PROTECTIVE LIFE CORP
10-Q, 1996-11-13
LIFE INSURANCE
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<PAGE>
                                    FORM 10-Q
                      ------------------------------------


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1996

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from to



                         Commission File Number 1-12332

                           Protective Life Corporation
             (Exact name of registrant as specified in its charter)

              Delaware                                 95-2492236
(State or other jurisdiction of            (IRS Employer Identification Number)
 incorporation or organization)


                             2801 Highway 280 South
                            Birmingham, Alabama 35223
              (Address of principal executive offices and zip code)

                                 (205) 879-9230
              (Registrant's telephone number, including area code)

                      ------------------------------------


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 (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Number of shares of Common Stock, $.50 par value, outstanding as of November 8,
1996: 30,803,052 shares.



<PAGE>

                           PROTECTIVE LIFE CORPORATION



                                      INDEX




Part I.   Financial Information:
   Item 1.   Financial Statements:
        Report of Independent Accountants
        Consolidated Condensed Statements of Income for the Three and Nine
          Months ended September 30, 1996 and 1995 (unaudited)
        Consolidated Condensed Balance Sheets as of September 30, 1996
          (unaudited) and December 31, 1995
        Consolidated Condensed Statements of Cash Flows for the
          Nine Months ended September 30, 1996 and 1995 (unaudited)
        Notes to Consolidated Condensed Financial Statements (unaudited)
   Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations

Part II.  Other Information:
   Item 6.  Exhibits and Reports on Form 8-K

Signature



<PAGE>





                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Directors and Stockholders
Protective Life Corporation
Birmingham, Alabama


We have  reviewed  the  accompanying  consolidated  condensed  balance  sheet of
Protective Life  Corporation and  subsidiaries as of September 30, 1996, and the
related  consolidated  condensed  statements of income for the  three-month  and
nine-month periods ended September 30, 1996 and 1995 and consolidated  condensed
statements of cash flows for the nine-month periods ended September 30, 1996 and
1995.  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  generally  accepted  auditing  standards,  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 consolidated condensed financial statements referred to above for
them to be in conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the  consolidated  balance  sheet as of December 31,  1995,  and the
related consolidated statements of income,  stockholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated February
12, 1996,  we expressed an  unqualified  opinion which  contains an  explanatory
paragraph regarding the changes in accounting for stock-based compensation plans
in 1995 and certain  investments in debt and equity  securities in 1993 on those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying  consolidated  condensed balance sheet as of December 31, 1995,
is fairly  stated in all  material  respects  in  relation  to the  consolidated
balance sheet from which it has been derived.




COOPERS & LYBRAND L.L.P.

Birmingham, Alabama
October 23, 1996


                                        2

<PAGE>
<TABLE>
<CAPTION>
                           PROTECTIVE LIFE CORPORATION
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                 (Dollars in thousands except per share amounts)
                                   (Unaudited)


                                                                               THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                                  SEPTEMBER  30                SEPTEMBER  30
                                                                            ------------------------      ----------------------
                                                                              1996           1995           1996            1995
                                                                              ----           ----           ----            ----
<S>                                                                         <C>           <C>             <C>            <C>
REVENUES
  Premium and policy fees (net of reinsurance ceded:
     three months: 1996 - $81,453; 1995 - $79,908;
     nine months: 1996 - $247,988; 1995 - $222,351)                        $110,310       $101,036        $343,111       $310,502
  Net investment income                                                     129,309        123,894         384,149        354,603
  Realized investment gains (losses)                                            861          1,337           5,882          3,401
  Other income                                                               13,465          8,924          38,931         22,395
                                                                          ---------      ---------       ---------      ---------
                                                                            253,945        235,191         772,073        690,901
                                                                          ---------      ---------       ---------      ---------

BENEFITS AND EXPENSES
  Benefits and settlement expenses (net of reinsurance ceded:
     three months: 1996 - $64,420; 1995 - $54,638;
     nine months: 1996 - $182,201; 1995 - $159,760)                         157,931        141,934         466,692        416,081
  Amortization of deferred policy acquisition costs                          18,822         17,652          70,162         63,218
  Other operating expenses (net of reinsurance ceded:
     three months: 1996 - $24,368; 1995 - $23,173;
     nine months: 1996 - $67,183; 1995 - $58,645)                            45,636         41,901         134,000        120,456
                                                                         ----------     ----------       ---------      ---------

                                                                            222,389        201,487         670,854        599,755
                                                                          ---------     ----------       ---------      ---------

INCOME BEFORE INCOME TAX AND MINORITY
 INTEREST                                                                    31,556         33,704         101,219         91,146

Income tax expense                                                           10,730         12,034          34,415         30,990
                                                                         ----------     ----------       ---------      ---------

INCOME BEFORE MINORITY INTEREST                                              20,826         21,670          66,804         60,156

Minority interest in net income
  of consolidated subsidiaries                                                  804            804           2,413          2,413
                                                                       ------------    -----------     -----------     ----------

NET INCOME                                                               $   20,022      $  20,866      $   64,391      $  57,743
                                                                         ==========      =========      ==========      =========

NET INCOME PER SHARE                                                   $        .64    $       .72    $       2.15    $      2.03
                                                                       ============    ===========    ============    ===========

DIVIDENDS PAID PER SHARE                                               $        .18    $       .16   $         .52    $       .46
                                                                       ============    ===========   =============    ===========

Average shares outstanding                                               31,147,723     28,775,118      29,995,190     28,384,873



See notes to consolidated condensed financial statements
</TABLE>

                                        3

<PAGE>
<TABLE>
<CAPTION>



                                           PROTECTIVE LIFE CORPORATION
                                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                             (Dollars in thousands)
                                                                                   SEPTEMBER 30       DECEMBER 31
                                                                                       1996              1995
                                                                                   -------------      ------------
                                                                                    (Unaudited)
<S>                                                                                 <C>                <C>
ASSETS
 Investments:
   Fixed maturities                                                                 $4,507,727         $3,892,008
   Equity securities                                                                    56,085             38,711
   Mortgage loans on real estate                                                     1,515,709          1,834,357
   Investment real estate, net                                                          19,352             20,921
   Policy loans                                                                        165,706            143,372
   Other long-term investments                                                          25,712             42,096
   Short-term investments                                                              158,463             53,591
                                                                                   -----------        -----------
      Total investments                                                              6,448,754          6,025,056
 Cash                                                                                   18,206             11,392
 Accrued investment income                                                              69,005             61,007
 Accounts and premiums receivable, net                                                  36,463             38,722
 Reinsurance receivables                                                               349,806            271,018
 Deferred policy acquisition costs                                                     477,344            410,396
 Property and equipment, net                                                            37,049             36,578
 Other assets                                                                           61,856             52,184
 Assets held in separate accounts                                                      488,298            324,904
                                                                                   -----------        -----------
   TOTAL ASSETS                                                                     $7,986,781         $7,231,257
                                                                                    ==========         ==========

LIABILITIES
 Policy liabilities and accruals                                                    $2,589,945         $2,124,486
 Guaranteed investment contract deposits                                             2,514,374          2,451,693
 Annuity deposits                                                                    1,304,141          1,280,069
 Other policyholders' funds                                                            142,368            134,380
 Other liabilities                                                                     161,275            152,042
 Accrued income taxes                                                                   (4,213)            (2,894)
 Deferred income taxes                                                                  24,376             69,520
 Debt                                                                                  139,000            115,500
 Liabilities related to separate accounts                                              488,298            324,904
 Minority interest in consolidated subsidiaries                                         55,000             55,000
                                                                                   -----------        -----------
   TOTAL LIABILITIES                                                                 7,414,564          6,704,700
                                                                                    ----------         ----------

COMMITMENTS AND CONTINGENT LIABILITIES - NOTE C

STOCKHOLDERS' EQUITY
 Preferred Stock, $1 par value
   Shares authorized: 3,600,000; Issued: none
 Junior Participating Cumulative Preferred Stock, $1 par value
   Shares authorized: 400,000; Issued:  none
 Common Stock, $0.50 par value
   Shares authorized: 80,000,000
   Issued: 1996 - 33,336,462; 1995 - 31,336,462                                         16,668             15,668
 Additional paid-in capital                                                            166,704             96,371
 Net unrealized gains (losses) on investments
   (net of income tax: 1996 - $(9,328); 1995 - $31,157)                                (17,323)            57,863
 Retained earnings                                                                     422,970            373,922
 Treasury stock (1996 - 2,533,410 shares; 1995 - 2,561,344 shares)                     (11,877)           (12,008)
 Unallocated stock in Employee Stock Ownership Plan
   (1996 - 774,058 shares; 1995 - 793,804 shares)                                       (4,925)            (5,259)
                                                                                  ------------       ------------
 TOTAL STOCKHOLDERS' EQUITY                                                            572,217            526,557
                                                                                   -----------        -----------
                                                                                    $7,986,781         $7,231,257
                                                                                    ==========         ==========
See notes to consolidated condensed financial statements
</TABLE>

                                        4

<PAGE>
<TABLE>
<CAPTION>
                                            PROTECTIVE LIFE CORPORATION
                                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                              (Dollars in thousands)
                                                    (Unaudited)
                                                                                                  NINE MONTHS ENDED
                                                                                                    SEPTEMBER 30
                                                                                                --------------------
                                                                                                1996            1995
                                                                                                ----            ----

