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

Attached files

file	filename
8-K - 8-K - PROTECTIVE LIFE CORP	a11-23569_18k.htm
EX-99.1 - EX-99.1 - PROTECTIVE LIFE CORP	a11-23569_1ex99d1.htm

Exhibit 99.2

Draft 8/3/2011

	Supplemental Schedules
	Second Quarter 2011

Draft 8/3/2011

Quarterly Financial Highlights

(Dollars In Thousands)	2ND QTR		3RD QTR		4TH QTR			1ST QTR		2ND QTR		6 MOS
(Unaudited)	2010		2010		2010			2011		2011		2010			2011

Pre-tax Operating Income (Loss) *

Life Marketing	$	35,755	$	30,868	$	40,169		$	26,239	$	33,704	$	76,433		$	59,943
Acquisitions	30,190		27,866		21,718			32,391		39,429		61,559			71,820
Annuities	605		22,704		12,405			13,085		24,375		18,792			37,460
Stable Value Products	10,979		8,339		8,862			9,195		19,142		22,006			28,337
Asset Protection	6,616		5,154		5,060			6,542		5,530		19,683			12,072
Corporate & Other	377		405		(9,703		)	10,021		3,977		(15,755		)	13,998
Total Pre-tax Operating Income	$	84,522	$	95,336	$	78,511		$	97,473	$	126,157	$	182,718		$	223,630

Balance Sheet Data

Total GAAP Assets	$	44,576,236	$	45,932,314	$	47,562,786		$	48,295,466	$	50,987,849
Total Protective Life Corporation’s Shareowners’ Equity	$	3,085,599	$	3,571,392	$	3,331,087		$	3,417,209	$	3,605,238
Total Protective Life Corporation’s Shareowners’ Equity (excluding accumulated other comprehensive income (loss))**	$	2,908,109	$	2,969,428	$	3,037,833		$	3,097,855	$	3,154,309

Stock Data

Closing Price	$	21.39	$	21.76	$	26.64		$	26.55	$	23.13
Average Shares Outstanding
Basic	86,562,379		86,603,569		86,600,622			86,603,228		86,346,216		86,531,461			86,474,012
Diluted	87,666,035		87,701,592		87,781,602			87,820,085		87,653,731		87,609,027			87,736,449

* “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 8/3/2011

Financial Strength Ratings as of June 30, 2011

	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 8/3/2011

GAAP Consolidated Statements of Income

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	679,241		$	640,265		$	677,116		$	666,343		$	716,586		$	1,308,013		$	1,382,929
Reinsurance Ceded	(379,729		)	(334,040		)	(388,742		)	(331,808		)	(364,248		)	(685,558		)	(696,056		)
Net Premiums and Policy Fees	299,512			306,225			288,374			334,535			352,338			622,455			686,873
Net investment income	422,500			429,548			419,631			444,213			448,785			834,497			892,998
RIGL - Derivatives	(119,888		)	(94,034		)	98,745			(12,686		)	(34,993		)	(142,960		)	(47,679		)
RIGL - All Other Investments	67,704			110,787			(72,024		)	4,472			58,917			115,603			63,389

OTTI losses	(36,683		)	(12,898		)	(3,904		)	(16,021		)	(15,632		)	(58,539		)	(31,653		)
OTTI losses/(gains) recognized in OCI (before taxes)	19,885			5,283			(1,324		)	10,358			6,145			29,872			16,503
Net OTTI losses recognized in earnings	(16,798		)	(7,615		)	(5,228		)	(5,663		)	(9,487		)	(28,667		)	(15,150		)
Other income	59,072			58,190			61,284			72,209			87,224			102,944			159,433
Total Revenues	712,102			803,101			790,782			837,080			902,784			1,503,872			1,739,864

BENEFITS & EXPENSES
Benefits and settlement expenses	525,371			549,567			507,196			536,369			551,553			1,032,666			1,087,922
Amortization of deferred policy acquisition costs and value of business acquired	23,086			42,386			62,961			74,363			79,688			104,375			154,051
Other operating expenses	61,084			65,213			65,356			82,702			88,268			127,764			170,970
Interest expense - subsidiaries	5,183			6,073			6,244			6,666			7,108			7,341			13,774
Interest expense - holding company - other debt	23,517			23,463			23,494			23,484			23,493			47,188			46,977
Interest expense - holding company - hybrid securities	9,401			9,402			9,401			9,401			9,401			18,802			18,802
Total Benefits and Expenses	647,642			696,104			674,652			732,985			759,511			1,338,136			1,492,496

INCOME BEFORE INCOME TAX	64,460			106,997			116,130			104,095			143,273			165,736			247,368
Income tax expense	23,216			36,626			37,655			36,629			49,909			54,786			86,538
NET INCOME	41,244			70,371			78,475			67,466			93,364			110,950			160,830
Less: Net Income (loss) attributable to noncontrolling interests	(127		)	(77		)	(168		)	(51		)	296			(200		)	245
NET INCOME AVAILABLE TO PLC’S COMMON SHAREOWNERS	$	41,371		$	70,448		$	78,643		$	67,517		$	93,068		$	111,150		$	160,585

PER SHARE DATA FOR QUARTER
Operating income-diluted *	$	0.62		$	0.71		$	0.62		$	0.72		$	0.94
RIGL - Derivatives net of gains related to corp debt, investments and annuities	(0.52		)	(0.67		)	0.87			0.07			(0.24		)
RIGL - All Other Investments	0.37			0.76			(0.59		)	(0.02		)	0.36
Net income available to PLC’s common shareowners-diluted	$	0.47		$	0.80		$	0.90		$	0.77		$	1.06
Average shares outstanding-diluted	87,666,035			87,701,592			87,781,602			87,820,085			87,653,731
Dividends paid	$	0.14		$	0.14		$	0.14		$	0.14		$	0.16
PER SHARE DATA FOR YTD
Operating income-diluted *	$	1.39		$	2.11		$	2.73		$	0.72		$	1.66
RIGL - Derivatives net of gains related to corp debt, investments and annuities	(0.77		)	(1.43		)	(0.56		)	0.07			(0.18		)
RIGL - All Other Investments	0.65			1.39			0.80			(0.02		)	0.35
Net income available to PLC’s common shareowners-diluted	$	1.27		$	2.07		$	2.97		$	0.77		$	1.83
Average shares outstanding-diluted	87,609,027			87,640,221			87,675,857			87,820,085			87,736,449
Dividends paid	$	0.26		$	0.40		$	0.54		$	0.14		$	0.30

