Protective Life Corp. ( PL ) reported third-quarter 2014 net operating earnings of $1.33 per share, surpassing the Zacks Consensus Estimate by 9.9%. Earnings improved 36% year over year on higher contribution from Life Marketing, Acquisitions, Stable Value products and Asset Protection business segments.
Net income of Protective Life increased 27% year over year to $1.46 per share in the quarter.
Total revenue of Protective Life grossed $1.5 billion, up 20.5% year over year on higher net premium and policy fess (up 24.7% year over year) and net investment income (up 22.9%). Reported revenues also outperformed the Zacks Consensus Estimate of $1.14 billion.
Total benefits and expenses of Protective Life increased 18.8% year over year to $963.2 million on higher benefits and settlement expenses, increase in amortization of deferred policy acquisition costs and value of business acquired, and higher operating expenses.
Life Marketing reported pre-tax operating income of $32.8 million, up 12.3% year over year on higher investment income, increased universal life premiums and policy fees, and favorable traditional and universal life mortality. Sales came in at $33.2 million, up 1.5% year over year.
Pre-tax operating income of Acquisition s was $72.9 million, 2.5 times higher than $29.4 million reported in the year-ago quarter. This growth was mainly fueled by MONY Life Insurance Company, which contributed $29.3 million to operating earnings.
Annuities pre-tax operating income declined 3.0% year over year to $49.3 million. Sales dropped 1.7% year over year to $547.1 million.
Pre-tax operating income at Stable Value was $19.5 million, up 1.6% year over year. The increase was led by higher participating mortgage income, partly offset by a decline in average account values. The segment's sales plunged to $15 million from $80.2 million in the year-ago quarter.
Asset Protection reported pre-tax operating income of $8.5 million, up 24.9% year over year. The increase was prompted by higher service contract earnings. Sales increased 1.4% year over year to $131.8 million.
Corporate & Other pre-tax operating loss was $15.1 million, wider than the $14.3 million loss incurred in the year-ago quarter.
Recent Developments in 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 in Japan.
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. Post takeover, Protective Life will rise in rank from a medium to a large-size U.S. insurer.
On Oct 6, 2014, Protective Life held a Special Meeting of shareholders at which its shareowners gave a nod to the merger. The transaction is progressing as scheduled.
Protective Life presently carries a Zacks Rank #4 (Sell).
Performance by Other Life Insurers
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