$	45,932,314		$	47,566,378

PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY PER SHARE
Total Protective Life Corporation’s Shareowners’ Equity	$	28.96		$	32.96		$	36.02		$	41.69		$	38.88
Less: Accumulated other comprehensive income (loss)	(3.76		)	(0.65		)	2.07			7.03			3.42
Excluding accumulated other comprehensive income (loss)*	$	32.72		$	33.61		$	33.95		$	34.66		$	35.46

Total Protective Life Corporation’s Shareowners’ Equity	$	2,478,821		$	2,821,033		$	3,085,599		$	3,571,392		$	3,331,087
Less: Accumulated other comprehensive income (loss)	(321,169		)	(55,716		)	177,490			601,964			293,254
Total Protective Life Corporation’s Shareowners’ Equity (excluding accumulated other comprehensive income (loss)) *	$	2,799,990		$	2,876,749		$	2,908,109		$	2,969,428		$	3,037,833

Common shares outstanding	85,580,803			85,601,358			85,662,191			85,664,518			85,667,977
Treasury Stock shares	3,196,157			3,175,602			3,114,769			3,112,442			3,108,983

* “Total Protective Life Corporation’s Shareowners’ equity excluding accumulated other comprehensive income (loss)” is a non-GAAP financial measure. “Total Protective Life Corporation’s Shareowners’ equity” is a GAAP financial measure to which “Total Protective Life Corporation’s Shareowners’ equity excluding accumulated other comprehensive income (loss)” may be compared.

Draft 2/9/2011

Page 6

Calculation of Operating Earnings Per Share

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

CALCULATION OF NET INCOME PER SHARE

Net income available to PLC’s common shareowners	$	131,011		$	69,779		$	41,371		$	70,448		$	78,643		$	271,488		$	260,241

Average shares outstanding-basic	86,491,754			86,500,199			86,562,379			86,603,569			86,600,622			80,488,694			86,567,069
Average shares outstanding-diluted	87,459,899			87,551,386			87,666,035			87,701,592			87,781,602			81,249,265			87,675,857

Net income available to PLC’s common shareowners per share-basic	$	1.51		$	0.81		$	0.48		$	0.81		$	0.91		$	3.37		$	3.01
Net income available to PLC’s common shareowners per share-diluted	$	1.50		$	0.80		$	0.47		$	0.80		$	0.90		$	3.34		$	2.97

Income from continuing operations	$	131,011		$	69,779		$	41,371		$	70,448		$	78,643		$	271,488		$	260,241

EPS (basic)	$	1.51		$	0.81		$	0.48		$	0.81		$	0.91		$	3.37		$	3.01
EPS (diluted)	$	1.50		$	0.80		$	0.47		$	0.80		$	0.90		$	3.34		$	2.97

CALCULATION OF REALIZED INVESTMENT GAINS (LOSSES) PER SHARE

RIGL - Derivatives	$	23,145		$	(23,072	)	$	(119,888	)	$	(94,034	)	$	98,745		$	(177,953	)	$	(138,249	)
Derivative activity related to Corporate Debt and Investments	—			(42		)	(42		)	(42		)	(42		)	(3,401		)	(168		)
Derivative activity related to Annuities	(19,003		)	(9,549		)	49,417			4,248			19,329			(22,620		)	63,445
RIGL - All Other Investments	(9,618		)	36,030			50,906			103,172			(77,252		)	120,149			112,856
Related amortization of DAC & VOBA	3,559			(214		)	(328		)	(1,606		)	(2,993		)	5,203			(5,141		)
	(1,917		)	3,153			(19,935		)	11,738			37,787			(78,622		)	32,743
Tax effect	671			(1,104		)	$	6,977		(4,108		)	(13,226		)	27,518			(11,461		)
	$	(1,246	)	$	2,049		$	(12,958	)	$	7,630		$	24,561		$	(51,104	)	$	21,282

RIGL - Derivatives per share-diluted	$	0.03		$	(0.24	)	$	(0.52	)	$	(0.67	)	$	0.87		$	(1.63	)	$	(0.56	)
RIGL - All Other Investments per share-diluted	$	(0.04	)	$	0.26		$	0.37		$	0.76		$	(0.59	)	$	1.00		$	0.80

OPERATING INCOME PER SHARE *

Net income available to PLC’s common shareowners per share-diluted	$	1.50		$	0.80		$	0.47		$	0.80		$	0.90		$	3.34		$	2.97
RIGL - Derivatives per share-diluted	0.03			(0.24		)	(0.52		)	(0.67		)	0.87			(1.63		)	(0.56		)
RIGL - All Other Investments per share-diluted	(0.04		)	0.26			0.37			0.76			(0.59		)	1.00			0.80
Operating income per share-diluted	$	1.51		$	0.78		$	0.62		$	0.71		$	0.62		$	3.97		$	2.73

NET OPERATING INCOME *

Net income available to PLC’s common shareowners	$	131,011		$	69,779		$	41,371		$	70,448		$	78,643		$	271,488		$	260,241
Less: RIGL - Derivatives net of tax & gains related to corp debt, investments & annuities	2,692			(21,231		)	(45,833		)	(58,388		)	76,721			(132,583		)	(48,731		)
Less: RIGL - All Other Investments net of tax and amortization	(3,938		)	23,280			32,877			66,018			(52,159		)	81,479			70,016
Net operating income	$	132,257		$	67,730		$	54,327		$	62,818		$	54,081		$	322,592		$	238,956

