(Except where otherwise indicated, dollars in thousands except per share amounts)

Notes To Consolidated Financial Statements

NOTE A. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of Protective Life Corporation and subsidiaries (the Company) are prepared on the basis of accounting principles generally accepted in the United States. Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities. (See also Note J.)

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make various estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, as well as the reported amounts of revenues and expenses.

Entities Included

The consolidated financial statements include the accounts, after intercompany eliminations, of Protective Life Corporation and its wholly owned subsidiaries. Additionally, the financial statements include the accounts of majority-owned subsidiaries. The ownership interest of the other share owners of these subsidiaries is reported as a liability of the Company and as an adjustment to income.(See also Note D.)

Nature of Operations

Protective Life Corporation is a holding company whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. The Company markets individual life insurance, indemnity and prepaid dental products, credit life and disability insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and automobile service contracts throughout the United States. The Company also maintains a separate division devoted exclusively to the acquisition of insurance policies from other companies. Founded in 1907, Protective Life Insurance Company (Protective Life) is the Company’s principal operating subsidiary.

        The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, and other factors.

Recently Issued Accounting Standards

In 1997, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities;" SFAS No. 128, "Earnings per Share;" SFAS No. 130, "Reporting Comprehensive Income;" and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information."

In 1998, the Company adopted SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement Benefits."

In 1999, the Company adopted SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise,” and Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” and Statement of Position 97-3, “Accounting by Insurance and Other Enterprises for Insurance Related Assessments” issued by the American Institute of Certified Public Accountants.

        The adoption of these accounting standards did not have a material effect on the Company’s financial statements.

        The Financial Accounting Standards Board has issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” Effective January 1, 2001, SFAS No. 133 will require the Company to report derivative financial instruments on the balance sheet and to carry such derivatives at fair value. The fair values of derivatives increase or decrease as interest rates change. Under SFAS No. 133, changes in fair value are reported as a component of net income or as a change to share-owners’ equity, depending upon the nature of the derivative. Although the adoption of SFAS No. 133 will not affect the Company’s operations, adoption will introduce volatility into the Company’s reported net income and share-owners’ equity as interest rates change. The Company has not estimated the potential effect SFAS No. 133 will have on its net income and share-owners’ equity.

Investments

        Investments are reported on the following bases less allowances for uncollectible amounts on investments, if applicable:

·Fixed maturities (bonds and redeemable preferred stocks) – at current market value. Where market values are unavailable, the Company obtains estimates from independent pricing services or estimates market value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics.

·Equity securities (common and nonredeemable preferred stocks) – at current market value.

·Mortgage loans – at unpaid balances, adjusted for loan origination costs, net of fees, and amortization of premium or discount.

·Investment real estate – at cost, less allowances for depreciation computed on the straight-line method. With respect to real estate acquired through foreclosure, cost is the lesser of the loan balance plus foreclosure costs or appraised value.

·Policy loans – at unpaid balances.

·Other long-term investments - at a variety of methods similar to those listed above, as deemed appropriate for the specific investment.

·Short-term investments - at cost, which approximates current market value.

        Substantially all short-term investments have maturities of three months or less at the time of acquisition and include approximately $0.8 million in bank deposits voluntarily restricted as to withdrawal.

        As prescribed by SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” 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 share-owners’ equity. The market values of fixed maturities increase or decrease as interest rates fall or rise. Therefore, although the application of SFAS No. 115 does not affect the Company’s operations, its reported share-owners’ equity will fluctuate significantly as interest rates change.

                                                      1999               1998
-------------------------------------------------------------------------------
Total investments                                 $8,965,673         $8,501,646
Deferred policy acquisition costs                    992,518            857,948
All other assets                                   3,260,631          2,545,197
-------------------------------------------------------------------------------
                                                 $13,218,822        $11,904,791
===============================================================================
Deferred income taxes                                $40,749            $12,798
All other liabilities                             11,976,769         10,757,856
-------------------------------------------------------------------------------
                                                  12,017,518         10,770,654
-------------------------------------------------------------------------------
Guaranteed preferred beneficial
interests in Company's subordinated
debentures                                           190,000            245,000
-------------------------------------------------------------------------------
Share-owners' equity                               1,011,304            889,137
-------------------------------------------------------------------------------
                                                 $13,218,822        $11,904,791
===============================================================================

     Realized gains and losses on sales of investments are recognized in net
income using the specific identification basis.

Derivative Financial Instruments

The Company has not used derivative financial instruments for trading purposes. Combinations of interest rate swap contracts, options, and futures contracts are sometimes used as hedges against changes in interest rates for certain investments, primarily outstanding mortgage loan commitments, mortgage loans, and mortgage-backed securities, and liabilities arising from interest-sensitive products. Realized gains and losses on certain contracts are deferred and amortized over the life of the hedged asset or liability, and such amortization is recorded in investment income or interest expense. Any unamortized gain or loss is recorded as a realized investment gain or loss upon the early termination of a hedged asset or liability, or when the anticipated transaction is no longer likely to occur. No realized gains or losses were deferred in 1999 and 1998.

        The Company uses interest rate swap contracts, swaptions (options to enter into interest rate swap contracts), caps, and floors to convert certain investments from a variable to a fixed rate of interest and from a fixed rate to a variable rate of interest, and to convert a portion of its Senior Notes, Medium-Term Notes, Monthly Income Preferred Securities, and 8.25% Trust Originated Preferred Securities from a fixed rate to a variable rate of interest. Swap contracts are also used to alter the effective durations of assets and liabilities. Amounts paid or received related to the initiation of certain interest rate swap contracts, swaptions, caps, and floors are deferred and amortized over the life of the related financial instrument, and subsequent periodic settlements are recorded in investment income or interest expense. Gains or losses on contracts terminated upon the early termination of the related financial instrument are recorded as realized investment gains or losses, except in the case of an early extinguishment of debt, in which case, gains or losses are recorded as extraordinary gains or losses. Amounts paid related to the initiation of interest rate swap contracts, swaptions, caps, and floors were $1.4 million and $1.0 million in 1999 and 1998 respectively. No amounts were received in 1999 and 1998. Amounts paid and received were $0.5 million and $1.0 million, respectively, in 1997.

        At December 31, 1999, contracts with a notional amount of $1,598.9 million were in a $3.7 million net unrealized loss position. At December 31, 1998, contracts with a notional amount of $1,948.1 million were in an $11.6 million net unrealized gain position. The Company recognized $3.8 million in realized investment losses and $3.2 million in realized investment gains related to derivative financial instruments in 1999 and 1998, respectively.

        The Company’s derivative financial instruments are with highly rated counterparties.

Cash

Cash includes all demand deposits reduced by the amount of outstanding checks and drafts. The Company has deposits with certain financial institutions which exceed federally insured limits. The Company has reviewed the credit worthiness of these financial institutions and believes there is minimal risk of a material loss.

Deferred Policy Acquisition Costs

Commissions and other costs of acquiring traditional life and health insurance, credit insurance, universal life insurance, and investment products that vary with and are primarily related to the production of new business, have been deferred. Traditional life and health insurance acquisition costs are amortized over the premium-payment period of the related policies in proportion to the ratio of annual premium income to total anticipated premium income. Credit insurance acquisition costs are being amortized in proportion to earned premium. Acquisition costs for universal life and investment products are amortized over the lives of the policies in relation to the present value of estimated gross profits before amortization. Under SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments,” the Company makes certain assumptions regarding the mortality, persistency, expenses, and interest rates it expects to experience in future periods. These assumptions are to be best estimates and are to be periodically updated whenever actual experience and/or expectations for the future change from that assumed. Additionally, relating to SFAS No. 115, these costs have been adjusted by an amount equal to the amortization that would have been recorded if unrealized gains or losses on investments associated with the Company’s universal life and investment products had been realized.

        The cost to acquire blocks of insurance representing the present value of future profits from such blocks of insurance is also included in deferred policy acquisition costs. The Company amortizes the present value of future profits over the premium payment period, including accrued interest of up to approximately 8%. The unamortized present value of future profits for all acquisitions was approximately $340.6 million and $370.3 million at December 31, 1999 and 1998, respectively. During 1999, $13.3 million of present value of future profits was capitalized (relating to acquisitions made during the year) and $43.0 million was amortized. During 1998, $132.5 million of present value of future profits was capitalized, and $37.1 million was amortized.

Goodwill

The Company has recorded goodwill primarily in connection with its acquisitions of various small prepaid dental plans and United Dental Care, Inc. Most of the goodwill is being amortized straight-line over 40 years. Goodwill at December 31 is as follows:

                                          1999               1998
-------------------------------------------------------------------
Goodwill                               $229,887           $208,435
Accumulated  amortization                11,404              5,820
-------------------------------------------------------------------
                                       $218,483           $202,615
===================================================================

        The Company periodically evaluates the recoverability of its goodwill by comparing expected future cash flows to the amount of unamortized goodwill. In addition, if facts and circumstances were to indicate the unamortized goodwill is impaired, the goodwill would be reduced to an amount representing the present value of applicable estimated future cash flows.

Property and Equipment

Property and equipment are reported at cost. The Company primarily uses the straight-line method of depreciation based upon the estimated useful lives of the assets. Major repairs or improvements are capitalized and depreciated over the estimated useful lives of the assets. Other repairs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or retired are removed from the accounts, and resulting gains or losses are included in income.

                                               1999               1998
-----------------------------------------------------------------------
Home Office building                       $  40,524          $  37,959
Data processing equipment                     30,246             31,503
Other, principally furniture
   and equipment                              35,991             36,592
-----------------------------------------------------------------------
                                             106,761            106,054
Accumulated depreciation                      49,272             55,469
-----------------------------------------------------------------------
                                           $  57,489          $  50,585
=======================================================================

Separate Accounts

The assets and liabilities related to separate accounts in which the Company does not bear the investment risk are valued at market and reported separately as assets and liabilities related to separate accounts in the accompanying consolidated financial statements.

Revenues and Benefits Expense

· Traditional Life, Health, and Credit Insurance Products. Traditional life insurance products consist principally of those products with fixed and guaranteed premiums and benefits, and include whole life insurance policies, term and term-like life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies. Life insurance and immediate annuity premiums are recognized as revenue when due. Health and credit insurance premiums are recognized as revenue over the terms of the policies. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contracts. This is accomplished by means of the provision for liabilities for future policy benefits and the amortization of deferred policy acquisition costs.

