##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-K
 (Mark one)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    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 1-5955
 JEFFERSON-PILOT CORPORATION
  100 North Greene Street,North Carolina
    
    Greensboro, North Carolina 27401
    
    56-0896180(State or Other Jurisdiction of
Incorporation or Organization)
    
    (Address of Principal
Executive Offices)
    
    (I.R.S. Employer
Identification No.)
 Registrants Telephone Number, Including Area Code: 336-691-3000
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each ExchangeTitle of Each Class
    
    on Which RegisteredCommon Stock (Par Value $1.25)
    
    New York, Midwest and
Pacific Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None
 þ o
 o þ
 þ o
 o
 þ o o
 o þ




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##### 



Documents Incorporated by Reference
   TABLE OF CONTENTS
 PagePART IITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    5ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    13ITEM 2. PROPERTIES
    
    
    13ITEM 3. LEGAL PROCEEDINGS
    
    
    14ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
    
    
    14EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    14PART IIITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
    
    
    16ITEM 6. SELECTED FINANCIAL DATA
    
    
    18ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
    
    
    21ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK
    
    
    64ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    65ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    115ITEM 9A. CONTROLS AND PROCEDURES
    
    
    115ITEM 9B. OTHER INFORMATION
    
    
    115PART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    116ITEM 11. EXECUTIVE COMPENSATION
    
    
    116ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    116ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    117ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    118PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    119UndertakingsSignatures
    
    
    119List of Financial Statements and Financial Statement Schedules, followed by the Schedules
    
    
    F-1List and Index of Exhibits, followed by Exhibits including certifications
    
    
    E-1




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##### 



PART I
 Item 1. Business
 (a) General Development of Business
                1




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##### 



Proposed Merger.
  (b) Financial Information About Industry Segments
 Notes to
Consolidated Financial Statements
 (c) Narrative Description of Business
  Revenues by Segment*
 2005
    
    
    2004
    
    
    2003(In Millions)Individual Products
    
    $
    1,821
    
    
    $
    1,780
    
    
    $
    1,774Annuity and Investment Products
    
    
    732
    
    
    
    718
    
    
    
    694Benefit Partners
    
    
    1,279
    
    
    
    1,202
    
    
    
    820Communications
    
    
    247
    
    
    
    239
    
    
    
    214Corporate and Other
    
    
    141
    
    
    
    163
    
    
    
    71$
    4,220
    
    
    $
    4,102
    
    
    $
    3,573
 
 *
    
    Revenues include net investment income earned on
assets backing insurance liabilities and line
surplus for each reportable segment. Corporate and
Other revenues include $11, $41 and ($47) of
realized gains (losses) for 2005, 2004 and 2003.  2




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##### 



INSURANCE COMPANY SUBSIDIARIES
      Individual Products.
  Annuity and Investment Products.
 Benefit Partners.
 Other Information Regarding Insurance Company Subsidiaries
 Regulation.
  3




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##### 



Competition.
  Employees.
 COMMUNICATIONS
  Television Operations
  Radio Operations
  4




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##### 



JP Sports
  Other Information Regarding Communications Companies
 Competition.
 Employees.
 Federal Regulation.
  (d) Financial Information About Geographic Areas
  (e) Available Information
  Item 1A. Risk Factors
  5




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##### 



We are subject to operational risks that could lead to adverse effects on our operations and
operating results
    6




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##### 




    
    perceived adverse changes in product offerings available to clients or client
service standards, whether or not these changes do, in fact, occur;
    
    conditions imposed by regulators in connection with decisions whether to approve
the merger;
    
    potential charges to earnings resulting from the application of purchase accounting
to the transactions;
    
    the retention of existing clients, key portfolio managers, sales representatives
and wholesalers of each company; and
    
    retaining and integrating management and other key employees of the resulting
company.
    Changes in economic conditions could adversely affect our results or financial position
  Changes in interest rates or market prices of assets and liabilities could adversely affect our
results
 Market Risk Exposures
  7




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##### 



Defaults or downgrades of others could reduce our profitability or negatively affect the value of
our investments
  Ratings downgrades could adversely affect our life insurance subsidiaries or our
borrowing costs
  8




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##### 




    
    our ability to compete and sell our products;
    
    the return on the products we issue;
    
    the number of policies surrendered and cash value withdrawn; and
    
    relationships with creditors, agents, banks, wholesalers and other distributors of our
insurance subsidiaries products and services.
   Our parent company and insurance subsidiaries face liquidity risk
  Liquidity
 Our sales may be concentrated in certain products or distribution, increasing our risk from changes
that may occur
    9




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##### 




    
    our ability to adjust crediting rates;
    
    relatively high minimum rate guarantees;
    
    the difficulty of re-underwriting existing and additional covered lives; and
    
    unfavorable tax attributes of certain surrenders.
   Intense competition could negatively affect our ability to maintain or increase our profitability
   We face a risk of non-collectibility on reinsurance, which could adversely affect our results of
operations
  10




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##### 



Higher than anticipated mortality or morbidity could adversely affect our results
   Changes in federal tax laws could make some products less attractive to consumers
    Our businesses are heavily regulated and subject to legal and regulatory actions, and changes or
outcomes could reduce our profitability
  11




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##### 



12




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##### 



Our actual results may differ from estimates and judgments we make in financial reporting
 Critical Accounting Policies and Estimates Significant Accounting Policies .
 Our communications business faces a variety of risks that could adversely affect its results
     Item 1B. Unresolved Staff Comments
  Item 2. Properties
    13




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##### 



Item 3. Legal Proceedings
   Environmental Proceedings
 Item 4. Submission of Matters to a Vote of Securities Holders
  Executive Officers of the Registrant
    14




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##### 



15




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##### 



PART II
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
 (a)
    
    Market Information. JP common stock principally trades on the New York Stock
Exchange. Quarterly composite tape trading ranges have been:
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    52.49
    
    
    $
    47.17
    
    
    $
    55.08
    
    
    $
    48.97
    
    
    $
    40.93
    
    
    $
    35.75
    
    
    $
    53.00
    
    
    $
    45.23
    
    
    $
    49.67
    
    
    $
    41.00Second Quarter
    
    
    51.39
    
    
    
    47.11
    
    
    
    56.39
    
    
    
    47.40
    
    
    
    43.20
    
    
    
    38.34
    
    
    
    52.99
    
    
    
    45.07
    
    
    
    49.25
    
    
    
    44.07Third Quarter
    
    
    51.25
    
    
    
    49.00
    
    
    
    50.90
    
    
    
    46.66
    
    
    
    46.57
    
    
    
    41.21
    
    
    
    47.50
    
    
    
    36.75
    
    
    
    49.00
    
    
    
    38.00Fourth Quarter
    
    
    57.83
    
    
    
    50.59
    
    
    
    52.73
    
    
    
    46.00
    
    
    
    50.72
    
    
    
    44.55
    
    
    
    45.21
    
    
    
    36.35
    
    
    
    46.90
    
    
    
    41.15
 (b)
    
    Holders. As of March 1, 2006, our stock was owned by 8,006 shareholders of record, and
a much larger number of street name holders.(c)
    
    Dividends. See Item 6 for dividend information. Dividends to the Registrant from its
insurance subsidiaries are subject to state regulation, as more fully described in Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations.(d)
    
    Issuer Purchases of Equity Securities.
 Total Number
    
    Maximumof Shares
    
    Number ofPurchased as
    
    Shares thatTotal
    
    Average
    
    Part of
    
    May Yet BeNumber of
    
    Price
    
    Publicly
    
    PurchasedShares
    
    Paid
    
    Announced
    
    Under thePeriod
    
    Purchased
    
    per Share
    
    Plans
    
    PlansOctober 1, 2005 to October 31, 2005
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    895,500November 1, 2005 to November 30, 2005
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    895,500December 1, 2005 to December 31, 2005
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    
    895,500Total
    
    
    0
    
    
    $
    0.00
    
    
    
    0
   16




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##### 



1.
    
    A domestic Rabbi Trust buys shares with directors fee deferrals and with dividends
received on shares held in the Trust. This arrangement is disclosed in our proxy
statement. Trust purchases in the fourth quarter 2005 were: October, 611 shares, average
price $52.37; November, 2,732 shares, average price $54.36; and December, 556 shares,
average price $55.38.2.
    
    Under our stock option plans, an optionee may exercise options by certifying to the
Company that the optionee owns sufficient common shares of the Company to pay the exercise
price for the option shares being exercised. We then issue to the optionee common shares
equal to the spread (profit) on the exercise, less required withholding taxes if the
optionee so designates. There were no shares used to pay option exercise prices in fourth
quarter 2005.
 17




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##### 



Item 6. Selected Financial Data
 JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
REVENUE BY SOURCES
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Millions)Individual Products
    
    $
    1,821
    
    
    $
    1,780
    
    
    $
    1,774
    
    
    $
    1,737
    
    
    $
    1,682Annuity and Investment Products
    
    
    732
    
    
    
    718
    
    
    
    694
    
    
    
    686
    
    
    
    647Benefit Partners
    
    
    1,279
    
    
    
    1,202
    
    
    
    820
    
    
    
    698
    
    
    
    602Communications
    
    
    247
    
    
    
    239
    
    
    
    214
    
    
    
    208
    
    
    
    195Corporate and Other
    
    
    130
    
    
    
    122
    
    
    
    118
    
    
    
    99
    
    
    
    130Revenues before investment gains (losses) and cumulative
effect of change in accounting principle
    
    
    4,209
    
    
    
    4,061
    
    
    
    3,620
    
    
    
    3,428
    
    
    
    3,256Realized investment gains (losses)
    
    
    11
    
    
    
    41
    
    
    
    (47
    )
    
    
    (22
    )
    
    
    66Cumulative effect of change in accounting for derivative
instruments (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Total revenues
    
    $
    4,220
    
    
    $
    4,102
    
    
    $
    3,573
    
    
    $
    3,406
    
    
    $
    3,324
 NET
INCOME BY SOURCES
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Millions)Individual Products
    
    $
    316
    
    
    $
    302
    
    
    $
    309
    
    
    $
    293
    
    
    $
    295Annuity and Investment Products
    
    
    83
    
    
    
    76
    
    
    
    85
    
    
    
    80
    
    
    
    75Benefit Partners
    
    
    87
    
    
    
    71
    
    
    
    51
    
    
    
    48
    
    
    
    44Communications
    
    
    58
    
    
    
    54
    
    
    
    46
    
    
    
    40
    
    
    
    34Corporate and Other
    
    
    28
    
    
    
    33
    
    
    
    32
    
    
    
    4
    
    
    
    20Total reportable segment results (3)
    
    
    572
    
    
    
    536
    
    
    
    523
    
    
    
    465
    
    
    
    468Realized investment gains (losses), net of taxes
    
    
    7
    
    
    
    27
    
    
    
    (31
    )
    
    
    (15
    )
    
    
    44Income before cumulative effects of changes in accounting
principles
    
    
    579
    
    
    
    563
    
    
    
    492
    
    
    
    450
    
    
    
    512Cumulative effect of change in accounting for derivative
instruments, net of taxes (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Cumulative effect of change in accounting for long-duration
contracts, net of taxes (2)
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492
    
    
    $
    450
    
    
    $
    513
 
 (1)
    
    Effective January 1, 2001, the Company adopted SFAS
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended.(2)
    
    Effective January 1, 2004, the Company adopted SOP 03-1, Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts.(3)
    
    Reportable segment results is a non-GAAP measure. See discussion in the MD&A under the section heading, Results by
Business Segment. Effective January 1, 2002, the Company ceased amortization of goodwill as a result of the adoption
of a new accounting standard (See Note 2).
 18




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##### 



SUMMARY OF SELECTED FINANCIAL DATA
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Income before cumulative effects of changes in accounting
principles
    
    $
    579
    
    
    $
    563
    
    
    $
    492
    
    
    $
    450
    
    
    $
    512Cumulative effect of change in accounting for derivative
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Cumulative effect of change in accounting for long-duration
contracts, net of taxes
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492
    
    
    $
    450
    
    
    $
    513Per Share Information  BasicIncome before cumulative effects of changes in accounting
principles
    
    $
    4.28
    
    
    $
    4.08
    
    
    $
    3.47
    
    
    $
    3.07
    
    
    $
    3.37Cumulative effect of change in accounting for derivative
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Cumulative effect of change in accounting for long-duration
contracts, net of taxes
    
    
    
    
    
    
    (0.12
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    4.28
    
    
    $
    3.96
    
    
    $
    3.47
    
    
    $
    3.07
    
    
    $
    3.38Per Share Information  Assuming DilutionIncome
before cumulative effects of changes in accounting principles
    
    $
    4.25
    
    
    $
    4.04
    
    
    $
    3.44
    
    
    $
    3.04
    
    
    $
    3.33Cumulative effect of change in accounting for derivative
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Cumulative effect of change in accounting for long-duration
contracts, net of taxes
    
    
    
    
    
    
    (0.12
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    4.25
    
    
    $
    3.92
    
    
    $
    3.44
    
    
    $
    3.04
    
    
    $
    3.34Cash dividends declared on common stock
    
    $
    225
    
    
    $
    208
    
    
    $
    187
    
    
    $
    175
    
    
    $
    166Cash dividends declared per common share
    
    $
    1.67
    
    
    $
    1.52
    
    
    $
    1.32
    
    
    $
    1.20
    
    
    $
    1.12Cash dividends paid per common shareFirst quarter
    
    $
    0.38
    
    
    $
    0.33
    
    
    $
    0.30
    
    
    $
    0.28
    
    
    $
    0.25Second quarter
    
    
    0.42
    
    
    
    0.38
    
    
    
    0.33
    
    
    
    0.30
    
    
    
    0.28Third quarter
    
    
    0.42
    
    
    
    0.38
    
    
    
    0.33
    
    
    
    0.30
    
    
    
    0.28Fourth quarter
    
    
    0.42
    
    
    
    0.38
    
    
    
    0.33
    
    
    
    0.30
    
    
    
    0.28Total
    
    $
    1.64
    
    
    $
    1.47
    
    
    $
    1.29
    
    
    $
    1.18
    
    
    $
    1.09Average common shares outstanding (in thousands)
    
    
    135,067
    
    
    
    137,999
    
    
    
    141,795
    
    
    
    146,847
    
    
    
    151,915Total assets
    
    $
    36,078
    
    
    $
    35,105
    
    
    $
    32,696
    
    
    $
    30,619
    
    
    $
    29,005Debt and junior subordinated debentures
    
    $
    1,169
    
    
    $
    1,097
    
    
    $
    963
    
    
    $
    762
    
    
    $
    756Stockholders equity
    
    $
    3,917
    
    
    $
    3,934
    
    
    $
    3,806
    
    
    $
    3,540
    
    
    $
    3,391Stockholders equity per share of common stock
    
    $
    29.15
    
    
    $
    28.75
    
    
    $
    27.07
    
    
    $
    24.79
    
    
    $
    22.61
 19




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Millions)Life Insurance In Force (Excludes Annuities)Traditional
    
    $
    37,424
    
    
    $
    37,649
    
    
    $
    40,583
    
    
    $
    41,570
    
    
    $
    41,185Universal Life
    
    
    102,703
    
    
    
    98,751
    
    
    
    96,369
    
    
    
    91,675
    
    
    
    89,054Variable Universal Life
    
    
    28,538
    
    
    
    29,331
    
    
    
    29,547
    
    
    
    30,327
    
    
    
    28,650Benefit Partners
    
    
    155,772
    
    
    
    152,180
    
    
    
    100,432
    
    
    
    90,627
    
    
    
    53,763Total Life Insurance In Force
    
    $
    324,437
    
    
    $
    317,911
    
    
    $
    266,931
    
    
    $
    254,199
    
    
    $
    212,652Life Premiums on a SFAS 60 BasisFirst Year Life (Note)
    
    $
    795
    
    
    $
    757
    
    
    $
    834
    
    
    $
    821
    
    
    $
    918Renewal and Other Life
    
    
    1,252
    
    
    
    1,228
    
    
    
    1,106
    
    
    
    1,059
    
    
    
    1,061Life Insurance
    
    
    2,047
    
    
    
    1,985
    
    
    
    1,940
    
    
    
    1,880
    
    
    
    1,979Accident and Health (including premium equivalents)
    
    
    807
    
    
    
    742
    
    
    
    533
    
    
    
    445
    
    
    
    382Total Life Insurance Premiums
    
    $
    2,854
    
    
    $
    2,727
    
    
    $
    2,473
    
    
    $
    2,325
    
    
    $
    2,361Annuity Premiums on a SFAS 60 BasisFixed Annuity
    
    $
    1,100
    
    
    $
    1,265
    
    
    $
    815
    
    
    $
    1,051
    
    
    $
    1,497Variable Annuity (including separate accounts)
    
    
    5
    
    
    
    7
    
    
    
    11
    
    
    
    26
    
    
    
    59Total Annuity Premiums
    
    $
    1,105
    
    
    $
    1,272
    
    
    $
    826
    
    
    $
    1,077
    
    
    $
    1,556Investment Product Sales
    
    $
    5,329
    
    
    $
    4,780
    
    
    $
    3,258
    
    
    $
    2,904
    
    
    $
    2,803Communications Broadcast Cash Flow
    
    $
    111
    
    
    $
    108
    
    
    $
    92
    
    
    $
    85
    
    
    $
    74
 
  20




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##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Company Profile
 Proposed Merger
   Overview
    21




---



##### 



Individual Products
   Annuity and Investment Product (AIP)
 22




---



##### 



Benefit Partners
   Communications
  Corporate and Other
 23




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##### 



Segment Revenues
  Year Ended2005
    
    2004
    
    2003Individual Products
    
    
    43
    %
    
    
    44
    %
    
    
    50
    %AIP
    
    
    18
    %
    
    
    18
    %
    
    
    19
    %Benefit Partners
    
    
    30
    %
    
    
    29
    %
    
    
    22
    %Communications
    
    
    6
    %
    
    
    6
    %
    
    
    6
    %Corporate and Other
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
 Critical Accounting Policies and Estimates
 General
  DAC, VOBA and Unearned Revenue Reserves
   24




