##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended September 30, 2005
 Commission file number 1-5955
 JEFFERSON-PILOT CORPORATION
  North Carolina
    
    56-0896180(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)100 North Greene Street, Greensboro, North Carolina
    
    27401(Address of principal executive offices)
    
    (Zip Code)
 (336) 691-3000
 þ o
 þ o
 o þ




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 INDEX
 - Page No. -PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Condensed Balance
Sheets
- September 30, 2005 (Unaudited) and December 31, 2004
    
    
    1Consolidated Unaudited Condensed
Statements of Income
- Three and Nine Months ended September 30, 2005 and 2004
    
    
    2Consolidated Unaudited Condensed
Statements of Cash Flows
- Nine Months ended September 30, 2005 and 2004
    
    
    3Notes to Consolidated Unaudited Condensed Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    44Item 4.
    
    Controls and Procedures
    
    
    44PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    45Item 2.
    
    Changes in Securities, Use of Proceeds and Issuer Repurchase of Equity Securities
    
    
    45Item 6.
    
    Exhibits
    
    
    45Signatures
    
    
    46Exhibit Index, followed by Exhibits
    
    
    47




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##### 



Item 1. Financial Statements
 JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
  (Unaudited)
    
    
    (Audited)September 30,
    
    
    December 31,2005
    
    
    2004ASSETSInvestments:Debt securities available-for-sale, at fair value (amortized cost $19,711 and $18,816)
    
    $
    20,258
    
    
    $
    19,725Debt securities held-to-maturity, at amortized cost (fair value $2,206 and $2,514)
    
    
    2,096
    
    
    
    2,369Equity securities available-for-sale, at fair value (cost $192 and $201)
    
    
    593
    
    
    
    650Mortgage loans on real estate
    
    
    3,912
    
    
    
    3,667Policy loans
    
    
    836
    
    
    
    839Real estate
    
    
    127
    
    
    
    125Other investments
    
    
    238
    
    
    
    193Total investments
    
    
    28,060
    
    
    
    27,568Cash and cash equivalents
    
    
    14
    
    
    
    87Accrued investment income
    
    
    355
    
    
    
    342Due from reinsurers
    
    
    1,305
    
    
    
    1,341Deferred policy acquisition costs and value of business acquired
    
    
    2,704
    
    
    
    2,430Goodwill
    
    
    312
    
    
    
    312Other assets
    
    
    660
    
    
    
    652Assets held in separate accounts
    
    
    2,431
    
    
    
    2,373$
    35,841
    
    
    $
    35,105LIABILITIES AND STOCKHOLDERS EQUITYPolicy liabilities:Future policy benefits
    
    $
    3,133
    
    
    $
    3,096Policyholder contract deposits
    
    
    22,061
    
    
    
    21,694Policy and contract claims
    
    
    189
    
    
    
    232Funding agreements
    
    
    300
    
    
    
    Other
    
    
    1,222
    
    
    
    1,144Total policy liabilities
    
    
    26,905
    
    
    
    26,166Commercial paper and revolving credit borrowings
    
    
    224
    
    
    
    188Securities sold under repurchase agreements
    
    
    500
    
    
    
    468Notes payable
    
    
    600
    
    
    
    600Junior subordinated debentures
    
    
    309
    
    
    
    309Income tax liabilities
    
    
    532
    
    
    
    620Accounts payable, accruals and other liabilities
    
    
    482
    
    
    
    447Liabilities related to separate accounts
    
    
    2,431
    
    
    
    2,373Total liabilities
    
    
    31,983
    
    
    
    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 2005-134,010,974 shares; 2004-136,819,214 shares
    
    
    168
    
    
    
    180Retained earnings
    
    
    3,200
    
    
    
    3,071Accumulated other comprehensive income
    
    
    490
    
    
    
    683Total stockholders equity
    
    
    3,858
    
    
    
    3,934$
    35,841
    
    
    $
    35,105
  1




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF INCOME
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004RevenuePremiums and other considerations
    
    $
    330
    
    
    $
    328
    
    
    $
    1,014
    
    
    $
    960Universal life and investment product charges
    
    
    194
    
    
    
    179
    
    
    
    585
    
    
    
    544Net investment income
    
    
    429
    
    
    
    406
    
    
    
    1,262
    
    
    
    1,226Realized investment gains (losses)
    
    
    (7
    )
    
    
    3
    
    
    
    3
    
    
    
    37Communications sales
    
    
    59
    
    
    
    58
    
    
    
    177
    
    
    
    173Broker-dealer concessions and other
    
    
    34
    
    
    
    28
    
    
    
    98
    
    
    
    94Total revenue
    
    
    1,039
    
    
    
    1,002
    
    
    
    3,139
    
    
    
    3,034Benefits and ExpensesInsurance and annuity benefits
    
    
    581
    
    
    
    575
    
    
    
    1,719
    
    
    
    1,701Insurance commissions, net of deferrals
    
    
    64
    
    
    
    62
    
    
    
    197
    
    
    
    189General and administrative expenses, net of deferrals
    
    
    48
    
    
    
    48
    
    
    
    134
    
    
    
    133Insurance taxes, licenses and fees
    
    
    21
    
    
    
    16
    
    
    
    64
    
    
    
    53Amortization of policy acquisition costs and value of
business acquired
    
    
    82
    
    
    
    56
    
    
    
    238
    
    
    
    198Interest expense
    
    
    15
    
    
    
    12
    
    
    
    44
    
    
    
    35Communications operations
    
    
    33
    
    
    
    31
    
    
    
    100
    
    
    
    97Total benefits and expenses
    
    
    844
    
    
    
    800
    
    
    
    2,496
    
    
    
    2,406Income before income taxes and cumulative effect of
change in accounting principle
    
    
    195
    
    
    
    202
    
    
    
    643
    
    
    
    628Income taxes
    
    
    64
    
    
    
    68
    
    
    
    214
    
    
    
    211Income before cumulative effect of change in
accounting principle
    
    
    131
    
    
    
    134
    
    
    
    429
    
    
    
    417Cumulative effect of change in accounting for long-duration contracts, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )Net income
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    400Per Share Information  BasicIncome before cumulative effect of change in
accounting principle
    
    $
    0.97
    
    
    $
    0.98
    
    
    $
    3.17
    
    
    $
    3.01Cumulative effect of change in accounting for long-duration contracts, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.12
    )Net income
    
    $
    0.97
    
    
    $
    0.98
    
    
    $
    3.17
    
    
    $
    2.89Per Share Information  Assuming DilutionIncome before cumulative effect of change in
accounting principle
    
    $
    0.97
    
    
    $
    0.97
    
    
    $
    3.15
    
    
    $
    2.99Cumulative effect of change in accounting for long-duration contracts, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.12
    )Net income
    
    $
    0.97
    
    
    $
    0.97
    
    
    $
    3.15
    
    
    $
    2.87Dividends declared per common share
    
    $
    0.418
    
    
    $
    0.380
    
    
    $
    1.215
    
    
    $
    1.090
  2




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 (In Millions)
 Nine Months EndedSeptember 30,2005
    
    
    2004Cash Flows from Operating Activities
    
    $
    289
    
    
    $
    814Cash Flows from Investing ActivitiesSecurities and loans purchased, net
    
    
    (814
    )
    
    
    (1,475
    )Other investing activities
    
    
    (41
    )
    
    
    (128
    )Net cash used in investing activities
    
    
    (855
    )
    
    
    (1,603
    )Cash Flows from Financing ActivitiesPolicyholder contract deposits
    
    
    2,151
    
    
    
    2,154Policyholder contract withdrawals
    
    
    (1,719
    )
    
    
    (1,257
    )Funding agreements issuance
    
    
    300
    
    
    
    Net borrowings (repayments)
    
    
    68
    
    
    
    213Net repurchase of common shares
    
    
    (145
    )
    
