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Protective Reports First Quarter 2013 Financial Results

  Protective Reports First Quarter 2013 Financial Results

  *Net income of $78.3 million, or $0.97 per share
  *Operating earnings of $71.4 million, or $0.89 per share
  *Life Marketing sales more than double 1Q12 level and 24% above plan
  *On April 10, 2013 announced a $1.06 billion accretive acquisition
    transaction

Business Wire

BIRMINGHAM, Ala. -- May 06, 2013

Protective Life Corporation (NYSE: PL) (“PLC” or “the Company”) today reported
results for the first quarter of 2013. Net income available to PLC’s common
shareowners for the first quarter of 2013 was $78.3 million or $0.97 per
average diluted share, compared to $99.0 million or $1.18 per average diluted
share in the first quarter of 2012. After-tax operating income was $71.4
million or $0.89 per average diluted share, compared to $99.1 million or $1.18
per average diluted share in the first quarter of 2012.

“We are off to a strong start in 2013,” said John D. Johns, Chairman,
President and CEO. “Operating earnings in the quarter were right on our plan
and exceeded plan, if adjusted for a few small, unexpected items. We are also
pleased to see higher life sales, moderation in variable annuity sales, solid
performance in the investment portfolio and continued robust spreads in the
stable value segment. Our energies for the rest of the year will be intensely
focused on achieving our financial plan and closing the recently-announced
MONY Life Insurance Company acquisition transaction.”

Business Segment Results

The table below sets forth business segment operating income before income tax
for the periods shown:

                                                            
  Operating Income Before Income Tax
  ($ in thousands)                                     $               %
                         1Q13            1Q12          Change          Change
  Life Marketing         $ 23,707        $ 30,369      $ (6,662  )     (22 ) %
  Acquisitions             34,377          39,099        (4,722  )     (12 )
  Annuities                43,398          35,783        7,615         21
  Stable Value             17,844          12,646        5,198         41
  Products
  Asset Protection         6,081           4,966         1,115         22
  Corporate &             (18,332 )      27,880       (46,212 )     n/m
  Other
                         $ 107,075      $ 150,743     $ (43,668 )     (29 )
                                                                             

The following table reconciles segment operating income to consolidated net
income available to PLC’s common shareowners:

                                                            
  ($ in thousands)
                                                    1Q13          1Q12
  Operating income before income tax                 $ 107,075     $ 150,743
  Realized investment gains (losses)                   11,579        (5,707  )
  Less:
  Related amortization of deferred policy
  acquisition costs and value of business              1,027         (5,543  )
  acquired
  Income tax expense                                  39,336       51,558  
  Net income available to PLC's common               $ 78,291      $ 99,021  
  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:

                                                         
  ($ in millions)                                     $             %
                              1Q13        1Q12        Change        Change
  Life Marketing              $ 47.3      $ 22.6      $ 24.7        n/m  %
  Annuities                     695.1       720.2       (25.1 )     (3)
  Stable Value Products         112.0       176.0       (64.0 )     (36)
  Asset Protection              104.1       109.9       (5.8  )     (5)
                                                                         

Review of Business Segment Results

Life Marketing

Life Marketing segment pre-tax operating income was $23.7 million in the first
quarter of 2013, representing a decrease of $6.7 million from the three months
ended March 31, 2012. The decrease was primarily due to an increase in
non-deferred expenses resulting from higher sales, which was partially offset
by higher investment income. Traditional life mortality was 92% of expected in
the first quarter of 2013 compared to 90% of expected in the first quarter of
2012.

Sales were $47.3 million for the quarter, up $24.7 million compared to the
first quarter of 2012.

Acquisitions

Acquisitions segment pre-tax operating income was $34.4 million in the first
quarter of 2013 compared to $39.1 million in the same quarter last year. The
decrease was primarily due to lower spread income and the expected runoff of
business.

Annuities

Annuities segment pre-tax operating income was $43.4 million in the first
quarter of 2013 compared to $35.8 million in the first quarter of 2012.

Fixed annuity operating income was $17.5 million, compared to $18.4 million in
the prior year. This decrease was primarily due to an unfavorable change of
$4.5 million in the single premium immediate annuity (“SPIA”) mortality
variance partially offset by a favorable change in credited interest.

Variable annuity (“VA”) operating income was $25.9 million, compared to $17.3
million in the first quarter of 2012. The increase included a $10.9 million
increase in revenue driven by higher policy fees associated with the growth in
account balances. Offsetting this was a $1.2 million increase in non-deferred
commission expenses compared to the first quarter of 2012.

Net cash flows for the segment remained positive during the quarter. Annuity
account balances were $18.4 billion as of March 31, 2013, an increase of 18%
over the past twelve months. Sales in the first quarter of 2013 were $695.1
million compared to $720.2 million in the first quarter of 2012. Variable
annuity sales were $579.7 million compared to $567.4 million in the first
quarter of 2012. Fixed annuity sales were $115.4 million compared to $152.8
million in the prior year’s first quarter.

Stable Value Products

Stable Value Products segment pre-tax operating income was $17.8 million in
the first quarter of 2013 compared to $12.6 million in the first quarter of
2012. Included in the first quarter of 2013 results is $1.7 million of
participating mortgage income compared to $0.1 million in the first quarter of
2012. In addition, the segment experienced a 75 basis point increase in the
adjusted operating spread, which excludes participating income, for the three
months ended March 31, 2013 over the prior year, due to a decline in credited
interest. These favorable items were partially offset by lower average account
balances.

Account balances as of March 31, 2013 totaled $2.5 billion. Sales were $112.0
million for the three months ended March 31, 2013, compared to $176.0 million
in the first quarter of 2012.

