**FORM
10-Q**
 ____________________
 
 UNITED
      STATES
      SECURITIES
      AND EXCHANGE COMMISSION
      **WASHINGTON,
      D. C. 20549**[X]QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF
      THE SECURITIES EXCHANGE ACT OF 1934For
      the quarterly period ended**March
      31, 2005**OR[
      ]TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF
      THE SECURITIES EXCHANGE ACT OF 1934For
      the transition period from __ to __Commission
      File Number**333-42425****Protective
      Life and Annuity Insurance Company**(Exact
      name of registrant as specified in its charter)**Alabama**
      (State
      or other jurisdiction of
      incorporation
      or organization)
    **63-0761690**
      (IRS
      Employer Identification Number)**2801
      Highway 280 South**
      **Birmingham,
      Alabama 35223**
      (Address
      of principal executive offices and zip code)(205)
      268-1000
      (Registrant's
      telephone number, including area code)Indicate
      by check mark whether the registrant (1) has filed all reports
      required to be filed by Section 13 or 15(d) of the Securities
      Exchange Act of 1934 during the preceding 12 months (or for such shorter
      period that the registrant was required to file such reports), and
      (2) has been subject to such filing requirements for the past 90
      days. Yes [X] No [ ]Indicate
      by check mark whether the registrant is an accelerated filer (as defined
      in Rule 12b-2 of the Exchange Act). Yes [ ]
      No [X]Number
      of shares of Common Stock, $10.00 par value, outstanding as of
      May 11, 2004: 250,000 shares.**The
      registrant meets the conditions set forth in General
      Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
      this form with the reduced disclosure format pursuant to General
      Instruction H(2).**


**PROTECTIVE
      LIFE AND ANNUITY INSURANCE COMPANY**
      Quarterly
      Report on Form 10-Q
      For
      Quarter Ended March 31, 2005
      
      INDEX*Page***Part
      I. Financial Information:**Item
      1.Financial
      Statements (unaudited):Report
      of Independent Registered Public Accounting Firm
    2Condensed
      Statements of Income for the Three Monthsended
      March 31, 2005 and 2004
    3Condensed
      Balance Sheets as of March 31, 2005and
      December 31, 2004
    4Condensed
      Statements of Cash Flows for thethree
      months ended March 31, 2005 and 2004
    5Notes
      to Condensed Financial Statements
    6Item
      2.Management’s
      Narrative Analysis of the Results of Operations
    11Item
      4.Controls
      and Procedures
    14**Part
      II. Other Information:**Item
      6.Exhibits
    15Signature
    16











**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To the
Directors and Share Owners


Protective
Life and Annuity Insurance Company





We have
reviewed the accompanying condensed balance sheet of Protective Life and Annuity
Insurance Company as of March 31, 2005, and the related condensed
statements of income and cash flows  for each of the three-month periods
ended March 31, 2005 and 2004 .  These interim financial statements
are the responsibility of the Company’s management.





We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, 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 the standards of the Public Company
Accounting Oversight Board (United States), the balance sheet as of
December 31, 2004 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 30, 2005, 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, 2004, 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


May 13,
2005



















**PROTECTIVE
LIFE AND ANNUITY INSURANCE COMPANY**


**CONDENSED
STATEMENTS OF INCOME**


(Unaudited)








**Three
      Months Ended****March
      31****2005**
    **2004**





**REVENUES**Premiums
      and policy fees
    
    $
    14,631,801
    
    $
    16,549,566Reinsurance
      ceded
    
    
    (8,754,119
    )
    
    (10,350,957
    )Premiums
      and policy fees, net of reinsurance ceded
    
    
    5,877,682
    
    
    6,198,609Net
      investment income
    
    
    9,874,639
    
    
    9,933,930Realized
      investment gains (losses)
    
    
    (351,403
    )
    
    240,458Other
      income
    
    
    (898
    )
    