    
    (226
    )Cash dividends paid
    
    
    (165
    )
    
    
    (151
    )Other financing activities
    
    
    3
    
    
    
    9Net cash provided by financing activities
    
    
    493
    
    
    
    742Decrease in cash and cash equivalents
    
    
    (73
    )
    
    
    (47
    )Cash and cash equivalents at beginning of period
    
    
    87
    
    
    
    72Cash and cash equivalents at end of period
    
    $
    14
    
    
    $
    25Supplemental Cash Flow InformationIncome taxes paid (received)
    
    $
    188
    
    
    $
    30Interest paid
    
    $
    59
    
    
    $
    42
  3




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##### 



JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED UNAUDITED CONDENSED
FINANCIAL STATEMENTS
 (Dollar Amounts In Millions, Except Share Information)
 1. Basis of Presentation
   First Quarter Earnings
  2. Significant Accounting Policies
 Stock Based Compensation
 Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
  4




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##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    400Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of taxes
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    6Pro forma net income
    
    $
    130
    
    
    $
    133
    
    
    $
    426
    
    
    $
    394Per Share  BasicAs reported
    
    $
    0.97
    
    
    $
    0.98
    
    
    $
    3.17
    
    
    $
    2.89Pro forma
    
    
    0.97
    
    
    
    0.97
    
    
    
    3.14
    
    
    
    2.85Per Share  Assuming DilutionAs reported
    
    $
    0.97
    
    
    $
    0.97
    
    
    $
    3.15
    
    
    $
    2.87Pro forma
    
    
    0.96
    
    
    
    0.96
    
    
    
    3.12
    
    
    
    2.82
 New Accounting Pronouncements
 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, Accounting Changes,
and FASB
 5




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##### 



Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements.
 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)
  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
 6




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##### 



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 of Paragraphs 1020 of EITF Issue No. 03-1, The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,
 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.
 3. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    400Change in unrealized gains (losses) on securities
    
    
    (241
    )
    
    
    227
    
    
    
    (187
    )
    
    
    (2
    )Change in minimum pension liability
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    Change in the fair value of derivative
financial instruments
    
    
    1
    
    
    
    3
    
    
    
    (5
    )
    
    
    (1
    )Comprehensive income (loss)
    
    $
    (108
    )
    
    $
    364
    
    
    $
    236
    
    
    $
    397
 4. Income Per Share of Common Stock
  7




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##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004NumeratorsIncome
before cumulative effect of change in accounting principle
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    417Cumulative effect of change in
accounting principle, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )Net income
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    400DenominatorsWeighted average shares outstanding
    
    
    134,392,449
    
    
    
    136,485,685
    
    
    
    135,377,203
    
    
    
    138,470,054Effect of dilutive securities:Stock options
    
    
    894,428
    
    
    
    1,014,180
    
    
    
    899,927
    
    
    
    1,260,971Weighted average shares outstanding -
assuming dilution
    
    
    135,286,877
    
    
    
    137,499,865
    
    
    
    136,277,130
    
    
    
    139,731,025Earnings Per Share  BasicIncome before cumulative effect of
change in accounting principle
    
    $
    0.97
    
    
    $
    0.98
    
    
    $
    3.17
    
    
    $
    3.01Cumulative effect of change in
accounting principle, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.12
    )Net income
    
    $
    0.97
    
    
    $
    0.98
    
    
    $
    3.17
    
    
    $
    2.89Earnings Per Share  Assuming DilutionIncome before cumulative effect of
change in accounting principle
    
    $
    0.97
    
    
    $
    0.97
    
    
    $
    3.15
    
    
    $
    2.99Cumulative effect of change in
accounting principle, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.12
    )Net income
    
    $
    0.97
    
    
    $
    0.97
    
    
    $
    3.15
    
    
    $
    2.87
 5. Policy Liabilities
   8




---



##### 



6. Contingent Liabilities
   7. Retirement Benefit Plans
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    4
    
    
    $
    3
    
    
    $
    12
    
    
    $
    11Interest cost
    
    
    6
    
    
    
    6
    
    
    
    18
    
    
    
    17Expected return on plan assets
    
    
    (8
    )
    
    
    (9
    )
    
    
    (24
    )
    
    
    (24
    )Amortization of net transition asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Amortization of prior service cost
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Amortization of net (gain) loss
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    1Net periodic benefit cost
    
    $
    3
    
    
    $
    1
    
    
    $
    8
    
    
    $
    5
  8. Reinsurance Transaction
   9




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##### 



9. Segment Reporting
  September 30,
    
    
    December 31,2005
    
    
    2004AssetsIndividual Products
    
    $
    19,438
    
    
    $
    18,776AIP
    
    
    10,834
    
    
    
    10,504Benefit Partners
    
    
    1,887
    
    
    
    1,839Communications
    
    
    222
    
    
    
    223Corporate and Other
    
    
    3,460
    
    
    
    3,763Total assets
    
    $
    35,841
    
    
    $
    35,105
 10




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004RevenuesIndividual Products
    
    $
    454
    
    
    $
    437
    
    
    $
    1,360
    
    
    $
    1,325AIP
    
    
    191
    
    
    
    166
    
    
    
    544
    
    
    
    519Benefit Partners
    
    
    311
    
    
    
    308
    
    
    
    958
    
    
    
    890Communications
    
    
    61
    
    
    
    58
    
    
    
    178
    
    
    
    171Corporate and Other
    
    
    29
    
    
    
    30
    
    
    
    96
    
    
    
    921,046
    
    
    
    999
    
    
    
    3,136
    
    
    
    2,997Realized investment gains (losses), before taxes
    
    
    (7
    )
    
    
    3
    
    
    
    3
    
    
    
    37Total revenues
    
    $
    1,039
    
    
    $
    1,002
    
    
    $
    3,139
    
    
    $
    3,034Total Reportable Segment Results and
Reconciliation to Net IncomeIndividual Products
    
    $
    78
    
    
    $
    76
    
    
    $
    238
    
    
    $
    226AIP
    
    
    24
    
    
    
    17
    
    
    
    61
    
    
    
    56Benefit Partners
    
    
    15
    
    
    
    20
    
    
    
    70
    
    
    
    51Communications
    
    
    14
    
    
    
    14
    
    
    
    40
    
    
    
    38Corporate and Other
    
    
    5
    
    
    
    5
    
    
    
    18
    
    
    
    22Total reportable segment results
    
    
    136
    
    
    
    132
    
    
    
    427
    
    
    
    393Realized investment gains (losses), net of taxes
    
    
    (5
    )
    
    
    2
    
    
    
    2
    
    
    
    24Income before cumulative effect of change
in accounting principle
    
    
    131
    
    
    
    134
    
    
    
    429
    
    
    
    417Cumulative effect of change in accounting
for long-duration contracts, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )Net income
    
    $
    131
    
    
    $
    134
    
    
    $
    429
    
    
    $
    400
  10. Subsequent Event
   11




---



##### 



12




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Company Profile
 Overview
  Proposed Merger
   Segment Revenues
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Individual Products
    
    
    43
    %
    
    
    44
    %
    
    
    43
    %
    
    
    44
    %AIP
    
    
    18
    %
    
    
    17
    %
    
    
    17
    %
    
    
    17
    %Benefit Partners
    
    
    30
    %
    
    
    30
    %
    
    
    31
    %
    
    
    30
    %Communications
    
    
    6
    %
    
    
    6
    %
    
    
    6
    %
    
    
    6
    %Corporate and Other
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
 13




---



##### 



Critical Accounting Policies and Estimates
  Results of Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeConsolidated Summary of IncomeIncome before realized
gains (losses) and
cumulative effect of
change in accounting
principle
    
    $
    135.6
    
    
    $
    131.6
    
    
    
    3.0
    %
    
    $
    427.1
    
    
    $
    393.0
    
    
    
