-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BxH5Q+YocGLNd2ueOGjUGfiEmGsViJ5CeUHbxLDeeMmw6PTJ0Tl7bL/W1GOs0g6u sAZKS41voaIhCSVoFerTVQ== 0000310826-96-000005.txt : 19960814 0000310826-96-000005.hdr.sgml : 19960814 ACCESSION NUMBER: 0000310826-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROTECTIVE LIFE INSURANCE CO CENTRAL INDEX KEY: 0000310826 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 630169720 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-31940 FILM NUMBER: 96610539 BUSINESS ADDRESS: STREET 1: 2801 HIGHWAY 280 SOUTH CITY: BIRMINGHAM STATE: AL ZIP: 35223 BUSINESS PHONE: 2058799230 MAIL ADDRESS: STREET 1: PO BOX 2606 CITY: BIRMINGHAM STATE: AL ZIP: 35202 10-Q 1 FORM 10-Q ------------------------------------ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Numbers 33-31940; 33-39345; 33-57052; 333-02249 PROTECTIVE LIFE INSURANCE COMPANY (Exact name of registrant as specified in its charter) Tennessee 63-0169720 (State of incorporation) (IRS Employer Identification Number) 2801 Highway 280 South Birmingham, Alabama 35223 (Address of principal executive offices) (205) 879-9230 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Number of shares of Common Stock, $1.00 par value, outstanding as of August 2, 1996: 5,000,000 shares. The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format pursuant to General Instruction H(2). PROTECTIVE LIFE INSURANCE COMPANY INDEX Part I. Financial Information: Item 1. Financial Statements: Report of Independent Accountants Consolidated Condensed Statements of Income for the Three and Six Months ended June 30, 1996 and 1995 (unaudited) Consolidated Condensed Balance Sheets as of June 30, 1996 (unaudited) and December 31, 1995 Consolidated Condensed Statements of Cash Flows for the Six Months ended June 30, 1996 and 1995 (unaudited) Notes to Consolidated Condensed Financial Statements (unaudited) Item 2. Management's Narrative Analysis of the Results of Operations Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K Signature REPORT OF INDEPENDENT ACCOUNTANTS To the Directors and Stockholder Protective Life Insurance Company Birmingham, Alabama We have reviewed the accompanying consolidated condensed balance sheet of Protective Life Insurance Company and subsidiaries as of June 30, 1996, and the related consolidated condensed statements of income for the three-month and six-month periods ended June 30, 1996 and 1995 and consolidated condensed statements of cash flows for the six-month periods ended June 30, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1995, and the related consolidated statements of income, stockholder's equity, and cash flows for the year then ended (not presented herein); and in our report dated February 12, 1996, we expressed an unqualified opinion which contains an explanatory paragraph regarding the changes in accounting for certain investments in debt and equity securities in 1993 on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 1995, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. COOPERS & LYBRAND L.L.P. Birmingham, Alabama July 24, 1996 2
PROTECTIVE LIFE INSURANCE COMPANY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ------------------------ ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- REVENUES Premiums and policy fees (net of reinsurance ceded: three months: 1996 - $88,232; 1995 - $80,312; six months: 1996 - $166,535; 1995 - $142,444) $124,134 $107,452 $232,801 $209,466 Net investment income 126,421 113,564 244,764 223,855 Realized investment gains (losses) 600 (555) 5,021 2,106 Other income 1,251 25 3,198 1,379 --------- ---------- ---------- ---------- 252,406 220,486 485,784 436,806 -------- -------- --------- -------- BENEFITS AND EXPENSES Benefits and settlement expenses (net of reinsurance ceded: three months: 1996 - $61,030; 1995 - $62,213; six months: 1996 - $117,781; 1995 - $105,122) 159,533 138,754 308,761 274,147 Amortization of deferred policy acquisition costs 29,521 25,225 51,340 45,550 Other operating expenses (net of reinsurance ceded: three months: 1996 - $25,007; 1995 - $24,204; six months: 1996 - $42,809; 1995 - $35,473) 30,958 28,748 63,715 60,443 -------- --------- --------- -------- 220,012 192,727 423,816 380,140 -------- -------- -------- -------- INCOME BEFORE INCOME TAX 32,394 27,759 61,968 56,666 Income tax expense 10,539 9,161 21,153 18,700 -------- -------- -------- -------- NET INCOME $ 21,855 $ 18,598 $ 40,815 $ 37,966 ======== ======== ======== ======== See notes to consolidated condensed financial statements
3