    13,05415,400,020
    
    
    16,386,051**BENEFITS
      AND EXPENSES**
      Benefits
      and settlement expenses
      (net
      of reinsurance ceded:
      three
      months: 2005 - $6,180,228; 2004 - $6,585,056)
    
    
    6,644,573
    
    
    7,356,998Amortization
      of deferred policy acquisition costs
    
    
    2,076,066
    
    
    1,703,843Other
      operating expenses (net of reinsurance ceded:
      three
      months: 2005 - $374,645; 2004 - $(20,278))
    
    
    1,694,135
    
    
    2,286,62610,414,774
    
    
    11,347,467**INCOME
      BEFORE INCOME TAX**
    
    
    4,985,246
    
    
    5,038,584Income
      tax expense
    
    
    1,779,109
    
    
    1,758,494**NET
      INCOME**
    
    $
    3,206,137
    
    $
    3,280,090











*See
notes to condensed financial statements*





**PROTECTIVE
LIFE AND ANNUITY INSURANCE COMPANY**


**CONDENSED
BALANCE SHEETS**


**(Unaudited)**





**March
      31**
    **December
      31****2005**
    **2004**





**ASSETS**
      Investments:
      Fixed
      maturities, at market
      (amortized
      cost: 2005 - $585,270,534; 2004 - $578,812,588)
    
    $
    625,519,208
    
    $
    625,095,231Mortgage
      loans on real estate
    
    
    1,123,237
    
    
    1,177,521Policy
      loans
    
    
    51,954,737
    
    
    52,994,451Short-term
      investments
    
    
    6,926,613
    
    
    10Total
      investments
    
    
    685,523,795
    
    
    679,267,213Cash
    
    
    0
    
    
    10,337,198Accrued
      investment income
    
    
    9,511,259
    
    
    10,825,632Accounts
      and premiums receivable, net of allowance
      for
      uncollectible amounts
    
    
    554,127
    
    
    396,654Reinsurance
      receivables
    
    
    39,377,284
    
    
    43,363,998Deferred
      policy acquisition costs
    
    
    93,538,197
    
    
    93,107,390Other
      assets
    
    
    12,522
    
    
    13,027Assets
      related to separate accounts
      Variable
      Annuity
    
    
    10,194,210
    
    
    10,629,080Total
      assets
    
    $
    838,711,394
    
    $
    847,940,192**LIABILITIES**
      Policy
      liabilities and accruals:
      Future
      policy benefits and claims
    
    $
    483,512,540
    
    $
    486,995,573Unearned
      premiums
    
    
    6,522,976
    
    
    7,513,955Total
      policy liabilities and accruals
    
    
    490,035,516
    
    
    494,509,528Annuity
      account balances
    
    
    59,653,806
    
    
    59,989,579Other
      policyholders' funds
    
    
    2,822,136
    
    
    2,765,727Funds
      held-coinsurance
    
    
    21,656,743
    
    
    25,713,359Other
      liabilities
    
    
    8,530,670
    
    
    8,736,280Accrued
      income taxes
    
    
    890,803
    
    
    (529,937
    )Deferred
      income taxes
    
    
    40,266,261
    
    
    41,614,693Liabilities
      related to separate accounts
      Variable
      Annuity
    
    
    10,194,210
    
    
    10,629,080Total
      liabilities
    
    
    634,050,145
    
    
    643,428,309**COMMITMENTS
      AND CONTINGENT LIABILITIES - NOTE 2**
      **SHARE-OWNERS'
      EQUITY**
      Preferred
      Stock, $1.00 par value, shares authorized and issued:
2,000
    
    
    2,000
    
    
    2,000Common
      Stock, $10.00 par value,
      shares
      authorized: 500,000
      shares
      issued and outstanding: 250,000
    
    
    2,500,000
    
    
    2,500,000Additional
      paid-in capital
    
    
    171,386,324
    
    
    171,386,324Retained
      earnings
    
    
    10,868,520
    
    
    7,662,382Accumulated
      other comprehensive income:
      Net
      unrealized gains on investments (net of income tax:
      2005
      - $10,717,757; 2004 - $12,363,711)
    