<S>                                                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                               $    64,391    $    57,743
  Adjustments to reconcile net income to net cash provided by
     operating activities:
        Amortization of deferred policy acquisition costs                                       70,162         63,218
        Capitalization of deferred policy acquisition costs                                    (70,124)       (61,287)
        Depreciation expense                                                                     5,114          4,277
        Deferred income taxes                                                                   (4,659)        (6,966)
        Accrued income taxes                                                                    (1,319)        11,088
        Interest credited to universal life and investment products                            206,763        213,303
           Policy fees assessed on universal life and investment products                      (84,362)       (74,772)
        Change in accrued investment income and other receivables                              (78,861)      (116,181)
        Change in policy liabilities and other policyholders' funds
          of traditional life and health products                                               53,996        131,345
        Change in other liabilities                                                              8,619         (5,964)
        Other (net)                                                                            (11,792)        (1,381)
                                                                                           -----------    -----------
  Net cash provided by operating activities                                                    157,928        214,423
                                                                                            ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Maturities and principal reductions of investments
        Investments available for sale                                                         494,088        219,760
        Other                                                                                   94,816         49,536
  Sale of investments
        Investments available for sale                                                         769,357        863,479
        Other                                                                                  561,440          4,243
  Cost of investments acquired
        Investments available for sale                                                      (2,112,193)    (1,322,651)
        Other                                                                                 (335,397)      (243,788)
  Acquisitions and bulk reinsurance assumptions                                                172,726         (7,550)
  Purchase of property and equipment                                                            (6,040)        (5,283)
  Sale of property and equipment                                                                   455            136
                                                                                         -------------  -------------
  Net cash used in investing activities                                                       (360,748)      (442,118)
                                                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings under line of credit arrangements and debt                          840,484      1,032,400
  Principal payments on line of credit arrangements and debt                                  (816,984)      (989,900)
  Issuance of Common Stock                                                                      70,538
  Purchase of treasury stock                                                                                       (3)
  Dividends to stockholders                                                                    (15,343)       (12,995)
  Investment product deposits and changes in universal life deposits                           842,765        734,707
  Investment product withdrawals                                                              (711,826)      (535,234)
                                                                                           -----------    -----------
  Net cash provided by financing activities                                                    209,634        228,975
                                                                                          ------------    -----------

INCREASE (DECREASE) IN CASH                                                                      6,814          1,280
CASH AT BEGINNING OF PERIOD                                                                     11,392          4,468
                                                                                          ------------   ------------
CASH AT END OF PERIOD                                                                     $     18,206   $      5,748
                                                                                          ============   ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period:
     Interest on debt                                                                       $    9,389      $   9,740
     Income taxes                                                                           $   38,971      $  25,648

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
  FINANCING ACTIVITIES
  Reissuance of treasury stock to ESOP                                                      $      669      $     350
  Unallocated stock in ESOP                                                                 $      334      $     333
  Reissuance of treasury stock                                                              $      258      $     362
  Acquisitions
     Assets acquired                                                                        $  200,737      $  10,394
     Liabilities assumed                                                                      (253,480)       (25,651)
     Reissuance of treasury stock                                                                             (30,681)
                                                                                           -------------   ----------
     Net                                                                                    $  (52,743)     $ (45,938)
                                                                                            ===========     =========
See notes to consolidated condensed financial statements
</TABLE>

                                        5

<PAGE>



                           PROTECTIVE LIFE CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)


NOTE A - BASIS OF PRESENTATION

         The accompanying  unaudited consolidated condensed financial statements
of Protective Life  Corporation (the "Company") have been prepared in accordance
with generally accepted accounting  principles 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
nine month period ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. The year-end
consolidated  condensed  balance  sheet data was derived from audited  financial
statements,  but does not include all disclosures required by generally accepted
accounting  principles.  For  further  information,  refer  to the  consolidated
financial  statements and notes thereto  included in the Company's annual report
on Form 10-K for the year ended December 31, 1995.

NOTE B - ISSUANCE OF COMMON STOCK

         On May 30,  1996,  the  Company  issued 2 million  shares of its common
stock in a public offering at an issue price of $37.25 per share.  Proceeds from
the  issuance,  net  of  underwriting  fees  and  other  expenses,  amounted  to
approximately $70.5 million.

NOTE C - COMMITMENTS AND CONTINGENT LIABILITIES

         The Company is  contingently  liable to obtain a $20 million  letter of
credit under indemnity  agreements with its directors.  These agreements provide
insurance protection in excess of the directors and officers liability insurance
in force at the time up to $20 million. Should certain events occur constituting
a change in control of the Company, the Company must obtain the letter of credit
upon which directors may draw for defense or settlement of any claim relating to
performance   of  their   duties  as   directors.   Although   the  Company  has
indemnification  agreements  with  certain of its  officers  providing up to $10
million in indemnification,  the officers' agreements do not require the Company
to obtain a letter of credit.

         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 any
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.

         The Company and its subsidiaries,  like other life and health insurers,
are involved in lawsuits, in which the plaintiff may seek punitive damage awards
in addition to compensatory damage awards. In addition,  insurers frequently are
the target of  class-action  lawsuits.  To date,  no lawsuit has resulted in the
award of any material amount of damages against the Company. Although the

                                        6

<PAGE>



outcome of any  litigation  cannot be  predicted  with  certainty,  the  Company
believes that no pending or threatened litigation is reasonably likely to have a
material adverse effect on the financial position of the Company.

NOTE D - BUSINESS SEGMENTS

         The Company operates  predominantly in the life and accident and health
insurance industry. The following table sets forth total revenues, income (loss)
before  income  tax  and  minority  interest,  and  identifiable  assets  of the
Company's business segments.

                                            NINE MONTHS ENDED SEPTEMBER 30
                                     -------------------------------------------
                                               1996                   1995
                                               ----                   ----
                                      AMOUNT      PERCENT      AMOUNT   PERCENT
                                      ------      -------      ------   -------
                                                (dollars in thousands)
TOTAL REVENUES:
  Acquisitions                       $157,565       20.4%     $144,712    21.0%
  Financial Institutions               69,453        9.0        60,043     8.7
  Group                               151,767       19.7       134,909    19.5
  Guaranteed Investment
     Contracts                        153,720       19.9       150,221    21.7
  Individual Life                     133,958       17.4       108,553    15.7
  Investment Products                  85,949       11.1        79,250    11.5
  Corporate and Other                  13,871        1.8        12,604     1.8
  Unallocated Realized
     Investment Gains (Losses)          5,790        0.7           609     0.1
                                   ----------     ------    ----------  ------
                                     $772,073      100.0%     $690,901   100.0%
                                     ========      =====      ========   =====

INCOME (LOSS) BEFORE INCOME
  TAX AND MINORITY INTEREST:
  Acquisitions                       $ 38,252       37.8%     $ 34,481    37.8%
  Financial Institutions                6,893        6.8         6,036     6.6
  Group                                 2,821        2.8         7,961     8.7
  Guaranteed Investment
     Contracts                         22,299       22.0        22,524    24.7
  Individual Life                      11,502       11.4        12,029    13.2
  Investment Products                   9,822        9.7         6,343     7.0
  Corporate and Other                   3,840        3.8         1,163     1.3
  Unallocated Realized
     Investment Gains (Losses)          5,790        5.7           609     0.7
                                    ---------     ------    ----------  ------
                                     $101,219      100.0%    $  91,146   100.0%
                                     ========      =====     =========   =====

                                      SEPTEMBER 30, 1996      DECEMBER 31, 1995
                                      ------------------      -----------------
                                      AMOUNT     PERCENT      AMOUNT    PERCENT
                                      ------     -------      ------    -------
                                                (dollars in thousands)
IDENTIFIABLE ASSETS:
  Acquisitions                     $1,465,249      18.3%     $1,255,542   17.4%
  Financial Institutions              374,707       4.7         268,782    3.7
  Group                               281,782       3.5         278,094    3.8
  Guaranteed Investment
     Contracts                      2,634,356      33.0       2,537,045   35.1
  Individual Life                     989,661      12.4         890,198   12.3
  Investment Products               1,769,445      22.2       1,580,519   21.9
  Corporate and Other                 471,581       5.9         421,077    5.8
                                  -----------    ------     -----------  -----
                                   $7,986,781     100.0%     $7,231,257  100.0%
                                   ==========     =====      ==========  =====



                                        7

<PAGE>



NOTE E - STATUTORY REPORTING PRACTICES

         Financial  statements  prepared in conformity  with generally  accepted
accounting  principles  ("GAAP")  differ  in some  respects  from the  statutory
accounting   practices   prescribed   or  permitted   by  insurance   regulatory
authorities.  At  September  30, 1996 and for the nine  months  then ended,  the
Company's life insurance  subsidiaries had  stockholder's  equity and net income
prepared in conformity with statutory  reporting practices of $458.9 million and
$79.5 million, respectively.

NOTE F - INVESTMENTS

         As prescribed by Statement of Financial  Accounting  Standards ("SFAS")
No.  115,  certain  investments  are  recorded at their  market  values with the
resulting  unrealized  gains  and  losses  reduced  by a related  adjustment  to
deferred policy acquisition costs, net of income tax, reported as a component of
stockholders' equity. The market values of fixed maturities increase or decrease
as interest rates fall or rise. Therefore, although the adoption of SFAS No. 115
does not affect the Company's operations, its reported stockholders' equity will
fluctuate significantly as interest rates change.