PRE-TAX OPERATING INCOME **

Income before income tax and discontinued operations	$	202,768		$	101,275		$	64,461		$	106,997		$	116,130		$	416,778		$	388,863
Less: RIGL - Derivatives	23,145			(23,072		)	(119,888		)	(94,034		)	98,745			(177,953		)	(138,249		)
Less: Derivative activity related to corporate debt, investments & annuities ***	(19,003		)	(9,591		)	49,375			4,206			19,287			(26,021		)	63,277
Less: RIGL - All Other Investments	(9,618		)	36,030			50,906			103,172			(77,252		)	120,149			112,856
Less: Related amortization of DAC & VOBA	3,559			(214		)	(328		)	(1,606		)	(2,993		)	5,203			(5,141		)
Less: Minority Interest	—			(74		)	(126		)	(77		)	(168		)	—			(445		)
Pre-tax operating income	$	204,685		$	98,196		$	84,522		$	95,336		$	78,511		$	495,400		$	356,565

* “Net Operating Income” and “Operating Income Per Share” are non-GAAP financial measures. “Net Income available to PLC’s common shareowners” and “Net Income available to PLC’s common shareowners Per Share” are GAAP financial measures to which “Net Operating Income” and “Operating Income Per Share” may be compared.

** “Pre-tax Operating Income” is a non-GAAP financial measure. “Income Before Income Tax” is a GAAP financial measure to which “Pre-tax Operating Income” may be compared.

*** Includes derivative (gains)/losses

Draft 2/9/2011

Page 7

Invested Asset Summary

(Dollars In Millions)	4TH QTR		1ST QTR		2ND QTR		3RD QTR		4TH QTR
(Unaudited)	2009		2010		2010		2010		2010

Total Portfolio

Fixed Maturities	$	22,830.4	$	23,203.0	$	23,687.5	$	24,838.6	$	24,676.9	79	%
Mortgage Loans	3,877.1		4,861.7		4,905.3		4,884.1		4,891.2		16	%
Investment Real Estate	25.2		25.1		22.4		24.7		25.3		0	%
Equity Securities	275.5		280.7		309.0		335.2		359.4		1	%
Policy Loans	794.3		783.6		775.1		767.2		793.5		2	%
Short-Term Investments	1,049.6		647.9		972.8		483.7		352.8		1	%
Other Long-Term Investments	204.7		198.0		182.1		256.1		278.0		1	%
Total Invested Assets	$	29,056.8	$	30,000.0	$	30,854.2	$	31,589.6	$	31,377.1	100	%

Draft 2/9/2011

Page 8

Invested Asset Summary - Fixed Income

(Dollars In Millions)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR
(Unaudited)	2009			2010			2010			2010			2010

Fixed Income

Corporate Bonds	$	14,847.8		$	15,724.6		$	15,950.7		$	17,255.7		$	17,433.7		71	%
Residential Mortgage-Backed Securities	3,917.5			3,720.4			3,511.4			3,363.0			2,979.8			12	%
Commercial Mortgage-Backed Securities	1,124.3			270.9			297.0			312.2			312.6			1	%
Other Asset-Backed Securities	1,120.8			959.2			951.6			877.2			927.1			4	%
U.S. Government-related Securities	811.3			1,579.4			1,824.2			1,718.5			1,572.1			6	%
Other Government-related Securities	608.5			307.1			368.8			362.0			327.8			1	%
States, Municipals and Political Subdivisions	400.2			641.4			783.8			950.0			1,123.8			5	%
Total Fixed Income Portfolio	$	22,830.4		$	23,203.0		$	23,687.5		$	24,838.6		$	24,676.9		100	%

Fixed Income - Quality

AAA	21.0		%	18.6		%	18.9		%	17.3		%	17.0		%
AA	4.9		%	4.0		%	4.6		%	4.7		%	4.8		%
A	17.6		%	18.0		%	17.4		%	17.8		%	17.9		%
BBB	42.9		%	45.6		%	45.1		%	46.6		%	47.8		%
Below investment grade	13.6		%	13.8		%	14.0		%	13.6		%	12.5		%
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Note: Prior periods restated to be consistent with current quarter presentation.

Draft 2/9/2011

Page 9

Invested Asset Summary - Mortgages

(Dollars In Millions)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR
(Unaudited)	2009			2010			2010			2010			2010

Mortgage Loans - Type

Retail	64.5		%	66.4		%	66.3		%	66.3		%	66.2		%
Apartments	11.3		%	10.9		%	11.6		%	12.2		%	12.7		%
Office Buildings	14.4		%	13.3		%	13.0		%	12.9		%	12.2		%
Warehouses	7.4		%	7.4		%	7.1		%	7.2		%	7.1		%
Miscellaneous	2.4		%	2.0		%	2.0		%	1.4		%	1.8		%
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Delinquent Loans & Foreclosed Properties

60 Days Past Due	$	5.9		$	23.8		$	21.0		$	—		$	—
90 Days Past Due	6.5			21.4			8.2			16.5			12.7
Renegotiated Loans	—			—			35.7			35.7			16.1
Foreclosed Real Estate	10.7			—			0.7			3.3			4.8
	$	23.1		$	45.2		$	65.6		$	55.5		$	33.6	(1)

(1) Includes $16.1 million of loans being restructured under the terms of a pooling and servicing agreement.

