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Previous: BTI TELECOM CORP, 10-Q, 2000-05-15 |
Next: PROTECTIVE LIFE & ANNUITY INSURANCE CO, 10-Q, 2000-05-15 |
ALABAMA 63-0761690
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No[ ]
Number of shares of Common Stock, $10.00 par value, outstanding as of May 5, 2000: 250,000 shares.
The registrant meets the conditions set forth in General Instruction H(1)(a)and (b) of Form 10-Q and
Page Number
Part I. Financial Information:
Item 1. Financial Statements:
Report of Independent Accountants......................................
Condensed Statements of Income for the Three Months
ended March 31, 2000 and 1999 (unaudited)............................
Condensed Balance Sheets as of March 31, 2000
(unaudited) and December 31, 1999....................................
Condensed Statements of Cash Flows for the
Three Months ended March 31, 2000 and 1999 (unaudited)...............
Notes to Condensed Financial Statements (unaudited)....................
Item 2. Management's Narrative Analysis of the Results of Operations......
Item 3. Quantitative and Qualitative Disclosures about Market Risk........
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K....................................
Signature......................................................................
We have reviewed the accompanying condensed balance sheet of Protective Life and Annuity Insurance Company as of March 31, 2000, and the related condensed statements of income for the three-month periods ended March 31, 2000 and 1999, and condensed statements of cash flows for the three-month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the condensed interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.
We previously audited in accordance with auditing standards generally accepted in the United States, the balance sheet as of December 31, 1999, and the related statements of income, share- owners' equity, and cash flows for the year then ended (not presented herein), and in our report dated February 23, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1999, is fairly stated in all material respects in relation to the balance sheet from which it has been derived.
PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
CONDENSED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
MARCH 31
-------------------------------
2000 1999
---- ----
REVENUES
Premiums and policy fees $12,776,306 $16,615,108
Reinsurance ceded (4,678,778) (5,513,237)
----------- ------------
Premiums and policy fees, net of reinsurance ceded 8,097,528 11,101,871
Net investment income 7,366,363 6,935,627
Realized investment gains 11,044
Other income (loss) 3,708 (8,736)
------------ ------------
15,467,599 18,039,806
------------ ------------
BENEFITS AND EXPENSES
Benefits and settlement expenses (net of reinsurance ceded:
2000 - $3,523,755; 1999 - $4,420,651) 8,017,391 10,466,587
Amortization of deferred policy acquisition costs 1,574,851 2,225,730
Other operating expenses (net of reinsurance ceded:
2000 - $78,596; 1999 - $70,765) 3,355,127 2,313,441
------------ ------------
12,947,369 15,005,758
------------ ------------
INCOME BEFORE INCOME TAX 2,520,230 3,034,048
Income tax expense 869,479 849,533
------------ -------------
NET INCOME $ 1,650,751 $ 2,184,515
=========== ============
See notes to condensed financial statements
PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
CONDENSED BALANCE SHEETS
MARCH 31 DECEMBER 31
2000 1999
-------- -----------
(Unaudited)
ASSETS
Investments
Fixed maturities, at market
(amortized cost: 2000 - $401,182,167; 1999 - $384,291,937) $383,089,822 $366,838,300
Mortgage loans on real estate 3,577,256 3,683,311
Investment in real estate, net of accumulated depreciation 1,092,500 1,096,250
Policy loans 54,668,050 54,824,429
Short-term investments 3,498,891 7,493,877
------------- -------------
Total investments 445,926,519 433,936,167
Cash 3,506,708 4,021,839
Accrued investment income 7,705,176 7,718,388
Accounts and premiums receivable, net of allowance for uncollectible
amounts (2000 - $7,000; 1999 - $7,000) 2,779,475 4,256,931
Reinsurance receivables 28,207,947 26,779,589
Deferred policy acquisition costs 134,266,161 127,792,025
Other assets 28,718 41,731
Assets related to separate accounts
Variable annuity 7,328,018 4,951,159
----------- -----------
$629,748,722 $609,497,829
=========== ===========
LIABILITIES
Policy liabilities and accruals:
Future policy benefits and claims $446,838,854 $445,284,973
Unearned premiums 7,766,548 7,852,424