         The  Company's  balance  sheets at September  30, 1996 and December 31,
1995,  prepared on the basis of reporting  investments  at amortized cost rather
than at market values, are as follows:

                                      SEPTEMBER 30, 1996      DECEMBER 31, 1995
                                      ------------------      -----------------
                                                   (IN THOUSANDS)

  Total investments                     $6,477,411                $5,919,787
  Deferred policy acquisition costs        475,338                   426,645
  All other assets                       1,060,683                   795,805
                                        ----------               -----------
                                        $8,013,432                $7,142,237
                                        ==========                ==========

  Deferred income taxes                $    33,704               $    38,364
  All other liabilities                  7,390,188                 6,635,179
                                        ----------                ----------
                                         7,423,892                 6,673,543
  Stockholders' equity                     589,540                   468,694
                                       -----------               -----------
                                        $8,013,432                $7,142,237
                                        ==========                ==========


NOTE G - RECENTLY ADOPTED ACCOUNTING STANDARDS

         At January 1, 1996, the Company  adopted SFAS No. 120,  "Accounting and
Reporting by Mutual Life Insurance  Enterprises and by Insurance Enterprises for
Certain Long-Duration Contracts"; SFAS No. 121,"Accounting for the Impairment of
Long-Lived  Assets and for Long- Lived  Assets to Be Disposed  Of"; and SFAS No.
122,   "Accounting  for  Mortgage  Servicing  Rights."  The  adoption  of  these
accounting  standards did not have a material effect on the Company's  financial
statements.



                                        8

<PAGE>



NOTE H - RECLASSIFICATIONS

         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 stockholders' equity.

                                        9

<PAGE>



            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         Protective Life Corporation through its subsidiaries provides financial
services through the production,  distribution,  and administration of insurance
and investment  products.  Founded in 1907,  Protective  Life Insurance  Company
("Protective Life") is the Company's principal operating subsidiary.

         Unless the context  otherwise  requires,  the  "Company"  refers to the
consolidated group of Protective Life Corporation and its subsidiaries.

         The  Company  has  six  operating  divisions:  Acquisitions,  Financial
Institutions,  Group,  Guaranteed  Investment  Contracts,  Individual  Life, and
Investment  Products.  The Company also has an additional business segment which
is described herein as Corporate and Other.


                              RESULTS OF OPERATIONS


Premiums and Policy Fees

         The  following  table  sets forth for the  periods  shown the amount of
premiums and policy fees and the percentage change from the prior period:

                               PREMIUMS AND POLICY FEES
     NINE MONTHS                                PERCENTAGE
        ENDED               AMOUNT               INCREASE/
    SEPTEMBER 30        (IN THOUSANDS)          (DECREASE)

        1995               $310,502                 7.3%
        1996                343,111                10.5

         Premiums and policy fees increased  $32.6 million or 10.5% in the first
nine months of 1996 over the first nine months of 1995.  The  coinsurance by the
Acquisitions  Division  of a block of  policies  in the  first  quarter  of 1996
resulted in a $12.1 million  increase in premiums and policy fees.  Decreases in
older acquired blocks resulted in a $7.7 million decrease in premiums and policy
fees. Premium and policy fees from the Financial Institutions Division increased
$5.6  million the first nine months of 1996 as compared to the first nine months
of 1995. This resulted from the reinsurance of a block of policies in the second
quarter of 1996  representing  a $26.9  million  increase in premiums and policy
fees. This increase was largely offset by decreases resulting from a reinsurance
arrangement  begun in 1995,  whereby all of the Division's new credit  insurance
sales are ceded to a reinsurer.  Premium and policy fees from the Group Division
increased  $6.3 million in the first nine months of 1996 as compared to the same
period in 1995.  Premium  and  policy  fees  related  to the  Division's  dental
business increased $14.9 million in the first nine months of 1996 as compared to
the same period in 1995.  This increase was  partially  offset by a reduction to
premiums   related  to  a  refund  of  premiums  to  certain  cancer   insurance
policyholders and to decreases in traditional

                                       10

<PAGE>



group health premiums. Increases in premiums and policy fees from the Individual
Life and  Investment  Product  Divisions  were $13.1  million and $2.8  million,
respectively.

         On October 7, 1996 the Company  announced  that it will make  voluntary
refunds to certain of its cancer insurance policyholders and will reduce premium
rates  charged to such  policyholders  until  certain  conditions  are met.  The
estimated  refunds  reduced the Group  Division's  premiums and policy fees,  as
noted above.

Net Investment Income

         The following  table sets forth for the periods shown the amount of net
investment income and the percentage change from the prior period:

 NINE MONTHS                  NET INVESTMENT INCOME
    ENDED                 AMOUNT              PERCENTAGE
 SEPTEMBER 30        (IN THOUSANDS)            INCREASE

    1995                $354,603                16.4%
    1996                 384,149                 8.3

         Net  investment  income  in the  first  nine  months  of 1996 was $29.5
million or 8.3%  higher  than the  corresponding  period of the  preceding  year
primarily due to increases in the average  amount of invested  assets.  Invested
assets  have  increased  primarily  due  to  receiving  annuity  and  guaranteed
investment  contract ("GIC")  deposits and to acquisitions.  The assumption of a
block of  policies  in the first  quarter of 1996 and a block of policies in the
second quarter of 1996 resulted in an increase in net investment income of $13.5
million in the first nine months of 1996 as compared to the same period in 1995.

Realized Investment Gains

         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 have resulted  principally  from  portfolio
management decisions to maintain approximate matching of assets and liabilities.

         The  following  table  sets  forth  realized  investment  gains for the
periods shown:

  NINE MONTHS                       REALIZED
    ENDED                        INVESTMENT GAINS
 SEPTEMBER 30                     (IN THOUSANDS)

    1995                              $3,401
    1996                               5,882

         Realized  investment  gains for the first nine months of 1996 were $2.5
million higher than the corresponding period of 1995. In the 1996 first quarter,
the Company sold $554 million of its

                                       11

<PAGE>



commercial mortgage loans in a securitization  transaction,  resulting in a $6.1
million realized investment gain.

Other Income

         The following table sets forth other income for the periods shown:

         NINE MONTHS
           ENDED                     OTHER INCOME
        SEPTEMBER 30                (IN THOUSANDS)

           1995                         $22,395
           1996                          38,931

         Other income  consists  primarily of revenues of the  Company's  dental
managed    care    plans    and    broker-dealer    subsidiary,     fees    from
administrative-services-only  types  of  group  accident  and  health  insurance
contracts,  and  revenues  of the  Company's  wholly-owned  insurance  marketing
organizations  and other small  noninsurance  subsidiaries.  Other income in the
first nine months of 1996 was $16.5 million higher than the corresponding period
of 1995. On March 20, 1995,  the Company  completed its  acquisition of National
Health Care Systems of Florida,  Inc. ("NHCS" also known as "DentiCare"),  based
in Jacksonville, Florida. The acquisition resulted in a $9.0 million increase in
other  income in the first  nine  months of 1996.  Revenues  from the  Company's
broker-dealer subsidiary increased $3.2 million in the first nine months of 1996
as  compared  to the same period in 1995.  Other  income from all other  sources
increased  $4.3  million in the first nine months of 1996 as  compared  with the
first nine months of 1995.

Income Before Income Tax and Minority Interest

         The  following  table sets forth  income or loss before  income tax and
minority interest by business segment for the periods shown:

                                                INCOME (LOSS) BEFORE INCOME TAX
                                                      AND MINORITY INTEREST
                                                 NINE MONTHS ENDED SEPTEMBER 30
                                                         (IN THOUSANDS)
         BUSINESS SEGMENT                          1995                1996
         ----------------                          ----                ----

 Acquisitions                                    $34,481            $ 38,252
 Financial Institutions                            6,036               6,893
 Group                                             7,961               2,821
 Guaranteed Investment Contracts                  22,524              22,299
 Individual Life                                  12,029              11,502
 Investment Products                               6,343               9,822
 Corporate and Other                               1,163               3,840
 Unallocated Realized Investment Gains(Losses)       609               5,790
                                                 -------            --------
                                                 $91,146            $101,219
                                                 =======            ========

 Percentage Increase                               17.7%               11.1%


                                       12

<PAGE>



         Pretax earnings from the Acquisitions  Division  increased $3.8 million
in the  first  nine  months  of 1996 as  compared  to the same  period  of 1995.
Earnings from the  Acquisitions  Division are normally  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 Division's two
most recent acquisitions resulted in a $5.9 million increase in pretax earnings.
Older  acquired  blocks  represented  a $2.1 million  decrease in the first nine
months of 1996 as compared to the same period in 1995.

         Pretax  earnings  of the  Financial  Institutions  Division  were  $0.9
million  higher in the first nine  months of 1996 as compared to the same period
in 1995.  Included in the  Division's  1996 results are earnings of $2.1 million
from the  coinsurance  of a block of policies in the second quarter of 1996. The
reinsurance  arrangement  begun in the first  quarter of 1995 to reinsure all of
the Division's  new credit  insurance  sales and thereby  improve the Division's
return on investment,  reduced the Division's reported earnings by approximately
$3.8 million, which was contemplated when the arrangement was entered into.

         Group  Division  pretax  earnings  were $5.1 million lower in the first
nine months of 1996 as compared to the first nine months of 1995. The previously
discussed  estimate  for the  refund of cancer  premiums  and  related  expenses
resulted in a $6.8 million decrease in the Division's  pretax  earnings.  Dental
earnings improved $3.5 million and traditional group health earnings declined by
$1.8 million.

         The  Guaranteed   Investment   Contract  ("GIC")  Division  had  pretax
operating  earnings of $30.1  million in the first nine months of 1996 and $23.3
million in the  corresponding  period of 1995. This increase was due to improved
operating  spreads and to the growth in GIC  deposits  placed with the  Company.
Realized  investment  losses  associated  with this  Division  in the first nine
months of 1996 were $7.8  million as compared to $0.8 million in the same period
last year.  As a result,  total pretax  earnings were $22.3 million in the first
nine months of 1996 compared to $22.5 million for the same period last year.

         The  Individual  Life Division had pretax  operating  earnings of $10.4
million in the first nine  months of 1996 as  compared  to $12.0  million in the
same period of 1995.  The decrease was primarily  due to higher  expenses in the
first nine months of 1996 as  compared  to the same  period last year.  Realized
investment  gains,  net of related  amortization of deferred policy  acquisition
costs,  associated  with this  Division  were $1.1 million in 1996. As a result,
total pretax  earnings were $11.5 million in the first nine months of 1996 which
was $0.5 million lower than the first nine months of 1995 in which there were no
realized investment gains.