Draft 2/9/2011

Page 10

Invested Asset Summary - Trading Portfolios

(Dollars In Millions)	4TH QTR		1ST QTR		2ND QTR		3RD QTR		4TH QTR
(Unaudited)	2009		2010		2010		2010		2010

Trading Portfolio Composition (excl. Modco Trading Portfolio)

Rating
AAA	$	21.6	$	19.6	$	17.4	$	14.8	$	10.7
AA	6.2		6.3		6.4		1.3		1.0
A	43.2		23.8		12.6		—		—
BBB	120.3		82.8		65.0		47.5		46.3
Below investment grade	81.3		84.8		80.0		69.3		61.4
Total	$	272.6	$	217.3	$	181.4	$	132.9	$	119.4

Modco Trading Portfolio

Rating
AAA	$	834.7	$	780.6	$	919.9	$	898.2	$	816.1
AA	73.2		117.2		133.7		182.0		177.4
A	544.1		574.1		565.2		636.7		584.4
BBB	950.3		969.9		978.2		996.3		1,008.9
Below investment grade	281.5		291.6		275.8		292.7		269.7
Short-term investments	250.8		236.5		130.5		71.5		114.3
Total	$	2,934.6	$	2,969.9	$	3,003.3	$	3,077.4	$	2,970.8

Draft 2/9/2011

Page 11

Invested Asset Summary - MBS - Alt-A

Mortgage-backed Securities Collateralized by Alt-A Mortgage Loans as of December 31, 2010:

(Dollars In Millions)	2006 and
(Unaudited)	Prior			2007			2008		2009		2010		Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	8.6		$	—		$	—	$	—	$	1.7	$	10.3
A	4.0			—			—		—		—		4.0
BBB	1.0			—			—		—		—		1.0
Below investment grade	242.7			143.6			—		—		—		386.3
Total mortgage-backed securities collateralized by Alt-A mortgage loans	$	256.3		$	143.6		$	—	$	—	$	1.7	$	401.6

Estimated Unrealized Gain (Loss) of Security by Year of Security Origination

Rating
AAA	$	(0.2	)	$	—		$	—	$	—	$	—	$	(0.2	)
A	0.4			—			—		—		—		0.4
BBB	(1.0		)	—			—		—		—		(1.0		)
Below investment grade	(23.2		)	(11.0		)	—		—		—		(34.2		)
Total mortgage-backed securities collateralized by Alt-A mortgage loans	$	(24.0	)	$	(11.0	)	$	—	$	—	$	—	$	(35.0	)

Draft 2/9/2011

Page 12

Invested Asset Summary - MBS - Sub-prime

Mortgage-backed Securities Collateralized by Sub-prime Loans as of December 31, 2010:

(Dollars In Millions)	2006 and
(Unaudited)	Prior			2007			2008		2009		2010		Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	4.0		$	—		$	—	$	—	$	—	$	4.0
AA	2.1			—			—		—		—		2.1
BBB	2.1			—			—		—		—		2.1
Below investment grade	16.3			17.6			—		—		—		33.9
Total mortgage-backed securities collateralized by sub-prime mortgage loans	$	24.5		$	17.6		$	—	$	—	$	—	$	42.1

Estimated Unrealized Gain (Loss) of Security by Year of Security Origination

Rating
AAA	$	(0.2	)	$	—		$	—	$	—	$	—	$	(0.2	)
AA	(0.1		)	—			—		—		—		(0.1		)
BBB	(0.5		)	—			—		—		—		(0.5		)
Below investment grade	(4.0		)	(16.6		)	—		—		—		(20.6		)
Total mortgage-backed securities collateralized by sub-prime mortgage loans	$	(4.8	)	$	(16.6	)	$	—	$	—	$	—	$	(21.4	)

Draft 2/9/2011

Page 13

Invested Asset Summary - MBS - Prime

Mortgage-backed Securities Collateralized by Prime Loans as of December 31, 2010:

(Dollars In Millions)	2006 and
(Unaudited)	Prior			2007			2008		2009		2010			Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	889.4		$	6.9		$	—	$	—	$	135.2		$	1,031.5
AA	132.6			—			—		—		—			132.6
A	9.4			4.8			—		—		—			14.2
BBB	106.7			—			—		—		—			106.7
Below investment grade	1,018.4			232.7			—		—		—			1,251.1
Total mortgage-backed securities collateralized by prime loans	$	2,156.5		$	244.4		$	—	$	—	$	135.2		$	2,536.1

Includes $825.9 million of agency mortgage backed securities.

Estimated Unrealized Gain (Loss) of Security by Year of Security Origination

Rating
AAA	$	53.2		$	0.5		$	—	$	—	$	(2.7	)	$	51.0
AA	1.3			—			—		—		—			1.3
A	(0.1		)	0.4			—		—		—			0.3
BBB	1.1			—			—		—		—			1.1
Below investment grade	(67.4		)	(11.8		)	—		—		—			(79.2		)
Total mortgage-backed securities collateralized by prime loans	$	(11.9	)	$	(10.9	)	$	—	$	—	$	(2.7	)	$	(25.5	)

Draft 2/9/2011

Page 14

Invested Asset Summary - CMBS

Commercial Mortgage-backed Securities as of December 31, 2010:

(Dollars In Millions)	2006 and
(Unaudited)	Prior			2007		2008		2009			2010			Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	170.4		$	—	$	47.2	$	3.9		$	85.6		$	307.1
AA	2.6			—		—		—			2.9			5.5
Total commercial mortgage-backed securities	$	173.0		$	—	$	47.2	$	3.9		$	88.5		$	312.6

Estimated Unrealized Gain (Loss) of Security by Year of Security Origination

Rating
AAA	$	6.1		$	—	$	3.0	$	(0.1	)	$	(0.9	)	$	8.1
AA	(0.1		)	—		—		—			(0.1		)	(0.2		)
Total commercial mortgage-backed securities	$	6.0		$	—	$	3.0	$	(0.1	)	$	(1.0	)	$	7.9

Draft 2/9/2011

Page 15

Invested Asset Summary - ABS*

Other Asset-backed Securities* as of December 31, 2010:

(Dollars In Millions)	2006 and
(Unaudited)	Prior			2007			2008		2009		2010			Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	628.5		$	194.2		$	—	$	19.8	$	31.9		$	874.4
AA	29.4			—			—		—		—			29.4
A	6.2			—			—		—		—			6.2
BBB	5.6			—			—		—		—			5.6
Below investment grade	0.5			11.0			—		—		—			11.5
Total other asset-backed securities	$	670.2		$	205.2		$	—	$	19.8	$	31.9		$	927.1