------------- ------------
454,605,402 453,137,397
Annuity deposits 17,804,259 12,253,056
Other policyholders' funds 5,459,331 5,410,510
Other liabilities 19,362,542 18,338,059
Deferred income taxes 3,520,454 109,523
Liabilities related to separate accounts
Variable annuity 7,328,018 4,951,159
------------- ------------
Total liabilities 508,080,006 494,199,704
------------- ------------
COMMITMENTS AND CONTINGENT LIABILITIES - NOTE B
SHARE-OWNERS' EQUITY
Preferred Stock, $1.00 par value, shares authorized, issued, and
outstanding: 2,000 2,000 2,000
Common Stock, $10 par value
Shares authorized: 500,000
Shares issued and outstanding: 2000 and 1999: 250,000 2,500,000 2,500,000
Additional paid-in capital 101,386,324 101,386,324
Retained earnings 24,405,416 22,754,665
Accumulated other comprehensive income
Net unrealized gains (losses) on investments (net of income
tax: 2000 - $(3,567,321); 1999 - $(6,108,773)) (6,625,024) (11,344,864)
------------- -------------
Total share-owners' equity 121,668,716 115,298,125
------------- -------------
$629,748,722 $609,497,829
============= =============
See notes to condensed financial statements
PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
MARCH 31
-----------------------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,650,751 $ 2,184,515
Adjustments to reconcile net income to net cash used in operating activities:
Realized investment gains (11,044)
Amortization of deferred policy acquisition costs 1,574,851 2,225,730
Capitalization of deferred policy acquisition costs (148,987) (140,406)
Deferred income tax 869,479 849,533
Interest credited to universal life and investment products 4,382,558 2,928,606
Policy fees assessed on universal life and investment products (9,778,675) (250,505)
Change in accrued investment income and other receivables 62,310 (3,556,811)
Change in policy liabilities and other policyholder
funds of traditional life and health products 5,406,468 (800,200)
Change in other liabilities 1,024,483 567,779
Other (net) 13,013 14,012
---------- ---------
Net cash provided by operating activities 5,056,251 4,011,209
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities and principal reductions of investments
Investments available for sale 101,329,695 96,448,241
Other 111,127 1,994,242
Sale of investments
Investments available for sale 14,009,410
Cost of investments acquired
Investments available for sale (114,069,882) (116,763,891)
------------ ------------
Net cash used in investing activities (12,629,060) (4,311,998)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Investment product deposits and change in universal life deposits 19,756,393 12,990,963
Investment product withdrawals (12,698,715) (11,694,009)
---------- ------------
Net cash provided by financing activities 7,057,678 1,296,954
---------- ------------
INCREASE (DECREASE) IN CASH (515,131) 996,165
CASH AT BEGINNING OF PERIOD 4,021,839 0
---------- ----------
CASH AT END OF PERIOD $3,506,708 $996,165
=========== ==========
See notes to condensed financial statements
The accompanying unaudited condensed financial statements of Protective Life and Annuity Insurance Company ("the Company") have been prepared on the basis of accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. For further information, refer to the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999.
All outstanding shares of the Company's common stock are owned by Protective Life Insurance Company ("Protective"), which is a wholly-owned subsidiary of Protective Life Corporation ("PLC"). All outstanding shares of the Company's preferred stock are owned by PLC.
Under insurance guaranty fund laws, in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer's own financial strength.
A number of civil jury verdicts have been returned against insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments against the insurer that are disproportionate to the actual damages, including material amounts of punitive damages. In addition, in some class action and other lawsuits involving insurers' sales practices, insurers have made material settlement payments. In some states (including Alabama), juries have substantial discretion in awarding punitive damages which creates the potential for unpredictable material adverse judgments in any given punitive damage suit. The Company, like other insurers, in the ordinary course of business, are involved in such litigation or alternatively in arbitration. Although the outcome of any litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.