         Investment  Products  Division  pretax  operating  earnings  were  $7.4
million which was $3.2 million  higher in the first nine months of 1996 compared
to the same period of 1995. Earnings increased due to growth in variable annuity
deposits and due to lower expenses.  Realized  investment  gains associated with
the Division,  net of related amortization of deferred policy acquisition costs,
were $2.4  million as compared to $2.1  million  last year,  resulting  in total
pretax  earnings of $9.8 million in the first nine months of 1996 as compared to
$6.3 million in the same period of 1995.

         The Corporate and Other segment  consists  primarily of net  investment
income on capital, interest expense on substantially all debt, the Company's 50%
owned joint venture in Hong Kong, several small insurance lines of business, and
the operations of several small noninsurance  subsidiaries. Pretax earnings for
this segment increased $2.7 million in the first nine months of 1996 as compared
to the first nine  months of 1995 due to  improved  operating  results  from the
Company's  joint  venture in Hong Kong and increased  net  investment  income on
capital.

                                     13

<PAGE>


Income Taxes

         The following  table sets forth the effective  income tax rates for the
periods shown:

      NINE MONTHS
        ENDED               ESTIMATED EFFECTIVE
     SEPTEMBER 30            INCOME TAX RATES

        1995                       33%
        1996                       34

         The  effective  income  tax  rate  for the  full  year of 1995 was 34%.
Management's estimate of the effective income tax rate for 1996 is also 34%.

Net Income

         The following  table sets forth net income and the net income per share
for the periods shown, and the percentage change from the prior period:

  NINE MONTHS                     NET INCOME
     ENDED             TOTAL                   PERCENTAGE
  SEPTEMBER 30    (IN THOUSANDS)   PER SHARE    INCREASE

     1995             $57,743        $2.03        7.4%
     1996              64,391         2.15        5.9

         Compared to the same period in 1995,  net income per share in the first
nine months of 1996 increased 5.9%,  reflecting  improved  operating earnings in
the Acquisitions,  Financial Institutions,  Guaranteed Investment Contracts, and
Investment Products Divisions,  and the Corporate and Other segment,  and higher
realized  investment  gains  (net of related  amortization  of  deferred  policy
acquisition  costs),  which were partially offset by lower operating earnings in
the Group and Individual Life Divisions.

Recently Issued Accounting Standards

         In June 1996 the Financial  Accounting Standards Board issued Statement
of  Financial  Accounting  Standards  No. 125,  "Accounting  for  Transfers  and
Servicing of Financial Assets and  Extinguishments of Liabilities".  The Company
anticipates  that the  impact  of  adopting  this  accounting  standard  will be
immaterial  to  its  financial  condition.   This  statement  is  effective  for
transactions entered into after January 1, 1997.


                                       14

<PAGE>



                         LIQUIDITY AND CAPITAL RESOURCES

         The Company's  operations  usually  produce a positive cash flow.  This
cash flow is used to fund an  investment  portfolio  to finance  future  benefit
payments.  Since future benefit payments largely represent medium- and long-term
obligations  reserved  using  certain  assumed  interest  rates,  the  Company's
investments are predominantly in medium- and long-term,  fixed-rate  investments
such as bonds and mortgage loans.

         Many of the  Company's  products  contain  surrender  charges and other
features  that reward  persistency  and penalize the early  withdrawal of funds.
Surrender  charges for these  products  generally  are  sufficient  to cover the
Company's  unamortized  deferred  policy  acquisition  costs with respect to the
policy being  surrendered.  GICs and certain annuity contracts have market-value
adjustments that protect the Company against investment losses if interest rates
are higher at the time of surrender than at the time of issue.

         The Company's investments in debt and equity securities are reported at
market value,  and investments in mortgage loans are reported at amortized cost.
At  September  30,  1996,  the  fixed  maturity  investments  (bonds,  bank loan
participations,  and redeemable preferred stocks) had a market value of $4,507.7
million,  which is 0.7% below amortized cost (less allowances for  uncollectible
amounts on investments) of $4,541.2 million. The Company had $1,515.7 million in
mortgage loans at September 30, 1996. While the Company's  mortgage loans do not
have quoted  market  values,  at September 30, 1996,  the Company  estimates the
market value of its mortgage loans to be $1,619.8 million (using discounted cash
flows from the next call date) which is 6.9% in excess of amortized  book value.
Most of the Company's  mortgage  loans have  significant  prepayment  penalties.
These assets are invested for terms  approximately  corresponding to anticipated
future benefit payments.  Thus, market value  fluctuations  should not adversely
affect liquidity.

         For several years the Company has offered a commercial loan under which
the Company will permit a slightly higher  loan-to-value ratio in exchange for a
participating  interest  in the cash  flows  from the  underlying  real  estate.
Approximately   $487  million  of  the  Company's   mortgage   loans  have  this
participation feature.

         At September 30, 1996,  delinquent  mortgage loans and foreclosed  real
estate were 0.4% of assets.  Bonds rated less than investment grade were 1.7% of
assets.  Additionally,  the Company had bank loan  participations that were less
than investment grade  representing 2.7% of assets.  The Company does not expect
these investments to adversely affect its liquidity or ability to hold its other
investments to maturity.  The Company's  allowance for uncollectible  amounts on
investments was $31.6 million at September 30, 1996.

         Policy loans at September 30, 1996 were $165.7 million,  unchanged from
December 31, 1995 (after  excluding the $22.3 million of policy loans associated
with the  coinsurance  of a block of  policies  in the first  quarter  of 1996).
Policy loan rates are generally in the 4.5% to 8.0% range and at least equal the
assumed interest rates used for future policy benefits.



                                       15

<PAGE>



         The Company believes its asset/liability matching practices and certain
product  features  provide  significant  protection for the Company  against the
effects of changes in interest rates. However,  approximately  one-fourth of the
Company's  liabilities  relate to products  (primarily whole life insurance) the
profitability  of which may be affected by changes in interest rates. The effect
of such changes in any one year is not  expected to be  material.  Additionally,
the Company believes its  asset/liability  matching practices provide sufficient
liquidity  to enable it to fulfill  its  obligation  to pay  benefits  under its
various insurance and deposit contracts.

         The Company's asset/liability matching practices involve the monitoring
of asset and liability  durations for various  product lines;  cash flow testing
under various interest rate scenarios;  and the continuous rebalancing of assets
and liabilities with respect to yield, risk, and cash flow  characteristics.  It
is the Company's  policy to generally  maintain  asset and  liability  durations
within 10% of one another,  although from time to time broader duration matching
is allowed.

         The Company does not use derivative  financial  instruments for trading
purposes.  Combinations  of futures  contracts and options on treasury notes are
sometimes used as hedges for asset/liability  management of certain investments,
primarily  mortgage  loans  on  real  estate,   and  liabilities   arising  from
interest-sensitive  products  such as GICs and  annuities.  Realized  investment
gains and losses of such  contracts are deferred and amortized  over the life of
the hedged  asset.  The Company  uses  interest  rate swap  contracts to convert
certain investments from a variable to a fixed rate of interest and from a fixed
to a variable  rate of  interest,  and to convert  its Senior  Notes and Monthly
Income Preferred Securities from a fixed rate to a variable rate of interest. At
September 30, 1996,  related open interest rate swap  contracts  with a notional
amount of $230.3 million were in a $1.3 million net unrealized loss position.

         Withdrawals  related to GICs were  approximately  $800  million  during
1995. Withdrawals related to GICs are estimated to be approximately $700 million
in 1996.  The Company's  asset/liability  matching  practices  take into account
maturing contracts.  Accordingly, the Company does not expect maturing contracts
to have an unusual effect on the future operations and liquidity of the Company.

         On March 22, 1996, the Company sold  approximately  $554 million of its
commercial  mortgage loans in a  securitization  transaction.  Proceeds from the
sale consisted of cash of $400 million,  net of expenses,  and  mortgaged-backed
securities of approximately $161 million. The transaction resulted in a realized
gain of approximately  $6.1 million.  The cash proceeds were reinvested in fixed
maturity and short-term investments.

         In  anticipation  of  receiving  GIC and  annuity  deposits,  the  life
insurance  subsidiaries  were  committed at September  30, 1996 to fund mortgage
loans and to purchase  fixed  maturity and other  long-term  investments  in the
amount of $283.8 million. The Company's subsidiaries held $176.1 million in cash
and short-term  investments at September 30, 1996.  Protective Life  Corporation
had an additional $0.6 million in cash and short-term  investments available for
general corporate purposes.

         While the  Company  generally  anticipates  that the cash  flows of its
subsidiaries  will  be  sufficient  to meet  their  investment  commitments  and
operating  cash  needs,  the  Company  recognizes  that  investment  commitments
scheduled  to be funded may from time to time  exceed the funds then  available.
Therefore,  the  Company  has  arranged  sources  of  credit  for its  insurance
subsidiaries to

                                       16

<PAGE>



use when needed.  The Company  expects that the rate received on its investments
will equal or exceed its borrowing rate. Additionally, the Company may from time
to time sell short-duration GICs to complement its cash management practices.

         During the third  quarter of 1996,  the Company  issued $20 million (in
two separate  offerings) of 7.45% Medium-Term Notes due in 2011. Net proceeds of
$19.4 million were used to repay bank  borrowings.  The Company has on file with
the Securities and Exchange  Commission a shelf  registration  to issue up to an
additional $25 million of debt securities.

