#### FORM 10-Q

#### SECURITIES AND EXCHANGE COMMISSION

##### WASHINGTON, D. C.  20549

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

# For the quarterly period ended June 30, 2002

# OR

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

# For the transition period from ___ to ___

# Commission File Number 333-42425

# Protective Life and Annuity Insurance Company

| |  | ALABAMA | 63-0761690
| |  | ------- | ----------
|
|

# 2801 HIGHWAY 280 SOUTHBIRMINGHAM, ALABAMA 35223

Indicate by check mark whether the Registrant (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934  during the  preceding  12 months  and (2) has been  subject to such
filing requirements for the past 90 days. Yes [X] No[ ]

Number of shares of Common Stock, $10.00 par value,  outstanding
as of August 9, 2002: 250,000 shares.

### PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY

                                                                 INDEX

### Part I.  Financial Information:

Item 1.  Financial Statements:

### PART II.  Other Information

Item 6.     Exhibits and Reports on Form 8-K

Signature

### REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors and Share Owners
Protective Life and Annuity Insurance Company
Birmingham, Alabama

We have reviewed the
accompanying condensed balance sheet of Protective Life and Annuity Insurance
Company as of June 30, 2002, and the related condensed statements of income for
each of the three-month and six-month periods ended June 30, 2002 and 2001, and
the condensed statements of cash flows for the six-month periods ended June 30,
2002 and 2001. These financial statements are the responsibility of the
Companys management.

We conducted our review in
accordance with standards established by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with auditing
standards generally accepted in the United States of America, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are
not aware of any material modifications that should be made to the accompanying
condensed interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We previously audited in
accordance with auditing standards generally accepted in the United States of
America, the balance sheet as of December 31, 2001, and the related statements
of income, share-owners equity, and cash flows for the year then ended
(not presented herein), and in our report dated March 1, 2002, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 2001, is fairly stated in all material respects in relation to the balance
sheet from which it has been derived.

/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Birmingham, Alabama
August 14, 2002

`PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
                                   CONDENSED STATEMENTS OF INCOME
                                            (Unaudited)

                                                                 Three Months Ended                  Six Months Ended
                                                                      June 30                            June 30
                                                             -----------------------------      --------------------------
                                                                   2002          2001              2002           2001
                                                                   ----          ----              ----           ----

REVENUES
    Premiums and policy fees                                  $11,447,368     $11,742,829       $23,074,134    $23,682,190
    Reinsurance ceded                                          (3,696,597)     (3,324,679)       (8,223,764)    (7,974,591)
                                                              ------------    ------------      ------------   ------------
      Premiums and policy fees, net of reinsurance ceded        7,750,771       8,418,150        14,850,370     15,707,599
    Net investment income                                       8,938,842       8,447,484        17,604,612     16,500,098
    Realized investment gains (losses)                           (509,709)        (53,164)         (529,692)       611,280
    Other income                                                     (902)            501             2,213          2,482
                                                              ------------    ------------      ------------   ------------
                                                               16,179,002      16,812,971        31,927,503     32,821,459
                                                              ------------    ------------      ------------   ------------

BENEFITS AND EXPENSES
    Benefits and settlement expenses
      (net of reinsurance ceded:
      three months: 2002 - $2,918,803; 2001 - $2,248,001
      six months: 2002 - $6,483,335; 2001 - $5,447,964)         8,557,440       9,280,095        16,602,419     17,312,652
    Amortization of deferred policy acquisition costs           2,541,468       1,763,835         4,916,545      3,533,157
    Other operating expenses (net of reinsurance ceded:
      three months: 2002 - $(135,882); 2001 - $26,942
      six months: 2002 - $(51,062); 2001 - $67,263)             2,308,641       2,289,642         4,505,892      4,304,835
                                                              ------------    ------------      ------------   ------------
                                                               13,407,549      13,333,572        26,024,856     25,150,644
                                                              ------------    ------------      ------------   ------------

INCOME FROM CONTINUING OPERATIONS
     BEFORE INCOME TAX                                          2,771,453       3,479,399         5,902,647      7,670,815

Income tax expense                                                968,911       1,200,393         2,063,664      2,646,432
                                                              ------------    ------------      ------------   ------------

NET INCOME FROM CONTINUING OPERATIONS
    BEFORE CUMULATIVE EFFECT OF CHANGE IN
    ACCOUNTING PRINCIPLE                                       1,802,542       2,279,006          3,838,983      5,024,383

Income from discontinued operations, net of tax                                   38,103                            22,222

Net income before cumulative effect of change
in accounting principle                                        1,802,542       2,317,109          3,838,983      5,046,605

Cumulative effect of change in accounting
   principle, net of tax                                                                                          (284,968)
                                                              ------------    ------------      ------------   ------------

NET INCOME                                                    $1,802,542      $2,317,109        $ 3,838,983    $ 4,761,637
                                                              ============    ============      ============   ============