Estimated Unrealized Gain (Loss) of Security by Year of Security Origination

Rating
AAA	$	(13.9	)	$	(2.3	)	$	—	$	—	$	(0.1	)	$	(16.3	)
AA	2.7			—			—		—		—			2.7
A	0.3			—			—		—		—			0.3
BBB	(0.8		)	—			—		—		—			(0.8		)
Below investment grade	(0.2		)	(10.6		)	—		—		—			(10.8		)
Total other asset-backed securities	$	(11.9	)	$	(12.9	)	$	—	$	—	$	(0.1	)	$	(24.9	)

* Excludes Residential and Commercial mortgage-backed securities

Draft 2/9/2011

Page 16

Invested Asset Summary - Other

(Dollars In Millions)	GAAP
(Unaudited)	Amortized		Market		Unrealized
(Excludes Modco portfolio)	Cost		Value		Gain / (Loss)
Hybrid / Preferred Securities as of December 31, 2010

Domestic Exposure
Tier 1	$	998.7	$	1,004.6	$	5.9
Preferred Stock	155.3		159.3		4.0
Total Domestic Exposure	$	1,154.0	$	1,163.9	$	9.9

European Exposure
Upper Tier 2	$	53.2	$	57.2	$	4.0
Tier 1	180.7		164.8		(15.9		)
Preferred Stock	64.4		67.6		3.2
Total European Exposure	$	298.3	$	289.6	$	(8.7	)

Other Foreign Exposure
Tier 1	$	65.2	$	68.5	$	3.3
Preferred Stock	0.1		0.1		—
Total Other Foreign Exposure	$	65.3	$	68.6	$	3.3

Total Domestic, European and Other Exposure
Upper Tier 2	$	53.2	$	57.2	$	4.0
Tier 1	1,244.6		1,237.9		(6.7		)
Preferred Stock	219.8		227.0		7.2
Total Domestic, European and Other Exposure	$	1,517.6	$	1,522.1	$	4.5

Draft 2/9/2011

Page 17

Life Marketing Quarterly Trends

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	412,468		$	373,390		$	407,900		$	379,745		$	414,729		$	1,565,144		$	1,575,764
Reinsurance Ceded	(260,829		)	(176,752		)	(227,543		)	(190,877		)	(244,340		)	(911,703		)	(839,512		)
Net Premiums and Policy Fees	151,639			196,638			180,357			188,868			170,389			653,441			736,252
Net investment income	88,713			91,144			94,763			96,977			105,177			362,108			388,061
Other income	21,262			21,222			23,008			24,141			26,708			80,847			95,079
Total Revenues	261,614			309,004			298,128			309,986			302,274			1,096,396			1,219,392

BENEFITS & EXPENSES
Benefits and settlement expenses	182,294			220,556			217,032			260,177			224,000			782,372			921,765
Amortization of deferred policy acquisition costs and value of business acquired	34,851			34,078			30,892			1,172			25,221			144,125			91,363
Other operating expenses	12,876			13,692			14,449			17,769			12,884			32,073			58,794
Total Benefits and Expenses	230,021			268,326			262,373			279,118			262,105			958,570			1,071,922

INCOME BEFORE INCOME TAX	$	31,593		$	40,678		$	35,755		$	30,868		$	40,169		$	137,826		$	147,470

Life Marketing Key Data

(Dollars In Thousands)	4TH QTR		1ST QTR		2ND QTR		3RD QTR		4TH QTR		12 MOS
(Unaudited)	2009		2010		2010		2010		2010		2009		2010

SALES BY PRODUCT
Traditional	$	22,090	$	20,765	$	17,626	$	8,291	$	3,419	$	96,932	$	50,101
Universal life	20,931		21,263		23,313		29,553		39,039		62,025		113,168
Bank-owned life insurance	1,331		940		1,974		1,987		3,197		3,643		8,098
Total	$	44,352	$	42,968	$	42,913	$	39,831	$	45,655	$	162,600	$	171,367

SALES BY DISTRIBUTION
Brokerage general agents	$	27,833	$	26,351	$	26,654	$	24,033	$	24,550	$	101,381	$	101,588
Independent agents	6,478		6,691		6,254		5,369		6,524		27,765		24,838
Stockbrokers/banks	8,696		8,971		8,031		8,425		11,206		30,131		36,633
BOLI/other	1,345		955		1,974		2,004		3,375		3,323		8,308
Total	$	44,352	$	42,968	$	42,913	$	39,831	$	45,655	$	162,600	$	171,367

Draft 2/9/2011

Page 18

Annuities Quarterly Trends

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	8,176		$	8,775		$	9,800		$	11,086		$	13,125		$	33,983		$	42,786
Reinsurance Ceded	(39		)	(37		)	(38		)	(41		)	(20		)	(152		)	(136		)
Net Premiums and Policy Fees	8,137			8,738			9,762			11,045			13,105			33,831			42,650
Net investment income	115,255			116,197			118,719			122,662			124,686			440,097			482,264
RIGL - Derivatives	19,003			9,549			(49,417		)	(4,248		)	(19,329		)	22,620			(63,445		)
RIGL - All Other Investments	717			102			(524		)	3,610			6,987			(5,288		)	10,175
Other income	5,264			5,994			6,935			8,060			9,603			17,596			30,592
Total Revenues	148,376			140,580			85,475			141,129			135,052			508,856			502,236

BENEFITS & EXPENSES
Benefits and settlement expenses	90,165			94,241			114,534			98,023			100,657			350,850			407,455
Amortization of deferred policy acquisition costs and value of business acquired	30,451			19,671			(37,549		)	8,616			6,080			81,928			(3,182		)
Other operating expenses	7,396			8,450			9,003			8,789			10,528			26,294			36,770
Total Benefits and Expenses	128,012			122,362			85,988			115,428			117,265			459,072			441,043