        Liabilities for future policy benefits on traditional life insurance products have been computed using a net level method including assumptions as to investment yields, mortality, persistency, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Reserve investment yield assumptions are graded and range from 2.5% to 7.0%. The liability for future policy benefits and claims on traditional life, health, and credit insurance products includes estimated unpaid claims that have been reported to the Company and claims incurred but not yet reported. Policy claims are charged to expense in the period in which the claims are incurred.

                                        1999            1998            1997
-----------------------------------------------------------------------------
Balance beginning of year           $  93,966        $106,121        $108,159
   Less reinsurance                    20,019          18,673           6,423
-----------------------------------------------------------------------------
Net balance beginning
   of year                             73,947          87,448         101,736
-----------------------------------------------------------------------------
Incurred related to:
Current year                          331,380         317,447         258,322
Prior year                             (4,997)        (11,211)        (14,540)
-----------------------------------------------------------------------------
Total incurred                        326,383         306,236         243,782
-----------------------------------------------------------------------------
Paid related to:
Current year                          283,219         261,837         203,381
Prior year                             44,093          62,679          58,104
-----------------------------------------------------------------------------
Total paid                            327,312         324,516         261,485
-----------------------------------------------------------------------------
Other changes:
Acquisitions and reserve
   transfers                            1,667           4,779           3,415
-----------------------------------------------------------------------------
Net balance end of year                74,685          73,947          87,448
   Plus reinsurance                    47,661          20,019          18,673
-----------------------------------------------------------------------------
Balance end of year                  $122,346       $  93,966        $106,121
==============================================================================

· Universal Life and Investment Products.Universal life and investment products include universal life insurance, guaranteed investment contracts, deferred annuities, and annuities without life contingencies. Revenues for universal life and investment products consist of policy fees that have been assessed against policy account balances for the costs of insurance, policy administration, and surrenders. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. Interest rates credited to universal life and investment products ranged from 3.4% to 9.4% in 1999.

        The Company’s accounting policies with respect to variable universal life and variable annuities are identical except that policy account balances (excluding account balances that earn a fixed rate) are valued at market and reported as components of assets and liabilities related to separate accounts.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Income tax provisions are generally based on income reported for financial statement purposes. Deferred federal income taxes arise from the recognition of temporary differences between the bases of assets and liabilities determined for financial reporting purposes and the bases determined for income tax purposes. Such temporary differences are principally related to the deferral of policy acquisition costs and the provision for future policy benefits and expenses.

Net Income Per Share

All references to number of shares and per share amounts have been restated to reflect a two-for-one stock split on April 1, 1998.

        Net income per share –basic is net income divided by the average number of shares of Common Stock outstanding including sharesthat are issuable under various deferred compensation plans.

        Net income per share – diluted is adjusted net income divided by the average number of shares outstanding including all diluted, potentially issuable shares that are issuable under various stock-based compensation plans and stock purchase contracts.

                                       1999            1998            1997
-----------------------------------------------------------------------------
Net income                          $151,327        $130,781        $111,993
Dividends on
    FELINE PRIDES                      -- 1            -- 1            -- 1
-----------------------------------------------------------------------------
Adjusted net income                 $151,327        $130,781        $111,993
=============================================================================
Average shares issued
    and outstanding               64,481,997      62,553,803      61,623,692
Stock held in trust                  (13,030)
Issuable under
    various deferred
    compensation plans             1,135,344         967,784         805,558
-----------------------------------------------------------------------------
Average shares
    outstanding - basic           65,604,311      63,521,587      62,429,250
Stock held in trust                   13,030
Stock appreciation rights            183,996         167,981          33,552
Issuable under various
    other stock-based
    compensation plans               360,030         398,176         386,816
FELINE PRIDES stock
    purchase contracts                 -- 1            -- 1            -- 1
-----------------------------------------------------------------------------
Average shares
    outstanding - diluted         66,161,367      64,087,744      62,849,618
=============================================================================
-- 1 Excluded because the effect is anti-dilutive.

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 share-owners’ equity.

NOTE B. INVESTMENT OPERATIONS

Major categories of net investment income for the years ended December 31 are summarized as follows:

                                        1999            1998            1997
-----------------------------------------------------------------------------
Fixed maturities                     $478,151        $474,200        $402,664
Equity securities                       1,949           2,832           2,841
Mortgage loans                        172,027         158,461         161,605
Investment real estate                  2,655           1,274           2,057
Policy loans                           15,994          12,345          11,370
Other, principally
    short-term
    investments                        21,501          15,123          25,976
-----------------------------------------------------------------------------
                                      692,277         664,235         606,513
Investment expenses                    15,876          27,839          15,137
-----------------------------------------------------------------------------
                                     $676,401        $636,396        $591,376
==============================================================================

Realized investment gains (losses) for the years ended December 31 are summarized as follows:

                                        1999            1998            1997
-----------------------------------------------------------------------------
Fixed maturities                       $7,233          $4,374         $(8,354)
Equity securities                      (3,371)         (4,465)          5,975
Mortgage loans and
   other investments                   (4,919)          3,212           3,209
-----------------------------------------------------------------------------
                                      $(1,057)        $ 3,121           $ 830
=============================================================================

        The Company recognizes permanent impairments through charges to an allowance for uncollectible amounts on investments. The allowance totaled $21.1 million and $24.8 million at December 31, 1999 and 1998, respectively. Additions and reductions to the allowance are included in realized investment gains (losses). Without such additions/ reductions, the Company had net realized investment losses of $4.8 million in 1999, net realized investment gains of $4.2 million in 1998, and net realized investment losses of $7.1 million in 1997.

In 1999, gross gains on the sale of investments available for sale (fixed maturities, equity securities, and short-term investments) were $48.8 million, and gross losses were $39.4 million. In 1998, gross gains were $33.3 million, and gross losses were $32.5 million. In 1997, gross gains were $21.3 million, and gross losses were $23.5 million.

The amortized cost and estimated market values of the Company's investments classified as available for sale at December 31 are as follows:

                                                       Gross          Gross         Estimated
                                     Amortized       Unrealized     Unrealized        Market
1999                                    Cost          Gains           Losses          Values
-----------------------------------------------------------------------------------------------
Fixed maturities:
     Bonds:
         Mortgage-backed
            securities               $2,619,957          $18,491       $101,189      $2,537,259
         United States Govern-
            ment and authorities        154,957              138          1,260         153,835
         States, municipalities,
            and political
            subdivisions                 27,254                7            295          26,966
         Public utilities               537,842              301         14,697         523,446
         Convertibles and
            bonds with warrants             693                             155             538
         All other corporate
            bonds                     3,212,184            5,938        149,545       3,068,577
         Redeemable preferred
            stocks                        1,182               19                          1,201
-----------------------------------------------------------------------------------------------
                                      6,554,069           24,894        267,141       6,311,822
Equity securities                        37,842              644          2,040          36,446
Short-term investments                  113,657                0              0         113,657
-----------------------------------------------------------------------------------------------
                                     $6,705,568          $25,538       $269,181      $6,461,925
===============================================================================================

                                                        Gross          Gross           Estimated
                                     Amortized        Unrealized     Unrealized        Market
1998                                    Cost            Gains           Losses         Values
-----------------------------------------------------------------------------------------------
Fixed maturities:
     Bonds:
         Mortgage-backed
            securities               $2,581,561        $  41,626      $  33,939     $ 2,589,248
         United States Govern-
            ment and authorities         72,697            2,812              0          75,509
         States, municipalities,
            and political
            subdivisions                 29,521            1,131              0          30,652
         Public utilities               533,082           15,066              0         548,148
         Convertibles and
            bonds with warrants             694                0            179             515
         All other corporate
            bonds                     3,106,407          104,421         23,189       3,187,639
         Redeemable preferred
            stocks                        5,937              108              0           6,045
-----------------------------------------------------------------------------------------------
                                      6,329,899          165,164         57,307       6,437,756
Equity securities                        15,151              456          3,349          12,258
Short-term investments                  216,249                                         216,249
-----------------------------------------------------------------------------------------------
                                     $6,561,299         $165,620      $  60,656      $6,666,263
===============================================================================================

The amortized cost and estimated market values of fixed maturities at December 31, by expected maturity, are shown as follows. Expected maturities are derived from rates of prepayment that may differ from actual rates of prepayment.

                                                                Estimated
                                 Amortized                        Market
1999                                Cost                          Values
---------------------------------------------------------------------------
Due in one year or less        $   321,667                $        321,131
Due after one year
  through five years             2,918,273                       2,868,604
Due after five years
  through ten years              2,155,553                       2,052,867
Due after ten years              1,158,576                       1,069,220
---------------------------------------------------------------------------
                                $6,554,069                      $6,311,822
===========================================================================

                                                                 Estimated
                                Amortized                         Market
1998                               Cost                           Values
---------------------------------------------------------------------------
Due in one year or less        $   705,859                $        709,686
Due after one year
  through five years             3,255,973                       3,325,078
Due after five years
  through ten years              1,677,680                       1,728,075
Due after ten years                690,387                         674,917
----------------------------------------------------------------------------
                                $6,329,899                      $6,437,756
============================================================================

    Rating                         1999                        1998
-----------------------------------------------------------------------------
AAA                                37.4%                       34.2%
AA                                  6.3                         6.2
A                                  26.4                        29.3
BBB                                25.5                        26.3
BB or less                          4.3                         3.9
Redeemable preferred stocks         0.1                         0.1
-----------------------------------------------------------------------------
                                  100.0%                      100.0%
=============================================================================

        At December 31, 1999 and 1998, the Company had bonds which were rated less than investment grade of $269.6 million and $248.9 million, respectively, having an amortized cost of $319.1 million and $278.0 million, respectively. At December 31, 1999, approximately $81.5 million of the bonds rated less than investment grade were securities issued in Company-sponsored commercial mortgage loan securitizations. Approximately $936.4 million of bonds are not publicly traded.

        The change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities for the years ended December 31 is summarized as follows:

                                 1999            1998            1997
-----------------------------------------------------------------------------
Fixed maturities             $(227,568)        $(12,041)        $72,741
Equity securities                  973            4,605          (8,813)
=============================================================================

        At December 31, 1999, all of the Company’s mortgage loans were commercial loans of which 79% were retail, 8% were apartments, 6% were office buildings, and 6% were warehouses. The Company specializes in making mortgage loans on either credit-oriented or credit-anchored commercial properties, most of which are strip shopping centers in smaller towns and cities. No single tenant’s leased space represents more than 5% of mortgage loans. Approximately 74% of the mortgage loans are on properties located in the following states listed in decreasing order of significance: Florida, Texas, Georgia, Tennessee, North Carolina, Virginia, Alabama, South Carolina, Washington, Kentucky, Ohio, and Mississippi.

