Operating Income (Loss)(1) Life Insurance Acquisitions........................ $11,605,470 $12,159,598 Specialty Insurance Products Dental Benefits..................... (77,872) 489,179 Financial Institutions.............. 603,586 910,419 Retirement Savings and Investment Products Investment Products................. 870,329 (714,839) Corporate and Other...................... 305,451 123,278 ------------------- ----------------- Total operating income................... 13,306,964 12,967,635 ------------------- ----------------- Realized Investment Gains Unallocated Realized Investment Gains.... 42,148 89,550 ------------------- ----------------- Total.................................... 42,148 89,550 ------------------- ----------------- Income (Loss) Before Income Tax Life Insurance Acquisitions........................ 11,605,470 12,159,598 Specialty Insurance Products Dental Benefits..................... (77,872) 489,179 Financial Institutions.............. 603,586 910,419 Retirement Savings and Investment Products Investment Products................. 870,329 (714,839) Corporate and Other...................... 305,451 123,278 Unallocated Realized Investment Gains.... 42,148 89,550 -------------- -------------- Total income before income tax............................. $13,349,112 $13,057,185 ============== ===============
REVENUES Premiums and policy fees............................................... $49,266,966 $ 56,989,060 $ 23,242,432 Reinsurance ceded...................................................... (18,061,887) (20,858,094) (13,475,288) ------------ ------------ ------------ Net of reinsurance ceded............................................. 31,205,079 36,130,966 9,767,144 Net investment income.................................................. 31,692,497 28,714,951 10,678,166 Realized investment gains.............................................. 42,148 89,550 127,769 Other income (loss).................................................... (6,551) 90,289 (598) ------------ ------------ ----------- 62,933,173 65,025,756 20,572,481 ------------ ------------ ----------- BENEFITS AND EXPENSES Benefits and settlement expenses (net of reinsurance ceded: 2000-$15,454,285; 1999-$17,399,370;1998-$18,523,397)................................. 33,502,040 32,207,147 9,261,000 Amortization of deferred policy acquisition costs...................... 6,765,446 6,835,492 1,711,138 Other operating expenses (net of reinsurance ceded: 2000-$286,602; 1999-$291,274; 1998-$247,095)...................................... 9,316,575 12,925,932 6,246,819 ------------ ------------ ---------- 49,584,061 51,968,571 17,218,957 ------------ ------------ ----------
SHARE-OWNERS' EQUITY Preferred Stock, $1.00 par value, shares authorized, issued and outstanding: 2,000....................................... 2,000 2,000 Common Stock, $10.00 par value Shares authorized: 2000 and 1999 - 500,000 Shares issued and outstanding: 2000 and 1999 - 250,000........................... 2,500,000 2,500,000 Additional paid-in capital........................................................... 101,386,324 101,386,324 Retained earnings.................................................................... 18,748,333 22,754,665 Accumulated other comprehensive income Net unrealized losses on investments (net of income tax: 2000 - ($1,759,799);1999 - ($6,108,773)) .................... (3,268,198) (11,344,864) ------------ ------------- Total share-owners' equity.................................................... 119,368,459 115,298,125 ------------ ------------- $652,899,705 $609,497,829 ============ =============
Balance, December 31, 1997.............. $2,000 $2,000,000 $ 6,200,000 $ 16,538,954 $709,187 $ 25,450,141 --------------- Net income for 1998................... 2,414,538 2,414,538 Increase in net unrealized gains on investments (net of income tax: $4,405,946)...... 8,182,472 8,182,472 Reclassification adjustment for amounts included in net income (net of income tax: ($44,719))....... (83,050) (83,050) ------------- Comprehensive income for 1998......... 10,513,960 ------------- Common stock dividend (50,000 shares). 500,000 (500,000) Preferred dividends ($50 per share)... (100,000) (100,000) Capital contribution from Protective.. 95,374,516 95,374,516 ------------ ---------- ------------- ------------ ------------- --------------- Balance, December 31, 1998.............. 2,000 2,500,000 101,574,516 18,353,492 8,808,609 131,238,617 --------------- Net income for 1999................... 