         At September 30, 1996,  Protective Life  Corporation had borrowed $44.0
million of a $70.0  million  revolving  line of credit  bearing  interest  rates
averaging 5.8%. The Company's bank  borrowings have increased $3.5 million,  net
of repayments, since December 31, 1995. Proceeds were used for general corporate
purposes, including the acquisition of a small dental managed care organization,
an additional investment in the Hong Kong joint venture, and an investment in an
Internet-based insurance distribution system.

         Protective Life  Corporation's cash flow is dependent on cash dividends
and payments on surplus notes from its  subsidiaries,  revenues from investment,
data processing,  legal, and management  services  rendered to the subsidiaries,
and  investment  income.  At December  31, 1995,  approximately  $180 million of
consolidated   stockholders'   equity,   excluding  net  unrealized   losses  on
investments, represented net assets of the Company's insurance subsidiaries that
cannot be transferred in the form of dividends,  loans or advances to the parent
company. In addition,  the states in which the Company's insurance  subsidiaries
are domiciled impose certain restrictions on the insurance subsidiaries' ability
to pay dividends to Protective Life Corporation. Also, distributions,  including
cash  dividends  to  Protective  Life   Corporation   from  its  life  insurance
subsidiaries,  in excess of  approximately  $322  million,  would be  subject to
federal  income tax at rates then  effective.  The Company  does not  anticipate
involuntarily making distributions that would be subject to income tax.

         Due to the  expected  growth  of the  Company's  insurance  sales,  the
Company  plans  to  retain  substantial  portions  of the  earnings  of its life
insurance  subsidiaries  in those  companies  primarily to support  their future
growth.  Protective Life Corporation's cash disbursements have from time to time
exceeded  its cash  receipts,  and these  shortfalls  have been  funded  through
various  external  financings.  Therefore,  Protective Life Corporation may from
time to time require additional external financing.

         A life insurance  company's  statutory capital is computed according to
rules  prescribed  by  the  National  Association  of  Insurance   Commissioners
("NAIC"),  as modified by the insurance  company's state of domicile.  Statutory
accounting rules are different from generally accepted accounting principles and
are  intended to reflect a more  conservative  view by, for  example,  requiring
immediate  expensing of policy  acquisition  costs. The achievement of long-term
growth will require growth in the statutory  capital of the Company's  insurance
subsidiaries.  The subsidiaries may secure additional  statutory capital through
various  sources,  such as  internally  generated  statutory  earnings or equity
contributions by the Company.

         On May 30, 1996, the Company  completed a public  offering of 2 million
shares of its common  stock.  Net proceeds of  approximately  $70.5 million were
primarily  invested in the Company's  insurance company  subsidiaries to support
future growth.


                                       17

<PAGE>



         The NAIC's risk-based capital  requirements require insurance companies
to calculate and report  information under a risk-based  capital formula.  These
requirements are intended to allow insurance regulators to identify inadequately
capitalized  insurance  companies  based  upon the types and  mixtures  of risks
inherent in the insurer's operations.  The formula includes components for asset
risk,  liability risk, interest rate exposure and other factors.  Based upon the
September  30,  1996  statutory  financial  reports of the  Company's  insurance
subsidiaries,  the Company's insurance  subsidiaries are adequately  capitalized
under the formula.

         Under insurance guaranty fund laws in most states,  insurance companies
doing business in a participating  state can be assessed up to prescribed limits
for policyholder  losses incurred by insolvent  companies.  The Company does not
believe that any such  assessments  will be  materially  different  from amounts
already reflected in the financial statements.

         A substantial number of class action and other civil lawsuits have been
filed against life and health 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.  Some of the lawsuits
have  resulted  in the  award of  substantial  settlements  with,  or  judgments
against,  the insurers,  including material amounts of punitive damages that are
disproportionate  to the actual  damages.  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.  In addition,  in some class  action and other  lawsuits  involving
insurers' sales practices,  insurers have made material settlement payments. The
Company and its subsidiaries, like other life and health insurers, in the course
of business are involved in such litigation. Pending litigation includes a class
action  filed in  Jefferson  County  (Birmingham),  Alabama  with respect to the
previously  discussed  cancer  premium  refunds.  Although  the  outcome  of any
litigation cannot be predicted with certainty,  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  of the
Company.

         The  Company  is  not  aware  of any  material  pending  or  threatened
regulatory action with respect to the Company or any of its subsidiaries.

                                       18

<PAGE>



                                     PART II


Item 6.          Exhibits and Reports on Form 8-K

          (a).   Exhibit 10(1) - The Company's 1996 Stock Incentive Plan

                 Exhibit 10(2) - Specimen letter confirming grants under
                                 the Company's 1996 Stock Incentive Plan

                 Exhibit 15 - Letter re: unaudited interim financial statements

                 Exhibit 27 - Financial data schedule

          (b).   A report on Form 8-K was filed July 24, 1996,  reporting  under
                 Item  5  the  Company's  1996  second  quarter  earnings  press
                 release.

                 A report on Form 8-K was filed July 31, 1996 filing  under Item
                 7 certain Exhibits  related to the  Registration  Statements on
                 Form S-3 (Registration Nos. 33-55063, 333-03435 and 33-52831)
                 of the Company and PLC Capital L.L.C.

                 A report on Form 8-K was filed  September 15, 1996 filing under
                 Item 7 certain Exhibits related to the Registration  Statements
                 on  Form  S-3  (Registration  Nos.  33-55063,  333-03435  and
                 33-52831) of the Company and PLC Capital L.L.C.


                                       19

<PAGE>
                                    SIGNATURE


          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 CORPORATION




Date: November 12, 1996             /s/  Jerry W. DeFoor
                                    --------------------
                                    Jerry W. DeFoor
                                    Vice President and Controller,
                                    and Chief Accounting Officer
                                    (Duly authorized officer)

                                       20

<PAGE>


                                                             EXHIBIT 10(1)


                           PROTECTIVE LIFE CORPORATION
                            1996 STOCK INCENTIVE PLAN


                                    SECTION 1

                                     PURPOSE

         The  purpose  of the  Plan  is to  foster  and  promote  the  long-term
financial  success of the Company and materially  increase  stockholder value by
(a) motivating superior performance by means of performance-related  incentives,
(b) encouraging  and providing for the  acquisition of an ownership  interest in
the Company by Employees, and (c) enabling the Company to attract and retain the
ser vices of an outstanding  management team upon whose judgment,  interest, and
special effort the successful conduct of its operations is largely dependent.


                                    SECTION 2

                                   DEFINITIONS

         2.1  Definitions.  Whenever used herein, the following terms shall have
the respective meanings set forth below:

         (a)      "Act" means the Securities Exchange Act of 1934, as amended.

         (b)      "Board" means the Board of Directors of the Company.

         (c)      "Cause" means (i) the willful failure by the Participant to
                    perform substantially his duties as an Employee of the
                    Company (other than due to physical or mental illness) after
                    reasonable notice to the Participant of such failure,
                    (ii) the Participant's engaging in serious misconduct that
                    is injurious to the Company or any Subsidiary, (iii) the
                    Participant's having been convicted of, or entered a plea
                    of nolo contendere to, a crime that constitutes a felony or
                    (iv) the breach by the Participant of any written covenant
                    or agreement with the Company or any Subsidiary not to
                    disclose any information pertaining to the Company or any
                    Subsidiary or not to compete or interfere with the Company
                    or any Subsidiary.

         (d)      "Change in Control" is (i) as defined in the Company's Rights
                   Agreement, as in effect from time to time, or (ii) the
                   consummation of (A) any consolidation or merger of the
                   Company in which the Company is not the continuing or
                   surviving corporation or pursuant to which shares of the
                   Common Stock are converted into cash, securities or other
                   property, other than a merger of the Company in which th
                   holders of Common Stock immediately prior to the merger have
                   the same proportionate ownership of Common Stock of the
                   surviving corporation immediately after the merger as they
                   had in Common Stock immediately prior to the merger, or
                   (B) any sale, lease, exchange

                                        1

<PAGE>



                  or other  transfer (in one  transaction or a series of related
                  transactions) of all, or  substantially  all, of the assets of
                  the Company,  including,  without limitation, any sale, lease,
                  exchange or other transfer (in one  transaction or a series of
                  related  transactions)  of all or  substantially  all,  of the
                  assets of Protective Life Insurance Company.

         (e)      "Change in Control Price" means the highest price per share of
                  Stock offered in conjunction with any transaction resulting in
                  a  Change  in  Control  (as  determined  in good  faith by the
                  Committee  if any part of the offered  price is payable  other
                  than in cash).

         (f)      "Code" means the Internal Revenue Code of 1986, as amended.

         (g)      "Committee"  means the Compensation and Management  Succession
                  Committee  of the Board,  which  shall  consist of two or more
                  members,  each  of whom  shall  be a  "Non-employee  Director"
                  within the meaning of Rule  16b-3,  as  promulgated  under the
                  Act.

         (h)      "Company" means Protective Life Corporation, a Delaware
                  corporation, and any successor thereto.

         (i)      "Disability"   means  total   disability   as   determined  in
                  accordance with the terms of the long-term  disability plan of
                  the  Company  or  any  of  its   Subsidiaries   in  which  the
                  Participant is eligible to participate.

         (j)      "Employee" means any officer or other key executive and
                  management employee of the Company or any of its Subsidiaries.

         (k)      "Fair Market  Value"  means,  on any date,  the average of the
                  average of the highest  and lowest  sales price for a share of
                  Stock  reported  for such day on a  national  exchange  or the
                  average of the highest  and lowest bid and asked  prices for a
                  share of Stock on such date on a nationally  recognized system
                  of price  quotation.  In the  event  that  there  are no Stock
                  transactions reported on such exchange or system on such date,
                  Fair  Market  Value  shall  mean  the  closing  price  on  the
                  immediately preceding date on which Stock transactions were so
                  reported.