    
    19,904,405
    
    
    22,961,177204,661,249
    
    
    204,511,883$
    838,711,394
    
    $
    847,940,192







*See
notes to condensed financial statements*








**PROTECTIVE
LIFE AND ANNUITY INSURANCE COMPANY**


**CONDENSED
STATEMENTS OF CASH FLOWS**


( Unaudited )





**Three
      Months Ended****March
      31****2005**
    **2004**





**CASH
      FLOWS FROM OPERATING ACTIVITIES**
      Net
      income
    
    $
    3,206,137
    
    $
    3,280,090Adjustments
      to reconcile net income to net cash used in operating
      activities:
      Realized
      investment (gains) losses
    
    
    351,403
    
    
    (240,458
    )Amortization
      of deferred policy acquisition costs
    
    
    2,076,066
    
    
    1,703,843Capitalization
      of deferred policy acquisition costs
    
    
    (1,157,821
    )
    
    (739,930
    )Deferred
      income tax
    
    
    297,522
    
    
    (95,066
    )Accrued
      income tax
    
    
    1,420,740
    
    
    1,853,560Interest
      credited to universal life and investment products
    
    
    4,945,539
    
    
    5,093,586Policy
      fees assessed on universal life and investment products
    
    
    (8,187,992
    )
    
    (8,423,342
    )Change
      in accrued investment income and other receivables
    
    
    5,143,614
    
    
    7,312,122Change
      in policy liabilities and other policyholders' funds of
      traditional
      life
      and health products
    
    
    (4,005,922
    )
    
    (9,342,727
    )Change
      in funds held-coinsurance
    
    
    (4,056,616
    )
    
    (6,781,391
    )Change
      in other liabilities
    
    
    (205,610
    )
    
    1,011,439Other,
      net
    
    
    10,386
    
    
    1,378Net
      cash used in operating activities
    
    
    (162,554
    )
    
    (5,366,896
    )**CASH
      FLOWS FROM INVESTING ACTIVITIES**
      Investments
      available for sale, net of short-term investments:
      Maturities
      and principal reductions of investments
    
    
    7,378,761
    
    
    13,497,992Sale
      of investments
    
    
    2,697,500
    
    
    7,208,363Cost
      of investments acquired
    
    
    (16,913,300
    )
    
    (17,833,197
    )Change
      in mortgage loans, net
    
    
    54,284
    
    
    51,600Change
      in policy loans, net
    
    
    1,039,714
    
    
    747,693Change
      in short-term investments, net
    
    
    (6,926,603
    )
    
    (2,083
    )Net
      cash (used in) provided by investing activities
    
    
    (12,669,644
    )
    
    3,670,368**CASH
      FLOWS FROM FINANCING ACTIVITIES**
      Investment
      product deposits and change in universal life deposits
    
    
    5,558,363
    
    
    6,017,531Investment
      product withdrawals
    
    
    (3,063,363
    )
    
    (1,911,373
    )Net
      cash provided by financing activities
    
    
    2,495,000
    
    
    4,106,158**CHANGE
      IN CASH**
    
    
    (10,337,198
    )
    
    2,409,630**CASH
      AT BEGINNING OF PERIOD**
    
    
    10,337,198
    
    
    13,052,781**CASH
      AT END OF PERIOD**
    
    $
    0
    
    $
    15,462,411










*See
notes to condensed financial statements*










**PROTECTIVE
LIFE AND ANNUITY INSURANCE COMPANY**


**NOTES
TO CONDENSED FINANCIAL STATEMENTS**


**(Unaudited)**








NOTE 1 -
BASIS OF PRESENTATION





The
accompanying unaudited condensed financial statements of Protective Life and
Annuity Insurance Company ( the “ Company”)
have been prepared in accordance with accounting principles generally accepted
in the United States of America  (“GAAP”)
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 GAAP 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 three-month period ended
March 31, 2005 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2005. The year-end condensed
balance sheet data was derived from audited financial statements, but does not
include all disclosures required by GAAP. 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, 2004.