INCOME (LOSS) BEFORE INCOME TAX	20,364			18,218			(513		)	25,701			17,787			49,784			61,193

Adjustments to Reconcile to Operating Income:
Less: RIGL - Derivatives	19,003			9,549			(49,417		)	(4,248		)	(19,329		)	22,620			(63,445		)
Add back: Derivative activity related to annuities	19,003			9,549			(49,417		)	(4,248		)	(19,329		)	22,620			(63,445		)
Less: RIGL - All Other Investments	717			102			(524		)	3,610			6,987			(5,288		)	10,175
Add back: Related amortization of RIGL	—			71			594			613			1,605			1,570			2,883

PRE-TAX OPERATING INCOME	$	19,647		$	18,187		$	605		$	22,704		$	12,405		$	56,642		$	53,901

Annuities Key Data

	4TH QTR		1ST QTR		2ND QTR			3RD QTR		4TH QTR		12 MOS
	2009		2010		2010			2010		2010		2009		2010

SALES
Variable Annuity	$	285,454	$	349,936	$	412,789		$	436,350	$	515,678	$	796,245	$	1,714,753
Immediate Annuity	11,886		9,347		13,270			20,949		20,801		76,345		64,367
Single Premium Deferred Annuity	202,483		183,828		261,673			194,919		120,135		783,815		760,555
Market Value Adjusted Annuity	22,409		24,713		50,057			24,951		5,045		361,290		104,766
Equity Indexed Annuity	233		141		299			66		100		3,761		606
Total	$	522,465	$	567,965	$	738,088		$	677,235	$	661,759	$	2,021,456	$	2,645,047

PRE-TAX OPERATING INCOME (LOSS)
Variable Annuity	$	11,607	$	11,710	$	(7,762	)	$	8,792	$	2,487	$	21,281	$	15,227
Fixed Annuity	8,040		6,477		8,367			13,912		9,918		35,361		38,674
Total	$	19,647	$	18,187	$	605		$	22,704	$	12,405	$	56,642	$	53,901

DEPOSIT BALANCE
VA Fixed Annuity	$	291,733	$	332,711	$	382,064		$	433,120	$	451,918
VA Separate Account Annuity	2,808,123		3,164,958		3,177,824			3,765,148		4,429,084
Sub-total	3,099,856		3,497,669		3,559,888			4,198,268		4,881,002
Fixed Annuity	7,252,246		7,364,042		7,599,107			7,715,622		7,758,905
Total	$	10,352,102	$	10,861,711	$	11,158,995		$	11,913,890	$	12,639,907

Draft 2/9/2011

Page 19

Stable Value Products Quarterly Trends

(Dollars In Thousands)	4TH QTR		1ST QTR		2ND QTR			3RD QTR		4TH QTR		12 MOS
(Unaudited)	2009		2010		2010			2010		2010		2009			2010

REVENUES
Net investment income	$	46,938	$	46,420	$	45,724		$	41,100	$	38,083	$	221,688		$	171,327
RIGL - Derivatives	529		360		(696		)	26		427		1,570			117
RIGL - All Other Investments	261		1,176		(7,755		)	905		2,113		(4,267		)	(3,561		)
Other income	—		—		—			—		—		1,866			—
Total Revenues	47,728		47,956		37,273			42,031		40,623		220,857			167,883

BENEFITS & EXPENSES
Benefits and settlement expenses	34,792		33,731		32,972			30,442		26,220		154,555			123,365
Amortization of deferred policy acquisition costs and value of business acquired	807		979		882			1,398		2,171		3,471			5,430
Other operating expenses	898		683		891			921		830		3,565			3,325
Total Benefits and Expenses	36,497		35,393		34,745			32,761		29,221		161,591			132,120

INCOME BEFORE INCOME TAX	11,231		12,563		2,528			9,270		11,402		59,266			35,763

Adjustments to Reconcile to Operating Income:
Less: RIGL-Derivatives	529		360		(696		)	26		427		1,570			117
Less: RIGL-All Other Investments	261		1,176		(7,755		)	905		2,113		(4,267		)	(3,561		)

PRE-TAX OPERATING INCOME	$	10,441	$	11,027	$	10,979		$	8,339	$	8,862	$	61,963		$	39,207

Stable Value Products Key Data

	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
	2009			2010			2010			2010			2010			2009		2010

SALES
GIC	$	—		$	1,000		$	6,500		$	66,477		$	58,635		$	—	$	132,612
GFA - Direct Institutional	—			150,000			250,000			—			225,000			—		625,000
GFA - Registered - Institutional	—			—			—			—			—			—		—
GFA - Registered - Retail	—			—			—			—			—			—		—
Total	$	—		$	151,000		$	256,500		$	66,477		$	283,635		$	—	$	757,612

DEPOSIT BALANCE
Quarter End Balance	$	3,581,409		$	3,454,186		$	3,488,175		$	3,105,822		$	3,076,233
Average Daily Balance	$	3,602,681		$	3,494,977		$	3,497,115		$	3,331,250		$	3,000,692

OPERATING SPREAD	1.16		%	1.26		%	1.26		%	1.00		%	1.18		%

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Page 20

Asset Protection Quarterly Trends

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	85,321		$	79,515		$	76,984		$	75,601		$	73,731		$	339,516		$	305,831
Reinsurance Ceded	(36,439		)	(35,906		)	(34,654		)	(34,826		)	(33,153		)	(152,222		)	(138,539		)
Net Premiums and Policy Fees	48,882			43,609			42,330			40,775			40,578			187,294			167,292
Net investment income	7,780			7,497			7,316			7,065			6,942			33,157			28,820
Other income	15,719			15,325			18,123			19,916			17,650			56,552			71,014
Total Revenues	72,381			66,431			67,769			67,756			65,170			277,003			267,126

