Protective Reports Third Quarter 2012 Results

  Protective Reports Third Quarter 2012 Results

  *Life sales up 12% year over year and 21% sequentially
  *Record level of pre-tax operating earnings in the Acquisitions segment
  *Year-to-date operating earnings up 15% to $233 million
  *51% of year-to-date earnings returned to shareowners through dividends and
    share repurchase

Business Wire

BIRMINGHAM, Ala. -- November 06, 2012

Protective Life Corporation (NYSE: PL) (“PLC” or “the Company”) today reported
results for the third quarter of 2012. Net income available to PLC’s common
shareowners for the third quarter of 2012 was $60.5 million or $0.73 per
average diluted share, compared to $82.9 million or $0.96 per average diluted
share in the third quarter of 2011. After-tax operating income was $63.0
million or $0.76 per average diluted share, compared to $64.2 million or $0.74
per average diluted share in the third quarter of 2011.

Net income available to PLC’s common shareowners for the nine months ended
September 30, 2012 was $235.7 million or $2.83 per average diluted share,
compared to $229.4 million or $2.63 per average diluted share for the nine
months ended September 30, 2011. After-tax operating income was $233.0 million
or $2.80 per average diluted share, compared to $202.1 million or $2.32 per
average diluted share for the nine months ended September 30, 2011.

“Our core fundamentals were solid in the third quarter,” commented John D.
Johns, Chairman, President and CEO. “We experienced renewed sales momentum in
Life Marketing, achieved a record level of account balances in Annuities,
continued to enjoy robust spreads in Stable Value and enjoyed a record level
of investment income in the quarter. In addition, our very strong and growing
capital position enabled us to continue to return a substantial portion of our
earnings to shareowners through dividends and share repurchase. We are very
well positioned to close the year on a strong note. We are fully engaged in
executing our plan in fourth quarter. If we are successful, we will achieve a
record level of operating income for the year. That is our goal.”

Richard J. Bielen, Protective’s Vice Chairman and CFO added, “The quarter’s
results included extraordinary investment income of $0.11; deferred debt issue
cost write-off of $(0.03); and unfavorable unlocking of $(0.20), primarily
attributable to the variable annuity product line. Adjusted for these items,
the core operations generated $0.88 of operating earnings in the quarter.”

Business Segment Results

                                                             
The table below sets forth business segment operating income before income tax
for the periods shown:
                                                                      
   Operating Income Before Income Tax
   (dollars in
   thousands)
                       3Q12             3Q11             $ Variance   %
                                                                      Variance
   Life                $                $                $ 15,896     n/m
   Marketing           28,673           12,777
   Acquisitions        46,155           44,028           2,127        5%
   Annuities           9,408            20,176           (10,768  )   -53%
   Stable Value        13,050           14,217           (1,167   )   -8%
   Products
   Asset               4,150            6,164            (2,014   )   -33%
   Protection
   Corporate &         (6,614  )        (3,815  )        (2,799   )   -73%
   Other
                       $                $                $ 1,275      1%
                       94,822           93,547
                                                                      

The following table reconciles segment operating income to consolidated net
income available to PLC’s common shareowners:
                                                                
    (dollars in thousands)
                                                     3Q12            3Q11
    Operating income before income tax               $ 94,822        $ 93,547
    Realized investment gains (losses)               (10,582   )     36,487
    Less:
    Related amortization of deferred policy
    acquisition costs and value of business          (6,746    )     7,748
    acquired
    Income tax expense                               30,506         39,429
    Net income available to PLC's common             $ 60,480       $ 82,857
    shareowners
                                                                     

Sales

The Company uses sales statistics to measure the relative progress of its
marketing efforts. The Company derives these statistics from various sales
tracking and administrative systems and not from its financial reporting
systems or financial statements. These statistics measure only one of many
factors that may affect future profitability of the business segments and
therefore are not intended to be predictive of future profitability.

                                                         
The table below sets forth business segment sales for the periods shown:

  (dollars in millions)
                            3Q12        3Q11        $ Variance     % Variance
  Life Marketing            $ 31 .1     $ 27 .7     $ 3   .4       12%
  Annuities                 913  .2     859  .8     53    .4       6%
  Stable Value Products     147  .0     430  .0     (283  .0)      -66%
  Asset Protection          117  .3     110  .6     6     .7       6%
                                                                   

Review of Business Segment Results

Life Marketing

Life Marketing segment pre-tax operating income was $28.7 million in the third
quarter of 2012, representing an increase of $15.9 million from the three
months ended September 30, 2011. The increase was primarily due to higher
investment income and less unfavorable unlocking. Prospective unlocking for
the third quarter of 2012 was an unfavorable $5.5 million compared to an
unfavorable $10.2 million for the prior year’s third quarter. In addition,
favorable traditional life mortality was 83% of expected in the third quarter
of 2012 compared to 91% of expected in the third quarter of 2011.