        Many of the mortgage loans have call provisions between 3 and 10 years. Assuming the loans are called at their next call dates, approximately $109.6 million would become due in 2001, $408.8 million in 2002 to 2005, and $333.6 million in 2006 to 2010.

        At December 31, 1999, the average mortgage loan was $2.0 million, and the weighted average interest rate was 7.8%. The largest single mortgage loan was $17.0 million.

        At December 31, 1999 and 1998, the Company’s problem mortgage loans (over ninety days past due) and foreclosed properties totaled $22.9 million and $11.7 million, respectively. Since the Company’s mortgage loans are collateralized by real estate, any assessment of impairment is based upon the estimated fair value of the real estate. Based on the Company’s evaluation of its mortgage loan portfolio, the Company does not expect any material losses on its mortgage loans.

        Certain investments with a carrying value of $36.3 million, were non-income producing for the twelve months ended December 31,1999.

        Policy loan interest rates generally range from 4.5% to 8.0%.

NOTE C. FEDERAL INCOME TAXES

                                  1999              1998            1997
--------------------------------------------------------------------------

Statutory federal income
     tax rate applied to
     pretax income                35.0%             35.0%           35.0%
Amortization of
     nondeductible
     goodwill                      0.8               0.3             0.3
State income taxes                 0.4               0.3
Dividends received
     deduction and
     tax-exempt
     interest                                       (0.1)           (0.2)
Low-income housing
     credit                       (0.3)             (0.4)           (0.5)
Tax differences arising
     from prior acquisitions
     and other adjustments         0.1               0.2            (0.6)
--------------------------------------------------------------------------
                                  36.0%             35.3%           34.0%
==========================================================================

        The provision for federal income tax differs from amounts currently payable due to certain items reported for financial statement purposes in periods which differ from those in which they are reported for income tax purposes.

        Details of the deferred income tax provision for the years ended December 31 are as follows:

                                     1999              1998            1997
----------------------------------------------------------------------------
Deferred policy
     acquisition
     costs                        $ 52,831          $ 60,855       $   7,368
Benefit and other
     policy liability
     changes                       (22,660)          (26,221)        (27,480)
Temporary
     differences of
     investment income               6,655            (3,491)          2,516
Other items                         (1,696)           (2,105)           (216)
----------------------------------------------------------------------------
                                  $ 35,130          $ 29,038        $(17,812)
=============================================================================

                                                  1999            1998
----------------------------------------------------------------------------
Deferred income tax assets:
     Policy and policyholder
         liability reserves                    $226,134        $195,469
     Other                                        6,170           4,474
----------------------------------------------------------------------------
                                                232,304         199,943
----------------------------------------------------------------------------
Deferred income tax liabilities:
   Deferred policy acquisition costs            264,896         212,065
     Unrealized gains (losses) on investments   (70,420)         32,514
----------------------------------------------------------------------------
                                                194,476         244,579
----------------------------------------------------------------------------
Net deferred income tax liability             $ (37,828)      $  44,636
============================================================================

        Under pre-1984 life insurance company income tax laws, a portion of the Company’s gain from operations which was not subject to current income taxation was accumulated for income tax purposes in a memorandum account designated as Policyholders’ Surplus. The aggregate accumulation in this account at December 31, 1999, was approximately $70.5 million. Should the accumulation in the Policyholders’ Surplus account of the life insurance subsidiaries exceed certain stated maximums, or should distributions including cash dividends be made to Protective Life Corporation in excess of approximately $840.3 million, such excess would be subject to federal income taxes at rates then effective. Deferred income taxes have not been provided on amounts designated as Policyholders’ Surplus. Under current income tax laws, the Company does not anticipate paying income tax on amounts in the Policyholders’ Surplus accounts.

NOTE D. DEBT AND GUARANTEED PREFERRED BENEFICIAL INTERESTS

                                                 1999            1998
----------------------------------------------------------------------
Short-term debt:
     Notes payable to banks                    $55,000         $19,749
======================================================================
Long-term debt:
     Notes payable to banks                    $59,000         $30,000
     Senior Notes                               75,000          75,000
     Medium-Term Notes                          44,685          44,923
     Mortgage note on
         investment real estate                  2,338           2,363
----------------------------------------------------------------------
                                              $181,023        $152,286
======================================================================

        Under a five-year revolving line of credit arrangement with several banks, the Company can borrow up to $70 million on an unsecured basis. No compensating balances are required to maintain the line of credit. At December 31, 1999, the Company had $59.0 million outstanding under this credit arrangement at an interest rate of 6.6%. In addition, the Company had borrowed $55.0 million at an interest rate of 6.7%.

        The aforementioned revolving line of credit arrangement contains, among other provisions, requirements for maintaining certain financial ratios and restrictions on indebtedness incurred by the Company and its subsidiaries. Additionally, the Company, on a consolidated basis, cannot incur debt in excess of 50% of its total capital.

        In 1994, the Company issued $75 million of 7.95% Senior Notes due July 1, 2004. The notes are not redeemable by the Company prior to maturity. During 1996, the Company issued $45 million of Medium-Term Notes with interest rates ranging from 7.00% to 7.45%. These notes are due in 2011, and approximately $35 million of the notes are redeemable by the Company after five years. Limited amounts of the Medium-Term Notes may be redeemed upon the death of the beneficial owner of the notes.

        As discussed in Note A, the Company uses derivative financial instruments to convert a portion of its Senior Notes and Medium-Term Notes from a fixed interest rate to a floating interest rate. The effective interest rate for the Senior Notes was 7.0% and 7.3% in 1999 and 1998, respectively. The effective interest rate for the Medium-Term Notes was 6.3% in 1999 and 6.4% in 1998.

        Future maturities of the long-term debt are $61.3 million in 2003, $75.0 million in 2004, and $44.7 million in 2011.

        Interest expense on all debt totaled $16.0 million, $13.5 million, and $10.8 million in 1999, 1998, and 1997, respectively.

        In 1994, a special purpose finance subsidiary of the Company, PLC Capital L.L.C. (PLC Capital), issued $55 million of 9% Cumulative Monthly Income Preferred Securities, Series A (MIPSSM). On June 30, 1999, the Company caused PLC Capital to redeem the MIPS. In a related transaction the Company redeemed its $69.6 million of Subordinated Debentures which were held by PLC Capital. The redemption of the Subordinated Debentures resulted in an extraordinary loss of $1.8 million. The extraordinary loss was comprised primarily of unamortized deferred debt issue costs and losses related to the termination of related interest rate swap agreements, net of an income tax benefit of $0.9 million.

        On April 29, 1997, another special purpose finance subsidiary, PLC Capital Trust I, issued $75 million of 8.25% Trust Originated Preferred Securities (TOPrSSM). The 8.25% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 8.25% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust I’s obligations with respect to the 8.25% TOPrS.

        PLC Capital Trust I was formed solely to issue securities and use the proceeds thereof to purchase subordinated debentures of the Company. The sole assets of PLC Capital Trust I are $77.3 million of Protective Life Corporation 8.25% Subordinated Debentures due 2027, Series B. The Company has the right under the subordinated debentures to extend interest payment periods up to five consecutive years, and, as a consequence, dividends on the 8.25% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust I during any such extended interest payment period. The 8.25% TOPrS are redeemable by PLC Capital Trust I at any time on or after April 29, 2002.

        On November 20, 1997, another special purpose finance subsidiary, PLC Capital Trust II, issued $115 million of FELINE PRIDESsm which are comprised of a stock purchase contract and a beneficial ownership of 6.5% TOPrS. The sole assets of PLC Capital Trust II are $118.6 million of Protective Life Corporation 6.5% Subordinated Debentures due 2003, Series C. Under the stock purchase contract, on February 16, 2001, the holders will purchase shares of the Company’s Common Stock from the Company. The holders may generally settle the contract in cash or by exercising their right to put, in effect, the 6.5% TOPrS back to the Company. The shares of common stock issuable range from approximately 3.5 million shares if the price of the Company’s Common Stock is greater than or equal to $32.52 to approximately 4.3 million shares if the stock price is less than or equal to $26.66. The 6.5% TOPrS are guaranteed on a subordinated basis by the Company. Dividends on the 6.5% TOPrS may be deferred until maturity. The dividend rate on the 6.5% TOPrS which remain outstanding after February 16, 2001, will be reset by a formula specified in the agreement.

        In related transactions, the Company entered into interest rate swap agreements which effectively converted a portion of the MIPS and 8.25% TOPrS from a fixed dividend rate to a floating rate. During 1999, the effective dividend on the 8.25% TOPrS was 6.3%. During 1998, the effective dividend rates on the MIPS and 8.25% TOPrS were approximately 6.4% and 6.6%, respectively. During 1997, the effective dividend rates on the MIPS and 8.25% TOPrS were approximately 6.4% and 6.8%, respectively.

        Dividends, net of tax, on the MIPS, 8.25% TOPrS, and FELINE PRIDES totaled $10.5 million in 1999, $12.1 million in 1998, and $6.4 million in 1997 before consideration of the interest rate swap agreements. On a swap-adjusted basis, dividends were $9.5 million, $10.9 million, and $5.0 million in 1999, 1998, and 1997, respectively.

        The MIPS, 8.25% TOPrS, and FELINE PRIDES are reported in the accompanying balance sheets as “guaranteed preferred beneficial interests in Company’s subordinated debentures,” and the related dividends are reported in the accompanying statements of income as “minority interest in net income of consolidated subsidiaries.”

NOTE E. RECENT ACQUISITIONS

In January 1997, the Company acquired a small prepaid dental plan. A second small prepaid dental plan was acquired in February 1997, and a third in August 1997. In June 1997, the Company acquired West Coast Life Insurance Company (West Coast). In September 1997, the Company acquired the Western Diversified Group. In October 1997, the Company coinsured a block of credit policies.

        In September 1998, the Company acquired United Dental Care, Inc. (United Dental Care), a leading provider of prepaid dental coverages. In October 1998, the Company coinsured a block of life insurance policies from Lincoln National Corporation. The policies represent the payroll deduction business originally marketed and underwritten by Aetna.

        September 1999, the Company recaptured a block of credit life and disability policies which it had previously ceded.

        These transactions have been accounted for as purchases, and the results of the transactions have been included in the accompanying financial statements since their respective effective dates.

        Summarized below are the consolidated results of operations for 1998 and 1997, on an unaudited pro forma basis, as if the West Coast, Western Diversified Group, and United Dental Care acquisitions had occurred as of January 1, 1997. The pro forma information is based on the Company’s consolidated results of operations for 1998 and 1997, and on data provided by the respective companies, after giving effect to certain pro forma adjustments. The pro forma financial information does not purport to be indicative of results of operations that would have occurred had the transaction occurred on the basis assumed above nor are they indicative of results of the future operations of the combined enterprises.