    8.7
    %Realized investment gains
(losses), net of taxes
    
    
    (4.7
    )
    
    
    2.2
    
    
    
    (313.6
    )%
    
    
    1.8
    
    
    
    24.1
    
    
    
    (92.5
    )%Income before cumulative
effect of change in
accounting principle
    
    $
    130.9
    
    
    $
    133.8
    
    
    
    (2.2
    )%
    
    $
    428.9
    
    
    $
    417.1
    
    
    
    2.8
    %Cumulative effect of
change in accounting
principle for long
duration contracts, net of
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.6
    )
    
    
    (100.0
    )%Net income
    
    $
    130.9
    
    
    $
    133.8
    
    
    
    (2.2
    )%
    
    $
    428.9
    
    
    $
    400.5
    
    
    
    7.1
    %Consolidated Earnings Per ShareAssuming dilution:Income before realized
gains (losses) and
cumulative effect of
change in accounting
principle
    
    $
    1.00
    
    
    $
    0.96
    
    
    
    4.2
    %
    
    $
    3.13
    
    
    $
    2.81
    
    
    
    11.4
    %Realized investment gains
(losses), net of taxes
    
    
    (0.03
    )
    
    
    0.01
    
    
    
    (400.0
    )%
    
    
    0.02
    
    
    
    0.18
    
    
    
    (88.9
    )%Income before cumulative
effect of change in
accounting principle
    
    
    0.97
    
    
    
    0.97
    
    
    
    0.0
    %
    
    
    3.15
    
    
    
    2.99
    
    
    
    5.4
    %Cumulative effect of
change in accounting
principle, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.12
    )
    
    
    (100.0
    )%Net income
    
    $
    0.97
    
    
    $
    0.97
    
    
    
    0.0
    %
    
    $
    3.15
    
    
    $
    2.87
    
    
    
    9.8
    %
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Average number of
shares outstanding
- assuming dilution
    
    
    135,286,877
    
    
    
    137,499,865
    
    
    
    136,277,130
    
    
    
    139,731,025
 14




---



##### 



Results by Business Segment
   15




---



##### 



Results by Reportable Segment
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeIndividual Products
    
    $
    77.5
    
    
    $
    75.2
    
    
    
    3.1
    %
    
    $
    237.7
    
    
    $
    225.5
    
    
    
    5.4
    %AIP
    
    
    24.0
    
    
    
    17.6
    
    
    
    36.4
    %
    
    
    61.2
    
    
    
    56.4
    
    
    
    8.5
    %Benefit Partners
    
    
    15.0
    
    
    
    19.7
    
    
    
    (23.9
    )%
    
    
    70.1
    
    
    
    50.8
    
    
    
    38.0
    %Communications
    
    
    13.9
    
    
    
    13.5
    
    
    
    3.0
    %
    
    
    39.9
    
    
    
    37.8
    
    
    
    5.6
    %Corporate and Other
    
    
    5.2
    
    
    
    5.6
    
    
    
    (7.1
    )%
    
    
    18.2
    
    
    
    22.5
    
    
    
    (19.1
    )%Total reportable segment results
    
    
    135.6
    
    
    
    131.6
    
    
    
    3.0
    %
    
    
    427.1
    
    
    
    393.0
    
    
    
    8.7
    %Realized investment gains
(losses), net of taxes
    
    
    (4.7
    )
    
    
    2.2
    
    
    
    (313.6
    )%
    
    
    1.8
    
    
    
    24.1
    
    
    
    (92.5
    )%Net income before cumulative
effect of change in accounting
principle
    
    
    130.9
    
    
    
    133.8
    
    
    
    (2.2
    )%
    
    
    428.9
    
    
    
    417.1
    
    
    
    2.8
    %Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.6
    )
    
    
    (100.0
    )%Net income
    
    $
    130.9
    
    
    $
    133.8
    
    
    
    (2.2
    )%
    
    $
    428.9
    
    
    $
    400.5
    
    
    
    7.1
    %
 Segment Assets
  September 30,2005
    
    
    2004Individual Products
    
    $
    19,438
    
    
    $
    18,484AIP
    
    
    10,834
    
    
    
    10,479Benefit Partners
    
    
    1,887
    
    
    
    1,797Communications
    
    
    222
    
    
    
    219Corporate and Other
    
    
    3,460
    
    
    
    3,667Total assets
    
    $
    35,841
    
    
    $
    34,646
 Individual Products
  16




---



##### 



(1)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeUL-Type Products:Net investment income
    
    $
    188.4
    
    
    $
    185.2
    
    
    
    1.7
    %
    
    $
    560.1
    
    
    $
    553.8
    
    
    
    1.1
    %Interest credited to policyholders
    
    
    (128.4
    )
    
    
    (127.8
    )
    
    
    (0.5
    )%
    
    
    (382.4
    )
    
    
    (378.9
    )
    
    
    (0.9
    )%Interest margin
    
    
    60.0
    
    
    
    57.4
    
    
    
    4.5
    %
    
    
    177.7
    
    
    
    174.9
    
    
    
    1.6
    %Product charge revenue:Cost of insurance charges
    
    
    145.3
    
    
    
    137.0
    
    
    
    6.1
    %
    
    
    442.3
    
    
    
    405.4
    
    
    
    9.1
    %Expense charges
    
    
    40.1
    
    
    
    30.8
    
    
    
    30.2
    %
    
    
    115.0
    
    
    
    106.0
    
    
    
    8.5
    %Surrender charges
    
    
    7.9
    
    
    
    9.7
    
    
    
    (18.6
    )%
    
    
    24.9
    
    
    
    30.3
    
    
    
    (17.8
    )%Total product charge revenue
    
    
    193.3
    
    
    
    177.5
    
    
    
    8.9
    %
    
    
    582.2
    
    
    
    541.7
    
    
    
    7.5
    %Death benefits and other insurance
benefits
    
    
    (80.4
    )
    
    
    (85.8
    )
    
    
    6.3
    %
    
    
    (255.4
    )
    
    
    (239.0
    )
    
    
    (6.9
    )%Expenses excluding amortization of DAC
and VOBA
    
    
    (24.1
    )
    
    
    (23.6
    )
    
    
    (2.1
    )%
    
    
    (65.6
    )
    
    
    (70.6
    )
    
    
    7.1
    %Amortization of DAC and VOBA
    
    
    (51.6
    )
    
    
    (34.3
    )
    
    
    (50.4
    )%
    
    
    (142.9
    )
    
    
    (131.8
    )
    
    
    (8.4
    )%Miscellaneous income (expense)
    
    
    (0.3
    )
    
    
    (0.1
    )
    
    
    (200.0
    )%
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    0.0
    %UL-type product income before taxes
    
    
    96.9
    
    
    
    91.1
    
    
    
    6.4
    %
    
    
    295.5
    
    
    
    274.7
    
    
    
    7.6
    %Traditional Products:Premiums and other considerations
    
    
    37.3
    
    
    
    37.2
    
    
    
    0.3
    %
    
    
    109.1
    
    
    
    115.3
    
    
    
    (5.4
    )%Net investment income
    
    
    36.1
    
    
    
    37.7
    
    
    
    (4.2
    )%
    
    
    109.4
    
    
    
    114.8
    
    
    
    (4.7
    )%Benefits
    
    
    (42.1
    )
    
    
    (41.8
    )
    
    
    (0.7
    )%
    
    
    (123.7
    )
    
    
    (130.1
    )
    
    
    4.9
    %Expenses excluding amortization of DAC
and VOBA
    
    
    (7.1
    )
    
    
    (6.0
    )
    
    
    (18.3
    )%
    
    
    (20.8
    )
    
    
    (19.8
    )
    
    
    (5.1
    )%Amortization of DAC and VOBA
    
    
    (4.3
    )
    