PLC, through its subsidiaries, operates seven divisions whose principal strategic focus can be grouped into three general categories: life insurance, specialty insurance products, and retirement savings and investment products. The Company is involved in the businesses of four of PLC's seven divisions. The following table sets forth operating segment income and assets for the periods shown. Adjustments represent the inclusion of unallocated realized investment gains (losses) and the recognition of income tax expense. There are no asset adjustments.
Operating Segment Income for the
Three Months Ended March 31, 2000
----------------------------------------------------------------
Dental and
Consumer Financial
Acquisitions Benefits Institutions
------------ ---------- ------------
Premiums and policy fees $11,785,305 $292,478 $ 677,657
Reinsurance ceded (4,532,540) (146,238)
------------ -------- -------
Net of reinsurance ceded 7,252,765 146,240 677,657
Net investment income 7,005,884 1,616 141,512
Realized investment gains (losses)
Other income
----------- -------- ---------
Total revenues 14,258,649 147,856 819,169
----------- -------- ---------
Benefits and settlement expenses 7,010,523 79,306 720,279
Amortization of deferred policy
acquisition costs 1,411,832 163,019
Other operating expenses 2,826,773 (1,980) 19,950
----------- --------- ----------
Total benefits and expenses 11,249,128 77,326 903,248
----------- -------- ---------
Income (loss) before income tax 3,009,521 70,530 (84,079)
Corporate
Investment and
Products Other Adjustments Total
----------- ----------- ----------- -----
Premiums and policy fees $ 20,866 $12,776,306
Reinsurance ceded (4,678,778)
------- ----------
Net of reinsurance ceded 20,866 8,097,528
Net investment income 243,888 $(26,537) 7,366,363
Realized investment gains (losses)
Other income 3,708 3,708
------- -------- ----------
Total revenues 268,462 (26,537) 15,467,599
------- -------- ----------
Benefits and settlement expenses 207,283 8,017,391
Amortization of deferred policy
acquisition costs 1,574,851
Other operating expenses 376,289 134,095 3,355,127
------- -------- ----------
Total benefits and expenses 583,572 134,095 12,947,369
------- -------- ----------
Income (loss) before income tax (315,110) (160,632) 2,520,230
Income tax expense 869,479 869,479
----------
Net income $1,650,751
==========
Operating Segment Income for the
Three Months Ended March 31, 1999
--------------------------------------------------------------
Dental and
Consumer Financial
Acquisitions Benefits Institutions
------------ --------- ------------
Premiums and policy fees $15,658,767 $605,037 $349,482
Reinsurance ceded (5,336,719) (176,518)
---------- -------- -------
Net of reinsurance ceded 10,322,048 428,519 349,482
Net investment income 6,657,571 120,269 59,342
Realized investment gains (losses)
Other Income (8,718)
---------- -------- --------
Total revenues 16,970,901 548,788 408,824
---------- -------- --------
Benefits and settlement expenses 9,850,644 436,081 153,913
Amortization of deferred policy
acquisition costs 2,138,361 87,369
Other operating expenses 2,182,085 8,554 (57,899)
---------- -------- --------
Total benefits and expenses 14,171,090 444,635 183,383
---------- -------- --------
Income before income tax 2,799,811 104,153 225,441
Corporate
Investment and
Products Other Adjustments Total
----------- ----------- ----------- -----
Premiums and policy fees $ 1,822 $16,615,108
Reinsurance ceded (5,513,237)
----- ----------
Net of reinsurance ceded 1,822 11,101,871
Net investment income $98,445 6,935,627
Realized investment gains (losses) $ 11,044 11,044
Other Income (18) (8,736)
----- ------ ------- ----------
Total revenues 1,804 98,445 11,044 18,039,806
------ ------ ------- ----------
Benefits and settlement expenses 25,949 10,466,587
Amortization of deferred policy
acquisition costs 2,225,730
Other operating expenses 155,571 25,130 2,313,441
------- ------- ----------
Total benefits and expenses 181,520 25,130 15,005,758
