10-Q

___________________________________________________________________________

FORM 10-Q

_____________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

OR

[ ] 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 001-12332

Protective Life Corporation

(Exact name of registrant as specified in its charter)

DELAWARE	95-2492236
(State or other jurisdiction	(IRS Employer
incorporation or organization)	Identificiation No.)

2801 HIGHWAY 280 SOUTH
BIRMINGHAM, ALABAMA 35223

(Address of principal executive offices and zip code)

(205) 268-1000

(Registrant's telephone number, including area code) _____________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

Number of shares of Common Stock, $.50 par value, outstanding as of April 23, 2004: 69,310,717 shares.

PROTECTIVE LIFE CORPORATION

                                                           INDEX


                                                                                               Page Number

Part I.  Financial Information:
   Item 1.  Financial Statements:
       Report of Independent Accountants..................................................................
       Consolidated Condensed Statements of Income for the
           Three Months ended March 31, 2004 and 2003 (unaudited).........................................
       Consolidated Condensed Balance Sheets as of March 31, 2004
           (unaudited) and December 31, 2003..............................................................
       Consolidated Condensed Statements of Cash Flows for the
           Three Months ended March 31, 2004 and 2003 (unaudited).........................................
       Notes to Consolidated Condensed Financial Statements (unaudited)...................................

   Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations..................................................................

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk...................................

   Item 4.  Controls and Procedures......................................................................

Part II.  Other Information:
   Item 2.  Changes in Securities and Use of Proceeds....................................................

   Item 6.  Exhibits and Reports on Form 8-K.............................................................

Signature................................................................................................

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors and Share Owners
Protective Life Corporation

We have reviewed the accompanying consolidated condensed balance sheet of Protective Life Corporation and its subsidiaries as of March 31, 2004, and the related consolidated condensed statements of income for each of the three-month periods ended March 31, 2004 and 2003, and the consolidated condensed statements of cash flows for the three-month periods ended March 31, 2004 and 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated condensed interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2003, and the related consolidated statements of income, share-owners’ equity, and cash flows for the year then ended (not presented herein), and in our report dated March 11, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Birmingham, Alabama
May 4, 2004

PROTECTIVE LIFE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)
(Unaudited)

                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                      2004            2003
- ---------------------------------------------------------------------------------------------------------------------------------
REVENUES
   Premiums and policy fees                                                                           $443,796         $387,094
   Reinsurance ceded                                                                                  (249,339)        (189,417)
- ---------------------------------------------------------------------------------------------------------------------------------
     Premiums and policy fees, net of reinsurance ceded                                                194,457          197,677
   Net investment income                                                                               264,608          257,701
   Realized investment gains (losses):
     Derivative financial instruments                                                                    5,083           (4,880)
     All other investments                                                                              16,627           (1,178)
   Other income                                                                                         37,419           25,309
- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                       518,194          474,629
- ---------------------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
   Benefits and settlement expenses
     (net of reinsurance ceded:
     three months: 2004 - $241,287; 2003 - $217,771)                                                   287,316          297,273
   Amortization of deferred policy acquisition costs                                                    59,794           55,759
   Other operating expenses (net of reinsurance ceded:
     three months: 2004 - $39,562; 2003 - $29,033)                                                      71,685           65,558
- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                       418,795          418,590
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX                                                                                99,399           56,039

Income tax expense                                                                                      34,094           18,334
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING PRINCIPLE                                                                       65,305           37,705
- ---------------------------------------------------------------------------------------------------------------------------------
Cumulative effect of change in accounting principle,
   net of income tax                                                                                   (10,128)               0
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                                            $ 55,177         $ 37,705
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING PRINCIPLE PER
   SHARE - BASIC                                                                                          $.93             $.54
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING PRINCIPLE PER
   SHARE - DILUTED                                                                                        $.92             $.53
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE - BASIC                                                                              $.79             $.54
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE - DILUTED                                                                            $.78             $.53
- ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS PAID PER SHARE                                                                                  $.16             $.15
- ---------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - basic                                                                  70,117,634       69,956,505

Average shares outstanding - diluted                                                                70,863,117       70,483,448

See notes to consolidated condensed financial statements

PROTECTIVE LIFE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

                                                                                                        MARCH 31          DECEMBER 31
                                                                                                          2004                2003
                                                                                                      (Unaudited)

- -------------------------------------------------------------------------------------------------------------------------------------
ASSETS
  Investments:
     Fixed maturities, at market (amortized cost: 2004 - $13,010,864; 2003 - $12,743,213)             $13,875,517        $13,355,911
     Equity securities, at market (amortized cost: 2004 - $55,192; 2003 - $45,379)                         58,362             46,731
     Mortgage loans on real estate                                                                      2,746,706          2,733,722
     Investment in real estate, net                                                                       108,098             18,126
     Policy loans                                                                                         492,782            502,748
     Other long-term investments                                                                          231,161            249,494
     Short-term investments                                                                               516,988            519,419
- -------------------------------------------------------------------------------------------------------------------------------------
         Total investments                                                                             18,029,614         17,426,151
  Cash                                                                                                    114,972            136,698
  Accrued investment income                                                                               198,564            189,232
  Accounts and premiums receivable, net                                                                    95,943             57,944
  Reinsurance receivables                                                                               2,462,269          2,350,606
  Deferred policy acquisition costs                                                                     1,867,195          1,861,020
  Goodwill                                                                                                 46,619             47,312
  Property and equipment, net                                                                              45,143             45,640
  Other assets                                                                                            256,894            238,581
  Assets related to separate accounts
     Variable annuity                                                                                   2,113,413          2,045,038
     Variable universal life                                                                              182,665            171,408
     Other                                                                                                  4,365              4,361
- -------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      $25,417,656        $24,573,991
- -------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
  Policy liabilities and accruals                                                                     $ 9,960,399        $ 9,732,697
  Stable value product account balances                                                                 4,923,231          4,676,531
  Annuity account balances                                                                              3,412,553          3,480,577
  Other policyholders' funds                                                                              159,458            158,875
  Securities sold under repurchase agreements                                                               8,660                  0
  Other liabilities                                                                                       814,308            875,652
  Accrued income taxes                                                                                     42,262            (34,261)
  Deferred income taxes                                                                                   415,849            377,990
  Liabilities related to variable interest entities                                                       477,128            400,000
  Long-term debt                                                                                          376,457            461,329
  Subordinated debt securities                                                                            324,743            221,650
  Liabilities related to separate accounts
    Variable annuity                                                                                    2,113,413          2,045,038
    Variable universal life                                                                               182,665            171,408
    Other                                                                                                   4,365              4,361
- -------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       23,215,491         22,571,847
- -------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENT LIABILITIES - NOTE B
SHARE-OWNERS' EQUITY
  Preferred Stock, $1.00 par value, shares authorized: 3,600,000; Issued: None
  Junior Participating Cumulative Preferred Stock, $1.00 par value
     shares authorized: 400,000; Issued: None
  Common Stock, $.50 par value, shares authorized: 160,000,000
     shares issued: 2004 and 2003 - 73,251,960                                                             36,626             36,626
  Additional paid-in capital                                                                              419,147            418,351
  Treasury stock, at cost (2004 - 3,941,243 shares; 2003 - 4,260,259 shares)                              (13,931)           (15,275)
  Stock held in trust (2004 - 81,142 shares; 2003 - 97,700 shares)                                         (2,365)            (2,788)
  Unallocated stock in Employee Stock Ownership Plan
     (2004 - 609,735 shares; 2003 - 724,068 shares)                                                        (1,989)            (2,367)
  Retained earnings                                                                                     1,279,131          1,235,012
  Accumulated other comprehensive income:
     Net unrealized gains on investments
     (net of income tax: 2004 - $258,871; 2003 - $177,642)                                                480,761            329,907
     Accumulated gain  - hedging (net of income tax: 2004 - $2,577; 2003 - $1,442)                          4,785              2,678
- -------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        2,202,165          2,002,144
- -------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      $25,417,656        $24,573,991
- -------------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated condensed financial statements

PROTECTIVE LIFE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands)
(Unaudited)

                                                                                                           THREE MONTHS ENDED
                                                                                                                 MARCH 31
                                                                                                         2004              2003
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                                      $    55,177       $   37,705
   Adjustments to reconcile net income to net cash provided by operating activities:
     Realized investment (gains) losses                                                                (13,803)          (2,926)
     Amortization of deferred policy acquisition costs                                                  59,794           56,265
     Capitalization of deferred policy acquisition costs                                               (95,245)         (92,518)
     Depreciation expense                                                                                2,736            2,634
     Deferred income tax                                                                                (5,312)         (13,497)
     Accrued income tax                                                                                 37,533           21,725
     Interest credited to universal life and investment products                                       161,309          142,383
     Policy fees assessed on universal life and investment products                                    (87,864)         (75,558)
     Change in accrued investment income and other receivables                                        (158,539)         (50,708)
     Change in policy liabilities and other policyholders' funds
       of traditional life and health products                                                         208,648           71,229
     Net change in trading securities                                                                    1,708                0
     Change in other liabilities                                                                       (92,180)         (11,995)
     Other, net                                                                                        (30,540)          45,501
- ---------------------------------------------------------------------------------------------------------------------------------
   Net cash provided by operating activities                                                            43,422          130,240
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Investments available for sale, net of short-term investments:
     Maturities and principal reductions of investments                                                454,563        1,375,990
     Sale of investments                                                                               925,287        3,220,069
     Cost of investments acquired                                                                   (1,620,368)      (4,974,504)
   (Increase) decrease in mortgage loans, net                                                          (12,984)          34,522
   Decrease in investment real estate, net                                                                 972            1,226
   Decrease in policy loans, net                                                                         9,966            7,076
   Increase in other long-term investments, net                                                         (1,910)          (5,064)
   Decrease in short-term investments, net                                                              40,351           25,400
   Purchase of property and equipment                                                                   (2,239)          (5,876)
- ---------------------------------------------------------------------------------------------------------------------------------
   Net cash used in investing activities                                                              (206,362)        (321,161)
- ---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Borrowings under line of credit arrangements and long-term debt                                   2,552,151          152,500
   Principal payments on line of credit arrangement and long-term debt                              (2,628,363)        (132,507)
   Dividends to share owners                                                                           (11,058)         (10,323)
   Issuance of subordinated debt securities                                                            103,093                0
   Issuance (purchase) of common stock held in trust                                                       423             (395)
   Investment product deposits and change in universal life deposits                                   597,697          586,860
   Investment product withdrawals                                                                     (472,729)        (451,337)
- ---------------------------------------------------------------------------------------------------------------------------------
   Net cash provided by financing activities                                                           141,214          144,798
- ---------------------------------------------------------------------------------------------------------------------------------
DECREASE IN CASH                                                                                       (21,726)         (46,123)
CASH AT BEGINNING OF PERIOD                                                                            136,698          101,953
- ---------------------------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD                                                                              $   114,972       $   55,830
- ---------------------------------------------------------------------------------------------------------------------------------

See notes to consolidated condensed financial statements

PROTECTIVE LIFE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Amounts in tables are in thousands, except per share amounts)

NOTE A – BASIS OF PRESENTATION

        The accompanying unaudited consolidated condensed financial statements of Protective Life Corporation and subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair statement have been included. Operating results for the three month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. The year-end consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2003.