    
    (4.3
    )
    
    
    0.0
    %
    
    
    (11.0
    )
    
    
    (11.9
    )
    
    
    7.6
    %Traditional product income before taxes
    
    
    19.9
    
    
    
    22.8
    
    
    
    (12.7
    )%
    
    
    63.0
    
    
    
    68.3
    
    
    
    (7.8
    )%Reportable segment results before
income taxes(1)
    
    
    116.8
    
    
    
    113.9
    
    
    
    2.5
    %
    
    
    358.5
    
    
    
    343.0
    
    
    
    4.5
    %Income taxes
    
    
    (39.3
    )
    
    
    (38.7
    )
    
    
    (1.6
    )%
    
    
    (120.8
    )
    
    
    (117.5
    )
    
    
    (2.8
    )%Reportable segment results(1)
    
    $
    77.5
    
    
    $
    75.2
    
    
    
    3.1
    %
    
    $
    237.7
    
    
    $
    225.5
    
    
    
    5.4
    %
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 of the Consolidated
Financial Statements in our Form 10-K for further discussion. 17




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeAnnualized life
insurance premium
sales:Individual Markets
excluding Community
Banks and BOLI
    
    $
    80
    
    
    $
    48
    
    
    
    66.7
    %
    
    $
    201
    
    
    $
    148
    
    
    
    35.8
    %Community Banks and
BOLI
    
    $
    1
    
    
    $
    2
    
    
    
    (50.0
    )%
    
    $
    1
    
    
    $
    6
    
    
    
    (83.3
    )%Average UL
policyholder fund
balances
    
    $
    11,647
    
    
    $
    11,138
    
    
    
    4.6
    %
    
    $
    11,528
    
    
    $
    11,073
    
    
    
    4.1
    %Average VUL separate
account assets
    
    
    1,731
    
    
    
    1,525
    
    
    
    13.5
    %
    
    
    1,689
    
    
    
    1,515
    
    
    
    11.5
    %$
    13,378
    
    
    $
    12,663
    
    
    
    5.6
    %
    
    $
    13,217
    
    
    $
    12,588
    
    
    
    5.0
    %Average face
amount of
insurance in
force :Total
    
    $
    166,892
    
    
    $
    165,527
    
    
    
    0.8
    %
    
    $
    166,410
    
    
    $
    165,770
    
    
    
    0.4
    %UL-type contracts
    
    $
    129,640
    
    
    $
    126,789
    
    
    
    2.2
    %
    
    $
    129,018
    
    
    $
    126,575
    
    
    
    1.9
    %Average assets
    
    $
    19,300
    
    
    $
    18,384
    
    
    
    5.0
    %
    
    $
    19,078
    
    
    $
    18,169
    
    
    
    5.0
    %
    18




---



##### 



19




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeCommissions
    
    $
    98.7
    
    
    $
    68.8
    
    
    
    (43.5
    )%
    
    $
    259.7
    
    
    $
    198.2
    
    
    
    (31.0
    )%General and
administrative 
acquisition related
    
    
    24.3
    
    
    
    19.2
    
    
    
    (26.6
    )%
    
    
    63.0
    
    
    
    57.2
    
    
    
    (10.1
    )%General and
administrative 
maintenance related
    
    
    12.6
    
    
    
    10.2
    
    
    
    (23.5
    )%
    
    
    33.0
    
    
    
    32.4
    
    
    
    (1.9
    )%Taxes, licenses and fees
    
    
    12.9
    
    
    
    9.6
    
    
    
    (34.4
    )%
    
    
    36.6
    
    
    
    31.9
    
    
    
    (14.7
    )%Total commissions and
expenses incurred
    
    
    148.5
    
    
    
    107.8
    
    
    
    (37.8
    )%
    
    
    392.3
    
    
    
    319.7
    
    
    
    (22.7
    )%Less commissions and
expenses capitalized
    
    
    (117.3
    )
    
    
    (78.2
    )
    
    
    50.0
    %
    
    
    (305.9
    )
    
    
    (229.3
    )
    
    
    33.4
    %Expenses excluding
amortization of DAC and
VOBA
    
    
    31.2
    
    
    
    29.6
    
    
    
    (5.4
    )%
    
    
    86.4
    
    
    
    90.4
    
    
    
    4.4
    %Amortization of DAC and
VOBA
    
    
    55.9
    
    
    
    38.6
    
    
    
    (44.8
    )%
    
    
    153.9
    
    
    
    143.7
    
    
    
    (7.1
    )%Total expense
    
    $
    87.1
    
    
    $
    68.2
    
    
    
    (27.7
    )%
    
    $
    240.3
    
    
    $
    234.1
    
    
    
    (2.6
    )%
  20




---



##### 



21




---



##### 



Annuity and Investment Products
  (1)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeInvestment product charges and premiums
    
    $
    3.2
    
    
    $
    3.4
    
    
    
    (5.9
    )%
    
    $
    9.2
    
    
    $
    9.0
    
    
    
    2.2
    %Net investment income
    
    
    157.2
    
    
    
    137.2
    
    
    
    14.6
    %
    
    
    442.8
    
    
    
    425.4
    
    
    
    4.1
    %Broker-dealer concessions and other
    
    
    31.1
    
    
    
    25.6
    
    
    
    21.5
    %
    
    
    92.4
    
    
    
    84.5
    
    
    
    9.3
    %Total revenue
    
    
    191.5
    
    
    
    166.2
    
    
    
    15.2
    %
    
    
    544.4
    
    
    
    518.9
    
    
    
    4.9
    %Policy benefits (including interest credited)
    
    
    104.8
    
    
    
    100.3
    
    
    
    (4.5
    )%
    
    
    300.4
    
    
    
    307.6
    
    
    
    2.3
    %Insurance expenses
    
    
    21.0
    
    
    
    14.6
    
    
    
    (43.8
    )%
    
    
    63.3
    
    
    
    45.4
    
    
    
    (39.4
    )%Broker-dealer expenses
    
    
    29.2
    
    
    
    24.6
    
    
    
    (18.7
    )%
    
    
    87.7
    
    
    
    80.0
    
    
    
    (9.6
    )%Total benefits and expenses
    
    
    155.0
    
    
    
    139.5
    
    
    
    (11.1
    )%
    
    
    451.4
    
    
    
    433.0
    
    
    
    (4.2
    )%Reportable segment results before
income taxes (1)
    
    
    36.5
    
    
    
    26.7
    
    
    
    36.7
    %
    
    
    93.0
    
    
    
    85.9
    
    
    
    8.3
    %Income taxes
    
    
    12.5
    
    
    
    9.1
    
    
    
    (37.4
    )%
    
    
    31.8
    
    
    
    29.5
    
    
    
    (7.8
    )%Reportable segment results (1)
    
    $
    24.0
    
    
    $
    17.6
    
    
    
    36.4
    %
    
    $
    61.2
    
    
    $
    56.4
    
    
    
    8.5
    %
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 of the Consolidated
Financial Statements in our Form 10-K for further discussion. 22




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeFixed annuity premium sales
    
    $
    263
    
    
    $
    312
    
    
    
    (15.7
    )%
    
    $
    798
    
    
    $
    913
    
    
    
    (12.6
    )%Funding agreement issuance
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    300
    
    
    $
    Investment product sales
    
    $
    1,358
    
    
    $
    1,037
    
    
    
    31.0
    %
    
    $
    3,993
    
    
    $
    3,767
    
    
    
    6.0
    %Average fixed policyholder
fund balances
    
    $
    9,486
    
    
    $
    9,291
    
    
    
    2.1
    %
    
    $
    9,474
    
    
    $
    9,098
    
    
    
    4.1
    %Average separate account
policyholder fund balances
    
    
    283
    
    
    
    323
    
    
    
    (12.4
    )%
    
    
    297
    
    
    