                                               1998                   1997
------------------------------------------------------------------------------
                                                         (unaudited)
Total revenues                             $1,459,552              $1,417,655
Net income                                 $  124,855              $  117,087
Net income per share - basic               $     1.91              $     1.80
Net income per share - diluted             $     1.89              $     1.79
===============================================================================

NOTE F. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is contingently liable to obtain a $20 million letter of credit under indemnity agreements with its directors. Such 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. The Company has similar agreements with certain of its officers providing up to $10 million in indemnification which are not secured by the obligation to obtain a letter of credit.

        The Company leases administrative and marketing office space in approximately 45 cities including Birmingham, with most leases being for periods of three to five years. The aggregate annualized rent is approximately $6.8 million.

        Under insurance guaranty fund laws, in most states, insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength.

        A number of civil jury verdicts have been returned against insurers in the jurisdictions in which the Company does business involving the insurers’ sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments against the insurer that are disproportionate to the actual damages, including material amounts of punitive damages. In some states, including Alabama (where the Company maintains its headquarters), juries have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments in any given lawsuit. In addition, in some class action and other lawsuits involving insurers’ sales practices, insurers have made material settlement payments. The Company, like other financial service companies, in the ordinary course of business, is involved in such litigation or, alternatively, in arbitration. Although the outcome of any such litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.

NOTE G. SHARE-OWNERS’ EQUITY AND RESTRICTIONS

The Company’s Board of Directors approved a two-for-one split of the Company’s Common Stock in the form of a 100% stock dividend on April 1, 1998. Share-owners’ equity has been restated to give retroactive recognition to the stock split for all periods presented by reclassifying from retained earnings to common stock the par value of the additional shares arising from the stock split. In addition, all references to number of shares and per share amounts have been restated to reflect the stock split.

                                  Issued          Treasury          Outstanding
                                  Shares            Shares             Shares
-------------------------------------------------------------------------------
Balance, December 31, 1996      66,672,924        5,065,712          61,607,212
Purchase of treasury stock                           74,750             (74,750)
Reissuance of treasury stock                       (109,822)            109,822
-------------------------------------------------------------------------------
Balance, December 31, 1997      66,672,924        5,030,640          61,642,284
Issuance of common stock         2,660,193               28           2,660,165
Reissuance of treasury stock                       (132,568)            132,568
-------------------------------------------------------------------------------
Balance, December 31, 1998      69,333,117        4,898,100          64,435,017
Reissuance of treasury stock                        (67,075)             67,075
-------------------------------------------------------------------------------
Balance, December 31, 1999      69,333,117        4,831,025          64,502,092
===============================================================================

        The Company has a Rights Agreement that provides rights to owners of the Company’s Common Stock to purchase Series A Junior Participating Cumulative Preferred Stock, or in certain circumstances, either Common Stock or common stock of an acquiring company at one half the market price of such Common Stock or common stock, as the case may be. The rights will become exercisable if certain events occur with respect to the Company, including the acquisition by a person or group of 15% or more of the Company’s Common Stock. The Company can redeem the rights at $.01 per right in certain circumstances, including redemption until ten business days following a public announcement that 15% or more of the Company’s Common Stock has been acquired by a person or group.

        Share owners have authorized 4,000,000 shares of Preferred Stock, $1.00 par value. Other terms, including preferences, voting, and conversion rights, may be established by the Board of Directors. In connection with the Rights Agreement, 400,000 of these shares have been designated as Series A Junior Participating Cumulative Preferred Stock, $1.00 par value, and were unissued at December 31, 1999. The remaining 3,600,000 shares of Preferred Stock, $1.00 par value, were also unissued at December 31, 1999.

        The Company sponsors a deferred compensation plan for certain of its agents. A trust was established to aid the Company in meeting its obligations under the plan. Company common stock owned by the trust is accounted for as treasury stock.

        The Company has an Employee Stock Ownership Plan (ESOP). The stock is used to match employee contributions to the Company’s 401(k) and Stock Ownership Plan (401(k) Plan) and to provide other employee benefits. The stock held by the ESOP that has not yet been used is the unallocated stock shown as a reduction to share-owners’ equity. The ESOP shares are dividend-paying and are considered outstanding for earnings per share calculations. Dividends on the shares are used to pay the ESOP’s note to Protective Life. If certain events associated with a change in control of the Company occur, any unallocated shares held by the ESOP will become allocable to employee 401(k) accounts.

        The Company may, from time to time, reissue treasury shares or buy in the open market additional shares of Common Stock to complete its 401(k) employer match obligation. Accordingly, in 1998, the Company reissued from treasury 6,442 shares of Common Stock to the 401(k) Plan and reissued from treasury another 12,979 shares during 1999.

        Since 1973, the Company has had a Long-Term Incentive Plan (previously known as the Performance Share Plan) to motivate senior management to focus on the Company’s long-range earnings performance through the awarding of performance shares. The criterion for payment of performance share awards is based upon a comparison of the Company’s average return on average equity and total rate of return over a four year award period (earlier upon the death, disability, or retirement of the executive, or in certain circumstances, of a change in control of the Company) to that of a comparison group of publicly held life and multiline insurance companies. If the Company’s results are below the median of the comparison group, no portion of the award is earned. If the Company’s results are at or above the 90th percentile, the award maximum is earned. Under plans approved by share owners in 1992 and 1997, up to 6,400,000 shares may be issued in payment of awards. The number of shares granted in 1999, 1998, and 1997 was 99,380, 71,340 and 98,780, respectively, having an approximate market value on the grant date of $3.4 million, $2.3 million, and $2.0 million, respectively. At December 31, 1999, outstanding awards measured at target and maximum payouts were 424,960 and 571,396 shares, respectively. The expense recorded by the Company for the Long-Term Incentive Plan was $3.4 million, $2.7 million, and $2.7 million in 1999, 1998, and 1997, respectively.

        During 1996, stock appreciation rights (SARs) were granted to certain executives of the Company to provide long-term incentive compensation based on the performance of the Company’s Common Stock. Under this arrangement the Company will pay (in shares of Company Common Stock) an amount equal to the difference between the specified base price of the Company’s Common Stock and the market value at the exercise date. The SARs are exercisable after five years (earlier upon the death, disability, or retirement of the executive, or in certain circumstances, of a change in control of the Company) and expire in 2006 or upon termination of employment. The number of SARs granted during 1996 and outstanding at December 31, 1999, was 675,000. The SARs have a base price of $17.4375 per share of Company Common Stock (the market price on the grant date was $17.50 per share). The estimated fair value of the SARs on the grant date was $3.0 million. This estimate was derived using the Roll-Geske variation of the Black-Sholes option pricing model. Assumptions used in the pricing model are as follows: expected volatility rate of 15% (approximately equal to that of the S&P Life Insurance Index), a risk free interest rate of 6.35%, a dividend yield rate of 1.97%, and an expected exercise date of August 15, 2002. The expense recorded by the Company for the SARs was $0.6 million in 1999, 1998, and 1997.

        The Company has established deferred compensation plans for directors, officers, and others. Compensation deferred is credited to the participants in cash, Common Stock equivalents, or a combination thereof. The Company may, from time to time, reissue treasury shares or buy in the open market shares of Common Stock to fulfill its obligation under the plans. At December 31, 1999, the plans had 1,232,612 shares of Common Stock equivalents credited to participants.

        At December 31, 1999, approximately $408.3 million of consolidated share-owners’ equity, excluding net unrealized gains on investments, represented net assets of the Company’s insurance subsidiaries that cannot be transferred to Protective Life Corporation. In addition, the company’s insurance subsidiaries are subject to various state statutory and regulatory restrictions on the insurance subsidiaries’ ability to pay dividends to Protective Life Corporation. In general, dividends up to specified levels are considered ordinary and may be paid thirty days after written notice to the insurance commissioner of the state of domicile unless such commissioner objects to the dividend prior to the expiration of such period. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The maximum amount that would qualify as ordinary dividends to the Company by its insurance subsidiaries in 2000 is estimated to be $175.5 million.

NOTE H. RELATED PARTY MATTERS

Certain corporations with which the Company’s directors were affiliated paid the Company premiums and policy fees or deposits for various types of insurance and investment products. Such premiums, policy fees, and deposits amounted to $56.4 million, $28.6 million, and $21.4 million in 1999, 1998, and 1997, respectively. The Company paid commissions, interest on debt and investment products, and fees to these same corporations totaling $16.9 million, $7.3 million, and $5.4 million in 1999, 1998, and 1997, respectively.

        In addition, the Company has borrowed $55.0 million from one such corporation and has entered into a swap contract having a notional amount of $543.0 million, which to the Company was in a breakeven position at December 31, 1999.

NOTE I. OPERATING SEGMENTS

The Company operates several divisions whose principal strategic focuses can be grouped into three general categories: life insurance, specialty insurance products, and retirement savings and investment products. Each division has a senior officer of the Company responsible for its operations. A division is generally distinguished by products and/or channels of distribution. A brief description of each division follows.

Life Insurance

· Individual Life Division. The Individual Life Division markets level premium term and term-like insurance products, universal life, and variable universal life on a national basis primarily through networks of independent insurance agents.

· West Coast Division. The West Coast Division sells universal life and level premium term-like insurance products in the life insurance brokerage market and in the “bank owned life insurance” market.

· Acquisitions Division. The Acquisitions Division focuses on acquiring, converting, and servicing policies acquired from other companies. The Division’s primary focus is on life insurance policies sold to individuals.

Specialty Insurance Products

· Dental and Consumer Benefits Division. The Division's primary focus is on indemnity and prepaid dental products. In 1997, the Division exited from the traditional major medical business, fulfilling the Division's strategy to focus primarily on dental and related products.

· Financial Institutions Division. The Financial Institutions Division specializes in marketing credit life and disability insurance products through banks, consumer finance companies, and automobile dealers. The Division also includes a small property and casualty insurer that sells automobile service contracts.

Retirement Savings and Investment Products

· Stable Value Products Division. The Stable Value Products Division markets guaranteed investment contracts to 401(k) and other qualified retirement savings plans. The Division also offers related products, including fixed and floating rate funding agreements offered to the trustees of municipal bond proceeds, bank trust departments, and money market funds, and long-term annuity contracts offered to fund certain state obligations.

· Investment Products Division. The Investment Products Division manufactures, sells, and supports fixed and variable annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Individual Life Division’s sales force.

