#### 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 1934

# For the quarterly period ended March 31, 2003

# OR

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

# For the transition period from ___ to ___

# Commission File Number 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 (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 9, 2003: 250,000 shares.

### PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY

                                                                 INDEX

`Part I.  Financial Information:
   Item 1.  Financial Statements:
       Report of Independent Accountants
       Condensed Statements of Income for the Three Months
           ended March 31, 2003 and 2002 (unaudited)
       Condensed Balance Sheets as of March 31, 2003
           (unaudited) and December 31, 2002
       Condensed Statements of Cash Flows for the
           Three Months ended March 31, 2003 and 2002 (unaudited)
       Notes to Condensed Financial Statements (unaudited)

   Item 2.  Management's Narrative Analysis of the Results of Operations
   Item 4.  Controls and Procedures

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

Signature`

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, 2003, and the related condensed statements of income for
each of the three-month periods ended March 31, 2003 and 2002, and the condensed
statements of cash flows for the three-month periods ended March 31, 2003 and
2002. 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, 2002, 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 3, 2003, 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, 2002, 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 9, 2003

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

                                                                                                    Three Months Ended
                                                                                                          March 31
                                                                                               ---------------------------
                                                                                                    2003           2002
                                                                                                    ----           ----

REVENUES
    Premiums and policy fees                                                                    $19,870,307    $12,181,462
    Reinsurance ceded                                                                           (13,510,673)    (5,081,864)
                                                                                                ------------   ------------
      Premiums and policy fees, net of reinsurance ceded                                          6,359,634      7,099,598
    Net investment income                                                                        10,132,301      8,665,770
    Realized investment gains (losses)                                                              733,557        (19,983)
    Other income (loss)                                                                                (568)         3,115
                                                                                                ------------   ------------
                                                                                                 17,224,924     15,748,500
                                                                                                ------------   ------------

BENEFITS AND EXPENSES
    Benefits and settlement expenses
      (net of reinsurance ceded:
      three months: 2003 - $6,015,224; 2002 - $3,969,782)                                         7,837,609      8,044,979
    Amortization of deferred policy acquisition costs                                             2,078,112      2,375,077
    Other operating expenses (net of reinsurance ceded:
      three months: 2003 - $(879,203); 2002 - $157,951)                                           2,123,828      2,197,251
                                                                                                ------------   ------------
                                                                                                 12,039,549     12,617,307
                                                                                                ------------   ------------

INCOME BEFORE INCOME TAX                                                                          5,185,375      3,131,193

INCOME TAX EXPENSE                                                                                1,805,331      1,094,753
                                                                                                ------------   ------------

NET INCOME                                                                                     $  3,380,044   $  2,036,440
                                                                                                ============   ============

























See notes to condensed financial statements





                                             PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY
                                                       CONDENSED BALANCE SHEETS


                                                                                        March 31            December 31
                                                                                          2003                  2002
                                                                                      -----------           -----------
                                                                                      (Unaudited)
ASSETS
   Investments:
     Fixed maturities, at market
       (amortized cost: 2003 - $589,934,614; 2002 - $466,924,086)                     $623,462,584           $488,701,807
     Mortgage loans on real estate                                                       1,742,179              1,793,590
     Other long term investments                                                           572,818                572,818
     Policy loans                                                                       54,156,724             54,807,151
     Short-term investments                                                             46,566,264            178,805,245
                                                                                       -----------            -----------
       Total investments                                                              726,500,569            724,680,611
   Cash                                                                                          0              1,669,532
   Accrued investment income                                                             9,755,549              8,382,989
   Accounts and premiums receivable, net of allowance for
     uncollectible amounts                                                               1,469,164                325,479
   Reinsurance receivables                                                              79,874,790             92,256,257
   Deferred policy acquisition costs                                                   100,105,002            104,779,582
   Other assets                                                                             23,525                 21,955
   Assets related to separate accounts
     Variable Annuity                                                                    8,482,447              8,382,367
                                                                                       -----------            -----------
                                                                                     $926,211,046           $940,498,772
                                                                                       ===========            ===========
LIABILITIES
   Policy liabilities and accruals:
     Future policy benefits and claims                                                $509,824,150           $517,624,864
     Unearned premiums                                                                  21,644,435             26,349,028
                                                                                       -----------            -----------
                                                                                      531,468,585            543,973,892
   Annuity deposits                                                                     59,648,428             60,080,082
   Other policyholders' funds                                                            6,066,006              6,025,066
   Funds held-coinsurance                                                               75,912,970             89,552,015
   Other liabilities                                                                    12,600,081             14,214,260
   Deferred income taxes                                                                30,339,991             25,533,038
   Liabilities related to separate accounts
     Variable Annuity                                                                    8,482,447              8,382,367
                                                                                       -----------            -----------
                                                                                      724,518,508            747,760,720
                                                                                       -----------            -----------

