CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under line of credit arrangements and long-term debt......................... 4,351,177 1,975,800 1,159,538 Capital contribution from PLC........................................................... 90,000 Principal payments on line of credit arrangements and long-term debt.................... (4,351,203) (1,973,437) (1,159,538) Principal payment on surplus note to PLC................................................ (4,000) (2,000) (4,693) Dividends to share owner................................................................ (60,100) (100) Investment product deposits and change in universal life deposits....................... 1,300,736 981,124 910,659 Investment product withdrawals.......................................................... (1,190,903) (1,037,424) (745,083) -------------------------------------- Net cash provided by (used in) financing activities.......................................... 105,807 (116,037) 250,783 --------------------------------------
The accompanying consolidated financial statements of Protective Life Insurance Company and subsidiaries ("Protective") are prepared on the basis of accounting principles generally accepted in the United States. Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities. (See also Note B.)
·Other long-term investments-- at a variety of methods similar to those listed above, as deemed appropriate for the specific investment.
At December 31, 1999, contracts with a notional amount of $1,328.9 million were in a $2.1 million net unrealized gain position. At December 31, 1998, contracts with a notional amount of $1,623.1 million were in a $5.4 million net unrealized gain position. Protective recognized $3.8 million in realized investment gains related to derivative financial instruments in 1999.
Realized investment gains (losses) for the years ended December 31 are summarized as follows:
Fixed maturities: Bonds: Mortgage-backed........................... $2,619,918 $ 18,491 $101,150 $2,537,259 United States Government and authorities............................... 154,954 138 1,257 153,835 States, municipalities, and political subdivisions.................... 27,254 7 295 26,966 Public utilities............................ 537,834 301 14,690 523,445 Convertibles and bonds with warrants.................................. 693 0 155 538 All other corporate bonds................... 3,176,016 5,938 149,591 3,032,363 Redeemable preferred stocks............... 1,182 19 0 1,201 -------------------------------------------------------- 6,517,851 24,894 267,138 6,275,607 Equity securities............................ 32,092 644 2,040 30,696 Short-term investments....................... 81,171 0 0 81,171 -------------------------------------------------------- $6,631,114 $ 25,538 $269,178 $6,387,474 ========================================================
1999 1998 1997 ---------------------------------------- Fixed maturities...................................... $(217,901) $(21,705) $72,741 Equity securities..................................... $ 973 $ 4,605 $(8,813)
At December 31, 1999, all of Protective's mortgage loans were commercial loans of which 79% were retail, 8% were apartments, 6% were office buildings, and 6% were warehouses. Protective specializes in making mortgage loans on either credit-oriented or credit-anchored commercial properties, most of which are strip shopping centers in smaller towns and cities. No single tenant's leased space represents more than 5% of mortgage loans. Approximately 74% of the mortgage loans are on properties located in the following states listed in decreasing order of significance: Florida, Texas, Georgia, Tennessee, North Carolina, Virginia, Alabama, South Carolina, Washington, Kentucky, Ohio, and Mississippi.
Note I-- PREFERRED STOCK PLC owns all of the 2,000 shares of preferred stock issued by Protective's subsidiary, Protective Life and Annuity Insurance Company ("PLA"). Prior to November 1998, the stock paid, when and if declared, annual minimum cumulative dividends of $50 per share, and noncumulative participating dividends to the extent PLA's statutory earnings for the immediately preceding fiscal year exceeded $1 million. PLA paid no preferred dividends during 1999. Dividends of $0.1 million were paid to PLC in 1998, and 1997. Effective November 3, 1998, PLA's articles of incorporation were amended such that the provision for an annual minimum cumulative dividend was removed.
Estimated Estimated Carrying Fair Carrying Fair Amount Values Amount Values -----------------------------------------------------------------
Protective estimates the fair value of its derivative financial instruments using market quotes or derivative pricing models. The fair value represents the net amount of cash Protective would have received (or paid) had the contracts been terminated on December 31.