------- ------- ------- ----------
Income (loss) before income tax (179,716) 73,315 11,044 3,034,048
Income tax expense 849,533 849,533
----------
Net income $ 2,184,515
==========
Operating Segment Assets
March 31, 2000
Dental and
Consumer Financial
Acquisitions Benefits Institutions
------------ --------- ------------
Investments and other assets $432,750,859 $3,728,824 $11,741,402
Deferred policy acquisition costs 132,736,033 1,530,128
------------ ---------- ------------
Total assets $565,486,892 $3,728,824 $13,271,530
============ ========== ===========
Corporate
Investment and
Products Other Total
------------ ----------- ------------
Investments and other assets $15,418,535 $31,842,941 $495,482,561
Deferred policy acquisition costs 134,266,161
----------- ----------- ------------
Total assets $15,418,535 $31,842,941 $629,748,722
=========== =========== ============
Operating Segment Assets
December 31, 1999
Dental and
Consumer Financial
Acquisitions Benefits Institutions
------------ ---------- -----------
Investments and other assets $424,265,907 $3,871,844 $11,815,617
Deferred policy acquisition costs 126,247,865 1,544,160
------------ ---------- -----------
Total assets $550,513,772 $3,871,844 $13,359,777
============ ========== ===========
Corporate
Investment and
Products Other Total
---------- ----------- ------------
Investments and other assets $9,812,824 $31,939,612 $481,705,804
Deferred policy acquisition costs 127,792,025
---------- ----------- ------------
Total assets $9,812,824 $31,939,612 $609,497,829
========== =========== ============
Financial statements prepared in conformity with generally accepted accounting principles (i.e., GAAP) differ in some respects from the statutory accounting practices prescribed or permitted by insurance regulatory authorities. At March 31, 2000, and for the three months then ended, the Company had share-owners' equity and net income prepared in conformity with statutory reporting practices of $34.5 million and $3.2 million, respectively.
As prescribed by Statement of Financial Accounting Standards ("SFAS") No. 115, certain investments are recorded at their market values with the resulting net unrealized gains and losses reduced by a related adjustment to deferred policy acquisition costs, net of income tax, recorded as a component of share-owners' equity. The market values of fixed maturities increase or decrease as interest rates fall or rise. Therefore, although the application of SFAS No. 115 does not affect the Company's operations, its reported share-owners' equity will fluctuate significantly as interest rates change.
The Company's balance sheets at March 31, 2000 and December 31, 1999, prepared on the basis of reporting investments at amortized cost rather than at market values, are as follows:
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
Total investments $464,018,864 $451,389,804
Deferred policy acquisition costs 126,366,161 127,792,025
All other assets 49,556,042 47,769,637
----------- -----------
$639,941,067 $626,951,466
=========== ===========
Deferred income taxes $ 7,087,775 $ 6,218,296
All other liabilities 504,559,552 494,090,181
----------- -----------
511,647,327 500,308,477
Share-owners' equity 128,293,740 126,642,989
----------- -----------
$639,941,067 $626,951,466
=========== ===========
The following table sets forth the Company's comprehensive income (loss) for the three months ended March 31, 2000 and 1999:
Three Months Ended
March 31
------------------
2000 1999
---- ----
Net income $1,650,751 $2,184,515
Increase (decrease) in net unrealized gains
on investments (net of income tax:
2000 - $2,541,452; 1999 - $(2,336,724)) 4,719,840 (4,339,630)
Reclassification adjustment for amounts
included in net income (net of income tax:
1999 - $(3,865)) (7,179)
--------- ----------
Comprehensive income (loss) $6,370,591 $(2,162,294)
========= ==========
Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income, total assets, or share-owners' equity.