---



##### 



25




---



##### 



One-time Effect on DAC, VOBA,Unearned Revenue Reserves andSecondary Guarantee Benefit ReservesFavorable
    
    UnfavorableQuantitative Change in Significant Assumptions
    
    Change
    
    ChangeEstimated mortality improving (degrading)
0.5% per year for 10 years from the current
estimate
    
    $
    44.4
    
    
    $
    (46.4
    )Estimated interest spread increasing
(decreasing) 2.5 basis points per year for 10
years from the current assumed spread
    
    
    41.5
    
    
    
    (45.6
    )Estimated policy lapse rates decreasing
(increasing) 25% immediately and then
increasing (decreasing) 2.5% per year for 10
years
    
    
    36.0
    
    
    
    (36.1
    )Estimated long-term rate of return from VUL
assets increasing (decreasing) 1.25% using
mean reversion techniques
    
    
    10.9
    
    
    
    (11.2
    )
    One-time Effect on DAC and VOBAAmortizationFavorable
    
    UnfavorableQuantitative Change in Significant Assumptions
    
    Change
    
    ChangeEstimated interest spread increasing
(decreasing) 2.5 basis points per year for 10
years from the current assumed spread
    
    $
    9.6
    
    
    $
    (11.2
    )Estimated policy lapse rates decreasing
(increasing) 50% immediately and then
increasing (decreasing) 5.0% per year for 10
years
    
    
    29.9
    
    
    
    (31.2
    )
   26




---



##### 



Investments
     Policy Liabilities
   27




---



##### 



Pension Plans
   Goodwill
 Goodwill and
Other Intangible Assets,
 Litigation
  28




---



##### 



Results of Operations
  Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Consolidated Summary of IncomeIncome before realized gains
(losses) and cumulative effect of
change in accounting principle
    
    $
    571.4
    
    
    $
    536.2
    
    
    $
    522.5
    
    
    
    6.6
    %
    
    
    2.6
    %Realized investment gains (losses),
net of taxes
    
    
    7.2
    
    
    
    26.5
    
    
    
    (30.9
    )
    
    
    (72.8
    )
    
    
    185.8Income before cumulative effect of
change in accounting principle
    
    
    578.6
    
    
    
    562.7
    
    
    
    491.6
    
    
    
    2.8
    
    
    
    14.5Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    (16.6
    )
    
    
    
    
    
    
    100.0
    
    
    
    (100.0
    )Net income
    
    $
    578.6
    
    
    $
    546.1
    
    
    $
    491.6
    
    
    
    6.0
    %
    
    
    11.1
    %Consolidated Earnings Per ShareAssuming dilution:Income before realized gains
(losses) and cumulative effect of
change in accounting principle
    
    $
    4.20
    
    
    $
    3.85
    
    
    $
    3.66
    
    
    
    9.1
    %
    
    
    5.2
    %Realized investment gains (losses),
net of taxes
    
    
    0.05
    
    
    
    0.19
    
    
    
    (0.22
    )
    
    
    (73.7
    )
    
    
    186.4Income before cumulative effect of
change in accounting principle
    
    
    4.25
    
    
    
    4.04
    
    
    
    3.44
    
    
    
    5.2
    
    
    
    17.4Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    (0.12
    )
    
    
    
    
    
    
    100.0
    
    
    
    (100.0
    )Net income
    
    $
    4.25
    
    
    $
    3.92
    
    
    $
    3.44
    
    
    
    8.4
    %
    
    
    14.0
    %
 2005
    
    2004
    
    2003Average number of shares
outstanding  assuming
dilution
    
    
    136,167,843
    
    
    
    139,213,034
    
    
    
    142,867,215
  29




---



##### 



Results by Business Segment
   30




---



##### 



Results by Reportable Segment
 Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Individual Products
    
    $
    316.5
    
    
    $
    302.0
    
    
    $
    309.4
    
    
    
    4.8
    %
    
    
    (2.4
    )%AIP
    
    
    82.9
    
    
    
    76.4
    
    
    
    85.0
    
    
    
    8.5
    
    
    
    (10.1
    )Benefit Partners
    
    
    86.7
    
    
    
    70.7
    
    
    
    50.6
    
    
    
    22.6
    
    
    
    39.7Communications
    
    
    57.6
    
    
    
    54.4
    
    
    
    45.4
    
    
    
    5.9
    
    
    
    19.8Corporate and Other
    
    
    27.7
    
    
    
    32.7
    
    
    
    32.1
    
    
    
    (15.3
    )
    
    
    1.9Total reportable segment results
    
    
    571.4
    
    
    
    536.2
    
    
    
    522.5
    
    
    
    6.6
    
    
    
    2.6Realized investment gains
(losses), net of taxes
    
    
    7.2
    
    
    
    26.5
    
    
    
    (30.9
    )
    
    
    (72.8
    )
    
    
    185.8Income before cumulative effect
of change in accounting
principle
    
    
    578.6
    
    
    
    562.7
    
    
    
    491.6
    
    
    
    2.8
    
    
    
    14.5Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    (16.6
    )
    
    
    
    
    
    
    100.0
    
    
    
    (100.0
    )Net income
    
    $
    578.6
    
    
    $
    546.1
    
    
    $
    491.6
    
    
    
    6.0
    %
    
    
    11.1
    %
 Segment Assets
  2005
    
    
    2004Individual Products
    
    $
    19,672
    
    
    $
    18,776AIP
    
    
    10,794
    
    
    
    10,504Benefit Partners
    
    
    1,937
    
    
    
    1,839Communications
    
    
    224
    
    
    
    223Corporate and Other
    
    
    3,451
    
    
    
    3,763Total assets
    
    $
    36,078
    
    
    $
    35,105
 31




---



##### 



Individual Products
  (1)
 Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003UL-Type Products:Net investment income
    
    $
    751.6
    
    
    $
    746.6
    
    
    $
    749.2
    
    
    
    0.7
    %
    
    
    (0.3
    )%Interest credited to policyholders
    
    
    (509.0
    )
    
    
    (507.1
    )
    
    
    (515.4
    )
    
    
    (0.4
    )
    
    
    1.6Interest margin
    
    
    242.6
    
    
    
    239.5
    
    
    
    233.8
    
    
    
    1.3
    
    
    
    2.4Product charge revenue:Cost of insurance charges
    
    
    583.4
    
    
    
    539.1
    
    
    
    511.9
    
    
    
    8.2
    
    
    
    5.3Expense charges
    
    
    162.2
    
    
    
    148.8
    
    
    
    141.6
    
    
    
    9.0
    
    
    
    5.1Surrender charges
    
    
    33.0
    
    
    
    40.7
    
    
    
    34.9
    
    
    
    (18.9
    )
    
    
    16.6Total product charge revenue
    
    
    778.6
    
    
    
    728.6
    
    
    
    688.4
    
    
    
    6.9
    
    
    
    5.8Death benefits and other insurance benefits
    
    
    (350.4
    )
    
    
    (312.8
    )
    
    
    (272.4
    )
    
    
    (12.0
    )
    
    
    (14.8
    )Expenses excluding amortization of DAC and VOBA
    
    
    (83.6
    )
    
    
    (97.0
    )
    
    
    (96.4
    )
    
    
    13.8
    
    
    
    (0.6
    )Amortization of DAC and VOBA
    
    
    (193.8
    )
    
    
    (190.3
    )
    
    
    (179.0
    )
    
    
    (1.8
    )
    
    
    (6.3
    )Miscellaneous income (expense)
    
    
    (0.7
    )
    
    
    (0.8
    )
    
    
    (2.1
    )
    
    
    12.5
    
    
    
    61.9UL-type product income before taxes
    
    
    392.7
    
    
    
    367.2
    
    
    
    372.3
    
    
    
    6.9
    
    
    
    (1.4
    )Traditional Products:Premiums and other considerations
    
    
    145.6
    
    
    
    152.3
    
    
    
    173.0
    
    
    
    (4.4
    )
    
    
    (12.0
    )Net investment income
    
    
    145.7
    
    
    
    153.7
    
    
    
    165.2
    
    
    
    (5.2
    )
    
    
    (7.0
    )Benefits
    
    
    (164.0
    )
    
    
    (172.8
    )
    
    
    (197.8
    )
    
    
    5.1
    
    
    
    12.6Expenses excluding amortization of DAC and VOBA
    
    
    (28.3
    )
    
    
    (25.3
    )
    
    
    (24.1
    )
    
    
    (11.9
    )
    
    
    (5.0
    )Amortization of DAC and VOBA
    
    
    (15.6
    )
    
    
    (16.7
    )
    
    
    (16.3
    )
    
    
    6.6
    
    
    
    (2.5
    )Traditional product income before taxes
    
    
    83.4
    
    
    
    91.2
    
    
    
    100.0
    
    
    
    (8.6
    )
    
    
    (8.8
    )Reportable segment results before income
taxes (1)
    
    
    476.1
    
    
    
    458.4
    
    
    
    472.3
    
    
    
    3.9
    
    
    
    (2.9
    )Income taxes
    
    
    (159.6
    )
    
    
    (156.4
    )
    
    
    (162.9
    )
    
    
    (2.0
    )
    
    
    4.0Reportable segment results (1)
    
    $
    316.5
    
    
    $
    302.0
    
    
    $
    309.4
    
    
    
    4.8
    %
    
    
    (2.4
    )%
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 for further
discussion. 32




---



##### 



Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Annualized life
insurance premium
sales:Individual Markets
excluding Community
Banks and BOLI
    
    $
    269
    
    
    $
    211
    
    
    $
    216
    
    
    
    27.5
    %
    
    
    (2.3
    )%Community Banks and BOLI
    
    $
    3
    
    
    $
    9
    
    
    $
    9
    
    
    
    (66.7
    )%
    
    
    
    %Average UL policyholder
fund balances
    
    $
    11,592
    
    
    $
    11,131
    
    
    $
    10,585
    
    
    
    4.1
    %
    
    
    5.2
    %Average VUL separate
account assets
    
    
    1,715
    
    
    
    1,535
    
    
    
    1,233
    
    
    
    11.7
    %
    
    
    24.5
    %$
    13,307
    
    
    $
    12,666
    
    
    $
    11,818
    
    
    
    5.1
    %
    
    
    7.2
    %Average face amount of
insurance in force:Total
    
    $
    166,861
    
    
    $
    165,762
    
    
    $
    164,963
    
    
    
    0.7
    %
    
    
    0.5
    %UL-type contracts
    
    $
    129,466
    
    
    $
    126,876
    
    
    $
    123,848
    
    
    
    2.0
    %
    
    
    2.4
    %Average assets
    
    $
    19,197
    
    
    $
    18,292
    
    
    $
    17,128
    
    
    
    4.9
    %
    
    
    6.8
    %
    33




---



##### 



34




---



##### 



Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Commissions
    
    $
    341.3
    
    
    $
    276.7
    
    
    $
    295.5
    
    
    
    (23.3
    )%
    
    
    6.4
    %General and
administrative 
acquisition related
    
    
    91.1
    
    
    
    79.0
    
    
    
    80.9
    
    
    
    (15.3
    )
    
    
    2.3General and
administrative 
maintenance related
    
    
    42.9
    
    
    
    43.8
    
    
    
    42.3
    
    
    
    2.1
    
    
    
    (3.5
    )Taxes, licenses and fees
    
    
    45.5
    
    
    
    44.3
    
    
    
    50.3
    
    
    
    (2.7
    )
    
    
    11.9Total commissions and expenses incurred
    
    
    520.8
    
    
    
    443.8
    
    
    
    469.0
    
    
    
    (17.4
    )
    
    
    5.4Less commissions and expenses
capitalized
    
    
    (408.9
    )
    
    
    (321.5
    )
    
    
    (348.5
    )
    
    
    27.2
    
    
    
    (7.7
    )Expenses excluding amortization of DAC
and VOBA
    
    
    111.9
    
    
    
    122.3
    
    
    
    120.5
    
    
    
    8.5
    
    
    
    (1.5
    )Amortization of DAC and VOBA
    
    
    209.4
    
    
    
    207.0
    
    
    
    195.3
    
    
    
    (1.2
    )
    
    
    (6.0
    )Total expense
    
    $
    321.3
    
    
    $
    329.3
    
    
    $
    315.8
    
    
    
    2.4
    %
    
    
    (4.3
    )%
 35




---



##### 



Annuity and Investment Products
  36




---



##### 



(1)
 Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Investment product charges and premiums
    
    $
    12.5
    
    
    $
    12.2
    
    
    $
    8.8
    
    
    
    2.5
    %
    
    
    38.6
    %Net investment income
    
    
    594.9
    
    
    
    592.9
    
    
    
    586.6
    
    
    
    0.3
    
    
    
    1.1Broker-dealer concessions and other
    
    
    124.8
    
    
    
    112.6
    
    
    
    98.3
    
    
    
    10.8
    
    
    
    14.5Total revenue
    
    
    732.2
    
    
    
    717.7
    
    
    
    693.7
    
    
    
    2.0
    
    
    
    3.5Policy benefits (including interest credited)
    
    
    403.7
    
    
    
    426.1
    
    
    
    416.6
    
    
    
    5.3
    
    
    
    (2.3
    )Insurance expenses
    
    
    83.4
    
    
    
    68.0
    
    
    
    55.8
    
    
    
    (22.6
    )
    
    
    (21.9
    )Broker-dealer expenses
    
    
    119.2
    
    
    
    107.2
    
    
    
    90.7
    
    
    
    (11.2
    )
    
    
    (18.2
    )Total benefits and expenses
    
    
    606.3
    
    
    
    601.3
    
    
    
    563.1
    
    
    
    (0.8
    )
    
    
    (6.8
    )Reportable segment results before income
taxes (1)
    
    
    125.9
    
    
    
    116.4
    
    
    
    130.6
    
    
    
    8.2
    
    
    
    (10.9
    )Income taxes
    
    
    43.0
    
    
    
    40.0
    
    
    
    45.6
    
    
    
    (7.5
    )
    
    
    12.3Reportable segment results (1)
    
    $
    82.9
    
    
    $
    76.4
    
    
    $
    85.0
    
    
    
    8.5
    %
    
    
    (10.1
    )%
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 for further
discussion.  Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Fixed annuity premium sales
    
    $
    1,028
    
    
    $
    1,217
    
    
    $
    756
    
    
    
    (15.5
    )%
    
    
    61.0
    %Variable annuity premium sales
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    (100.0
    )
    
    
    (50.0
    )$
    1,028
    
    
    $
    1,218
    
    
    $
    758
    
    
    
    (15.6
    )%
    
    
    60.7
    %Funding agreement issuance
    
    $
    300
    
    
    $
    
    
    
    $
    
    
    
    
    100.0
    %Investment product sales
    
    $
    5,329
    
    
    $
    4,780
    
    
    $
    3,258
    
    
    
    11.5
    %
    
    
    46.7
    %Average fixed policyholder fund
balances
    
    $
    9,467
    
    
    $
    9,169
    
    
    $
    8,400
    
    
    
    3.3
    %
    
    
    9.2
    %Average separate account
policyholder fund balances
    
    
    290
    
    
    
    332
    
    
    
    340
    
    
    
    (12.7
    )
    
    
    (2.4
    )Average funding agreement balances
    
    
    188
    
    
    
    
    
    
    
    
    
    
    
    100.0
    
    
    
    $
    9,945
    
    
    $
    9,501
    
    
    $
    8,740
    
    
    
    4.7
    %
    
    
    8.7
    %Average assets
    
    $
    10,683
    
    
    $
    10,360
    
    
    $
    9,537
    
    
    
    3.1
    %
    
    
    8.6
    %Effective investment spreads for
fixed annuities and funding
agreements
    
    
    1.96
    %
    
    
    1.76
    %
    
    
    1.90
    %Effective investment spreads for
fixed annuities and funding
agreements excluding gross SFAS
133 impact
    
    
    1.90
    %
    
    
    1.73
    %
    
    
    1.88
    %Fixed annuity surrenders as a
percentage of beginning fund
balances
    
    
    16.2
    %
    
    
    12.3
    %
    
    
    8.4
    %
 37




---



##### 



® Accounting for Derivative Instruments and Hedging Activities
   38




---



##### 



39




---



##### 



Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Insurance companies:Commissions
    
    $
    65.2
    
    
    $
    76.2
    
    
    $
    36.7
    
    
    
    14.4
    %
    
    
    (107.6
    )%General and administrative
 acquisition related
    
    
    17.5
    
    
    
    14.8
    
    
    
    12.6
    
    
    
    (18.2
    )
    
    
    (17.5
    )General and administrative
 maintenance related
    
    
    8.6
    
    
    
    6.5
    
    
    
    5.6
    
    
    
    (32.3
    )
    
    
    (16.1
    )Taxes, licenses and fees
    
    
    2.8
    
    
    
    2.8
    
    
    
    1.9
    
    
    
    
    
    
    
    (47.4
    )Gross commissions and
expenses incurred
    
    
    94.1
    
    
    
    100.3
    
    
    
    56.8
    
    
    
    6.2
    
    
    
    (76.6
    )Less commissions and
expenses capitalized
    
    
    (76.1
    )
    
    
    (85.4
    )
    
    
    (47.2
    )
    
    
    (10.9
    )
    
    
    80.9Amortization of DAC and VOBA
    
    
    65.4
    
    
    
    53.1
    
    
    
    46.2
    
    
    
    (23.2
    )
    
    
    (14.9
    )Net expense-insurance companies
    
    
    83.4
    
    
    
    68.0
    
    
    
    55.8
    
    
    
    (22.6
    )
    
    
    (21.9
    )Broker/Dealer:Commissions
    
    
    106.5
    
    
    
    95.4
    
    
    
    80.5
    
    
    
    (11.6
    )
    