See notes to condensed financial statements`

`PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
                                            CONDENSED BALANCE SHEETSJune 30                  December 31
                                                                                    2002                        2001
                                                                                ------------               -------------
                                                                                (Unaudited)
ASSETS
   Investments:
     Fixed maturities, at market
       (amortized cost:  2002 - $480,064,917; 2001 - $442,583,178)              $487,990,988                $445,730,493
     Mortgage loans on real estate                                                 2,466,597                   2,717,495
     Other long term investments                                                     673,869                     470,030
     Policy loans                                                                 54,021,519                  54,565,016
     Short-term investments                                                        1,832,820                  12,000,000
                                                                                ------------                ------------
       Total investments                                                         546,985,793                 515,483,034
   Cash                                                                            1,143,519                   4,284,257
   Accrued investment income                                                       8,537,116                   8,432,689
   Accounts and premiums receivable, net of allowance for
     uncollectible amounts                                                           414,573                   7,888,382
   Reinsurance receivables                                                        20,813,341                  20,642,570
   Deferred policy acquisition costs                                             112,875,024                 118,997,438
   Other assets                                                                       30,539                      19,689
   Assets related to separate accounts
     Variable Annuity                                                              8,552,724                   9,001,016
                                                                                ------------                ------------
                                                                                $699,352,629                $684,749,075
                                                                                ============                ============
LIABILITIES
   Policy liabilities and accruals:
     Future policy benefits and claims                                          $463,293,936                $458,568,381
     Unearned premiums                                                             6,482,621                   7,767,028
                                                                                ------------                ------------
                                                                                 469,776,557                 466,335,409
   Annuity deposits                                                               57,140,121                  47,324,337
   Other policyholders' funds                                                      5,847,721                   5,874,932
   Other liabilities                                                              10,874,987                  17,390,459
   Deferred income taxes                                                          19,993,726                  17,077,829
   Liabilities related to separate accounts
     Variable Annuity                                                              8,552,724                   9,001,016
                                                                                ------------                ------------
                                                                                 572,185,836                 563,003,982
                                                                                ------------                ------------

COMMITMENTS AND CONTINGENT LIABILITIES - NOTE B

SHARE-OWNERS' EQUITY
   Preferred Stock, $1.00 par value, shares
     authorized and issued:  2,000                                                     2,000                       2,000
   Common Stock, $10.00 par value,
     Shares authorized:  500,000
     Shares issued and outstanding:  250,000                                       2,500,000                   2,500,000
   Additional paid-in capital                                                    101,386,324                 101,386,324
   Retained earnings                                                              19,307,499                  15,468,517
   Accumulated other comprehensive income:
     Net unrealized gains on investments (net of income
       tax: 2002 - $2,138,215; 2001 - $1,285,982)                                  3,970,970                   2,388,252
                                                                                ------------                ------------
                                                                                 127,166,793                 121,745,093
                                                                                ------------                ------------
                                                                                $669,352,629                $684,749,075
                                                                                ============                ============






See notes to condensed financial statements`

`PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
                                        CONDENSED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)

                                                                                                    Six Months Ended
                                                                                                        June 30
                                                                                             -------------------------------
                                                                                                   2002             2001
                                                                                                  ------          -------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                                 $  3,838,983     $  4,761,637
   Adjustments to reconcile net income to net cash provided by operating activities:
     Realized investment losses (gains)                                                            529,692         (611,280)
     Amortization of deferred policy acquisition costs                                           4,916,445        3,533,157
     Capitalization of deferred policy acquisition costs                                        (1,137,837)        (690,107)
     Deferred income tax                                                                         2,063,664        2,658,136
     Interest credited to universal life and investment products                                18,731,490       15,061,287
     Policy fees assessed on universal life and investment products                            (17,479,689)     (18,286,723)
     Change in accrued investment income and other receivables                                   7,198,612       (1,773,089)
     Change in policy liabilities and other policyholders' funds
       of traditional life and health products                                                    (295,668)       2,557,594
     Change in other liabilities                                                                (6,515,471)        (996,276)
     Other (net)                                                                                   (10,849)           5,450
                                                                                              -------------    ------------
     Net cash provided by operating activities                                                  11,839,372        6,219,786
                                                                                              -------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Maturities and principal reductions of investments
     Investments available for sale                                                             35,558,343      216,467,309
     Other                                                                                         801,687          667,061
   Sale of available for sale investments
     Investments available for sale                                                            198,751,403       48,615,511
   Cost of investments acquired
     Investments available for sale                                                           (263,616,932)    (279,385,109)
                                                                                              -------------    ------------
   Net cash used in investing activities                                                       (28,505,499)     (13,635,228)
                                                                                              -------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Investment product deposits and change in universal life deposits                            30,503,057       21,058,020
   Investment product withdrawals                                                              (16,977,668)     (12,860,711)
                                                                                              -------------    ------------
   Net cash provided by financing activities                                                    13,525,389        8,197,309
                                                                                              -------------    ------------
   (DECREASE) INCREASE IN CASH                                                                  (3,140,738)         781,867
   CASH AT BEGINNING OF PERIOD                                                                   4,284,257        1,165,410
                                                                                              -------------    ------------
   CASH AT END OF PERIOD                                                                      $  1,143,519     $  1,947,277
                                                                                              =============    ============