PROTECTIVE LIFE INSURANCE COMPANY CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) JUNE 30 DECEMBER 31 1996 1995 ----------- ---------- (Unaudited) ASSETS Investments: Fixed maturities $4,461,977 $3,891,932 Equity securities 45,668 38,711 Mortgage loans on real estate 1,463,770 1,835,057 Investment in real estate, net 19,015 20,788 Policy loans 165,471 143,372 Other long-term investments 23,332 43,875 Short-term investments 87,338 46,891 ------------ ----------- Total investments 6,266,571 6,020,626 Cash 13,632 6,198 Accrued investment income 67,461 61,004 Accounts and premiums receivable, net 52,487 35,492 Reinsurance receivables 322,683 271,018 Deferred policy acquisition costs 471,572 410,183 Property and equipment, net 33,745 34,211 Receivables from related parties 1,961 Other assets 13,426 13,096 Assets held in separate accounts 443,406 324,904 ----------- ----------- TOTAL ASSETS $7,684,983 $7,178,693 ========== ========== LIABILITIES Policy liabilities and accruals $2,521,726 $2,121,921 Guaranteed investment contract deposits 2,459,727 2,451,693 Annuity deposits 1,253,784 1,280,069 Other policyholders' funds 142,691 134,380 Other liabilities 124,276 109,538 Accrued income taxes 6,265 838 Deferred income taxes 11,333 67,420 Indebtedness to related parties 32,155 34,693 Liabilities related to separate accounts 443,406 324,904 ----------- ----------- TOTAL LIABILITIES 6,995,363 6,525,456 ---------- ---------- COMMITMENTS AND CONTINGENT LIABILITIES - NOTE C REDEEMABLE PREFERRED STOCK, $1 par value, at redemption value; Shares authorized and issued: 2,000 2,000 2,000 ----------- ----------- STOCKHOLDER'S EQUITY Common Stock, $1 par value Shares authorized and issued: 5,000,000 5,000 5,000 Additional paid-in capital 223,193 144,494 Net unrealized gains (losses) on investments (Net of income tax: 1996 - ($13,679); 1995 - $31,157) (25,404) 57,863 Retained earnings 490,410 449,645 Note receivable from PLC Employee Stock Ownership Plan (5,579) (5,765) ------------ ------------ TOTAL STOCKHOLDER'S EQUITY 687,620 651,237 ----------- ----------- $7,684,983 $7,178,693 ========== ========== See notes to consolidated condensed financial statements
4
PROTECTIVE LIFE INSURANCE COMPANY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) SIX MONTHS ENDED JUNE 30 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 40,815 $ 37,966 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred policy acquisition 51,340 45,551 Capitalization of deferred policy acquisition costs (47,830) (39,292) Depreciation expense 2,617 2,125 Deferred income tax (11,251) (8,508) Accrued income tax 5,427 3,024 Interest credited to universal life and investment products 135,915 140,650 Policy fees assessed on universal life and investment products (53,936) (48,472) Change in accrued investment income and other receivables (67,490) (36,209) Change in policy liabilities and other policyholders' funds of traditional life and health products 109,036 72,806 Change in other liabilities 14,124 (38,532) Other (net) (2,453) (927) ----------- ---------- Net cash provided by operating activities 176,314 130,182 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Maturities and principal reductions of investments Investments available for sale 364,292 110,715 Other 35,649 36,281 Sale of investments Investments available for sale 550,200 715,811 Other 560,840 3,062 Cost of investments acquired Investments available for sale (1,628,369) (1,057,842) Other (244,164) (129,153) Acquisitions and bulk reinsurance assumptions 172,726 Purchase of property and equipment (2,184) (4,111) Sale of property and equipment 33 81 ------------ ----------- Net cash used in investing activities (190,977) (325,156) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contribution from PLC 78,699 18,000 Proceeds from borrowings under line of credit arrangements and debt 689,000 683,000 Principal payments on line of credit arrangements and debt (689,000) (683,000) Principal payment on surplus note to PLC (2,538) Dividends to PLC (50) (50) Investment product deposits and change in universal life deposits 425,110 447,884 Investment product withdrawals (479,124) (270,860) ----------- ----------- Net cash provided by financing activities 22,097 194,974 ------------ ----------- INCREASE (DECREASE) IN CASH 7,434 0 CASH AT BEGINNING OF PERIOD 6,198 0 ------------- ----------- CASH AT END OF PERIOD $ 13,632 $ 0 ============ =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period: Interest on notes and mortgages payable $ (2,663) $ (1,652) Income taxes $ (26,566) $(24,183) SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Reduction of principal on note from ESOP $ 186 $ 171 Acquisitions and bulk reinsurance assumptions Assets acquired $ 204,435 $ 613 Liabilities assumed (253,480) (21,800) --------- -------- Net $ (49,045) $(21,187) ========= ========