    
    (18.5
    )Other
    
    
    12.7
    
    
    
    11.8
    
    
    
    10.2
    
    
    
    (7.6
    )
    
    
    (15.7
    )Net expense  broker/dealer
    
    
    119.2
    
    
    
    107.2
    
    
    
    90.7
    
    
    
    (11.2
    )
    
    
    (18.2
    )Net expense
    
    $
    202.6
    
    
    $
    175.2
    
    
    $
    146.5
    
    
    
    (15.6
    )%
    
    
    (19.6
    )%
   40




---



##### 



Benefit Partners
  (1)
 Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Premiums and other considerations
    
    $
    1,182.0
    
    
    $
    1,113.2
    
    
    $
    756.0
    
    
    
    6.2
    %
    
    
    47.2
    %Net investment income
    
    
    96.8
    
    
    
    88.9
    
    
    
    63.8
    
    
    
    8.9
    
    
    
    39.3Total revenue
    
    
    1,278.8
    
    
    
    1,202.1
    
    
    
    819.8
    
    
    
    6.4
    
    
    
    46.6Policy benefits
    
    
    861.3
    
    
    
    840.7
    
    
    
    576.3
    
    
    
    (2.5
    )
    
    
    (45.9
    )Expenses
    
    
    284.1
    
    
    
    252.6
    
    
    
    165.6
    
    
    
    (12.5
    )
    
    
    (52.5
    )Total benefits and expenses
    
    
    1,145.4
    
    
    
    1,093.3
    
    
    
    741.9
    
    
    
    (4.8
    )
    
    
    (47.4
    )Reportable segment results before income
taxes (1)
    
    
    133.4
    
    
    
    108.8
    
    
    
    77.9
    
    
    
    22.6
    
    
    
    39.7Income taxes
    
    
    46.7
    
    
    
    38.1
    
    
    
    27.3
    
    
    
    (22.6
    )
    
    
    (39.6
    )Reportable segment results (1)
    
    $
    86.7
    
    
    $
    70.7
    
    
    $
    50.6
    
    
    
    22.6
    
    
    
    39.7
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 for further
discussion. 41




---



##### 



Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Life, Disability and Dental annualized
sales
    
    $
    261
    
    
    $
    203
    
    
    $
    200
    
    
    
    28.6
    %
    
    
    1.5
    %Premiums and other considerations:Life
    
    $
    426.9
    
    
    $
    423.0
    
    
    $
    264.1
    
    
    
    0.9
    %
    
    
    60.2
    %Disability
    
    
    487.4
    
    
    
    428.6
    
    
    
    276.5
    
    
    
    13.7
    
    
    
    55.0Dental
    
    
    130.6
    
    
    
    133.8
    
    
    
    103.8
    
    
    
    (2.4
    )
    
    
    28.9Other
    
    
    137.1
    
    
    
    127.8
    
    
    
    111.6
    
    
    
    7.3
    
    
    
    14.5Total
    
    $
    1,182.0
    
    
    $
    1,113.2
    
    
    $
    756.0
    
    
    
    6.2
    %
    
    
    47.2
    %Reportable segment results:Life
    
    $
    38.8
    
    
    $
    30.4
    
    
    $
    17.7
    
    
    
    27.6
    %
    
    
    71.8
    %Disability
    
    
    38.6
    
    
    
    35.6
    
    
    
    28.2
    
    
    
    8.4
    
    
    
    26.2Dental
    
    
    6.1
    
    
    
    4.0
    
    
    
    5.2
    
    
    
    52.5
    
    
    
    (23.1
    )Other
    
    
    3.2
    
    
    
    0.7
    
    
    
    (0.5
    )
    
    
    357.1
    
    
    
    240.0Total
    
    $
    86.7
    
    
    $
    70.7
    
    
    $
    50.6
    
    
    
    22.6
    %
    
    
    39.7
    %Loss ratios:Life
    
    
    69.7
    %
    
    
    73.5
    %
    
    
    77.5
    %Disability
    
    
    71.7
    
    
    
    72.9
    
    
    
    69.2Dental
    
    
    73.5
    
    
    
    76.8
    
    
    
    75.6Combined
    
    
    71.1
    %
    
    
    73.7
    %
    
    
    73.7
    %Gross general and administrative
expenses as a % of premium income
    
    
    10.1
    %
    
    
    10.1
    %
    
    
    10.0
    %Total expenses as a % of premium income
    
    
    24.1
    %
    
    
    22.7
    %
    
    
    21.9
    %Average assets
    
    $
    1,867
    
    
    $
    1,683
    
    
    $
    988
    
    
    
    10.9
    %
    
    
    70.3
    %
    42




---



##### 



Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Commissions
    
    $
    135.0
    
    
    $
    125.1
    
    
    $
    85.3
    
    
    
    (7.9
    )%
    
    
    (46.7
    )%General and administrative
    
    
    118.8
    
    
    
    112.2
    
    
    
    75.6
    
    
    
    (5.9
    )
    
    
    (48.4
    )Taxes, licenses and fees
    
    
    30.7
    
    
    
    26.0
    
    
    
    19.2
    
    
    
    (18.1
    )
    
    
    (35.4
    )Total commissions and expenses incurred
    
    
    284.5
    
    
    
    263.3
    
    
    
    180.1
    
    
    
    (8.1
    )
    
    
    (46.2
    )Less commissions and expenses
capitalized
    
    
    (43.6
    )
    
    
    (38.1
    )
    
    
    (114.4
    )
    
    
    14.4
    
    
    
    (66.7
    )Amortization of DAC
    
    
    43.2
    
    
    
    27.4
    
    
    
    99.9
    
    
    
    (57.7
    )
    
    
    72.6Total expense
    
    $
    284.1
    
    
    $
    252.6
    
    
    $
    165.6
    
    
    
    (12.5
    )%
    
    
    (52.5
    )%
  ® ®
 43




---



##### 



Communications
 (1)
 Favorable/(Unfavorable)2005 vs.
    
    
    2004 vs.2005
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Communications revenues (net)
    
    $
    246.6
    
    
    $
    241.1
    
    
    $
    216.7
    
    
    
    2.3
    %
    
    
    11.3
    %Cost of sales
    
    
    50.3
    
    
    
    47.8
    
    
    
    45.8
    
    
    
    (5.2
    )
    
    
    (4.4
    )Operating expenses
    
    
    85.5
    
    
    
    85.2
    
    
    
    79.3
    
    
    
    (0.4
    )
    
    
    (7.4
    )Broadcast cash flow
    
    
    110.8
    
    
    
    108.1
    
    
    
    91.6
    
    
    
    2.5
    
    
    
    18.0Depreciation and amortization
    
    
    8.3
    
    
    
    8.8
    
    
    
    8.4
    
    
    
    5.7
    
    
    
    (4.8
    )Corporate general and administrative
expenses
    
    
    5.8
    
    
    
    7.3
    
    
    
    6.4
    
    
    
    20.5
    
    
    
    (14.1
    )Net interest expense
    
    
    2.0
    
    
    
    2.1
    
    
    
    2.2
    
    
    
    4.8
    
    
    
    4.5Reportable segment results before
income taxes(1)
    
    
    94.7
    
    
    
    89.9
    
    
    
    74.6
    
    
    
    5.3
    
    
    
    20.5Income taxes
    
    
    37.1
    
    
    
    35.5
    
    
    
    29.2
    
    
    
    (4.5
    )
    
    
    (21.6
    )Reportable segment results(1)
    
    $
    57.6
    
    
    $
    54.4
    
    
    $
    45.4
    
    
    
    5.9
    %
    
    
    19.8
    %
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 for further
discussion.     44




---



##### 



Corporate and Other
  (1)
 2005
    
    
    2004
    
    
    2003Earnings on investments and other income
    
    $
    103.0
    
    
    $
    94.9
    
    
    $
    93.9Interest expense on debt
    
    
    (60.1
    )
    
    
    (48.1
    )
    
    
    (33.8
    )Operating expenses
    
    
    (17.5
    )
    
    
    (20.7
    )
    
    
    (31.2
    )Income taxes
    
    
    2.3
    
    
    
    6.6
    
    
    
    3.2Reportable segment results(1)
    
    
    27.7
    
    
    
    32.7
    
    
    
    32.1Realized investment gains (losses), net of taxes
    
    
    7.2
    
    
    
    26.5
    
    
    
    (30.9
    )Reportable segment results, including realized
gains (losses)(1)
    
    $
    34.9
    
    
    $
    59.2
    
    
    $
    1.2
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 for further
discussion.   45




---



##### 



2005
    
    
    2004
    
    
    2003Stock gains
    
    $
    19.3
    
    
    $
    95.6
    
    
    $
    13.8Stock losses
    
    
    (0.1
    )
    
    
    (3.6
    )
    
    
    Stock losses from writedowns
    
    
    (1.1
    )
    
    
    (1.1
    )
    
    
    Bond gains
    
    
    35.4
    
    
    
    36.8
    
    
    
    58.0Bond losses from sales and calls
    
    
    (19.7
    )
    
    
    (36.4
    )
    
    
    (34.0
    )Bond losses from writedowns
    
    
    (35.0
    )
    
    
    (58.5
    )
    
    
    (94.8
    )Other gains and losses (net)
    
    
    14.0
    
    
    
    6.2
    
    
    
    (4.1
    )Total pretax gains (losses)
    
    
    12.8
    
    
    
    39.0
    
    
    
    (61.1
    )DAC amortization
    
    
    (1.7
    )
    
    
    1.8
    
    
    
    14.4Income taxes
    
    
    (3.9
    )
    
    
    (14.3
    )
    
    
    15.8Realized investment gains (losses),
net of taxes
    
    $
    7.2
    
    
    $
    26.5
    
    
    $
    (30.9
    )
    2005 vs.2005
    
    
    2004
    
    
    2004Parent company, passive investment companies
and Corporate line assets of insurance
subsidiaries
    
    $
    1,267
    
    
    $
    1,195
    
    
    
    6.0
    %Unrealized gain on fixed interest investments
    
    
    274
    
    
    
    629
    
    
    
    (56.4
    )%Coinsurance receivables on acquired blocks
    
    
    875
    
    
    
    929
    
    
    
    (5.8
    )%Employee benefit plan assets
    
    
    396
    
    
    
    397
    
    
    
    (0.3
    )%Goodwill arising from insurance acquisitions
    
    
    270
    
    
    
    270
    
    
    
    Other
    
    
    369
    
    
    
    343
    
    
    
    7.6
    %Total
    
    $
    3,451
    
    
    $
    3,763
    
    
    
    (8.3
    )%
   Capital Resources
 ®
 46




---



##### 



Agency
    
    RatingFitch
    
    F1+Standard & Poors
    
    A1+
     ®
 47




---



##### 



JP Life
    
    JPFIC
    
    JPLAA.M. Best
    
    
    A++
    
    
    
    A++
    
    
    
    A++Standard & Poors
    
    AAA
    
    AAA
    
    AAAFitch Ratings
    
    AA+
    
    AA+
    
    AA+
  48




---



##### 



Liquidity
        49




---



##### 



Contractual Obligations
  Estimated Payments Due by Period20112006
    
    2007-2008
    
    2009-2010
    
    and After
    
    TotalCommercial paper borrowings
    
    $
    261
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    261Reverse repurchase agreements
    
    
    453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    453EXLs
    
    
    15
    
    
    
    29
    
    
    
    30
    
    
    
    303
    
    
    
    37710-year term notes
    
    
    14
    
    
    
    29
    
    
    
    29
    
    
    
    344
    
    
    
    416Junior subordinated debentures
    
    
    25
    
    
    
    335
    
    
    
    
    
    
    
    
    
    
    
    360Purchase obligations
    
    
    67
    
    
    
    122
    
    
    
    88
    
    
    
    49
    
    
    
    326Total, excluding policy liabilities
    
    
    835
    
    
    
    515
    
    
    
    147
    
    
    
    696
    
    
    
    2,193Policy liabilities, discounted
    
    
    3,440
    
    
    
    5,506
    
    
    
    4,323
    
    
    
    18,614
    
    
    
    31,883Total contractual obligations
    
    $
    4,275
    
    
    $
    6,021
    
    
    $
    4,470
    
    
    $
    19,310
    
    
    $
    34,076
   50




---



##### 



Off Balance Sheet Arrangements and Commitments
  Investments
 Portfolio Description
  51




---



##### 



December 31, 2005
    
    
    December 31, 2004Publicly-issued bonds
    
    $
    16,997
    
    
    
    60.4
    %
    
    $
    16,871
    
    
    
    61.0
    %Privately-placed bonds
    
    
    5,172
    
    
    
    18.4
    
    
    
    5,210
    
    
    
    18.8Total bonds
    
    
    22,169
    
    
    
    78.8
    
    
    
    22,081
    
    
    
    79.8Redeemable preferred stock
    
    
    11
    
    
    
    
    
    
    
    13
    
    
    
    0.1Total debt securities
    
    
    22,180
    
    
    
    78.8
    
    
    
    22,094
    
    
    
    79.9Mortgage loans on real property
    
    
    3,982
    
    
    
    14.2
    
    
    
    3,667
    
    
    
    13.3Common stock
    
    
    618
    
    
    
    2.2
    
    
    
    647
    
    
    
    2.3Non-redeemable preferred stock
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    Policy loans
    
    
    833
    
    
    
    3.0
    
    
    
    839
    
    
    
    3.0Real estate
    
    
    124
    
    
    
    0.4
    
    
    
    125
    
    
    
    0.5Other
    
    
    252
    
    
    
    0.9
    
    
    
    193
    
    
    
    0.7Cash and equivalents
    
    
    150
    
    
    
    0.5
    
    
    
    87
    
    
    
    0.3Total
    
    $
    28,141
    
    
    
    100.0
    %
    
    $
    27,655
    
    
    
    100.0
    %
 52




---



##### 



Unrealized Gains and Losses
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueAFS, carried at fair valueUS Treasury obligations and direct
obligations of US Government
agencies
    
    $
    241
    
    
    $
    7
    
    
    $
    (1
    )
    
    $
    247
    
    
    $
    247Federal agency mortgage-backed
securities (including collateralized
mortgage obligations)
    
    
    1,225
    
    
    
    33
    
    
    
    (10
    )
    
    
    1,248
    
    
    
    1,248Obligations of states and political
subdivisions
    
    
    62
    
    
    
    5
    
    
    
    
    
    
    
    67
    
    
    
    67Corporate obligations
    
    
    16,994
    
    
    
    542
    
    
    
    (204
    )
    
    
    17,332
    
    
    
    17,332Corporate private-labeled
mortgage-backed securities
(including collateralized mortgage
obligations)
    
    
    1,297
    
    
    
    21
    
    
    
    (17
    )
    
    
    1,301
    
    
    
    1,301Redeemable preferred stock
    
    
    9
    
    
    
    2
    
    
    
    
    
    
    
    11
    
    
    
    11Subtotal, debt securities
    
    
    19,828
    
    
    
    610
    
    
    
    (232
    )
    
    
    20,206
    
    
    
    20,206Non-redeemable preferred stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    2Common stock
    
    
    191
    
    
    
    428
    
    
    
    (1
    )
    
    
    618
    
    
    
    618Securities available-for-sale
    
    
    20,020
    
    
    
    1,039
    
    
    
    (233
    )
    
    
    20,826
    
    
    
    20,826HTM, carried at amortized costObligations of state and political
subdivisions
    
    
    5
    
    
    
    1
    
    
    
    
    
    
    
    6
    
    
    
    5Corporate obligations
    
    
    1,969
    
    
    
    103
    
    
    
    (13
    )
    
    
    2,059
    
    
    
    1,969Debt securities held-to-maturity
    
    
    1,974
    
    
    
    104
    
    
    
    (13
    )
    
    
    2,065
    
    
    
    1,974Total AFS and HTM securities
    
    $
    21,994
    
    
    $
    1,143
    
    
    $
    (246
    )
    
    $
    22,891
    
    
    $
    22,800
  53




---



##### 



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueIndustrialsBasic Materials
    
    $
    1,027
    
    
    $
    25
    
    
    $
    (13
    )
    
    $
    1,039
    
    
    $
    1,035Capital Goods
    
    
    1,371
    
    
    
    48
    
    
    
    (13
    )
    
    
    1,406
    
    
    
    1,395Communications
    
    
    1,358
    
    
    
    37
    
    
    
    (26
    )
    
    
    1,369
    
    
    
    1,360Consumer Cyclical
    
    
    1,128
    
    
    
    33
    
    
    
    (29
    )
    
    
    1,132
    
    
    
    1,122Consumer Non-Cyclical
    
    
    2,283
    
    
    
    83
    
    
    
    (21
    )
    
    
    2,345
    
    
    
    2,337Energy
    
    
    1,347
    
    
    
    48
    
    
    
    (8
    )
    
    
    1,387
    
    
    
    1,384Technology
    
    
    400
    
    
    
    4
    
    
    
    (16
    )
    
    
    388
    
    
    
    387Transportation
    
    
    855
    
    
    
    43
    
    
    
    (9
    )
    
    
    889
    
    
    
    887Other Industrials
    
    
    717
    
    
    
    21
    
    
    
    (5
    )
    
    
    733
    
    
    
    731Utilities
    
    
    4,006
    
    
    
    179
    
    
    
    (30
    )
    
    
    4,155
    
    
    
    4,128FinancialsBanks
    
    
    2,578
    
    
    
    78
    
    
    
    (27
    )
    
    
    2,629
    
    
    
    2,621Insurance
    
    
    782
    
    
    
    19
    
    
    
    (7
    )
    
    
    794
    
    
    
    791Other Financials
    
    
    1,428
    
    
    
    42
    
    
    
    (14
    )
    
    
    1,456
    
    
    
    1,453Mortgage-backed Securities(including Commercial
Mortgage-backed
Securities)
    
    
    2,522
    
    
    
    54
    
    
    
    (27
    )
    
    
    2,549
    
    
    