Protective Life and Annuity Insurance Company ("the Company"), a stock life insurance company, was founded in 1978. Since 1983, all outstanding shares of the Company's common stock have been owned by Protective Life Insurance Company ("Protective"), which is a wholly- owned subsidiary of Protective Life Corporation ("PLC"), an insurance holding company whose common stock is traded on the New York Stock Exchange under the symbol "PL". All outstanding shares of the Company's preferred stock are owned by PLC. The Company is authorized to transact insurance business as an insurance company or a reinsurance company in 48 states, including New York.
In accordance with General Instruction H(2)(a), the Company includes the following analysis with the reduced disclosure format.
PLC through its subsidiaries provides financial services through the production, distribution, and administration of insurance and investment products. PLC through its subsidiaries operates seven divisions whose principal strategic focuses can be grouped into three general categories: life insurance, specialty insurance products, and retirement savings and investment products. The life insurance category includes the Individual Life, West Coast, and Acquisitions Divisions. The specialty insurance products category includes the Dental and Consumer Benefits ("Dental") and Financial Institutions Divisions. The retirement savings and investment products category includes the Stable Value Products and Investment Products Divisions.
The Company, since it is licensed in the State of New York, is the entity through which PLC markets, distributes, and services insurance and annuity products in New York. As of March 31, 2000, the Company was involved in the businesses of four of PLC's seven divisions: the Acquisition Division, the Dental Division, the Financial Institutions Division and the Investment Products Division. The Company has an additional business segment which is described herein as Corporate and Other.
Protective has entered into an intercompany guaranty agreement, enforceable by the Company or its successors, whereby Protective has guaranteed the Company's payment of claims made by the holders of Company policies according to the terms of such policies. The guarantee will remain in force until the earlier of (a) when the Company achieves a claims-paying rating equal to or better than Protective without the benefit of any intercompany guaranty agreement or (b) 90 days after the guaranty agreement is revoked by written instrument; provided, however, even after any revocation or termination by such notice, the guarantee shall remain effective as to policies issued during the existence of the guaranty agreement.
This report includes "forward-looking statements" which express expectations of future events and/or results. The words "believe", "expect", "anticipate" and similar expressions identify forward-looking statements which are based on future expectations rather than on historical facts and are subject to a number of risks and uncertainties, and the Company cannot give assurance that such statements will prove to be correct. Please refer to Exhibit 99 herein for more information about factors which could affect future results.
The following table sets forth revenues by source for the period shown, and the percentage change from the prior period:
THREE MONTHS PERCENTAGE
ENDED INCREASE
MARCH 31 (DECREASE)
-------------------------- ----------
2000 1999
---- ----
Premiums and policy fees $8,097,528 $11,101,871 (27.1)%
Net investment income 7,366,363 6,935,627 6.2
Realized investment gains -- 11,044 --
Other 3,708 (8,736) --
----------- -----------
$15,467,599 $18,039,806
=========== ===========
Premiums and policy fees, net of reinsurance ("premiums and policy fees") decreased $3.0 million or 27.1% in the first three months of 2000 over the first three months of 1999. Premiums and policy fees from the Acquisitions Division decreased $3.1 million primarily due to the expected lapsing of policies associated with the nature of the division. Premiums and policy fees related to the Dental Division decreased $0.3 million in the first three months of 2000 as compared to the same period in 1999, primarily due to the termination of a group life customer effective December 31, 1999. The Financial Institutions Division's premiums and policy fees increased $0.3 million in the first three months of 2000 over the first three months of 1999 due to increased marketing efforts and sales momentum.
Net investment income in the first three months of 2000 increased $0.4 million or 6.2% as compared to the corresponding period of the preceding year primarily due to increases in the average amount of invested assets.
The Company generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash-flow needs. However, the Company may sell any of its investments to maintain approximate matching of assets and liabilities. Accordingly, the Company has classified its fixed maturities and certain other securities as "available for sale." The sales of investments that have occurred generally result from portfolio management decisions to maintain proper matching of assets and liabilities.