* “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 8/3/2011

GAAP Consolidated Balance Sheets

(Dollars In Thousands)	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR
(Unaudited)	2010		2010		2010		2011		2011
ASSETS

Fixed maturities	$	23,687,528	$	24,838,626	$	24,676,939	$	24,676,049	$	26,133,625
Equity securities	308,951		335,151		359,412		352,927		349,738
Mortgage loans	4,905,276		4,884,102		4,892,829		4,873,678		5,349,851
Investment real estate	22,431		24,669		25,340		21,884		23,737
Policy loans	775,105		767,214		793,448		784,320		881,757
Other long-term investments	182,075		256,093		276,337		276,291		297,825
Long-term investments	29,881,366		31,105,855		31,024,305		30,985,149		33,036,533
Short-term investments	972,804		483,698		352,824		406,676		134,698
Total investments	30,854,170		31,589,553		31,377,129		31,391,825		33,171,231
Cash	156,524		151,340		264,425		230,938		419,210
Accrued investment income	303,916		320,668		329,078		343,181		345,906
Accounts and premiums receivable	38,817		65,948		58,580		63,547		68,559
Reinsurance receivable	5,553,385		5,563,824		5,608,029		5,659,191		5,730,025
Deferred policy acquisition costs and value of business acquired	3,671,153		3,642,484		3,851,743		3,885,016		4,028,452
Goodwill	116,307		115,532		114,758		113,983		113,209
Property and equipment, net	37,831		37,722		39,386		42,585		43,142
Other assets	188,862		207,198		169,664		176,778		180,602
Current/Deferred income tax	43,609		2,438		45,582		29,422		39,936
Assets related to separate accounts
Variable annuity	3,307,239		3,899,308		5,170,193		5,797,956		6,291,158
Variable universal life	304,423		336,299		534,219		561,044		556,419

TOTAL ASSETS	$	44,576,236	$	45,932,314	$	47,562,786	$	48,295,466	$	50,987,849

Draft 8/3/2011

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR
(Unaudited)	2010			2010			2010			2011			2011

LIABILITIES
Policy liabilities and accruals
Future policy benefits and claims	$	17,679,905		$	17,824,414		$	18,530,564		$	18,727,050		$	20,619,144
Unearned premiums	1,258,161			1,305,092			1,182,828			1,201,591			1,225,066
Stable value product deposits	3,487,963			3,105,822			3,076,233			2,664,139			2,565,235
Annuity deposits	10,309,546			10,451,322			10,591,605			10,781,341			10,899,995
Other policyholders’ funds	551,860			577,275			578,037			557,378			589,879
Other liabilities	1,059,034			1,115,755			926,201			975,974			964,392
Mortgage loan backed certificates	85,873			74,324			61,678			51,540			42,862
Deferred income taxes	891,177			1,113,532			1,022,130			1,054,984			1,171,305
Non-recourse funding obligations	556,600			548,000			532,400			496,700			438,300
Debt	1,474,852			1,485,852			1,501,852			1,484,852			1,494,852
Subordinated debt securities	524,743			524,743			524,743			524,743			524,743
Liabilities related to separate accounts
Variable annuity	3,307,239			3,899,308			5,170,193			5,797,956			6,291,158
Variable universal life	304,423			336,299			534,219			561,044			556,419
TOTAL LIABILITIES	41,491,376			42,361,738			44,232,683			44,879,292			47,383,350

SHAREOWNERS’ EQUITY
Common stock	44,388			44,388			44,388			44,388			44,388
Additional paid-in-capital	581,646			584,865			586,592			590,783			592,451
Treasury stock	(25,745		)	(26,101		)	(26,072		)	(25,763		)	(50,326		)
Retained earnings	2,307,820			2,366,276			2,432,925			2,488,447			2,567,796
Accumulated other comprehensive income (loss)	177,490			601,964			293,254			319,354			450,929
TOTAL PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY	3,085,599			3,571,392			3,331,087			3,417,209			3,605,238
Noncontrolling interest	(739		)	(816		)	(984		)	(1,035		)	(739		)
TOTAL EQUITY	3,084,860			3,570,576			3,330,103			3,416,174			3,604,499
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY	$	44,576,236		$	45,932,314		$	47,562,786		$	48,295,466		$	50,987,849

PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY PER SHARE
Total Protective Life Corporation’s Shareowners’ Equity	$	36.02		$	41.69		$	38.88		$	39.87		$	42.59
Less: Accumulated other comprehensive income (loss)	2.07			7.03			3.42			3.72			5.33
Excluding accumulated other comprehensive income (loss)*	$	33.95		$	34.66		$	35.46		$	36.15		$	37.26

Total Protective Life Corporation’s Shareowners’ Equity	$	3,085,599		$	3,571,392		$	3,331,087		$	3,417,209		$	3,605,238
Less: Accumulated other comprehensive income (loss)	177,490			601,964			293,254			319,354			450,929
Total Protective Life Corporation’s Shareowners’ Equity (excluding accumulated other comprehensive income (loss)) *	$	2,908,109		$	2,969,428		$	3,037,833		$	3,097,855		$	3,154,309

Common shares outstanding	85,662,191			85,664,518			85,667,977			85,705,659			84,650,243
Treasury Stock shares	3,114,769			3,112,442			3,108,983			3,071,301			4,126,717

* “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 8/3/2011

Calculation of Operating Earnings Per Share

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

CALCULATION OF NET INCOME PER SHARE

Net income available to PLC’s common shareowners	$	41,371		$	70,448		$	78,643		$	67,517		$	93,068		$	111,150		$	160,585

Average shares outstanding-basic	86,562,379			86,603,569			86,600,622			86,603,228			86,346,216			86,531,461			86,474,012
Average shares outstanding-diluted	87,666,035			87,701,592			87,781,602			87,820,085			87,653,731			87,609,027			87,736,449