    2,549Total
    
    $
    21,802
    
    
    $
    714
    
    
    $
    (245
    )
    
    $
    22,271
    
    
    $
    22,180
 Credit Risk Management
  S&P or
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofSVO
    
    Equivalent
    
    Amortized
    
    
    Fair
    
    
    Carrying
    
    
    CarryingRating
    
    Designation
    
    Cost
    
    
    Value
    
    
    Value
    
    
    Value1
    
    AAA
    
    $
    2,997
    
    
    $
    3,033
    
    
    $
    3,029
    
    
    
    13.7
    %1
    
    AA
    
    
    1,962
    
    
    
    2,017
    
    
    
    2,010
    
    
    
    9.11
    
    A
    
    
    7,687
    
    
    
    7,911
    
    
    
    7,867
    
    
    
    35.42
    
    BBB
    
    
    7,822
    
    
    
    7,973
    
    
    
    7,936
    
    
    
    35.83
    
    BB
    
    
    875
    
    
    
    883
    
    
    
    884
    
    
    
    4.04
    
    B
    
    
    424
    
    
    
    418
    
    
    
    418
    
    
    
    1.95
    
    CCC and lower
    
    
    26
    
    
    
    26
    
    
    
    26
    
    
    
    0.16
    
    In or near default
    
    
    9
    
    
    
    10
    
    
    
    10
    
    
    
    0.0Total
    
    $
    21,802
    
    
    $
    22,271
    
    
    $
    22,180
    
    
    
    100.0
    %
 54




---



##### 



CarryingCreditor
    
    Sector
    
    ValueWachovia
    
    Financial Institutions
    
    $
    145HSBC Holdings PLC
    
    Financial Institutions
    
    
    108JP Morgan Chase & Co
    
    Financial Institutions
    
    
    106General Electric Co
    
    Capital Goods
    
    
    104Cargill Incorporated
    
    Consumer, Noncyclical
    
    
    104Goldman Sachs Group
    
    Financial Institutions
    
    
    103Weingarten Realty Investors
    
    Financial Institutions
    
    
    102Citigroup Inc
    
    Financial Institutions
    
    
    102Wells Fargo & Co
    
    Financial Institutions
    
    
    101BB&T Corp
    
    Financial Institutions
    
    
    100
   Amortized
    
    Fair
    
    Gross Unrealized
    
    CarryingCreditor
    
    Sector
    
    Cost
    
    Value
    
    Gain/(Loss)
    
    ValueEl Paso Corp
    
    Utilities
    
    $
    48
    
    
    $
    48
    
    
    $
    
    
    
    $
    48Ahold, Royal
    
    Consumer, NonCyclical
    
    
    43
    
    
    
    46
    
    
    
    3
    
    
    
    46General Motors Corp
    
    Consumer, Cyclical
    
    
    52
    
    
    
    41
    
    
    
    (11
    )
    
    
    41Ford Motor
    
    Consumer, Cyclical
    
    
    44
    
    
    
    38
    
    
    
    (6
    )
    
    
    38Kerr-McGee Corp
    
    Energy
    
    
    36
    
    
    
    38
    
    
    
    2
    
    
    
    38Nova Chem. Ltd/Nova
    
    Basic Materials
    
    
    36
    
    
    
    36
    
    
    
    
    
    
    
    36Rite Aid Corp
    
    Consumer, Cyclical
    
    
    33
    
    
    
    33
    
    
    
    
    
    
    
    33Homer City Funding LLC
    
    Utilities
    
    
    24
    
    
    
    27
    
    
    
    3
    
    
    
    27Williams Cos Inc
    
    Utilities
    
    
    26
    
    
    
    27
    
    
    
    1
    
    
    
    27Qwest Communications Intl
    
    Communications
    
    
    25
    
    
    
    27
    
    
    
    2
    
    
    
    27
   55




---



##### 



Impairment Review
  
    
    current fair value of the security compared to amortized cost;
    
    length of time the fair value was below amortized cost;
    
    industry factors or conditions related to a geographic area that are negatively
affecting the security;
    
    downgrades by a rating agency;
    
    past due interest or principal payments or other violation of covenants; and
    
    deterioration of the overall financial condition of the specific issuer.
   
    
    fundamental analysis of the liquidity and financial condition of the specific issuer;
    
    underlying valuation of assets specifically pledged to support the credit;
    
    time period in which the fair value has been significantly below amortized cost;
    
    industry sector or geographic area applicable to the specific issuer; and
    
    our ability and intent to retain the investment for a sufficient time to recover its value.
   56




---



##### 



GrossAmortized
    
    
    
    
    
    UnrealizedCost
    
    Fair Value
    
    Losses
    
    Carrying ValueDue in one year or less
    
    $
    46
    
    
    $
    43
    
    
    $
    (3
    )
    
    $
    44Due after one year through five years
    
    
    2,105
    
    
    
    2,058
    
    
    
    (47
    )
    
    
    2,061Due after five years through ten years
    
    
    5,287
    
    
    
    5,162
    
    
    
    (125
    )
    
    
    5,169Due after ten years through twenty years
    
    
    1,278
    
    
    
    1,246
    
    
    
    (32
    )
    
    
    1,247Due after twenty years
    
    
    1,020
    
    
    
    984
    
    
    
    (36
    )
    
    
    985Amounts not due at a single maturity date
    
    
    104
    
    
    
    102
    
    
    
    (2
    )
    
    
    102Subtotal
    
    
    9,840
    
    
    
    9,595
    
    
    
    (245
    )
    
    
    9,608Redeemable preferred stocks
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    3Total
    
    $
    9,843
    
    
    $
    9,598
    
    
    $
    (245
    )
    
    $
    9,611
  Gross
    
    
    % of GrossSVO
    
    S&P or Equivalent
    
    Amortized
    
    
    
    
    
    
    % of
    
    
    Unrealized
    
    
    Unrealized
    
    
    CarryingRating
    
    Designation
    
    Cost
    
    
    Fair Value
    
    
    Fair Value
    
    
    Losses
    
    
    Losses
    
    
    Value1
    
    AAA/AA/A
    
    $
    5,709
    
    
    $
    5,585
    
    
    
    58.2
    %
    
    $
    (124
    )
    
    
    50.6
    %
    
    $
    5,5892
    
    BBB
    
    
    3,729
    
    
    
    3,620
    
    
    
    37.7
    
    
    
    (109
    )
    
    
    44.5
    
    
    
    3,6283
    
    BB
    
    
    272
    
    
    
    262
    
    
    
    2.7
    
    
    
    (10
    )
    
    
    4.1
    
    
    
    2634
    
    B
    
    
    126
    
    
    
    124
    
    
    
    1.3
    
    
    
    (2
    )
    
    
    0.8
    
    
    
    1245
    
    CCC and lower
    
    
    7
    
    
    
    7
    
    
    
    0.1
    
    
    
    
    
    
    
    0.0
    
    
    
    76
    
    In or near default
    
    
    
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    Total
    
    $
    9,843
    
    
    $
    9,598
    
    
    
    100.0
    %
    
    $
    (245
    )
    
    
    100.0
    %
    
    $
    9,611
   Gross
    
    
    % of GrossFair
    
    
    Unrealized
    
    
    Unrealized
    
    
    CarryingValue
    
    
    Losses
    
    
    Losses
    
    
    ValueMore than 1 year
    
    $
    1,369
    
    
    $
    (93
    )
    
    
    38.0
    %
    
    $
    1,3396 months  1 year
    
    
    1,022
    
    
    
    (44
    )
    
    
    18.0
    
    
    
    1,026Less than 6 months
    
    
    7,207
    
    
    
    (108
    )
    
    
    44.0
    
    
    
    7,246Total
    
    $
    9,598
    
    
    $
    (245
    )
    
    
    100.0
    %
    
    $
    9,611
   57




---



##### 



Realized
Losses  Write-Downs and Sales
     Mortgage-backed Securities
  2005
    
    
    2004Federal agency issued mortgage-backed securities
    
    $
    1,248
    
    
    $
    1,670Corporate private-labeled mortgage-backed securities
    
    
    1,301
    
    
    
    688Total
    
    $
    2,549
    
    
    $
    2,358
   58




---



##### 



Mortgage Loans
  Derivative Instruments
 ®
  Market Risk Exposures
   59




---



##### 



60




---



##### 



Estimated Incremental Single YearGain/(Loss) Based on:Change in Interest Rate
    
    Graded Quarterly Shift
    
    Instantaneous Shift+300 basis points
    
    $
    (11
    )
    
    $
    (16
    )+200 basis points
    
    
    (8
    )
    
    
    (12
    )+100 basis points
    
    
    (4
    )
    
    
    (6
    ) 100 basis points
    
    
    3
    
    
    
    2
   61




---



##### 



®
 Hypothetical Change inFair Value from10% Market DeclineBankAmerica common stock
    
    $
    (38
    )Other equity securities
    
    
    (24
    )Total change in fair values
    
    $
    (62
    )
  External Trends and Forward Looking Information
    62




---



##### 



Regulatory and Legal Environment
    Environmental Liabilities
  Accounting Pronouncements
  Forward Looking Information
    63




---



##### 



Item 7A. Quantitative and Qualitative Disclosures about Market Risk
  64




---



##### 



Item 8. Financial Statements and Supplementary Data
 March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2005
    
    
    2005
    
    
    2005
    
    
    2005(In Millions Except Share Information)Revenues, excluding realized investment gains
    
    $
    1,032
    
    
    $
    1,058
    
    
    $
    1,046
    
    
    $
    1,073Realized investment gains (losses)
    
    
    5
    
    
    
    5
    
    
    
    (7
    )
    
    
    8Total revenue
    
    
    1,037
    
    
    
    1,063
    
    
    
    1,039
    
    
    
    1,081Benefits and expenses
    
    
    794
    
    
    
    858
    
    
    
    844
    
    
    
    857Income taxes
    
    
    82
    
    
    
    68
    
    
    
    64
    
    
    
    74Income before cumulative effect of change in accounting
principle
    
    
    161
    
    
    
    137
    
    
    
    131
    
    
    
    150Cumulative effect of change in accounting for
long-duration contracts, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    161
    
    
    $
    137
    
    
    $
    131
    
    
    $
    150Per share
    
    $
    1.18
    
    
    $
    1.01
    
    
    $
    0.97
    
    
    $
    1.12Per share  assuming dilution
    
    $
    1.17
    
    
    $
    1.00
    
    
    $
    0.97
    
    
    $
    1.11
 RestatedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2004
    
    
    2004
    
    
    2004
    
    
    2004(In Millions Except Share Information)Revenues, excluding realized investment gains
    
    $
    961
    
    
    $
    1,037
    
    
    $
    999
    
    
    $
    1,064Realized investment gains
    
    
    24
    
    
    
    10
    
    
    
    3
    
    
    
    4Total revenue
    
    
    985
    
    
    
    1,047
    
    
    
    1,002
    
    
    
    1,068Benefits and expenses
    
    
    770
    
    
    
    836
    
    
    
    800
    
    
    
    856Income taxes
    
    
    74
    
    
    
    69
    
    
    
    68
    
    
    
    66Income before cumulative effect of change in accounting
principle
    
    
    141
    
    
    
    142
    
    
    
    134
    
    
    
    146Cumulative effect of change in accounting for
long-duration contracts, net of taxes
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    124
    
    
    $
    142
    
    
    $
    134
    
    
    $
    146Per share
    
    $
    0.88
    
    
    $
    1.03
    
    
    $
    0.98
    
    
    $
    1.07Per share  assuming dilution
    
    $
    0.87
    
    
    $
    1.02
    
    
    $
    0.97
    
    
    $
    1.06
 65




---



##### 



REPORT OF MANAGEMENT ON THE CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENTS ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING
    Internal Control 
Integrated Framework.
  /s/ Dennis R. Glass

Dennis R. GlassPresident andChief Executive Officer/s/ Theresa M. Stone

Theresa M. StoneExecutive Vice President andChief Financial Officer
 66




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Report of Management on the
Consolidated Financial Statements and Managements Assessment of Internal Controls Over Financial
Reporting
      67




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 
 68




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSInvestments:Debt securities available-for-sale, at fair value (amortized cost $19,828 and $18,816)
    
    $
    20,206
    
    
    $
    19,725Debt securities held-to-maturity, at amortized cost (fair value $2,065 and $2,514)
    
    
    1,974
    
    
    
    2,369Equity securities available-for-sale, at fair value (cost $192 and $201)
    
    
    620
    
    
    
    650Mortgage loans on real estate
    
    
    3,982
    
    
    
    3,667Policy loans
    
    
    833
    
    
    
    839Real estate
    
    
    124
    
    
    
    125Other investments
    
    
    252
    
    
    
    193Total investments
    
    
    27,991
    
    
    
    27,568Cash and cash equivalents
    
    
    150
    
    
    
    87Accrued investment income
    
    
    345
    
    
    
    342Due from reinsurers
    
    
    1,318
    
    
    
    1,341Deferred policy acquisition costs and value of business acquired
    
    
    2,822
    
    
    
    2,430Goodwill
    
    
    312
    
    
    
    312Other assets
    
    
    673
    
    
    
    652Assets held in separate accounts
    
    
    2,467
    
    
    
    2,373$
    36,078
    
    
    $
    35,105LIABILITIES AND STOCKHOLDERS EQUITYPolicy liabilities:Future policy benefits
    
    $
    3,148
    
    
    $
    3,096Policyholder contract deposits
    
    
    22,156
    
    
    
    21,694Policy and contract claims
    
    
    223
    
    
    
    232Funding agreements
    
    
    300
    
    
    
    Other
    
    
    1,265
    
    
    
    1,144Total policy liabilities
    
    
    27,092
    
    
    
    26,166Commercial paper and revolving credit borrowings
    
    
    260
    
    
    
    188Securities sold under repurchase agreements
    
    
    452
    
    
    
    468Notes payable
    
    
    600
    
    
    
    600Junior subordinated debentures
    
    
    309
    
    
    
    309Currently payable (recoverable) income taxes
    
    
    (17
    )
    
    
    31Deferred income tax liabilities
    
    
    555
    
    
    
    589Accounts payable, accruals and other liabilities
    
    
    443
    
    
    
    447Liabilities related to separate accounts
    
    
    2,467
    
    
    
    2,373Total liabilities
    
    
    32,161
    
    
    
    31,171Commitments and contingent liabilitiesStockholders equity:Common stock and paid in capital, par value $1.25 per share: authorized 350,000,000
shares; issued and outstanding 2005-134,378,258 shares; 2004-136,819,214 shares
    
    
    186
    
    
    
    180Retained earnings
    
    
    3,293
    
    
    
    3,071Accumulated other comprehensive income
    
    
    438
    
    
    
    683Total stockholders equity
    
    
    3,917
    
    
    
    3,934$
    36,078
    
    
    $
    35,105
  69




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 Year Ended December 31,2005
    
    
    2004
    
    
    2003RevenuePremiums and other considerations
    
    $
    1,356
    
    
    $
    1,293
    
    
    $
    951Universal life and investment product charges
    
    
    783
    
    
    
    732
    
    
    
    691Net investment income
    
    
    1,691
    
    
    
    1,672
    
    
    
    1,657Realized investment gains (losses)
    
    
    11
    
    
    
    41
    
    
    
    (47
    )Communications sales
    
    
    246
    
    
    
    241
    
    
    
    216Broker-dealer concessions and other
    
    
    133
    
    
    
    123
    
    
    
    105Total revenue
    
    
    4,220
    
    
    
    4,102
    
    
    
    3,573Benefits and ExpensesInsurance and annuity benefits
    
    
    2,317
    
    
    
    2,287
    
    
    
    2,005Insurance commissions, net of deferrals
    
    
    263
    
    
    
    250
    
    
    
    108General and administrative expenses, net of deferrals
    
    
    177
    
    
    
    184
    
    
    
    149Insurance taxes, licenses and fees
    
    
    82
    
    
    
    73
    
    
    
    73Amortization of policy acquisition costs and value of
business acquired
    
    
    318
    
    
    
    287
    
    
    
    341Interest expense
    
    
    60
    
    
    
    48
    
    
    
    34Communications operations
    
    
    136
    
    
    
    133
    
    
    
    125Total benefits and expenses
    
    
    3,353
    
    
    
    3,262
    
    
    
    2,835Income before income taxes and cumulative effect of
change in accounting principle
    
    
    867
    
    
    
    840
    
    
    
    738Income taxes
    
    
    288
    
    
    
    277
    
    
    
    246Income before cumulative effect of change in
accounting principle
    
    
    579
    
    
    
    563
    
    
    
    492Cumulative effect of change in accounting for long-
duration contracts, net of taxes
    
    
    
    
    
    
    (17
    )
    
    
    Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492Per Share Information  BasicIncome before cumulative effect of change in
accounting principle
    
    $
    4.28
    
    
    $
    4.08
    
    
    $
    3.47Cumulative effect of change in accounting for long-
duration contracts, net of taxes
    
    
    
    
    
    
    (0.12
    )
    
    
    Net income
    
    $
    4.28
    
    
    $
    3.96
    
    
    $
    3.47Per Share Information  Assuming DilutionIncome before cumulative effect of change in
accounting principle
    
    $
    4.25
    
    
    $
    4.04
    
    
    $
    3.44Cumulative effect of change in accounting for long-
duration contracts, net of taxes
    
    
    
    
    
    
    (0.12
    )
    
    
    Net income
    
    $
    4.25
    
    
    $
    3.92
    
    
    $
    3.44
  70




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In Millions, Except Share Information)
 Common
    
    
    
    
    
    
    AccumulatedStock and
    
    
    
    
    
    
    Other
    
    
    TotalPaid in
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersCapital
    
    
    Earnings
    
    
    Income
    
    
    EquityBalance, January 1, 2003
    
    $
    180
    
    
    $
    2,750
    
    
    $
    610
    
    
    $
    3,540Net income
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    492Change in fair value of derivative financial
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Unrealized gain on available-for-sale securities,
net of taxes
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    78Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    565Common dividends declared $1.32 per share
    
