Protective Life Corp
) reported second-quarter 2014 net operating earnings of $1.31 per
share, surpassing the Zacks Consensus Estimate by 9.2%. Earnings
improved 36% year over year on better performance across most of
the segments, but were dampened somewhat by weak results at the
Stable Value Products.
Protective Life Corporation - Earnings Surprise
Including realized investment gains and related amortization on
investment of 60 cents and realized investment loss and related
amortization on derivatives of 58 cents, net income of Protective
Life increased 4.7% year over year to $1.33 in the quarter.
Total revenue of Protective Life grossed $1.2 billion, up 20.8%
year over year on higher net premium and policy fess (up 39% year
over year) and net investment income (up 18%). Reported revenues
also outperformed the Zacks Consensus Estimate of $1.1 billion.
Total benefits and expenses of Protective Life increased 24% year
over year to $993 million on higher benefits and settlement
expenses and higher operating expenses.
Life Marketing reported pre-tax operating income of $26.3 million,
up 6.5% year over year on higher investment income partially offset
by less favorable mortality and higher operating expenses partially
offset by less favorable mortality and higher operating expenses.
Sales came in at $32.8 million, down 26% year over year.
Pre-tax operating income of Acquisitions was $64.9 million, more
than double year over year. The growth was mainly fueled by MONY
Life Insurance Company, which contributed $31.2 million to
Annuities pre-tax operating income surged 52% year over year to
$55.3 million. Sales dropped 49% year over year to $440.9 million.
Lower participating mortgage income and a decline in average
account values resulted in a 12% year-over-year decline in pre-tax
operating income at Stable Value to $17.3 million. The segment's
sales dropped to $50 million from $250.3 million in the year-ago
Asset Protection reported pre-tax operating income of $8.5 million,
up 14.7% year over year. The increase was prompted by higher
service contract earnings as well as higher credit insurance
earnings. Sales increased 2.5% year over year to $126.5 million.
Corporate & Other pre-tax operating loss was $12.6 million,
wider than $2.5 million loss incurred in the year-ago quarter.
Takeover By Dai-ichi Life Co.
In June, Protective Life announced its takeover by the Japanese
life insurer Dai-ichi Life Co. for $5.7 billion. The transaction is
expected to be completed in late 2014 or early 2015. The takeover
will provide immense diversification benefits, helping it to
transform from a national to an international player courtesy of
being a wholly owned subsidiary of the one of the largest insurers
This transaction will also enable Protective Life to deliver
substantial, immediate cash value to its shareholders and sustain
growth. Moreover, Protective Life will be part of the
thirteenth largest global insurer which Dai-ichi Life will
transform to, post acquisition. Consequently, courtesy of its
takeover, Protective Life will rise in rank from a medium to a
large-size U.S. insurer.
Protective Life presently carries a Zacks Rank #3 (Hold).
Performance of Other Life Insurers
While Lincoln National Corp. (
) outperformed the Zacks Consensus Estimate on higher revenues,
Reinsurance Group of America Inc. (
) surpassed the same on strong international earnings. However,
StanCorp Financial Group Inc. (
) missed the estimate on a less favorable claims experience in
Employee Benefits and Individual Disability.
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