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                                                          171,386,324            171,386,324
   Retained earnings                                                                    12,723,210              9,343,166
   Accumulated other comprehensive income:
     Net unrealized gains on investments (net of income
       tax: 2003 - $8,120,541; 2002 - $5,118,918)                                       15,081,004              9,506,562
                                                                                       -----------            -----------
                                                                                      201,692,538            192,738,052
                                                                                       -----------            -----------
                                                                                     $926,211,046           $940,498,772
                                                                                       ===========            ===========









See notes to condensed financial statements







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

                                                                                                    Three Months Ended
                                                                                                         March 31
                                                                                            -------------------------------
                                                                                                   2003             2002
                                                                                                    ----             ----

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                                  $ 3,380,044      $ 2,036,440
   Adjustments to reconcile net income to net cash provided by operating activities:
     Realized investment (gains) losses                                                           (733,557)          19,983
     Amortization of deferred policy acquisition costs                                           2,078,112        2,375,077
     Capitalization of deferred policy acquisition costs                                          (601,929)        (449,262)
     Deferred income tax                                                                         1,805,331        1,094,753
     Interest credited to universal life and investment products                                 4,498,577        8,586,220
     Policy fees assessed on universal life and investment products                             (8,551,518)      (8,806,779)
     Change in accrued investment income and other receivables                                   9,865,222        5,423,061
     Change in policy liabilities and other policyholders' funds
       of traditional life and health products                                                 (13,803,879)        (248,741)
     Change in fund held-coinsurance                                                           (13,639,045)
     Change in other liabilities                                                                (1,614,179)      (7,276,584)
     Other (net)                                                                                    (1,570)          (5,821)
                                                                                               -----------       -----------
     Net cash (used in) provided by operating activities                                       (17,318,391)       2,748,347
                                                                                               -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Maturities and principal reductions of investments
     Investments available for sale                                                            221,488,068       10,788,286
     Other                                                                                         701,838          643,049
   Sale of investments
     Investments available for sale                                                            184,563,691      125,815,313
   Cost of investments acquired
     Investments available for sale                                                           (396,065,537)    (148,499,167)
                                                                                               -----------       -----------
   Net cash provided by (used in) investing activities                                          10,688,060      (11,252,519)
                                                                                               -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Investment product deposits and change in universal life deposits                             6,182,501        6,694,608
   Investment product withdrawals                                                               (1,221,702)        (672,679)
                                                                                               -----------       -----------
   Net cash provided by financing activities                                                     4,960,799        6,021,929
                                                                                               -----------       -----------

(DECREASE) INCREASE IN CASH                                                                     (1,669,532)      (2,482,243)
CASH AT BEGINNING OF PERIOD                                                                      1,669,532        4,284,257
                                                                                               -----------       -----------
CASH AT END OF PERIOD                                                                         $          0      $ 1,802,014
                                                                                               ===========       ===========



















See notes to condensed financial statements`

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
three month period ended March 31, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. 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, 2002.