Net income available to PLC’s common shareowners per share-basic	$	0.48		$	0.81		$	0.91		$	0.78		$	1.08		$	1.28		$	1.86
Net income available to PLC’s common shareowners per share-diluted	$	0.47		$	0.80		$	0.90		$	0.77		$	1.06		$	1.27		$	1.83

Income from continuing operations	$	41,371		$	70,448		$	78,643		$	67,517		$	93,068		$	111,150		$	160,585

EPS (basic)	$	0.48		$	0.81		$	0.91		$	0.78		$	1.08		$	1.28		$	1.86
EPS (diluted)	$	0.47		$	0.80		$	0.90		$	0.77		$	1.06		$	1.27		$	1.83

CALCULATION OF REALIZED INVESTMENT GAINS (LOSSES) PER SHARE

RIGL - Derivatives	$	(119,888	)	$	(94,034	)	$	98,745		$	(12,686	)	$	(34,993	)	$	(142,960	)	$	(47,679	)
Derivative activity related to Corporate Debt and Investments	(42		)	(42		)	(42		)	—			—			(84		)	—
Derivative activity related to Annuities	49,417			4,248			19,329			21,483			2,196			39,868			23,679
RIGL - All Other Investments	50,906			103,172			(77,252		)	(1,191		)	49,430			86,936			48,239
Related amortization of DAC & VOBA	(328		)	(1,606		)	(2,993		)	(933		)	187			(542		)	(746		)
	(19,935		)	11,738			37,787			6,673			16,820			(16,782		)	23,493
Tax effect	$	6,977		(4,108		)	(13,226		)	(2,336		)	(5,887		)	5,873			(8,223		)
	$	(12,958	)	$	7,630		$	24,561		$	4,337		$	10,933		$	(10,909	)	$	15,270

RIGL - Derivatives per share-diluted	$	(0.52	)	$	(0.67	)	$	0.87		$	0.07		$	(0.24	)	$	(0.77	)	$	(0.18	)
RIGL - All Other Investments per share-diluted	$	0.37		$	0.76		$	(0.59	)	$	(0.02	)	$	0.36		$	0.65		$	0.35

OPERATING INCOME PER SHARE *

Net income available to PLC’s common shareowners per share-diluted	$	0.47		$	0.80		$	0.90		$	0.77		$	1.06		$	1.27		$	1.83
Less: RIGL - Derivatives per share-diluted	(0.52		)	(0.67		)	0.87			0.07			(0.24		)	(0.77		)	(0.18		)
Less: RIGL - All Other Investments per share-diluted	0.37			0.76			(0.59		)	(0.02		)	0.36			0.65			0.35
Operating income per share-diluted	$	0.62		$	0.71		$	0.62		$	0.72		$	0.94		$	1.39		$	1.66

NET OPERATING INCOME *

Net income available to PLC’s common shareowners	$	41,371		$	70,448		$	78,643		$	67,517		$	93,068		$	111,150		$	160,585
Less: RIGL - Derivatives net of tax & gains related to corp debt, investments & annuities	(45,833		)	(58,388		)	76,721			5,718			(21,318		)	(67,064		)	(15,600		)
Less: RIGL - All Other Investments net of tax and amortization	32,877			66,018			(52,159		)	(1,381		)	32,251			56,157			30,870
Net operating income	$	54,327		$	62,818		$	54,081		$	63,180		$	82,135		$	122,057		$	145,315

PRE-TAX OPERATING INCOME **

Income before income tax and discontinued operations	$	64,461		$	106,997		$	116,130		$	104,095		$	143,273		$	165,736		$	247,368
Less: RIGL - Derivatives	(119,888		)	(94,034		)	98,745			(12,686		)	(34,993		)	(142,960		)	(47,679		)
Less: Derivative activity related to corporate debt, investments & annuities ***	49,375			4,206			19,287			21,483			2,196			39,784			23,679
Less: RIGL - All Other Investments	50,906			103,172			(77,252		)	(1,191		)	49,430			86,936			48,239
Less: Related amortization of DAC & VOBA	(328		)	(1,606		)	(2,993		)	(933		)	187			(542		)	(746		)
Less: Minority Interest	(126		)	(77		)	(168		)	(51		)	296			(200		)	245
Pre-tax operating income	$	84,522		$	95,336		$	78,511		$	97,473		$	126,157		$	182,718		$	223,630

* “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 8/3/2011

Invested Asset Summary

(Dollars In Millions)	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR
(Unaudited)	2010		2010		2010		2011		2011

Total Portfolio

Fixed Maturities	$	23,687.5	$	24,838.6	$	24,676.9	$	24,676.0	$	26,133.6	79	%
Mortgage Loans	4,905.3		4,884.1		4,892.8		4,873.7		5,349.9		16	%
Investment Real Estate	22.4		24.7		25.4		21.9		23.7		0	%
Equity Securities	309.0		335.2		359.4		352.9		349.7		1	%
Policy Loans	775.1		767.2		793.5		784.3		881.8		3	%
Short-Term Investments	972.8		483.7		352.8		406.7		134.7		0	%
Other Long-Term Investments	182.1		256.1		276.3		276.3		297.8		1	%
Total Invested Assets	$	30,854.2	$	31,589.6	$	31,377.1	$	31,391.8	$	33,171.2	100	%

% Total Portfolio by Asset Type as of 6/30/11

Draft 8/3/2011

Invested Asset Summary - Fixed Income

(Dollars In Millions)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR
(Unaudited)	2010			2010			2010			2011			2011

Fixed Income

Corporate Bonds	$	15,950.7		$	17,255.7		$	17,433.7		$	17,669.2		$	18,762.9		72	%
Residential Mortgage-Backed Securities	3,511.4			3,363.0			2,979.8			2,697.7			2,838.7			11	%
Commercial Mortgage-Backed Securities	297.0			312.2			312.6			316.4			457.5			2	%
Other Asset-Backed Securities	951.6			877.2			927.1			952.5			905.8			3	%
U.S. Government-related Securities	1,824.2			1,718.5			1,572.1			1,622.3			1,532.0			6	%
Other Government-related Securities	368.8			362.0			327.8			277.2			253.5			1	%
States, Municipals and Political Subdivisions	783.8			950.0			1,123.8			1,140.7			1,383.2			5	%
Total Fixed Income Portfolio	$	23,687.5		$	24,838.6		$	24,676.9		$	24,676.0		$	26,133.6		100	%

