Protective Life Corporation (PL)

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Protective Life Corporation (PL)

Q3 2011 Earnings Call

November 3, 2011 10:00 a.m. ET

Executives

Eva Robertson - Vice President, Investor Relations

John Johns - Chairman, President and Chief Executive Officer

Richard Bielen - Vice Chairman and Chief Financial Officer

Edward Berko - Executive Vice President Chief Risk Officer

Carolyn Johnson - Executive Vice President and Chief Operating Officer

Carl Thigpen - Executive Vice President and Chief Investment Officer

Steven Walker - Senior Vice President, Controller and Chief Accounting Officer

Analysts

Mark Finkelstein - Evercore Partners

Steven Schwartz - Raymond James & Associates

Ed Spehar - Bank of America Merrill Lynch

Christopher Giovanni - Goldman Sachs

John Nadel - Sterne, Agee & Leach, Inc.

Ian Gutterman - Adage Capital

Presentation

Operator

Good day, ladies and gentlemen, and welcome to your Q3 2011 Protective Life Co. Earnings Conference Call. My name is Belleau and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards end of today's conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I will now turn the presentation over to your host for today’s conference, Eva Robertson, Vice President, Investor Relations. Please proceed.

Eva Robertson

Thank you, operator. Good morning, everybody, and welcome to Protective Life Corporation’s 2011 third quarter earnings call. Our call today is hosted by John Johns, Protective’s Chairman, President and CEO; as well as Rich Bielen, our Vice Chairman and CFO. Here in the room also we 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.

Yesterday we did release our earnings press release and the supplemental financial information, and both of those documents are posted on our website at www.protective.com. In addition to that information we are using a slide presentation today with our discussion. That deck is being webcast from a link on the Investor Relations section of our website and the file is available for download at that location.

Finally, today’s discussion does include forward-looking statements which are expectations of future events and results. Actual events and results may differ materially from what we’ll be talking about today but you can refer to our press release and the risk and uncertainties, as well as risk factors section of the company’s most recent report on Form 10-K and subsequent 10-Qs, for more information about factors that may affect future results.

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

At this time, I will turn the call over to John Johns.

John Johns

Yes, thank you, Eva, and thanks to everyone for joining us this morning to go over our third quarter earnings. We are very pleased to report strong financial results in the quarter. We think the results show that durability, resilience and strength of our core business franchise. Earnings for the quarter are up about 34% over the third quarter of last year. About 24% on a year-to-date basis.

Core segments are all solid, but we showed special strength in annuities, acquisitions and stable value. In life marketing the core earnings were strong, if you adjusted for some unlocking that occurred, which is normal in this third quarter of this year. Our plan is then to focus on improving returns in our life insurance business. Our sales slowed a bit but we are ahead of plan for the year in terms of sales and we do anticipate a return to growth next year in our life insurance business.

Annuities, very strong in the quarter. Sales were strong, earnings were strong, fund flows were positive for the quarter. We are very pleased overall with that segment. In acquisitions, the United Investors and Liberty transactions are now starting to be significant contributors to earnings. They are very much on track. The integration work is going just fine and we are very pleased with the progress we are making there.

Stable value, again, very good results in the quarter. We are pleased to see sales opportunities have come back. We are even seeing some interest in the traditional 401(k) pinch in business which is a good thing. It’s good business for us and we are optimistic about that segment as we look to the balance of the year. Asset protection, sales were up ahead of plan. Earnings right in line with plan. Overall a good quarter.

We did continue our share repurchase program in the quarter. We repurchased -- we spend about $34 million to repurchase about 2 million shares in the quarter. Year-to-date we’ve spend about $60 million to repurchase about 3 million shares. At our last board meeting, which occurred this week, our board authorized a new share repurchase program. They have authorized a repurchase of up to 300 million in shares, good through the end of 2014. That replaces the small remaining amount on our existing share repurchase program.

You may have seen an article this week in the Wall Street Journal dealing with AG 38, the actuarial guideline dealing with reserving of Universal Life products. Our name was mentioned in the article. As we have indicated, we believe that our methodologies are fully compliant with AG 38. We believe that our reserves are adequate. We have been subject to regulatory review and regulators have found that we are compliant with AG 38 and then our reserves are adequate.

We are involved in the industry discussions. They’re ongoing now with the regulatory community with the NAIC. Those are constructive and positive and we are very fortunate at this time to have some very strong and capable leadership and the NAIC and we are confident this issue is going to get resolved in a satisfactory manner.

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