Sales were $31.1 million for the quarter, up 12% compared to $27.7 million in
the third quarter of 2011.

Acquisitions

Acquisitions segment pre-tax operating income was $46.2 million in the third
quarter of 2012 compared to $44.0 million in the same quarter last year. The
increase was primarily due to favorable prospective unlocking of $4.5 million
in the third quarter of 2012 compared to an unfavorable $0.7 million recorded
in the third quarter of 2011. This favorable increase was partially offset by
expected runoff in the older acquired blocks of business.

Annuities

Annuities segment pre-tax operating income was $9.4 million in the third
quarter of 2012 compared to $20.2 million in the third quarter of 2011.

Fixed annuity operating income was $12.3 million, compared to $30.4 million in
the prior year. This decrease was primarily due to an unfavorable change of
$14.0 million related to unlocking. The segment recorded $1.2 million of
unfavorable prospective unlocking in the third quarter of 2012 compared to
$12.8 million of favorable prospective unlocking recorded in the third quarter
of 2011. In addition, there was an unfavorable change of $8.7 million in the
single premium immediate annuity (“SPIA”) mortality variance. Partially
offsetting these unfavorable items was lower credited interest of $8.5
million.

Variable annuity operating loss was $2.9 million, compared to an operating
loss of $10.2 million in the third quarter of 2011. This variance included a
favorable change of $14.3 million in revenue driven by higher policy fees
associated with the growth in account values. Offsetting this was a $5.9
million increase in non-deferred acquisition, operating, and commission
expenses and unfavorable unlocking as compared to the third quarter of 2011.
The segment recorded $23.2 million of unfavorable prospective unlocking in the
third quarter of 2012 compared to $11.1 million of unfavorable prospective
unlocking recorded in the third quarter of 2011. Retrospective unlocking for
the third quarter of 2012 was a favorable $0.3 million compared to an
unfavorable $11.0 million for the prior year’s third quarter.

Net cash flows for the segment remained positive during the quarter. Annuity
account values were $16.8 billion as of September 30, 2012, an increase of 20%
over the past twelve months. Sales in the third quarter of 2012 were $913.2
million compared to $859.8 million in the third quarter of 2011. Variable
annuity sales were $761.0 million compared to $573.2 million in the third
quarter of 2011. Fixed annuity sales were $152.2 million compared to $286.6
million in the prior year’s third quarter.

Stable Value Products

Stable Value Products segment pre-tax operating income was $13.1 million in
the third quarter of 2012 compared to $14.2 million in the third quarter of
2011. The decrease in operating earnings was primarily the result of lower
account values and a $1.1 million reduction in income from participating
mortgage loan and bank loan fees as compared to the third quarter of 2011.
Included in the third quarter of 2012 results is $0.1 million of participating
income compared to $1.2 million in the third quarter of 2011. This variance
was partially offset by lower expenses and an 8 basis point increase in the
adjusted operating spread, which excludes participating income.

Account balances as of September 30, 2012 totaled $2.3 billion. Sales were
$147.0 million for the three months ended September 30, 2012, compared to
$430.0 million in the third quarter of 2011.

Asset Protection

Asset Protection segment pre-tax operating income was $4.2 million in the
third quarter of 2012 compared to $6.2 million in the third quarter of 2011.
The decrease was primarily the result of a $1.5 million decrease in credit
insurance earnings resulting from higher claims. The decrease included higher
expenses in the service contract product line and higher loss ratios in the
guaranteed asset protection (“GAP”) product line.

Sales in the current quarter were $117.3 million, an increase of 6%, compared
to the third quarter of 2011. Service contract sales increased $9.8 million,
or 12%, and credit insurance sales increased $0.6 million, or 7%. Sales of the
GAP product decreased $3.7 million, or 20%, compared to the prior year’s third
quarter.