See notes to condensed financial statements`

### PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
                                      NOTES TO CONDENSED FINANCIAL STATEMENTS
                                                    (Unaudited)

NOTE A - BASIS OF PRESENTATION

The
accompanying unaudited condensed financial statements of Protective Life and
Annuity Insurance Company (the Company) have been prepared on the
basis of accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
disclosures required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair statement have been included. Operating results for the six
month period ended June 30, 2002, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002. The year-end
condensed balance sheet data was derived from audited financial statements, but
does not include all disclosures required by accounting principles generally
accepted in the United States of America. For further information, refer to the
financial statements and notes thereto included in the Companys annual
report on Form 10-K for the year ended December 31, 2001.

All
outstanding shares of the Companys common stock are owned by Protective
Life Insurance Company (Protective), which is a wholly owned
subsidiary of Protective Life Corporation (PLC). All outstanding
shares of the Companys preferred stock are owned by PLC.

NOTE B - COMMITMENTS AND CONTINGENT LIABILITIES

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 currently 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 and other
providers of financial services involving sales practices, alleged agent
misconduct, failure to properly supervise representatives, relationships with
agents or other persons with whom the insurer does business, and other matters.
Increasingly these lawsuits have resulted in the award of substantial judgments
that are disproportionate to the actual damages, including material amounts of
punitive, and non-economic compensatory damages. In some states, juries, judges,
and arbitrators have substantial discretion in awarding punitive and
non-economic compensatory damages, which creates the potential for unpredictable
material adverse judgments or awards in any given lawsuit or arbitration.
Arbitration awards are subject to very little appellate review. In addition, in
some class action and other lawsuits, companies have made material settlement
payments. The Company, like other financial services 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 operation, or liquidity of the
Company.

NOTE C - OPERATING SEGMENTS

PLC,
through its subsidiaries, operates several segments each having a strategic
focus which can be grouped into three general product categories: life
insurance, retirement savings and investment products, and specialty insurance
products. An operating segment is generally distinguished by products and/or
channels of distribution. A brief description of each segment in which the
Company operates follows:

Life Insurance

The Life Marketing segment markets level premium term and term-like insurance,
universal life, and variable universal life products on a national basis
primarily through networks of independent agents and brokers, and in the
bank owned life insurance market.

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

Retirement Savings and Investment Products

The Annuities segment manufactures, sells, and supports fixed and variable annuity
products. These products are primarily sold through stockbrokers, but are also
sold through financial institutions.

Specialty Insurance Products

The Credit Products segment markets credit life and disability insurance products
through banks, consumer finance companies and automobile dealers, and markets
vehicle and recreational marine extended service contracts.

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 segments above (including net
investment income on unallocated capital).

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.  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  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.

The
following table sets forth total operating segment income and assets for the
period shown. Adjustments represent the inclusion of unallocated realized
investment gains (losses), income from discontinued operations, cumulative
effect of change in accounting principle, and the recognition of income tax
expense. Asset adjustments represent the inclusion of assets related to
discontinued operations.

In
December 2001, the Company sold substantially all of its Dental Division, and
discontinued other Dental Division related operations. Prior period segment
results have been restated to reflect these changes.

`Operating Segment Income for the
                                                                   Three Months Ended June 30,2002
                                               ---------------------------------------------------------------------

                                                                                               Retirement Savings and
                                                             Life Insurance                      Investment Products
                                                      Life
                                                   Marketing             Acquisitions                    Annuities
                                                   ---------             ------------                    ---------
Premiums and policy fees                           $241,389              $10,318,784                    $   40,998
Reinsurance ceded                                  (142,703)              (3,552,726)                            0
                                                   ---------             ------------                    ---------
   Net of reinsurance ceded                          98,686                6,766,058                        40,998
Net investment income                                  (695)               7,571,771                       947,610
Realized investment gains                                                                                      923
Other income                                                                                                  (902)
                                                   ---------             ------------                    ---------
       Total revenues                                97,991               14,337,829                       988,629
                                                   ---------             ------------                    ---------
Benefits and settlement expenses                    (12,627)               7,192,798                       883,657
Amortization of deferred policy
   acquisition costs                                (16,791)               2,103,139                       291,060
Other operating expenses                             86,908                2,103,358                        88,213
                                                   ---------             ------------                    ---------
       Total benefits and expenses                   57,490               11,399,295                     1,262,930
                                                   ---------             ------------                    ---------
Income (loss) before income tax                      40,501                2,938,534                      (274,301)


                                                 Specialty Insurance
                                                       Products
                                                                             Corporate
                                                          Credit                and
                                                         Products              Other         Adjustments         Total
                                                        ---------             --------       -----------      ------------