NOTE B – COMMITMENTS AND CONTINGENT LIABILITIES

        The Company’s certificate of incorporation provides indemnification for persons serving as officers and directors of the Company. In addition, agreements with the Company’s directors require the Company, upon certain “change-in-control” contingencies, to obtain a $20 million letter of credit to secure the Company’s indemnification obligations. The letter of credit would provide security for the Company’s obligations up to an aggregate amount of $20 million (after taking into account amounts paid by the Company and amounts paid under the Company’s directors and officers or other insurance policies).

        Under insurance guaranty fund laws, in most states insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements. Most of these laws do provide, however, that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength.

        A number of civil jury verdicts have been returned against insurers and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very little appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The Company, like other financial services companies, in the ordinary course of business, is involved in such litigation and in arbitration. Although the outcome of any such litigation or arbitration cannot be predicted, the Company believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse effect on the financial position, results of operations, or liquidity of the Company.

NOTE C – OPERATING SEGMENTS

        The Company operates several business segments. An operating segment is generally distinguished by products and/or channels of distribution. A brief description of each segment follows:

Life Marketing. The Life Marketing segment markets level premium term and term-like insurance, universal life, and variable universal life products on a national basis primarily through networks of independent insurance agents and brokers, stockbrokers, and in the “bank owned life insurance” market.

Acquisitions. The Acquisitions segment focuses on acquiring, converting, and servicing policies acquired from other companies. The segment’s primary focus is on life insurance policies sold to individuals.

Annuities. The Annuities segment manufactures, sells, and supports fixed and variable annuity products. These products are primarily sold through stockbrokers, but are also sold through financial institutions and the Life Marketing segment’s sales force.

Stable Value Products. The Stable Value Products segment markets guaranteed investment contracts to 401(k) and other qualified retirement savings plans, and sells funding agreements to special purpose entities that in turn issue notes or certificates in smaller, transferable denominations. The segment also markets fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, institutional investors, bank trust departments, and money market funds. During the fourth quarter of 2003, the Company registered a funding agreement-backed notes program with the SEC.

Asset Protection. The Asset Protection segment markets extended service contracts and credit life and disability insurance to protect consumers’ investments in automobiles and watercraft.

Corporate and Other. The Company has an additional segment herein referred to as Corporate and Other. The Corporate and Other segment primarily consists of net investment income and expenses not attributable to the segments above (including net investment income on unallocated capital and interest on substantially all debt). This segment also includes earnings from several lines of business which the Company is not actively marketing (mostly cancer insurance, surety insurance, and group annuities), various investment-related transactions, and the operations of several small subsidiaries. A small surety line of business was moved from the Asset Protection segment to Corporate and Other in the quarter, and prior period segment data was restated to reflect the change.

        The Company uses the same accounting policies and procedures to measure operating segment income and assets as it uses to measure its consolidated net income and assets. Operating segment income is generally income before income tax, adjusted to exclude any pretax minority interest in income of consolidated subsidiaries, net realized investment gains and losses, the related amortization of deferred policy acquisition costs, and the cumulative effect of change in accounting principle. Periodic settlements of interest rate swaps associated with corporate debt and certain investments are included in realized gains and losses but are considered part of operating income because the interest rate swaps are hedging items affecting operating income. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of deferred policy acquisition costs are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner which appropriately reflects the operations of that segment.

        Assets are allocated based on policy liabilities directly attributable to each segment and deferred policy acquisition costs and goodwill are shown in the segments to which they are attributable. A reclassification adjustment has been made to the December 31, 2003 segment asset information in the Annuities and Corporate and Other segments to reflect segment asset groupings consitently.

        There are no significant intersegment transactions.

        The following table sets forth total operating segment income and assets for the periods shown. Adjustments represent the cumulative effect of change in accounting principle and the recognition of income tax expense. Asset adjustments represent the inclusion of assets related to discontinued operations. The reduction in the goodwill balance in the Asset Protection segment relates to the sale of a small subsidiary in the first quarter of 2004.

                                                                          Operating Segment Income for the
                                                                         Three Months Ended March 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                        Life                                              Stable Value
                                                                      Marketing        Acquisitions       Annuities         Products
- ---------------------------------------------------------------------------------------------------------------------------------------

Premiums and policy fees                                              $235,986            $69,469           $7,628
Reinsurance ceded                                                     (168,786)           (17,101)
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net of reinsurance ceded                                             67,200             52,368            7,628
Net investment income                                                   57,940             58,655           51,588          $64,033
Realized investment gains                                                                                    6,004            3,879
Other income                                                            21,143                717            1,785
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total revenue                                                   146,283            111,740           67,005           67,912
- ---------------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                        72,026             73,020           46,046           49,769
Amortization of deferred policy acquisition costs                       21,081              7,849            9,057              761
Other operating expenses                                                11,575              9,668            6,745            1,804
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total benefits and expenses                                     104,682             90,537           61,848           52,334
- ---------------------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                41,601             21,203            5,157           15,578
Less: realized investment gains                                                                              6,004            3,879
Add back: related amortization of deferred
  policy acquisition costs                                                                                   3,660
- ---------------------------------------------------------------------------------------------------------------------------------------
Operating income                                                        41,601             21,203            2,813           11,699



- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Corporate
                                                                       Asset               and                               Total
                                                                     Protection           Other          Adjustments     Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------------

Premiums and policy fees                                              $120,570           $10,143                            $443,796
Reinsurance ceded                                                      (63,107)             (345)                           (249,339)
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net of reinsurance ceded                                             57,463             9,798                             194,457
Net investment income                                                    7,917            24,475                             264,608
Realized investment gains                                                                 11,827                              21,710
Other income                                                             9,062             4,712                              37,419
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total revenue                                                    74,442            50,812                             518,194
- ---------------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                        34,887            11,568                             287,316
Amortization of deferred policy acquisition costs                       20,069               977                              59,794
Other operating expenses                                                14,926            26,967                              71,685
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total benefits and expenses                                      69,882            39,512                             418,795
- ---------------------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                 4,560            11,300                              99,399
Less: realized investment gains                                                           11,827
Add back: derivative gains related to corporate
  debt and investments                                                                     4,875
- ---------------------------------------------------------------------------------------------------------------------------------------
Operating income                                                         4,560             4,348
Income tax expense                                                                                         $34,094            34,094
- ---------------------------------------------------------------------------------------------------------------------------------------
Net income before cumulative effect of change in
  accounting principle                                                                                                        65,305
Cumulative effect of change in accounting principle,
  net of income tax                                                                                        (10,128)          (10,128)
- ---------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                                 $  55,177
- ---------------------------------------------------------------------------------------------------------------------------------------




                                                                                  Operating Segment Income for the
                                                                                 Three Months Ended March 31, 2003
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                        Life                                              Stable Value
                                                                      Marketing        Acquisitions       Annuities         Products
- ---------------------------------------------------------------------------------------------------------------------------------------

Premiums and policy fees                                              $186,547           $ 73,063          $ 5,883
Reinsurance ceded                                                     (124,038)           (18,626)
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net of reinsurance ceded                                             62,509             54,437            5,883
Net investment income                                                   56,538             62,296           58,442          $58,532
Realized investment gains (losses)                                                                              27           (6,702)
Other income                                                            13,972                905            1,941
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total revenue                                                   133,019            117,638           66,293           51,830
- ---------------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                        75,222             72,619           52,986           47,765
Amortization of deferred policy acquisition costs                       20,884             10,081            4,386              599
Other operating expenses                                                 6,278             12,166            5,910            1,030
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total benefits and expenses                                     102,384             94,866           63,282           49,394
- ---------------------------------------------------------------------------------------------------------------------------------------
Income before income tax                                                30,635             22,772            3,011            2,436
Less: realized investment gains (losses)                                                                        27           (6,702)
Add back: related amortization of deferred
  policy acquisition costs                                                                                     731
- ---------------------------------------------------------------------------------------------------------------------------------------
Operating income                                                        30,635             22,772            3,715            9,138



- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Corporate
                                                                       Asset               and                                Total
                                                                     Protection           Other          Adjustment       Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------------

Premiums and policy fees                                              $108,677          $12,924                             $387,094
Reinsurance ceded                                                      (44,179)          (2,574)                            (189,417)
- ---------------------------------------------------------------------------------------------------------------------------------------
   Net of reinsurance ceded                                             64,498           10,350                              197,677
Net investment income                                                    9,700           12,193                              257,701
Realized investment gains (losses)                                                          617                               (6,058)
Other income                                                             6,971            1,520                               25,309
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total revenue                                                    81,169           24,680                              474,629
- ---------------------------------------------------------------------------------------------------------------------------------------
Benefits and settlement expenses                                        39,302            9,379                              297,273
Amortization of deferred policy acquisition costs                       18,691            1,118                               55,759
Other operating expenses                                                22,023           18,151                               65,558
- ---------------------------------------------------------------------------------------------------------------------------------------
       Total benefits and expenses                                      80,016           28,648                              418,590
- ---------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax                                          1,153           (3,968)                              56,039
Less: realized investment gains (losses)                                                    617
Add back: derivative gains related to corporate
  debt and investments                                                                    5,634
- ---------------------------------------------------------------------------------------------------------------------------------------
Operating income                                                         1,153            1,049
Income tax expense                                                                                         $18,334            18,334
- ---------------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                                                 $  37,705
- ---------------------------------------------------------------------------------------------------------------------------------------



                                                                                      Operating Segment Assets
                                                                                           March 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                        Life                                               Stable Value
                                                                      Marketing        Acquisitions         Annuities         Products
- ---------------------------------------------------------------------------------------------------------------------------------------

Investments and other assets                                          $5,295,967         $4,200,503        $5,464,463      $4,790,288
Deferred policy acquisition costs                                      1,220,932            378,596            78,422          11,207
Goodwill                                                                  10,354
- ---------------------------------------------------------------------------------------------------------------------------------------
   Total assets                                                       $6,527,253         $4,579,099        $5,542,885      $4,801,495
- ---------------------------------------------------------------------------------------------------------------------------------------



- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Corporate
                                                                         Asset              and                                 Total
                                                                      Protection           Other          Adjustments       Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------------

Investments and other assets                                         $  981,132         $2,711,615        $59,874          $23,503,842
Deferred policy acquisition costs                                       169,980              8,058                           1,867,195
Goodwill                                                                 36,182                 83                              46,619
- ---------------------------------------------------------------------------------------------------------------------------------------
   Total assets                                                      $1,187,294         $2,719,756        $59,874          $25,417,656
- ---------------------------------------------------------------------------------------------------------------------------------------



                                                                                       Operating Segment Assets
                                                                                           December 31, 2003
- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                        Life                                              Stable Value
                                                                      Marketing        Acquisitions       Annuities         Products
- ---------------------------------------------------------------------------------------------------------------------------------------

Investments and other assets                                        $4,987,757           $4,356,929        $5,436,619      $4,520,955
Deferred policy acquisition costs                                    1,185,102              385,042           101,096           7,186
Goodwill                                                                10,354
- ---------------------------------------------------------------------------------------------------------------------------------------
   Total assets                                                     $6,183,213           $4,741,971        $5,537,715      $4,528,141
- ---------------------------------------------------------------------------------------------------------------------------------------



- ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Corporate
                                                                       Asset                and                               Total
                                                                     Protection            Other         Adjustments      Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------------

Investments and other assets                                         $1,014,556         $2,288,582         $60,261         $22,665,659
Deferred policy acquisition costs                                       173,123              9,471                           1,861,020
Goodwill                                                                 36,875                 83                              47,312
- ---------------------------------------------------------------------------------------------------------------------------------------
   Total assets                                                      $1,224,554         $2,298,136         $60,261         $24,573,991
- ---------------------------------------------------------------------------------------------------------------------------------------

NOTE D – STATUTORY REPORTING PRACTICES

        Financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) differ in some respects from the statutory accounting practices prescribed or permitted by insurance regulatory authorities. In accordance with statutory reporting practices, at March 31, 2004, and for the three months then ended, the Company’s insurance subsidiaries had combined share-owners’ equity of $1,091.5 million and net income of $30.4 million.