    338
    
    
    
    (12.1
    )%Average funding agreement
balances
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    $
    10,069
    
    
    $
    9,614
    
    
    
    4.7
    %
    
    $
    9,921
    
    
    $
    9,436
    
    
    
    5.1
    %Average assets
    
    $
    10,770
    
    
    $
    10,462
    
    
    
    
    
    
    $
    10,639
    
    
    $
    10,316Effective investment
spreads for
fixed annuities and funding
agreements
    
    
    2.20
    %
    
    
    1.62
    %
    
    
    
    
    
    
    1.95
    %
    
    
    1.68
    %Effective investment
spreads for
fixed annuities and funding
agreements excluding
gross SFAS 133
impact
    
    
    1.82
    %
    
    
    1.74
    %
    
    
    
    
    
    
    1.88
    %
    
    
    1.70
    %Fixed annuity surrenders as a
percentage of beginning fund
balances
    
    
    18.7
    %
    
    
    15.4
    %
    
    
    
    
    
    
    16.2
    %
    
    
    11.0
    %
   23




---



##### 



24




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeInsurance companies:Commissions
    
    $
    16.9
    
    
    $
    20.5
    
    
    
    17.6
    %
    
    $
    50.0
    
    
    $
    56.5
    
    
    
    11.5
    %General and administrative 
acquisition related
    
    
    3.2
    
    
    
    3.6
    
    
    
    11.1
    %
    
    
    12.8
    
    
    
    10.4
    
    
    
    (23.1
    )%General and administrative 
maintenance related
    
    
    2.0
    
    
    
    1.6
    
    
    
    (25.0
    )%
    
    
    5.0
    
    
    
    4.8
    
    
    
    (4.2
    )%Taxes, licenses and fees
    
    
    0.5
    
    
    
    0.6
    
    
    
    16.7
    %
    
    
    2.1
    
    
    
    1.8
    
    
    
    (16.7
    )%Gross commissions and
expenses incurred
    
    
    22.6
    
    
    
    26.3
    
    
    
    14.1
    
    
    
    69.9
    
    
    
    73.5
    
    
    
    4.9
    %Less commissions and
expenses capitalized
    
    
    (18.1
    )
    
    
    (22.5
    )
    
    
    (19.6
    )%
    
    
    (58.2
    )
    
    
    (62.6
    )
    
    
    (7.0
    )%Amortization of DAC and VOBA
    
    
    16.5
    
    
    
    10.8
    
    
    
    (52.8
    )%
    
    
    51.6
    
    
    
    34.5
    
    
    
    (49.6
    )%Net expense  insurance companies
    
    
    21.0
    
    
    
    14.6
    
    
    
    (43.8
    )%
    
    
    63.3
    
    
    
    45.4
    
    
    
    (39.4
    )%Broker/Dealer:Commissions
    
    
    26.3
    
    
    
    21.8
    
    
    
    (20.6
    )%
    
    
    79.0
    
    
    
    71.4
    
    
    
    (10.6
    )%Other
    
    
    2.9
    
    
    
    2.8
    
    
    
    (3.6
    )%
    
    
    8.7
    
    
    
    8.6
    
    
    
    (1.2
    )%Net expense  broker/dealer
    
    
    29.2
    
    
    
    24.6
    
    
    
    (18.7
    )%
    
    
    87.7
    
    
    
    80.0
    
    
    
    (9.6
    )%Net expense
    
    $
    50.2
    
    
    $
    39.2
    
    
    
    (28.1
    )%
    
    $
    151.0
    
    
    $
    125.4
    
    
    
    (20.4
    )%
  25




---



##### 



Benefit Partners
  (1)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangePremiums and other considerations
    
    $
    286.6
    
    
    $
    284.2
    
    
    
    0.8
    %
    
    $
    886.4
    
    
    $
    824.4
    
    
    
    7.5
    %Net investment income
    
    
    24.3
    
    
    
    23.7
    
    
    
    2.5
    %
    
    
    72.0
    
    
    
    65.3
    
    
    
    10.3
    %Total revenues
    
    
    310.9
    
    
    
    307.9
    
    
    
    1.0
    %
    
    
    958.4
    
    
    
    889.7
    
    
    
    7.7
    %Policy benefits
    
    
    218.3
    
    
    
    212.1
    
    
    
    (2.9
    )%
    
    
    637.7
    
    
    
    625.2
    
    
    
    (2.0
    )%Expenses
    
    
    69.6
    
    
    
    65.6
    
    
    
    (6.1
    )%
    
    
    212.9
    
    
    
    186.4
    
    
    
    (14.2
    )%Total benefits and expenses
    
    
    287.9
    
    
    
    277.7
    
    
    
    (3.7
    )%
    
    
    850.6
    
    
    
    811.6
    
    
    
    (4.8
    )%Reportable segment results before
income taxes(1)
    
    
    23.0
    
    
    
    30.2
    
    
    
    (23.8
    )%
    
    
    107.8
    
    
    
    78.1
    
    
    
    38.0
    %Income taxes
    
    
    8.0
    
    
    
    10.5
    
    
    
    23.8
    %
    
    
    37.7
    
    
    
    27.3
    
    
    
    (38.1
    )%Reportable segment results (1)
    
    $
    15.0
    
    
    $
    19.7
    
    
    
    (23.9
    )%
    
    $
    70.1
    
    
    $
    50.8
    
    
    
    38.0
    %
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 of the Consolidated
Financial Statements in our Form 10-K for further discussion. 26




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeLife, Disability and
Dental annualized sales
    
    $
    57.8
    
    
    $
    46.8
    
    
    
    23.5
    %
    
    $
    180.6
    
    
    $
    148.8
    
    
    
    21.4
    %Premiums and other
considerations:Life
    
    $
    103.9
    
    
    $
    112.0
    
    
    
    (7.2
    )%
    
    $
    320.7
    
    
    $
    312.4
    
    
    
    2.7
    %Disability
    
    
    123.5
    
    
    
    113.6
    
    
    
    8.7
    %
    
    
    361.1
    
    
    
    313.5
    
    
    
    15.2
    %Dental
    
    
    33.0
    
    
    
    34.9
    
    
    
    (5.4
    )%
    
    
    97.4
    
    
    
    99.7
    
    
    
    (2.3
    )%Other
    
    
    26.2
    
    
    
    23.7
    
    
    
    10.5
    %
    
    
    107.2
    
    
    
    98.8
    
    
    
    8.5
    %Total
    
    $
    286.6
    
    
    $
    284.2
    
    
    
    0.8
    %
    
    $
    886.4
    
    
    $
    824.4
    
    
    
    7.5
    %Reportable segment
results:Life
    
    $
    5.9
    
    
    $
    7.1
    
    
    
    (16.9
    )%
    
    $
    34.4
    
    
    $
    18.9
    
    
    
    82.0
    %Disability
    
    
    7.1
    
    
    
    12.0
    
    
    
    (40.8
    )%
    
    
    31.5
    
    
    
    29.1
    
    
    
    8.2
    %Dental
    
    
    1.7
    
    
    
    1.1
    
    
    
    54.5
    %
    
    
    2.6
    
    
    
    2.2
    
    
    
    18.2
    %Other
    
    
    0.3
    
    
    
    (0.5
    )
    
    
    160.0
    %
    
    
    1.6
    
    
    
    0.6
    
    
    
    166.7
    %Total
    
    $
    15.0
    
    
    $
    19.7
    
    
    
    (23.9
    )%
    
    $
    70.1
    
    
    $
    50.8
    
    
    
    38.0
    %Loss ratios:Life
    
    
    75.4
    %
    
    
    75.0
    %
    
    
    
    
    
    
    67.1
    %
    
    
    75.3
    %Disability
    
    
    75.3
    %
    
    
    69.6
    %
    
    
    
    
    