Premiums and policy fees                                 $846,197                                              $11,447,368
Reinsurance ceded                                          (1,168)                                              (3,696,597)
                                                         --------                                              ------------
   Net of reinsurance ceded                               845,029                                                7,750,771
Net investment income                                     138,697             $281,459                           8,938,842
Realized investment gains (losses)                                                              $(510,632)        (509,709)
Other income                                                                                                          (902)
                                                         --------             --------          ----------     ------------
       Total revenues                                     983,726              281,459           (510,632)      16,179,002
                                                         --------             --------          ----------     ------------
Benefits and settlement expenses                          493,612                                                8,557,440
Amortization of deferred policy
   acquisition costs                                      164,060                                                2,541,468
Other operating expenses                                   29,954                  208                           2,308,641
                                                         --------             ---------                        ------------
       Total benefits and expenses                        687,626                  208                          13,407,549
                                                         --------             ---------                        ------------
Income (loss) before income tax                           296,100              281,251           (510,632)       2,771,453
Income tax expense                                                                                968,911          968,911
                                                                                                               ------------
Net income                                                                                                    $  1,802,542
                                                                                                               ============`

`Operating Segment Income for the
                                                                    Three Months Ended June 30, 2001
                                                       ------------------------------------------------------------

                                                                                                  Retirement Savings and
                                                           Life Insurance                          Investment Products

                                                            Acquisitions                                 Annuities
                                                            ------------                                -----------

Premiums and policy fees                                     $10,724,242                                 $  35,075
Reinsurance ceded                                             (3,440,410)                                        0
                                                             ------------                                ---------
   Net of reinsurance ceded                                    7,283,832                                    35,075
Net investment income                                          7,406,215                                   185,165
Other income                                                                                                   501
                                                             ------------                                ---------
       Total revenues                                         14,690,047                                   220,741
                                                             ------------                                ---------
Benefits and settlement expenses                               8,110,065                                   479,052
Amortization of deferred policy
   acquisition costs                                           1,529,444                                    56,343
Other operating expenses                                       2,245,698                                    14,470
                                                             ------------                                ---------
       Total benefits and expenses                            11,885,207                                   549,865
                                                             ------------                                ---------
Income (loss) from continuing operations
   before income tax                                           2,804,840                                  (329,124)


                                                 Specialty Insurance
                                                       Products
                                                                              Corporate
                                                           Credit                and
                                                          Products              Other          Adjustments        Total
                                                        ----------            ---------        -----------     -----------

Premiums and policy fees                                $  983,512                                             $11,742,829
Reinsurance ceded                                          115,731                                              (3,324,679)
                                                        ----------                                             ------------
   Net of reinsurance ceded                              1,099,243                                               8,418,150
Net investment income                                      149,180             $706,924                          8,447,484
Realized investment gains (losses)                                                            $   (53,164)         (53,164)
Other income                                                                                                           501
                                                        ----------             --------       ------------     -----------
       Total revenues                                    1,248,423              706,924           (53,164)      16,812,971
                                                        ----------             --------       ------------     -----------
Benefits and settlement expenses                           690,978                                               9,280,095
Amortization of deferred policy
   acquisition costs                                       178,048                                               1,763,835
Other operating expenses                                    29,474                                               2,289,642
                                                        ----------                                             -----------
       Total benefits and expenses                         898,500                                              13,333,572
                                                        ----------                                             -----------
Income from continuing operations
   before income tax                                       349,923              706,924           (53,164)       3,479,399
Income tax expense                                                                              1,200,393        1,200,393
Income from discontinued operations,
   net of income tax                                                                               38,103           38,103
                                                                                                               -----------
Net income                                                                                                    $  2,317,109
                                                                                                               ===========`

`Operating Segment Income for the
                                                               Six Months Ended June 30, 2002
                                                ----------------------------------------------------------------------

                                                                                              Retirement Savings and
                                                          Life Insurance                         Investment Products
                                                     Life
                                                  Marketing         Acquisitions                         Annuities
                                                 -----------        -------------                        ---------

Premiums and policy fees                           $364,209          $20,931,210                      $     76,876
Reinsurance ceded                                  (142,703)          (8,054,907)                                0
                                                 -----------         ------------                        ---------
   Net of reinsurance ceded                         221,506           12,876,303                            76,876
Net investment income                                  (208)          15,264,331                         1,758,697
Realized investment gains (losses)                                                                          66,277
Other income                                                                                                 2,213
                                                 -----------         ------------                        ---------
       Total revenues                               221,298           28,140,634                         1,904,063
                                                 -----------         ------------                        ---------
Benefits and settlement expenses                     31,723           13,971,889                         1,620,858
Amortization of deferred policy
   acquisition costs                                (14,705)           4,022,153                           579,608
Other operating expenses                            113,079            4,286,466                           119,131
                                                 -----------         ------------                        ---------
       Total benefits and expenses                  130,097           22,280,508                         2,319,597
                                                 -----------         ------------                        ---------
Income before income tax                             91,201            5,860,126                          (415,534)