Corporate and Other

The Company has an additional business segment herein referred to as Corporate and Other. The Corporate and Other segment primarily consists of net investment income and expenses not attributable to the Divisions above (including net investment income on capital and interest on substantially all debt). This segment also includes earnings from various investment-related transactions, the Company’s 50%-owned joint venture in Hong Kong, and the operations of several small subsidiaries.

        The Company uses the same accounting policies and procedures to measure operating segment income and assets as it uses to measure its consolidated net income and assets. Operating segment income is generally income before income tax, adjusted to exclude any pretax minority interest in income of consolidated subsidiaries. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of deferred policy acquisition costs are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner which most appropriately reflects the operations of that segment. Unallocated realized investment gains (losses) are deemed not to be associated with any specific segment.

        Assets are allocated based on policy liabilities and deferred policy acquisition costs directly attributable to each segment.

        There are no significant intersegment transactions.

                                                                           Individual
Operating Segment Income                                                     Life             West Coast       Acquisitions
===========================================================================================================================
1999
Premiums and policy fees                                                    $274,598            $87,226           $148,620
Reinsurance ceded                                                           (182,092)           (64,019)           (33,754)
---------------------------------------------------------------------------------------------------------------------------
     Net of reinsurance ceded                                                 92,506             23,207            114,866
Net investment income                                                         60,070             78,128            129,806
Realized investment gains (losses)
Other income                                                                  46,478              1,302                 (9)
---------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                          199,054            102,637            244,663
---------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                              74,455             73,176            129,581
Amortization of deferred policy acquisition costs and goodwill                23,491              6,047             19,444
Other operating expenses                                                      68,983             (2,649)            31,967
---------------------------------------------------------------------------------------------------------------------------
Total benefits and expenses                                                  166,929             76,574            180,992
---------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                      32,125             26,063             63,671
Income tax expense
Minority interest
Extraordinary loss
---------------------------------------------------------------------------------------------------------------------------
Net income
===========================================================================================================================
1998
Premiums and policy fees                                                    $228,699            $75,757           $125,329
Reinsurance ceded                                                           (102,533)           (53,377)           (28,594)
---------------------------------------------------------------------------------------------------------------------------
     Net of reinsurance ceded                                                126,166             22,380             96,735
Net investment income                                                         55,903             63,492            112,154
Realized investment gains (losses)
Other income                                                                  32,241                  6              1,713
---------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                          214,310             85,878            210,602
---------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                             106,306             54,617            112,051
Amortization of deferred policy acquisition costs and goodwill                30,543              4,924             18,894
Other operating expenses                                                      48,231              5,354             28,194
---------------------------------------------------------------------------------------------------------------------------
     Total benefits and expenses                                             185,080             64,895            159,139
---------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                      29,230             20,983             51,463
Income tax expense
Minority interest
---------------------------------------------------------------------------------------------------------------------------
Net income
===========================================================================================================================
1997
Premiums and policy fees                                                    $182,746          $  41,290           $120,504
Reinsurance ceded                                                            (55,266)           (27,168)           (17,869)
---------------------------------------------------------------------------------------------------------------------------
     Net of reinsurance ceded                                                127,480             14,122            102,635
Net investment income                                                         54,647             30,194            110,155
Realized investment gains (losses)
Other income                                                                  18,230                                    10
---------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                          200,357             44,316            212,800
---------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                             114,678             28,304            116,506
Amortization of deferred policy acquisition costs and goodwill                27,374                961             16,606
Other operating expenses                                                      37,921              6,849             24,050
---------------------------------------------------------------------------------------------------------------------------
     Total benefits and expenses                                             179,973             36,114            157,162
---------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                      20,384              8,202             55,638
Income tax expense
Minority interest
---------------------------------------------------------------------------------------------------------------------------
Net income
===========================================================================================================================

Operating Segment Assets

1999
Investments and other assets                                              $1,214,428         $1,343,517         $1,553,954
Deferred policy acquisition costs and goodwill                               379,117           $200,605           $235,903
---------------------------------------------------------------------------------------------------------------------------
Total assets                                                              $1,593,545         $1,544,122         $1,789,857
===========================================================================================================================
1998
Investments and other assets                                              $1,083,388         $1,149,642         $1,600,123
Deferred policy acquisition costs and goodwill                               301,941            144,455            255,347
---------------------------------------------------------------------------------------------------------------------------
Total assets                                                              $1,385,329         $1,294,097         $1,855,470
===========================================================================================================================
1997
Investments and other assets                                                $963,661           $910,030         $1,401,294
Deferred policy acquisition costs and goodwill                               252,321            108,126            138,052
---------------------------------------------------------------------------------------------------------------------------
Total assets                                                              $1,215,982         $1,018,156         $1,539,346
===========================================================================================================================
(1) Adjustments represent the inclusion of unallocated realized investment gains (losses), the reclassification and tax effecting of
pretax minority interest in the Individual Life Division and Corporate and Other segment, and the recognition of income tax expense
and extraordinary loss. There are no asset adjustments.





                 Specialty Insurance        Retirement Savings and
                   Products                     Investment Products
      Dental and                           Stable                             Corporate
        Consumer         Financial          Value            Investment        and                                 Total
      Benefits          Institutions        Products         Products          Other          Adjustments(1)   Consolidated
============================================================================================================================

        $479,415            $284,897                            $24,248            $313                          $1,299,317
         (81,240)           (176,928)                                                                              (538,033)
---------------------------------------------------------------------------------------------------------------------------
         398,175             107,969                             24,248             313                             761,284
          17,946              24,506        $210,208            106,645          49,092                             676,401
                                                (549)             1,446                            $(1,954)          (1,057)
           9,347              27,456                              9,628           3,052                              97,254
---------------------------------------------------------------------------------------------------------------------------
         425,468             159,931         209,659            141,967          52,457                           1,533,882
---------------------------------------------------------------------------------------------------------------------------
         265,221              55,899         175,290             88,642           2,318                             864,582
          15,972              24,966             744             19,820              12                             110,496
         104,922              57,134           4,709             21,014          33,204            (16,255)         303,029
---------------------------------------------------------------------------------------------------------------------------
         386,115             137,999         180,743            129,476          35,534                           1,278,107
---------------------------------------------------------------------------------------------------------------------------
          39,353              21,932          28,916             12,491          16,923                             255,775
                                                                                                    92,079           92,079
                                                                                                    10,606           10,606
                                                                                                     1,763            1,763
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                    151,327
===========================================================================================================================

       $ 371,988            $301,230                            $18,809           $ 198                          $1,122,010
         (85,753)           (188,958)                                                                              (459,215)
---------------------------------------------------------------------------------------------------------------------------
         286,235             112,272                             18,809             198                             662,795
          15,995              25,313        $213,136            105,890          44,513                             636,396
                                               1,609              1,318                         $      194            3,121
           4,314              17,505                              8,873            (549)                             64,103
---------------------------------------------------------------------------------------------------------------------------
         306,544             155,090         214,745            134,890          44,162                           1,366,415
---------------------------------------------------------------------------------------------------------------------------
         195,903              52,629         178,745             85,045             469                             785,765
          13,130              28,526             735             17,213               1                             113,966
          76,031              55,197           2,876             19,637          29,052            (18,612)         245,960
---------------------------------------------------------------------------------------------------------------------------
         285,064             136,352         182,356            121,895          29,522                           1,145,691
---------------------------------------------------------------------------------------------------------------------------
          21,480              18,738          32,389             12,995          14,640                             220,724
                                                                                                    77,845           77,845
                                                                                                    12,098           12,098
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                   $130,781
===========================================================================================================================

        $302,719            $196,694                            $12,367     $       229                           $ 856,549
        (109,480)           (124,431)                                                                              (334,214)
---------------------------------------------------------------------------------------------------------------------------
         193,239              72,263                             12,367             229                             522,335
          24,202              16,462        $211,915            105,321          38,480                             591,376
                                              (3,179)               589                             $3,420              830
           1,278               4,962                              6,164           2,140                              32,784
---------------------------------------------------------------------------------------------------------------------------
         218,719              93,687         208,736            124,441          40,849                           1,147,325
---------------------------------------------------------------------------------------------------------------------------
         134,384              27,643         179,235             82,019             339                             683,108
          17,121              30,812             618             15,110              35                             108,637
          50,955              21,120           3,946             15,749          25,453             (9,836)         176,207
---------------------------------------------------------------------------------------------------------------------------
         202,460              79,575         183,799            112,878          25,827                             967,952
---------------------------------------------------------------------------------------------------------------------------
          16,259              14,112          24,937             11,563          15,022                             179,373





                                                                                                    60,987           60,987
                                                                                                     6,393            6,393
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                   $111,993
===========================================================================================================================

        $283,475            $745,733      $2,766,177         $3,352,911        $503,962                         $11,764,157
         235,213              53,567           1,156            124,335             111                           1,230,007
---------------------------------------------------------------------------------------------------------------------------
        $518,688            $799,300      $2,767,333         $3,477,246        $504,073                         $12,994,164
===========================================================================================================================

        $272,586            $655,684      $2,869,304         $2,545,364        $769,364                         $10,945,455
         223,953              41,710           1,448             75,177               9                           1,044,040
---------------------------------------------------------------------------------------------------------------------------
        $496,539            $697,394      $2,870,752         $2,620,541        $769,373                         $11,989,495
===========================================================================================================================

        $220,655            $544,085      $2,887,732         $2,316,495        $591,518                          $9,835,470
          65,887              52,837           1,785             56,074           1,083                             676,165
---------------------------------------------------------------------------------------------------------------------------
        $286,542            $596,922      $2,889,517         $2,372,569        $592,601                         $10,511,635
===========================================================================================================================

                                                            Net Income                            Share-Owners' Equity
                                                    1999          1998         1997           1999           1998         1997
-------------------------------------------------------------------------------------------------------------------------------
In conformity with statutory
    reporting practices(1)                     $  83,656      $158,902     $134,417   $    598,655   $    567,125    $ 579,111
Additions (deductions)
    by adjustment:
Deferred policy acquisition
    costs, net of amortization                   120,644        68,155       10,310      1,011,524        841,425      632,737
Deferred income tax                              (35,130)      (29,038)      17,812         37,828        (44,636)     (41,212)
Asset Valuation Reserve                                                                     41,104         66,922       67,369
Interest Maintenance Reserve                        (226)       (1,355)      (1,434)        19,328         15,507        9,809
Nonadmitted items                                                                           51,350         42,835       30,500
Noninsurance affiliates                            2,584         8,612       17,176        904,762        956,928      626,615
Minority interest in
    consolidated subsidiaries                    (10,607)      (12,098)      (6,393)
Consolidation elimination                                                               (1,411,392)    (1,334,183)    (982,889)
Other valuation and timing differences            (9,594)      (62,397)     (59,895)      (387,936)      (167,729)    (163,843)
-------------------------------------------------------------------------------------------------------------------------------
In conformity with generally
    accepted accounting principles              $151,327      $130,781     $111,993   $    865,223   $    944,194    $ 758,197
===============================================================================================================================
(1) Consolidated