    
    70.3
    %
    
    
    71.2
    %Dental
    
    
    72.9
    %
    
    
    76.6
    %
    
    
    
    
    
    
    76.2
    %
    
    
    78.1
    %Combined
    
    
    75.0
    %
    
    
    72.9
    %
    
    
    
    
    
    
    69.7
    %
    
    
    73.9
    %Gross general and
administrative expenses
as a % of premium income
    
    
    10.6
    %
    
    
    10.4
    %
    
    
    
    
    
    
    9.8
    %
    
    
    9.9
    %Total expenses as a % of
premium income
    
    
    24.4
    %
    
    
    23.1
    %
    
    
    
    
    
    
    24.0
    %
    
    
    22.7
    %Average assets
    
    $
    1,873
    
    
    $
    1,781
    
    
    
    
    
    
    $
    1,852
    
    
    $
    1,638
  27




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeCommissions
    
    $
    33.3
    
    
    $
    32.4
    
    
    
    (2.8
    )%
    
    $
    102.4
    
    
    $
    94.0
    
    
    
    (8.9
    )%General and administrative
    
    
    30.4
    
    
    
    29.6
    
    
    
    (2.7
    )%
    
    
    86.6
    
    
    
    81.6
    
    
    
    (6.1
    )%Taxes, licenses and fees
    
    
    7.0
    
    
    
    6.3
    
    
    
    (11.1
    )%
    
    
    22.8
    
    
    
    18.6
    
    
    
    (22.6
    )%Total commissions and
expenses incurred
    
    
    70.7
    
    
    
    68.3
    
    
    
    (3.5
    )%
    
    
    211.8
    
    
    
    194.2
    
    
    
    (9.1
    )%Less commissions and
expenses capitalized
    
    
    (10.7
    )
    
    
    (9.7
    )
    
    
    10.3
    %
    
    
    (31.6
    )
    
    
    (27.7
    )
    
    
    14.1
    %Amortization of DAC
    
    
    9.6
    
    
    
    7.0
    
    
    
    (37.1
    )%
    
    
    32.7
    
    
    
    19.9
    
    
    
    (64.3
    )%Total expense
    
    $
    69.6
    
    
    $
    65.6
    
    
    
    (6.1
    )%
    
    $
    212.9
    
    
    $
    186.4
    
    
    
    (14.2
    )%
   28




---



##### 



Communications
 (1)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeCommunications revenues (net)
    
    $
    59.1
    
    
    $
    58.1
    
    
    
    1.7
    %
    
    $
    177.2
    
    
    $
    173.1
    
    
    
    2.4
    %Cost of sales
    
    
    11.3
    
    
    
    10.5
    
    
    
    (7.6
    )%
    
    
    33.7
    
    
    
    32.7
    
    
    
    (3.1
    )%Operating expenses
    
    
    20.9
    
    
    
    20.3
    
    
    
    (3.0
    )%
    
    
    65.8
    
    
    
    64.1
    
    
    
    (2.7
    )%Broadcast cash flow
    
    
    26.9
    
    
    
    27.3
    
    
    
    (1.5
    )%
    
    
    77.7
    
    
    
    76.3
    
    
    
    1.8
    %Depreciation and amortization
    
    
    2.0
    
    
    
    2.1
    
    
    
    4.8
    %
    
    
    6.3
    
    
    
    6.5
    
    
    
    3.1
    %Corporate general and administrative expenses
    
    
    1.2
    
    
    
    1.6
    
    
    
    25.0
    %
    
    
    4.7
    
    
    
    5.2
    
    
    
    9.6
    %Net interest expense
    
    
    0.5
    
    
    
    0.6
    
    
    
    16.7
    %
    
    
    1.5
    
    
    
    1.6
    
    
    
    6.3
    %Reportable segment results before income
taxes(1)
    
    
    23.2
    
    
    
    23.0
    
    
    
    0.9
    %
    
    
    65.2
    
    
    
    63.0
    
    
    
    3.5
    %Income taxes
    
    
    9.3
    
    
    
    9.5
    
    
    
    2.1
    %
    
    
    25.3
    
    
    
    25.2
    
    
    
    (0.4
    )%Reportable segment results (1)
    
    $
    13.9
    
    
    $
    13.5
    
    
    
    3.0
    %
    
    $
    39.9
    
    
    $
    37.8
    
    
    
    5.6
    %
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 of the Consolidated
Financial Statements in our Form 10-K for further discussion.    29




---



##### 



Corporate and Other
  (1)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings on investments and other income
    
    $
    23.2
    
    
    $
    23.1
    
    
    $
    78.3
    
    
    $
    72.0Interest expense on debt
    
    
    (15.1
    )
    
    
    (12.5
    )
    
    
    (43.7
    )
    
    
    (35.0
    )Operating expenses
    
    
    (5.0
    )
    
    
    (6.3
    )
    
    
    (18.2
    )
    
    
    (16.1
    )Income taxes
    
    
    2.1
    
    
    
    1.3
    
    
    
    1.8
    
    
    
    1.6Reportable segment results (1)
    
    
    5.2
    
    
    
    5.6
    
    
    
    18.2
    
    
    
    22.5Realized investment gains (losses), net of taxes
    
    
    (4.7
    )
    
    
    2.2
    
    
    
    1.8
    
    
    
    24.1Reportable segment results, including realized gains (1)
    
    $
    0.5
    
    
    $
    7.8
    
    
    $
    20.0
    
    
    $
    46.6
 
 (1)
    
    Reportable segment results is a non-GAAP measure. See Note 15 of the Consolidated
Financial Statements in our Form 10-K for further discussion.  30




---



##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Stock gains
    
    $
    8.3
    
    
    $
    18.7
    
    
    $
    19.3
    
    
    $
    82.3Stock losses
    
    
    (0.1
    )
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (4.2
    )Bond gains
    
    
    8.8
    
    
    
    5.7
    
    
    
    27.9
    
    
    
    31.2Bond losses from sales
    
    
    (3.2
    )
    
    
    (4.4
    )
    
    
    (14.1
    )
    
    
    (30.7
    )Bond losses from write-downs
    
    
    (22.1
    )
    
    
    (16.4
    )
    
    
    (32.4
    )
    
    
    (48.7
    )Other gains and losses (net)
    
    
    1.4
    
    
    
    4.4
    
    
    
    4.4
    
    
    
    6.6Total pretax gains
    
    
    (6.9
    )
    
    
    6.8
    
    
    
    3.9
    
    
    
    36.5DAC amortization
    
    
    (0.6
    )
    
    
    (3.4
    )
    
    
    (1.4
    )
    
    
    0.6Income taxes
    
    
    2.8
    
    
    
    (1.2
    )
    
    
    (0.7
    )
    
    
    (13.0
    )Realized investment gains (losses), net of taxes
    
    $
    (4.7
    )
    
    $
    2.2
    
    
    $
    1.8
    
    
    $
    24.1
   31




---



##### 



Favorable/September 30,
    
    
    Unfavorable2005
    
    
    2004
    
    
    2005 vs.2004Parent company, passive investment companies
and Corporate line assets of insurance
subsidiaries
    
    $
    1,173
    
    
    $
    1,065
    
    
    
    10.1
    %Unrealized gain on fixed interest investments
    
    
    380
    
    
    
    643
    
    
    
    (40.9
    )%Coinsurance receivables on acquired blocks
    
    
    883
    
    
    
    934
    
    
    
    (5.5
    )%Employee benefit plan assets
    
    
    395
    
    
    
    377
    
    
    
    4.8
    %Goodwill arising from insurance acquisitions
    
    
    270
    
    
    
    270
    
    
    
    0.0
    %Other
    
    
    359
    
    
    
    378
    
    
    
    (5.0
    )%Total
    
    $
    3,460
    
    
    $
    3,667
    
    
    