                                                 Specialty Insurance
                                                       Products
                                                                             Corporate
                                                         Credit                 and
                                                        Products               Other         Adjustments          Total
                                                      ------------           ----------      -----------      -------------

Premiums and policy fees                               $1,701,839                                              $23,074,134
Reinsurance ceded                                         (26,154)                                              (8,223,764)
                                                      ------------                                             ------------
   Net of reinsurance ceded                             1,675,685                                               14,850,370
Net investment income                                     283,900             $297,892                          17,604,612
Realized investment gains (losses)                                                              $(595,969)        (529,692)
Other income                                                                                                         2,213
                                                      ------------           ----------      -----------      -------------
       Total revenues                                   1,959,585              297,892           (595,969)      31,927,503
                                                      ------------           ----------      -----------      -------------
Benefits and settlement expenses                          977,949                                               16,602,419
Amortization of deferred policy
   acquisition costs                                      329,489                                                4,916,545
Other operating expenses                                   57,994              (70,778)                          4,505,892
                                                      ------------           ----------                       -------------
       Total benefits and expenses                      1,365,432              (70,778)                         26,024,856
                                                      ------------           ----------                       -------------
Income before income tax                                  594,153              368,670           (595,969)       5,902,647
Income tax expense                                                                              2,063,664        2,063,664
                                                                                                              -------------
Net income                                                                                                    $  3,838,983
                                                                                                              =============`

`Operating Segment Income for the
                                                                         Six Months Ended June 30, 2001

                                                                                                Retirement Savings and
                                                          Life Insurance                          Investment Products

                                                           Acquisitions                                 Annuities
                                                           -------------                               -----------

Premiums and policy fees                                     $21,898,439                               $    66,385
Reinsurance ceded                                             (8,058,932)                                        0
                                                           -------------                               -----------
   Net of reinsurance ceded                                   13,839,507                                    66,385
Net investment income                                         14,671,180                                   499,363
Other income                                                         244                                     2,238
                                                           -------------                               -----------
       Total revenues                                         28,510,931                                   567,986
                                                           -------------                               -----------
Benefits and settlement expenses                              15,215,332                                   954,515
Amortization of deferred policy
   acquisition costs                                           3,087,180                                   110,104
Other operating expenses                                       4,246,176                                    97,829
                                                           -------------                               -----------
       Total benefits and expenses                            22,548,688                                 1,162,448
                                                           -------------                               -----------
Income (loss) from continuing operations
   before income tax                                           5,962,243                                  (594,462)


                                                 Specialty Insurance
                                                       Products
                                                                              Corporate
                                                          Credit                 and
                                                         Products               Other         Adjustments        Total
                                                       -----------           -----------     -------------    -------------

Premiums and policy fees                                $1,717,366                                             $23,682,190
Reinsurance ceded                                           84,341                                              (7,974,591)
                                                       -----------                                            -------------
   Net of reinsurance ceded                              1,801,707                                              15,707,599
Net investment income                                      307,863           $1,021,692                         16,500,098
Realized investment gains (losses)                                                            $   611,280          611,280
Other income                                                                                                         2,482
                                                       -----------           -----------     -------------    -------------
       Total revenues                                    2,109,570            1,021,692           611,280       32,821,459
                                                       -----------           -----------     -------------    -------------
Benefits and settlement expenses                         1,142,805                                              17,312,652
Amortization of deferred policy
   acquisition costs                                       335,873                                               3,533,157
Other operating expenses                                    39,008              (78,178)                         4,304,835
                                                       -----------           -----------                      -------------
       Total benefits and expenses                       1,517,686              (78,178)                        25,150,644
                                                       -----------           -----------                      -------------
Income (loss) from continuing operations
   before income tax                                       591,884            1,099,870           611,280        7,670,815
Income tax expense                                                                              2,646,432        2,646,432
Income from discontinued operations,
   net of income tax                                                                               22,222           22,222
Cumulative effect of change in accounting
   principle, net of income tax                                                                  (284,968)        (284,968)
                                                                                                              -------------
Net income                                                                                                     $ 4,761,637
                                                                                                              =============`

`Operating Segment Assets
                                                                    June 30, 2002
                                              ----------------------------------------------------------------------

                                                                                             Retirement Savings and
                                                        Life Insurance                         Investment Products

                                                    Life
                                                  Marketing         Acquisitions                         Annuities
                                                  ---------         ------------                        -----------
Investments and other assets                       $304,500         $473,980,993                        $56,149,609
Deferred policy acquisition costs                   268,149          108,536,546                          2,455,663
                                                  ---------         ------------                        -----------
       Total assets                                $572,649         $582,517,539                        $58,605,272
                                                  =========         ============                        ===========


                                               Specialty Insurance
                                                   Products
                                                                            Corporate
                                                      Credit                  and
                                                     Products                Other          Adjustments           Total
                                                   ------------            -----------      ------------       ------------