                                             1999                        1998
------------------------------------------------------------------------------

Projected Benefit obligation,
  beginning of the year                   $36,547                     $30,612
Service cost - benefits earned
  during the year                           3,270                       2,585
Interest cost - on projected
  benefit obligation                        2,779                       2,203
Actuarial gain (loss)                      (5,729)                      2,115
Plan amendment                                 32                         160
Benefits paid                                (369)                     (1,128)
------------------------------------------------------------------------------
Projected Benefit obligation,
  end of the year                          36,530                      36,547
------------------------------------------------------------------------------


Fair value of plan assets
  beginning of the year                   $25,147                      21,763
Actual return on plan assets                2,594                       1,689
Employer contribution                       7,048                       2,823
Benefits paid                                (369)                     (1,128)
------------------------------------------------------------------------------
Fair value of plan assets
    end of the year                        34,420                      25,147
------------------------------------------------------------------------------
Plan assets less than the
    projected benefit obligation          $(2,110)           $        (11,400)
Unrecognized net actuarial loss
    from past experience different
 from that assumed                          2,601                       9,069
Unrecognized prior service cost               569                         652
Unrecognized net transition asset             (17)                        (34)
------------------------------------------------------------------------------
Net pension asset (liability) recognized
  in balance sheet                        $ 1,043            $         (1,713)
==============================================================================

                              1999                 1998                1997
------------------------------------------------------------------------------
Service cost                 $3,270              $ 2,585              $2,112
Interest cost                 2,779                2,203               2,036
Expected return on
  plan assets                (2,348)              (1,950)             (1,793)
Amortization of
  prior service cost            115                  112                 100
Amortization of
  transition asset              (17)                 (17)                (17)
Recognized net actuarial
  loss                          494                  305                 152
------------------------------------------------------------------------------
Net pension cost             $4,293              $ 3,238              $2,590
==============================================================================

                                1999                 1998                1997
------------------------------------------------------------------------------
Weighted average
    discount rate               8.00%                6.75%               7.25%
Rates of increase
    in compensation level       5.75%                4.75%               5.25%
Expected long-term
    rate of return on assets    8.50%                8.50%               8.50%
===============================================================================

                                 1999                 1998                1997
-------------------------------------------------------------------------------
Service cost                     $695                 $611               $ 544
Interest cost                     887                  722                 651
Plan amendment                                                             351
Amortization of
__prior service cost              113                  112                 112
Amortization of
__transition asset                 37                   37                  37
Recognized net actuarial
__loss                            265                  173                 180
------------------------------------------------------------------------------
Net pension cost               $1,997               $1,655              $1,875
==============================================================================

                                       1999                             1998
-----------------------------------------------------------------------------------------
                                              Estimated                        Estimated
                               Carrying         Fair           Carrying          Fair
                                Amounts         Values          Amounts         Values
-----------------------------------------------------------------------------------------

Assets (see Notes A and B):
Investments:
  Fixed maturities           $6,311,822      $6,311,822      $6,437,756         $6,437,756
  Equity securities              36,446          36,446          12,258             12,258
  Mortgage loans
       on real estate         1,945,990       1,909,026       1,622,903          1,774,379
  Short-term
       investments              113,657         113,657         216,249            216,249
Cash                             51,642          51,642           9,486              9,486
Liabilities
  (see Notes A and D):
Stable value contract
    account balances          2,680,009       2,649,616       2,691,697          2,751,007
Annuity account balances      1,639,231       1,598,993       1,519,820          1,513,148
Debt:
  Notes payable
    to banks                    114,000         114,000          49,749             49,749
  Senior Notes                   75,000          76,395          75,000             79,335
  Medium-Term
   Notes                         44,685          42,366          44,923             46,075
9% Monthly Income
    Preferred Securities                                         55,000             55,836
8.25% Trust Originated
    Preferred Securities         75,000          65,820          75,000             78,570
6.5% FELINE PRIDES              115,000         121,624         115,000            150,075
Other (see Note A):
Derivative Financial
    Instruments                      63          (2,282)          4,223             12,607

1999                                  First Quarter      Second Quarter       Third Quarter      Fourth Quarter
----------------------------------------------------------------------------------------------------------------
Premiums and policy fees                $315,369            $326,805            $325,654            $331,489
Reinsurance ceded                       (117,952)           (130,345)           (134,573)           (155,163)
----------------------------------------------------------------------------------------------------------------
  Net of reinsurance ceded               197,417             196,460             191,081             176,326
Net investment income                    162,435             170,818             170,318             172,831
Realized investment gains (losses)         1,326                (682)             (3,984)              2,283
Other income                              18,003              25,244              23,808              30,198
----------------------------------------------------------------------------------------------------------------
Total revenues                           379,181             391,840             381,223             381,638
Benefits and expenses                    317,232             327,413             319,422             314,040
----------------------------------------------------------------------------------------------------------------
Income before income tax                  61,949              64,427              61,801              67,598
Income tax expense                        22,301              23,195              22,248              24,335
Minority interest                          3,025               3,024               2,220               2,337
Extraordinary loss, net of income tax                          1,763
================================================================================================================
Net income                               $36,623             $36,445             $37,333             $40,926
================================================================================================================
Operating income(1)per share - basic        $.55                $.59                $.61                $.61
Income before extraordinary loss - basic    $.56                $.58                $.57                $.63
Net income per share - basic                $.56                $.55                $.57                $.63
Average shares outstanding - basic    65,489,805          65,519,483          65,725,022          65,712,537
================================================================================================================
Operating income(1)per share - diluted      $.55                $.58                $.61                $.60
Income before extraordinary loss - diluted  $.56                $.57                $.57                $.62
Net income per share - diluted              $.56                $.54                $.57                $.62
Average shares outstanding - diluted  66,075,522          66,189,219          66,180,351          66,198,821
================================================================================================================


1998                                  First Quarter      Second Quarter       Third Quarter      Fourth Quarter
Premiums and policy fees                $242,832            $258,524            $275,411            $345,243
Reinsurance ceded                        (93,647)           (103,691)           (107,677)           (154,200)
----------------------------------------------------------------------------------------------------------------
  Net of reinsurance ceded               149,185             154,833             167,734             191,043
Net investment income                    157,649             153,006             164,537             161,204
Realized investment gains (losses)            11               2,023                 411                 676
Other income                              13,515              19,150              15,912              15,526
----------------------------------------------------------------------------------------------------------------
Total revenues                           320,360             329,012             348,594             368,449
Benefits and expenses                    270,334             273,524             292,391             309,442
----------------------------------------------------------------------------------------------------------------
Income before income tax                  50,026              55,488              56,203              59,007
Income tax expense                        17,009              19,921              19,671              21,244
Minority interest                          3,024               3,025               3,024               3,025
================================================================================================================
Net income                               $29,993             $32,542             $33,508             $34,738
================================================================================================================
Operating income(1) per share - basic       $.48                $.50                 $.53               $.53
Net income per share - basic                $.48                $.52                 $.53               $.53
Average shares outstanding - basic    62,606,735          62,704,433          63,272,089          65,474,321
================================================================================================================
Operating income(1)per share - diluted      $.47                $.50                 $.52               $.53
Net income per share - diluted              $.47                $.52                 $.52               $.53
Average shares outstanding - diluted  63,226,180          63,295,035          63,790,168          66,012,247
================================================================================================================

(1) Net income excluding realized investment gains and losses and related amortization and extraordinary loss.

                                SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                                    OF REGISTRANT
                                                STATEMENTS OF INCOME
                                    PROTECTIVE LIFE CORPORATION (Parent Company)
                                    Years Ended December 31, 1999, 1998, and 1997
                                                   (in thousands)




                                                                        1999               1998             1997
                                                                      --------           --------         ------

REVENUES
        Dividends from subsidiaries*                                   $18,980            $ 77,639       $   5,317
        Service fees from subsidiaries*                                 82,559              56,683          54,712
        Net investment income                                           10,506               9,295          10,433
        Realized investment gains (losses)                              (5,817)                985            (994)
        Other income (loss)                                              1,327                (406)          2,186
                                                                    ----------            ----------     ----------
                                                                       107,555             144,196          71,654
                                                                     ---------            ---------       ---------

EXPENSES
        Operating and administrative                                    44,074              36,737          36,309
        Interest - subsidiaries*                                        17,217              20,351          11,303
        Interest - others                                               12,215               3,541           8,148
                                                                     ---------            ----------      ----------
                                                                        73,506              60,629          55,760
                                                                     ---------            ---------       ---------

INCOME BEFORE FEDERAL INCOME
        TAX AND OTHER ITEMS BELOW                                       34,049              83,567          15,894

INCOME TAX EXPENSE                                                      11,136               9,843           2,342
                                                                       ---------          ----------      ---------

INCOME BEFORE EQUITY IN UNDISTRIBUTED
        INCOME OF SUBSIDIARIES                                          22,913              73,724          13,552

EQUITY IN UNDISTRIBUTED INCOME OF
        SUBSIDIARIES*                                                  130,177              57,057          98,441

INCOME BEFORE EXTRAORDINARY LOSS
        Extraordinary loss on early
        extinguishment of debt, net of tax                               1,763
                                                                    ----------          ----------       ----------

NET INCOME                                                            $151,327            $130,781        $111,993
                                                                      ========            ========        ========










*Eliminated in consolidation.

