Protective Life Earnings Top on Low Expenses

Zacks

Protective Life Corp. (PL) reported fourth-quarter 2013 net operating earnings of $1.43 per share, 31 cents ahead of the Zacks Consensus Estimate. Earnings also surged 46% year over year.

Total revenue in the quarter amounted to $869.9 million, down 22.1% year over year due to a decline in net premium net investment income. Reported revenues also missed the Zacks Consensus Estimate of $966 million.    

Net investment income of Protective Life came in at $476.0 million, down 11.8% year over year.

Total benefits and expenses came in at $766.1 million, down 18.8% year over year.

Full-Year Highlights

For full-year 2013, earnings per share came in at $4.26, up 12.7% year over year and also significantly ahead of the Zacks Consensus Estimate of $3.95.  

Full-year revenues of $3.6 billion declined 8.5% year over year, due to lower premium and lower net investment income. Reported revenues also lagged the Zacks Consensus Estimate of $3.7 billion.

Segment Details

The Life Marketing segment reported before-tax operating income of $32.7 million, more than double on a year-over-year basis, led by favorable mortality as compared to the fourth quarter of 2012. Sales were $30.2 million, down 28% year over year.

Before tax, operating income of Acquisitions segment was $60.8 million, up 44% year over year. The increase was primarily due to the addition of MONY Life Insurance Company and the MONY Life Insurance Company of America reinsurance transaction which accrued $25.2 million to operating income on a pre-tax basis.

The Annuities segment reported before tax operating income of $53.5 million, which increased 17.9% year over year. Annuities sale decreased 46% year over year to $469.4 million.

Higher operating spread led to a 12.7% year–over-year rise in pre-tax operating income at the company’s Stable Value segment which came in at $21.0 million. The segment’s sales, however, declined 64% year over year to $97.1 million.

The Asset Protection segment reported before-tax operating income of $6.5 million, which grew 7.5 times year over year. The increase was primarily due to a $4.1 million write-off of previously capitalized software development costs recorded within the service contract product line in the year-ago quarter. Sales improved 4.1% year over year to $109.2 million.

Corporate & Other segment pre-tax operating loss was $5.5 million compared with operating income of $0.9 million in the year-ago quarter.

Share Repurchase Update

During the reported quarter, Protective Life did not make any share repurchases and has shares worth $170 million remaining under its authorization.

Our Take

Protective Life witnessed broad-based growth across all its business segments in 2013.  Going forward, in 2014, we expect the company to benefit from successful integration of the MONY acquisition, innovative retail growth initiatives, focus on careful and rational allocation of capital and the company’s constant attention toward rigorous expense management.

Protective Life presently carries a Zacks Rank #2 (Buy).

Other Stocks

Other players like Primerica, Inc. (PRI), Lincoln National Corporation (LNC) and Symetra Financial Corporation (SYA), with the same Zacks Rank as Protective Life, are worth reckoning. All these companies reported fourth-quarter earnings ahead of the respective Zacks Consensus Estimate.

Read the Full Research Report on LNC
Read the Full Research Report on PL
Read the Full Research Report on SYA
Read the Full Research Report on PRI


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