Investments and other assets                        $10,087,214            $42,230,648        $3,724,641       $586,477,605
Deferred policy acquisition costs                     1,614,666                                                 112,875,024
                                                   ------------            -----------      -----------        ------------
       Total assets                                 $11,701,880            $42,230,648        $3,724,641       $699,352,629
                                                   ============            ===========      ============       ============



                                                                     Operating Segment Assets
                                                                       December 31, 2001

                                                                                                   Retirement Savings and
                                                     Life Insurance                                  Investment Products

                                                      Acquisitions                                       Annuities
                                                    ---------------                                     -----------

Investments and other assets                         $471,065,653                                       $46,091,122
Deferred policy acquisition costs                     114,902,459                                         2,483,640
                                                    ---------------                                     -----------
       Total assets                                  $585,968,112                                       $48,574,762
                                                    ===============                                     ===========


                                               Specialty Insurance
                                                   Products
                                                                           Corporate
                                                      Credit                  and
                                                     Products                Other          Adjustments           Total
                                                    -----------            -----------      ------------      -------------

Investments and other assets                        $10,390,438            $34,248,362        $3,956,062       $565,751,637
Deferred policy acquisition costs                     1,611,339                                                 118,997,438
                                                    -----------            -----------      ------------      -------------
       Total assets                                 $12,001,777            $34,248,362        $3,956,062       $684,749,075
                                                    ===========            ===========      ============      =============`

NOTE D - STATUTORY REPORTING PRACTICES

Financial
statements prepared in conformity with accounting principles generally accepted
in the United States of America (GAAP) differ in some respects from
the statutory accounting practices prescribed or permitted by insurance
regulatory authorities. In accordance with statutory accounting reporting
practices, at June 30, 2002, and for the six months then ended, the Company had
share-owners equity of $42.2 million and net income of $6.4 million.

NOTE E - COMPREHENSIVE INCOME

The following table sets forth the Company's comprehensive income for the periods shown:

`Three Months Ended                 Six Months Ended
                                                                       June 30                           June 30
                                                                ----------------------------     --------------------------
                                                                   2002             2001            2002           2001
                                                                   ----             ----            ----           ----

Net income                                                       $1,802,542       $2,317,109      $3,838,983     $4,761,637
Change in net unrealized gains/losses
   on investments (net of income tax:
   three months: 2002 - $2,210,781; 2001 - $(540,486)
   six months: 2002 - $666,840; 2001 - $1,507,879)                4,105,736       (1,003,760)      1,238,418      2,800,347
Reclassification adjustment for amounts
   included in net income (net of income tax:
   three months: 2002 - $178,398; 2001 - $18,607
   six months: 2002 - $185,392; 2001 - $(213,948))                  331,311           34,557         344,300       (397,332)
Transition adjustment on derivative financial
   instruments (net of income tax:
   six months: 2001 - $153,444)                                                                                     284,968
                                                                 ----------       ----------      ----------     ----------
Comprehensive income                                             $6,239,589       $1,347,906      $5,421,701     $7,449,620
                                                                 ==========       ==========      ==========     ==========`

NOTE F - 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 G - RECENTLY ISSUED ACCOUNTING STANDARDS

In
August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires that companies record the fair value of
a liability for an asset retirement obligation in the period in which the
liability is incurred. The Statement is effective for fiscal years beginning
after June 15, 2002. The Company does not expect the adoption of SFAS No. 143 to
have a material effect on the Companys financial position or results of
operations.

In
August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 requires that the same
accounting model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, expands the use of
discontinued operations accounting to include more types of transactions and
changes the timing of when discontinued operation accounting is applied. The
Company adopted SFAS No. 144 on January 1, 2002, and the adoption did not have a
material effect on the Companys financial position or results of
operations.

NOTE H - DISCONTINUED OPERATIONS

On
December 31, 2001, PLC completed the sale to Fortis, Inc. of substantially all
of its Dental Benefits Division (Dental Division), and discontinued certain
other remaining Dental Division related operations, primarily other health
insurance lines. These discontinued operations have been included in various
operating subsidiaries of PLC, including the Company. The results of the
operations of the Dental Division as related to the Company have been included
herein as discontinued operations.

### ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE
                                         RESULTS OF CONTINUING OPERATIONS

Protective
Life and Annuity Insurance Company (the Company), a stock life
insurance company, was founded in 1978. Since 1983, all outstanding shares of
the Companys common stock have been owned by Protective Life Insurance
Company (Protective), which is a wholly owned subsidiary of
Protective Life Corporation (PLC), an insurance holding company
whose common stock is traded on the New York Stock Exchange under the symbol
PL. All outstanding shares of the Companys preferred stock are
owned by PLC. The Company is authorized to transact insurance business as an
insurance company or a reinsurance company in 49 states, including New York.

In
accordance with General Instruction H(2)(a), the Company includes the following
analysis with the reduced disclosure format.