The Company reported an insignificant amount of realized investment gains and other income (loss) in the first three months of 2000 and 1999.
The following table sets forth operating income or loss and income or loss before income tax by business segment for the periods shown:
OPERATING INCOME (LOSS) AND INCOME (LOSS) BEFORE INCOME TAX
THREE MONTHS ENDED MARCH 31
2000 1999
---- ----
Operating Income (Loss)1
Acquisitions $3,009,521 $2,799,811
Dental and Consumer Benefits 70,530 104,153
Financial Institutions (84,079) 225,441
Investment Products (315,110) (179,716)
Corporate and Other (160,632) 73,315
--------- ---------
Total operating income 2,520,230 3,023,004
--------- ---------
Realized Investment Gains
Unallocated Investment Gains 11,044
--------
Total net 11,044
--------
Income (Loss) Before Income Tax
Acquisitions 3,009,521 2,799,811
Dental and Consumer Benefits 70,530 104,153
Financial Institutions (84,079) 225,441
Investment Products (315,110) (179,716)
Corporate and Other (160,632) 84,359
--------- ---------
Total income before tax $2,520,230 $3,034,048
========= =========
1 Income (loss) before tax excluding realized investment gains and losses.
Pretax operating income from the Acquisitions Division was $3.0 million in the first three months of 2000 as compared to $2.8 million in the same period of 1999. Earnings from the Acquisitions Division are expected to decline over time (due to the lapsing of policies resulting from deaths of insureds or terminations of coverage) unless new acquisitions are made. The increase is primarily due to an increase in investment income on invested assets allocated to the division.
Dental Division pretax earnings were $0.1 million in the first three months of 2000 and $0.1 million in the first three months of 1999.
The Financial Institutions Division's pretax operating loss was $0.1 million for the first three months of 2000 as compared to $0.2 million income in the first three months of 1999. The decrease was primarily due to higher than expected mortality in the division.
The Investment Products Division began marketing certain annuity products in the state of New York in the latter part of 1998. The Division had a pretax operating loss of $0.3 million in the first three months of 2000 as compared to a pretax operating loss of $0.2 million in 1999, primarily related to start-up expenses.
The Corporate and Other segment consists of net investment income and realized investment gains not identified with the preceding operating divisions. The pretax operating loss from this segment was $0.2 million in the first three months of 2000 compared to pretax operating income of $0.1 million in the first three months of 1999.
The following table sets forth the effective tax rates for the periods shown:
THREE MONTHS
ENDED ESTIMATED EFFECTIVE
MARCH 31 INCOME TAX RATES
------------ --------------------
1999 28.0 %
2000 34.5
The effective income tax rate for the full year of 1999 was 28%. Management's estimate of the effective income tax rate for 2000 is 34.5%.
The following table sets forth net income for the periods shown, and the percentage change from the prior period:
NET INCOME
-----------------------------------
THREE MONTHS PERCENTAGE
ENDED INCREASE
MARCH 31 TOTAL (DECREASE)
------------ ----- ----------
1999 $2,184,515 112.5 %
2000 1,650,751 (24.4)
Compared to the same period in 1999, net income in the first three months of 2000 decreased $0.5 million, reflecting an increase related to the Acquisitions Division, which was offset by decreases in the Dental, Financial Institutions, Investment Products Divisions and the Corporate and Other segment, and by an increase in the Company’s effective tax rate.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThere have been no material change from the disclosure in the Company’s 1999 Annual Report on Form 10-K for the year ended December 31, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial data schedule
Exhibit 99 - Safe Harbor for Forward-Looking Statements
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Protective Life and Annuity Insurance Company
Date: May 15, 2000 /s/ Jerry W. DeFoor
-------------------
Jerry W. DeFoor
Vice President and Controller,
and Chief Accounting Officer
(Duly authorized officer)
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