    (5.6
    )%
   Capital Resources
    Agency
    
    RatingFitch
    
    
    F1+Standard & Poors
    
    
    A1+
  32




---



##### 



33




---



##### 



JP Life
    
    JPFIC
    
    JPLAA.M. Best
    
    A++
    
    A++
    
    A++Standard & Poors
    
    AAA
    
    AAA
    
    AAAFitch Ratings
    
    AA+
    
    AA+
    
    AA+
  Liquidity
       34




---



##### 



Contractual Obligations
  Off Balance Sheet Arrangements and Commitments
  Investments
 Portfolio Description
  35




---



##### 



September 30,
    
    
    December 31,2005
    
    
    2004Publicly-issued bonds
    
    $
    17,156
    
    
    
    61.1
    %
    
    $
    16,871
    
    
    
    61.0
    %Privately-placed bonds
    
    
    5,187
    
    
    
    18.5
    
    
    
    5,210
    
    
    
    18.8Total bonds
    
    
    22,343
    
    
    
    79.6
    
    
    
    22,081
    
    
    
    79.8Redeemable preferred stock
    
    
    11
    
    
    
    
    
    
    
    13
    
    
    
    0.1Total debt securities
    
    
    22,354
    
    
    
    79.6
    
    
    
    22,094
    
    
    
    79.9Mortgage loans on real property
    
    
    3,912
    
    
    
    14.0
    
    
    
    3,667
    
    
    
    13.3Common stock
    
    
    591
    
    
    
    2.1
    
    
    
    647
    
    
    
    2.3Non-redeemable preferred stock
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    Policy loans
    
    
    836
    
    
    
    3.0
    
    
    
    839
    
    
    
    3.0Real estate
    
    
    127
    
    
    
    0.5
    
    
    
    125
    
    
    
    0.5Other
    
    
    238
    
    
    
    0.8
    
    
    
    193
    
    
    
    0.7Cash and equivalents
    
    
    14
    
    
    
    
    
    
    
    87
    
    
    
    0.3Total
    
    $
    28,074
    
    
    
    100.0
    %
    
    $
    27,655
    
    
    
    100.0
    %
 36




---



##### 



Unrealized Gains and Losses
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueAFS, carried at fair value:US Treasury obligations and direct obligations
of US Government agencies
    
    $
    235
    
    
    $
    9
    
    
    $
    (1
    )
    
    $
    243
    
    
    $
    243Federal agency mortgage-backed securities
(including collateralized mortgage obligations)
    
    
    1,315
    
    
    
    38
    
    
    
    (8
    )
    
    
    1,345
    
    
    
    1,345Obligations of states and political subdivisions
    
    
    62
    
    
    
    5
    
    
    
    
    
    
    
    67
    
    
    
    67Corporate obligations
    
    
    16,998
    
    
    
    631
    
    
    
    (141
    )
    
    
    17,488
    
    
    
    17,488Corporate private-labeled mortgage-backed
securities (including collateralized mortgage
obligations)
    
    
    1,092
    
    
    
    23
    
    
    
    (11
    )
    
    
    1,104
    
    
    
    1,104Redeemable preferred stock
    
    
    9
    
    
    
    2
    
    
    
    
    
    
    
    11
    
    
    
    11Subtotal, debt securities
    
    
    19,711
    
    
    
    708
    
    
    
    (161
    )
    
    
    20,258
    
    
    
    20,258Non-redeemable preferred stock
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    2Common stock
    
    
    191
    
    
    
    401
    
    
    
    (1
    )
    
    
    591
    
    
    
    591Securities available-for-sale
    
    
    19,903
    
    
    
    1,110
    
    
    
    (162
    )
    
    
    20,851
    
    
    
    20,851HTM, carried at amortized cost:Obligations of state and political subdivisions
    
    
    5
    
    
    
    1
    
    
    
    
    
    
    
    6
    
    
    
    5Corporate obligations
    
    
    2,091
    
    
    
    120
    
    
    
    (11
    )
    
    
    2,200
    
    
    
    2,091Debt securities held-to-maturity
    
    
    2,096
    
    
    
    121
    
    
    
    (11
    )
    
    
    2,206
    
    
    
    2,096Total AFS and HTM securities
    
    $
    21,999
    
    
    $
    1,231
    
    
    $
    (173
    )
    
    $
    23,057
    
    
    $
    22,947
  37




---



##### 



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    CarryingCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueIndustrialsBasic Materials
    
    $
    1,003
    
    
    $
    31
    
    
    $
    (7
    )
    
    $
    1,027
    
    
    $
    1,022Capital Goods
    
    
    1,389
    
    
    
    56
    
    
    
    (10
    )
    
    
    1,435
    
    
    
    1,422Communications
    
    
    1,441
    
    
    
    50
    
    
    
    (13
    )
    
    
    1,478
    
    
    
    1,464Consumer Cyclical
    
    
    1,208
    
    
    
    40
    
    
    
    (18
    )
    
    
    1,230
    
    
    
    1,218Consumer Non-Cyclical
    
    
    2,273
    
    
    
    98
    
    
    
    (16
    )
    
    
    2,355
    
    
    
    2,345Energy
    
    
    1,397
    
    
    
    54
    
    
    
    (9
    )
    
    
    1,442
    
    
    
    1,438Technology
    
    
    386
    
    
    
    5
    
    
    
    (8
    )
    
    
    383
    
    
    
    382Transportation
    
    
    836
    
    
    
    46
    
    
    
    (8
    )
    
    
    874
    
    
    
    873Other Industrials
    
    
    699
    
    
    
    24
    
    
    
    (3
    )
    
    
    720
    
    
    
    718Utilities
    
    
    3,934
    
    
    
    201
    
    
    
    (24
    )
    
    
    4,111
    
    
    
    4,082FinancialsBanks
    
    
    2,552
    
    
    
    91
    
    
    
    (20
    )
    
    
    2,623
    
    
    
    2,612Insurance
    
    
    791
    
    
    
    20
    
    
    
    (7
    )
    
    
    804
    
    
    
    802Other Financials
    
    
    1,491
    
    
    
    52
    
    
    
    (11
    )
    
    
    1,532
    
    
    
    1,527Mortgage-backed Securities
(including Commercial
Mortgage-backed
Securities)
    
    
    2,407
    
    
    
    61
    
    
    
    (18
    )
    
    
    2,450
    
    
    
    2,449Total
    
    $
    21,807
    
    
    $
    829
    
    
    $
    (172
    )
    
    $
    22,464
    
    
    $
    22,354
 Credit Risk Management
  S&P or
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofSVO
    
    Equivalent
    
    Amortized
    
    
    Fair
    
    
    Carrying
    
    
    CarryingRating
    
    Designation
    
    Cost
    
    
    Value
    
    
    Value
    
    
    Value1
    
    AAA
    
    $
    2,908
    
    
    $
    2,965
    
    
    $
    2,962
    
    
    
    13.2
    %1
    
    AA
    
    
    1,919
    
    
    
    1,998
    
    
    
    1,989
    
    
    
    8.91
    
    A
    
    
    7,517
    
    
    
    7,798
    
    
    
    7,748
    
    
    
    34.72
    
    BBB
    
    
    7,970
    
    
    
    8,187
    
    
    
    8,142
    
    
    
    36.43
    
    BB
    
    
    1,007
    
    
    
    1,024
    
    
    
    1,022
    
    
    
    4.64
    
    B
    
    
    423
    
    
    
    427
    
    
    
    427
    
    
    
    1.95
    
    CCC and lower
    
    
    53
    
    
    
    54
    
    
    
    54
    
    
    
    0.26
    
    In or near default
    
    
    10
    
    
    
    11
    
    
    
    10
    
    
    
    0.1Total
    
    $
    21,807
    
    
    $
    22,464
    
    
    $
    22,354
    
    
    