PLC,
through its subsidiaries, provides financial services through the production,
distribution, and administration of insurance and investment products. PLC,
through its subsidiaries, operates several segments each having a strategic
focus which can be grouped into three general product categories: life
insurance, retirement savings and investment products, and specialty insurance
products. The life insurance category includes the Life Marketing and
Acquisitions segments. The specialty insurance products category includes the
Credit Products segment. The retirement savings and investment products category
includes the Stable Value contracts and Annuities segments.

The
Company, since it is licensed in the State of New York, is the entity through
which PLC markets, distributes, and services insurance and annuity products in
New York. As of June 30, 2002, the Company was involved in the businesses of
four of PLCs operating segments: Acquisitions, Life Marketing, Credit
Products and Annuities. The Company has an additional business segment which is
described herein as Corporate and Other.

Protective
has entered into an intercompany guaranty agreement, enforceable by the Company
or its successors, whereby Protective has guaranteed the Companys payment
of claims made by the holders of Company policies according to the terms of such
policies. The guarantee will remain in force until the earlier of (a) when the
Company achieves a claims-paying rating equal to or better than Protective
without the benefit of any intercompany guaranty agreement or (b) 90 days after
the guaranty agreement is revoked by written instrument; provided, however, even
after any revocation or termination by such notice, the guarantee shall remain
effective as to policies issued during the existence of the guaranty agreement.

This
report includes forward-looking statements which express
expectations of future events and/or results. All statements based on future
expectations rather than on historical facts are forward-looking statements that
involve a number of risks and uncertainties, and the Company cannot give
assurance that such statements will prove to be correct. Please refer to Exhibit
99 herein for more information about factors which could affect future results.

In
the conduct of its business, the Company makes certain assumptions regarding the
mortality, persistency, claims, expenses and interest rates, or other factors
appropriate to the type of business, it expects to experience in future periods,
which are also used to estimate the amounts of deferred policy acquisition
costs, policy liabilities and accruals, and various other components of the
Companys balance sheet. The Companys actual experience,
as well as changes in estimates, are used to prepare the Companys statements of
income. The calculations the Company uses to estimate various components of its
balance sheet and statement of income are necessarily complex and include large
amounts of data. Assumptions and estimates involve judgement and by their nature
are imprecise and subject to changes and revisions over time. Accordingly, the
Company's results may be affected, positively or negatively, from time to time,
by actual results differing from assumptions, by changes in estimates,
and changes arising from implementing more sophisticated administrative systems and
procedures that are capable of calculating more precise estimates.

The
following discussion and analysis primarily relates to the six months ended June
30, 2002, as it compares to the same period last year. Unless otherwise noted,
the general factors discussed also apply to the quarter ended June 30, 2002, as
it compares to the same quarter last year. Where needed for a more complete
understanding of the Companys operating results, information related to
the quarters ended June 30, 2002, and June 30, 2001, has been provided.

The
Companys results may fluctuate from period to period due to fluctuations
in mortality, persistency, claims, expenses, interest rates, and other factors.
Therefore, it is managements opinion that quarterly operating results for
insurance enterprises are not necessarily indicative of results to be achieved
in succeeding quarters, and that a review of operating results over a longer
period is necessary to assess an insurance companys performance.

Revenues

The following table sets
forth revenues by source for the periods shown:

`Three Months Ended                        Six Months Ended
                                                               June 30                                June 30
                                                    -----------------------------------------------------------------------
                                                          2002              2001                 2002              2001
                                                          ----              ----                 ----              ----
         Premiums and policy fees, net of
             reinsurance                             $  7,750,771       $  8,418,150           $14,850,370      $15,707,599
         Net investment income                          8,938,842          8,447,484            17,604,612       16,500,098
         Realized investment (losses) gains              (509,709)           (53,164)             (529,692)         611,280
         Other income                                        (902)               501                 2,213            2,482
                                                     ------------       ------------           -----------      -----------
                                                     $ 16,179,002       $ 16,812,971           $31,927,503      $32,821,459
                                                     ============       ============           ===========      ===========`

Premiums
and policy fees, net of reinsurance (premiums and policy fees)
decreased $0.9 million or 5.5% in the first six months of 2002 from the first
six months of 2001. Premiums and policy fees in the Acquisitions Division are
expected to decline with time unless new acquisitions are made. No acquisitions
were made in this Division in 2001 or the first six months of 2002, therefore
decreases in older acquired policies resulted in a decrease of $1.0 million in
the first six months of 2002 as compared with the first six months of 2001. This
decrease was partially offset by increases in premiums and policy fees in the
Annuities segment and the addition of the Life Marketing segment in the first
quarter of 2002.

Net
investment income in the first six months of 2002 increased by $1.1 million as
compared to the corresponding period of the preceding year primarily due to
increases in the average amount of invested assets.

The
Company generally purchases its investments with the intent to hold to maturity
by purchasing investments that match future cash-flow needs. However, the
Company may sell any of its investments to maintain approximate matching of
assets and liabilities. Accordingly, the Company has classified its fixed
maturities and certain other securities as available for sale. The
sales of investments that have occurred generally result from portfolio
management decisions to maintain proper matching of assets and liabilities.