         (l)      "Participant" means any Employee designated by the Committee
                  to participate in the Plan.

         (m)      "Plan"  means  the  Protective  Life  Corporation  1996  Stock
                  Incentive Plan, as in effect from time to time.

         (n)      "Retirement"   means  retirement  at  the  age  at  which  the
                  Participant  may retire and  immediately  thereafter  commence
                  receipt  of any  benefits  due  under  the  Company's  defined
                  benefit pension plan.




                                        2

<PAGE>



         (o)      "Stock" means the common stock of the Company, par value $0.50
                  per share.

         (p)      "Stock  Appreciation  Right"  shall mean a  contractual  right
                  granted under Section 6 to receive Stock.

         (q)      "Subsidiary" means any corporation or partnership in which the
                  Company owns, directly or indirectly, 50% or more of the total
                  combined  voting  power  of  all  classes  of  stock  of  such
                  corporation or of the capital  interest or profits interest of
                  such partnership.

         2.2 Gender and Number.  Except when otherwise indicated by the context,
words in the  masculine  gender  used in the Plan  shall  include  the  feminine
gender,  the singular shall include the plural, and the plural shall include the
singular.


                                    SECTION 3

                          ELIGIBILITY AND PARTICIPATION

         Participants  in the  Plan  shall be those  Employees  selected  by the
Committee to participate in the Plan.


                                    SECTION 4

                             POWERS OF THE COMMITTEE

         4.1 Power to Grant.  The Committee shall determine the  Participants to
whom Stock Appreciation  Rights shall be granted and the terms and conditions of
any and all such  Stock  Appreciation  Rights.  The  Chairman  of the  Board may
suggest to the Committee the Participants who should receive Stock  Appreciation
Rights under the Plan. The terms and conditions of each Stock Appreciation Right
shall be determined  by the  Committee at the time of grant,  and such terms and
conditions shall not be subsequently  changed in a manner which would be adverse
to  participants  without  the  consent  of the  Participant  to whom such Stock
Appreciation Right has been granted. The Committee may establish different terms
and conditions for different  Participants  receiving Stock Appreciation  Rights
and for the same Participant for each Stock  Appreciation Right such Participant
may receive, whether or not granted at different times.

         4.2 Substitute Stock Appreciation  Rights. The Committee shall have the
right  to  grant  Stock  Appreciation  Rights  in  substitution  for or upon the
cancellation of Stock Appreciation  Rights previously granted and such new Stock
Appreciation  Rights may contain terms more  favorable to the recipient than the
Stock Appreciation Rights they replace,  including,  without limitation, a lower
exercise price.




                                        3

<PAGE>



         4.3  Administration.   The  Committee  shall  be  responsible  for  the
administration  of the Plan.  The  Committee,  by majority  action  thereof,  is
authorized to prescribe,  amend,  and rescind rules and regulations  relating to
the Plan, to provide for conditions deemed necessary or advisable to protect the
interests  of the  Company,  and to make all other  determinations  necessary or
advisable  for the  administration  and  interpretation  of the Plan in order to
carry out its provisions and purposes. Determinations, interpretations, or other
actions made or taken by the  Committee  pursuant to the  provisions of the Plan
shall be final, binding, and conclusive for all purposes and upon all persons.


                                    SECTION 5

                              STOCK SUBJECT TO PLAN

         5.1 Number.  Subject to the  provisions  of Section  5.3, the number of
shares of Stock  subject  to Stock  Appreciation  Rights  under the Plan may not
exceed 500,000 shares of Stock.  The shares to be delivered  under the Plan will
consist of treasury Stock.

         5.2 Canceled,  Terminated,  or Forfeited Stock Appreciation Rights. Any
shares of Stock  subject to a Stock  Appreciation  Right which for any reason is
canceled,  terminated  or  otherwise  settled  without the issuance of any Stock
shall again be available under the Plan.

         5.3 Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including,  without limitation, the payment of an
extraordinary   dividend),   merger,   consolidation,   combination,   spin-off,
distribution  of assets to  stockholders,  exchange of shares,  or other similar
corporate  change,  the aggregate  number of shares of Stock available for Stock
Appreciation   Rights  under  Section  5.1  or  subject  to  outstanding   Stock
Appreciation  Rights and the respective base prices and/or performance  criteria
applicable  to  outstanding  Stock  Appreciation  Rights  may  be  appropriately
adjusted by the Committee, whose determination shall be conclusive.


                                    SECTION 6

                            STOCK APPRECIATION RIGHTS

         6.1 Grant of Stock Appreciation  Rights.  Stock Appreciation Rights may
be granted to  Participants  at such time or times as shall be determined by the
Committee.  The Committee  shall have complete  discretion  in  determining  the
number of Stock  Appreciation  Rights,  if any, to be granted to a  Participant.
Each Stock Appreciation Right shall be evidenced by a letter to each Participant
that shall  specify  the base  price,  the  duration  of the Stock  Appreciation
Rights,  the  number of shares of Stock to which the Stock  Appreciation  Rights
pertain,  and such other terms and conditions not inconsistent  with the Plan as
the Committee shall determine.

         6.2 Base Price. Unless otherwise  determined by the Committee,  a Stock
Appreciation Right granted pursuant to the Plan shall have a base price which is
not less  than  the  Fair  Market  Value  of the  Stock  on the  date the  Stock
Appreciation Right is granted.



                                        4

<PAGE>



         6.3 Exercise of Stock  Appreciation  Rights. A Stock Appreciation Right
awarded under the Plan shall  entitle a Participant  to receive from the Company
an amount in Stock  equal to the excess of the Fair  Market  Value of a share of
Stock on the date of  exercise  of the Stock  Appreciation  Right  over the base
price  thereof.  Except as  otherwise  provided  in the Plan and  subject to the
Committee's right to accelerate the  exercisability  of such Stock  Appreciation
Rights  in  its  discretion,   the  Stock   Appreciation   Rights  shall  become
exercisable,  subject to the  restrictions and conditions  hereof,  on the fifth
anniversary  of the Grant  Date (the  "Grant  Date"),  provided  that such Stock
Appreciation  Rights  shall  also  become  exercisable  under the  circumstances
described in Section 7 and/or Section 9.1.  Notwithstanding  the  foregoing,  no
Stock  Appreciation  Right shall be exercisable for more than 10 years after the
date on which it is granted.

         6.4 Payment.  The Committee  shall establish  procedures  governing the
exercise of Stock Appreciation  Rights,  which shall require that written notice
of  exercise  be given.  The number of shares of Stock  payable  pursuant to the
exercise of Stock  Appreciation  Rights  shall be equal to the (x) the excess of
(i) the Fair Market Value of a share of Stock on the date of exercise multiplied
by the number of Stock  Appreciation  Rights  exercised over (ii) the sum of the
base price for all Stock  Appreciation  Rights exercised divided by (y) the Fair
Market Value of a share of Stock on the date of exercise. As soon as practicable
after  receipt of a written  exercise  notice,  the Company shall deliver to the
Participant a certificate or  certificates  representing  the acquired shares of
Stock.  In the event that the Committee  shall  determine that any  certificates
issued hereunder must bear a legend restricting the transfer of such Stock, such
certificates shall have the appropriate legend.

         6.5   Limitations   on  and   Deferral  of  Payment.   (a)   Deferrals.
Notwithstanding  anything in the Plan to the  contrary,  the Committee may defer
all or any portion of any  distribution  of Common Stock to be made hereunder to
the extent such  distribution,  when added to all other payments to be made to a
Participant in a calendar year, would not be deductible compensation paid by the
Company  for  federal  income tax  purposes  within the  meaning of Section  162
(including Section 162(m)) of the Internal Revenue Code of 1986, as amended (the
"Code").  In the  event  that a  distribution  or  distributions  of  Stock to a
Participant is deferred,  the Company will establish for each such Participant a
book-entry account (the "Account") representing all such deferred awards.

         (b) Dividends on Deferred Awards.  In the event that dividends are paid
         by the Company during the deferral period,  each Participant's  Account
         shall  be  credited  with  the  amount  of any  dividends  which  would
         otherwise have been payable to such Participant if the number of shares
         represented  by such Account had been owned  directly,  and such amount
         shall be deemed to be reinvested in additional shares of Stock.

         (c) Payment. The Stock represented by each Participant's  Account shall
         be paid to such  Participant  (or, in the event of his or her death, to
         his or her designated beneficiary or, if none, to his or her estate) in
         a  lump  sum,  or  in  installments,   if  necessary  to  preserve  the
         deductibility of such payment, as of the earliest date that the payment
         of the Account  balance,  or portion  thereof,  when added to all other
         payments  to be made to a  Participant  in a  calendar  year,  would be
         deductible  by the Company for federal  income tax purposes  within the
         meaning of Section 162 (including Section 162(m)) of the Code.




                                        5

<PAGE>
                                    SECTION 7

                            TERMINATION OF EMPLOYMENT

         7.1  Termination of Employment Due to Death.  Disability or Retirement.
Unless otherwise  determined by the Committee at the time of grant, in the event
a  Participant's  employment  terminates  by  reason  of  death,  Disability  or
Retirement,  any Stock Appreciation Rights granted to such Participant which are
then  outstanding  (whether  or not  exercisable  prior  to  the  date  of  such
termination) may be exercised by the Participant or the Participant's designated
beneficiary,  and if none is named, in accordance with Section 11.2, at any time
prior to the  expiration  date of the term of the Stock  Appreciation  Rights or
within three (3) years (or such other period as the Committee shall determine at
the time of  grant)  following  the  Participant's  termination  of  employment,
whichever period is shorter.