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.

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 that any 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 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.

PLC,
through its subsidiaries, operates several business segments. 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 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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Annuities.  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 and the Life Marketing segment's sales
         force.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Asset
Protection. The Asset Protection segment primarily 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) and the recognition of income tax expense. Asset
adjustments represent the inclusion of assets related to discontinued
operations.

`Operating Segment Income for the
                                                                  Three Months Ended March 31, 2003
                                                -----------------------------------------------------------------------

                                   Life
                                                    Marketing                  Annuities                    Acquisitions
                                                   -----------               ------------                 --------------

Premiums and policy fees                             $710,912                $    54,312                    $10,424,899
Reinsurance ceded                                    (652,625)                                               (5,053,413)
                                                     ---------                  --------                    ------------
   Net of reinsurance ceded                          58,287                     54,312                      5,371,486
Net investment income                                   2,939                    943,460                      7,332,057
Realized investment gains
Other income (loss)                                                                4,477                         (5,045)
                                                     ---------                  --------                    ------------
       Total revenues                                61,226                  1,002,249                     12,698,498
                                                     ---------                  --------                    ------------
Benefits and settlement expenses                     12,862                    904,489                      6,456,153
Amortization of deferred policy
   acquisition costs                                  169,174                     56,853                      1,660,575
Other operating expenses                                2,406                    (43,556)                     2,176,225
                                                     ---------                  --------                    ------------
       Total benefits and expenses                  184,442                    917,786                     10,292,953
                                                     ---------                  --------                    ------------
Income (loss) before income tax                    (123,216)                    84,463                      2,405,545


                                                                             Corporate
                                                          Asset                 and                               Total
                                                       Protection              Other         Adjustments      Consolidated
                                                       ------------         ------------    -------------     ------------
Premiums and policy fees                                $8,680,184                                             $19,870,307
Reinsurance ceded                                       (7,804,635)                                            (13,510,673)
                                                        -----------                                            -----------
   Net of reinsurance ceded                                875,549                                               6,359,634
Net investment income                                       99,378           $1,754,467                         10,132,301
Realized investment gains                                                                      $  733,557          733,557
Other income (loss)                                                                                                   (568)
                                                          --------            ---------          ---------      -----------
Total revenues                                             974,927            1,754,467           733,557       17,224,924
                                                          --------            ---------          ---------      -----------
Benefits and settlement expenses                           464,105                                               7,837,609
Amortization of deferred policy
   acquisition costs                                       191,510                                               2,078,112
Other operating expenses                                    27,142              (38,389)                         2,123,828
                                                          --------            ---------                         -----------
       Total benefits and expenses                         682,757              (38,389)                        12,039,549
                                                          --------            ---------                         -----------
Income (loss) before income tax                            292,170            1,792,856           733,557        5,185,375
Income tax expense                                                                              1,805,331        1,805,331
                                                                                                                -----------
Net income                                                                                                    $  3,380,044
                                                                                                                ===========


Operating Segment Income for the
                                                                          Three Months Ended March 31, 2002
                                                -----------------------------------------------------------------------


              Life
                                                    Marketing                  Annuities                    Acquisitions
                                                   -----------               ------------                 --------------
Premiums and policy fees                            $122,820                $     35,878                    $11,167,122
Reinsurance ceded                                                                                            (5,056,878)
                                                     ---------                  --------                    ------------
    Net of reinsurance ceded                       122,820                      35,878                      6,110,244
Net investment income                                    487                     811,087                      7,692,560
Realized investment gains                                                         65,354
Other income                                                                       3,115
                                                     ---------                  --------                    ------------
        Total revenues                               123,307                     915,434                     13,802,804
                                                    ---------                   --------                   ------------
Benefits and settlement expenses                    44,350                     737,201                      6,779,091
Amortization of deferred policy
    acquisition costs                                  2,086                     288,548                      1,919,014
Other operating expenses                              26,171                      30,918                      2,183,108
                                                    ---------                   --------                   ------------
        Total benefits and expenses                 72,607                   1,056,667                     10,881,213
                                                    ---------                   --------                   ------------
Income (loss) before income tax                     50,700                    (141,233)                     2,921,591