9,401,173 9,401,173 Decrease in net unrealized gains on investments (net of income tax: ($(10,820,527)).. Reclassification adjustment for amounts (20,095,265) (20,095,265) included in net income (net of income tax: ($31,342))....... (58,208) (58,208) -------------- Comprehensive loss for 1999........... (10,752,300) -------------- Reduction in paid in capital.......... (188,192) (188,192) Common dividends ($20 per share)...... (5,000,000) (5,000,000) ------- ----------- ------------- ------------ ------------- -------------- Balance, December 31, 1999.............. 2,000 2,500,000 101,386,324 22,754,665 (11,344,864) $115,298,125 -------------- Net income for 2000................... 8,743,668 8,743,668 Decrease in net unrealized losses on investments (net of income tax: $4,363,726)..... 8,104,062 8,104,062 Reclassification adjustment for amounts included in net income (net of income tax: ($14,752))...... (27,396) (27,396) -------------- Comprehensive income for 2000......... 16,820,334 -------------- Common dividends ($51 per share)...... (12,750,000) (12,750,000) ------- ----------- ------------- -------------- ------------- -------------- Balance, December 31, 2000.............. $2,000 $2,500,000 $101,386,324 $ 18,748,333 $ (3,268,198) $119,368,459 ======= =========== ============= ============== ============= ==============
BASIS OF PRESENTATION The accompanying financial statements of Protective Life and Annuity Insurance Company ("the Company") are prepared on the basis of accounting principles generally accepted in the United States of America. Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities. (See also Note B.)
The Company recognizes certain permanent impairments through charges to an allowance for uncollectible amounts on investments. The allowance totaled $500,000 at December 31, 2000 and 1999. Additions and reductions to the allowance are included in realized investment gains (losses). There were no such additions/reductions to the allowance in 2000 or 1999. Without such additions/reductions, the Company had net realized investment gains of $627,769 in 1998.
In 2000, gross gains on the sale of investments available for sale (fixed maturities and short-term investments) were approximately $27,500 and gross losses were approximately $97,700. In 1999, gross gains were approximately $298,700 and gross losses were approximately $104,300. In 1998, gross gains were approximately $600,000 and gross losses were approximately $500,000.
The amortized cost and estimated market value of fixed maturities at December 31, by expected maturity, are shown below. Expected maturities are derived from rates of prepayment that may differ from actual rates of prepayment.
Year Ended December 31, 2000: Life Insurance Acquisitions...... $124,984,368 $447,949,295 $ 50,335 $ 4,925,125 $27,443,897 $29,275,899 $29,247,353 $5,871,420 $ 9,991,067 Specialty Insurance Products Dental Benefits... 0 607,136 2,665 3,424,830 647,946 6,049 737,005 0 (5,138) Financial Institutions 1,596,654 3,037,218 8,101,233 323,800 2,997,130 628,572 2,250,237 714,278 57,601 Retirement Savings and Investment Products Investment Products 1,647,338 619,322 0 25,179,780 116,106 1,416,117 1,267,445 179,748 (787,364) Corporate and Other.. 0 0 0 0 0 365,860 0 0 60,409 ------------- ------------ ---------- ----------- ----------- ----------- ----------- ---------- ------------ TOTAL........ $128,228,360 $452,212,971 $8,154,233 $33,853,535 $31,205,079 $31,692,497 $33,502,040 $6,765,446 $ 9,316,575 ============= ============ ========== ============ =========== =========== =========== ========== =========== Year Ended December 31, 1999: Life Insurance Acquisitions...... $126,247,865 $440,688,572 $ 54,704 $ 4,730,918 $32,290,715 $27,604,825 $29,333,105 $6,334,661 $ 12,059,458 Specialty Insurance Products Dental Benefits... 0 105,162 1,242 3,441,818 1,750,639 442,048 1,657,675 0 45,833 Financial Institutions 1,544,160 4,086,816 7,796,478 18,864 2,059,410 269,670 974,013 500,831 33,574 Retirement Savings and Investment Products Investment Products 0 404,423 0 9,471,966 30,202 250,000 242,354 0 761,937 Corporate and Other.. 0 0 0 0 0 148,408 0 0 25,130 ------------ ------------ ---------- ----------- ----------- ----------- ----------- ---------- ----------- TOTAL........ $127,792,025 $445,284,973 $7,852,424 $17,663,566 $36,130,966 $28,714,951 $32,207,147 $6,835,492 $ 12,925,932 ============ ============ ========== =========== =========== =========== =========== ========== ===========