See notes to consolidated condensed financial statements 5 PROTECTIVE LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements of Protective Life Insurance Company ("Protective Life") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. The year-end consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. For further information, refer to the consolidated financial statements and notes thereto included in Protective Life's annual report on Form 10-K for the year ended December 31, 1995. Protective Life is a wholly-owned subsidiary of Protective Life Corporation ("PLC"). NOTE B - SALE OF MORTGAGE LOANS On March 22, 1996, Protective Life sold $554 million of its commercial mortgage loans in a securitization transaction. Proceeds from the sale consisted of cash of $400 million, net of expenses, and subordinated mortgaged-backed securities of $161 million. The transaction resulted in a realized investment gain of approximately $6.1 million. The cash proceeds were reinvested in fixed maturity and short-term investments. NOTE C - COMMITMENTS AND CONTINGENT LIABILITIES Under insurance guaranty fund laws in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. Protective Life does not believe any assessments will be materially different from amounts already provided for in the financial statements. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer's own financial strength. Protective Life and its subsidiaries, like other life and health insurers, from time to time are involved in lawsuits, in which the plaintiff may seek punitive damage awards as well as compensatory damage awards. To date, no such lawsuit has resulted in the award of any material amount of damages against Protective Life. Although the outcome of any litigation cannot be predicted with certainty, Protective Life believes that no pending or threatened litigation is reasonably likely to have a material adverse effect on the financial position of Protective Life. 6 NOTE D - STATUTORY REPORTING PRACTICES Financial statements prepared in conformity with generally accepted accounting principles (i.e., GAAP) differ in some respects from the statutory accounting practices prescribed or permitted by insurance regulatory authorities. At June 30, 1996 and for the six months then ended, Protective Life and its life insurance subsidiaries had consolidated stockholder's equity and net income prepared in conformity with statutory reporting practices of $386.9 million and $43.6 million, respectively. NOTE E - RECENTLY ADOPTED ACCOUNTING STANDARDS At December 31, 1993, Protective Life adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." For purposes of adopting SFAS No. 115 Protective Life has classified all of its investments in fixed maturities, equity securities, and short-term investments as "available for sale." As prescribed in SFAS No. 115, these investments are recorded at their market values with the resulting net unrealized gain or loss, net of income tax and a related adjustment to deferred policy acquisition costs, recorded as a component of stockholder's equity. Protective Life's balance sheets at June 30, 1996 and December 31, 1995, prepared on the basis of reporting investments at amortized cost rather than at market values, are as follows: JUNE 30, 1996 DECEMBER 31, 1995 ------------- ----------------- (IN THOUSANDS) Total investments $6,309,748 $5,915,357 Deferred policy acquisition costs 467,479 426,432 All other assets 946,840 747,884 ---------- ---------- $7,724,067 $7,089,673 ========== ========== Deferred income taxes $ 25,012 $ 36,263 All other liabilities 6,984,030 6,458,036 ---------- ---------- 7,009,042 6,494,299 Redeemable preferred stock 2,000 2,000 Stockholder's equity 713,025 593,374 ---------- ----------- $7,724,067 $7,089,673 ========== ========== At January 1, 1996, Protective Life adopted SFAS No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration Contracts"; SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed of"; and SFAS No. 122, "Accounting for Mortgage Servicing Rights". The adoption of these accounting standards did not have a material effect on Protective Life's financial statements. 7 NOTE F - RECLASSIFICATIONS Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income, total assets, or stockholder's equity. 8 ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS Protective Life Insurance Company ("Protective Life") is a wholly-owned and the principal operating subsidiary of Protective Life Corporation ("PLC"), an insurance holding company whose common stock is traded on the New York Stock Exchange. Founded in 1907, Protective Life provides financial services through the production, distribution, and administration of insurance and investment products. In accordance with General Instruction H(2)(a), Protective Life includes the following analysis with the reduced disclosure format. Protective Life has six operating divisions: Acquisitions, Financial Institutions, Group, Guaranteed Interest Contracts, Individual Life, and Investment Products. Protective Life also has an additional business segment which is described herein as Corporate and Others. Revenues The following table sets forth revenues by source for