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 or share-owners' equity.





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.





With
respect to the unaudited condensed financial information of the Company for the
three-month periods ended March 31, 2005 and 2004, PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report dated May 13, 2005, appearing herein, stated
that they did not audit and they do not express an opinion on that unaudited
condensed financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. PricewaterhouseCoopers is not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited condensed financial information because that report is
not a "report" or a "part" of a registration statement prepared or certified by
PricewaterhouseCoopers into which this Form 10-Q may
be incorporated by reference within the meaning of Sections 7 and 11 of the
Act.





NOTE 2 -
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 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 limited 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 and in arbitration. Although
the outcome of any such litigation or arbitration cannot be predicted, the
Company believes that at the present time there are no pending or threatened
lawsuits that are reasonably likely to have a material adverse effect on the
financial position, results of operations, or liquidity of the
Company.





NOTE 3 -
OPERATING SEGMENTS





PLC,
through its subsidiaries, operates several business segments each having a
strategic focus. 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
Marketing.** The
Company became involved with PLC’s Life Marketing segment beginning in 2002.
PLC’s Life Marketing segment markets level premium term and term-like insurance,
universal life, variable universal life and “bank owned life
insurance ”  (BOLI)
products on a national basis primarily through networks of independent insurance
agents and brokers, and in the BOLI market.





**Acquisitions.** 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.





**Annuities.** The
Annuities segment manufactures, sells, and supports fixed annuity
products. The
Annuities segment also supports variable annuity products sold in prior periods. These
products are primarily sold through stockbrokers, but are also sold through
financial institutions and independent insurance agents and
brokers.





**Asset
Protection.** The
Asset Protection segment markets extended service contracts and credit life and
disability insurance to protect consumers’ investments in automobiles and
watercraft.





The
Company has an additional 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 and interest on all debt).





The
Company uses the same accounting policies and procedures to measure segment
operating income and assets as it uses to measure its net income and assets.
Segment operating income is generally income before income tax, adjusted to
exclude net realized investment gains and losses. Segment operating income
represents the basis on which the performance of the Company’s business is
assessed by management. Premiums and policy fees, other income, benefits and
settlement expenses, and amortization of deferred policy acquisition costs are
attributed directly to each operating segment. Net investment income is
allocated based on directly related assets required for transacting the business
of that segment. Realized investment gains (losses) and other operating expenses
are allocated to the segments in a manner which most appropriately reflects the
operations of that segment. Assets are allocated based on statutory policy
liabilities and deferred policy acquisition costs directly attributable to each
segment.





There are
no significant intersegment transactions.





The
following tables sets forth total revenue by segment, segment operating income,
and assets for the period shown. Asset adjustments represent the inclusion of
assets related to discontinued operations.





**Three
      Months Ended**
      **March
      31****2005**
    
    **2004****Total
      Revenue**Life
      Marketing
    
    $
    332,006
    
    $
    126,969Acquisitions
    
    
    11,922,829
    
    
    12,408,386Annuities
    
    
    1,072,912
    
    
    1,247,379Asset
      Protection
    
    
    880,403
    
    
    995,854Corporate
      and Other
    
    
    1,191,870
    
    
    1,607,463$
    15,400,020
    
    $
    16,386,051








**Three
      Months Ended**
      **March
      31****2005**
    
    **2004****Segment
      Operating Income**Life
      Marketing
    
    $
    285,415
    
    $
    233,388Acquisitions
    
    
    2,986,585
    
    
    2,787,410Annuities
    
    
    60,911
    
    
    6,624Asset
      Protection
    
    
    465,033
    
    
    225,063Corporate
      and Other
    
    
    1,538,705
    
    
    1,545,641Total
      segment operating income
    
    
    5,336,649
    
    
    4,798,126Add
      back: realized investment gains (losses)
    
    
    (351,403
    )
    