    
    
    
    
    
    (187
    )
    
    
    
    
    
    
    (187
    )Common stock issued
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    43Common stock reacquired
    
    
    (47
    )
    
    
    (108
    )
    
    
    
    
    
    
    (155
    )Balance, December 31, 2003
    
    
    176
    
    
    
    2,947
    
    
    
    683
    
    
    
    3,806Net income
    
    
    
    
    
    
    546
    
    
    
    
    
    
    
    546Change in fair value of derivative financial
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Minimum pension liability, net of taxes
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Unrealized gain on available-for-sale securities,
net of taxes
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    546Common dividends declared $1.52 per share
    
    
    
    
    
    
    (208
    )
    
    
    
    
    
    
    (208
    )Common stock issued
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    64Common stock reacquired
    
    
    (60
    )
    
    
    (214
    )
    
    
    
    
    
    
    (274
    )Balance, December 31, 2004
    
    
    180
    
    
    
    3,071
    
    
    
    683
    
    
    
    3,934Net income
    
    
    
    
    
    
    579
    
    
    
    
    
    
    
    579Change in fair value of derivative financial
instruments, net of taxes
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )Minimum pension liability, net of taxes
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Unrealized loss on available-for-sale securities,
net of taxes
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    (237
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    334Common dividends declared $1.67 per share
    
    
    
    
    
    
    (225
    )
    
    
    
    
    
    
    (225
    )Common stock issued
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    30Common stock reacquired
    
    
    (24
    )
    
    
    (132
    )
    
    
    
    
    
    
    (156
    )Balance, December 31, 2005
    
    $
    186
    
    
    $
    3,293
    
    
    $
    438
    
    
    $
    3,917
  71




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Cash Flows from Operating ActivitiesNet income
    
    $
    579
    
    
    $
    546
    
    
    $
    492Adjustments to reconcile net income to net cash provided by operating activities:Change in policy liabilities other than deposits
    
    
    168
    
    
    
    251
    
    
    
    121Credits to (deductions from) policyholder accounts, net
    
    
    (43
    )
    
    
    78
    
    
    
    96Deferral of policy acquisition costs and sales inducements, net of amortization
    
    
    (271
    )
    
    
    (233
    )
    
    
    (221
    )Change in receivables and asset accruals
    
    
    (43
    )
    
    
    (24
    )
    
    
    (40
    )Change in payables and expense accruals
    
    
    40
    
    
    
    123
    
    
    
    55Realized investment losses (gains)
    
    
    (11
    )
    
    
    (41
    )
    
    
    47Depreciation and amortization (accretion)
    
    
    39
    
    
    
    24
    
    
    
    (33
    )Amortization (accretion) of value of business acquired, net
    
    
    52
    
    
    
    (3
    )
    
    
    52Group coinsurance assumed
    
    
    
    
    
    
    329
    
    
    
    Other
    
    
    (34
    )
    
    
    (59
    )
    
    
    (32
    )Net cash provided by operating activities
    
    
    476
    
    
    
    991
    
    
    
    537Cash Flows from Investing ActivitiesSecurities available-for-sale:Sales
    
    
    1,576
    
    
    
    1,422
    
    
    
    1,370Maturities, calls and redemptions
    
    
    1,408
    
    
    
    1,716
    
    
    
    3,392Purchases
    
    
    (4,001
    )
    
    
    (4,994
    )
    
    
    (6,242
    )Securities held-to-maturity:Sales
    
    
    3
    
    
    
    39
    
    
    
    31Maturities, calls and redemptions
    
    
    398
    
    
    
    361
    
    
    
    527Purchases
    
    
    
    
    
    
    (7
    )
    
    
    (299
    )Repayments of mortgage loans
    
    
    691
    
    
    
    406
    
    
    
    205Mortgage loans originated
    
    
    (1,006
    )
    
    
    (587
    )
    
    
    (382
    )(Increase) decrease in policy loans, net
    
    
    9
    
    
    
    (11
    )
    
    
    7Purchase of radio station assets
    
    
    
    
    
    
    (18
    )
    
    
    Other investing activities, net
    
    
    (57
    )
    
    
    (113
    )
    
    
    (29
    )Net cash used in investing activities
    
    
    (979
    )
    
    
    (1,786
    )
    
    
    (1,420
    )Cash Flows from Financing ActivitiesPolicyholder contract deposits
    
    
    2,850
    
    
    
    2,906
    
    
    
    2,525Withdrawals of policyholder contract deposits
    
    
    (2,294
    )
    
    
    (1,884
    )
    
    
    (1,444
    )Funding agreements issuance
    
    
    300
    
    
    
    
    
    
    
    Borrowings of notes payable
    
    
    
    
    
    
    600
    
    
    
    Borrowings under short-term credit facilities
    
    
    5,109
    
    
    
    5,545
    
    
    
    5,178Repayments under short-term credit facilities
    
    
    (5,037
    )
    
    
    (6,011
    )
    
    
    (4,977
    )Net proceeds (payments) from securities sold under repurchase agreements
    
    
    (16
    )
    
    
    67
    
    
    
    (98
    )Cash dividends paid
    
    
    (220
    )
    
    
    (203
    )
    
    
    (184
    )Common stock transactions, net
    
    
    (126
    )
    
    
    (210
    )
    
    
    (112
    )Net cash provided by financing activities
    
    
    566
    
    
    
    810
    
    
    
    888Net increase in cash and cash equivalents
    
    
    63
    
    
    
    15
    
    
    
    5Cash and cash equivalents at beginning of period
    
    
    87
    
    
    
    72
    
    
    
    67Cash and cash equivalents at end of period
    
    $
    150
    
    
    $
    87
    
    
    $
    72Supplemental Cash Flow InformationIncome taxes paid
    
    $
    219
    
    
    $
    83
    
    
    $
    236Interest paid
    
    $
    68
    
    
    $
    46
    
    
    $
    37
  72




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts In Millions, Except Share Information)
 N ote 1. Nature of Operations
 Nature of Operations
   N ote 2. S ignificant Accounting Policies
 Basis of Presentation
   First Quarter Earnings
  73




---



##### 



Principles of Consolidation
   Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51
 Use of Estimates
  Earnings Per Share
  Debt and Equity Securities
  74




---



##### 



Mortgage and Policy Loans
  Real Estate and Other Investments
 ®
  Derivative Financial Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities
 75




---



##### 



Cash and Cash Equivalents
  Reinsurance Balances and Transactions
  Deferred Policy Acquisition Costs and Value of Business Acquired
      76




---



##### 



Goodwill
  Separate Accounts
  Film and Program Rights
  77




---



##### 



Property and Equipment
  Deferred Sales Inducements
  Future Policy Benefits and Other Policy Liabilities
   Policyholder Contract Deposits
  Policy and Contract Claims
  78




---



##### 



Funding Agreements
  Recognition of Revenue
     Recognition of Benefits and Expenses
  Income Taxes
  Stock-Based Compensation
 Accounting for Stock Issued to Employees
 79




---



##### 



Accounting for Stock-Based
Compensation
  Year Ended December 31,2005
    
    2004
    
    2003Net income, as reported
    
    $
    579
    
    
    $
    546
    
    
    $
    492Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
    
    
    5
    
    
    
    8
    
    
    
    6Pro forma net income
    
    $
    574
    
    
    $
    538
    
    
    $
    486Earnings per share, as reported
    
    $
    4.28
    
    
    $
    3.96
    
    
    $
    3.47Pro forma earnings per share
    
    $
    4.25
    
    
    $
    3.90
    
    
    $
    3.42Earnings per shareassuming dilution, as reported
    
    $
    4.25
    
    
    $
    3.92
    
    
    $
    3.44Pro forma earnings per shareassuming dilution
    
    $
    4.22
    
    
    $
    3.86
    
    
    $
    3.40
  New Accounting Pronouncements
 Accounting for Certain Hybrid Financial Instruments
 Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
140 Accounting for
Derivative Instruments and Hedging Activities,
 Terms of Loan Products That May Give Rise to a Concentration of Credit Risk
 Terms of Loan Products
That May Give Rise to a Concentration of Credit Risk
 80




---



##### 



Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications
or Exchanges of Insurance Contracts
 Accounting by
Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges
of Insurance Contracts Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from
the Sale of Investments
 Accounting Changes and Error Corrections
 Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20, , and FASB Statement No. 3,
 Share-Based Payment
 Share Based Payment Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange
for Employee Services under FASB Statement No. 123(R) Practical Accommodation to the Application of Grant Date as Defined in FASB Statement
No. 123(R)
 Transition Election Related to Accounting
for the Tax Effects of Share-Based Payment Awards
 81




---



##### 



Classification of Options and Similar
Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a
Contingent Event
  Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003
 Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
 The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments
 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments Effective Date
 82




---



##### 



of Paragraphs 1020 of EITF
Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments
 The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments Accounting for Certain Investments in Debt and Equity
Securities
 Employers Disclosures about Pensions and Other Postretirement Benefits
 Employers Disclosures about
Pensions and Other Postretirement Benefits
 Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts
 Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts
 Accrual for an Unearned Revenue Liability
 Situations in Which Paragraphs 17(b) and 20 of
FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration
Contracts and for Realized Gains and Losses from the Sale of Investments, Permit or Require Accrual
for an Unearned Revenue Liability
 83




---



##### 



Consolidation of Variable Interest Entities
  N ote 3. I ncome Per Share of Common Stock
  Year Ended December 31,2005
    
    2004
    
    2003NumeratorsIncome before cumulative effect of change in
accounting principle
    
    $
    579
    
    
    $
    563
    
    
    $
    492DenominatorsWeighted-average shares outstanding
    
    
    135,067,487
    
    
    
    137,999,364
    
    
    
    141,795,065Effect of dilutive securities:Employee, director and agent stock options
    
    
    1,100,356
    
    
    
    1,213,670
    
    
    
    1,072,150Weighted-average shares outstanding 
assuming dilution
    
    
    136,167,843
    
    
    
    139,213,034
    
    
    
    142,867,215Earnings Per Share  BasicIncome before cumulative effect of change in
accounting principle
    
    $
    4.28
    
    
    $
    4.08
    
    
    $
    3.47Earnings Per Share  Assuming DilutionIncome before cumulative effect of change in
accounting principle
    
    $
    4.25
    
    
    $
    4.04
    
    
    $
    3.44
  84




---



##### 



N ote 4. I nvestments
 Summary Cost and Fair Value Information
  December 31, 2005Cost or
    
    Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    (Losses)
    
    ValueAvailable-for-sale, carried at fair valueU.S. Treasury obligations and direct
obligations of U.S. Government agencies
    
    $
    241
    
    
    $
    7
    
    
    $
    (1
    )
    
    $
    247Federal agency issued mortgage-backed
securities (including collateralized mortgage
obligations)
    
    
    1,225
    
    
    
    33
    
    
    
    (10
    )
    
    
    1,248Obligations of states and political subdivisions
    
    
    62
    
    
    
    5
    
    
    
    
    
    
    
    67Corporate obligations
    
    
    16,994
    
    
    
    542
    
    
    
    (204
    )
    
    
    17,332Corporate private-labeled mortgage-backed
securities (including collateralized mortgage
obligations)
    
    
    1,297
    
    
    
    21
    
    
    
    (17
    )
    
    
    1,301Redeemable preferred stocks
    
    
    9
    
    
    
    2
    
    
    
    
    
    
    
    11Subtotal, debt securities
    
    
    19,828
    
    
    
    610
    
    
    
    (232
    )
    
    
    20,206Equity securities
    
    
    192
    
    
    
    429
    
    
    
    (1
    )
    
    
    620Securities available-for-sale
    
    $
    20,020
    
    
    $
    1,039
    
    
    $
    (233
    )
    
    $
    20,826Held-to-maturity, carried at amortized costObligations of state and political subdivisions
    
    $
    5
    
    
    $
    1
    
    
    $
    
    
    
    $
    6Corporate obligations
    
    
    1,969
    
    
    
    103
    
    
    
    (13
    )
    
    
    2,059Debt securities held-to-maturity
    
    $
    1,974
    
    
    $
    104
    
    
    $
    (13
    )
    
    $
    2,065
 85




---



##### 



December 31, 2004Cost or
    
    Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    (Losses)
    
    ValueAvailable-for-sale, carried at fair valueU. S. Treasury obligations and direct
obligations of U.S. Government agencies
    
    $
    253
    
    
    $
    13
    
    
    $
    
    
    
    $
    266Federal agency issued mortgage-backed
securities (including collateralized mortgage
obligations)
    
    
    1,610
    
    
    
    64
    
    
    
    (4
    )
    
    
    1,670Obligations of states and political subdivisions
    
    
    57
    
    
    
    4
    
    
    
    
    
    
    
    61Corporate obligations
    
    
    16,225
    
    
    
    853
    
    
    
    (51
    )
    
    
    17,027Corporate private-labeled mortgage-backed
securities (including collateralized mortgage
obligations)
    
    
    659
    
    
    
    31
    
    
    
    (2
    )
    
    
    688Redeemable preferred stocks
    
    
    12
    
    
    
    1
    
    
    
    
    
    
    
    13Subtotal, debt securities
    
    
    18,816
    
    
    
    966
    
    
    
    (57
    )
    
    
    19,725Equity securities
    
    
    201
    
    
    
    449
    
    
    
    
    
    
    
    650Securities available-for-sale
    
    $
    19,017
    
    
    $
    1,415
    
    
    $
    (57
    )
    
    $
    20,375Held-to-maturity, carried at amortized costObligations of state and political subdivisions
    
    $
    6
    
    
    $
    1
    
    
    $
    
    
    
    $
    7Corporate obligations
    
    
    2,363
    
    
    
    153
    
    
    
    (9
    )
    
    
    2,507Debt securities held-to-maturity
    
    $
    2,369
    
    
    $
    154
    
    
    $
    (9
    )
    
    $
    2,514
 Contractual Maturities
  Available-for-sale
    
    Held-to-maturityAmortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    ValueDue in one year or less
    
    $
    488
    
    
    $
    493
    
    
    $
    182
    
    
    $
    184Due after one year through five years
    
    
    4,097
    
    
    
    4,174
    
    
    
    691
    
    
    
    708Due after five years through ten years
    
    
    8,818
    
    
    
    8,854
    
    
    
    716
    
    
    
    750Due after ten years through twenty years
    
    
    3,119
    
    
    
    3,241
    
    
    
    315
    
    
    
    344Due after twenty years
    
    
    3,222
    
    
    
    3,361
    
    
    
    70
    
    
    
    79Amounts not due at a single maturity date
    
    
    75
    
    
    
    72
    
    
    
    
    
    
    
    19,819
    
    
    
    20,195
    
    
    
    1,974
    
    
    
    2,065Redeemable preferred stocks
    
    
    9
    
    
    
    11
    
    
    
    
    
    
    
    $
    19,828
    
    
    $
    20,206
    
    
    $
    1,974
    
    
    $
    2,065
 86




---



##### 



Securities Lending
  Changes in Net Unrealized Gains on Securities
  Net Unrealized Gains (Losses)Debt
    
    EquitySecurities
    
    Securities
    
    TotalNet unrealized gains on securities
available-for-sale as of December 31, 2002
    
    $
    376
    
    
    $
    221
    
    
    $
    597Change during year ended December 31, 2003:Increase in stated amount of securities
    
    
    13
    
    
    
    89
    
    
    
    102Increase in deferred policy acquisition costs and
value of business acquired
    
    
    20
    
    
    
    
    
    
    
    20Increase in deferred income tax liabilities
    
    
    (15
    )
    
    
    (29
    )
    
    
    (44
    )Increase in net unrealized gains included in other
comprehensive income
    
    
    18
    
    
    
    60
    
    
    
    78Net unrealized gains on securities
available-for-sale as of December 31, 2003
    
    
    394
    
    
    
    281
    
    
    
    675Change during year ended December 31, 2004:Increase (decrease) in stated amount of securities
    
    
    22
    
    
    
    (3
    )
    
    
    19Increase in deferred policy acquisition costs and
value of business acquired
    
    
    
    
    
    
    
    
    
    
    Decrease (increase) in deferred income tax
liabilities
    
    
    (8
    )
    
    
    1
    
    
    
    (7
    )Increase (decrease) in net unrealized gains
included in other comprehensive income
    
    
    14
    
    
    
    (2
    )
    
    
    12Net unrealized gains on securities
available-for-sale as of December 31, 2004
    
    
    408
    
    
    
    279
    
    
    
    687Change during year ended December 31, 2005:(Decrease) in stated amount of securities
    
    
    (526
    )
    
    
    (22
    )
    
    
    (548
    )Increase in deferred policy acquisition costs and
value of business acquired
    
    
    183
    
    
    
    
    
    
    
    183Decrease in deferred income tax liabilities
    
    
    120
    
    
    
    8
    
    
    
    128Decrease in net unrealized gains included in
other comprehensive income
    
    
    (223
    )
    
    
    (14
    )
    
    
    (237
    )Net unrealized gains on securities
available-for-sale as of December 31, 2005
    
    $
    185
    
    
    $
    265
    
    
    $
    450
 87




---



##### 



Net Investment Income
  Year Ended December 31,2005
    
    2004
    
    2003Interest on debt securities
    
    $
    1,324
    
    
    $
    1,298
    
    
    $
    1,317Investment income on equity securities
    
    
    27
    
    
    
    29
    
    
    
    25Interest on mortgage loans
    
    
    266
    
    
    
    262
    
    
    
    256Interest on policy loans
    
    
    52
    
    
    
    51
    
    
    
    50Other investment income
    
    
    64
    
    
    
    68
    
    
    
    42Gross investment income
    
    
    1,733
    
    
    
    1,708
    
    
    
    1,690Investment expenses
    
    
    (42
    )
    
    
    (36
    )
    