the period shown: SIX MONTHS PERCENTAGE ENDED INCREASE/ JUNE 30 (DECREASE) ---------- ---------- (in Thousands) 1996 1995 ---- ---- Premiums and policy fees $232,801 $209,466 11.1% Net investment income 244,764 223,855 9.3 Realized investment gains 5,021 2,106 138.4 Other income 3,198 1,379 131.9 -------- -------- $485,784 $436,806 ======== ======== Premiums and policy fees increased $23.3 million or 11.1% in the first six months of 1996 over the first six months of 1995. Increases in premiums and policy fees from the Group, Individual Life and Investment Products Divisions were $7.8 million, $8.8 million and $2.0 million, respectively. The coinsurance of a block of policies in the first quarter of 1996 resulted in a $8.9 million increase in premiums and policy fees. Premiums and policy fees from the Financial Institutions Division increased $0.8 million in the first six months of 1996 as compared to the first six months of 1995. This resulted from the reinsurance of a block of policies in the second quarter of 1996 representing an $18.2 million increase in premium and policy fees. This increase was largely offset by decreases resulting from a reinsurance arrangement, begun in 1995, 9 whereby all of the Division's new credit sales are being ceded to a reinsurer. Decreases in older acquired blocks resulted in a $5.2 million decrease in premiums and policy fees. Net investment income in the first six months of 1996 increased by $20.9 million over the corresponding period of the preceding year, primarily due to increases in the average amount of invested assets. Invested assets have increased primarily due to receiving annuity and guaranteed investment contract ("GIC") deposits and to acquisitions. The assumption of a block of policies in the first quarter of 1996 and a block of policies in the second quarter of 1996 resulted in an increase in net investment income of $9.0 million in the first six months of 1996 as compared to the same period in 1995. Protective Life generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash-flow needs. However, Protective Life may sell any of its investments to maintain approximate matching of assets and liabilities. Accordingly, Protective Life has classified its fixed maturities and certain other securities as "available for sale." The sales of investments that have occurred have resulted principally from portfolio management decisions to maintain approximate matching of assets and liabilities. Realized investment gains for the first six months of 1996 were $2.9 million higher than the corresponding period of 1995. In the 1996 first quarter, Protective Life sold $554 million of its commercial mortgage loans in a securitization transaction, resulting in a $6.1 million realized investment gain. Other income consists primarily of fees from administrative-services-only types of group accident and health insurance contracts, and from rental of space in its administrative building to PLC. Income Before Income Tax The following table sets forth income or loss before income tax by business segment for the periods shown: INCOME (LOSS) BEFORE INCOME TAX SIX MONTHS ENDED JUNE 30 (IN THOUSANDS) ------------------------------- BUSINESS SEGMENT 1996 1995 - ---------------- ---- ---- Acquisitions $26,122 $23,515 Financial Institutions 3,863 3,557 Group 4,865 4,351 Guaranteed Investment Contracts 15,171 15,363 Individual Life 7,271 9,545 Investment Products 7,244 4,994 Corporate and Other (4,379 (2,704) Unallocated Realized Investment Gains (Losses) 1,811 (1,955) ------- ------- $61,968 $56,666 ======= ======= 10 Pretax earnings from the Acquisitions Division increased $2.6 million in the first six months of 1996 as compared to the same period of 1995. Earnings from the Acquisitions Division are expected to decline over time (due to the lapsing of policies resulting from deaths of insureds or terminations of coverage) unless new acquisitions are made. The Division's two most recent acquisitions represented a $2.9 million increase. Older acquired blocks represented a $0.3 million decrease in the first six months of 1996 as compared to the same period in 1995. Pretax earnings of the Financial Institutions Division were $0.3 million higher in the first six months of 1996 as compared to the same period in 1995. The reinsurance arrangement begun in 1995 to reinsure all of the Division's new credit insurance sales and thereby improve the Division's return on investment, reduced the Division's reported earnings for the first six months of 1996 by approximately $1.9 million, as contemplated at the date of the arrangement. This decrease was partially offset by the coinsurance of a block of policies in the second quarter of 1996 which resulted in a $1.0 million increase in earnings. Group pretax earnings were $0.5 million higher in the first six months of 1996 as compared to the