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Protective Life Corporation (PL)

Q3 2012 Earnings Call

November 7, 2012 10:00 AM ET


Eva Robertson - Vice President, Investor Relations

John Johns - Chairman, President and Chief Executive Officer

Richard Bielen - Vice Chairman and Chief Financial Officer

Carl Thigpen - Executive Vice President and Chief Investment Officer

Carolyn Johnson - Executive Vice President and Chief Operating Officer

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


Sean Dargan - Macquarie

Chris Giovanni - Goldman Sachs

Joanne Smith - Scotia Capital

Jimmy Bhullar - JPMorgan

Mark Finkelstein - Evercore Partners

John Nadel - Sterne, Agee

Eric Berg - RBC Capital Markets

Tom Gallagher - Credit Suisse

Steven Schwartz - Raymond James Associates

Dan Berman - UBS



Good day, ladies and gentlemen, and welcome to the Q3 2012 Protective Life Corporation earnings conference call. (Operator Instructions) I would now like to turn the call over to, Ms. Eva Robertson, Vice President, Investor Relations.

Eva Robertson

Good morning, everyone. Welcome to Protective Life Corporation's third quarter earnings call. Our call today is hosted by John Johns, our Chairman, President and CEO; as well as Rich Bielen, our Vice Chairman and CFO. And here in the room with us, we also have Carl Thigpen, our Executive Vice President and Chief Investment Officer; Carolyn Johnson, our Executive Vice President and Chief Operating Officer; and Steve Walker, our Senior Vice President and Chief Accounting Officer.

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

Finally, today's discussion includes forward-looking statements which express expectations of future events and results. Actual events and results may differ materially from these expectations. You can refer to our press release and the risks and uncertainties, as well as Risk Factors section of the company's most recent report on Form 10-K or subsequent 10-Q for more information about these factors that may affect our future results.

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

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

John Johns

Thank you, Eva, and thanks everyone for joining our call this morning. Before we jump into discussion of the quarters, we would like to express our best wishes and concerns to all our friends up in the Northeast, who are now continuing to suffer some of the consequences of the superstorm Sandy, and the storm is heading up that way now, but please note that we're thinking about you and we hope everybody is getting to just fine.

We're pleased to report what we view as a very solid quarter in the third quarter. To look under the hood, the income seems to be running very well. At Protective right now, our fundamentals all seem very strong. On a year-to-date basis, our operating earnings are up 15% over last year. As you know, we track our sales and we'll do that against our internal financial plans. We're consistently running ahead of plan for the year.

Some of the highlights for the quarter are Life sales starting to pick up, as we expected they would. You will recall that we were sort of an early adopter and moved our pricing around in reaction to lower interest rates, a bit earlier than a lot of other companies in the industry, but that's all starting to play out now. And as expected, we had a nice quarter for Life sales and we think that will continue through the fourth quarter. The sales were up 21% sequentially and 12% on a year-over-year basis.

Annuity business continues to be very robust and strong. We have nice positive flows in the segment. Our account values are now at record levels, up 4% sequentially, 15% year-over-year. Our Acquisition block performed extremely well in the quarter, with the two recent acquisitions are performing just right on our plans maybe a bit ahead here in the yonder.

Stable Value continues to perform very well. We're experiencing very nice spreads there and actually seeing a bit of sales activity. Again, we're picking up a little bit of sales in the Stable Value line. One very pleasant surprise in the quarter was we had extremely strong investment income in the quarter. We don't think it will be quite robust in the fourth quarter, but we enjoyed it this quarter. And again, our investment income is holding quite well and very much in line with our expectations, notwithstanding the low interest rate environment.

And lastly, we're very excited about our capital position. Our capital generation is very, very strong, and Rich will talk about that in more detail, Rich Bielen, our CFO, but it's really a bright spot for us right now. As a consequence, we have continued our share repurchase program, we continue to pay a nice dividend, and again our expectation is it will be able to continue to do that out in the future.

So again, the whole focus around here is only plan. We expect to have a good strong close for the quarter, and I'll come back and say a bit more about that at the end of our presentation.

I'll now turn it over to our Vice Chairman and Chief Financial Officer, Rich Bielen.

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