NOTE E – REINSURANCE RECEIVABLE

        In 2002, the Company discovered that it had overpaid reinsurance premiums to several reinsurance companies of approximately $94.5 million. The Company has received payment from substantially all of the affected reinsurance companies. In the first quarter of 2003, the Company increased premiums and policy fees $2.8 million as a result of cash received and changes in expected receipts at that time. The increase in premiums and policy fees resulted in $1.0 million of additional amortization of deferred policy acquisition costs. As a result, the Company’s pretax income for the first quarter of 2003 increased by $1.8 million.

NOTE F – NET INCOME PER SHARE

        Net income per share – basic is net income divided by the average number of shares of Common Stock outstanding including shares that are issuable under various deferred compensation plans.

        Net income per share – diluted is adjusted net income divided by the average number of shares outstanding including all dilutive, potentially issuable shares that are issuable under various stock-based compensation plans and stock purchase contracts.

        Net income and a reconciliation of basic and diluted average shares outstanding for the three month periods ended March 31, 2004 and 2003 are summarized as follows:

                                             RECONCILIATION OF NET INCOME AND
                                                AVERAGE SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                       THREE MONTHS ENDED
                                                                                                            MARCH 31
                                                                                                       2004           2003
- --------------------------------------------------------------------------------------------------------------------------------

Net income                                                                                             $55,177         $37,705
- --------------------------------------------------------------------------------------------------------------------------------

Average shares issued and outstanding                                                               69,148,942      68,794,968
Stock held in trust                                                                                    (81,142)        (96,262)
Issuable under various deferred compensation plans                                                   1,049,834       1,257,799
- --------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - basic                                                                  70,117,634      69,956,505
Stock held in trust                                                                                     81,142          96,262
Stock appreciation rights                                                                              313,583         183,576
Issuable under various other stock-based compensation plans                                            350,758         247,105
- --------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding - diluted                                                                70,863,117      70,483,448
- --------------------------------------------------------------------------------------------------------------------------------

NOTE G – RECENTLY ISSUED ACCOUNTING STANDARDS

        In January 2003, the FASB issued FASB Interpretation No. (FIN) 46 “Consolidation of Variable Interest Entities,” which was revised in December 2003. FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated support from the other parties. The effective date of FIN 46 is March 31, 2004, for the Company. However, FIN 46 guidance required the interpretation to be applied to entities that are considered special-purpose entities no later than as of the end of the first reporting period that ends after December 15, 2003 (December 31, 2003, for the Company). As such, the Company consolidated, as of December 31, 2003, a special-purpose entity whose investments are managed by the Company. The special-purpose entity was consolidated based on the determination that the Company was its primary beneficiary. The Company also consolidated, as of and for the three months ended March 31, 2004, two real estate investment companies that the Company had previously reported as investments. The entities were consolidated based on the determination that the Company was the primary beneficiary. The consolidation resulted in the Company’s reported assets and liabilities increasing by $76.2 million with an immaterial impact on results of operations. Additionally, the Company deconsolidated, as of December 31, 2003, the special-purpose entities PLC Capital Trust III and PLC Capital Trust IV after determining the Company was not the primary beneficiary of these special-purpose entities.

        In July 2003, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” SOP 03-1 is effective for fiscal years beginning after December 15, 2003. See Note L for discussion of the Company’s adoption of SOP 03-1.

        On December 31, 2003, the Company adopted SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” as revised by the FASB in December 2003.

        The following table sets forth the amount of net periodic benefit cost recognized for the Company’s defined benefit pension plan and unfunded excess benefits plan:

- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                  THREE MONTHS ENDED
                                                                                                       MARCH 31
                                                                                               2004                2003
- --------------------------------------------------------------------------------------------------------------------------------

         Service cost                                                                        $ 2,012             $ 1,700
         Interest cost                                                                         2,325               1,991
         Expected return on plan assets                                                       (2,280)             (1,903)
         Amortization of prior service cost                                                       92                  78
         Amortization of net loss                                                                470                 397
- --------------------------------------------------------------------------------------------------------------------------------
         Net periodic benefit cost                                                           $ 2,619             $ 2,263
- --------------------------------------------------------------------------------------------------------------------------------

        The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expected to contribute $6.4 million to its pension plan in 2004. There has been no change in this estimate. As of March 31, 2004, no contributions have been made.

        In addition to pension benefits, the Company provides limited healthcare benefits and life insurance benefits to eligible retirees. The cost of these plans for the three months ended March 31, 2004 and 2003 was immaterial.

NOTE H – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Fair-Value Hedges

        As of March 31, 2004 and 2003, and during the three month periods then ended, the Company had no hedging relationships designated as a fair-value hedge.

Cash-Flow Hedges

        The Company has entered into a foreign currency swap to hedge the risk of changes in the value of interest and principal payments to be made on certain of its foreign-currency-based stable value contracts. Under the terms of the swap, the Company pays a fixed U.S.-dollar-denominated rate and receives a fixed foreign-currency-denominated rate. Effective July 1, 2002, the Company designated this swap as a cash flow hedge and therefore recorded the change in the fair value of the swap during the period in accumulated other comprehensive income. In the first quarter of 2004, the income recognized by the Company related to the ineffective portion of the hedging instrument was immaterial. In the first quarter of 2003, the income recognized by the Company related to the ineffective portion of the hedging instrument was $0.3 million. There were no components of the hedging instrument excluded from the assessment of hedge ineffectiveness. During the three months ended March 31, 2004, a pretax gain of $12.6 million, representing the change in fair value of the hedged contracts during the period, and a loss of like amount representing the application of hedge accounting to this transaction, were recorded in Realized Investment Gains (Losses) – Derivative Financial Instruments in the Company’s consolidated condensed statements of income. During the three months ended March 31, 2003, a pretax loss of $11.6 million, representing the change in fair value of the hedged contracts during the period, and a gain of like amount representing the application of hedge accounting were recorded. Additionally, at March 31, 2004 and 2003, the Company reported an increase of $4.8 million and a reduction of $0.1 million, respectively, in accumulated other comprehensive income (net of income tax of $2.6 million and $34 thousand, respectively) related to its derivative designated as a cash flow hedge. During the next twelve months, the Company expects to reclassify out of accumulated other comprehensive income and into earnings approximately $36 thousand.

Other Derivatives

        The Company uses certain interest rate swaps, caps, floors, swaptions, options and futures contracts to mitigate or eliminate certain financial and market risks, including those related to changes in interest rates, fair value, and cash flows, of outstanding mortgage loan commitments and certain owned investments as well as certain debt and subordinated debt securities of the Company. For the three months ended March 31, 2004 and 2003, the Company recognized total pretax gains of $1.1 million and pretax losses of $4.2 million, respectively, representing the change in fair value of these derivative instruments as well as the realized gain or loss on contracts closed during the period.

        On its foreign currency swaps, the Company recognized a $9.6 million pretax loss and a $6.7 million pretax gain for the first three months of 2004 and 2003, respectively, while recognizing a $9.9 million foreign exchange pretax gain and $7.6 million foreign exchange pretax loss on the related foreign-currency-denominated stable value contracts in the same periods, respectively. The net change primarily results from the difference in the forward and spot exchange rates used to revalue the currency swaps and the stable value contracts, respectively.

        The Company has entered into asset swap arrangements to, in effect, sell the equity options embedded in owned convertible bonds in exchange for an interest rate swap that converts the remaining host bond to a variable rate instrument. For the three months ended March 31, 2004, the Company recognized a $0.2 million pretax loss for the change in the asset swaps’ fair value and recognized a $4.0 million pretax gain to separately record the embedded equity options at fair value. For the three months ended March 31, 2003, the Company recognized a $0.1 million pretax gain for the change in the asset swaps’ fair value and recognized a $0.4 million pretax loss to separately record the embedded equity options at fair value.

NOTE I – COMPREHENSIVE INCOME

        The following table sets forth the Company’s comprehensive income for the periods presented below:

- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                     THREE MONTHS ENDED
                                                                                                          MARCH 31
                                                                                                    2004            2003
- --------------------------------------------------------------------------------------------------------------------------------
  Net income                                                                                       $ 55,177        $37,705
  Change in net unrealized gains/losses on
    investments (net of income tax:
    2004 - $87,049; 2003 - $31,354)                                                                 161,662         58,229
  Change in accumulated gain-hedging (net of income
    tax: 2004 - $1,135; 2003 - $1,080)                                                                2,107          2,005
  Reclassification adjustment for amounts included
    in net income (net of income tax:
    2004 - $(5,819); 2003 - $412)                                                                   (10,808)           766
- --------------------------------------------------------------------------------------------------------------------------------
  Comprehensive income                                                                             $208,138        $98,705
- --------------------------------------------------------------------------------------------------------------------------------

NOTE J – RECLASSIFICATIONS

        Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income or share-owners’ equity.

NOTE K – SUBORDINATED DEBT SECURITIES AND SENIOR NOTES

        On January 27, 2004, a special-purpose entity, PLC Capital Trust V, issued $100 million of 6.125% Trust Originated Preferred Securities (TOPrS). The 6.125% TOPrS are guaranteed on a subordinated basis by the Company. This guarantee, considered together with the other obligations of the Company with respect to the 6.125% TOPrS, constitutes a full and unconditional guarantee by the Company of PLC Capital Trust V’s obligations with respect to the 6.125% TOPrS.

        PLC Capital Trust V was formed solely to issue securities and use the proceeds thereof to purchase subordinated debt securities of the Company. The sole assets of PLC Capital Trust V are $103.1 million of Protective Life Corporation 6.125% Subordinated Debentures due 2034, Series F. The Company has the right under the subordinated debt securities to extend interest payment periods up to five consecutive years, and as a consequence, dividends on the 6.125% TOPrS may be deferred (but will continue to accumulate, together with additional dividends on any accumulated but unpaid dividends at the dividend rate) by PLC Capital Trust V during any such extended interest payment period. The 6.125% TOPrS are redeemable by PLC Capital Trust V at any time on or after January 27, 2009.

