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March 5, 2019, 3:12 p.m. EST


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(EDGAR Online via COMTEX) -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with our consolidated audited financial statements and related notes included herein. FORWARD-LOOKING STATEMENTS-CAUTIONARY LANGUAGE This report reviews our financial condition and results of operations, including our liquidity and capital resources. Historical information is presented and discussed, and where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements made in this report include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that may predict, forecast, indicate, or imply future results, performance, or achievements instead of historical facts and may contain words like "believe," "expect," "estimate," "project," "budget," "forecast," "anticipate," "plan," "will," "shall," "may," and other words, phrases, or expressions with similar meaning. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from the results contained in the forward-looking statements, and we cannot give assurances that such statements will prove to be correct. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments, or otherwise. For more information about the risks, uncertainties, and other factors that could affect our future results, please refer to Item 1A, Risk Factors, included herein. IMPORTANT INVESTOR INFORMATION We file reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports as required. The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer and the SEC maintains an internet site at www.sec.gov that contains these reports and other information filed electronically by us. We make available through our website, www.protective.com , our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. We will furnish such documents to anyone who requests such copies in writing. Requests for copies should be directed to: Financial Information, Protective Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202, Telephone (205) 268-3912, Fax (205) 268-3642. We also make available to the public current information, including financial information, regarding the Company and our affiliates on the Financial Information page of our website, www.protective.com . We encourage investors, the media and others interested in us and our affiliates to review the information we post on our website. The information found on our website is not part of this or any other report filed with or furnished to the SEC. OVERVIEW Our Business On February 1, 2015, Protective Life Corporation (the "Company") became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan (now known as Dai-ichi Life Holdings, Inc., "Dai-ichi Life"), when DL Investment (Delaware), Inc., a wholly owned subsidiary of Dai-ichi Life, merged with and into the Company (the "Merger"). Prior to February 1, 2015, our stock was publicly traded on the New York Stock Exchange. Subsequent to the Merger, we remain an SEC registrant for financial reporting purposes in the United States. The Company, which is headquartered in Birmingham, Alabama, operates as a holding company for its insurance and other subsidiaries that provide financial services primarily in the United States through the production, distribution, and administration of insurance and investment products. Founded in 1907, Protective Life Insurance Company ("PLICO") is our largest operating subsidiary. Unless the context otherwise requires, the "Company," "we," "us," or "our" refers to the consolidated group of Protective Life Corporation and our subsidiaries. We have several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. We periodically evaluate our operating segments and make adjustments to our segment reporting as needed. Our operating segments are Life Marketing, Acquisitions, Annuities, Stable Value Products, and Asset Protection. We have an additional reporting segment referred to as Corporate and Other. Life Marketing-We market fixed universal life ("UL"), indexed universal life ("IUL"), variable universal life ("VUL"), bank-owned life insurance ("BOLI"), and level premium term insurance ("traditional") products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent distribution organizations, and affinity groups. Acquisitions-We focus on acquiring, converting, and/or servicing policies and contracts from other companies. This segment's primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment's acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed. Therefore earnings and account values are

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expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

                  Annuities-We market fixed and variable annuity ("VA") products. These
                  products are primarily sold through broker-dealers, financial
                  institutions, and independent agents and brokers.
                  Stable Value Products-We sell fixed and floating rate funding
                  agreements directly to the trustees of municipal bond proceeds, money
                  market funds, bank trust departments, and other institutional
                  investors. The segment also issues funding agreements to the Federal
                  Home Loan Bank ("FHLB"), and markets guaranteed investment
                  contracts ("GICs") to 401(k) and other qualified retirement savings
                  plans. We also have an unregistered funding agreement-backed notes
                  program which provides for offers of notes to both domestic and
                  international institutional investors.
                  Asset Protection-We market extended service contracts, guaranteed asset
                  protection ("GAP") products, credit life and disability insurance, and
                  other specialized ancillary products to protect consumers' investments
                  in automobiles, recreational vehicles, watercraft, and powersports. GAP
                  products are designed to cover the difference between the scheduled
                  loan pay-off amount and an asset's actual cash value in the case of a
                  total loss. Each type of specialized ancillary product protects against
                  damage or other loss to a particular aspect of the underlying asset.
                  Corporate and Other-This segment primarily consists of net investment
                  income on assets supporting our equity capital, unallocated corporate
                  overhead, and expenses not attributable to the segments above
                  (including interest on corporate debt). This segment includes earnings
                  from several non-strategic or runoff lines of business, financing and
                  investment related transactions, and the operations of several small