Corporate & Other

Corporate & Other segment pre-tax operating loss was $6.6 million in the third
quarter of 2012 compared to an operating loss of $3.8 million in the third
quarter of 2011. The decrease was primarily due to $6.3 million of gains on
the repurchase of non-recourse funding obligations in the third quarter of
2011 but no gains in the current quarter and a $4.0 million deferred issue
cost write-off recorded during the third quarter of 2012 associated with the
call of our remaining capital securities. The third quarter of 2012 results
included $5.9 million of investment income related to called securities
compared to $8.2 million included in the third quarter of 2011 results.
Partially offsetting this variance was a $2.8 million increase in earnings
related to a portfolio of securities designated for trading, a $2.5 million
favorable variance related to mortgage loan fee income, and growth in core
investment income as compared to the third quarter of 2011.

Share Repurchase Program

During the third quarter of 2012, the Company repurchased 913,423 shares at a
total cost of approximately $26 million. For the nine months ended September
30, 2012, the Company repurchased 2,876,252 shares at a total cost of
approximately $79 million. The Company has $197 million of remaining capacity
under its existing share repurchase program, which extends through December
31, 2014.

Future repurchase activity will depend on many factors, including capital
levels, liquidity needs, rating agency expectations, and the relative
attractiveness of alternative uses for capital.

Investments

  *The net unrealized gain position on investments was $1.8 billion, after
    tax and DAC offsets, an improvement of $731 million compared to December
    31, 2011.
  *Total cash and investments were $36.6 billion as of September 30, 2012.
    This includes $0.3 billion of cash and short-term investments.
  *During the third quarter of 2012, the Company had $8.6 million of pre-tax
    other-than-temporary impairment losses recognized in earnings.
  *Nonperforming mortgage loans equaled $25.8 million as of September 30,
    2012, representing 0.5% of the commercial mortgage loan portfolio.
  *Net realized investment losses, after tax, of $2.5 million, or $0.03 per
    average diluted share, were recorded in the third quarter of 2012,
    compared to net realized investment gains, after tax, of $18.7 million, or
    $0.22 per average diluted share, in the third quarter of 2011.


Net Realized Investment/Derivative Activity
(dollars per average diluted share)              3Q 2012      3Q 2011
                                                                    
Net realized gain on securities                     $ 0  .18        $ 0  .16
Modco net realized gain                               0  .03          0  .11
Impairments                                           (0 .07)         (0 .07)
Derivatives related to VA contracts                   (0 .13)         0  .12
Derivatives related to interest rate activity         -               (0 .08)
Mortgage/real estate losses                           (0 .04)         (0 .04)
All other                                            -             0  .02
Total                                               $ (0 .03)       $ 0  .22
                                                                      

Operating income differs from the GAAP measure, net income, in that it
excludes realized investment gains (losses) and related amortization. The
tables below reconcile operating income to net income available to PLC’s
common shareowners:

                                                            
(dollars in thousands; net of income tax)        3Q 2012           3Q 2011
                                                                   
After-tax Operating Income                       $ 62,974          $ 64,177
Realized investment gains (losses) and
related amortization
Investments                                        78,484            78,424
Derivatives                                       (80,978 )        (59,744 )
Net income available to PLC's common             $ 60,480         $ 82,857  
shareowners
                                                                   
                                                                   
(dollars per average diluted share; net of       3Q 2012           3Q 2011
income tax)
                                                                   
After-tax Operating Income                       $ 0.76            $ 0.74
Realized investment gains (losses) and
related amortization
Investments                                        0.95              0.91
Derivatives                                       (0.98   )        (0.69   )
Net income available to PLC's common             $ 0.73           $ 0.96    
shareowners
                                                                     

For information relating to non-GAAP measures (operating income and PLC’s
shareowners’ equity per share excluding other comprehensive income (loss)) in
this press release, please refer to the disclosure at the end of this press
release and to the Company’s Supplemental Financial Information located on the
Company’s website at www.protective.com. All per share results used throughout
this press release are presented on a diluted basis, unless otherwise noted.