Fixed Income - Quality

AAA	18.9		%	17.3		%	17.0		%	16.8		%	17.2		%
AA	4.6		%	4.7		%	4.8		%	4.9		%	5.4		%
A	17.4		%	17.8		%	17.9		%	18.3		%	21.1		%
BBB	45.1		%	46.6		%	47.8		%	47.9		%	46.0		%
Below investment grade	14.0		%	13.6		%	12.5		%	12.1		%	10.3		%
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

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

Draft 8/3/2011

Fixed Maturities by NAIC Rating

STAT Carry Value % of Total

	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR
(Unaudited)	2010		2010		2010		2011		2011

NAIC Rating
1	51.76	%	50.62	%	52.63	%	52.50	%	55.32	%
2	40.13	%	41.93	%	41.80	%	42.31	%	40.33	%
3	5.17	%	4.81	%	2.83	%	2.79	%	2.31	%
4	1.84	%	1.62	%	1.52	%	1.18	%	1.01	%
5	1.02	%	0.94	%	1.04	%	0.72	%	0.87	%
6	0.08	%	0.08	%	0.18	%	0.50	%	0.16	%

	100.00	%	100.00	%	100.00	%	100.00	%	100.00	%

BIG (using NAIC 3-6)	8.11	%	7.45	%	5.57	%	5.19	%	4.35	%

Note: NAIC Ratings reflect statutory carrying values

Draft 8/3/2011

Invested Asset Summary - Mortgages

(Dollars In Millions)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR
(Unaudited)	2010			2010			2010			2011			2011

Mortgage Loans - Type

Retail	66.3		%	66.3		%	66.2		%	66.6		%	64.4		%
Apartments	11.6		%	12.2		%	12.2		%	11.9		%	11.4		%
Office Buildings	13.0		%	12.9		%	12.7		%	12.6		%	14.1		%
Warehouses	7.1		%	7.2		%	7.0		%	6.9		%	8.0		%
Miscellaneous	2.0		%	1.4		%	1.9		%	2.0		%	2.1		%
	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

Delinquent Loans & Foreclosed Properties

60 Days Past Due	$	21.0		$	—		$	—		$	—		$	10.3
90 Days Past Due	8.2			16.5			12.7			12.5			15.7
Renegotiated Loans	35.7			35.7			16.1			16.1			16.1
Foreclosed Real Estate	0.7			3.3			4.8			1.6			1.7
	$	65.6		$	55.5		$	33.6		$	30.2		$	43.8	(1)

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

Draft 8/3/2011

Invested Asset Summary - Trading Portfolios

(Dollars In Millions)	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR
(Unaudited)	2010		2010		2010		2011		2011

Trading Portfolio Composition (excl. Modco Trading Portfolio)

Rating
AAA	$	17.4	$	14.8	$	10.7	$	7.9	$	3.0
AA	6.4		1.3		1.0		0.7		—
A	12.6		—		—		—		—
BBB	65.0		47.5		46.3		13.2		6.0
Below investment grade	80.0		69.3		61.4		48.1		20.7
Total	$	181.4	$	132.9	$	119.4	$	69.9	$	29.7





Modco Trading Portfolio

Rating
AAA	$	919.9	$	898.2	$	816.1	$	806.8	$	803.6
AA	133.7		182.0		177.4		207.9		226.0
A	565.2		636.7		584.4		557.9		615.6
BBB	978.2		996.3		1,008.9		964.5		990.0
Below investment grade	275.8		292.7		269.7		242.4		221.9
Short-term investments	130.5		71.5		114.3		155.4		102.2
Total	$	3,003.3	$	3,077.4	$	2,970.8	$	2,934.9	$	2,959.3

Draft 8/3/2011

Invested Asset Summary - MBS - Alt-A

Mortgage-backed Securities Collateralized by Alt-A Mortgage Loans as of June 30, 2011:

(Dollars In Millions)	2007 and
(Unaudited)	Prior			2008		2009		2010		2011		Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	0.2		$	—	$	—	$	1.4	$	—	$	1.6
AA	0.1			—		—		—		—		0.1
A	3.8			—		—		—		—		3.8
BBB	17.7			—		—		—		—		17.7
Below investment grade	356.0			—		—		—		—		356.0
Total mortgage-backed securities collateralized by Alt-A mortgage loans	$	377.8		$	—	$	—	$	1.4	$	—	$	379.2

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

Rating
AAA	$	—		$	—	$	—	$	—	$	—	$	—
AA	—			—		—		—		—		—
A	—			—		—		—		—		—
BBB	2.0			—		—		—		—		2.0
Below investment grade	(38.2		)	—		—		—		—		(38.2		)
Total mortgage-backed securities collateralized by Alt-A mortgage loans	$	(36.2	)	$	—	$	—	$	—	$	—	$	(36.2	)

Draft 8/3/2011

Invested Asset Summary - MBS - Sub-prime

Mortgage-backed Securities Collateralized by Sub-prime Loans as of June 30, 2011:

(Dollars In Millions)	2007 and
(Unaudited)	Prior			2008		2009		2010		2011		Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	0.1		$	—	$	—	$	—	$	—	$	0.1
AA	6.7			—		—		—		—		6.7
A	6.3			—		—		—		—		6.3
BBB	11.7			—		—		—		—		11.7
Below investment grade	38.6			—		—		—		—		38.6
Total mortgage-backed securities collateralized by sub-prime mortgage loans	$	63.4		$	—	$	—	$	—	$	—	$	63.4

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

Rating
AAA	$	—		$	—	$	—	$	—	$	—	$	—
AA	(0.1		)	—		—		—		—		(0.1		)
A	(0.3		)	—		—		—		—		(0.3		)
BBB	(0.3		)	—		—		—		—		(0.3		)
Below investment grade	(25.3		)	—		—		—		—		(25.3		)
Total mortgage-backed securities collateralized by sub-prime mortgage loans	$	(26.0	)	$	—	$	—	$	—	$	—	$	(26.0	)

Draft 8/3/2011

Invested Asset Summary - MBS - Prime

Mortgage-backed Securities Collateralized by Prime Loans as of June 30, 2011:

(Dollars In Millions)	2007 and
(Unaudited)	Prior			2008		2009		2010		2011			Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	808.9		$	—	$	70.1	$	250.4	$	200.3		$	1,329.7
AA	57.4			—		—		—		—			57.4
A	67.6			—		—		—		—			67.6
BBB	51.0			—		—		—		—			51.0
Below investment grade	890.4			—		—		—		—			890.4
Total mortgage-backed securities collateralized by prime loans	$	1,875.3		$	—	$	70.1	$	250.4	$	200.3		$	2,396.1

Includes $1.2 billion of agency mortgage backed securities.