first six months of 1995. Dental earnings improved $1.2 million which was partially offset by a decline in traditional group health earnings. The Guaranteed Investment Contract ("GIC") Division had pretax operating earnings of $19.6 million in the first six months of 1996 and $15.1 million in the corresponding period of 1995. This was due to improved operating spreads and to the growth of GIC deposits placed with Protective Life. At June 30, 1996, GIC deposits totaled $2.5 billion compared to $2.4 billion one year earlier. Realized investment losses associated with this Division in the first six months of 1996 were $4.4 million, as compared to realized investment gains of $0.3 million in the same period last year. As a result, total pretax earnings were $15.2 million in the first six months of 1996 compared to $15.4 million for the same period in 1995. The Individual Life Division had pretax operating earnings of $6.2 million in the first six months of 1996 as compared to $9.5 million in the same period of 1995. The decrease was primarily due to higher expenses and to approximately $0.7 million higher life insurance claims in the first six months of 1996 as compared to the same period last year. Realized investment gains, net of related amortization of deferred policy acquisition costs, associated with this Division were $1.1 million in 1996. As a result, total pretax earnings were $7.3 million in the first six months of 1996 compared to $9.5 million as in the first six months of 1995 in which there were no realized investment gains. Investment Products Division pretax operating earnings were $5.1 million which was $2.5 million higher in the first six months of 1996 compared to the same period of 1995. Realized investment gains associated with the Division, net of related amortization of deferred policy acquisition costs, were $2.1 million as compared to $2.4 million last year, resulting in total pretax earnings of $7.2 million in the first quarter of 1996 as compared to $5.0 million in the same period of 1995. The Corporate and Other segment consists of several small insurance lines of business, net investment income and other operating expenses not identified with the preceding operating divisions (including interest on substantially all debt), and the operations of a small noninsurance 11 subsidiary. Pretax losses for this segment were $1.7 million higher in the first six months of 1996 as compared to the first six months of 1995 primarily due to lower investment income allocated to this segment. Income Taxes The following table sets forth the effective tax rates for the periods shown: SIX MONTHS ENDED ESTIMATED EFFECTIVE JUNE 30 INCOME TAX RATES ---------- ------------------- 1996 34.1% 1995 33.0 The effective income tax rate for the full year of 1995 was 34%. Management's estimate of the effective income tax rate for 1996 is also 34%. Net Income The following table sets forth net income for the periods shown: NET INCOME ---------- SIX MONTHS PERCENTAGE ENDED TOTAL INCREASE/ JUNE 30 (IN THOUSANDS) (DECREASE) ---------- -------------- ---------- 1996 $40,815 7.5% 1995 37,966 17.6 Compared to the same period in 1995, net income in the first six months of 1996 increased $2.8 million, reflecting improved operating earnings in the Acquisitions, Financial Institutions, Group, and Investment Products Divisions and higher realized investment gains net of related amortization of deferred policy acquisition costs which were offset by lower earnings in the Individual Life and Guaranteed Investment Contracts Divisions and the Corporate and Other segment. Recently Issued Accounting Standards In June 1996 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Protective Life anticipates that the impact of adopting this accounting standard will be immaterial to its financial condition. 12 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 - Financial data schedule SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROTECTIVE LIFE INSURANCE COMPANY Date: August 12, 1996 /s/ Jerry W. DeFoor ------------------- Jerry W. DeFoor Vice President and Controller, and Chief Accounting Officer (Duly authorized officer) 13 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
7 This schedule contains summary financial information extracted from the consolidated financial statements of Protective Life Insurance Company and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 4,461,977 0 0 45,668 1,463,770 19,015 6,266,571 13,632 322,683 471,572 7,684,983 2,250,256 271,470 0 142,691 0 2,000 0 5,000 682,620 7,684,983 232,801 244,764 5,021 3,198 308,761 51,340 63,715 61,968 21,153 40,815 0 0 0 40,815 0 0 0 0 0 0 0 0 0 Protective Life Insurance Company is a wholly-owned subsidiary of Protective Life Corporation (NYSE: PL) and is not required to present EPS information.
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