        The majority of the proceeds of the 6.125% TOPrS was used to pay down outstanding bank debt, including $59.9 million incurred to redeem the Company’s outstanding 7.50% 15-year Senior Notes on January 1, 2004. In addition, the Company repaid the $25 million outstanding as of December 31, 2003, on its $200 million line of credit. The balance of the proceeds will be used for general corporate purposes, affording the Company additional financial flexibility.

NOTE L – CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

        In January 2004, the Company adopted SOP 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts”. SOP 03-1 provides guidance related to the establishment of reserves for benefit guarantees provided under certain long-duration contracts, as well as the accounting for mortality benefits provided in certain universal life products. In addition, it addresses the capitalization and amortization of sales inducements to contract holders. The adoption of SOP 03-1 resulted in a cumulative charge to net income of $10.1 million, net of income tax of $5.5 million ($0.14 per share on both a basic and diluted basis). The charge to net income includes a $10.0 million charge to recognize additional liabilities, including an adjustment to deferred policy acquisition costs, on certain universal life contracts. These additional liabilities are required due to a change in the pattern of recognition of mortality benefits called for by the SOP. In addition, the Company recorded a $0.1 million adjustment related to guaranteed minimum death benefits (GMDB) on its variable annuity products.

        The Company issues variable universal life and variable annuity products through its separate accounts for which the investment risk is borne by the contract holder. The Company also offers, for its variable annuity products, various account value guarantees upon death. The most significant of these guarantees involve (a) return of the highest anniversary date account value, or (b) return of the greater of the highest anniversary date account value or the last anniversary date account value compounded at 5% interest. The GMDB reserve is calculated by applying a benefit ratio, equal to the present value of total expected GMDB claims divided by the present value of total expected contract assessments, to cumulative contract assessments. This amount is then adjusted by the amount of cumulative GMDB claims paid and accrued interest. Assumptions used in the calculation of the GMDB reserve were as follows: mean investment performance of 9%, mortality at 60% of the 1994 MGDB Mortality Table, lapse rates ranging from 1%-20% (depending on product type and duration), and an average discount rate of 7%.

        Separate account balances are valued at market and reported separately as assets and liabilities related to separate accounts in the accompanying consolidated balance sheets. Amounts assessed against policy account balances for the costs of insurance, policy administration, and other services are included in premiums and policy fees in the accompanying statements of income. Changes in the GMDB reserve are included in benefits and settlement expenses in the accompanying statements of income.

        The variable annuity separate account balances subject to GMDB were $2.1 billion at March 31, 2004. The total guaranteed amount payable based on variable annuity account balances at March 31, 2004, was $295.3 million (including $262.0 million in the Annuities segment and $33.3 million in the Acquisitions segment), with a GMDB reserve of $5.7 million (including $5.2 million in the Annuities segment and $0.5 million in the Acquisitions segment). The average attained age of contract holders at March 31, 2004 was 64. For the three months ended March 31, 2004, the total incurred and paid GMDB claims were $0.8 million and $1.0 million, respectively. For the three months ended March 31, 2003, the total incurred and paid GMDB claims were $3.7 million and $3.1 million, respectively.

        Account balances of variable annuities with guarantees were invested in variable annuity separate accounts as follows:

- -------------------------------------------------------------------------------------------------------------------------
                                                                           MARCH 31, 2004           DECEMBER 31, 2003
- -------------------------------------------------------------------------------------------------------------------------
         Equity mutual funds                                                   $1,906.6                   $1,846.0
         Fixed income mutual funds                                                206.8                      199.0
- -------------------------------------------------------------------------------------------------------------------------
         Total                                                                 $2,113.4                   $2,045.0
- -------------------------------------------------------------------------------------------------------------------------

        Certain of the Company’s universal life products have a sales inducement in the form of a retroactive interest credit (RIC). In addition, certain variable annuity contracts provide a sales inducement in the form of a bonus interest credit. In accordance with SOP 03-1, the Company maintains a reserve for all interest credits earned to date. The Company defers the expense associated with the RIC and bonus interest credits each period and amortizes these costs in a manner similar to that used for deferred policy acquisition costs. The amount of the total unamortized deferred asset at March 31, 2004 and December 31, 2003 was $27.4 million and $27.7 million, respectively. The amount of costs deferred and amortized in the first three months of 2004 was $2.3 million and $3.0 million, respectively. The amount of costs deferred and amortized in the first three months of 2003 was $1.5 million and $3.7 million, respectively.

        Prospectively, the Company currently anticipates that the adoption of SOP 03-1 may negatively impact pretax income by $0 to $2.0 million per quarter. However, the Company will continue to review and refine its estimates and monitor the relevant regulatory bodies for further implementation guidance and interpretations of this standard.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

        Protective Life Corporation is a holding company whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. Founded in 1907, Protective Life Insurance Company is the Company’s principal operating subsidiary. Unless the context otherwise requires, the “Company” refers to the consolidated group of Protective Life Corporation and its subsidiaries.

        For a more complete understanding of the Company’s business and its current period results, please read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the Company’s latest annual report on Form 10-K and other filings with the SEC.

        The Company operates several business segments each having a strategic focus. An operating segment is generally distinguished by products and/or channels of distribution. The Company’s operating segments are Life Marketing, Acquisitions, Annuities, Stable Value Products, and Asset Protection. The Company also has an additional segment referred to as Corporate and Other.

        This report reviews the Company’s financial condition and results of operations including its liquidity and capital resources. Historical information is presented and discussed. Where appropriate, factors that may affect future financial performance are also identified and discussed. Certain statements made in this report include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that may predict, forecast, indicate or imply future results, performance or achievements instead of historical facts and may contain words like “believe,” “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “plan,” “will,” “shall,” “may,” and other words, phrases, or expressions with similar meanings. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from the results contained in the forward-looking statements, and the Company cannot give assurances that such statements will prove to be correct. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Please refer to Exhibit 99, incorporated by reference herein, for more information about factors which could affect future results.

        The Company’s results may fluctuate from period to period due to fluctuations in mortality, persistency, claims, expenses, interest rates, and other factors. Therefore, it is management’s opinion that quarterly operating results for an insurance company are not necessarily indicative of results to be achieved in future periods, and that a review of operating results over a longer period is necessary to assess an insurance company’s performance.

RESULTS OF OPERATIONS

Premiums and Policy Fees

        The following table sets forth for the periods shown the amount of premiums and policy fees, net of reinsurance ceded (“premiums and policy fees”):

  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                       ($ in thousands)

         Premiums and Policy Fees                                                                   $194,457       $197,677
  ----------------------------------------------------------------------------------------------------------------------------

        Premiums and policy fees decreased $3.2 million or 1.6% in the first three months of 2004 as compared to the first three months of 2003. Premiums and policy fees in the Life Marketing segment increased $4.7 million in the first three months of 2004 as compared to the same period in 2003. In the first three months of 2003, the Company recorded $2.8 million of additional premiums related to recoveries of overpaid reinsurance, no increase was recorded in the first three months of 2004. (See Note E in the Notes to Consolidated Condensed Financial Statements.) The growth of the face value of in-force policies resulted in an increase of $7.5 million in net premiums and policy fees in the first three months of 2004 as compared to the same period of 2003. Premiums and policy fees in the Acquisitions segment decreased $2.1 million in the first three months of 2004, as compared to the first three months of 2003. Premiums and policy fees in the Acquisitions segment are expected to decline with time (due to the lapsing of policies resulting from death of insureds or terminations of coverage) unless new acquisitions are made. The increase in premiums and policy fees from the Annuities segment was $1.7 million in the first three months of 2004 as compared to the first three months of 2003 primarily due to increased fees on variable account values. Premiums and policy fees related to the Asset Protection segment fell $7.0 million for the first three months of 2004 compared to the first three months of 2003. The segment’s decrease primarily relates to the termination of non-core lines of business. Premiums and policy fees relating to various insurance lines in the Corporate and Other segment decreased $0.6 million in the first three months of 2004 as compared to the first three months of 2003. Premiums and policy fees on these lines are expected to decline as they continue to run off.

Net Investment Income

        The following table sets forth for the periods shown the amount of net investment income:

  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                       ($ in thousands)

         Net Investment Income                                                                      $264,608       $257,701
  ----------------------------------------------------------------------------------------------------------------------------

        Net investment income in the first three months of 2004 was $264.6 million, which was $6.9 million or 2.7% higher than the corresponding period of the preceding year. The increase is a result of an increase in average invested assets partially offset by lower interest rates on new investments. The percentage earned on average cash and investments was 5.9% in the first three months of 2004, compared to 6.4% in the first three months of 2003. Participating mortgage loan income decreased $1.9 million in the first three months of 2004 as compared to the first three months of 2003.

Realized Investment Gains/(Losses)

        The Company generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash-flow needs.

        The following table sets forth realized investment gains (losses) for the periods shown:

  ----------------------------------------------------------------------------------------------------------------------------
                       REALIZED INVESTMENT                                                            THREE MONTHS ENDED
                         GAINS/(LOSSES)                                                                    MARCH 31
                                                                                                     2004           2003
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                       ($ in thousands)

         Derivative Financial Instruments                                                           $ 5,083        $(4,880)
         All Other Investments                                                                       16,627         (1,178)
  ----------------------------------------------------------------------------------------------------------------------------

        The sales of investments that have occurred generally have resulted from portfolio management decisions to maintain proper matching of assets and liabilities. Realized investment gains related to all other investments in the first three months of 2004 of $20.2 million were partially offset by realized investment losses of $3.6 million. Realized investment losses related to all other investments in the first three months of 2003 of $17.1 million were largely offset by realized investment gains of $15.9 million. During the first three months of 2004, the Company recorded no other-than-temporary impairments in its investments, compared to $15.9 million of impairments that were included in realized investment losses related to all other investments in the first three months of 2003.

        Each quarter the Company reviews its investments with material unrealized losses and tests for other-than-temporary impairments. Management analyzes various factors to determine if any other-than-temporary asset impairments exist. Once a determination has been made that an other-than-temporary impairment exists, a realized loss is recognized and the cost basis of the impaired asset is adjusted to its fair value. An other-than-temporary impairment loss is recognized based upon all relevant facts and circumstances for each investment. With respect to unrealized losses due to issuer-specific events, the Company considers the creditworthiness and financial performance of the issuer and other available information. With respect to unrealized losses that are not due to issuer-specific events, such as losses due to interest rate fluctuations, general market conditions or industry-related events, the Company considers its intent and ability to hold the investment to allow for a market recovery or to maturity together with an assessment of the likelihood of full recovery.

        Realized investment gains and losses related to derivative financial instruments represent changes in the fair values of certain derivative financial instruments and gains or losses on contracts closed during the period. Net realized investment gains related to derivative financial instruments were $5.1 million in the three months ended March 31, 2004, compared to net losses of $4.9 million in the three months ended March 31, 2003. For the three months ended March 31, 2004 and 2003, the net derivative gains (losses) were primarily due to adjustments from derivative instruments entered into to reduce the Company’s exposure to interest rate risk. (See also Note H to the Company’s Consolidated Condensed Financial Statements included herein.)