BENEFITS & EXPENSES
Benefits and settlement expenses	32,832			18,756			26,836			28,942			25,302			127,314			99,836
Amortization of deferred policy acquisition costs and value of business acquired	13,887			12,775			12,807			12,250			12,175			55,120			50,007
Other operating expenses	19,100			21,907			21,627			21,487			22,801			71,340			87,822
Total Benefits and Expenses	65,819			53,438			61,270			62,679			60,278			253,774			237,665

INCOME BEFORE INCOME TAX	6,562			12,993			6,499			5,077			4,892			23,229			29,461
Less: noncontrolling interests	—			(74		)	(117		)	(77		)	(168		)	—			(436		)
OPERATING INCOME	$	6,562		$	13,067		$	6,616		$	5,154		$	5,060		$	23,229		$	29,897

Asset Protection Key Data

	4TH QTR		1ST QTR		2ND QTR		3RD QTR		4TH QTR		12 MOS
	2009		2010		2010		2010		2010		2009		2010

SALES
Credit insurance	$	7,830	$	7,692	$	9,693	$	10,099	$	8,735	$	35,379	$	36,219
Service contracts	57,507		52,539		65,353		71,384		62,710		226,794		251,986
Other products	8,911		11,459		13,363		15,861		13,806		42,831		54,489
Total	$	74,248	$	71,690	$	88,409	$	97,344	$	85,251	$	305,004	$	342,694

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Page 21

Acquisitions Quarterly Trends

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	185,807		$	160,721		$	178,389		$	167,985		$	169,754		$	724,488		$	676,849
Reinsurance Ceded	(125,558		)	(93,134		)	(117,492		)	(108,296		)	(111,229		)	(462,972		)	(430,151		)
Net Premiums and Policy Fees	60,249			67,587			60,897			59,689			58,525			261,516			246,698
Net investment income	118,485			115,401			116,748			114,045			112,509			479,743			458,703
RIGL - Derivatives	(6,818		)	(30,063		)	(62,593		)	(85,352		)	112,021			(252,100		)	(65,987		)
RIGL - All Other Investments	13,026			44,519			61,152			97,784			(87,411		)	281,963			116,044
Other income	1,545			1,273			1,375			2,011			1,227			6,059			5,886
Total Revenues	186,487			198,717			177,579			188,177			196,871			777,181			761,344

BENEFITS & EXPENSES
Benefits and settlement expenses	126,702			133,474			127,554			125,234			126,171			532,992			512,433
Amortization of deferred policy acquisition costs and value of business acquired	14,297			13,338			15,602			18,551			16,919			59,025			64,410
Other operating expenses	3,684			6,223			5,408			5,087			8,841			14,768			25,559
Total Benefits and Expenses	144,683			153,035			148,564			148,872			151,931			606,785			602,402

INCOME BEFORE INCOME TAX	41,804			45,682			29,015			39,305			44,940			170,396			158,942

Adjustments to Reconcile to Operating Income:
Less: RIGL - Derivatives	(6,818		)	(30,063		)	(62,593		)	(85,352		)	112,021			(252,100		)	(65,987		)
Less: RIGL - All Other Investments	13,026			44,519			61,152			97,784			(87,411		)	281,963			116,044
Add back: Related amortization of deferred policy acquisition costs and value of business acquired	(3,559		)	143			(266		)	993			1,388			(6,773		)	2,258

PRE-TAX OPERATING INCOME	$	32,037		$	31,369		$	30,190		$	27,866		$	21,718		$	133,760		$	111,143

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Corporate & Other Quarterly Trends

(Dollars In Thousands)	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

REVENUES
Gross Premiums and Policy Fees	$	6,289		$	6,371		$	6,168		$	5,848		$	5,777		$	26,568		$	24,164
Reinsurance Ceded	—			—			(2		)	—			—			(4		)	(2		)
Net Premiums and Policy Fees	6,289			6,371			6,166			5,848			5,777			26,564			24,162
Net investment income	25,080			35,338			39,230			47,699			32,234			128,243			154,501
RIGL - Derivatives	10,430			(2,918		)	(7,182		)	(4,460		)	5,626			49,957			(8,934		)
RIGL - All Other Investments	(23,621		)	(9,767		)	(1,967		)	873			1,059			(152,259		)	(9,802		)
Other income	134,887			58			9,631			4,062			6,096			135,228			19,847
Total Revenues	153,065			29,082			45,878			54,022			50,792			187,733			179,774

BENEFITS & EXPENSES
Benefits and settlement expenses	7,469			6,537			6,443			6,749			4,846			29,896			24,575
Amortization of deferred policy acquisition costs and value of business acquired	439			448			452			399			395			1,900			1,694
Other operating expenses	53,943			50,955			47,807			50,098			48,611			179,660			197,471
Total Benefits and Expenses	61,851			57,940			54,702			57,246			53,852			211,456			223,740

INCOME (LOSS) BEFORE INCOME TAX	91,214			(28,858		)	(8,824		)	(3,224		)	(3,060		)	(23,723		)	(43,966		)

Adjustments to Reconcile to Operating Income:
Less: RIGL-Derivatives	10,430			(2,918		)	(7,182		)	(4,460		)	5,626			49,957			(8,934		)
Less: RIGL-All Other Investments	(23,621		)	(9,767		)	(1,967		)	873			1,059			(152,259		)	(9,802		)
Add back: Derivative activity related to corporate debt and investments	—			42			42			42			42			3,401			168
Less: noncontrolling interests	—			1			(10		)	—			—			—			(9		)

PRE-TAX OPERATING INCOME (LOSS)	$	104,405		$	(16,132	)	$	377		$	405		$	(9,703	)	$	81,980		$	(25,053	)

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Page 23

INFORMATION RELATED TO CERTAIN NON-GAAP DISCLOSURES

The following pages contain information related to certain non-GAAP disclosures (consolidated and segment operating income, operating income per diluted share, shareowners’ equity per share excluding accumulated other comprehensive income (loss), operating income return on average equity, and net income return on average equity).