                                     SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                                     OF REGISTRANT
                                                    BALANCE SHEETS
                                     PROTECTIVE LIFE CORPORATION (Parent Company)
                                                    (in thousands)
                                                                                  December 31
                                                                             ------------------------


                                                                                 1999                   1998
                                                                            ----------             -----------
ASSETS
         Investments:
              Fixed maturities                                              $   20,791             $    26,000
              Long-term investments                                             17,616                  11,424
              Short-term investments                                             2,000
              Investments in subsidiaries (equity method)*                   1,323,233               1,380,593
                                                                             ----------              ----------
                                                                             1,363,640               1,418,017
         Cash                                                                    1,623                     515
         Accrued investment income                                               2,160
         Receivables from subsidiaries*                                         27,324                  22,578
         Property and equipment, net                                               741                   1,007
         Accrued income taxes                                                                            8,850
         Other                                                                   8,571                  10,590
                                                                              ------------           -----------
              Total Assets                                                  $1,404,059              $1,461,557
                                                                              ==========              ==========

LIABILITIES
         Accrued expenses and other liabilities                             $   69,690               $  62,609
         Accrued income taxes                                                   10,816
         Deferred income taxes                                                  28,769                  20,834
         Debt:
              Banks                                                            114,000                  48,500
              Senior Notes                                                      75,000                  75,000
              Medium-Term Notes                                                 44,685                  44,923
              Subsidiaries*                                                    195,876                 265,497
                                                                              -------------          ----------

                            Total Liabilities                                  538,836                 517,363
                                                                              -------------           ----------

SHARE-OWNERS' EQUITY
         Preferred Stock
         Junior Participating Cumulative
              Preferred Stock
         Common Stock                                                           34,667                  34,667
         Additional paid-in capital                                            256,057                 254,705
         Treasury stock                                                        (12,960)                (13,140)
         Stock Held in Trust                                                      (621)
         Unallocated stock in Employee Stock Ownership Plan                     (4,043)                 (4,277)
         Retained earnings (including undistributed
              income of subsidiaries: 1999 - $814,940; 1998 - $684,763)        738,204                 617,182
         Accumulated other comprehensive income
              Net unrealized gains (losses) on
              investments (all from subsidiaries, net
              of income tax: 1999 - $(78,659); 1998 - $29,646)                (146,081)                 55,057
                                                                          --------------            ------------

                            Total Share-Owners' Equity                         865,223                 944,194
                                                                          --------------            -----------

                                                                           $ 1,404,059              $1,461,557
--------------------------                                                 ===========               ==========
*Eliminated in consolidation.
See notes to condensed financial statements.

                                     SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                                     OF REGISTRANT
                                               STATEMENTS OF CASH FLOWS
                                     PROTECTIVE LIFE CORPORATION (Parent Company)
                                     Years Ended December 31, 1999, 1998, and 1997
                                                    (in thousands)

                                                                             1999              1998           1997
                                                                          ------------      --------      ----------
CASH FLOWS FROM OPERATING ACTIVITIES
        Net income                                                         $151,327          $130,781       $111,993
        Adjustments to reconcile net income
           to net cash provided by operating
           activities:
              Equity in undistributed net income
                 of subsidiaries*                                          (130,177)          (57,057)       (98,441)
              Deferred income taxes                                           7,935            15,446         (5,668)
              Accrued income taxes                                           19,666            (8,850)        (7,636)
              Accrued expenses                                                4,380            14,507          4,443
              Accrued investment income                                      (2,160)
              Receivables from subsidiaries                                  (8,746)           (7,342)         2,118
              Other (net)                                                     5,884               361          4,708
                                                                           -----------      -----------    ----------

        Net cash provided by operating activities                            48,109            87,846         11,517
                                                                           ---------        ---------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of and/or additional investments
           in subsidiaries*                                                 (28,638)         (115,960)      (112,448)
        Return of capital from subsidiaries                                  14,621                            1,280
        Principal payments received on loan
           to subsidiary*                                                     4,000             2,000
        Change in fixed maturities and long-term
           investments                                                          301            (2,242)        (2,993)
        Change in short-term investments                                     (2,000)            7,000         (7,000)
                                                                           ----------       ---------      -----------

        Net cash used in investing activities                                (11,716)        (109,202)      (121,161)
                                                                           ---------         --------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES
        Borrowings under line of
           credit arrangements and long-term debt                            106,800           52,000         79,901
        Principal payments on line of credit
           arrangements and debt                                             (41,538)          (3,577)      (140,900)
        Borrowing (repayment of subsidiary debt)                             (69,621)                        195,876
        Purchase of Treasury Stock                                                                            (1,839)
        Purchase of Common Stock                                                (621)
        Dividends to Share Owners                                            (30,305)         (26,857)       (24,113)
                                                                           ---------        ---------      -----------
        Net cash provided by (used in) financing
           activities                                                        (35,285)          21,566        108,925
                                                                           ---------        ---------      ----------

INCREASE (DECREASE) IN CASH                                                   1,108               210           (719)
CASH AT BEGINNING OF YEAR                                                       515               305          1,024
                                                                           ---------        ----------     -----------
CASH AT END OF YEAR                                                        $  1,623         $     515     $      305
                                                                           ========         ==========     ===========


*Eliminated in consolidation.

See notes to condensed financial statements.

                                     SCHEDULE II - CONDENSED FINANCIAL INFORMATION
                                                     OF REGISTRANT
                                     PROTECTIVE LIFE CORPORATION (Parent Company)


NOTES TO CONDENSED FINANCIAL STATEMENTS

The Company publishes consolidated financial statements that are its primary financial statements.  Therefore,
these parent company condensed financial statements are not intended to be the primary financial statements of
the Company, and should be read in conjunction with the consolidated financial statements and notes thereto of
Protective Life Corporation and subsidiaries.

NOTE 1 - DEBT

At December 31, 1999, the Company had borrowed $59.0 million under its $70.0 million revolving line of credit and
had an additional $55.0 million of bank borrowings.  $75.0 million of Senior Notes due 2004, $44.7 million of
Medium-Term Notes due 2011, $77.3 million of subordinated debentures due 2027 and $118.6 million of subordinated
debentures due 2003 were outstanding at December 31, 1999.  The subordinated debentures were issued to affiliates
in connection with the issuance by such affiliates of 8.25% Trust Originated Preferred Securities (TOPrS), and
6.5% Trust Originated Preferred Securities (TOPrS) issued as part of the Company's FELINE PRIDES, respectively.


NOTE 2 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

                                                                           1999          1998         1997
                                                                         --------      --------     ------
CASH PAID (RECEIVED) DURING THE YEAR FOR:

              Interest Paid to Non-Affiliates                             $13,174       $ 9,285     $ 8,244

              Interest Paid to Subsidiary*                                 17,218        20,351      10,768
                                                                       ----------       -------     -------
                                                                        $  30,392       $29,636     $19,012
                                                                        =========       =======     =======
              Income Taxes (reduced by amounts received
                from affiliates under a tax sharing agreement)           $(18,584)     $   (464)    $(2,026)
                                                                         =========     ========     =======

NONCASH INVESTING AND FINANCING ACTIVITIES

              Reissuance of Treasury Stock to ESOP                     $      440      $    205   $      85
                                                                       ==========      ========   =========

              Unallocated Stock in ESOP                                $      234      $    315    $    333
                                                                       ==========      ========    ========

              Reissuance of Treasury Stock                              $   1,092       $ 3,097     $ 1,383
                                                                        =========       =======     =======

              Issuance of Common Stock                                                  $85,126
                                                                                        =======


NOTE 3 - SUBSIDIARY SURPLUS DEBENTURES

Protective Life Insurance Company ("Protective Life") has issued surplus debentures to the Company in order to
finance acquisitions and growth.  At December 31, 1999, the balance of the surplus debentures was $14.0 million.
The surplus debentures are included in receivables from subsidiaries.  Protective Life must obtain the approval
of the Tennessee Commissioner of Insurance before it may pay interest or repay principal on the surplus
debentures.





*Eliminated in consolidation.

                                                                     SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
                                                                        PROTECTIVE LIFE CORPORATION AND SUBSIDIARIES
                                                                                       (in thousands)

         COL. A                             COL. B       COL. C     COL. D         COL. E         COL. F            COL. G          COL. H         COL. I          COL. J
         ------                             ------       ------     ------         ------         ------            ------          ------         ------          ------

                                                                                   GIC and
                                                         Future                    Annuity          Net                                         Amortization
                                           Deferred      Policy                 Deposits and     Premiums                          Benefits      of Deferred
                                            Policy      Benefits                    Other           and               Net             and          Policy           Other
                                          Acquisition      and     Unearned    Policyholders'     Policy          Investment      Settlement     Acquisition      Operating
         Segment                             Costs       Claims    Premiums         Funds          Fees            Income(1)       Expenses         Costs        Expenses(1)
         -------                          -----------   --------   --------    --------------  ------------      ------------     ----------   ---------------   -----------
 Year Ended
  December 31, 1999:
           Individual Life                 $372,359   $1,210,187    $    338    $     17,159      $  92,506       $   60,070          $ 74,455     $ 23,434          $ 68,923
           West Coast                       200,605    1,279,554           0          74,831         23,207           78,128            73,176        6,047            (2,649)
           Acquisitions                     235,903    1,374,445         558         260,267        114,866          129,806           129,581       19,444            31,967
           Dental                            25,819      130,463       3,076          79,032        398,175           17,946           265,221       10,704           110,190
           Financial Institutions            51,339      149,746     504,965           9,045        107,969           24,506            55,899       24,718            57,382
           Stable Value Products              1,156      167,415           0       2,680,009              0          210,208           175,290          744             4,709
           Investment Products              124,335      254,492           0       1,320,453         24,248          106,645            88,642       19,820            21,014
           Corporate and Other                    8        2,852          34              88            313           49,092             2,318            1            17,077
                                      ------------- ------------ -----------  --------------    -----------       ----------        ---------- ------------        ----------
           TOTAL                         $1,011,524   $4,569,154    $508,971      $4,440,884       $761,284        $ 676,401          $864,582     $104,912          $308,613
                                         ==========   ==========    ========      ==========       ========        =========          ========     ========          ========
Year Ended
  December 31, 1998:
           Individual Life                $ 301,941   $1,054,253 $       355    $     10,802       $126,166        $  55,903          $106,306     $ 30,543          $ 48,231
           West Coast                       144,455    1,006,280           0          77,254         22,380           63,492            54,617        4,924             5,354
           Acquisitions                     255,347    1,383,759         553         233,846         96,735          112,154           112,051       18,894            28,194
           Dental                            23,836      114,693       5,728          81,572        286,235           15,995           195,903       10,352            78,809
           Financial Institutions            39,212      215,451     385,006         105,434        112,272           25,313            52,629       28,526            55,197
           Stable Value Products              1,448      172,674           0       2,691,697              0          213,136           178,745          735             2,876
           Investment Products               75,177      194,726           0       1,233,528         18,809          105,890            85,045       17,213            19,637
           Corporate and Other                    9          944          39              88            198           44,513               469            1            10,440
                                     ---------------------------------------------------------  -----------       ----------       -------------------------       ----------
           TOTAL                        $   841,425   $4,142,780    $391,681      $4,434,221       $662,795         $636,396          $785,765     $111,188          $248,738
                                        ===========   ==========    ========      ==========       ========         ========          ========     ========          ========
Year Ended
  December 31, 1997:
           Individual Life                 $252,321  $   920,924  $      356    $     16,334      $ 127,480       $   54,647          $114,678    $  27,374        $   37,921
           West Coast                       108,126      739,463           0          95,495         14,122           30,194            28,304          961             6,849
           Acquisitions                     138,052    1,025,340       1,437         311,151        102,635          110,155           116,506       16,606            24,050
           Dental                            22,459      120,925       6,541          80,564        193,239           24,202           134,384       15,711            52,365
           Financial Institutions            52,837      159,422     391,085           6,791         72,263           16,462            27,643       30,812            21,120
           Stable Value Products              1,785      180,690           0       2,684,676              0          211,915           179,235          618             3,946
           Investment Products               56,074      177,150           0       1,184,268         12,367          105,321            82,019       15,110            15,749
           Corporate and Other                1,083          380       1,438             183            229           38,480               339           35            15,617
                                         -----------------------------------  --------------   ------------       ----------       ------------------------        ----------
           TOTAL                           $632,737   $3,324,294    $400,857      $4,379,462       $522,335         $591,376          $683,108     $107,227          $177,617
                                           ========   ==========    ========      ==========       ========         ========          ========     ========          ========

(1)     Allocations of Net Investment Income and Other Operating Expenses are based on a number of
        assumptions and estimates and results would change if different methods were applied.