Other Income

        The following table sets forth other income for the periods shown:

  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                       ($ in thousands)

         Other Income                                                                                $37,419        $25,309
  ----------------------------------------------------------------------------------------------------------------------------

        Other income consists primarily of investment advisory fees from variable insurance products, and revenues from unaffiliated parties relating to the Company’s broker-dealer subsidiary, direct response businesses, service contract businesses, and the Company’s other non-insurance subsidiaries. Other income increased to $37.4 million in the first three months of 2004 from $25.3 million in the first nine months of 2003. Revenues from the Company’s broker-dealer subsidiary increased $3.2 million in the first three months of 2004 as compared to the same period in 2003. Revenues from the Company’s direct response businesses and service contract businesses increased $1.8 million and $2.2 million, respectively, in the first three months of 2004 as compared to the first three months of 2003. Due to the consolidation of variable interest entities, revenues from real estate holdings increased $4.3 million. Other income from all other sources increased $0.6 million in the first three months of 2004 as compared to the first three months of 2003.

Income Before Income Tax and Operating Income

        Consistent with the Company’s segment reporting in the Notes to Consolidated Condensed Financial Statements, management evaluates the results of the Company’s segments on a before-income-tax basis as adjusted for certain items which management believes are not indicative of the Company’s core operations. Segment operating income (loss) excludes net realized investment gains and losses and the related amortization of deferred policy acquisition costs because fluctuations in these items are due to changes in interest rates and other financial market factors instead of mortality and morbidity. Periodic settlements of interest rate swaps associated with corporate debt and certain investments are included in realized gains and losses but are considered part of operating income because the interest rate swaps are hedging items affecting operating income. Also, segment operating income (loss) excludes any net gains or losses on disposals of businesses and the cumulative effect of changes in accounting principles. Although the items excluded from segment operating income (loss) may be significant components in understanding and assessing the Company’s overall financial performance, management believes that operating segment income (loss) enhances an investor’s understanding of the Company’s results of operations by highlighting the income (loss) attributable to the normal, recurring operations of the insurance business (i.e., mortality and morbidity), consistent with industry practice. However, the Company’s segment operating income (loss) measures may not be comparable to similarly titled measures reported by other companies. Segment operating income (loss) should not be construed as a substitute for net income (loss) determined in accordance with accounting principles generally accepted in the United States of America (GAAP). “Total income before income tax” is a GAAP measure to which the non-GAAP measure “total operating income” may be compared. Unlike total operating income, total income before income tax includes net realized investment gains and losses, and the related amortization of deferred policy acquisition costs. In the Annuities and Stable Value Products segments operating income excludes realized investment gains and losses and related amortization. In the Corporate and Other segment operating income excludes realized investment gains and losses and includes derivative gains related to corporate debt and investments.

        The following table sets forth operating income and income or loss before income tax by business segment for the periods shown:

                                   OPERATING INCOME AND INCOME (LOSS) BEFORE INCOME TAX
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
- ------------------------------------------------------------------------------------------------------------------------------
($ in thousands)

Operating income 1
     Life Marketing                                                                                 $41,601        $30,635
     Acquisitions                                                                                    21,203         22,772
     Annuities                                                                                        2,813          3,715
     Stable Value Products                                                                           11,699          9,138
     Asset Protection                                                                                 4,560          1,153
     Corporate and Other                                                                              4,348          1,049
- ------------------------------------------------------------------------------------------------------------------------------
Realized investment gains (losses)
     Annuities                                                                                        6,004             27
     Stable Value Products                                                                            3,879         (6,702)
     Corporate and Other                                                                             11,827            617
Less derivative gains related to corporate debt
  and investments 2
     Corporate and Other                                                                             (4,875)        (5,634)
Related amortization of deferred policy
  acquisition costs
     Annuities                                                                                       (3,660)          (731)
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax
     Life Marketing                                                                                  41,601         30,635
     Acquisitions                                                                                    21,203         22,772
     Annuities                                                                                        5,157          3,011
     Stable Value Products                                                                           15,578          2,436
     Asset Protection                                                                                 4,560          1,153
     Corporate and Other                                                                             11,300         (3,968)
- ------------------------------------------------------------------------------------------------------------------------------
     Total income before income tax                                                                 $99,399        $56,039
- ------------------------------------------------------------------------------------------------------------------------------

¹ Income before income tax excluding realized investment gains and losses and related amortization of deferred policy acquisition costs

² Periodic settlement of interest rate swaps associated with corporate debt and certain investments included in realized investment gains and considered a part of operating income

        The Life Marketing segment’s pretax operating income was $41.6 million in the first three months of 2004 compared to $30.6 million in the same period of 2003. 2003 earnings include $1.8 million related to recoveries of overpaid reinsurance premiums, (See Note E in the Notes to Consolidated Condensed Financial Statements). Excluding earnings from recoveries from overpayments, operating income increased by $12.8 million. The increase is primarily attributable to growth in business-in-force due to strong sales in prior periods and favorable mortality experience. Mortality experience during the first three months of 2004 was approximately $2.3 million better than pricing, $3.7 million more favorable than in the same period of 2003. The increase in earnings was offset by expenses exceeding pricing allowances, reducing income by $7.1 million in the first three months of 2004.

        In the ordinary course of business, the Acquisitions segment regularly considers acquisitions of blocks of policies or smaller insurance companies. Policies acquired through the segment are usually administered as “closed” blocks; i.e., no new policies are being marketed. Therefore, earnings from the Acquisitions segment are normally expected to decline over time (due to the lapsing of policies resulting from deaths of insureds or terminations of coverage) unless new acquisitions are made.

        The Acquisitions segment’s pretax operating income was $21.2 million in the first three months of 2004, a decrease of $1.6 million from the first three months of 2003. Pretax operating income declined due to less favorable mortality experience than in the same period of 2003 and the expected decline in earnings from older acquisitions. Mortality experience was $1.1 million better than pricing in the first three months of 2004, compared to $1.7 million better than pricing in the first three months of 2003.

        The Annuities segment’s pretax operating income was $2.8 million in the first three months of 2004, a decrease from the $3.7 million of operating income for the first three months of 2003. The decrease in pretax operating income is primarily attributable to lower sales of annuities caused by lower interest rates and an unfavorable expense variance as compared to pricing allowances.

        The Company offers a guaranteed minimum death benefit feature (GMDB) on its variable annuity products. At March 31, 2004, the total GMDB reserve for the Annuities segment was $5.2 million, $0.1 million higher than the Company reported at December 31, 2003. The total guaranteed amount payable under this feature based on variable annuity account balances at March 31, 2004, was $262.0 million, a decrease of $25.0 million from December 31, 2003, caused by an improvement in the equity markets.

        In accordance with statutory accounting practices prescribed or permitted by regulatory authorities (which require the assumption that equity markets will significantly worsen), the Company’s insurance subsidiaries reported GMDB related policy liabilities and accruals of $12.0 million at March 31, 2004, a decrease of $0.1 million from December 31, 2003.

        Although positive performance in the equity markets in 2003 and 2004 allowed the Company to decrease its GMDB related policy liabilities, the Annuities segment’s future results may be negatively affected by a slow economy. Volatile equity markets could negatively affect sales of variable annuities and the fees the segment assesses on variable annuity contracts. Lower interest rates could negatively affect sales of fixed annuities. In this segment, equity market volatility may create uncertainty regarding the level of future profitability in the variable annuity business and the related rate of amortization of deferred policy acquisition costs.

        The Stable Value Products segment’s pretax operating income was $11.7 million in the first three months of 2004, an increase of $2.6 million from the first three months of 2003. The increase is attributable to an increase of average spreads from 93 basis points in the first three months of 2003, to 100 basis points in the first three months of 2004 and a $771.1 million increase in average account balances.

        The Asset Protection segment had $4.6 million in pretax operating income in the first three months of 2004, compared to $1.2 million pretax operating income in the first three months of 2003. The segment has several lines of business that are not considered core to the operations of the Company and, therefore, the segment is exiting those lines. Core operations contributed $3.7 million to income in the first three months of 2004, compared to $3.4 million in the first three months of 2003. The increase resulted from increased earnings in the service contract lines partially offset by losses in the credit insurance lines of business. Non-core and ancillary lines had a loss of $0.1 million in the first three months of 2004, compared to a loss of $0.5 million in the first three months of 2003. The Asset Protection segment sold an inactive charter in the first quarter of 2004, resulting in an increase in pretax operating income of $1.0 million. In the first quarter of 2003, the segment recorded a charge of $1.7 million related to uncollectible balances from a third party contract administrator. During the quarter, the Company determined that its surety line was not core to the Asset Protection business and reclassified it to the Corporate and Other segment for reporting purposes.

        The Corporate and Other segment consists primarily of net investment income on unallocated capital, interest expense on substantially all debt, and several lines of business that the Company is not actively marketing, earnings from various investment-related transactions, and various other items not associated with the other segments. The segment had pretax operating income of $4.3 million in the first three months of 2004, compared to income of $1.0 million in the first three months of 2003. The increase in pretax operating income resulted from an increase in net investment income for the segment, partially offset by a $2.2 million decrease in operating income from the surety insurance line of business, a $1.1 million charge from the early extinguishment of debt, and other increases in corporate expenses.

Income Taxes

        The following table sets forth the effective tax rates for the periods shown:

- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
- ------------------------------------------------------------------------------------------------------------------------------
       Effective Income Tax Rates                                                                    34.3%          32.7%
- ------------------------------------------------------------------------------------------------------------------------------

        The effective income tax rate for the full year of 2003 was approximately 33.3%. Management’s estimate of the effective income tax rate for the full year 2004 is approximately 34.3%. The expected increase is primarily due to the expiration of certain tax credits and an increase in state income taxes.

Net Income

        The following table sets forth net income before cumulative effect of change in accounting principle and related per share information for the periods shown:

- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                      THREE MONTHS ENDED
                                                                                                           MARCH 31
                                                                                                     2004           2003
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                   ($ in thousands, except
                                                                                                      per-share amounts)

  Net income before cumulative effect of change in
     accounting principle                                                                            $65,305        $37,705
  Per share-basic                                                                                        .93            .54
  Per share-diluted                                                                                      .92            .53
- ------------------------------------------------------------------------------------------------------------------------------

        Compared to the same period in 2003, net income before cumulative effect of change in accounting principle per share-diluted in the first three months of 2004 increased 73.6%, reflecting higher realized investment gains and higher operating earnings in the Life Marketing, Asset Protection, Stable Value Products, and Corporate and Other segments offset by decreases in operating results in the Annuities and Acquisitions segments.