         7.2  Termination of Employment for Any Other Reason.  Unless  otherwise
determined  by the  Committee  at or after the time of  grant,  in the event the
employment  of the  Participant  shall  terminate  for any reason other than one
described in Section 7.1, any unexercised Stock Appreciation  Rights (whether or
not  exercisable  prior  to the  date of  termination)  shall  terminate  and be
canceled immediately upon such termination of employment.


                                    SECTION 8

                     FORFEITURE OF STOCK APPRECIATION RIGHTS

         8.1 Forfeiture and Pay-Back of SAR Amount. If within one year after the
exercise of all or a portion of the Stock Appreciation Rights awarded under this
Agreement, the Participant voluntarily terminates his or her employment with the
Company and the Participant  becomes  employed by a competitor of the Company in
the financial services industry (which includes,  but is not limited to, working
in  the  insurance,  mutual  fund,  broker-dealer,   financial  institution,  or
investment company industries), the Participant agrees to pay the Company within
30 days of commencing such employment an amount, in cash or the equivalent value
in shares of Stock,  equal to the aggregate of all SAR Amounts  attributable  to
Stock Appreciation Rights exercised within the one year period prior to the date
of such termination.

         8.2   Forfeiture   of  Stock   Appreciation   Rights.   If,  after  the
Participant's  termination of employment,  the Committee determines that, either
during  or after  the  Participant's  employment  by the  Company  or one of its
Subsidiaries,  the Participant  engaged in conduct that (i) would have permitted
the Company or any of its Subsidiaries to terminate the Participant's employment
for Cause had he or she still been employed or (ii) otherwise  results in damage
to the business or reputation of the Company or any of its Subsidiaries,  all of
the Stock  Appreciation  Rights that are still  outstanding  at the time of such
determination shall immediately  terminate and be canceled immediately upon such
determination by the Committee.  Upon such a determination by the Committee, the
Company may disregard any attempted exercise of the Stock Appreciation Rights by
notice delivered prior to such



                                        6

<PAGE>



determination,  if,  at such  time,  the  Company  had not  completed  the steps
necessary to effect such exercise.

                                    SECTION 9

                                CHANGE IN CONTROL

         9.1  Accelerated  Vesting and  Payment.  Subject to the  provisions  of
Section 9.2 below, in the event of a Change in Control,  each Stock Appreciation
Right  (regardless of whether such SARs are at such time otherwise  exercisable)
shall be canceled in  exchange  for a payment in cash of an amount  equal to the
excess,  if any,  of the  Change in  Control  Price over the base price for such
Stock Appreciation Right.

         9.2 Alternative Awards.  Notwithstanding  Section 9.1, no cancellation,
acceleration  of  exercisability  or vesting or cash settlement or other payment
shall  occur with  respect  to any Stock  Appreciation  Rights if the  Committee
reasonably  determines  in good  faith  prior to the  occurrence  of a Change in
Control that such Stock Appreciation  Rights shall be honored or assumed, or new
rights  substituted  therefor  (such  honored,   assumed  or  substituted  award
hereinafter called an "Alternative Award"), by a Participant's  employer (or the
parent or a subsidiary  of such  employer)  immediately  following the Change in
Control, provided that any such Alternative Award must:

      (i) be based on stock which is traded on an established  securities
          market, or which will be so traded within 60 days of the Change in
          Control;

     (ii) provide  such   Participant  (or  each  Participant  in  a  class  of
          Participants) with rights and entitlements substantially equivalent to
          or better than the rights,  terms and conditions  applicable under
          such Award, including, but not limited to, an identical or better
          exercise or vesting schedule and identical or better timing and
          methods of payment;

    (iii) have substantially equivalent economic value to such Award (determined
          at the time of the Change in Control);

     (iv) have terms and conditions which provide that in the event that the
          Participant's employment is involuntarily terminated or constructively
          terminated, any conditions on a Participant's rights under, or any
          restrictions on transfer or exercisability applicable to, each such
          Alternative Award shall be waived or shall lapse, as the case may be.

For this purpose,  a  constructive  termination  shall mean a  termination  by a
Participant following a material reduction in the Participant's  compensation or
a material reduction in the Participant's responsibilities, in each case without
the Participant's written consent.

         9.3 Stock  Appreciation  Rights Granted Within Six Months of the Change
of Control.  If any Stock  Appreciation  Rights granted within six months of the
date on which a Change in Control  occurs (i) is held by a person subject to the
reporting  requirements of Section 16(a) of the Act and (ii) is to be cashed out
pursuant  to Section  9.1,  such cash out shall not occur until the later of (i)
the



                                        7

<PAGE>



date which is six months and one day after the date the Stock Appreciation Right
was  granted or (ii) the first date on which,  in the  opinion of the  Company's
counsel,  such  cash  out  could  occur  without  such  reporting  person  being
potentially  subject to liability  under  Section  16(b) of the Act by reason of
such cash out.


                                   SECTION 10

                AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

         The Board may at any time  terminate or suspend the Plan, and from time
to time  either  the Board or the  Committee  may amend or modify  the Plan.  No
amendment,  modification,  or  termination  of the  Plan  shall  in  any  manner
adversely  affect any Stock  Appreciation  Right  theretofore  granted under the
Plan, without the consent of the Participant.


                                   SECTION 11

                            MISCELLANEOUS PROVISIONS

         11.1   Nontransferability   of  Stock  Appreciation  Rights.  No  Stock
Appreciation  Right  granted under the Plan may be sold,  transferred,  pledged,
assigned,  or otherwise alienated or hypothecated,  other than by will or by the
laws of descent and distribution.  All rights with respect to Stock Appreciation
Rights granted to a Participant  under the Plan shall be exercisable  during his
lifetime only by such Participant.

         11.2  Beneficiary   Designation.   Benefits  remaining  unpaid  at  the
Participant's death shall be paid to or exercised by the Participant's surviving
spouse,  if  any,  or  otherwise  to or by  the  Participant's  estate.  If  the
Participant  desires to name another  beneficiary or  beneficiaries  (who may be
named  contingently or successively) to whom any benefit under the Plan is to be
paid or by whom  any  right  under  the Plan is to be  exercised  in case of the
Participant's  death,  the  Participant may do so by filing a form prescribed by
the  Committee.  Such  designation  will be  effective  only  when  filed by the
Participant, in writing with the Chief Accounting Officer of the Company, during
the Participant's  lifetime. Such designation will revoke all prior designations
made by the Participant.

         11.3 No Guarantee of Employment or  Participation.  Nothing in the Plan
shall  interfere  with or  limit  in any way the  right  of the  Company  or any
Subsidiary to terminate  any  Participant's  employment at any time,  nor confer
upon any  Participant  any right to continue in the employ of the Company or any
Subsidiary  or  affiliate.  No  Employee  shall have a right to be selected as a
Participant,   or,  having  been  so  selected,  to  receive  any  future  Stock
Appreciation Rights.

         11.4 Tax Withholding.  The Company shall have the power to withhold, or
require a Participant to remit to the Company,  an amount  sufficient to satisfy
Federal, state, and local withholding tax requirements on any Stock Appreciation
Rights  under the Plan,  and the Company may defer  issuance of Stock until such
requirements are satisfied.



                                        8

<PAGE>


         11.5 No  Limitation  on  Compensation.  Nothing  in the  Plan  shall be
construed to limit the right of the Company to  establish  other plans or to pay
compensation  to its  employees  in cash or  property,  in a manner which is not
expressly authorized under the Plan.

         11.6 Requirements of Law. The granting of Stock Appreciation Rights and
the issuance of shares of Stock shall be subject to all applicable laws,  rules,
and regulations,  and to such approvals by any governmental agencies or national
securities exchanges as may be required.

         11.7 Term of Plan.  The Plan shall be effective on August 15, 1996. The
Plan shall continue in effect,  unless sooner terminated  pursuant to Section 9,
until the tenth anniversary of the Grant Date.

         11.8  Governing Law.  The Plan, and all agreements hereunder, shall be
 construed in accordance with and governed by the laws of the State of Delaware.

         11.9  No Impact on Benefits.  Stock Appreciation Rights granted under
the Plan are not compensation for purposes of calculating an Employee's rights
under any employee benefit plan.

         11.10 No Voting Rights. The Participant shall have no right, in respect
of Stock  Appreciation  Rights granted,  to vote on any matter  submitted to the
Company's stockholders until such time as shares of Stock issuable upon exercise
of such Stock Appreciation Rights have been so issued.




                                        9

<PAGE>

<PAGE>
                                                             Exhibit 10(2)


                                                             October 23, 1996

HAND DELIVERY

Re:      Stock Appreciation Rights


name

The Company  hereby  confirms the grant to you,  effective as of August 15, 1996
(the "Grant Date"),  of stock  appreciation  rights (the "SARs") with respect to
______ shares of the Company's  Common Stock ("Common Stock") at a base price of
$34.875 per share (the "Base Price") under the Protective Life  Corporation 1996
Stock Incentive Plan (the "Plan").  The Stock Appreciation Rights are subject to
certain  restrictions  and conditions as set forth in the Plan and as imposed by
the  Compensation and Management  Succession  Committee (the  "Committee").  The
following  are  highlights  of  certain  conditions  of the Plan.  For  complete
details, you should consult the attached copy of the Plan.

1.  Exercisability.  Except as  otherwise  provided in the Plan,  the SARs shall
become  exercisable,  subject  to the  provisions  of  the  Plan,  on the  fifth
anniversary  of the Grant Date.  The SARs shall also become  exercisable  upon a
change of  control  as set forth in  Section  9 of the Plan.  Unless an  earlier
termination is specified in Section 7 of the Plan,  the SARs shall  terminate on
the tenth anniversary of the Grant Date (the "Normal Expiration Date").