                                                             
Reconciliation of PLC's Shareowners' Equity, Excluding Accumulated Other
Comprehensive Income
                                                                  
(dollars in millions)                           September 30,     December 31,
                                                2012              2011
PLC's shareowners' equity                       $    4,566        $    3,711
Less: Accumulated other comprehensive               1,717            985
income
PLC's shareowners' equity, excluding            $    2,849        $    2,726
accumulated other comprehensive income
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
Reconciliation of PLC's Shareowners' Equity per share, Excluding Accumulated
Other Comprehensive Income per share
                                                
(dollars per common share outstanding)          September 30,     December 31,
                                                2012              2011
PLC's shareowners' equity                       $    57.70        $    45.45
Less: Accumulated other comprehensive               21.70            12.07
income
PLC's shareowners' equity excluding             $    36.00        $    33.38
accumulated other comprehensive income
                                                                       

Accounting Changes

Results for the current and all prior periods reflect the adoption and the
Company’s retrospective application of Accounting Standards Update 2010-26,
effective January 1, 2012, which modifies the accounting guidance for deferred
acquisition costs.

Current and prior period operating income results within the Annuities segment
have been updated to reflect the Company’s revised definition of operating
income (loss) as it relates to embedded derivatives on our variable annuity
contracts and related hedging activities. This change was incorporated in the
first quarter of 2012 and did not impact its comparable GAAP measure income
before income tax.

See information relating to non-GAAP measures at the end of this press
release.

Conference Call

There will be a conference call for management to discuss the quarterly
results with analysts and professional investors on November 7, 2012 at 10:00
a.m. Eastern. Analysts and professional investors may access this call by
dialing 1-800-510-0219 (international callers 1-617-614-3451) and entering the
conference passcode: 50976951. A recording of the call will be available from
12:00 p.m. Eastern November 7,2012 until midnight November 21, 2012. The
recording may be accessed by calling 1-888-286-8010 (international callers
1-617-801-6888) and entering the passcode: 63146762.

The public may access a live webcast of the call, along with a call
presentation, in the Investor Relations section of the Company's website at
www.protective.com. The call presentation will be available on the website
beginning approximately 30 minutes prior to the conference call.

Supplemental financial information is available on the Company’s website at
www.protective.com in the Investor Relations section.

Investor Conference

Management will host the 2012 Annual Investor Conference on December 4, 2012
from 9:00 a.m. Eastern to 12:00 noon Eastern in New York City. The live
webcast and presentation slides will be available on the Company’s website at
www.protective.com. For meeting details, please contact Eva Robertson, Vice
President of Investor Relations, at 205-268-3912 or via email at
eva.robertson@protective.com.

Information Relating to Non-GAAP Measures

Throughout this press release, GAAP refers to accounting principles generally
accepted in the United States of America. Segment operating income (loss) is
income before income tax, excluding net realized investment gains and losses
(excluding periodic settlements of derivatives associated with debt and
certain investments) net of the related amortization of deferred acquisition
costs (“DAC”) and value of business acquired (“VOBA”). Operating earnings
exclude changes in the guaranteed minimum withdrawal benefits (“GMWB”)
embedded derivatives (excluding the portion attributed to economic cost),
realized and unrealized gains (losses) on derivatives used to hedge the VA
product, actual GMWB incurred claims and net of the related amortization of
DAC attributed to each of these items.

In the first quarter of 2012, management revised the definition of operating
income (loss) as it relates to certain features of our variable annuity
contracts and related hedging activities, to better reflect the basis on which
the performance of its business is internally assessed. Under the revised
definition, the following items will be excluded from operating income:

  *Changes in GMWB embedded derivatives related to this rider feature of
    certain variable annuity products (excluding the portion attributed to
    economic costs). Economic cost is the long-term expected average cost of
    providing the product benefit over the life of the policy based on product
    pricing assumptions. These include assumptions about the economic/market
    environment, and elective and non-elective policy owner behavior (e.g.
    lapses, withdrawal timing, mortality, etc.). These features are considered
    embedded derivatives under ASC 815.
  *Changes in value of certain derivative instruments used to mitigate the
    risk related to variable annuity contracts.
  *That portion of the change in balance sheet components amortized over
    estimated gross profit that is attributed to the embedded GMWB derivative
    and related economic hedges (e.g. DAC amortization).

Prior period operating income has been updated to reflect the revised
definition.

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 (loss) may be significant components in understanding and assessing the
Company’s overall financial performance, management believes that consolidated
and segment operating income (loss) enhances an investor’s understanding of
the Company’s results of operations by highlighting the income (loss)
attributable to the normal, recurring operations of the Company’s business. As
prescribed by GAAP, certain investments are recorded at their fair 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 total Protective
Life Corporation’s shareowners’ equity. The fair value of fixed maturities
generally 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.