All income per share results are presented on a diluted basis, unless otherwise noted.

CONSOLIDATED AND SEGMENT OPERATING INCOME AND OPERATING INCOME PER DILUTED SHARE

Consolidated and segment operating income and operating income per diluted share (hereinafter collectively referred to as “consolidated and segment operating income”) are defined as income before income tax excluding net realized investment gains (losses) (net of the related amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) and participating income from real estate ventures), and the cumulative effect of any change in accounting principle. Periodic settlements of derivatives associated with corporate debt and certain investments and annuity products are included in realized gains (losses), but are considered part of consolidated and segment operating income because the derivatives are used to mitigate risk in items affecting consolidated and segment operating income. Management believes that consolidated and segment operating income (loss) provides relevant and useful information to investors, as it represents the basis on which the performance of the Company’s business is internally assessed. Although the items excluded from consolidated and segment operating income may be significant components in understanding and assessing the Company’s overall financial performance, management believes that consolidated and segment operating income enhances an investor’s understanding of the Company’s results of operations by highlighting the income (loss) generally attributable to the normal, recurring operations of the Company’s business.

SHAREOWNERS’ EQUITY PER SHARE EXCLUDING ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

As prescribed by GAAP, certain investments are recorded at their market values with the resulting unrealized gains (losses) affected by a related adjustment to DAC and VOBA, net of income tax, reported as a component of shareowners’ equity. The market values of fixed maturities increase or decrease as interest rates change. The Company believes that an insurance company’s shareowners’ equity per share may be difficult to analyze without disclosing the effects of recording accumulated other comprehensive income (loss), including unrealized gains (losses) on investments. Therefore, the Company reports the non-GAAP measure shareowners’ equity per share excluding accumulated other comprehensive income (loss), including unrealized gains (losses) on investments. This non-GAAP measure may be reconciled to the GAAP measure, shareowners’ equity per share by including accumulated other comprehensive income (loss), including unrealized gains (losses) on investments.

OPERATING INCOME RETURN ON AVERAGE EQUITY

Operating income return on average equity is a measure used by management to evaluate the Company’s performance. It is calculated by dividing operating income (as defined above) for a rolling twelve month period by the average ending balance of shareowners’ equity excluding accumulated other comprehensive income (loss) for the five most recent quarters.

NET INCOME RETURN ON AVERAGE EQUITY

Net income return on average equity is a measure used by management to evaluate the Company’s performance. It is calculated by dividing net income for a rolling twelve month period by the average ending balance of shareowners’ equity excluding accumulated other comprehensive income (loss) for the five most recent quarters.

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Page 24

Reconciliation of Segment Operating
Income to Net Income available to PLC’s
common shareowners

(Dollars In Thousands)	4TH QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2009			2010

Life Marketing	$	31,593		$	40,169		$	137,826		$	147,470
Acquisitions	32,037			21,718			133,760			111,143
Annuities	19,647			12,405			56,642			53,901
Stable Value Products	10,441			8,862			61,963			39,207
Asset Protection	6,562			5,060			23,229			29,897
Corporate & Other	104,405			(9,703		)	81,980			(25,053		)

Total Pre-tax operating income	204,685			78,511			495,400			356,565

Realized Investment Gains (Losses) - Investments	(6,059		)	(80,245		)	(203,974		)	107,715
Realized Investment Gains (Losses) - Derivatives	4,142			118,032			125,352			(74,972		)
Income Tax Expense	(71,757		)	(37,655		)	(145,290		)	(129,067		)

Net income available to PLC’s common shareowners	$	131,011		$	78,643		$	271,488		$	260,241

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Page 25

Reconciliation of Operating Income per Diluted Share to Net Income Available
to PLC’s Common Shareowners per Diluted Share

	4TH QTR			1ST QTR			2ND QTR			3RD QTR			4TH QTR			12 MOS
(Unaudited)	2009			2010			2010			2010			2010			2009			2010

OPERATING INCOME PER SHARE

Operating income per share-diluted	$	1.51		$	0.78		$	0.62		$	0.71		$	0.62		$	3.97		$	2.73
RIGL - Derivatives per share-diluted	0.03			(0.24		)	(0.52		)	(0.67		)	0.87			(1.63		)	(0.56		)
RIGL - All Other Investments-diluted	(0.04		)	0.26			0.37			0.76			(0.59		)	1.00			0.80
Net income available to PLC’s common shareowners per share-diluted	$	1.50		$	0.80		$	0.47		$	0.80		$	0.90		$	3.34		$	2.97

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Page 26

Reconciliation of Total Protective Life
Corporation’s Shareowners’ Equity per Share
to Total Protective Life Corporation’s
Shareowners’ Equity (Excl. AOCI) per share

	4TH QTR			1ST QTR			2ND QTR		3RD QTR		4TH QTR
(Unaudited)	2009			2010			2010		2010		2010

PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY PER SHARE
Total Protective Life Corporation’s Shareowners’ Equity	$	28.96		$	32.96		$	36.02	$	41.69	$	38.88
Less: Accumulated other comprehensive income (loss)	(3.76		)	(0.65		)	2.07		7.03		3.42
Excluding accumulated other comprehensive income (loss)	$	32.72		$	33.61		$	33.95	$	34.66	$	35.46

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Page 27

Calculation of Operating Income Return on Average Equity
Rolling Twelve Months Ended December 31, 2010