                                                  SCHEDULE IV - REINSURANCE
                                        PROTECTIVE LIFE CORPORATION AND SUBSIDIARIES
                                                   (dollars in thousands)

        COL. A                           COL. B          COL. C             COL. D            COL. E           COL. F
        ------                           ------          ------             ------            ------          ---------



                                                                                                              Percentage
                                                         Ceded to          Assumed                             of Amount
                                          Gross           Other           from Other            Net             Assumed
                                          Amount         Companies         Companies          Amount            to Net
                                       -----------     ------------     ---------------    -------------      -----------


Year Ended
      December 31, 1999:
          Life insurance
              in force                 $120,577,512     $92,566,755     $    9,239,074    $   37,249,831        24.8%
                                       ============     ===========          ==========       ===========       =====

          Premiums and
           policy fees:
              Life insurance           $    540,430  $      364,680     $      131,856    $      307,606        42.9%                                                                                                               -----
              Accident/health
                insurance                   565,545         172,852             27,266           419,959         6.5%                                                                                                               -----
              Property and liability
                insurance                    34,110             501                110            33,719          .3%
                                       --------------- ----------------  -----------------  ---------------

              TOTAL                    $  1,140,085   $     538,033     $      159,232    $      761,284
                                       =============== ==============    ===============    ==============

 Year Ended
      December 31, 1998:
          Life insurance
              in force                $  91,980,657   $  64,846,246     $   18,010,434     $  45,144,845        39.9%
                                      =============   =============     ==============     =============        ====

          Premiums and
           policy fees:
              Life insurance          $     537,000   $     294,363     $       87,964     $     330,601        26.6%
              Accident/health
                insurance                   456,378         164,852             14,279           305,805         4.7%
              Property and liability
                insurance                    26,389               0                  0            26,389         0.0%
                                       ------------    ----------------  -------------      ------------

              TOTAL                   $   1,019,767   $     459,215     $      102,243     $     662,795
                                      =============    =============   ===============      ============

Year Ended
      December 31, 1997:
          Life insurance
              in force                  $78,240,282   $  34,139,554     $   11,013,202     $  55,113,930        20.0%
                                        ===========     ===========        ===========       ===========        ====

          Premiums and
            policy fees:
              Life insurance           $    387,108   $     147,184     $      74,738      $     314,662        23.8%
              Accident/health
                insurance                   378,704         187,539            10,510            201,675         5.3%
              Property and liability
                insurance                     6,139             176                35              5,998         0.6%
                                       --------------  ---------------   ----------------   --------------

              TOTAL                    $    771,951   $     334,899     $      85,283      $     522,335
                                       ============    ============      =============      ============

o     consolidated earnings to fixed charges;

o     consolidated earnings to combined fixed charges and distributions on the
      guaranteed preferred beneficial interest; and

o     consolidated earnings to the combined fixed charges, distributions on the
      guaranteed preferred beneficial interests and interest credited on
      investment products.

o     Series A Preferred Securities;
o     Trust I Preferred Securities; and
o     Trust II Preferred Securities.

                                                                               Year Ended December 31
                                                                         -----------------------------------
                                                                         1995     1996    1997    1998     1999
-------------------------------------------------------------------------------------------------------------------------
Ratio of Consolidated Earnings to Fixed Charges                          13.6     14.9     17.7    17.3     17.0
Ratio of Consolidated Earnings to Combined Fixed Charges and
   Distributions on the Guaranteed Preferred Beneficial Interests         9.0     10.0      9.2     7.3      8.5
Ratio of Consolidated Earnings to Combined Fixed Charges
   Distribution on the Guaranteed Preferred Beneficial Interest and
   Interest Credited on Investment Products                               1.4      1.5      1.5     1.5      1.7

Selected Financial Data

The following selected financial information for the years ended as of December
31, 1999, 1998, 1997, 1996, and 1995 has been derived from the audited financial
statements of Protective, prepared in accordance with generally accepted accounting
principles, which have been examined and reported upon by PriceWaterhouseCoopers
LLP, independent auditors.  The selected financial information should be read in
conjunction with, and is qualified in its entirety by reference to, the consolidated
financial statements from which it has been derived and the accompanying notes
thereto and the related Management's Discussion and Analysis and Results of
Operations associated therewith.

                                                                Year Ended December 31
                                         ----------------------------------------------------------------------
                                             1999          1998            1997           1996           1995
                                        -----------   --------------  -------------- -------------- -----------
                                                        (dollars in thousands, except per share amounts)
INCOME STATEMENT DATA

Premium and policy fees                 $  1,299,317  $  1,122,010     $  856,549      $  802,327   $     765,749
Reinsurance ceded                           (538,033)     (459,215)      (334,214)       (308,174)       (333,173)
                                       ------------- -------------     ----------         --------      ----------
     Net of reinsurance ceded                761,284       662,795        522,335         494,153         432,576
Net investment income.................       676,401       636,396        591,376         517,483         475,924
Realized investment gains(losses).....        (1,057)        3,121            830           5,510           1,612
Other income..........................        97,254        64,103         32,784          20,857          11,768
                                       ------------- --------------    -----------     -----------     -----------
          Total revenues..............     1,533,882     1,366,415      1,147,325       1,038,003         921,880
Benefits and expenses.................     1,278,107     1,145,691        967,952         898,262         800,846
Income tax expense....................        92,079        77,845         60,987          47,512          41,152
Minority interest.....................        10,606        12,098          6,393           3,217           3,217
Extraordinary loss(1)                          1,763
                                      ------------- --------------    -----------     -----------     -----------

Net income............................ $     151,327    $  130,781  $     111,993    $     89,012    $     76,665
                                       =============    ============  ===========    ============       =========


PER SHARE DATA(1)(2)

Operating income per share - basic(3).$         2.36    $     2.04  $        1.79    $       1.45    $       1.34

Income before extraordinary
     loss - basic.............        $         2.34    $     2.06  $        1.79    $       1.47    $       1.34
Net income per share - basic..........$         2.31    $     2.06  $        1.79    $       1.47    $       1.34

Average   shares outstanding - basic..    65,604,311    63,521,587     62,429,250      60,570,782      57,320,224
Operating income per share - diluted(3)$        2.34    $     2.02  $        1.78    $       1.44    $       1.33
Income before extraordinary
     loss - diluted...................$         2.32    $     2.04  $        1.78    $       1.46    $       1.33
Net income per share - diluted........$         2.29    $     2.04  $        1.78    $       1.46    $       1.33
Average shares
     outstanding - diluted............    66,161,367    64,087,744     62,849,618      60,969,664      57,705,698
Cash dividends........................$          .47    $      .43  $         .39    $        .35    $        .31
Share-owners' equity..................$        13.41    $    14.65  $       12.30    $       9.99    $       9.15
Share-owners' equity excluding net
     unrealized gains and losses
     on investments...................$       15.68     $    13.80  $       11.30    $       9.88    $       8.14



                                                                       December 31
                                        -------------------------------------------------------------------------
                                             1999          1998            1997           1996           1995
                                        -----------    -------------  -------------- -------------- -------------
                                                                                           (dollars in thousands)
BALANCE SHEET DATA

Total assets..........................$  12,994,164     $11,989,495 $  10,511,635    $  8,263,205    $  7,231,257
Long-term debt........................$     181,023     $   152,286 $     120,000    $    168,200    $    115,500
Total debt............................$     236,023     $   172,035 $     120,000    $    181,000    $    115,500
9% Cumulative Monthly Income
     Preferred Securities, Series A                     $    55,000 $      55,000    $     55,000    $     55,000
8.25% Trust Originated Preferred
     Securities                       $      75,000     $    75,000 $      75,000
6.5% FELINE PRIDES                    $     115,000     $   115,000 $     115,000
Share-owners' equity                  $     865,223     $   944,194 $     758,197    $    615,316    $    526,557
Share-owners' equity excluding
     unrealized gains and losses
     on investments                   $   1,011,304     $   889,137 $     696,470    $    608,628    $    468,694

(1)   Due to early extinguishment of debt,net of income tax.
(2)   Prior periods have been restated to reflect a two-for-one stock split on April 1, 1998.
(3)   Net income excluding realized investment gains and losses and related amortization and extraordinary loss.

Item 7.   Financial Statements and Exhibits
          ---------------------------------

       (c)   Exhibits
             --------

              The following exhibits are filed herewith in accordance with Item
                   601 of Regulation S-K:

           Exhibit No.         Description
           -----------         -----------

                12.            Statement regarding Computation of ratio of
                                Earnings to Fixed Charges

                23.            Consent of PricewaterhouseCoopers LLP.

                27.            Financial Data Schedule

                                             PROTECTIVE LIFE CORPORATION


                                              BY/s/Jerry W. DeFoor
                                              ------------------
                                              Jerry W. DeFoor
                                              Vice  President  and  Controller,
                                              and Chief Accounting  Officer
                                              (Principal Accounting Officer)

                                Exhibit Index

Exhibit Number         Description
--------------        -------------

     12.               Statement regarding Computation of Ratio of Earnings to
                          Fixed Charges

     23.               Consent of PricewaterhouseCoopers LLC.

     27.               Financial Data Schedule