Asset Protection

Asset Protection segment pre-tax operating income was $6.1 million in the
first quarter of 2013 compared to $5.0 million in the first quarter of 2012.
The increase was primarily the result of a $2.0 million legal settlement
accrual included in the first quarter of 2012 in the credit insurance product
line. This increase was partially offset by a $0.7 million decrease in
guaranteed asset protection (“GAP”) earnings due to lower volume and higher
loss ratios and a $0.3 million decrease in service contract earnings primarily
due to lower investment income.

Sales were $104.1 million for the three months ended March 31, 2013, compared
to $109.9 million in the first quarter of 2012. Service contract sales were
$82.0 million compared to $82.8 million in the first quarter of 2012. Credit
insurance sales were $7.3 million compared to $8.8 million in the first
quarter of 2012. Sales of the GAP product were $14.8 million compared to $18.3
million in the prior year’s first quarter.

Corporate & Other

Corporate & Other segment pre-tax operating loss was $18.3 million in the
first quarter of 2013 compared to operating income of $27.9 million in the
first quarter of 2012. The decrease was primarily due to fluctuations of gains
on the repurchase on non-recourse funding obligations. For the first quarter
of 2013, $1.3 million of pre-tax gains were generated from these repurchases
compared to $35.5 million of pre-tax gains during the first quarter of 2012.
In addition, the segment had higher operating expenses in the first quarter of
2013 as compared to the prior year’s first quarter, resulting from $4.5
million of guaranty fund assessments and $1.3 million of higher expenses
related to recent acquisition activity.

Share Repurchase Program

During the first quarter of 2013, the Company did not repurchase any of its
common stock. The Company has $170 million of remaining capacity under its
existing share repurchase program, which extends through December 31, 2014.

The Company does not intend to repurchase shares for the remainder of 2013 in
anticipation of the close of the recently-announced acquisition of MONY Life
Insurance Company and reinsurance of a portion of the MONY Life Insurance
Company of America.

Investments

  *The net unrealized gain position on investments was $1.7 billion, after
    tax and DAC offsets, an improvement of $0.6 billion compared to March 31,
    2012.
  *Total cash and investments were $37.3 billion as of March 31, 2013. This
    includes $0.4 billion of cash and short-term investments.
  *During the first quarter of 2013, the Company had $4.6 million of pre-tax
    other-than-temporary impairment losses recognized in earnings.
  *Nonperforming mortgage loans equaled $21.2 million as of March 31, 2013,
    representing 0.4% of the commercial mortgage loan portfolio.

                                                   
  Net Realized Investment/Derivative Activity
  ($ per average diluted share)             1Q13          1Q12
                                                            
  Net realized gain on securities           $ 0.10        $ 0.16
  Modco net realized gain                     0.01          0.22
  Impairments                                 (0.04 )       (0.15 )
  Derivatives related to VA contracts         0.01          (0.21 )
  Mortgage/real estate losses                 (0.01 )       (0.02 )
  All other                                  0.01        -     
  Total                                     $ 0.08       $ -     
                                                                  

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:

First Quarter Consolidated Results

                                                            
  ($ in thousands; net of income tax)               1Q13           1Q12
                                                                     
  After-tax operating income                        $ 71,432       $ 99,127
  Realized investment gains (losses) and
  related amortization
  Investments                                         (6,341 )       14,629
  Derivatives                                        13,200       (14,735 )
  Net income available to PLC's common              $ 78,291      $ 99,021  
  shareowners
                                                                     
                                                                     
  ($ per average diluted share; net of income        1Q13         1Q12
  tax)
                                                                     
  After-tax operating income                        $ 0.89         $ 1.18
  Realized investment gains (losses) and
  related amortization
  Investments                                         (0.08  )       0.18
  Derivatives                                        0.16         (0.18   )
  Net income available to PLC's common              $ 0.97        $ 1.18    
  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 in this press
release are presented on a diluted basis, unless otherwise noted.

                                                           
  Reconciliation of PLC's Shareowners' Equity, Excluding Accumulated Other
  Comprehensive Income
                                                                       
  ($ in millions)                                   March 31,     December 31,
                                                    2013          2012
  PLC's shareowners' equity                         $  4,541      $    4,615
  Less: Accumulated other comprehensive               1,599          1,737
  income
  PLC's shareowners' equity, excluding              $  2,942      $    2,878
  accumulated other comprehensive income
                                                                       
                                                                       
                                                                       
                                                                       
  Reconciliation of PLC's Shareowners' Equity per share, Excluding Accumulated
  Other
  Comprehensive Income per share
                                                       
  ($ per common share outstanding)                  March 31,     December 31,
                                                    2013          2012
  PLC's shareowners' equity                         $  57.89      $    59.06
  Less: Accumulated other comprehensive               20.39          22.22
  income
  PLC's shareowners' equity excluding               $  37.50      $    36.84
  accumulated other comprehensive income
                                                                       

Conference Call

There will be a conference call for management to discuss the quarterly
results with analysts and professional investors on May 7, 2013 at 10:00 a.m.
Eastern. Analysts and professional investors may access this call by dialing
1-866-271-6130 (international callers 1-617-213-8894) and entering the
conference passcode: 64700680. A recording of the call will be available from
12:00 p.m. Eastern May7,2013 until midnight May 21, 2013. The recording may
be accessed by calling 1-888-286-8010 (international callers 1-617-801-6888)
and entering the passcode: 56711748.

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.

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.

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) disruption of the capital and credit markets could negatively
affect the Company’s ability to meet its liquidity and financing needs; (30)
difficult general economic conditions could materially adversely affect our
business and results of operations; (31) we may not be able to protect our
intellectual property and may be subject to infringement claims; (32) we could
be adversely affected by an inability to access our credit facility; and (33)
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