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

Rating
AAA	$	52.5		$	—	$	1.4	$	0.3	$	(0.1	)	$	54.1
AA	0.6			—		—		—		—			0.6
A	0.1			—		—		—		—			0.1
BBB	0.1			—		—		—		—			0.1
Below investment grade	(28.4		)	—		—		—		—			(28.4		)
Total mortgage-backed securities collateralized by prime loans	$	24.9		$	—	$	1.4	$	0.3	$	(0.1	)	$	26.5

Draft 8/3/2011

Invested Asset Summary - CMBS

Commercial Mortgage-backed Securities as of June 30, 2011:

(Dollars In Millions)	2007 and
(Unaudited)	Prior			2008		2009		2010		2011			Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	170.2		$	46.5	$	5.7	$	104.8	$	82.7		$	409.9
AA	7.5			—		—		2.9		9.3			19.7
A	5.5			—		—		—		22.4			27.9
Total commercial mortgage-backed securities	$	183.2		$	46.5	$	5.7	$	107.7	$	114.4		$	457.5

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

Rating
AAA	$	4.1		$	2.4	$	—	$	0.4	$	(0.9	)	$	6.0
AA	(0.4		)	—		—		—		0.1			(0.3		)
A	—			—		—		—		—			—
Total commercial mortgage-backed securities	$	3.7		$	2.4	$	—	$	0.4	$	(0.8	)	$	5.7

Draft 8/3/2011

Invested Asset Summary - ABS*

Other Asset-backed Securities* as of June 30, 2011:

(Dollars In Millions)	2007 and
(Unaudited)	Prior			2008		2009		2010		2011		Total

Estimated Fair Value of Security by Year of Security Origination

Rating
AAA	$	763.7		$	—	$	19.7	$	32.0	$	9.1	$	824.5
AA	28.1			—		—		—		—		28.1
A	4.4			—		—		—		33.0		37.4
BBB	5.3			—		—		—		—		5.3
Below investment grade	10.5			—		—		—		—		10.5
Total other asset-backed securities	$	812.0		$	—	$	19.7	$	32.0	$	42.1	$	905.8

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

Rating
AAA	$	(19.6	)	$	—	$	—	$	—	$	—	$	(19.6	)
AA	2.7			—		—		—		—		2.7
A	0.3			—		—		—		—		0.3
BBB	(0.2		)	—		—		—		—		(0.2		)
Below investment grade	(11.2		)	—		—		—		—		(11.2		)
Total other asset-backed securities	$	(28.0	)	$	—	$	—	$	—	$	—	$	(28.0	)

* Excludes Residential and Commercial mortgage-backed securities

Draft 8/3/2011

Life Marketing Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	407,900		$	379,745		$	414,729		$	393,665		$	406,566		$	781,290		$	800,231
Reinsurance Ceded	(227,543		)	(190,877		)	(244,340		)	(198,086		)	(219,292		)	(404,295		)	(417,378		)
Net Premiums and Policy Fees	180,357			188,868			170,389			195,579			187,274			376,995			382,853
Net investment income	94,763			96,977			105,177			106,627			110,230			185,907			216,857
Other income	23,008			24,141			26,708			28,131			28,923			44,230			57,054
Total Revenues	298,128			309,986			302,274			330,337			326,427			607,132			656,764

BENEFITS & EXPENSES
Benefits and settlement expenses	217,032			260,177			224,000			245,162			236,439			437,588			481,601
Amortization of deferred policy acquisition costs and value of business acquired	30,892			1,172			25,221			35,569			31,989			64,970			67,558
Other operating expenses	14,449			17,769			12,884			23,367			24,295			28,141			47,662
Total Benefits and Expenses	262,373			279,118			262,105			304,098			292,723			530,699			596,821

INCOME BEFORE INCOME TAX	$	35,755		$	30,868		$	40,169		$	26,239		$	33,704		$	76,433		$	59,943

Life Marketing Key Data

(Dollars In Thousands)	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR		6 MOS
(Unaudited)	2010		2010		2010		2011		2011		2010		2011

SALES BY PRODUCT
Traditional	$	17,626	$	8,291	$	3,419	$	1,863	$	1,305	$	38,391	$	3,168
Universal life	23,313		29,553		39,039		35,945		32,988		44,576		68,933
Bank-owned life insurance	1,974		1,987		3,197		4,661		3,460		2,914		8,121
Total	$	42,913	$	39,831	$	45,655	$	42,469	$	37,753	$	85,881	$	80,222

SALES BY DISTRIBUTION
Brokerage general agents	$	26,654	$	24,033	$	24,550	$	24,520	$	21,183	$	53,005	$	45,703
Independent agents	6,254		5,369		6,524		4,723		4,507		12,945		9,230
Stockbrokers/banks	8,031		8,425		11,206		8,343		8,427		17,002		16,770
BOLI/other	1,974		2,004		3,375		4,883		3,636		2,929		8,519
Total	$	42,913	$	39,831	$	45,655	$	42,469	$	37,753	$	85,881	$	80,222

Draft 8/3/2011

Annuities Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	9,800		$	11,086		$	13,125		$	14,923		$	16,709		$	18,575		$	31,632
Reinsurance Ceded	(38		)	(41		)	(20		)	(21		)	(17		)	(75		)	(38		)
Net Premiums and Policy Fees	9,762			11,045			13,105			14,902			16,692			18,500			31,594
Net investment income	118,719			122,662			124,686			124,356			128,202			234,916			252,558
RIGL - Derivatives	(49,417		)	(4,248		)	(19,329		)	(21,483		)	(2,196		)	(39,868		)	(23,679		)
RIGL - All Other Investments	(524		)	3,610			6,987			999			(2,215		)	(422		)	(1,216		)
Other income	6,935			8,060			9,603			11,358			13,119			12,929			24,477
Total Revenues	85,475			141,129			135,052			130,132			153,602			226,055			283,734