                                                                            Corporate
                                                         Asset                 and                               Total
                                                       Protection             Other          Adjustments      Consolidated
                                                       ------------         ------------    -------------     ------------
Premiums and policy fees                                $855,642                                               $12,181,462
Reinsurance ceded                                        (24,986)                                               (5,081,864)
                                                        -----------                                            -----------
   Net of reinsurance ceded                              830,656                                                 7,099,598
Net investment income                                    145,203              $16,433                            8,665,770
Realized investment gains (losses)                                                             $  (85,337)         (19,983)
Other income                                                                                                         3,115
                                                        --------              ---------          ---------      -----------
       Total revenues                                    975,859               16,433             (85,337)      15,748,500
                                                        --------              ---------          ---------      -----------
Benefits and settlement expenses                         484,337                                                 8,044,979
Amortization of deferred policy
   acquisition costs                                     165,429                                                 2,375,077
Other operating expenses                                  28,040              (70,986)                           2,197,251
                                                        --------              ---------                         -----------
       Total benefits and expenses                       677,806              (70,986)                          12,617,307
                                                        --------              ---------                         -----------
Income (loss) before income tax                          298,053               87,419             (85,337)       3,131,193
Income tax expense                                                                              1,094,753        1,094,753
                                                                                                                -----------
Net income                                                                                                     $ 2,036,440
                                                                                                                ===========


Operating Segment Assets
                                                                          March 31, 2003
                                               -----------------------------------------------------------------------------
                                                    Life
                                                  Marketing                   Annuities                   Acquisitions
                                                 -----------                 -----------                 -------------

Investments and other assets                     $   955,360                  $53,619,578                 $598,246,388
Deferred policy acquisition costs                    691,422                    2,619,604                   95,214,119
                                                 -----------                  -----------                 ------------
       Total assets                              $ 1,646,782                  $56,239,182                 $693,460,507
                                                 ===========                  ===========                 ============


                                                                          Corporate
                                                    Asset                    and
                                                  Protection                Other           Adjustments           Total
                                                 ------------            ------------       ------------       ------------
Investments and other assets                      $65,290,039            $104,414,375         $3,580,304       $826,106,044
Deferred policy acquisition costs                   1,579,857                                                   100,105,002
                                                 ------------            ------------       ------------       ------------
                Total assets                      $66,869,896            $104,414,375         $3,580,304       $926,211,046
                                                 ============            ============       ============       ============


                                                        Operating Segment Assets
                                                                       December 31, 2002
                                               -----------------------------------------------------------------------------
                                                    Life
                                                  Marketing                   Annuities                   Acquisitions
                                                 -----------                 -----------                 -------------

Investments and other assets                     $   523,211                  $54,071,804                  $600,231,727
Deferred policy acquisition costs                    583,131                    2,581,309                   100,007,935
                                                 -----------                  -----------                 -------------
Total assets                                     $ 1,106,342                  $56,653,113                  $700,239,662
                                                 ===========                  ===========                 =============


                                                                          Corporate
                                                    Asset                    and
                                                  Protection                Other            Adjustments           Total
                                                 ------------            ------------       ------------       ------------
Investments and other assets                      $78,120,621             $99,048,739         $3,723,088       $835,719,190
Deferred policy acquisition costs                   1,607,207                                                   104,779,582
                                                 ------------            ------------       ------------       ------------
                Total assets                      $79,727,828             $99,048,739         $3,723,088       $940,498,772
                                                 ============            =============      ============       ============`

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
March 31, 2003, and for the three months then ended, the Company had
share-owners equity of $108.1 million and net income of $6.1 million.