Known Trends and Uncertainties

        The factors which could affect the Company’s future results include, but are not limited to, general economic conditions and the following known trends and uncertainties: we are exposed to the risks of natural disasters, malicious and terrorist acts that could adversely affect our operations; we operate in a mature, highly competitive industry, which could limit our ability to gain or maintain our position in the industry; a ratings downgrade could adversely affect our ability to compete; our policy claims fluctuate from period to period, and actual results could differ from our expectations; our results may be negatively affected should actual experience differ from management’s assumptions and estimates; the use of reinsurance introduces variability in our statement of income; we could be forced to sell investments at a loss to cover policyholder withdrawals; interest rate fluctuations could negatively affect our spread income or otherwise impact our business; equity market volatility could negatively impact our business; a deficiency in our systems could result in over- or underpayments of amounts owed to or by the Company and/or errors in our critical assumptions or reported financial results; insurance companies are highly regulated and subject to numerous legal restrictions and regulations; changes to tax law or interpretations of existing tax law could adversely affect the Company and its ability to compete with non-insurance products or reduce the demand for certain insurance products; financial services companies are frequently the targets of litigation, including class action litigation, which could result in substantial judgments; our ability to maintain low unit costs is dependent upon the level of new sales and persistency of existing business; our investments are subject to market and credit risks; we may not realize our anticipated financial results from our acquisitions strategy; we are dependent on the performance of others; our reinsurers could fail to meet assumed obligations, increase rates or be subject to adverse developments that could affect us; computer viruses or network security breaches could affect our data processing systems or those of our business partners; our ability to grow depends in large part upon the continued availability of capital; and new accounting rules or changes to existing accounting rules could negatively impact our reported financial results. Please refer to Exhibit 99, incorporated by reference herein, about these factors that could affect future results.

Recently Issued Accounting Standards

        In January 2003, the FASB issued FASB Interpretation No. (FIN) 46 “Consolidation of Variable Interest Entities,” which was revised in December 2003. FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated support from the other parties. The effective date of FIN 46 is March 31, 2004, for the Company. However, FIN 46 guidance required the interpretation to be applied to entities that are considered special-purpose entities no later than as of the end of the first reporting period that ends after December 15, 2003 (December 31, 2003, for the Company). As such, the Company consolidated, as of December 31, 2003, a special-purpose entity whose investments are managed by the Company. The special-purpose entity was consolidated based on the determination that the Company was its primary beneficiary. The Company also consolidated, as of and for the three months ended March 31, 2004, two real estate investment companies that the Company had previously reported as investments. The entities were consolidated based on the determination that the Company was the primary beneficiary. The consolidation resulted in the Company’s reported assets and liabilities increasing by $76.2 million with an immaterial impact on results of operations. Additionally, the Company deconsolidated, as of December 31, 2003, the special-purpose entities PLC Capital Trust III and PLC Capital Trust IV after determining the Company was not the primary beneficiary of these special-purpose entities.

        In January 2004, the Company adopted Statement of Position (SOP) 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts”. SOP 03-1 provides guidance related to the establishment of reserves for benefit guarantees provided under certain long-duration contracts, as well as the accounting for mortality benefits provided in certain universal life products. In addition, it addresses the capitalization and amortization of sales inducements to contract holders. The adoption of SOP 03-1 resulted in a cumulative charge to net income of $10.1 million, net of income tax of $5.5 million ($0.14 per share on both a basic and diluted basis). The charge to net income includes a $10.0 million charge to recognize additional liabilities, including an adjustment to deferred policy acquisition costs, on certain universal life contracts. These additional liabilities are required due to a change in the pattern of recognition of mortality benefits called for by the SOP. In addition, the Company recorded a $0.1 million adjustment related to guaranteed minimum death benefits (GMDB) on its variable annuity products. (See also Note L to the Company’s Consolidated Condensed Financial Statements included herein.)

Review by Independent Accountants

        With respect to the unaudited consolidated condensed financial information of Protective Life Corporation for the three month periods ended March 31, 2004 and 2003, PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated May 4, 2004, appearing herein, stated that they did not audit and they do not express an opinion on that unaudited consolidated condensed financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited consolidated condensed financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PricewaterhouseCoopers into which this Form 10-Q may be incorporated by reference within the meaning of Sections 7 and 11 of the Act.

LIQUIDITY AND CAPITAL RESOURCES

        The Company’s operations usually produce a positive cash flow. This cash flow is used to fund an investment portfolio to finance future benefit payments. Since future benefit payments largely represent medium- and long-term obligations reserved using certain assumed interest rates, the Company’s investments are predominantly in medium- and long-term, fixed-rate investments such as bonds and mortgage loans.

INVESTMENTS

Portfolio Description

        The Company’s investment portfolio consists primarily of fixed maturity securities (bonds and redeemable preferred stocks) and commercial mortgage loans. The Company generally purchases its investments with the intent to hold to maturity by purchasing investments that match future cash flow needs. However, the Company may sell any of its investments to maintain proper matching of assets and liabilities. Accordingly, the Company has classified $13.5 billion of its fixed maturities and certain other securities as “available for sale.”

        As of December 31, 2003, the Company consolidated a special-purpose entity, in accordance with FIN 46, whose investments are managed by the Company. These investments with a market value of $425.1 million at March 31, 2004, have been classified as “trading” securities by the Company.

        The Company’s investments in debt and equity securities are reported at market value, and investments in mortgage loans are reported at amortized cost. At March 31, 2004, the Company’s fixed maturity investments had a market value of $13.9 billion, which is 6.6% above amortized cost of $13.0 billion. The Company had $2.7 billion in mortgage loans at March 31, 2004. While the Company’s mortgage loans do not have quoted market values, at March 31, 2004, the Company estimates the market value of its mortgage loans to be $3.0 billion (using discounted cash flows from the next call date), which is 9.5% above amortized cost. Most of the Company’s mortgage loans have significant prepayment fees. These assets are invested for terms approximately corresponding to anticipated future benefit payments. Thus, market fluctuations are not expected to adversely affect liquidity.

        The following table shows the carrying values of the Company’s invested assets.

- ------------------------------------------------------------------------------------------------------------------------------
                                                                       March 31, 2004                 December 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------
($ in thousands)

Publicly-issued bonds                                               $11,944,952        66.2%        $11,377,474       65.3%
Privately issued bonds                                                1,927,272        10.7          1,975,273       11.3
Redeemable preferred stock                                                3,293         0.0              3,164        0.0
- ------------------------------------------------------------------------------------------------------------------------------
        Fixed maturities                                             13,875,517        76.9         13,355,911       76.6
Equity securities                                                        58,362         0.3             46,731        0.3
Mortgage loans                                                        2,746,706        15.3          2,733,722       15.7
Investment real estate                                                  108,098         0.6             18,126        0.1
Policy loans                                                            492,782         2.7            502,748        2.9
Other long-term investments                                             231,161         1.3            249,494        1.4
Short-term investments                                                  516,988         2.9            519,419        3.0
- ------------------------------------------------------------------------------------------------------------------------------
        Total investments                                           $18,029,614       100.0%       $17,426,151       100.0%
- ------------------------------------------------------------------------------------------------------------------------------

        Included in the above table are $407.0 million of fixed maturities and $18.1 million of short term investments at March 31, 2004 and $420.1 million of fixed maturities and $4.8 million of short term investments at December 31, 2003, classified by the Company as trading securities.

Risk Management and Impairment Review

        The Company monitors the overall credit quality of the Company’s portfolio within general guidelines. The following table shows the Company’s available for sale fixed maturities by credit rating at March 31, 2004.

- ------------------------------------------------------------------------------------------------------------------------------
    S&P or Equivalent                                                                                         Percent of
        Designation                                                           Market Value                   Market Value
- ------------------------------------------------------------------------------------------------------------------------------
($ in thousands)

    AAA                                                                       $ 5,063,737                         37.6 %
    AA                                                                            802,010                          6.0
    A                                                                           2,930,907                         21.8
    BBB                                                                         3,685,422                         27.4
- ------------------------------------------------------------------------------------------------------------------------------
       Investment grade                                                        12,482,076                         92.8
- ------------------------------------------------------------------------------------------------------------------------------
    BB                                                                            639,192                          4.7
    B                                                                             326,710                          2.4
    CCC or lower                                                                   12,628                          0.1
    In or near default                                                              4,590                          0.0
- ------------------------------------------------------------------------------------------------------------------------------
       Below investment grade                                                     983,120                          7.2
- ------------------------------------------------------------------------------------------------------------------------------
    Redeemable preferred stock                                                      3,293                          0.0
- ------------------------------------------------------------------------------------------------------------------------------
    Total                                                                     $13,468,489                         100.0%
- ------------------------------------------------------------------------------------------------------------------------------

        Not included in the table above are $396.0 million of investment grade and $11.0 million of less than investment grade fixed maturities classified by the Company as trading securities.

        Limiting bond exposure to any creditor group is another way the Company manages credit risk. The following table summarizes the Company’s ten largest fixed maturity exposures to an individual creditor group as of March 31, 2004.

                ---------------------------------------------------------------------------------------------
                               Creditor                                                       Market Value
                ---------------------------------------------------------------------------------------------
                                                                                            ($ in millions)

                     Wachovia                                                                    $75.5
                     Berkshire Hathaway                                                           73.6
                     Goldman Sachs                                                                73.0
                     FPL Group                                                                    71.4
                     Citigroup                                                                    70.4
                     Duke Energy                                                                  68.3
                     Verizon                                                                      66.0
                     Bank of America                                                              63.5
                     Progress Energy                                                              63.1
                     Public Service Enterprise Group                                              61.9
                ---------------------------------------------------------------------------------------------

        During the first three months of 2004, the Company recorded no pretax other-than-temporary impairments in its investments, as compared to $15.9 million in the first three months of 2003.

        The Company’s management considers a number of factors when determining the impairment status of individual securities. These include the economic condition of various industry segments and geographic locations and other areas of identified risks. Although it is possible for the impairment of one investment to affect other investments, the Company engages in ongoing risk management to safeguard against and limit any further risk to its investment portfolio. Special attention is given to correlated risks within specific industries, related parties and business markets.

        Once management has determined that a particular investment has suffered an other-than-temporary impairment, the asset is written down to its estimated fair value. The Company generally considers a number of factors in determining whether the impairment is other-than-temporary. These include, but are not limited to: 1) actions taken by rating agencies, 2) default by the issuer, 3) the significance of the decline, 4) the intent and ability of the Company to hold the investment until recovery, 5) the time period during which the decline has occurred, 6) an economic analysis of the issuer’s industry, and 7) the financial strength, liquidity, and recoverability of the issuer. Management performs a security by security review each quarter in evaluating the need for any other-than-temporary impairments. Although no set formula is used in this process, the investment performance, collateral position and continued viability of the issuer are significant measures considered.

        The Company generally considers a number of factors relating to the issuer in determining the financial strength, liquidity, and recoverability of an issuer. These include but are not limited to: available collateral, tangible and intangible assets that might be available to repay debt, operating cash flows, financial ratios, access to capital markets, quality of management, market position, exposure to litigation or product warranties, and the effect of general economic conditions on the issuer.

        There are certain risks and uncertainties associated with determining whether declines in market values are other-than-temporary. These include significant changes in general economic conditions and business markets, trends in certain industry segments, interest rate fluctuations, rating agency actions, changes in significant accounting estimates and assumptions, commission of fraud and legislative actions. The Company continuously monitors these factors as they relate to the investment portfolio in determining the status of each investment. Provided below are additional facts concerning the potential effect upon the Company’s earnings should circumstances lead management to conclude that some of the current declines in market value are other-than-temporary.

        Market values for private, non-traded securities are determined as follows: 1) the Company obtains estimates from independent pricing services or 2) the Company estimates market value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics. The market value of private, non-traded securities was $1,927.3 million at March 31, 2004, representing 10.7% of the Company’s total invested assets.