Unlocking

The Company periodically reviews and updates as appropriate key assumptions on
products using the Accounting Standards Codification (“ASC”) Financial
Services-Insurance Topic, including future mortality, expenses, lapses,
premium persistency, investment yields, interest spreads, and equity market
returns. Changes to these assumptions result in adjustments which increase or
decrease DAC amortization and/or benefits and expenses. The periodic review
and updating of assumptions is referred to as “unlocking”. When referring to
DAC amortization or unlocking on products covered under the ASC Financial
Services-Insurance Topic, the reference is to changes in all balance sheet
components amortized over estimated gross profits.

Forward-Looking Statements

This release includes “forward-looking statements” which express expectations
of future events and/or results. All statements based on future expectations
rather than on historical facts are forward-looking statements that involve a
number of risks and uncertainties, and the Company cannot give assurance that
such statements will prove to be correct. The factors which could affect the
Company’s future results include, but are not limited to, general economic
conditions and the following known risks and uncertainties:  (1) we are
exposed to the risks of natural and man-made catastrophes, pandemics,
malicious acts, terrorist acts, and climate change; (2) our strategies for
mitigating risks arising from our day-to-day operations may prove ineffective;
(3) we operate in a mature, highly competitive industry, which could limit our
ability to gain or maintain our position in the industry and negatively affect
profitability; (4) we operate as a holding company and depend on the ability
of our subsidiaries to transfer funds to us to meet our obligations and pay
dividends; (5) the policy claims of our insurance subsidiaries may fluctuate
from period to period resulting in earnings volatility; (6) we may be
adversely affected by a ratings downgrade or other negative action by a
ratings organization; (7) our results may be negatively affected should actual
experience differ from management’s assumptions and estimates, which by their
nature are imprecise and subject to changes and revisions over time; (8) our
financial condition and results of operations could be adversely affected if
our assumptions regarding the fair value and future performance of our
investments differ from actual experience; (9) our use of reinsurance
introduces variability in our statements of income; (10) we could be forced to
sell investments at a loss to cover policyholder withdrawals; (11) interest
rate fluctuations and sustained periods of low interest rates could negatively
affect our interest earnings and spread income, or otherwise impact our
business; (12) equity market volatility could negatively impact our business;
(13) our use of derivative financial instruments within our risk management
strategy may not be effective or sufficient; (14) we are highly regulated and
subject to numerous legal restrictions; (15) changes in tax law or
interpretations of existing tax law could adversely affect us; (16) we may be
required to establish a valuation allowance against our deferred tax assets;
(17) we, like other financial services companies, in the ordinary course of
business, are frequently the targets of litigation, including class action
litigation, which could result in substantial judgments; (18) we, as a
publicly held company generally, and a participant in the financial services
industry in particular, may be the target of law enforcement investigations
and the focus of increased regulatory scrutiny; (19) our ability to maintain
competitive unit costs is dependent upon the level of new sales and
persistency of existing business; (20) our investments are subject to market
and credit risks and these risks could be heightened during periods of extreme
volatility or disruption in financial and credit markets; (21) we may not
realize our anticipated financial results from our acquisition strategy; (22)
we are dependent upon the performance of others; (23) our risk management
policies, practices, and procedures could leave us exposed to unidentified or
unanticipated risks; (24) our reinsurers could fail to meet assumed
obligations, increase rates, or otherwise be subject to adverse developments;
(25) the occurrence of computer viruses, information security breaches,
disasters, or unanticipated events could affect our data processing systems or
those of our business partners and/or service providers; (26) our ability to
grow depends in large part upon the continued availability of capital; (27)
new accounting rules or changes to existing accounting rules could impact our
reported earnings; (28) credit market volatility or disruption could adversely
impact us; (29) difficult general economic conditions could materially
adversely affect our business and results of operations; (30) we may not be
able to protect our intellectual property and may be subject to infringement
claims; (31) we could be adversely affected by an inability to access our
credit facility; and (32) the amount of statutory capital we have and must
hold to maintain our financial strength and credit ratings and meet other
requirements can vary significantly and is sensitive to a number of factors
beyond our control. Please refer to Risk Factors and Cautionary Factors that
may Affect Future Results, which can be found in Part I, Item 1A of the
Company’s most recent report on Form 10-K and Part II, Item 1A of the
Company’s most recent report on Form 10-Q for more information about these
factors.

Contact:

Protective Life Corporation
Richard J. Bielen, 205-268-3617
Vice Chairman and Chief Financial Officer
or
Eva T. Robertson, 205-268-3912
Vice President, Investor Relations