(Dollars In Thousands)	Three Months												Twelve Months
(Unaudited)	3/31/2010			6/30/2010			9/30/2010			12/31/2010			12/31/2010
NUMERATOR:
Net income available to PLC’s common shareowners	$	69,779		$	41,371		$	70,448		$	78,643		$	260,241
Less:
Realized investment gains (losses), net of income tax
Investments	23,420			33,089			67,062			(50,214		)	73,357
Derivatives	(21,204		)	(45,806		)	(58,361		)	76,748			(48,623		)
Related amortization of DAC and VOBA, net of income tax	(140		)	(212		)	(1,044		)	(1,945		)	(3,341		)
Add back:
Derivative gains related to Corp. debt and investments, net of income tax	27			27			27			27			108
Operating Income	$	67,730		$	54,327		$	62,818		$	54,081		$	238,956

						Total
						Protective Life
						Corporation’s
	Total					Shareowners’
	Protective Life		Accumulated			Equity Excluding
	Corporation’s		Other			Accumulated Other
	Shareowners’		Comprehensive			Comprehensive
	Equity		Income (Loss)			Income (Loss)
DENOMINATOR:
December 31, 2009	$	2,478,821	$	(321,169	)	$	2,799,990
March 31, 2010	2,821,033		(55,716		)	2,876,749
June 30, 2010	3,085,599		177,490			2,908,109
September 30, 2010	3,571,392		601,964			2,969,428
December 31, 2010	3,331,087		293,254			3,037,833
Total						$	14,592,109

Average						$	2,918,422

Operating Income Return on Average Equity						8.2		%

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Calculation of Operating Income Return on Average Equity
Rolling Twelve Months Ended December 31, 2009

(Dollars In Thousands)	Three Months												Twelve Months
(Unaudited)	3/31/2009			6/30/2009			9/30/2009			12/31/2009			12/31/2009
NUMERATOR:
Net income available to PLC’s common shareowners	$	22,135		$	90,757		$	27,585		$	131,011		$	271,488
Less:
Realized investment gains (losses), net of income tax
Investments	(85,585		)	82,439			87,495			(6,251		)	78,098
Derivatives	47,675			(72,400		)	(108,339		)	2,692			(130,372		)
Related amortization of DAC and VOBA, net of income tax	(51		)	612			507			2,313			3,381
Add back:
Derivative gains related to Corp. debt and investments, net of income tax	1,455			756			—			—			2,211
Operating Income	$	61,551		$	80,862		$	47,922		$	132,257		$	322,592

						Total
						Protective Life
						Corporation’s
	Total					Shareowners’
	Protective Life		Accumulated			Equity Excluding
	Corporation’s		Other			Accumulated Other
	Shareowners’		Comprehensive			Comprehensive
	Equity		Income (Loss)			Income (Loss)
DENOMINATOR:
December 31, 2008	$	761,095	$	(1,667,056	)	$	2,428,151
March 31, 2009	783,178		(1,660,204		)	2,443,382
June 30, 2009	1,628,375		(1,031,719		)	2,660,094
September 30, 2009	2,302,799		(375,472		)	2,678,271
December 31, 2009	2,478,821		(321,169		)	2,799,990
Total						$	13,009,888

Average						$	2,601,978

Operating Income Return on Average Equity						12.4		%

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Calculation of Net Income Available to PLC’s
common shareowners Return on Average Equity
Rolling Twelve Months Ended December 31, 2010

(Dollars In Thousands)	Three Months								Twelve Months
(Unaudited)	3/31/2010		6/30/2010		9/30/2010		12/31/2010		12/31/2010
NUMERATOR:
Net income available to PLC’s common shareowners	$	69,779	$	41,371	$	70,448	$	78,643	$	260,241

						Total
						Protective Life
						Corporation’s
	Total					Shareowners’
	Protective Life		Accumulated			Equity Excluding
	Corporation’s		Other			Accumulated Other
	Shareowners’		Comprehensive			Comprehensive
	Equity		Income (Loss)			Income (Loss)
DENOMINATOR:
December 31, 2009	$	2,478,821	$	(321,169	)	$	2,799,990
March 31, 2010	2,821,033		(55,716		)	2,876,749
June 30, 2010	3,085,599		177,490			2,908,109
September 30, 2010	3,571,392		601,964			2,969,428
December 31, 2010	3,331,087		293,254			3,037,833
Total						$	14,592,109

Average						$	2,918,422

Net income available to PLC’s common shareowners Return on Average Equity						8.9		%

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Calculation of Net Income available to PLC’s common shareowners Return on
Average Equity Rolling Twelve Months Ended December 31, 2009

(Dollars In Thousands)	Three Months								Twelve Months
(Unaudited)	3/31/2009		6/30/2009		9/30/2009		12/31/2009		12/31/2009
NUMERATOR:
Net income available to PLC’s common shareowners	$	22,135	$	90,757	$	27,585	$	131,011	$	271,488

						Total
						Protective Life
						Corporation’s
	Total					Shareowners’
	Protective Life		Accumulated			Equity Excluding
	Corporation’s		Other			Accumulated Other
	Shareowners’		Comprehensive			Comprehensive
	Equity		Income (Loss)			Income (Loss)
DENOMINATOR:
December 31, 2008	$	761,095	$	(1,667,056	)	$	2,428,151
March 31, 2009	783,178		(1,660,204		)	2,443,382
June 30, 2009	1,628,375		(1,031,719		)	2,660,094
September 30, 2009	2,302,799		(375,472		)	2,678,271
December 31, 2009	2,478,821		(321,169		)	2,799,990
Total						$	13,009,888

Average						$	2,601,978

Net income available to PLC’s common shareowners Return on Average Equity						10.4		%

PROTECTIVE LIFE CORP - FORM 8-K - EX-99.2 - February 9, 2011

Attached files

PROTECTIVE LIFE CORP Reports