2. Method of Exercise  and Form of Payment.  You may exercise any portion of the
SARs that has become  exercisable  by written  notice of  exercise  to the Chief
Accounting  Officer of the Company.  As soon as  practicable  after receipt of a
written  exercise notice of any  exercisable  SARs, the Company shall deliver to
you a  certificate  or  certificates  representing  the  shares of Common  Stock
acquired upon the exercise  thereof.  The number of shares of Common Stock to be
distributed shall be as set forth in Section 6.4 of the Plan.

3.  Limitations  on and Deferral of Payment.  (a) The Committee may defer all or
any portion of any distribution of Common Stock to be made under the Plan to the
extent  such  distribution,  when  added to all other  payments  to be made to a
Participant in a calendar year, would not be deductible compensation paid by the
Company  for  federal  income tax  purposes  within the  meaning of Sec tion 162
(including Section 162(m)) of the Internal Revenue Code of 1986, as amended (the
"Code").  In the event that a distribution or distributions of Common Stock to a
Participant  is deferred,  the Company will  establish  for each  Participant  a
book-entry account (the "Account") representing all such deferred awards.




                                        1

<PAGE>



         (b) Dividends on Deferred Awards.  In the event that dividends are paid
by the Company during the deferral period,  each Participant's  Account shall be
credited  with the  amount of any  dividends  which  would  otherwise  have been
payable to such Participant if the number of shares  represented by such Account
had been owned  directly,  and such amount shall be deemed to be  reinvested  in
additional shares of Stock.

4.     Termination of Employment.  (a) Death, Disability or Retirement.  In the
event your  employment with the Company  terminates due to death,  disability or
retirement,  then 100% of the SARs shall be  exercisable  as of the date of such
termination,  and  such  SARs may be  exercised  by you or your  beneficiary  as
designated in accordance with Section 11.2 of the Plan, at any time on or before
the  earlier to occur of (i) the Normal  Expiration  Date or (ii) the day before
the third anniversary of your termination of employment.

         (b) Other  Termination.  In the event your  employment with the Company
terminates for any reason other than your death, disability or retirement,  then
all unexercised  SARs (whether or not then  exercisable)  shall terminate and be
canceled immediately upon such termination of employment.

   
5.  Forfeiture  and  Pay-Back  of SAR  Amount.  (a) If within one year after the
exercise of all or a portion of the SARs awarded under the Plan, you voluntarily
terminate  your  employment  with  the  Company  and you  become  employed  by a
competitor of the Company in the financial  services  industry (which  includes,
but is not limited to,  working in the  insurance,  mutual fund,  broker-dealer,
financial  institution or investment company  industries),  you agree to pay the
Company within 30 days of commencing such  employment an amount,  in cash or the
equivalent  value in shares of Common  Stock,  equal to the aggregate of all SAR
amounts  attributable to SARs exercised  within the one year period prior to the
date of such termination.
    

         (b) If, after your termination of employment,  the Committee determines
that,  either  during or after  your  employment  by the  Company  or one of its
Subsidiaries,  you engaged in conduct that (i) would have  permitted the Company
or any of its  Subsidiaries to terminate your employment for Cause had you still
been employed or (ii) otherwise  results in damage to the business or reputation
of the  Company  or any of its  Subsidiaries,  all of the SARs  that  are  still
outstanding at the time of such determination shall immediately terminate and be
canceled  immediately  upon such  determination  by the  Committee.  Upon such a
determination by the Committee, the Company may disregard any attempted exercise
of the SARs by notice delivered prior to such  determination,  if, at such time,
the Company had not completed the steps necessary to effect such exercise.

6.   Nontransferability of Awards. No SARs may be sold, transferred, pledged,
assigned, encumbered, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution.

7.  Beneficiary  Designation.  Benefits  remaining unpaid at your death shall be
paid to or  exercised  by your  surviving  spouse,  if any, or otherwise to your
estate. If you desire to name another beneficiary,  you may name any beneficiary
or  beneficiaries  (who may be named  contingently or  successively) by whom any
right under the Plan is to be  exercised  in case of your death by  submitting a
form reasonably  acceptable to the Company.  This  designation will be effective
only when filed in writing,  with the Chief  Accounting  Officer of the Company,
during your lifetime. Such designation will revoke all prior designations.




                                        2

<PAGE>


8.   Tax  Withholding.  Whenever Common Stock is to be issued pursuant to the
exercise of a SAR, the Company shall have the power to withhold,  or require you
to remit, an amount sufficient to satisfy Federal,  state, and local withholding
tax  requirements  relating to such  transaction,  and the Company may defer the
issuance of Common Stock until such  requirements  are satisfied.  The Committee
may  permit you to elect,  subject to such  conditions  as the  Committee  shall
impose, to have shares of Common Stock otherwise issuable upon the exercise of a
SAR withheld to satisfy all or part of your estimated total Federal,  state, and
local tax obligation associated with the transaction.

9.  Accelerated  Vesting  and  Payment.  Unless the  Committee  shall  otherwise
determine in the manner set forth in Section 9.2 of the Plan,  in the event of a
Change in Control,  each Stock  Appreciation  Right  (regardless of whether such
SARs are at such time otherwise exercisable) shall be canceled in exchange for a
payment  in cash of an amount  equal to the  excess,  if any,  of the  Change in
Control Price over the Base Price for such Stock Appreciation Right.

10.  No Guarantee of Employment. Nothing in the Plan shall interfere with or
limit  in any  way  the  right  of the  Company  or any of its  Subsidiaries  to
terminate your  employment at any time, or confer upon you any right to continue
in the employ of the Company or any Subsidiary.

11.  Amendments.  The Committee shall have the right, in its sole discretion, to
amend the Plan, from time to time,  provided that no such amendment shall impair
your  rights  under the Plan  without  your  consent.  Subject to the  preceding
sentence,  any alteration or amendment of the Plan by the Committee shall,  upon
adoption  thereof by the Committee,  become and be binding and conclusive on all
persons  affected  thereby without  requirement for consent or other action with
respect thereto by any such person. The Company shall give written notice to you
of any such alteration or amendment of the Plan as promptly as practicable after
the adoption thereof.  The Plan may also be amended in a written document signed
by both you and the Company.

12.  Interpretation;  Construction.  Any determination or interpretation by
the Committee under or pursuant to the Plan shall be final and conclusive on all
persons affected hereby

Please sign below  indicating  that you have  received this letter and a copy of
the Plan. Upon signing, please send a signed copy of this memo to Jerry DeFoor.

                                                 COMPENSATION AND MANAGEMENT
                                                    SUCCESSION COMMITTEE


                                                 John J. McMahon, Jr., Chairman


By signing below, I hereby  acknowledge  that I have reviewed the Company's 1996
Stock Incentive Plan. I understand that the terms of such Plan reflect the terms
and  conditions  under which the award was granted.  Further,  I understand  and
agree to be bound by all of the Plan's terms, including Section 8 concerning the
Forfeiture and Pay-Back of SARs.

By:

Signature:
                                        3

<PAGE>




<PAGE>

                                                                     Exhibit 15


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549


Re:      Protective Life Corporation

We are aware that our report dated  October 23,  1996,  on our review of interim
consolidated   financial   information  of  Protective   Life   Corporation  and
subsidiaries  for the period  ended  September  30,  1996,  and  included in the
Company's  quarterly  report  on  Form  10-Q  for the  quarter  then  ended,  is
incorporated by reference in the Company's  registration  statements on Form S-8
and Form S-3.  Pursuant to Rule 436(c) under the  Securities  Act of 1933,  this
report should not be considered a part of the registration  statements  prepared
or certified by us within the meaning of Sections 7 and 11 of that Act.





COOPERS & LYBRAND L.L.P.


Birmingham, Alabama
November 12, 1996


<PAGE>




<TABLE> <S> <C>

<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Protective Life Corporation and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               SEP-30-1996
<DEBT-HELD-FOR-SALE>                         4,507,727
<DEBT-CARRYING-VALUE>                                0
<DEBT-MARKET-VALUE>                                  0
<EQUITIES>                                      56,085
<MORTGAGE>                                   1,515,709
<REAL-ESTATE>                                   19,352
<TOTAL-INVEST>                               6,448,754
<CASH>                                          18,206
<RECOVER-REINSURE>                             349,806
<DEFERRED-ACQUISITION>                         477,344
<TOTAL-ASSETS>                               7,986,781
<POLICY-LOSSES>                              2,309,157
<UNEARNED-PREMIUMS>                            280,788
<POLICY-OTHER>                                       0
<POLICY-HOLDER-FUNDS>                          142,368
<NOTES-PAYABLE>                                139,000
                                0
                                          0
<COMMON>                                        16,668<F1>
<OTHER-SE>                                     555,549
<TOTAL-LIABILITY-AND-EQUITY>                 7,986,781
                                     343,111
<INVESTMENT-INCOME>                            384,149
<INVESTMENT-GAINS>                               5,882
<OTHER-INCOME>                                  38,931
<BENEFITS>                                     466,692
<UNDERWRITING-AMORTIZATION>                     70,162
<UNDERWRITING-OTHER>                           134,000
<INCOME-PRETAX>                                101,219
<INCOME-TAX>                                    34,415
<INCOME-CONTINUING>                             64,391<F2>
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    64,391
<EPS-PRIMARY>                                     2.15<F1>
<EPS-DILUTED>                                     2.15<F1>
<RESERVE-OPEN>                                       0
<PROVISION-CURRENT>                                  0
<PROVISION-PRIOR>                                    0
<PAYMENTS-CURRENT>                                   0
<PAYMENTS-PRIOR>                                     0
<RESERVE-CLOSE>                                      0
<CUMULATIVE-DEFICIENCY>                              0
<FN>
<F1>Reflects two for one stock split effective June 1, 1995.
<F2>Net of minority interest in income of consolidated subsidiaries of $2,413.
</FN>
        

</TABLE>


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