    100.0
    %
 38




---



##### 



CarryingCreditor
    
    Sector
    
    ValueWachovia Corp
    
    Financial Institutions
    
    $
    146HSBC Holdings PLC
    
    Financial Institutions
    
    
    109JP Morgan Chase & Co
    
    Financial Institutions
    
    
    107General Electric Co
    
    Capital Goods
    
    
    105Goldman Sachs Group
    
    Financial Institutions
    
    
    104Weingarten Realty Investors
    
    Financial Institutions
    
    
    103National Rural Utilities
    
    Utilities
    
    
    102Cargill Inc
    
    Consumer, Noncyclical
    
    
    102Citigroup Inc
    
    Financial Institutions
    
    
    102BB&T Corp
    
    Financial Institutions
    
    
    101
   GrossAmortized
    
    Fair
    
    Unrealized
    
    CarryingCreditor
    
    Sector
    
    Cost
    
    Value
    
    Gain/(Loss)
    
    ValueGeneral Motors Corp
    
    Consumer Cyclicals
    
    $
    59
    
    
    $
    52
    
    
    $
    (7
    )
    
    $
    52El Paso Corp
    
    Utilities
    
    
    48
    
    
    
    49
    
    
    
    1
    
    
    
    49Ahold, Royal
    
    Consumer, Noncyclical
    
    
    43
    
    
    
    47
    
    
    
    4
    
    
    
    47Kerr-McGee Corp
    
    Energy
    
    
    37
    
    
    
    38
    
    
    
    1
    
    
    
    38Nova Chem. Ltd/Nova
    
    Basic Materials
    
    
    36
    
    
    
    37
    
    
    
    1
    
    
    
    36Rite Aid Corp
    
    Consumer Cyclicals
    
    
    32
    
    
    
    33
    
    
    
    1
    
    
    
    33Homer City Funding LLC
    
    Utilities
    
    
    24
    
    
    
    28
    
    
    
    4
    
    
    
    28Liberty Media Corp
    
    Consumer Cyclicals
    
    
    28
    
    
    
    28
    
    
    
    
    
    
    
    28Williams Cos Inc
    
    Utilities
    
    
    26
    
    
    
    27
    
    
    
    1
    
    
    
    27Avis Europe PLC
    
    Consumer Cyclicals
    
    
    27
    
    
    
    26
    
    
    
    (1
    )
    
    
    26
   39




---



##### 



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
    
    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
    
    our ability and intent to retain the investment for a sufficient time to recover its value
   40




---



##### 



GrossAmortized
    
    
    
    
    
    Unrealized
    
    CarryingCost
    
    Fair Value
    
    Losses
    
    ValueDue in one year or less
    
    $
    56
    
    
    $
    55
    
    
    $
    (1
    )
    
    $
    55Due after one year through five years
    
    
    1,828
    
    
    
    1,791
    
    
    
    (37
    )
    
    
    1,796Due after five years through ten years
    
    
    4,034
    
    
    
    3,956
    
    
    
    (78
    )
    
    
    3,962Due after ten years through twenty years
    
    
    1,136
    
    
    
    1,108
    
    
    
    (28
    )
    
    
    1,108Due after twenty years
    
    
    983
    
    
    
    959
    
    
    
    (24
    )
    
    
    959Amounts not due at a single maturity date
    
    
    79
    
    
    
    75
    
    
    
    (4
    )
    
    
    75Subtotal
    
    
    8,116
    
    
    
    7,944
    
    
    
    (172
    )
    
    
    7,955Redeemable preferred stocks
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    3Total
    
    $
    8,119
    
    
    $
    7,947
    
    
    $
    (172
    )
    
    $
    7,958
  Gross
    
    % of GrossSVO
    
    S&P or Equivalent
    
    Amortized
    
    Fair
    
    % of
    
    Unrealized
    
    Unrealized
    
    CarryingRating
    
    Designation
    
    Cost
    
    Value
    
    Fair Value
    
    Losses
    
    Losses
    
    Value1
    
    AAA/AA/A
    
    $
    4,488
    
    
    $
    4,409
    
    
    
    55.5
    %
    
    $
    (79
    )
    
    
    45.9
    %
    
    $
    4,4112
    
    BBB
    
    
    3,062
    
    
    
    2,994
    
    
    
    37.7
    
    
    
    (68
    )
    
    
    39.5
    
    
    
    3,0003
    
    BB
    
    
    359
    
    
    
    343
    
    
    
    4.3
    
    
    
    (16
    )
    
    
    9.3
    
    
    
    3454
    
    B
    
    
    186
    
    
    
    178
    
    
    
    2.2
    
    
    
    (8
    )
    
    
    4.7
    
    
    
    1795
    
    CCC and lower
    
    
    22
    
    
    
    21
    
    
    
    0.3
    
    
    
    (1
    )
    
    
    0.6
    
    
    
    216
    
    In or near default
    
    
    2
    
    
    
    2
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    2Total
    
    $
    8,119
    
    
    $
    7,947
    
    
    
    100.0
    %
    
    $
    (172
    )
    
    
    100.0
    %
    
    $
    7,958
   Gross
    
    
    % of GrossFair
    
    
    Unrealized
    
    
    Unrealized
    
    
    CarryingValue
    
    
    Losses
    
    
    Losses
    
    
    ValueMore than 1 year
    
    $
    2,189
    
    
    $
    (66
    )
    
    
    38.4
    %
    
    $
    2,2066 months
 1 year
    
    
    1,499
    
    
    
    (38
    )
    
    
    22.1
    
    
    
    1,504Less than 6 months
    
    
    4,259
    
    
    
    (68
    )
    
    
    39.5
    
    
    
    4,248Total
    
    $
    7,947
    
    
    $
    (172
    )
    
    
    100.0
    %
    
    $
    7,958
   41




---



##### 



Realized Losses  Write-downs and Sales
    Mortgage-Backed Securities
  September 30,
    
    
    December 31,2005
    
    
    2004Federal agency issued mortgage-backed securities
    
    $
    1,345
    
    
    $
    1,670Corporate private-labeled mortgage-backed securities
    
    
    1,104
    
    
    
    688Total
    
    $
    2,449
    
    
    $
    2,358
   Mortgage Loans
  42




---



##### 



Derivative Instruments
   Market Risk Exposures
  External Trends
  Forward Looking Information
    43




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
  44




---



##### 



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
 Issuer Purchases of Equity Securities
 Total Number
    
    
    Maximumof Shares
    
    
    Number ofAverage
    
    
    Purchased
    
    
    Shares thatTotal
    
    
    Price
    
    
    as Part
    
    
    May Yet BeNumber
    
    
    Paid
    
    
    of Publicly
    
    
    Purchasedof Shares
    
    
    per
    
    
    Announced
    
    
    Under thePeriod
    
    Purchased
    
    
    Share
    
    
    Plans
    
    
    PlansJuly 1, 2005 to July 31, 2005
    
    
    10,000
    
    
    $
    49.80
    
    
    
    10,000
    
    
    
    1,722,000August 1, 2005 to August 31, 2005
    
    
    826,500
    
    
    
    49.66
    
    
    
    826,500
    
    
    
    895,500September 1, 2005 to September 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895,500Total
    
    
    836,500
    
    
    $
    49.66
    
    
    
    836,500
   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 third quarter 2005 were: July, none; August, 281 shares, average
price $49.84; and September, 581 shares, average price $50.10.2.
    
    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. The number of shares so used to pay option exercise prices in the
third quarter 2005 were: July, none; August, none; and September, none.
 
 Item 6. Exhibits
  45




---



##### 



SIGNATURES
   
   
  46




---



##### 



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    Amendment No. 1 to Employment Agreement of Dennis R. Glass, CEO.31.1
    
    Certification of Chief Executive Officer pursuant to Exchange
Act Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Exchange
Act Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32
    
    Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 47