    240,458Income
      before income tax
    
    
    4,985,246
    
    
    5,038,584Income
      tax expense
    
    
    1,779,109
    
    
    1,758,494Net
      income
    
    $
    3,206,137
    
    $
    3,280,090











**Operating
Segment Assets**


**March
31, 2005**


**Life**
      **Marketing**
    
    **Acquisitions**
    
    **Annuities**Investments
      and other assets
    
    $
    8,895,508
    
    $
    546,174,168
    
    $
    58,513,051Deferred
      policy acquisition costs
    
    
    4,500,271
    
    
    85,837,841
    
    
    2,020,053Total
      assets
    
    $
    13,395,779
    
    $
    632,012,009
    
    $
    60,533,104








**Asset**
      **Protection**
    
    **Corporate**
      **and
      Other**
    
    **Adjustments**
    
    **Total**
      **Consolidated**Investments
      and other assets
    
    $
    19,769,692
    
    $
    111,700,963
    
    $
    119,815
    
    $
    745,173,197Deferred
      policy acquisition costs
    
    
    1,180,032
    
    
    
    
    
    
    
    
    93,538,197Total
      assets
    
    $
    20,949,724
    
    $
    111,700,963
    
    $
    119,815
    
    $
    838,711,394











**Operating
Segment Assets**


**December
31, 2004**


**Life**
      **Marketing**
    
    **Acquisitions**
    
    **Annuities**Investments
      and other assets
    
    $
    8,440,192
    
    $
    558,422,751
    
    $
    59,057,983Deferred
      policy acquisition costs
    
    
    4,094,472
    
    
    85,663,856
    
    
    2,090,306Total
      assets
    
    $
    12,534,664
    
    $
    644,086,607
    
    $
    61,148,289








**Asset**
      **Protection**
    
    **Corporate**
      **and
      Other**
    
    **Adjustments**
    
    **Total**
      **Consolidated**Investments
      and other assets
    
    $
    23,408,930
    
    $
    105,382,771
    
    $
    120,175
    
    $
    754,832,802Deferred
      policy acquisition costs
    
    
    1,258,756
    
    
    
    
    
    
    
    
    93,107,390Total
      assets
    
    $
    24,667,686
    
    $
    105,382,771
    
    $
    120,175
    
    $
    847,940,192








NOTE 4 -
STATUTORY REPORTING PRACTICES





Financial
statements prepared in conformity with GAAP differ in some respects from the
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. In accordance with statutory reporting practices, at March 31,
2005, and for the three months then ended, the Company had capital and surplus
of $110.2 million and net income of $4.1 million. At March 31,
2005, the asset valuation reserve held by the Company was
$4.8 million.








NOTE 5 -
COMPREHENSIVE INCOME





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





**Three
      Months Ended**
      **March
      31****2005**
    
    **2004**Net
      Income
    
    $
    3,206,137
    
    $
    3,280,090Change
      in net unrealized gains/losses
      on
      investments (net of income tax:
      three
      months: 2005 - $(1,768,945); 2004 - $4,393,931)
    
    
    (3,285,184
    )
    
    8,160,157Reclassification
      adjustment for amounts
      included
      in net income (net of income tax:
      three
      months: 2005 - $122,991; 2004 - $(84,160))
    
    
    228,412
    
    
    (156,298
    )Comprehensive
      income
    
    $
    149,365
    
    $
    11,283,949











**ITEM
2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF
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.





For a
more complete understanding of the Company's business and its current period
results, please read the following Management's Narrative Analysis of the
Results of Operations in conjunction with the Company's latest annual report on Form 10-K and
other filings with the SEC.





PLC,
through its subsidiaries, provides financial services through the production,
distribution, and administration of insurance and investment products. PLC,
through its subsidiaries, operates several business segments each having a
strategic focus. An operating segment is generally distinguished by products
and/or channels of distribution. PLC periodically evaluates its operating
segments in light of the segment reporting requirements prescribed by SFAS
No. 131, “Disclosures about Segments of an Enterprise and Related
Information”, and makes adjustments to its segment reporting as needed. PLC’s
operating segments are Life Marketing, Acquisitions, Stable Value Products,
Annuities and Asset Protection. PLC has an additional segment referred to as
Corporate and Other.