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

`Three Months Ended
                                                                          March 31
                                                                  ------------------------
                                                                    2003            2002
                                                                    ----            ----

Net income                                                       $3,380,044     $2,036,440
Change in net unrealized gains/losses
   on investments (net of income tax:
   three months: 2003 - $3,258,368; 2002 - $(1,543,940))          6,051,254     (2,867,318)
Reclassification adjustment for amounts
   included in net income (net of income tax:
   three months: 2003 - $(256,745); 2002 - $6,994)                 (476,812)        12,989
                                                                 -----------    -----------
   Comprehensive income                                          $8,954,486     $ (817,889)
                                                                 ===========    ===========`

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.

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 our 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.

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, 2003, the Company was involved in the businesses of
four of PLCs operating segments: Life Marketing, Annuities, Acquisitions,
and Asset Protection. 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 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, 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(a),
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.

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

`Three Months Ended
                                                           March 31
                                                                          --------------------------------
                                                                         2003                2002
                                                                               ----                ----

             Premiums and policy fees, net of reinsurance                 $  6,359,634        $  7,099,598
             Net investment income                                          10,132,301           8,665,770
             Realized investment losses                                        733,557             (19,983)
             Other income                                                         (568)              3,115
                                                                           -----------         -----------
                                                                           $17,224,924         $15,748,500
                                                                           ===========         ===========`

Premiums
and policy fees, net of reinsurance (premiums and policy fees)
decreased $0.7 million or 10.4% in the first three months of 2003 from the first
three months of 2002. 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 2002 or the first three months of 2003, therefore
decreases in older acquired policies resulted in a decrease of $0.7 million in
the first three months of 2003 as compared with the first three months of 2002.
Premiums and policy fees in the Life Marketing, Annuities and Asset Protection
segments were relatively unchanged in the first three months of 2003 as compared
to 2002.

Net
investment income in the first three months of 2003 increased by $1.5 million as
compared to the corresponding period of the preceding year primarily due to
increases in the average amount of invested assets. The percentage earned on
average cash and investments was 5.6% in the first quarter of 2003 compared to
6.7% in the first quarter of 2002. Investment returns have been negatively
affected by higher prepayment on mortgage-backed securities and mortgage loans,
and lower interest rates.

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 gains were approximately $0.7 million in the first three months of
2003. During the first three months of 2003, the Company recorded other than
temporary impairments on its investments of $0.3 million. Realized investment
gains were approximately $1.0 million in the first three months of 2003.

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.

The
Company reported an insignificant amount of other income in the first three
months of 2003 and 2002.

Management
evaluates the results of the Companys segments on a before-income-tax
basis as adjusted for certain items which management believes are not indicative
of the Companys core operations. Segment operating income (loss) excludes
net realized investment gains and losses and the related amortization of
deferred policy acquisition costs because fluctuations in these items are due to
changes in interest rates and other financial market factors instead of
mortality and morbidity. Also, segment operating income (loss) excludes any net
gains or losses on disposals of businesses, discontinued operations,
extraordinary items, the cumulative effect of changes in accounting principles, and any other
items, that, in each case, are neither normal nor recurring. Although the items
excluded from segment operating income (loss) may be significant components in
understanding and assessing the Companys overall financial performance,
management believes that segment operating income (loss) enhances an
investors understanding of the Companys results of operations by
highlighting the income (loss) attributable to the normal, recurring operations
of the insurance business (i.e., mortality and morbidity), consistent with
industry practice. However, the Companys segment income (loss) measures
may not be comparable to similarly titled measures reported by other companies.
Segment operating income (loss) should not be construed as a substitute for net
income (loss) determined in accordance with accounting principles generally
accepted in the United States of America (GAAP). Total income before
income tax is a GAAP measure to which the non-GAAP measure total
operating income may be compared. Unlike total operating income, total
income before income tax includes net realized investment gains and losses and
the related amortization of deferred policy acquisition costs.