Unrealized Gains and Losses

        The majority of unrealized losses can be attributed to interest rate fluctuations and have been deemed temporary. As indicated above, when the Company’s investment management deems an investment’s market value decline as other-than-temporary, it is written down to estimated market value. In all cases, management will continue to carefully review and monitor each security.

        The information presented below relates to investments at a certain point in time and is not necessarily indicative of the status of the portfolio at any time after March 31, 2004, the balance sheet date. Furthermore, since the timing of recognizing realized gains and losses is largely based on management’s decisions as to the timing and selection of investments to be sold, the tables and information provided below should be considered within the context of the overall unrealized gain (loss) position of the portfolio. At March 31, 2004, the Company had an overall pretax net unrealized gain of $867.8 million.

        For traded and private fixed maturity and equity securities held by the Company that are in an unrealized loss position at March 31, 2004, the estimated market value, amortized cost, unrealized loss and total time period that the security has been in an unrealized loss position are presented in the table below.

- ----------------------------------------------------------------------------------------------------------------------------
                                     Estimated     % Market       Amortized      % Amortized    Unrealized     % Unrealized
                                     Market Value    Value          Cost            Cost           Loss            Loss
- ----------------------------------------------------------------------------------------------------------------------------
  ($ in thousands)

‹= 90 days                            $274,579         30.2%       $276,572         29.1%         $ (1,993)        4.7%
›90 days but ‹= 180 days               146,313         16.1         149,453         15.7            (3,140)        7.4
›180 days but ‹= 270 days              171,233         18.9         173,509         18.3            (2,276)        5.4
›270 days but ‹= 1 year                188,705         20.8         194,084         20.4            (5,379)       12.7
›1 year but ‹= 2 years                  29,638          3.3          33,495          3.5            (3,857)        9.1
›2 years but ‹= 3 years                 35,071          3.9          39,423          4.2            (4,352)       10.3
›3 years but ‹= 4 years                  2,245          0.2           2,475          0.3              (230)        0.6
›4 years but ‹= 5 years                 15,009          1.7          16,578          1.7            (1,569)        3.7
›5 years                                44,841          4.9          64,315          6.8           (19,474)       46.1
- ----------------------------------------------------------------------------------------------------------------------------
Total                                 $907,634        100.0%       $949,904        100.0%         $(42,270)      100.0%
- ----------------------------------------------------------------------------------------------------------------------------

        At March 31, 2004, $21.9 million of securities in an unrealized loss position were securities issued in Company sponsored commercial mortgage loan securitizations, including $18.7 million in an unrealized loss position greater than five years. The Company does not consider these unrealized positions to be other-than-temporary, because the underlying mortgage loans continue to perform consistently with the Company’s original expectations.

        The Company has no material concentrations of issuers or guarantors of fixed maturity securities. The industry segment composition of all securities in an unrealized loss position held by the Company at March 31, 2004, is presented in the following table.

- ------------------------------------------------------------------------------------------------------------------------------
                                    Estimated      % Market       Amortized      % Amortized     Unrealized     % Unrealized
                                   Market Value      Value           Cost             Cost           Loss            Loss
- ------------------------------------------------------------------------------------------------------------------------------
  ($ in thousands)

Agency Mortgages                      $ 24,431         2.7%         $ 24,452          2.6%        $    (21)          0.0%
Banking                                 51,084         5.6            51,641          5.4             (557)          1.3
Basic Industrial                        53,383         5.9            54,126          5.7             (743)          1.8
Brokerage                               10,833         1.2            10,911          1.1              (78)          0.2
Capital Goods                              504         0.1               506          0.1               (2)          0.0
Communications                          65,639         7.2            68,006          7.2           (2,367)          5.6
Consumer Cyclical                       12,833         1.4            12,947          1.4             (114)          0.3
Consumer Noncyclical                    39,803         4.4            40,406          4.3             (603)          1.4
Electric                               165,026        18.2           172,231         18.1           (7,205)         17.0
Energy                                  43,131         4.8            43,969          4.6             (838)          2.0
Insurance                               44,656         4.9            44,903          4.7             (247)          0.6
Natural Gas                             66,607         7.3            67,516          7.1             (909)          2.2
Non-Agency Mortgages                   197,171        21.7           213,480         22.4          (16,309)         38.5
Other Finance                           56,491         6.2            63,290          6.7           (6,799)         16.1
Other Industrial                         2,400         0.3             2,422          0.3              (22)          0.1
Other Utility                               21         0.0                44          0.0              (23)          0.1
Technology                                 124         0.0               143          0.0              (19)          0.0
Transportation                          69,926         7.7            75,309          7.9           (5,383)         12.7
U. S. Government                         3,571         0.4             3,602          0.4              (31)          0.1
- ------------------------------------------------------------------------------------------------------------------------------
Total                                 $907,634       100.0%         $949,904        100.0%        $(42,270)        100.0%
- ------------------------------------------------------------------------------------------------------------------------------

        The range of maturity dates for securities in an unrealized loss position at March 31, 2004 varies, with 6.4% maturing in less than 5 years, 24.1% maturing between 5 and 10 years, and 69.5% maturing after 10 years. The following table shows the credit rating of securities in an unrealized loss position at March 31, 2004.

- ----------------------------------------------------------------------------------------------------------------------------
        S&P or Equivalent          Estimated        % Market     Amortized       % Amortized    Unrealized     % Unrealized
           Designation            Market Value       Value          Cost             Cost          Loss            Loss
- ----------------------------------------------------------------------------------------------------------------------------
  ($ in thousands)

  AAA/AA/A                          $508,307          56.0%       $517,696          54.5 %       $  (9,389)        22.2 %
  BBB                                223,564          24.6         229,127          24.1            (5,563)        13.2
- ----------------------------------------------------------------------------------------------------------------------------
  Investment grade                   731,871          80.6         746,823          78.6           (14,952)        35.4
- ----------------------------------------------------------------------------------------------------------------------------
  BB                                  82,732           9.1          88,077           9.3            (5,345)        12.6
  B                                   78,498           8.7          85,189           9.0            (6,691)        15.8
  CCC or lower                        14,533           1.6          29,815           3.1           (15,282)        36.2
  Near default                             0           0.0               0           0.0                (0)         0.0
- ----------------------------------------------------------------------------------------------------------------------------
Below investment grade               175,763          19.4         203,081          21.4           (27,318)        64.6
- ----------------------------------------------------------------------------------------------------------------------------
Total                               $907,634         100.0%       $949,904         100.0%         $(42,270)       100.0%
- ----------------------------------------------------------------------------------------------------------------------------

        At March 31, 2004, 80.6% of total securities in an unrealized loss position were rated as investment grade. Total bonds rated less than investment grade were 5.5% of invested assets.

        At March 31, 2004, securities in an unrealized loss position that were rated as below investment grade represented 19.4% of the total market value and 64.6% of the total unrealized loss. Unrealized losses related to below investment grade securities that had been in an unrealized loss position for more than twelve months were $25.9 million. Bonds in an unrealized loss position rated less than investment grade were 1.0% of invested assets. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities.

        The following table shows the estimated market value, amortized cost, unrealized loss and total time period that the security has been in an unrealized loss position for all below investment grade securities.

- ----------------------------------------------------------------------------------------------------------------------------
                                     Estimated       % Market     Amortized      % Amortized    Unrealized     % Unrealized
                                    Market Value       Value        Cost             Cost          Loss            Loss
- ----------------------------------------------------------------------------------------------------------------------------
  ($ in thousands)

‹= 90 days                            $ 30,783         17.5%       $ 31,544          15.5%        $   (761)         2.8%
›90 days but ‹= 180 days                 9,730          5.5           9,858           4.9             (128)         0.5
›180 days but ‹= 270 days                4,298          2.5           4,483           2.2             (185)         0.7
›270 days but ‹= 1 year                 24,031         13.7          24,345          12.0             (314)         1.1
›1 year but ‹= 2 years                  22,373         12.7          25,858          12.7           (3,485)        12.7
›2 years but ‹= 3 years                 28,292         16.1          31,673          15.6           (3,381)        12.4
›3 years but ‹= 4 years                  1,941          1.1           2,042           1.0             (101)         0.4
›4 years but ‹= 5 years                  9,823          5.6          10,306           5.1             (483)         1.8
›5 years                                44,492         25.3          62,972          31.0          (18,480)        67.6
- ----------------------------------------------------------------------------------------------------------------------------
Total                                 $175,763        100.0%       $203,081         100.0%        $(27,318)       100.0%
- ----------------------------------------------------------------------------------------------------------------------------

        At March 31, 2004, $17.8 million of below investment grade securities in an unrealized loss position were securities issued in the Company-sponsored commercial mortgage loan securitizations, all of which are in an unrealized loss position greater than five years. The Company does not consider these unrealized positions to be other-than-temporary, because the underlying mortgage loans continue to perform consistently with the Company’s original expectations.

Realized Losses

        Realized losses are comprised of both write-downs on other-than-temporary impairments and actual sales of investments.

        During the three months ended March 31, 2004, the Company recorded no pretax other-than-temporary impairments in its investments, as compared to $15.9 million in the three months ended March 31, 2004.

        As discussed earlier, the Company’s management considers several factors when determining other-than-temporary impairments. Although the Company generally intends to hold securities until maturity, the Company may change its positions as a result of a change in circumstances. Any such decision is consistent with the Company’s classification of all but a specific portion of its investment portfolio as available for sale. During the three months ended March 31, 2004, the Company sold securities in an unrealized loss position with a market value of $30.8 million resulting in a realized loss of $3.1 million. For such securities, the proceeds, realized loss and total time period that the security had been in an unrealized loss position are presented in the table below.

- ----------------------------------------------------------------------------------------------------------------------------
                                              Proceeds         % Proceeds         Realized Loss          % Realized Loss
- ----------------------------------------------------------------------------------------------------------------------------
  ($ in thousands)

‹= 90 days                                     $ 9,992             32.5%              $(1,500)                  48.7%
›90 days but ‹= 180 days                             0              0.0                     0                    0.0
›180 days but ‹= 270 days                       20,077             65.2                (1,571)                  51.1
›270 days but ‹= 1 year                              0              0.0                     0                    0.0
› 1 year                                           711              2.3                    (6)                   0.2
- ----------------------------------------------------------------------------------------------------------------------------
Total                                          $30,780            100.0%              $(3,077)                 100.0%
- ----------------------------------------------------------------------------------------------------------------------------

Mortgage Loans

        The Company records mortgage loans net of an allowance for credit losses. This allowance is calculated through analysis of specific loans that are believed to be at a higher risk of becoming impaired in the near future. At March 31, 2004 and December 31, 2003, the Company’s allowance for mortgage loan credit losses was $4.7 million.

        For several years the Company has offered a type of commercial mortgage loan under which the Company will permit a slightly higher loan-to-value ratio in exchange for a participating interest in the cash flows from the underlying real estate. As of March 31, 2004, approximately $403.1 million of the Company’s mortgage loans have this participation feature.