Realized
investment losses were approximately $0.5 million in the first six months of
2002. During the first six months of 2002, the Company recorded other than
temporary impairments on its investments of $1.5 million which were partially
offset by $1.0 million of realized gains. Realized investment gains were
approximately $0.6 million in the first six months of 2001.

The
Company reported an insignificant amount of other income in the first six months
of 2002 and 2001.

Income Before Income Tax

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

`Operating Income (Loss) and Income (Loss) Before Income Tax

                                                          Three Months Ended                        Six Months Ended
                                                               June 30                                  June 30
                                                     ---------------------------------------------------------------------
                                                           2002               2001               2002              2001
                                                           ----               ----               ----              ----
Operating Income (Loss)1
Life Insurance
     Acquisitions                                      $2,938,534         $2,804,840           $5,860,126       $5,962,243
     Life Marketing                                        40,501                                  91,201
Specialty Insurance Products
     Credit Products                                      296,100            349,923              594,153          591,884
Retirement Savings and Investment
Products
     Annuities                                           (275,224)          (329,124)            (481,811)        (594,462)
Corporate and Other                                       281,251            706,924              368,670        1,099,870
                                                      ------------        -----------           ----------      -----------
Total operating income                                  3,281,162          3,532,563            6,432,339        7,059,535
                                                      ------------        -----------           ----------      -----------

Realized Investment Gains (Losses)
     Annuities                                                923                                  66,277
     Unallocated Realized Investment
         Gains (Losses)                                  (510,632)           (53,164)            (595,969)         611,280
                                                      ------------        -----------           ----------      -----------
     Total                                               (509,709)           (53,164)            (529,692)         611,280
                                                      ------------        -----------           ----------      -----------
Income (Loss) Before Income Tax
Life Insurance
     Acquisitions                                       2,938,534          2,804,840            5,860,126        5,962,243
     Life Marketing                                        40,501                                  91,201
Specialty Insurance Products
     Credit Products                                      296,100            349,923              594,153          591,884
Retirement Savings and Investment
Products
     Annuities                                           (274,301)          (329,124)            (415,534)        (594,462)
Corporate and Other                                       281,251            706,924              368,670        1,099,870
Unallocated Realized Investment
    Gains (Losses)                                       (510,632)           (53,164)            (595,969)         611,280
                                                      ------------        -----------           ----------      -----------
Total income before income tax                         $2,771,453         $3,479,399           $5,902,647       $7,670,815
                                                      ============        ===========          ===========      ===========

1 Income (loss) from continuing operations before income tax excluding realized investment gains and losses.`

Pretax  operating  income from the  Acquisitions  segment was $5.9 million in the first six months of 2002
as compared to $6.0  million in the same period of 2001.  Earnings  from the  Acquisitions  segment are expected to
decline over time (due to the lapsing of policies  resulting from deaths of insureds or  terminations  of coverage)
unless new  acquisitions  are made. The increase in investment  income on invested assets  allocated to the segment
partially offset the decrease in premiums and policy fees.

The Credit Products  segment's  pretax  operating  income remained  relatively  unchanged in the first six
months of 2002 as compared to the same period of 2001.

The Annuity segment had pretax  operating  losses of $0.5 million in the first six months of 2002 and $0.6
million of pretax operating losses in the same period of 2001, as the segment continues to gain sales momentum.

The Corporate and Other segment  consist of net  investment  income and expenses not  identified  with the
preceding  business  segments.  Pretax  operating income from this segment was $0.4 million in the first six months
of 2002 as compared to $1.1 million in the first six months of 2001.

Income Taxes

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

`Three Months Ended                    Six Months Ended
                                                                      June 30                              June 30
                                                             -------------------------------------------------------------
                                                                2002             2001               2002            2001
                                                               -----             ----               -----          -----

           Estimated Effective Income Tax Rates                35.0%             34.5%              35.0%           34.5%`

The
effective income tax rate for the full year of 2001 was 34.5%. Managements
estimate of the effective income tax rate for 2002 is approximately 35.0%.

Net Income

`The following table sets forth net income for the periods shown:

                                                          Three Months Ended                       Six Months Ended
                  Net Income                                   June 30                                   June 30
                  ----------                            -----------------------------          ---------------------------
                                                           2002              2001                2002              2001
                                                           ----             ------              ------             ----
                    Total                               $1,802,542        $2,317,109           $3,838,983       $4,761,637`

Compared
to the same period in 2001, net income in the first six months of 2002 decreased
$0.9 million, reflecting decreases in the Acquisitions segment and the Corporate
and Other segment and unallocated realized gains, which were partially offset by
increases in the Credit Products, Annuities and Life Marketing segments.

### PART II

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibit 99 - Safe Harbor for Forward-Looking Statements

### SIGNATURE

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

Protective Life and Annuity Insurance Company

/s/Jerry W. DeFoor
Jerry W. DeFoor
Vice President and Controller
and Chief Accounting Officer
(Duly authorized officer)