    
    (33
    )Net investment income
    
    $
    1,691
    
    
    $
    1,672
    
    
    $
    1,657
  Realized Gains and Losses
  Year Ended December 31,2005
    
    2004
    
    2003Common stocks
    
    $
    19
    
    
    $
    92
    
    
    $
    14Debt securities
    
    
    (20
    )
    
    
    (59
    )
    
    
    (71
    )Total securities
    
    
    (1
    )
    
    
    33
    
    
    
    (57
    )Real estate
    
    
    4
    
    
    
    (1
    )
    
    
    Other
    
    
    10
    
    
    
    7
    
    
    
    (4
    )Amortization of deferred policy
acquisition costs, value of business
acquired and deferred sales
inducements
    
    
    (2
    )
    
    
    2
    
    
    
    14Realized investment gains (losses)
    
    $
    11
    
    
    $
    41
    
    
    $
    (47
    )
   Year Ended December 31,2005
    
    2004
    
    2003Gross realized:Gains
    
    $
    57
    
    
    $
    138
    
    
    $
    71Losses
    
    
    (58
    )
    
    
    (105
    )
    
    
    (128
    )Realized gains (losses) on total securities
    
    $
    (1
    )
    
    $
    33
    
    
    $
    (57
    )
 88




---



##### 



Year Ended December 31,2005
    
    2004
    
    2003Gross realized:Gains
    
    $
    52
    
    
    $
    133
    
    
    $
    56Losses
    
    
    (58
    )
    
    
    (103
    )
    
    
    (105
    )Realized gains (losses)
on available for sale
securities
    
    $
    (6
    )
    
    $
    30
    
    
    $
    (49
    )
 Investment Concentration Risk and Impairment
       89




---



##### 



December 31, 2005Less than 12 months
    
    
    12 months or longer
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury obligations and
direct obligations of U.S.
Government agencies
    
    $
    40
    
    
    $
    (1
    )
    
    $
    19
    
    
    $
    
    
    
    $
    59
    
    
    $
    (1
    )Federal agency issued
mortgage-backed securities
(including collateralized
mortgage obligations)
    
    
    175
    
    
    
    (4
    )
    
    
    173
    
    
    
    (6
    )
    
    
    348
    
    
    
    (10
    )Obligations of states and
political subdivisions
    
    
    14
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    15
    
    
    
    Corporate obligations
    
    
    7,163
    
    
    
    (134
    )
    
    
    2,298
    
    
    
    (83
    )
    
    
    9,461
    
    
    
    (217
    )Corporate private-labeled
mortgage-backed securities
(including collateralized
mortgage obligations)
    
    
    838
    
    
    
    (13
    )
    
    
    74
    
    
    
    (4
    )
    
    
    912
    
    
    
    (17
    )Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    Equity securities
    
    
    620
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    620
    
    
    
    (1
    )Total temporarily impaired
securities
    
    $
    8,850
    
    
    $
    (153
    )
    
    $
    2,568
    
    
    $
    (93
    )
    
    $
    11,418
    
    
    $
    (246
    )
 December 31, 2004Less than 12 months
    
    
    12 months or longer
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury obligations
and direct obligations of
U.S. Government agencies
    
    $
    14
    
    
    $
    
    
    
    $
    56
    
    
    $
    
    
    
    $
    70
    
    
    $
    Federal agency issued
mortgage-backed
securities (including
collateralized mortgage
obligations)
    
    
    149
    
    
    
    (2
    )
    
    
    144
    
    
    
    (2
    )
    
    
    293
    
    
    
    (4
    )Obligations of states and
political subdivisions
    
    
    11
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    13
    
    
    
    Corporate obligations
    
    
    1,590
    
    
    
    (38
    )
    
    
    1,734
    
    
    
    (22
    )
    
    
    3,324
    
    
    
    (60
    )Corporate private-labeled
mortgage-backed
securities (including
collateralized mortgage
obligations)
    
    
    132
    
    
    
    (2
    )
    
    
    18
    
    
    
    
    
    
    
    150
    
    
    
    (2
    )Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Total temporarily impaired
securities
    
    $
    1,896
    
    
    $
    (42
    )
    
    $
    1,958
    
    
    $
    (24
    )
    
    $
    3,854
    
    
    $
    (66
    )
  90




---



##### 



Amortized
    
    
    Fair
    
    
    UnrealizedCost
    
    
    Value
    
    
    Losses
    
    
    Percentage90%-99%
    
    $
    10,923
    
    
    $
    10,701
    
    
    $
    (222
    )
    
    
    90.2
    %80%-89%
    
    
    92
    
    
    
    79
    
    
    
    (13
    )
    
    
    5.3
    %Below 80%
    
    
    29
    
    
    
    18
    
    
    
    (10
    )
    
    
    4.5
    %$
    11,044
    
    
    $
    10,798
    
    
    $
    (245
    )
    
    
    100.0
    %
 N ote 5. D erivative F inancial I nstruments
  Cash Flow Hedging Strategy
     91




---



##### 



Other Derivatives
 ®
   92




---



##### 



N ote 6. D eferred P olicy A cquisition C osts , V alue O f B usiness Acquired And Deferred Sales Inducement Asset
 Deferred Policy Acquisition Costs
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Beginning balance
    
    $
    1,958
    
    
    $
    1,771
    
    
    $
    1,525Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (28
    )
    
    
    Group coinsurance assumed
    
    
    
    
    
    
    37
    
    
    
    Deferral:Commissions
    
    
    384
    
    
    
    319
    
    
    
    381Other
    
    
    144
    
    
    
    123
    
    
    
    120528
    
    
    
    442
    
    
    
    501Amortization
    
    
    (265
    )
    
    
    (256
    )
    
    
    (280
    )Adjustment related to unrealized losses (gains) on
debt securities available-for-sale
    
    
    126
    
    
    
    (8
    )
    
    
    19Adjustment related to realized losses (gains) on debt
securities available-for-sale
    
    
    (1
    )
    
    
    
    
    
    
    6Ending balance
    
    $
    2,346
    
    
    $
    1,958
    
    
    $
    1,771
  Value of Business Acquired
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Beginning balance
    
    $
    472
    
    
    $
    459
    
    
    $
    502Cumulative effect of change in accounting principle
    
    
    
    
    
    
    30
    
    
    
    Deferral of commissions and accretion of interest
    
    
    1
    
    
    
    4
    
    
    
    9Amortization
    
    
    (53
    )
    
    
    (31
    )
    
    
    (61
    )Adjustment related to unrealized losses on debt
securities available-for-sale
    
    
    57
    
    
    
    8
    
    
    
    1Adjustment related to realized losses (gains) on debt
securities available-for-sale
    
    
    (1
    )
    
    
    2
    
    
    
    8Ending balance
    
    $
    476
    
    
    $
    472
    
    
    $
    459
 93




---



##### 



AmortizationYear
    
    Percentage2006
    
    
    9.3
    %2007
    
    
    8.2
    %2008
    
    
    7.3
    %2009
    
    
    6.6
    %2010
    
    
    6.2
    %
  Deferred Sales Inducement Asset
  Year EndedDecember 31,2005
    
    
    2004Beginning balance
    
    $
    76
    
    
    $
    Cumulative impact of adoption, including $30
reclassified from deferred policy acquisition
costs
    
    
    
    
    
    
    68Additional amounts deferred
    
    
    19
    
    
    
    15Amortization
    
    
    (11
    )
    
    
    (7
    )Ending balance
    
    $
    84
    
    
    $
    76
 N ote 7. P olicy L iabilities I nformation
 Interest Rate Assumptions
   94




---



##### 



Mortality and Withdrawal Assumptions
  Accident and Health and Disability Insurance Liabilities Activity
  2005
    
    
    2004
    
    
    2003Balance as of January 1
    
    $
    965
    
    
    $
    630
    
    
    $
    564Less reinsurance recoverables
    
    
    125
    
    
    
    130
    
    
    
    132Net balance as of January 1
    
    
    840
    
    
    
    500
    
    
    
    432Reinsurance transaction (see Note 14)
    
    
    
    
    
    
    253
    
    
    
    Amount incurred:Current year
    
    
    588
    
    
    
    589
    
    
    
    408Prior years
    
    
    9
    
    
    
    (24
    )
    
    
    (1
    )597
    
    
    
    565
    
    
    
    407Less amount paid:Current year
    
    
    296
    
    
    
    293
    
    
    
    224Prior years
    
    
    238
    
    
    
    185
    
    
    
    115534
    
    
    
    478
    
    
    
    339Net balance as of December 31
    
    
    903
    
    
    
    840
    
    
    
    500Plus reinsurance recoverables
    
    
    139
    
    
    
    125
    
    
    
    130Balance as of December 31
    
    $
    1,042
    
    
    $
    965
    
    
    $
    630Balance as of December 31 included with:Total future policy benefits
    
    $
    3,148
    
    
    $
    3,096Less: Other future policy benefits
    
    
    2,151
    
    
    
    2,187A&H future policy benefits
    
    
    997
    
    
    
    909Total policy and contract claims
    
    
    223
    
    
    
    232Less: Other policy and contract claims
    
    
    178
    
    
    
    176A&H policy and contract claims
    
    
    45
    
    
    
    56Total A&H reserves
    
    $
    1,042
    
    
    $
    965
  95




---



##### 



Funding Agreements
   SOP 03-1 Policy Liabilities
  N ote 8. D ebt
 Commercial Paper and Revolving Credit Borrowings
  Notes Payable and Debentures
 ®
  96




---



##### 



Maturities
  2006
    
    $
    1,0122007  2010
    
    
    2011 and after
    
    
    609Total
    
    $
    1,621
 Letter of Credit
  N ote 9. S tockholders E quity
 Common Stock
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Shares outstanding, beginning
    
    
    136,819,214
    
    
    
    140,610,540
    
    
    
    142,798,768Shares issued under stock option plans
    
    
    734,544
    
    
    
    1,576,874
    
    
    
    1,390,372Shares reacquired
    
    
    (3,175,500
    )
    
    
    (5,368,200
    )
    
    
    (3,578,600
    )Shares outstanding, ending
    
    
    134,378,258
    
    
    
    136,819,214
    
    
    
    140,610,540
 Shareholders Rights Plan
   Preferred Stock
  97




---



##### 



N ote 10. S tock I ncentive P lans
 Long Term Stock Incentive Plan
    Non-Employee Directors Plan
   98




---



##### 



Summary Stock Option Activity
  2005
    
    
    2004
    
    
    2003Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExercisePrice
    
    
    
    
    
    
    Price
    
    
    
    
    
    
    PriceOptions
    
    
    Per Share
    
    
    Options
    
    
    Per Share
    
    
    Options
    
    
    Per ShareOutstanding beginning of year
    
    
    9,001,181
    
    
    $
    42.08
    
    
    
    9,657,303
    
    
    $
    38.80
    
    
    
    9,952,806
    
    
    $
    37.01Granted
    
    
    1,279,533
    
    
    
    49.87
    
    
    
    1,612,900
    
    
    
    52.30
    
    
    
    1,378,550
    
    
    
    38.49Exercised
    
    
    (814,374
    )
    
    
    34.13
    
    
    
    (1,752,756
    )
    
    
    32.54
    
    
    
    (1,525,590
    )
    
    
    26.30Forfeited and expired
    
    
    (42,364
    )
    
    
    48.37
    
    
    
    (516,266
    )
    
    
    45.07
    
    
    
    (148,463
    )
    
    
    51.53Outstanding end of year
    
    
    9,423,976
    
    
    $
    43.78
    
    
    
    9,001,181
    
    
    $
    42.08
    
    
    
    9,657,303
    
    
    $
    38.80Exercisable at end of year
    
    
    7,469,937
    
    
    $
    42.25
    
    
    
    7,444,427
    
    
    $
    40.85
    
    
    
    7,427,496
    
    
    $
    37.54Weighted-average fair value
of options granted during
the year
    
    $
    9.40
    
    
    
    
    
    
    $
    10.84
    
    
    
    
    
    
    $
    8.80
  Options Outstanding
    
    
    Options ExercisableWeighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Range of
    
    
    
    
    
    Remaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Number of
    
    
    Contractual
    
    
    Exercise
    
    
    Number of
    
    
    ExercisePrices
    
    Shares
    
    
    Life
    
    
    Price
    
    
    Shares
    
    
    Price$23.83 - $25.72
    
    
    540,616
    
    
    
    1.0
    
    
    $
    25.63
    
    
    
    540,616
    
    
    $
    25.63$32.33 - $35.96
    
    
    1,258,650
    
    
    
    3.3
    
    
    
    34.98
    
    
    
    1,258,650
    
    
    
    34.98$36.00 - $46.17
    
    
    2,284,139
    
    
    
    4.4
    
    
    
    40.13
    
    
    
    2,107,638
    
    
    
    40.33$46.55 - $52.98
    
    
    5,340,571
    
    
    
    6.4
    
    
    
    49.25
    
    
    
    3,563,033
    
    
    
    48.489,423,976
    
    
    
    
    
    
    $
    43.78
    
    
    
    7,469,937
    
    
    $
    42.25
   99




---



##### 



N ote 11.
S tatutory F inancial I nformation
    2005
    
    2004
    
    2003Statutory Accounting PracticesNet income for the year ended
December 31
    
    $
    381
    
    
    $
    295
    
    
    $
    424Statutory capital and surplus as of December 31
    
    $
    1,996
    
    
    $
    1,930
    
    
    $
    1,774Generally Accepted Accounting PrinciplesNet income for the year ended December 31
    
    $
    526
    
    
    $
    445
    
    
    $
    450Stockholders equity as of December 31
    
    $
    4,548
    
    
    $
    4,553
    
    
    $
    4,244
  100




---



##### 



N ote 12.
I ncome T axes
  Year Ended December 31,2005
    
    2004
    
    2003Current expense
    
    $
    191
    
    
    $
    193
    
    
    $
    127Deferred expense
    
    
    97
    
    
    
    84
    
    
    
    119Income tax expense before cumulative
effect of change in accounting
principle
    
    
    288
    
    
    
    277
    
    
    
    246Income tax effect of change in
accounting for long-duration
contracts
    
    
    
    
    
    
    (9
    )
    
    
    Total income tax expense
    
    $
    288
    
    
    $
    268
    
    
    $
    246
  Year ended December 31,2005
    
    2004
    
    2003Federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Reconciling items:Tax exempt interest and dividends received deduction
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (1.2
    )Affordable housing credits
    
    
    (0.6
    )
    
    
    (0.4
    )
    
    
    Other, net
    
    
    
    
    
    
    (0.4
    )
    
    
    (0.5
    )Effective income tax rate
    
    
    33.2
    %
    
    
    33.0
    %
    
    
    33.3
    %
 101




---



##### 



December 31,2005
    
    2004Deferred tax assets:Difference in policy liabilities
    
    $
    509
    
    
    $
    518Deferred compensation
    
    
    39
    
    
    
    37Differences in investment bases
    
    
    14
    
    
    
    Other deferred tax assets
    
    
    24
    
    
    
    40Gross deferred tax assets
    
    
    586
    
    
    
    595Deferred tax liabilities:Net unrealized gains on securities and other
    
    
    235
    
    
    
    368Deferral of policy acquisition costs and value of business acquired
    
    
    800
    
    
    
    659Deferred gain recognition for income tax purposes
    
    
    32
    
    
    
    37Differences in investment bases
    
    
    
    
    
    
    47Depreciation differences
    
    
    37
    
    
    
    40Other deferred tax liabilities
    
    
    37
    
    
    
    33Gross deferred tax liabilities
    
    
    1,141
    
    
    
    1,184Net deferred income tax liability
    
    $
    555
    
    
    $
    589
    102




---



##### 



N ote 13. R etirement B enefit P lans
 Pension Plans
   Year EndedDecember 31,2005
    
    2004Change in projected benefit obligation:Projected benefit obligation at beginning of year
    
    $
    405
    
    
    $
    361Service cost
    
    
    16
    
    
    
    15Interest cost
    
    
    24
    
    
    
    22Actuarial loss
    
    
    31
    
    
    
    26Benefits paid
    
    
    (34
    )
    
    
    (19
    )Projected benefit obligation at end of year
    
    
    442
    
    
    
    405Change in plan assets:Fair value of assets at beginning of year
    
    
    397
    
    
    
    369Actual return on plan assets
    
    
    17
    
    
    
    47Transfer in
    
    
    
    
    
    
    (1
    )Employer contribution
    
    
    16
    
    
    
    1Benefits paid
    
    
    (34
    )
    
    
    (19
    )Fair value of assets at end of year
    
    
    396
    
    
    
    397Funded status of the plans
    
    
    (46
    )
    
    
    (8
    )Unrecognized net loss
    
    
    58
    
    
    
    15Unrecognized transition net asset
    
    
    
    
    
    
    (1
    )Unrecognized prior service cost
    
    
    
    
    
    
    1Net amount recognized
    
    $
    12
    
    
    $
    7Amounts recognized consist of:Prepaid benefit cost
    
    $
    23
    
    
    $
    27Accrued benefit cost
    
    
    (30
    )
    
    
    (37
    )Intangible asset
    
    
    1
    
    
    
    2Accumulated other comprehensive income
    
    
    18
    
    
    
    15Net amount recognized
    
    $
    12
    
    
    $
    7
   103




---



##### 



Information for Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets
 December 31,2005
    
    2004Projected benefit obligation
    
    $
    38
    
    
    $
    39Accumulated benefit obligation
    
    
    30
    
    
    
    37Fair value of plan assets
    
    
    
    
    
    
    
 Components of Net Periodic Benefit Cost
 Year EndedDecember 31,2005
    
    
    2004
    
    
    2003Service cost
    
    $
    16
    
    
    $
    15
    
    
    $
    13Interest cost
    
    
    24
    
    
    
    22
    
    
    
    21Expected return on plan assets
    
    
    (31
    )
    
    
    (31
    )
    