BENEFITS & EXPENSES
Benefits and settlement expenses	114,534			98,023			100,657			96,247			99,856			208,775			196,103
Amortization of deferred policy acquisition costs and value of business acquired	(37,549		)	8,616			6,080			7,072			18,161			(17,878		)	25,233
Other operating expenses	9,003			8,789			10,528			12,963			13,068			17,453			26,031
Total Benefits and Expenses	85,988			115,428			117,265			116,282			131,085			208,350			247,367

INCOME (LOSS) BEFORE INCOME TAX	(513		)	25,701			17,787			13,850			22,517			17,705			36,367

Adjustments to Reconcile to Operating Income:
Less: RIGL - Derivatives	(49,417		)	(4,248		)	(19,329		)	(21,483		)	(2,196		)	(39,868		)	(23,679		)
Add back: Derivative activity related to annuities	(49,417		)	(4,248		)	(19,329		)	(21,483		)	(2,196		)	(39,868		)	(23,679		)
Less: RIGL - All Other Investments	(524		)	3,610			6,987			999			(2,215		)	(422		)	(1,216		)
Add back: Amortization related to benefit and settlement expenses	—			—			—			5			12			—			17
Add back: Related amortization of DAC	594			613			1,605			229			(369		)	665			(140		)

PRE-TAX OPERATING INCOME	$	605		$	22,704		$	12,405		$	13,085		$	24,375		$	18,792		$	37,460

Annuities Key Data

	2ND QTR			3RD QTR		4TH QTR		1ST QTR		2ND QTR		6 MOS
	2010			2010		2010		2011		2011		2010		2011

SALES
Variable Annuity	$	412,789		$	436,350	$	515,678	$	607,795	$	669,021	$	762,725	$	1,276,816
Immediate Annuity	13,270			20,949		20,801		19,194		14,200		22,617		33,394
Single Premium Deferred Annuity	261,673			194,919		120,135		246,942		212,323		445,501		459,265
Market Value Adjusted Annuity	50,057			24,951		5,045		42,950		18,989		74,770		61,939
Equity Indexed Annuity	299			66		100		178		291		440		469
Total	$	738,088		$	677,235	$	661,759	$	917,059	$	914,824	$	1,306,053	$	1,831,883

PRE-TAX OPERATING INCOME (LOSS)
Variable Annuity	$	(7,762	)	$	8,792	$	2,487	$	60	$	12,168	$	3,948	$	12,228
Fixed Annuity	8,367			13,912		9,918		13,025		12,207		14,844		25,232
Total	$	605		$	22,704	$	12,405	$	13,085	$	24,375	$	18,792	$	37,460

DEPOSIT BALANCE
VA Fixed Annuity	$	382,064		$	433,120	$	451,918	$	493,686	$	541,252
VA Separate Account Annuity	3,177,824			3,765,148		4,429,084		5,058,135		5,579,541
Sub-total	3,559,888			4,198,268		4,881,002		5,551,821		6,120,793
Fixed Annuity	7,599,107			7,715,622		7,758,905		7,931,246		8,035,741
Total	$	11,158,995		$	11,913,890	$	12,639,907	$	13,483,067	$	14,156,534

Draft 8/3/2011

Stable Value Products Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR		4TH QTR		1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010		2010		2011			2011			2010			2011

REVENUES
Net investment income	$	45,724		$	41,100	$	38,083	$	36,104		$	39,376		$	92,144		$	75,480
RIGL - Derivatives	(696		)	26		427		645			(617		)	(336		)	28
RIGL - All Other Investments	(7,755		)	905		2,113		7,967			7,661			(6,579		)	15,628
Other income	—			—		—		(1		)	1			—			—
Total Revenues	37,273			42,031		40,623		44,715			46,421			85,229			91,136

BENEFITS & EXPENSES
Benefits and settlement expenses	32,972			30,442		26,220		22,790			19,381			66,703			42,171
Amortization of deferred policy acquisition costs and value of business acquired	882			1,398		2,171		3,547			286			1,861			3,833
Other operating expenses	891			921		830		571			568			1,574			1,139
Total Benefits and Expenses	34,745			32,761		29,221		26,908			20,235			70,138			47,143

INCOME BEFORE INCOME TAX	2,528			9,270		11,402		17,807			26,186			15,091			43,993

Adjustments to Reconcile to Operating Income:
Less: RIGL-Derivatives	(696		)	26		427		645			(617		)	(336		)	28
Less: RIGL-All Other Investments	(7,755		)	905		2,113		7,967			7,661			(6,579		)	15,628

PRE-TAX OPERATING INCOME	$	10,979		$	8,339	$	8,862	$	9,195		$	19,142		$	22,006		$	28,337

Stable Value Products Key Data

	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
	2010			2010			2010			2011			2011			2010		2011
SALES
GIC	$	6,500		$	66,477		$	58,635		$	74,658		$	161,137		$	7,500	$	235,795
GFA - Direct Institutional	250,000			—			225,000			—			100,000			400,000		100,000
Total	$	256,500		$	66,477		$	283,635		$	74,658		$	261,137		$	407,500	$	335,795

DEPOSIT BALANCE
Quarter End Balance	$	3,488,175		$	3,105,822		$	3,076,233		$	2,664,139		$	2,565,235
Average Daily Balance	$	3,497,115		$	3,331,250		$	3,000,692		$	2,750,596		$	2,450,620

OPERATING SPREAD	1.26		%	1.00		%	1.18		%	1.34		%	3.12		%

ADJUSTED OPERATING SPREAD (1)	1.07		%	0.99		%	1.18		%	1.31		%	1.97		%

(1) Excludes participating mortgage loan income and bank loan participation fee income

Draft 8/3/2011

Asset Protection Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	76,984		$	75,601		$	73,731		$	71,606		$	72,333		$	156,499		$	143,939
Reinsurance Ceded	(34,654		)	(34,826		)	(33,153		)	(31,813		)	(32,253		)	(70,560		)	(64,066		)
Net Premiums and Policy Fees	42,330			40,775			40,578			39,793			40,080			85,939			79,873
Net investment income	7,316			7,065			6,942			6,984			6,788			14,813			13,772
Other income	18,123			19,916			17,650			21,126			22,909			33,448			44,035
Total Revenues	67,769			67,756			65,170			67,903			69,777			134,200			137,680