        The Lincoln National Life Insurance Company

On May 1, 2018, The Lincoln National Life Insurance Company ("Lincoln Life") completed the acquisition (the "Closing") of Liberty Mutual Group Inc.'s ("Liberty Mutual") Group Benefits Business and Individual Life and Annuity Business (the "Life Business") through the acquisition of all of the issued and outstanding capital stock of Liberty Life Assurance Company of Boston ("Liberty"). In connection with the Closing and pursuant to the Master Transaction Agreement, dated January 18, 2018, PLICO and Protective Life and Annuity Insurance Company ("PLAIC"), a wholly owned subsidiary of PLICO, entered into reinsurance agreements (the "Reinsurance Agreements") and related ancillary documents (including administrative services agreements and transition services agreements) providing for the reinsurance and administration of the Life Business.

Pursuant to the Reinsurance Agreements, Liberty ceded to PLICO and PLAIC the insurance policies related to the Life Business on a 100% coinsurance basis. The aggregate ceding commission for the reinsurance of the Life Business was $422.4 million. All policies issued in states other than New York were ceded to PLICO under a reinsurance agreement between Liberty and PLICO, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between Liberty and PLAIC. The aggregate statutory reserves of Liberty ceded to PLICO and PLAIC as of the closing of the Transaction were approximately $13.2 billion, which amount was based on initial estimates and is subject to adjustment following the Closing. Pursuant to the terms of the Reinsurance Agreements, each of PLICO and PLAIC are required to maintain assets in trust for the benefit of Liberty to secure their respective obligations to Liberty under the Reinsurance Agreements. The trust accounts were initially funded by each of PLICO and PLAIC principally with the investment assets that were received from Liberty. Additionally, PLICO and PLAIC have each agreed to provide, on behalf of Liberty, administration and policyholder servicing of the Life Business reinsured by it pursuant to administrative services agreements between Liberty and each of PLICO and PLAIC.

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        The factors which could affect our future results include, but are not limited
        to, general economic conditions and the following risks and uncertainties:
                  we are controlled by Dai-ichi Life, which has the ability to make
                  important decisions affecting our business;
                  exposure to risks related to natural and man-made disasters and
                  catastrophes, such as diseases, epidemics, pandemics, malicious acts,
                  cyber attacks, terrorist acts, and climate change, which could
                  adversely affect our operations and results;
                  a disruption or cyber attack affecting the electronic, communication
                  and information technology systems or other technologies of the Company
                  or those on whom the Company relies could adversely affect our
                  business, financial condition, and results of operations;
                  confidential information maintained in the systems of the Company or
                  other parties upon which we rely could be compromised or
                  misappropriated as a result of security breaches or other related
                  lapses or incidents, damaging our business and reputation and adversely
                  affecting our financial condition and results of operations;
                  our results and financial condition may be negatively affected should
                  actual experience differ from management's models, assumptions, or
                  we may not realize our anticipated financial results from our
                  acquisitions strategy;

we may experience competition in our acquisition segment;

                  assets allocated to the MONY Closed Block benefit only the holders of
                  certain policies; adverse performance of Closed Block assets or adverse
                  experience of Closed Block liabilities may negatively affect us;

we are dependent on the performance of others;

                  our risk management policies, practices, and procedures could leave us
                  exposed to unidentified or unanticipated risks, which could negatively
                  affect our business or result in losses;
                  our strategies for mitigating risks arising from our day-to-day
                  operations may prove ineffective resulting in a material adverse effect
                  on our results of operations and financial condition;
                  events that damage our reputation or the reputation of our industry
                  could adversely impact our business, results of operations, or
                  financial condition;
                  we may not be able to protect our intellectual property and may be
                  subject to infringement claims;

developments in technology may impact our business;