    
    (31
    )Amortization of net transition asset
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Amortization of prior service cost
    
    
    
    
    
    
    1
    
    
    
    1Amortization of net loss
    
    
    3
    
    
    
    1
    
    
    
    (2
    )Net periodic benefit cost
    
    $
    11
    
    
    $
    7
    
    
    $
    1
 Assumptions
 2005
    
    2004
    
    2003Weighted-average assumptions used to determine
benefit obligations at December 31:Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.25
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Weighted-average assumptions used to determine
net cost for years ended December 31:Discount rate
    
    
    6.00
    %
    
    
    6.25
    %
    
    
    6.75
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
   104




---



##### 



Plan Assets
  December 31,Asset Category
    
    2005
    
    2004Equity securities
    
    
    72
    %
    
    
    73
    %Debt securities
    
    
    27
    
    
    
    26Other
    
    
    1
    
    
    
    1Total
    
    
    100
    %
    
    
    100
    %
  Contributions
  Benefit Payments
  2006
    
    $
    202007
    
    
    202008
    
    
    212009
    
    
    212010
    
    
    242011 through 2015
    
    
    142
 Other Postretirement Benefit Plans
  105




---



##### 



Defined Contribution Plans
  N ote 14. R einsurance
      106




---



##### 



Year Ended December 31,2005
    
    
    2004
    
    
    2003Premiums and other considerations direct
    
    $
    1,415
    
    
    $
    1,200
    
    
    $
    1,029Premiums and other considerations assumed
    
    
    13
    
    
    
    164
    
    
    
    2Less premiums and other considerations ceded
    
    
    72
    
    
    
    71
    
    
    
    80Net premiums and other considerations
    
    $
    1,356
    
    
    $
    1,293
    
    
    $
    951Universal life and investment product charges direct
    
    $
    924
    
    
    $
    850
    
    
    $
    798Less universal life and investment product charges ceded
    
    
    141
    
    
    
    118
    
    
    
    107Net universal life and investment product charges
    
    $
    783
    
    
    $
    732
    
    
    $
    691Benefits direct
    
    $
    2,578
    
    
    $
    2,371
    
    
    $
    2,227Benefits assumed
    
    
    (34
    )
    
    
    155
    
    
    
    6Less reinsurance recoveries
    
    
    227
    
    
    
    239
    
    
    
    228Net benefits
    
    $
    2,317
    
    
    $
    2,287
    
    
    $
    2,005
  N ote 15. S egment I nformation
  107




---



##### 



December 31,2005
    
    
    2004AssetsIndividual Products
    
    $
    19,672
    
    
    $
    18,776AIP
    
    
    10,794
    
    
    
    10,504Benefit Partners
    
    
    1,937
    
    
    
    1,839Communications
    
    
    224
    
    
    
    223Corporate and Other
    
    
    3,451
    
    
    
    3,763Total assets
    
    $
    36,078
    
    
    $
    35,105
 108




---



##### 



Year Ended December 31,2005
    
    2004
    
    2003RevenuesIndividual Products
    
    $
    1,821
    
    
    $
    1,780
    
    
    $
    1,774AIP
    
    
    732
    
    
    
    718
    
    
    
    694Benefit Partners
    
    
    1,279
    
    
    
    1,202
    
    
    
    820Communications
    
    
    247
    
    
    
    239
    
    
    
    214Corporate and Other
    
    
    130
    
    
    
    122
    
    
    
    1184,209
    
    
    
    4,061
    
    
    
    3,620Realized investment gains (losses), before taxes
    
    
    11
    
    
    
    41
    
    
    
    (47
    )Total revenues
    
    $
    4,220
    
    
    $
    4,102
    
    
    $
    3,573Total reportable segment results and
reconciliation to net incomeIndividual Products
    
    $
    316
    
    
    $
    302
    
    
    $
    309AIP
    
    
    83
    
    
    
    76
    
    
    
    85Benefit Partners
    
    
    87
    
    
    
    71
    
    
    
    51Communications
    
    
    58
    
    
    
    54
    
    
    
    46Corporate and Other
    
    
    28
    
    
    
    33
    
    
    
    32Total reportable segment results
    
    
    572
    
    
    
    536
    
    
    
    523Realized investment gains (losses), net of taxes
    
    
    7
    
    
    
    27
    
    
    
    (31
    )Income before cumulative effect of change
in accounting principle
    
    
    579
    
    
    
    563
    
    
    
    492Cumulative effect of change in accounting
for long-duration contracts, net of taxes
    
    
    
    
    
    
    (17
    )
    
    
    Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492Net investment income (expense)Individual Products
    
    $
    897
    
    
    $
    900
    
    
    $
    914AIP
    
    
    595
    
    
    
    593
    
    
    
    587Benefit Partners
    
    
    97
    
    
    
    89
    
    
    
    64Communications
    
    
    1
    
    
    
    (2
    )
    
    
    (2
    )Corporate and Other
    
    
    101
    
    
    
    92
    
    
    
    94Total net investment income
    
    $
    1,691
    
    
    $
    1,672
    
    
    $
    1,657
 109




---



##### 



Year Ended December 31,2005
    
    2004
    
    2003Amortization of deferred policy acquisition costs and value
of business acquiredIndividual Products
    
    $
    209
    
    
    $
    207
    
    
    $
    195AIP
    
    
    66
    
    
    
    53
    
    
    
    46Benefit Partners
    
    
    43
    
    
    
    27
    
    
    
    100Amortization reflected in total reportable segment results
    
    
    318
    
    
    
    287
    
    
    
    341Amortization on realized investment gains (losses)
    
    
    2
    
    
    
    (2
    )
    
    
    (14
    )Amortization of deferred policy acquisition costs
and value of business acquired
    
    $
    320
    
    
    $
    285
    
    
    $
    327Income tax expense (benefit)Individual Products
    
    $
    159
    
    
    $
    156
    
    
    $
    163AIP
    
    
    43
    
    
    
    40
    
    
    
    46Benefit Partners
    
    
    47
    
    
    
    38
    
    
    
    27Communications
    
    
    37
    
    
    
    36
    
    
    
    29Corporate and Other
    
    
    (2
    )
    
    
    (7
    )
    
    
    (3
    )Total income tax expense in reportable segment results
    
    
    284
    
    
    
    263
    
    
    
    262Income tax expense (benefit) on realized investment gains (losses)
    
    
    4
    
    
    
    14
    
    
    
    (16
    )Income tax expense before cumulative effect of change in
accounting principle
    
    
    288
    
    
    
    277
    
    
    
    246Tax on cumulative effect of change in accounting principle
    
    
    
    
    
    
    (9
    )
    
    
    Total income tax expense
    
    $
    288
    
    
    $
    268
    
    
    $
    246
   110




---



##### 



N ote 16. O ther C omprehensive I ncome
  UnrealizedGains(Losses)on
    
    Derivative
    
    AdditionalAvailable-
    
    Financial
    
    Minimumfor-Sale
    
    Instruments
    
    PensionSecurities
    
    Gains (Losses)
    
    Liability
    
    TotalBalance at December 31, 2002
    
    $
    597
    
    
    $
    13
    
    
    $
    
    
    
    $
    610Unrealized holding gains arising during period, net of
$23 tax expense
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    46Change in fair value of derivatives, net of $2 tax
benefit
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Less: reclassification adjustmentLosses realized in net income, net of $17 tax
benefit
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    (32
    )Balance at December 31, 2003
    
    
    675
    
    
    
    8
    
    
    
    
    
    
    
    683Unrealized holding gains arising during period, net of
$15 tax expense
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    32Change in minimum pension liability, net of $6 tax
benefit
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Change in fair value of derivatives, net of $2 tax
benefit
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Less: reclassification adjustmentGains realized in net income, net of $10 tax expense
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Balance at December 31, 2004
    
    
    687
    
    
    
    5
    
    
    
    (9
    )
    
    
    683Unrealized holding losses arising during period, net
of $130 tax benefit
    
    
    (241
    )
    
    
    
    
    
    
    
    
    
    
    (241
    )Change in minimum pension liability, net of $1 tax
benefit
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Change in fair value of derivatives, net of $3 tax
benefit
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )Less: reclassification adjustmentLosses realized in net income, net of $2 tax benefit
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Balance at December 31, 2005
    
    $
    450
    
    
    $
    (1
    )
    
    $
    (11
    )
    
    $
    438
 111




---



##### 



N ote 17. D isclosures A bout F air V alue O f F inancial SI nstruments
  2005
    
    2004Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial AssetsDebt securities available-for-sale
    
    $
    20,206
    
    
    $
    20,206
    
    
    $
    19,725
    
    
    $
    19,725Debt securities held-to-maturity
    
    
    1,974
    
    
    
    2,065
    
    
    
    2,369
    
    
    
    2,514Equity securities available-for-sale
    
    
    620
    
    
    
    620
    
    
    
    650
    
    
    
    650Mortgage loans
    
    
    3,982
    
    
    
    4,193
    
    
    
    3,667
    
    
    
    3,854Policy loans
    
    
    833
    
    
    
    914
    
    
    
    839
    
    
    
    926Derivative financial instruments
    
    
    116
    
    
    
    116
    
    
    
    82
    
    
    
    82Financial LiabilitiesAnnuity contract liabilities in accumulation phase
    
    
    9,038
    
    
    
    8,306
    
    
    
    8,733
    
    
    
    8,325Funding agreements
    
    
    301
    
    
    
    301
    
    
    
    
    
    
    
    Commercial paper and revolving credit borrowings
    
    
    260
    
    
    
    260
    
    
    
    188
    
    
    
    188Securities sold under repurchase agreements
    
    
    452
    
    
    
    452
    
    
    
    468
    
    
    
    468Junior subordinated debentures
    
    
    309
    
    
    
    320
    
    
    
    309
    
    
    
    309Notes payable
    
    
    600
    
    
    
    589
    
    
    
    600
    
    
    
    597
        112




---



##### 



®
 N ote 18. C ommitments A nd C ontingent L iabilities
    Commitments
    
    Revenues
    
    Net2006
    
    $
    67
    
    
    $
    57
    
    
    $
    102007
    
    
    63
    
    
    
    41
    
    
    
    222008
    
    
    58
    
    
    
    37
    
    
    
    212009
    
    
    48
    
    
    
    32
    
    
    
    162010
    
    
    41
    
    
    
    30
    
    
    
    112011
    
    
    38
    
    
    
    32
    
    
    
    6Thereafter
    
    
    11
    
    
    
    
    
    
    
    11Total
    
    $
    326
    
    
    $
    229
    
    
    $
    97
    113




---



##### 



114




---



##### 



Item 9.Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
  Item 9A.Controls and Procedures
    Item 9B. Other Information
    115




---



##### 



PART III
 Item 10. Directors and Executive Officers of the Registrant
   www.jpfinancial.com
 Item 11. Executive Compensation
  Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
  116




---



##### 



Equity Compensation Plan Information
  Number of Shares to be
    
    Weighted Average
    
    Number of Shares Remainingissued Upon Exercise of
    
    Exercise Price of
    
    Available for Future IssuanceOutstanding Options
    
    Outstanding Options
    
    Excluding Shares in column (a)Plan Category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
shareholders(1)
    
    
    9,423,976
    
    
    $
    43.78
    
    
    
    1,623,124
    (2)Equity compensation
plans not approved
by shareholders(3)
    
    
    0
    
    
    
    0
    
    
    
    0
 
 (1)
    
    Option shares in column (a) approximated 7.0% of outstanding
shares, and available shares in column (c) approximated 1.2%
of outstanding shares.(2)
    
    Of these shares available for future awards, 1,204,830 are
available under the Long Term Stock Incentive Plan (LTS) and
418,294 are available under the Non-Employee Directors Stock
Option Plan. Shares covered by options that terminate
unexercised, and any shares tendered to pay for an option
exercise or withheld for taxes, will be available for future
option grants under the respective plan. The LTS permits
awards other than options, such as restricted stock up to 10%
of the shares reserved, and our LTIP payouts as described in
our Proxy Statement are made 50% in common shares from the
LTS shares shown in column (c).(3)
    
    Our directors fee deferral plan is not an equity
compensation plan because there is no share reserve, overhang
or dilution and fee deferrals are promptly used by the
grantor trust to buy shares in the open market for later
payout after directors leave the Board as described in our
proxy statement. Item 13. Certain Relationships and Related Transactions
  117




---



##### 



Item 14. Principal Accountant Fees and Services
  118




---



##### 



PART IV
 Item 15. Exhibits and Financial Statement Schedules
    Undertakings
   SIGNATURES
  JEFFERSON-PILOT CORPORATION
Registrant/s/ Dennis R. GlassBY (SIGNATURE)
(NAME AND TITLE)
    
    Dennis R. GlassPresident and Chief Executive Officer(also signing as Principal Executive Officer
and Director)DATE
    
    March 14, 2006
 119




---



##### 



/s/ Theresa M. StoneTheresa M. StoneExecutive Vice President andChief Financial Officer(Principal Financial Officer)March 14, 2006/s/ Reggie D. AdamsonReggie D. AdamsonSenior Vice President and Treasurer(Principal Accounting Officer)March 14, 2006/s/ William H. Cunningham*William H. Cunningham, DirectorMarch 14, 2006/s/ Robert G. Greer*Robert G. Greer, DirectorMarch 14, 2006/s/ George W. Henderson, III*George W. Henderson, IIIMarch 14, 2006/s/ Gary C. Kelly*Gary C. KellyMarch 14, 2006/s/ Elizabeth Valk Long*Elizabeth Valk LongMarch 14, 2006
 120




---



##### 



/s/ William P. Payne*William P. Payne, DirectorMarch 14, 2006/s/ Patrick S. Pittard*Patrick S. Pittard, DirectorMarch 14, 2006/s/ Donald S. Russell, Jr.*Donald S. Russell, Jr., DirectorMarch 14, 2006/s/ David A. Stonecipher*David A. Stonecipher, DirectorMarch 14, 2006/s/ Isaiah Tidwell*Isaiah Tidwell, DirectorMarch 14, 2006*By /s/ Robert A. ReedRobert A. Reed, Attorney-in-FactMarch 14, 2006
 121




---



##### 



LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
        PageSchedule I  Summary of Investments  Other Than Investments in Related Parties
    
    F-2Schedule II  Financial Statements of Jefferson-Pilot Corporation:Condensed Balance Sheets as of December 31, 2004 and 2003
    
    F-3Condensed Statements of Income for the Years Ended December 31, 2004, 2003 and 2002
    
    F-4Condensed Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and
2002
    
    F-5Note to Condensed Financial Statements
    
    F-6Schedule III  Supplementary Insurance Information
    
    F-7Schedule IV  Reinsurance for the Years Indicated
    
    F-8Schedule V  Valuation and Qualifying Accounts
    
    F-9List and Index of Exhibits
    
    E-1-E-2
  F-1




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE I  SUMMARY OF INVESTMENTS 
OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2005
 Column A
    
    Column B
    
    
    Column C
    
    
    Column DAmountat WhichShown in theFair
    
    
    ConsolidatedType of Investment
    
    Cost (a)
    
    
    Value
    
    
    Balance SheetDebt securities:Bonds and other debt instruments:United States Treasury obligations and direct obligations of U. S.
Government agencies
    
    $
    241
    
    
    $
    247
    
    
    $
    247Federal agency issued collateralized mortgage obligations
    
    
    1,225
    
    
    
    1,248
    
    
    
    1,248Obligations of states, municipalities and political subdivisions (b)
    
    
    67
    
    
    
    73
    
    
    
    72Obligations of public utilities (b)
    
    
    4,006
    
    
    
    4,155
    
    
    
    4,128Corporate obligations (b)
    
    
    14,957
    
    
    
    15,236
    
    
    
    15,173Corporate private-labeled collateralized mortgage obligations
    
    
    1,297
    
    
    
    1,301
    
    
    
    1,301Redeemable preferred stocks
    
    
    9
    
    
    
    11
    
    
    
    11Total debt securities
    
    
    21,802
    
    
    
    22,271
    
    
    
    22,180Equity securities:Common stocks:Public utilities
    
    
    111
    
    
    
    130
    
    
    
    130Banks, trust and insurance companies
    
    
    60
    
    
    
    451
    
    
    
    451Industrial and all other
    
    
    20
    
    
    
    37
    
    
    
    37Non-redeemable preferred stocks
    
    
    1
    
    
    
    2
    
    
    
    2Total equity securities
    
    
    192
    
    
    
    620
    
    
    
    620Mortgage loans on real estate (c)
    
    
    3,998
    
    
    
    
    
    
    
    3,982Other real estate held for investment
    
    
    124
    
    
    
    
    
    
    
    124Policy loans
    
    
    833
    
    
    
    
    
    
    
    833Other long-term investments
    
    
    252
    
    
    
    
    
    
    
    252Total investments
    
    $
    27,201
    
    
    
    
    
    
    $
    27,991
 
 a.
    
    Cost of debt securities is original cost, reduced by repayments and
other-than-temporary impairments and adjusted for amortization of premiums/accrual
of discounts. Cost of equity securities is original cost. Cost of mortgage loans
on real estate and policy loans represents aggregate outstanding balances. Cost
of real estate acquired by foreclosure is the originally capitalized amount,
reduced by applicable depreciation. Cost of other real estate held for investment
is depreciated original cost.b.
    
    Differences between amounts reflected in Column B or Column C and amounts at which
shown in the consolidated balance sheet reflected in Column D result from the
application of SFAS 115, Accounting for Certain Investments in Debt and Equity
Securities.A portion of bonds and debt securities are recorded as investments
held-to-maturity at amortized cost and a portion are recorded as investments
available-for-sale at fair value.c.
    