BENEFITS & EXPENSES
Benefits and settlement expenses	26,836			28,942			25,302			23,866			25,147			45,592			49,013
Amortization of deferred policy acquisition costs and value of business acquired	12,807			12,250			12,175			11,214			10,847			25,582			22,061
Other operating expenses	21,627			21,487			22,801			26,332			27,957			43,534			54,289
Total Benefits and Expenses	61,270			62,679			60,278			61,412			63,951			114,708			125,363

INCOME BEFORE INCOME TAX	6,499			5,077			4,892			6,491			5,826			19,492			12,317
Less: noncontrolling interests	(117		)	(77		)	(168		)	(51		)	296			(191		)	245
OPERATING INCOME	$	6,616		$	5,154		$	5,060		$	6,542		$	5,530		$	19,683		$	12,072

Asset Protection Key Data

	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR		6 MOS
	2010		2010		2010		2011		2011		2010		2011

SALES
Credit insurance	$	9,693	$	10,099	$	8,735	$	8,766	$	9,650	$	17,385	$	18,416
Service contracts	65,353		71,384		62,710		64,178		79,142		117,892		143,320
Other products	13,363		15,861		13,806		17,244		20,116		24,822		37,360
Total	$	88,409	$	97,344	$	85,251	$	90,188	$	108,908	$	160,099	$	199,096

Draft 8/3/2011

Acquisitions Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	178,389		$	167,985		$	169,754		$	180,494		$	215,533		$	339,110		$	396,027
Reinsurance Ceded	(117,492		)	(108,296		)	(111,229		)	(101,794		)	(112,681		)	(210,626		)	(214,475		)
Net Premiums and Policy Fees	60,897			59,689			58,525			78,700			102,852			128,484			181,552
Net investment income	116,748			114,045			112,509			117,938			132,710			232,149			250,648
RIGL - Derivatives	(62,593		)	(85,352		)	112,021			7,480			(28,858		)	(92,656		)	(21,378		)
RIGL - All Other Investments	61,152			97,784			(87,411		)	(5,274		)	34,676			105,671			29,402
Other income	1,375			2,011			1,227			1,279			1,391			2,648			2,670
Total Revenues	177,579			188,177			196,871			200,123			242,771			376,296			442,894

BENEFITS & EXPENSES
Benefits and settlement expenses	127,554			125,234			126,171			142,481			164,906			261,028			307,387
Amortization of deferred policy acquisition costs and value of business acquired	15,602			18,551			16,919			16,603			18,053			28,940			34,656
Other operating expenses	5,408			5,087			8,841			7,141			14,735			11,631			21,876
Total Benefits and Expenses	148,564			148,872			151,931			166,225			197,694			301,599			363,919

INCOME BEFORE INCOME TAX	29,015			39,305			44,940			33,898			45,077			74,697			78,975

Adjustments to Reconcile to Operating Income:
Less: RIGL - Derivatives	(62,593		)	(85,352		)	112,021			7,480			(28,858		)	(92,656		)	(21,378		)
Less: RIGL - All Other Investments	61,152			97,784			(87,411		)	(5,274		)	34,676			105,671			29,402
Add back: Related amortization of deferred policy acquisition costs and value of business acquired	(266		)	993			1,388			699			170			(123		)	869

PRE-TAX OPERATING INCOME	$	30,190		$	27,866		$	21,718		$	32,391		$	39,429		$	61,559		$	71,820

Draft 8/3/2011

Corporate & Other Quarterly Trends

(Dollars In Thousands)	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

REVENUES
Gross Premiums and Policy Fees	$	6,168		$	5,848		$	5,777		$	5,655		$	5,445		$	12,539		$	11,100
Reinsurance Ceded	(2		)	—			—			(94		)	(5		)	(2		)	(99		)
Net Premiums and Policy Fees	6,166			5,848			5,777			5,561			5,440			12,537			11,001
Net investment income	39,230			47,699			32,234			52,204			31,479			74,568			83,683
RIGL - Derivatives	(7,182		)	(4,460		)	5,626			672			(3,322		)	(10,100		)	(2,650		)
RIGL - All Other Investments	(1,967		)	873			1,059			(4,883		)	9,308			(11,734		)	4,425
Other income	9,631			4,062			6,096			10,316			20,881			9,689			31,197
Total Revenues	45,878			54,022			50,792			63,870			63,786			74,960			127,656

BENEFITS & EXPENSES
Benefits and settlement expenses	6,443			6,749			4,846			5,823			5,824			12,980			11,647
Amortization of deferred policy acquisition costs and value of business acquired	452			399			395			358			352			900			710
Other operating expenses	47,807			50,098			48,611			51,879			47,647			98,762			99,526
Total Benefits and Expenses	54,702			57,246			53,852			58,060			53,823			112,642			111,883

INCOME (LOSS) BEFORE INCOME TAX	(8,824		)	(3,224		)	(3,060		)	5,810			9,963			(37,682		)	15,773

Adjustments to Reconcile to Operating Income:
Less: RIGL-Derivatives	(7,182		)	(4,460		)	5,626			672			(3,322		)	(10,100		)	(2,650		)
Less: RIGL-All Other Investments	(1,967		)	873			1,059			(4,883		)	9,308			(11,734		)	4,425
Add back: Derivative activity related to corporate debt and investments	42			42			42			—			—			84			—
Less: noncontrolling interests	(10		)	—			—			—			—			(9		)	—

PRE-TAX OPERATING INCOME (LOSS)	$	377		$	405		$	(9,703	)	$	10,021		$	3,977		$	(15,755	)	$	13,998

Draft 8/3/2011

INFORMATION RELATED TO CERTAIN NON-GAAP DISCLOSURES

The following pages contain information related to certain non-GAAP disclosures (consolidated and segment operating income (loss), 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 (LOSS) AND OPERATING INCOME PER DILUTED SHARE

Consolidated and segment operating income (loss) 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.

