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Protective Reports First Quarter 2012 Results

Protective Life Corporation (NYSE: PL) (“PLC” or “the Company”) today reported results for the first quarter of 2012. Net income available to PLC’s common shareowners for the first quarter of 2012 was $99.0 million or $1.18 per average diluted share, compared to $58.9 million or $0.67 per average diluted share in the first quarter of 2011. After-tax operating income was $99.1 million or $1.18 per average diluted share, compared to $62.5 million or $0.71 per average diluted share in the first quarter of 2011.

“We are pleased to report strong financial results in the first quarter,” said John D. Johns, Chairman, President and CEO. “Our pre-tax operating earnings were up 56% over the first quarter of last year and 30% over the fourth quarter of 2011. We will continue to remain focused and disciplined in the way we allocate capital, manage risk and expenses and prudently grow our retail product lines. Notwithstanding the headwinds created by low interest rates and the macroeconomic environment, we remain optimistic about our ability to execute successfully on our business and financial plans for the year.”

Accounting Changes

Results for the current and all prior periods reflect the adoption and the Company’s retrospective application of Accounting Standards Update 2010-26, effective January 1, 2012, which modifies the accounting guidance for deferred acquisition costs.

Current and prior period operating income results within the Annuities segment have been updated to reflect the Company’s revised definition of operating income (loss) as it relates to embedded derivatives on our variable annuity contracts and related hedging activities. This change did not impact its comparable GAAP measure income before income tax.

See information relating to non-GAAP measures at the end of this press release.

Business Segment Results

The table below sets forth business segment operating income before income tax for the periods shown:
(dollars in thousands)                
1Q12 1Q11 $ Variance % Variance
Life Marketing $ 30,369 $ 19,273 $ 11,096 58%
Acquisitions 39,099 32,391 6,708 21%
Annuities 35,783 18,640 17,143 92%
Stable Value Products 12,646 9,195 3,451 38%
Asset Protection 4,966 6,852 (1,886 ) -28%
Corporate & Other   27,880   10,021   17,859   n/m
$ 150,743 $ 96,372 $ 54,371   56%

The following table reconciles segment operating income to consolidated net income available to PLC’s common shareowners:
(dollars in thousands)        
1Q12 1Q11
Operating income before income tax $ 150,743 $ 96,372
Realized investment gains (losses) (5,707 ) (9,532 )
Related amortization of deferred policy acquisition costs and value of business acquired (5,543 ) (3,925 )
Income tax expense   51,558     31,887  
Net income available to PLC's common shareowners $ 99,021   $ 58,878  


The Company uses sales statistics to measure the relative progress of its marketing efforts. The Company derives these statistics from various sales tracking and administrative systems and not from its financial reporting systems or financial statements. These statistics measure only one of many factors that may affect future profitability of the business segments and therefore are not intended to be predictive of future profitability.

The table below sets forth business segment sales for the periods shown:
(dollars in millions)                
1Q12 1Q11 $ Variance % Variance
Life Marketing $ 22.6 $ 42.5 $ (19.9 ) -47%
Annuities 720.2 917.1 (196.9 ) -21%
Stable Value Products 176.0 74.7 101.3 n/m
Asset Protection 109.9 90.2 19.7 22%

Review of Business Segment Results

Life Marketing

Life Marketing segment pre-tax operating income was $30.4 million in the first quarter of 2012 compared to $19.3 million in the first quarter of 2011. The increase was primarily due to higher investment income, a favorable change in unlocking of $(5.0) million in 1Q12 vs. $(6.0) million in 1Q11, more favorable traditional life mortality, and lower operating expenses. Traditional life mortality was 90% of expected in the first quarter of 2012 compared to 94% of expected in the first quarter of 2011.

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