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Protective Reports Fourth Quarter And Full-Year 2012 Financial Results

Share Repurchase Program

During the fourth quarter of 2012, the Company repurchased 1,047,084 shares at a total cost of approximately $27.4 million. For the twelve months ended December 31, 2012, the Company repurchased 3,923,336 shares at a total cost of approximately $106 million. The Company has $170 million of remaining capacity under its existing share repurchase program, which extends through December 31, 2014.

Future repurchase activity will depend on many factors, including capital levels, liquidity needs, rating agency expectations, and the relative attractiveness of alternative uses for capital.

Investments
  • The net unrealized gain position on investments was $1.8 billion, after tax and DAC offsets, an improvement of $754 million compared to December 31, 2011.
  • Total cash and investments were $37.3 billion as of December 31, 2012. This includes $0.6 billion of cash and short-term investments.
  • During the fourth quarter of 2012, the Company had $18.0 million of pre-tax other-than-temporary impairment losses recognized in earnings.
  • Nonperforming mortgage loans equaled $23.9 million as of December 31, 2012, representing 0.5% of the commercial mortgage loan portfolio.
       
Net Realized Investment/Derivative Activity
($ per average diluted share) 4Q12 2012
 
Net realized gain on securities $ 0.07 $ 0.53
Modco net realized gain 0.06 0.37
Impairments (0.14 ) (0.46 )
Derivatives related to VA contracts (0.13 ) (0.38 )
Mortgage/real estate losses (0.01 ) (0.11 )
All other   (0.01 )   (0.07 )
Total $ (0.16 ) $ (0.12 )
 

Operating income differs from the GAAP measure, net income, in that it excludes realized investment gains (losses) and related amortization. The tables below reconcile operating income to net income available to PLC’s common shareowners:

Fourth Quarter and Full-Year Consolidated Results
               

For the
For the

three months ended

twelve months ended

December 31,
December 31,
($ in thousands; net of income tax) 2012 2011 2012 2011
 
After-tax operating income $ 79,746 $ 81,786 $ 312,716 $ 283,844

Realized investment gains (losses) and related amortization
Investments (3,320 ) 6,377 121,022 118,239
Derivatives   (9,630 )   (2,129 )   (131,286 )   (86,691 )

Net income available to PLC’s common shareowners
$ 66,796   $ 86,034   $ 302,452   $ 315,392  
 
 

For the

For the

three months ended

twelve months ended

December 31,

December 31,
($ per average diluted share; net of income tax) 2012 2011 2012 2011
 
After-tax operating income $ 0.98 $ 0.97 $ 3.78 $ 3.28

Realized investment gains (losses) and related amortization
Investments (0.04 ) 0.08 1.47 1.37
Derivatives   (0.12 )   (0.03 )   (1.59 )   (1.00 )

Net income available to PLC’s common shareowners
$ 0.82   $ 1.02   $ 3.66   $ 3.65  
 

For information relating to non-GAAP measures (operating income and PLC’s shareowners’ equity per share excluding other comprehensive income (loss)) in this press release, please refer to the disclosure at the end of this press release and to the Company’s Supplemental Financial Information located on the Company’s website at www.protective.com . All per share results in this press release are presented on a diluted basis, unless otherwise noted.
       

Reconciliation of PLC’s Shareowners’ Equity, Excluding Accumulated Other Comprehensive Income
 
($ in millions) December 31, December 31,
2012 2011

PLC’s shareowners’ equity
$ 4,615 $ 3,711
Less: Accumulated other comprehensive income   1,737   985

PLC’s shareowners’ equity, excluding accumulated other comprehensive income
$ 2,878 $ 2,726
 
 
 
 

Reconciliation of PLC’s Shareowners’ Equity per share, Excluding Accumulated Other Comprehensive Income per share
 
($ per common share outstanding) December 31, December 31,
2012 2011

PLC’s shareowners’ equity
$ 59.06 $ 45.45
Less: Accumulated other comprehensive income   22.22   12.07

PLC’s shareowners’ equity excluding accumulated other comprehensive income
$ 36.84 $ 33.38
 

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.

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