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
                                                                                                        March 31
                                                                                               ---------------------------
                                                                                                   2003            2002
                                                                                                   ----            ----
Operating Income (Loss)1
     Life Marketing                                                                            $ (123,216)    $     50,700
     Annuities                                                                                     84,463         (206,587)
     Acquisitions                                                                               2,405,545        2,921,591
     Asset Protection                                                                             292,170          298,053
     Corporate and Other                                                                        1,792,856           87,419
                                                                                                ---------        ---------
     Total operating income                                                                     4,451,818        3,151,176
                                                                                                ---------        ---------

Realized Investment Gains (Losses)
     Annuities                                                                                                      65,354
     Unallocated Realized Investment Gains (Losses)                                               733,557          (85,337)
                                                                                                ---------        ---------
     Total                                                                                        733,557          (19,983)
                                                                                                ---------        ---------
Income (Loss) Before Income Tax
     Life Marketing                                                                              (123,216)          50,700
     Annuities                                                                                     84,463         (141,233)
     Asset Protection                                                                             292,170          298,053
     Acquisitions                                                                               2,405,545        2,921,591
     Corporate and Other                                                                        1,792,856           87,419
     Unallocated Realized Investment Gains (Losses)                                               733,557          (85,337)
                                                                                                ---------        ---------
     Total income before income tax                                                            $5,185,375       $3,131,193
                                                                                                =========        =========

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

The
Life Marketing segment had pretax operating losses of $0.1 million in the first
three months of 2003 and $0.1 million of operating income in the same period of
2002 primarily due to an increase in amortization of deferred policy acquisition costs.

The
Annuity segment had pretax operating income of $0.1 million in the first three
months of 2003 and $0.2 million of pretax operating losses in the same period of
2002, primarily due to an increase in net investment income on capital and a
decrease in amortization of deferred policy acquisition costs. The Annuities
segments future results may be negatively affected by a slow economy.
Volatile equity markets could negatively affect sales of variable annuities and
the fees the segment assesses on variable annuity contracts. Lower interest
rates could negatively affect sales of fixed annuities. In this segment, equity
market volatility may create uncertainty regarding the level of future
profitability in the variable annuity business and the related rate of
amortization of deferred policy acquisition costs. Also, beginning January 2003,
the Company is no longer marketing variable annuity products.

In
accordance with statutory accounting practices prescribed or permitted by
regulatory authorities (which require the assumption that equity markets will
significantly worsen), the Company reported GMDB related policy liabilities and
accruals of $0.2 million at March 31, 2003.

Pretax
operating income from the Acquisitions segment was $2.4 million in the first
three months of 2003 as compared to $2.9 million in the same period of 2002.
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 decrease in benefit and
settlement expenses and the decrease in deferred policy acquisition costs
partially offset the decrease in premiums and policy fees and the decrease in
investment income on invested assets allocated to the segment.

The
Asset Protection segments pretax operating income was $0.3 million in the
first three months of 2003, relatively unchanged from the same period of 2002.

The
Corporate and Other segment consists of net investment income and expenses not
identified with the preceding business segments. Pretax operating income from
this segment was $1.8 million in the first three months of 2003 as compared to
$0.1 million in the first three months of 2002.

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

`Three Months Ended
                                                                    March 31
                                                              ---------------------
                                                              2003            2002
                                                              ----            ----

         Effective Income Tax Rates                           34.8%           35.0%`

The effective
income tax rate for the full year of 2002 was 34.9%. Managements estimate
of the effective income tax rate for the full year of 2003 is approximately
35.0%.

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

`Three Months Ended
                                                       March 31
                                             -----------------------------
                                                 2003              2002
                                                 ----              ----

                                             $3,380,044         $2,036,440`

Compared
to the same period in 2002, net income in the first three months of 2003
increased $1.3 million, reflecting increases in the Annuities and Corporate and
Other segments, and larger unallocated realized gains, which were partially
offset by decreases in the Life Marketing, Acquisitions, and Asset Protection
segments.