    Differences between cost reflected in Column B and amounts at which shown in the
consolidated balance sheet reflected in Column D result from valuation allowances. F-2




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE II  CONDENSED BALANCE SHEETS OF JEFFERSON-PILOT CORPORATION
 December 31,2005
    
    
    2004ASSETSCash and investments:Cash and cash equivalents
    
    $
    64
    
    
    $
    2Investment in subsidiaries
    
    
    5,786
    
    
    
    5,688Total cash and investments
    
    
    5,850
    
    
    
    5,690Other assets
    
    
    12
    
    
    
    12Total assets
    
    $
    5,862
    
    
    $
    5,702LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Commerical paper and revolving credit borrowings
    
    $
    260
    
    
    $
    188Notes payable, subsidiaries
    
    
    703
    
    
    
    587Notes payable, other
    
    
    600
    
    
    
    600Junior subordinated debentures
    
    
    309
    
    
    
    309Payables and accruals
    
    
    24
    
    
    
    39Dividends payable
    
    
    56
    
    
    
    52Income taxes receivable
    
    
    (10
    )
    
    
    (7
    )Deferred income tax liabilities
    
    
    3
    
    
    
    Total liabilities
    
    
    1,945
    
    
    
    1,768Commitments & contingent liabilitiesStockholders equity:Common stock, par value $1.25 per share, authorized: 2005 and 2004 - 350,000,000;
issued: 2005 - 134,378,258 shares; 2004 - 136,819,214 shares
    
    
    186
    
    
    
    180Retained earnings, including equity in undistributed net income of subsidiaries
2005 - $3,121, 2004-$2,780
    
    
    3,293
    
    
    
    3,071Accumulated other comprehensive income
    
    
    438
    
    
    
    683Total stockholders equity
    
    
    3,917
    
    
    
    3,934Total liabilities and stockholders equity
    
    $
    5,862
    
    
    $
    5,702
  F-3




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE II  CONDENSED STATEMENTS OF INCOME
OF JEFFERSON-PILOT CORPORATION
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Income:Dividends from subsidiaries:Jefferson-Pilot Life Insurance Company
    
    $
    89
    
    
    $
    10
    
    
    $
    130Jefferson Pilot Financial Insurance Company
    
    
    170
    
    
    
    154
    
    
    
    96Jefferson-Pilot Communications Company
    
    
    49
    
    
    
    53
    
    
    
    38Other subsidiaries
    
    
    
    
    
    
    72
    
    
    
    8308
    
    
    
    289
    
    
    
    272Other investment income, including interest from subsidiaries, net
    
    
    1
    
    
    
    (2
    )
    
    
    2Realized investment losses
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Total income
    
    
    309
    
    
    
    285
    
    
    
    272Financing costs
    
    
    84
    
    
    
    65
    
    
    
    45Other expenses
    
    
    24
    
    
    
    20
    
    
    
    25Income before income taxes and equity in undistributed net income (loss)
of subsidiaries
    
    
    201
    
    
    
    200
    
    
    
    202Income tax benefits
    
    
    (37
    )
    
    
    (32
    )
    
    
    (34
    )Income before equity in undistributed net income (loss) of subsidiaries
    
    
    238
    
    
    
    232
    
    
    
    236Equity in undistributed net income (loss) of subsidiaries:Jefferson-Pilot Life Insurance Company
    
    
    148
    
    
    
    197
    
    
    
    35Jefferson Pilot Financial Insurance Company
    
    
    78
    
    
    
    49
    
    
    
    165Jefferson-Pilot Communications Company
    
    
    9
    
    
    
    2
    
    
    
    7Other subsidiaries, net
    
    
    106
    
    
    
    66
    
    
    
    49341
    
    
    
    314
    
    
    
    256Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492
  F-4




---



##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE II  CONDENSED STATEMENTS OF CASH FLOWS
OF JEFFERSON-PILOT CORPORATION
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    579
    
    
    $
    546
    
    
    $
    492Adjustments to reconcile net income to net cash provided by operating
activities:Equity in undistributed net income of subsidiaries
    
    
    (341
    )
    
    
    (314
    )
    
    
    (256
    )Realized investment losses
    
    
    
    
    
    
    2
    
    
    
    2Change in accrued items and other adjustments, net
    
    
    (24
    )
    
    
    (6
    )
    
    
    110Net cash provided by operating activities
    
    
    214
    
    
    
    228
    
    
    
    348Cash flows from investing activities:Sales of investments
    
    
    
    
    
    
    
    
    
    
    4Other returns from (investments in) subsidiaries
    
    
    
    
    
    
    (115
    )
    
    
    250Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (115
    )
    
    
    254Cash flows from financing activities:Cash dividends
    
    
    (220
    )
    
    
    (203
    )
    
    
    (184
    )Common stock transactions, net
    
    
    (126
    )
    
    
    (210
    )
    
    
    (112
    )Proceeds from external borrowings
    
    
    5,109
    
    
    
    6,145
    
    
    
    5,178Repayments of external borrowings
    
    
    (5,037
    )
    
    
    (6,011
    )
    
    
    (4,977
    )Borrowings from subsidiaries, net
    
    
    122
    
    
    
    155
    
    
    
    (229
    )Net cash used in financing activities
    
    
    (152
    )
    
    
    (124
    )
    
    
    (324
    )Net increase (decrease) in cash and cash equivalents
    
    
    62
    
    
    
    (11
    )
    
    
    278Cash and cash equivalents (overdrafts):Beginning
    
    
    2
    
    
    
    13
    
    
    
    (265
    )Ending
    
    $
    64
    
    
    $
    2
    
    
    $
    13
  F-5




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE II  NOTE TO CONDENSED FINANCIAL STATEMENTS
OF JEFFERSON-PILOT CORPORATION
 Note 1. Basis of Presentation and Significant Accounting Policies
   F-6




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column E
    
    
    Column FDeferred Policy
    
    
    Future Policy
    
    
    DeferredAcquisition
    
    
    Future Policy
    
    
    Revenue and
    
    
    Other PolicyCosts and Value
    
    
    Benefits and
    
    
    Premiums
    
    
    Claims and
    
    
    Premiumsof Business
    
    
    Contract
    
    
    Collected
    
    
    Benefits
    
    
    and OtherSegment
    
    Acquired
    
    
    Deposits (a)
    
    
    in Advance
    
    
    Payable (b)
    
    
    ConsiderationsAs of or Year Ended December 31, 2005Individual Products
    
    $
    2,345
    
    
    $
    14,103
    
    
    $
    480
    
    
    $
    753
    
    
    $
    145AIP
    
    
    360
    
    
    
    10,697
    
    
    
    
    
    
    
    1
    
    
    
    1,182Benefit Partners
    
    
    114
    
    
    
    785
    
    
    
    7
    
    
    
    245
    
    
    
    Corporate and Other
    
    
    3
    
    
    
    19
    
    
    
    
    
    
    
    2
    
    
    
    29Total
    
    $
    2,822
    
    
    $
    25,604
    
    
    $
    487
    
    
    $
    1,001
    
    
    $
    1,356As of or Year Ended December 31, 2004Individual Products
    
    $
    1,998
    
    
    $
    13,642
    
    
    $
    378
    
    
    $
    723
    
    
    $
    152AIP
    
    
    325
    
    
    
    10,428
    
    
    
    
    
    
    
    2
    
    
    
    1Benefit Partners
    
    
    105
    
    
    
    695
    
    
    
    5
    
    
    
    265
    
    
    
    1,113Corporate and Other
    
    
    2
    
    
    
    25
    
    
    
    
    
    
    
    3
    
    
    
    27Total
    
    $
    2,430
    
    
    $
    24,790
    
    
    $
    383
    
    
    $
    993
    
    
    $
    1,293As of or Year Ended December 31, 2003Individual Products
    
    $
    1,847
    
    
    $
    13,077
    
    
    $
    303
    
    
    $
    603
    
    
    $
    171AIP
    
    
    320
    
    
    
    9,849
    
    
    
    
    
    
    
    
    
    
    
    Benefit Partners
    
    
    61
    
    
    
    370
    
    
    
    4
    
    
    
    206
    
    
    
    756Corporate and Other
    
    
    2
    
    
    
    20
    
    
    
    
    
    
    
    3
    
    
    
    24Total
    
    $
    2,230
    
    
    $
    23,316
    
    
    $
    307
    
    
    $
    812
    
    
    $
    951
 Column A
    
    Column G
    
    
    Column H
    
    
    Column I
    
    
    Column JAmortizationof DeferredPolicyBenefits,
    
    
    AcquisitionClaims,
    
    
    Costs andNet
    
    
    Losses and
    
    
    Value of
    
    
    OtherInvestment
    
    
    Settlement
    
    
    Business
    
    
    OperatingSegment
    
    Income
    
    
    Expenses
    
    
    Acquired
    
    
    Expenses (c)As of or Year Ended December 31, 2005Individual Products
    
    $
    897
    
    
    $
    1,023
    
    
    $
    209
    
    
    $
    112AIP
    
    
    595
    
    
    
    404
    
    
    
    66
    
    
    
    137Benefit Partners
    
    
    97
    
    
    
    861
    
    
    
    43
    
    
    
    241Communications
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    17Corporate and Other
    
    
    101
    
    
    
    29
    
    
    
    
    
    
    
    75Total
    
    $
    1,691
    
    
    $
    2,317
    
    
    $
    318
    
    
    $
    582As of or Year Ended December 31, 2004Individual Products
    
    $
    900
    
    
    $
    993
    
    
    $
    207
    
    
    $
    122AIP
    
    
    593
    
    
    
    426
    
    
    
    53
    
    
    
    122Benefit Partners
    
    
    89
    
    
    
    841
    
    
    
    27
    
    
    
    225Communications
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    149Corporate and Other
    
    
    92
    
    
    
    27
    
    
    
    
    
    
    
    70Total
    
    $
    1,672
    
    
    $
    2,287
    
    
    $
    287
    
    
    $
    688As of or Year Ended December 31, 2003Individual Products
    
    $
    914
    
    
    $
    986
    
    
    $
    195
    
    
    $
    121AIP
    
    
    587
    
    
    
    417
    
    
    
    46
    
    
    
    100Benefit Partners
    
    
    64
    
    
    
    576
    
    
    
    100
    
    
    
    65Communications
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    141Corporate and Other
    
    
    94
    
    
    
    26
    
    
    
    
    
    
    
    62Total
    
    $
    1,657
    
    
    $
    2,005
    
    
    $
    341
    
    
    $
    489
 
 a.
    
    Future policy benefits and policyholder contract deposits include funding agreements.b.
    
    Other policy claims and benefits payable include dividend accumulations and other policyholder funds on deposit, policy and contract claims (life and annuity and accident and health), dividends for policyholders and other policy liabilities.c.
    
    Expenses related to the management and administration of investments have been netted with investment income in the determination of net investment income. Such expenses amounted to $42 in 2005, $36 in 2004, and $33 in 2003.
 F-7




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE IV  REINSURANCE FOR THE YEARS INDICATED
 Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column E
    
    Column FPercentageofAmountCeded to
    
    Assumed
    
    
    
    
    
    AssumedOther
    
    From Other
    
    
    
    
    
    toGross Amount
    
    Companies
    
    Companies
    
    Net Amount
    
    Net(a)Year Ended December 31, 2005:Life insurance in force at end of year
    
    $
    320,573
    
    
    $
    63,405
    
    
    $
    3,256
    
    
    $
    260,424
    
    
    
    1.3
    %Premiums and other considerations
    
    $
    1,415
    
    
    $
    72
    
    
    $
    13
    
    
    $
    1,356
    
    
    
    1.0
    %Year Ended December 31, 2004:Life insurance in force at end of year
    
    $
    312,825
    
    
    $
    60,007
    
    
    $
    5,022
    
    
    $
    257,840
    
    
    
    1.9
    %Premiums and other considerations
    
    $
    1,200
    
    
    $
    71
    
    
    $
    164
    
    
    $
    1,293
    
    
    
    12.7
    %Year Ended December 31, 2003:Life insurance in force at end of year
    
    $
    269,163
    
    
    $
    58,797
    
    
    $
    1,966
    
    
    $
    212,332
    
    
    
    0.9
    %Premiums and other considerations
    
    $
    1,029
    
    
    $
    80
    
    
    $
    2
    
    
    $
    951
    
    
    
    0.2
    %
 
 (a)
    
    Percentage of amount assumed to net is computed by dividing the amount in Column D by the amount in Column E.
 F-8




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
SCHEDULE V  VALUATION AND QUALIFYING ACCOUNTS
 December 31, 2005
  Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    ChargedBeginning of
    
    
    to Realized
    
    
    Charged to
    
    
    
    
    
    
    Balance atPeriod
    
    

Investment Gains
    
    
    Other Accounts
    
    
    Deductions
    
    
    End of Period2005:Valuation allowance for
mortgage loans on real estate
    
    $
    22
    
    
    $
    (6
    )
    
    $
    
    
    
    
    
    
    
    $
    16Valuation allowance for
uncollectible agents balances
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1$Total
    
    $
    23
    
    
    $
    (6
    )
    
    $
    
    
    
    
    
    
    
    $
    172004:Valuation allowance for
mortgage loans on real estate
    
    $
    36
    
    
    $
    (14
    )
    
    $
    
    
    
    
    
    
    
    $
    22Valuation allowance for
uncollectible agents balances
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1$Total
    
    $
    37
    
    
    $
    (14
    )
    
    $
    
    
    
    
    
    
    
    $
    232003:Valuation allowance for
mortgage loans on real estate
    
    $
    36
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    36Valuation allowance for
uncollectible agents balances
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1$Total
    
    $
    37
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    37
 F-9




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##### 



LIST AND INDEX OF EXHIBITS
 ReferencePer ExhibitTable
    
    Description of Exhibit
    
    Page(3)
    (i)
    Articles of Incorporation and amendments that have been
approved by shareholders are incorporated by reference to
Form 10-Q (Commission file no. 1-5955) for the first
quarter 1996
    
    (ii)
    By-laws as amended November 3, 2003 are incorporated by
reference to Form 10-K for 2003
    
    (4)
    (i)
    Agreement and Plan of Merger dated as of October 9, 2005
is included in Form 8-K for October 9, 2005, and
Amendment No. 1 to Agreement and Plan of Merger dated as
of January 26, 2006 among Jefferson-Pilot Corporation,
Lincoln National Corporation, an Indiana corporation,
Quartz Corporation, a North Carolina corporation, and
Lincoln JP Holdings, L.P., an Indiana limited partnership, is included in Form 8-K for
January 26, 2006; both are incorporated by reference
    
    (ii)
    Amended and Restated Rights Agreement dated November 7,
1994 between Jefferson-Pilot Corporation and First Union
National Bank, as Rights Agent, was included in Form 8-K
for November 7, 1994, Amendment to Rights Agreement dated
February 8, 1999 was included in Form 8-K for February 8,
1999 (Commission file no. 1-5955); and Second Amendment
to Rights Agreement dated as of October 9, 2005 was
included in Form 8-K for October 9, 2005; all are
incorporated by reference
    
    (iii)
    Credit agreements and other agreements and instruments
relating to debt securities issued by or borrowings
available to the Registrant, are not being filed because
the total amount of borrowing available under credit
agreements or amount of debt securities authorized by any
other agreement or instrument respectively does not
exceed 10% of total consolidated assets. The Registrant
agrees to furnish a copy of any such agreements and
documents to the Commission upon request
    
    (10)
    
    See item 4(i) above for our merger agreement and amendment
The following contracts and plans:(i)
    Employment Agreement between the Registrant and Dennis R.
Glass, our Chief Executive Officer, dated December 6,
2003, and Amendment No. 1 to Employment Agreement, dated
March 23, 2005, are incorporated by reference to Form
10-K for 2003, and to Form 10-Q for the third quarter
2005, respectively
    
    




---



##### 



ReferencePer ExhibitTable
    
    Description of Exhibit
    
    Page(ii)
Long Term Stock Incentive Plan, as amended in February 2005, is
incorporated by reference to Form 10-K for 2004; the summaries of the
long term incentive compensation awards and payments (LTIP) on pages
10 and 14 of the March 2005 Proxy Statement are incorporated by
reference
    
    (iii)
Non-Employee Directors Stock Option Plan, as amended in February 2005
is incorporated by reference to Form 10-K for 2004
    
    (iv)Jefferson-Pilot Corporation Supplemental Benefit Plan, as amended, is
incorporated by reference to Form 10-K for 1999 (Commission file no.
1-5955); the Executive Special Supplemental Benefit Plan, which now
operates under this Plan, is incorporated by reference to Form 10-K
(Commission file no. 1-5955) for 1994
    
    (v)Management Incentive Compensation Plan for Jefferson-Pilot Corporation
and its insurance subsidiaries is incorporated by reference to Form
10-K for 2002; description of the bonus program for executives is
incorporated by reference to the March 2003 Proxy Statement
    
    (vi)Deferred Fee Plan for Non-Employee Directors, as amended, is
incorporated by reference to Form 10-K (Commission file no. 1-5955)
for 1998
    
    (vii)Executive Change in Control Severance Plan and the 1999 amendment
thereto are incorporated by reference to Forms 10-K (Commission file
no. 1-5955) for 1998 and 1999, respectively, and the November 1, 2005
amendment to the Plan is being filed
    
    E-3(viii)Separation Pay Plan adopted February 12, 2006
    
    E-4(ix)Summary of non-employee director
compensation is incorporated by reference to
Form 10-K for 2005
    
    (x)Forms of stock option
terms for non-employee
directors are incorporated by reference to
Form 10-K for 2005 and Form 8-K for February
13, 2006
    

    (xi)Forms of stock option
terms for officers are
incorporated by reference to Form 10-K for
2005 and Form 8-K for February 13, 2006
    
    (21)Subsidiaries of the Registrant
    
    E-6(23)Consent of Independent Auditors
    
    E-7(24)Power of Attorney form
    
    E-8(31.1)Certification of Chief Executive Officer
pursuant to Exchange Act Rule 13a-14(a)
    
    E-9(31.2)Certification of Chief Financial Officer
pursuant to Exchange Act Rule 13a-14(a)
    
    E-10(32)Written Statement Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
    
    E-11