        Financial Environment
                  interest rate fluctuations and sustained periods of low or high
                  interest rates could negatively affect our interest earnings and spread
                  income, or otherwise impact our business;
                  our investments are subject to market and credit risks, which could be
                  heightened during periods of extreme volatility or disruption in
                  financial and credit markets;
                  credit market volatility or disruption could adversely impact the
                  Company's financial condition or results from operations;
                  disruption of the capital and credit markets could negatively affect
                  the Company's ability to meet its liquidity and financial needs;

equity market volatility could negatively impact our business;

                  our use of derivative financial instruments within our risk management
                  strategy may not be effective or sufficient;
                  our ability to grow depends in large part upon the continued
                  availability of capital;
                  we could be forced to sell investments at a loss to cover policyholder
                  difficult general economic conditions could materially adversely affect
                  our business and results of operations;
                  we may be required to establish a valuation allowance against our
                  deferred tax assets, which could have a material adverse effect on our
                  results of operations, financial condition, and capital position;

we could be adversely affected by an inability to access our credit facility;

                  the amount of statutory capital or risk-based capital that we have and
                  the amount of statutory capital or risk-based capital that we must hold
                  to maintain our financial strength and credit ratings and meet other
                  requirements can vary significantly from time to time and is sensitive
                  to a number of factors outside of our control;
                  we could be adversely affected by a ratings downgrade or other negative
                  action by a rating organization;
                  we operate as a holding company and depend on the ability of our
                  subsidiaries to transfer funds to us to meet our obligations;

we could be adversely affected by an inability to access FHLB lending;

our securities lending program may subject us to liquidity and other risks;

                  our financial condition or results of operations could be adversely
                  impacted if our assumptions regarding the fair value and future
                  performance of our investments differ from actual experience;
                  adverse actions of certain funds or their advisers could have a
                  detrimental impact on our ability to sell our variable life and annuity
                  products, or maintain current levels of assets in those products;

        Industry and Regulation
                  the business of our company is highly regulated and is subject to
                  routine audits, examinations, and actions by regulators, law
                  enforcement agencies, and self-regulatory organizations;
                  we may be subject to regulations of, or regulations influenced by,
                  international regulatory authorities or initiatives;
                  NAIC actions, pronouncements and initiatives may affect our product
                  profitability, reserve and capital requirements, financial condition or
                  results of operations;

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                  our use of captive reinsurance companies to finance statutory reserves
                  related to our term and universal life products and to reduce
                  volatility affecting our variable annuity products, may be limited or
                  adversely affected by regulatory action, pronouncements and
                  laws, regulations and initiatives related to unreported deaths and
                  unclaimed property and death benefits may result in operational
                  burdens, fines, unexpected payments or escheatments;
                  we are subject to insurance guaranty fund laws, rules and regulations
                  that could adversely affect our financial condition or results of
                  we are subject to insurable interest laws, rules and regulations that
                  could adversely affect our financial condition or results of
                  the Healthcare Act and related regulations could adversely affect our
                  results of operations or financial condition;
                  laws, rules and regulations promulgated in connection with the
                  enactment of the Dodd-Frank Wall Street Reform and Consumer Protection
                  Act may adversely affect our results of operations or financial
                  new and amended regulations regarding the standard of care or standard
                  of conduct applicable to investment professionals, insurance agencies,
                  and financial institutions that recommend or sell annuities or life
                  insurance products may have a material adverse impact on our ability to
                  sell annuities and other products and to retain in-force business and
                  on our financial condition or results of operations;
                  we may be subject to regulation, investigations, enforcement actions,
                  fines and penalties imposed by the SEC, FINRA and other federal and
                  international regulators in connection with our business operations;
                  changes to tax law, or interpretations of existing tax law could
                  adversely affect our ability to compete with non-insurance products or
                  reduce the demand for certain insurance products;
                  financial services companies are frequently the targets of legal
                  proceedings, including class action litigation, which could result in
                  substantial judgments;
                  the financial services and insurance industries are sometimes the
                  target of law enforcement investigations and the focus of increased
                  regulatory scrutiny;
                  new accounting rules, changes to existing accounting rules, or the
                  grant of permitted accounting practices to competitors could negatively
                  impact us;
                  if our business does not perform well, we may be required to recognize
                  an impairment of our goodwill and indefinite lived intangible assets
                  which could adversely affect our results of operations or financial

use of reinsurance introduces variability in our statements of income;

                  our reinsurers could fail to meet assumed obligations, increase rates,
                  terminate agreements or be subject to adverse developments that could
                  affect us;
                  our policy claims fluctuate from period to period resulting in earnings
                  we operate in a mature, highly competitive industry, which could limit
                  our ability to gain or maintain our position in the industry and
                  negatively affect profitability; and
                  our ability to maintain competitive unit costs is dependent upon the
                  level of new sales and persistency of existing business.

For more information about the risks, uncertainties, and other factors that could affect our future results, please see Item 1A, Risk Factors, of this report.

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determine that there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. As of December 31, 2018, we did not adjust any prices received from independent brokers.

Mar 05, 2019

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