With
respect to the unaudited condensed financial information of Protective Life and
Annuity Insurance Company for the three-month periods ended March 31, 2003 and
2002, 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 9, 2003, 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.

---

The
Companys President and Chief Financial Officer have, within the 90-day
period preceding the filing of the report, evaluated the Companys
disclosure controls and procedures and believe them to be operating effectively
to make known to them on a timely basis any material information required to be
included in the Companys periodic filings with the Securities and Exchange
Commission. There have been no significant changes in the internal controls, or
in other factors that could significantly affect internal controls, subsequent
to the date this evaluation was completed.

`(a)      Exhibit 99(a) - Safe Harbor for Forward-Looking Statements
                  Exhibit 99(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(c) - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002.`

`Protective Life and Annuity Insurance Company



Date:      May 15, 2003                                      /s/ Jerry W. DeFoor
                                                             Jerry W. DeFoor
                                                             Vice President and Controller
                                                             and Chief Accounting Officer
                                                             (Duly authorized officer)`

`Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, Wayne E. Stuenkel, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Protective Life and Annuity Insurance Company;

2.   Based on my knowledge,  this quarterly report does not contain any untrue statement of a material fact or omit to state a material
     fact necessary to make the statements  made, in light of the  circumstances  under which such statements were made, not misleading
     with respect to the period covered by this quarterly report;

3.   Based on my knowledge,  the financial  statements,  and other  financial  information  included in this quarterly  report,  fairly
     present in all material respects the financial  condition,  results of operations and cash flows of the registrant as of, and for,
     the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers and I are responsible for  establishing  and  maintaining  disclosure  controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including
              its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
              period in which this quarterly report is being prepared;


         b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
              the filing date of this quarterly report (the "Evaluation Date"); and


         c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures
              based on our evaluation as of the Evaluation Date;


5.   The  registrant's  other  certifying  officers and I have  disclosed,  based on our most recent  evaluation,  to the  registrant's
     auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

         a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the
              registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
              auditors any material weaknesses in internal controls; and



         b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the
              registrant's internal controls; and


6.   The  registrant's  other  certifying  officers and I have indicated in this quarterly report whether or not there were significant
     changes in internal controls or in other factors that could  significantly  affect internal controls subsequent to the date of our
     most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


Date:    May 15, 2003


                                                       /s/ Wayne E. Stuenkel
                                                     Title:   President and Chief Actuary`

`Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, Allen W. Ritchie, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Protective Life and Annuity Insurance Company;

2.   Based on my knowledge,  this quarterly report does not contain any untrue statement of a material fact or omit to state a material
     fact necessary to make the statements  made, in light of the  circumstances  under which such statements were made, not misleading
     with respect to the period covered by this quarterly report;

3.   Based on my knowledge,  the financial  statements,  and other  financial  information  included in this quarterly  report,  fairly
     present in all material respects the financial  condition,  results of operations and cash flows of the registrant as of, and for,
     the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers and I are responsible for  establishing  and  maintaining  disclosure  controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including
              its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
              period in which this quarterly report is being prepared;


         b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to
              the filing date of this quarterly report (the "Evaluation Date"); and


         c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures
              based on our evaluation as of the Evaluation Date;


5.   The  registrant's  other  certifying  officers and I have  disclosed,  based on our most recent  evaluation,  to the  registrant's
     auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

         a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the
              registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
              auditors any material weaknesses in internal controls; and



         b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the
              registrant's internal controls; and


6.   The  registrant's  other  certifying  officers and I have indicated in this quarterly report whether or not there were significant
     changes in internal controls or in other factors that could  significantly  affect internal controls subsequent to the date of our
     most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


Date:    May 15, 2003


                                                       /s/ Allen W. Ritchie
                                                     Title:   Executive Vice President and
                                                              Chief Financial Officer`