Protective Life Corporation (PL)

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Protective Life Corp. (PL)

Q2 2011 Earnings Call

August 4, 2011 10:00 AM ET

Executives

Eva Robertson – VP, IR

John Johns – Chairman, President and CEO

Richard Bielen – VP and CFO

Carl Thigpen – Chief Investment Officer

Analysts

Spehar – Bank of America/Merrill Lynch

John Nadel – Sterne, Agee & Leach, Inc

Steven Schwartz – Raymond James Associates

Eric Berg – Barclays Capital

Edward Spehar – Bank of America/Merrill Lynch

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Q2 2011 Protective Life Co Earnings Conference Call. My name is Grant and I will be your operator today. During the presentation, all participants will be in a listen-only mode. After the speaker’s remarks, you will be invited to participate in a question-and-answer session. As a reminder, this conference is also being recorded. And now I would now like to hand the call over to for the host of today’s call, Eva Robertson, the Vice President of Investor Relations.

Eva Robertson

Thank you, Grant. Good morning, everybody. Welcome to Protective Life Corporation’s 2011 second quarter earnings call. Our call today will be hosted by John Johns, Protective’s Chairman, President and CEO; along with Rich Bielen, our Vice Chairman and CFO. Here with us we also have Carl Thigpen, our Chief Investment Officer; Carolyn Johnson, our Chief Operating Officer; Steve Walker, our Chief Accounting Officer; and Ed Berko, our Chief Risk Officer to help with questions and discussions that we will be having this morning.

Yesterday we released our earnings press release and along with the supplemental financial information and both of those documents are posted on our website at protective.com.

In addition to that information, we are using a slide presentation with our discussion this morning, and that slide that has been webcast from our link in the Investor Relations section of the website at protective.com. It is also available for download at that location.

And finally today, our discussion will include some forward-looking statements and those express our view of future events and expectations. Actual events and results may differ from what we – we’ll be discussing today. You can refer to our press release and the risk and uncertainties as well as risk factors section of the company’s most recent 10-K and subsequent 10-Q, for more information about what may affect future events.

Our discussion also includes non-GAAP financial information and a reconciliation to GAAP measures can be found in the supplemental financial information on our website.

At this time, I’d like to turn the call over to John Johns.

John Johns

Good morning everyone and thank you Eva. We are pleased today to discuss what we view as very solid results for the second quarter of this year. Rich Bielen, our CFO will go through the results in detail in just a moment.

But I’d like to again noting that we were able in the quarter to restart our share repurchase program as those of you who follow us closely note that our Investors Conference of last year we laid out a comprehensive three-year plan for the company, the plan contemplated 50 basis points to 70 basis points of annual improvement in ROE leading to achievement of an ROE of in excess of 10% in 2013, double-digit growth in earnings per share. And just an overall approach to management of our business that would lead to less risk in products, investments and balance sheet.

I’m very pleased to say that we’re very much on that plan about three to first six months of this year actually we’re a bit ahead of it. But the repurchase program is a bit of a new – really wasn’t contemplated when we put that plan together that we would reinitiate the repurchase program at this juncture.

However, what has changed is that, when we were putting the plan together we assumed that as the other elements of the plan started to come together things that did the closing of the United Investor Liberty Life acquisition good results on our retail marketing units that our stock price would start going up. But instead it’s gone down. It’s now at a point where we found repurchase of our shares to be very compelling. And our intention is to continue to repurchase our shares at about this level through the plan period unless circumstances change.

We’ll note too that at this level of repurchase we’ll be able to maintain at a healthy cushion of capital to deal with any unexpected contingencies and also to take advantage of acquisition opportunities if they come along. But I would note that an acquisition opportunity would have to be very compelling to compete with repurchase of our shares at this level.

If you step back and look at what this really means, it means that as we continue to repurchase at this level and continue our current dividend, we’ll be returning to our investors a little bit more than 50% of our earnings or after-tax of earnings. And again and say we do believe we have the capacity to continue generate capital that will support those sorts of plans.

Also note that our results in our retail marketing units were very strong in the quarter very much in line with our plans for growth and return in – improvement in returns. At the investment income in the corporate and other segment was a bit less than planned due to lower than expected interest rates and higher than planned cash balances. But at the same time, this was largely offset in Life Marketing, Annuities and Stable Value are higher than plan sales and account balances and lower liability costs. So overall we’re very pleased with that result.

Read the rest of this transcript for free on seekingalpha.com