Draft 8/3/2011

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

(Dollars In Thousands)	2ND QTR			2ND QTR			6 MOS
(Unaudited)	2010			2011			2010			2011

Life Marketing	$	35,755		$	33,704		$	76,433		$	59,943
Acquisitions	30,190			39,429			61,559			71,820
Annuities	605			24,375			18,792			37,460
Stable Value Products	10,979			19,142			22,006			28,337
Asset Protection	6,616			5,530			19,683			12,072
Corporate & Other	377			3,977			(15,755		)	13,998

Total Pre-tax operating income	84,522			126,157			182,718			223,630

Realized Investment Gains (Losses) - Investments	50,578			49,617			86,394			47,493
Realized Investment Gains (Losses) - Derivatives	(70,513		)	(32,797		)	(103,176		)	(24,000		)
Income Tax Expense	(23,216		)	(49,909		)	(54,786		)	(86,538		)

Net income available to PLC’s common shareowners	$	41,371		$	93,068		$	111,150		$	160,585

Draft 8/3/2011

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

	2ND QTR			3RD QTR			4TH QTR			1ST QTR			2ND QTR			6 MOS
(Unaudited)	2010			2010			2010			2011			2011			2010			2011

OPERATING INCOME PER SHARE

Operating income per share-diluted	$	0.62		$	0.71		$	0.62		$	0.72		$	0.94		$	1.39		$	1.66
RIGL - Derivatives per share-diluted	(0.52		)	(0.67		)	0.87			0.07			(0.24		)	(0.77		)	(0.18		)
RIGL - All Other Investments-diluted	0.37			0.76			(0.59		)	(0.02		)	0.36			0.65			0.35
Net income available to PLC’s common shareowners per share-diluted	$	0.47		$	0.80		$	0.90		$	0.77		$	1.06		$	1.27		$	1.83

Draft 8/3/2011

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

	2ND QTR		3RD QTR		4TH QTR		1ST QTR		2ND QTR
(Unaudited)	2010		2010		2010		2011		2011

PROTECTIVE LIFE CORPORATION’S SHAREOWNERS’ EQUITY PER SHARE
Total Protective Life Corporation’s Shareowners’ Equity	$	36.02	$	41.69	$	38.88	$	39.87	$	42.59
Less: Accumulated other comprehensive income (loss)	2.07		7.03		3.42		3.72		5.33
Excluding accumulated other comprehensive income (loss)	$	33.95	$	34.66	$	35.46	$	36.15	$	37.26

Draft 8/3/2011

Calculation of Operating Income Return on Average Equity Rolling Twelve Months Ended June 30, 2011

(Dollars In Thousands)	Three Months												Twelve Months
(Unaudited)	9/30/2010			12/31/2010			3/31/2011			6/30/2011			6/30/2011
NUMERATOR:
Net income available to PLC’s common shareowners	$	70,448		$	78,643		$	67,517		$	93,068		$	309,676
Less:
Realized investment gains (losses), net of income tax
Investments	67,062			(50,214		)	(774		)	32,129			48,203
Derivatives	(58,361		)	76,748			5,718			(21,318		)	2,787
Related amortization of DAC and VOBA, net of income tax	(1,044		)	(1,945		)	(607		)	122			(3,474		)
Add back:
Derivative gains related to Corp. debt and investments, net of income tax	27			27			—			—			54
Operating Income	$	62,818		$	54,081		$	63,180		$	82,135		$	262,214

					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:
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
March 31, 2011	3,417,209		319,354		3,097,855
June 30, 2011	3,605,238		450,929		3,154,309
Total					$	15,167,534

Average					$	3,033,507

Operating Income Return on Average Equity					8.6		%

Draft 8/3/2011

Calculation of Operating Income Return on Average Equity Rolling Twelve Months Ended June 30, 2010

(Dollars In Thousands)	Three Months												Twelve Months
(Unaudited)	9/30/2009			12/31/2009			3/31/2010			6/30/2010			6/30/2010
NUMERATOR:
Net income available to PLC’s common shareowners	$	27,585		$	131,011		$	69,779		$	41,371		$	269,746
Less:
Realized investment gains (losses), net of income tax
Investments	87,495			(6,251		)	23,420			33,089			137,753
Derivatives	(108,339		)	2,692			(21,204		)	(45,806		)	(172,657		)
Related amortization of DAC and VOBA, net of income tax	507			2,313			(140		)	(212		)	2,468
Add back:
Derivative gains related to Corp. debt and investments, net of income tax	—			—			27			27			54
Operating Income	$	47,922		$	132,257		$	67,730		$	54,327		$	302,236

						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:
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
March 31, 2010	2,821,033		(55,716		)	2,876,749
June 30, 2010	3,085,599		177,490			2,908,109
Total						$	13,923,213

Average						$	2,784,643

Operating Income Return on Average Equity						10.9		%

Draft 8/3/2011

Calculation of Net Income Available to PLC’s common shareowners Return on Average Equity Rolling Twelve Months Ended June 30, 2011

(Dollars In Thousands)	Three Months								Twelve Months
(Unaudited)	9/30/2010		12/31/2010		3/31/2011		6/30/2011		6/30/2011
NUMERATOR:
Net income available to PLC’s common shareowners	$	70,448	$	78,643	$	67,517	$	93,068	$	309,676

					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:
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
March 31, 2011	3,417,209		319,354		3,097,855
June 30, 2011	3,605,238		450,929		3,154,309
Total					$	15,167,534

Average					$	3,033,507

Net income available to PLC’s common shareowners Return on Average Equity					10.2		%

Draft 8/3/2011

Calculation of Net Income available to PLC’s common shareowners Return on Average Equity Rolling Twelve Months Ended June 30, 2010

(Dollars In Thousands)	Three Months								Twelve Months
(Unaudited)	9/30/2009		12/31/2009		3/31/2010		6/30/2010		6/30/2010
NUMERATOR:
Net income available to PLC’s common shareowners	$	27,585	$	131,011	$	69,779	$	41,371	$	269,746

						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:
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
March 31, 2010	2,821,033		(55,716		)	2,876,749
June 30, 2010	3,085,599		177,490			2,908,109
Total						$	13,923,213

Average						$	2,784,643

Net income available to PLC’s common shareowners Return on Average Equity						9.7		%

PROTECTIVE LIFE CORP - FORM 8-K - EX-99.2 - August 3, 2011

Attached files

PROTECTIVE LIFE CORP Reports