The
Company, since it is licensed in the State of New York, is the entity through
which PLC markets, distributes, and services insurance and annuity products in
New York. As of March 31, 2005, the Company was involved in the businesses
of four of PLC’s operating segments: Life Marketing, Acquisitions, Asset
Protection,  Annuities
and  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 reviews the Company's financial condition and results of operations
including its liquidity and capital resources. Historical information is
presented and discussed. 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 meanings. 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 the Company 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. Please refer to Exhibit 99,
incorporated by reference herein, for more information about factors which could
affect future results.





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 an
insurance company are not necessarily indicative of results to be achieved in
future periods, 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**
      **March
      31****2005**
    
    **2004**Premiums
      and policy fees, net of reinsurance
    
    $
    5,877,682
    
    $
    6,198,609Net
      investment income
    
    
    9,874,639
    
    
    9,933,930Realized
      investment gains (losses)
    
    
    (351,403
    )
    
    240,458Other
      income(loss)
    
    
    (898
    )
    
    13,054$
    15,400,020
    
    $
    16,386,051








Premiums
and policy fees, net of reinsurance (“premiums and policy fees”) decreased
$0.3 million or 5.2% in the first three months of 2005 from the first three
months of 2004. 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 2004 or the first three months of 2005, therefore
decreases in older acquired policies resulted in a decrease of $0.4 million
in the first three months of 2005 as compared with the first three months of
2004. The Asset Protection segment had a decrease of $0.1 million in
premiums and policy fees in the first three months of 2005 compared to the same
period of 2004. Premiums and policy fees in the Annuities segment remained
relatively flat in the first three months of 2005 as compared to 2004, while
premiums and policy fees in the Life Marketing segment increased
$0.2 million for the same period.





Net
investment income in the first three months of 2005 remained relatively
unchanged from the corresponding period of the preceding year. The percentage
earned on average cash and investments was 5.9% in the first three months of
2005 compared to 5.5% in the same period of 2004.





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





Realized
investment losses were $0.4 million in the first three months of 2005
compared to realized investment gains of $0.2 million in the first three
months of 2004. During the first three months of 2005, the Company recorded no
other-than-temporary impairments on its investments as compared to
$0.3 million in the first three months of 2004.











Each
quarter the Company reviews investments with material unrealized losses and
tests for other-than-temporary impairments. Management analyzes various factors
to determine if any specific other-than-temporary asset impairments exist. Once
a determination has been made that a specific other-than-temporary impairment
exists, a realized loss is recognized and the cost basis of the impaired asset
is adjusted to its fair value. An other-than-temporary impairment loss is
recognized based upon all relevant facts and circumstances for each investment.
With respect to unrealized losses due to issuer-specific events, the Company
considers the creditworthiness and financial performance of the issuer and other
available information. With respect to unrealized losses that are not due to
issuer-specific events, such as losses due to interest rate fluctuations,
general market conditions or industry-related events, the Company considers its
intent and ability to hold the investment to allow for a market recovery or to
maturity together with an assessment of the likelihood of full
recovery.





Income
Before Income Tax and Segment Operating Income





In the
following discussion, segment operating income is defined as income before
income tax excluding net realized investment gains and losses and related
amortization of deferred policy acquisition costs  (DAC).
Management believes that segment operating income provides relevant and useful
information to investors, as it represents the basis on which the performance of
the Company’s business is internally assessed. Although the items excluded from
segment operating may be significant components in understanding and assessing
the Company’s overall financial performance, management believes that segment
operation income enhances an investor’s understanding of the Company’s results
of operations. Note that the Company’s segment operating income measures may not
be comparable to similarly titled measures reported by other
companies.





The
following table sets forth a summary of results and reconciles segment operating
income to net income:





**Three
      Months Ended**
      **March
      31****2005**
    
    **2004**
    
    **Change****Segment
      Operating Income**Life
      Marketing
    
    $
    285,415
    
    $
    233,388
    
    
    22.3
    %Acquisitions
    
    
    2,986,585
    
    
    2,787,410
    
    
    7.1Annuities
    
    
    60,911
    
    
    6,624
    
    
    819.6Asset
      Protection
    
    
    465,033
    
    
    225,063
    
    
    106.6Corporate
      and Other
    
    
    1,538,705
    
    
    1,545,641
    
    
    (0.4
    )5,336,649
    
    
    4,798,126Realized
      investment gains (losses) - investments
    
    
    (351,403
    )
    
    240,458Income
      tax expense
    
    
    (1,779,109
    )
    
    (1,758,494
    )Net
      income
    
    $
    3,206,137
    
    $
    3,280,090
    
    
    (2.3
    )








Net
income for the first quarter of 2005 reflects strong growth in segment operating
income, offset by lower net realized investment gains compared to the first
quarter of 2004. Segment operating income for the first three months of 2005
increased 11.2% from the same period in 2004, while the Company recorded net
realized investment losses of $0. 4  million
in the first quarter of 2005 compared to net realized investment gains of
$0. 2  million
in the first quarter of 2005. Life Marketing’s operating income increased 22.3%
from the first quarter of 2004, reflecting continued growth in life insurance
in-force through new sales. The Acquisitions segment’s earnings for the quarter
increased 7.1% primarily due to a 17.1% reduction in other operating expenses,
partially offset by a 3.9% decline in revenues due to the normal runoff of the
segment’s previously acquired blocks of business. 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. There were no new acquisitions made in 2004 or in the
first three months of 2005. Improvement in the equity markets and higher sales
contributed to the increase in the Annuities segment’s earnings. Asset
Protection segment operating income increased significantly over the first
quarter of 2004, primarily due to improvements in all of the segment’s core
product lines. The Corporate and Other segment consists of net investment income
and expenses not identified with the preceding business segments. Operating
income for the Corporate and Other segment for the first quarter of 2005
remained relatively unchanged from the same quarter of 2004.





Income
Taxes Expense





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





**Three
      Months Ended**
      **March
      31****2005**
    
    **2004**Effective
      Income Tax Rates
    
    
    35.7
    %
    
    34.9
    %








The
effective income tax rate for the full year of 2004 was 35.2%. Management's
estimate of the effective income tax rate for the full year of 2005 is
approximately 35.7%.





Item
4.  Controls
and Procedures






(a)
    Disclosure
      controls and procedures





Under the
direction of our President (Principal Executive Officer) and Chief Financial
Officer, we evaluated our disclosure controls and procedures and
concluded that our disclosure controls and procedures were effective as of
March 31, 2005. It should be noted that any system of controls, no matter
how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met. Further, the design
of any control system is based in part upon certain judgments, including the
costs and benefits of controls and the likelihood of future events. Because of
these and other inherent limitations of control systems, no evaluation of
controls can provide absolute assurance that all control issues, if any, within
the Company have been detected.





(b)
    Changes
      in internal control over financial
reporting





No
significant changes in our internal control over financial reporting occurred
during the quarter ended March 31, 2005, that have materially affected, or
is reasonably likely to materially affect, such internal control over financial
reporting. Our internal controls exist within a dynamic environment and the
Company continually strives to improve its internal controls and procedures to
enhance the quality of its financial reporting.











**PART
II**








Item
6.  Exhibits





(a)
    Exhibit 31(a)
      - Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.





Exhibit 31(b)
- Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.





Exhibit 32(a)
- Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





Exhibit 32(b)
- Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





Exhibit 99
- Safe Harbor for Forward-Looking Statements.











**SIGNATURE**








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








**Protective
      Life and Annuity Insurance Company**Date:
      May 13, 2005/s/
      Steven G. WalkerSteven
      G. WalkerSenior
      Vice President, Controllerand
      Chief Accounting Officer(Duly
      authorized officer)