        In the ordinary course of its commercial mortgage lending operations, the Company will commit to provide a mortgage loan before the property to be mortgaged has been built or acquired. The mortgage loan commitment is a contractual obligation to fund a mortgage loan when called upon by the borrower. The commitment is not recognized in the Company’s financial statements until the commitment is actually funded. The mortgage loan commitment contains terms, including the rate of interest which may become less than prevailing interest rates. At March 31, 2004, the Company had outstanding mortgage loan commitments of $700.4 million.

Liabilities

        Many of the Company’s products contain surrender charges and other features that reward persistency and penalizes the early withdrawal of funds. Certain stable value and annuity contracts have market-value adjustments that protect the Company against investment losses if interest rates are higher at the time of surrender than at the time of issue.

        At March 31, 2004, the Company had policy liabilities and accruals of $10.0 billion. The Company’s interest-sensitive life insurance policies have a weighted average minimum credited interest rate of approximately 4.5%.

        At March 31, 2004, the Company had $4.9 billion of stable value product account balances and $3.4 billion of annuity account balances.

Derivative Financial Instruments

        The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments, primarily to reduce its exposure to interest rate risk as well as currency exchange risk.

        Combinations of interest rate swap contracts, futures contracts, and option contracts are sometimes used to mitigate or eliminate certain financial and market risks, including those related to changes in interest rates for certain investments, primarily outstanding mortgage loan commitments and mortgage-backed securities. Interest rate swap contracts generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. Interest rate futures generally involve exchange traded contracts to buy or sell treasury bonds and notes in the future at specified prices. Interest rate options represent contracts that allow the holder of the option to receive cash or purchase, sell or enter into a financial instrument at a specified price within a specified period of time. The Company used interest rate swap contracts, swaptions (options to enter into interest rate swap contracts), caps, and floors to modify the interest characteristics of certain investments, its Senior Notes, Medium-Term Notes, and subordinated debt securities. Swap contracts are also used to alter the effective durations of assets and liabilities. The Company uses foreign currency swaps to reduce its exposure to currency exchange risk on certain stable value contracts denominated in foreign currencies, primarily the European euro and the British pound.

        Derivative instruments expose the Company to credit and market risk and could result in material changes from quarter-to-quarter. The Company minimizes its credit risk by entering into transactions with highly rated counterparties. The Company manages the market risk associated with interest rate and foreign exchange contracts by establishing and monitoring limits as to the types and degrees of risk that may be undertaken.

        The Company monitors its use of derivatives in connection with its overall asset/liability management programs and procedures. The Company’s asset/liability committee is responsible for implementing various strategies to mitigate or eliminate certain financial and market risks. These strategies are developed through the committee’s analysis of data from financial simulation models and other internal and industry sources and are then incorporated into the Company’s overall interest rate and currency exchange risk management strategies.

Asset/Liability Management

        The Company’s asset/liability management programs and procedures involve the monitoring of asset and liability durations for various product lines; cash flow testing under various interest rate scenarios; and the continuous rebalancing of assets and liabilities with respect to yield, risk, and cash flow characteristics. It is the Company’s policy to generally maintain asset and liability durations within one-half year of one another, although, from time to time, a broader interval may be allowed.

        The Company believes its asset/liability management programs and procedures and certain product features provide protection for the Company against the effects of changes in interest rates under various scenarios. Additionally, the Company believes its asset/liability management programs and procedures provide sufficient liquidity to enable it to fulfill its obligation to pay benefits under its various insurance and deposit contracts. However, the Company’s asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve), relationships between risk-adjusted and risk-free interest rates, market liquidity and other factors, and the effectiveness of the Company’s asset/liability management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

        Cash outflows related to stable value contracts (primarily maturing contracts, scheduled interest payments and expected withdrawals) were approximately $1,100.1 million during 2003. Cash outflows related to stable value contracts are estimated to be approximately $1,106.1 million in 2004. The Company’s asset/liability management programs and procedures take into account maturing contracts and expected withdrawals. Accordingly, the Company does not expect stable value contract related cash outflows to have an unusual effect on the future operations and liquidity of the Company.

        The life insurance subsidiaries were committed at March 31, 2004, to fund mortgage loans in the amount of $700.4 million. The Company’s subsidiaries held $629.2 million in cash and short-term investments at March 31, 2004. The Company had an additional $2.7 million in cash and short-term investments available for general corporate purposes.

        While the Company generally anticipates that the cash flows of its subsidiaries will be sufficient to meet their investment commitments and operating cash needs, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has arranged sources of credit for its insurance subsidiaries to use when needed. At March 31, 2004, Protective Life Insurance Company had $8.7 million of securities sold under repurchase agreements with an interest rate of 1.12%. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Additionally, the Company may from time to time sell short-duration stable value products to complement its cash management practices.

        The Company has also used securitization transactions involving its commercial mortgage loans to increase its liquidity.

Capital

        At March 31, 2004, the Company had no borrowings under its $200.0 million revolving line of credit due October 1, 2005.

        Protective Life Corporation’s cash flow is dependent on cash dividends and payments on surplus notes from its subsidiaries, revenues from investment, data processing, legal and management services rendered to the subsidiaries, and investment income. At December 31, 2003, approximately $529.8 million of consolidated share-owners’ equity, excluding net unrealized investment gains and losses, represented net assets of the Company’s insurance subsidiaries that cannot be transferred to the Company. In addition, the states in which the Company’s insurance subsidiaries are domiciled impose certain restrictions on the insurance subsidiaries’ ability to pay dividends to the Company.

        The Company plans to retain substantial portions of the earnings of its life insurance subsidiaries in those companies primarily to support their future growth. The Company’s cash disbursements have from time to time exceeded its cash receipts, and these shortfalls have been funded through various external financings. Therefore, the Company may, from time to time, require additional external financing.

        To give the Company flexibility in connection with future acquisitions and other growth opportunities or for other corporate purposes, the Company has registered debt securities, preferred and common stock, and stock purchase contracts of Protective Life Corporation, and additional preferred securities of special purpose finance subsidiaries under the Securities Act of 1933 on a delayed (or shelf) basis.

        A life insurance company’s statutory capital is computed according to rules prescribed by the National Association of Insurance Commissioners (“NAIC”), as modified by the insurance company’s state of domicile. Statutory accounting rules are different from GAAP and are intended to reflect a more conservative view by, for example, requiring immediate expensing of policy acquisition costs. The NAIC’s risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. The achievement of long-term growth will require growth in the statutory capital of the Company’s insurance subsidiaries. The subsidiaries may secure additional statutory capital through various sources, such as retained statutory earnings or equity contributions by the Company.

Contractual Obligations

        The table below sets forth future maturities of debt, subordinated debt securities, stable value products, notes payable, operating lease obligation, other property lease obligations, mortgage loan commitments, and liabilities related to variable interest entities.

- ------------------------------------------------------------------------------------------------------------------------------
                                                           2004           2005-2006          2007-2008         After 2008
- ------------------------------------------------------------------------------------------------------------------------------
($ in thousands)

Long-term debt                                           $ 75,000                                                $299,231
Subordinated debt securities                                                                                      324,743
Stable value products                                     977,991           $2,074,564        $1,380,016          490,660
Note payable                                                2,226
Operating lease obligation                                  1,119                2,983            66,249
Other property lease obligations                            5,730                9,459             5,646            9,313
Mortgage loan commitments                                 700,395
Liabilities related to variable interest entities         400,803               12,437            48,495           15,393
- ------------------------------------------------------------------------------------------------------------------------------

        The table above excludes liabilities related to separate accounts of $2,300.4 million. Separate account liabilities represent funds maintained for contract holders who bear the related investment risk. These liabilities are supported by assets that are legally segregated and are not subject to claims that arise from other business activities of the Company. These assets and liabilities are separately identified on the consolidated balance sheets of the Company. The table also excludes future cash flows related to certain insurance liabilities due to the uncertainty with respect to the timing of the cash flows.

Item 3.      Quantitative and Qualitative Disclosures About Market Risk

        There has been no material change from the disclosures in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Item 4.      Controls and Procedures

        Under the direction our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that (i) our disclosure controls and procedures were effective as of March 31, 2004, and (ii) no change in internal control over financial reporting occurred during the quarter ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

PART II

Item 2.      Changes in Securities and Use of Proceeds

        During the quarter ended March 31, 2004, the Company issued the following securities in transactions which were not registered under the Securities Act of 1933, as amended (the “Act”).

(a) On March 11, 2004, the Company issued 9 shares of Common Stock, par value $.50 per share.

(b) No underwriters participated. The shares were issued to a nonemployee Director of the Company: Thomas L. Hamby.

(c) The shares were issued in partial payment of the Directors’ retainer fee.

(d) Exemption from registration under the Act was claimed based upon Section 4(2) as a sale by an issuer not involving a public offering.

Item 6.      Exhibits and Reports on Form 8-K

(a) Exhibit 10(a) – Employment Continuation Agreement (Executives)

Exhibit 10(b) – Employment Continuation Agreement (Senior Officers)

Exhibit 15 — Letter re: unaudited interim financial information.

Exhibit 31(a) – Certification Pursuant to §302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31(b) – Certification Pursuant to §302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(a) — Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32(b) — Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 99 – Safe Harbor for Forward-Looking Statements.

(b) The following Forms 8-K were filed or furnished to the Securities and Exchange Commission during the three months ended March 31, 2004:

A Form 8-K was filed under Items 5 and 7 with the Securities and Exchange Commission on January 28, 2004.

A Form 8-K was furnished under Item 12 to the Securities and Exchange Commission on February 11, 2004.

A Form 8-K/A was furnished under Item 12 to the Securities and Exchange Commission on February 11, 2004.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PROTECTIVE LIFE CORPORATION
Date:	May 10, 2004	/s/ Steven G. Walker
		Steven G. Walker
		Senior Vice President, Controller
		and Chief Accounting Officer
		(Duly authrorized officer)

EX-10

EMPLOYMENT CONTINUATION AGREEMENT

        This Employment Continuation Agreement dated as of February 2, 2004 ("Agreement") is by and between Protective Life Corporation, a Delaware corporation (the "Company"), and ________________ ("Executive").

W I T N E S S E T H :

        WHEREAS, the Company has determined that Executive holds a position that is critical to the Company;

        WHEREAS, the Company believes that, if it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of shareholders;

        WHEREAS, the Company understands that any such situation could be a distraction to Executive, to the detriment of the Company and its shareholders;

        WHEREAS, the Company desires to assure itself of Executive’s services during the period in which it is confronting such a situation, and to provide Executive with certain financial assurances to enable Executive to perform his or her responsibilities without undue distraction and without bias due to Executive’s personal circumstances; and

        WHEREAS, to achieve these objectives, the Company and Executive desire to enter into an agreement providing the Company and Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2);

        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and Executive hereby agree as follows:

        1.   Effective Date. The effective date of this Agreement (the “Effective Date”) shall be the date on which a Change of Control occurs during the term of this Agreement (as provided in Section 12(c)); provided that (i) anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if Executive’s employment with the Company is terminated before the date on which the Change of Control occurs, and if it is reasonably demonstrated by Executive that such termination of employment (A) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (B) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately before such termination of employment, and (ii) except as provided in clause (i) above, if Executive is not employed by the Company on the date on which a Change of Control occurs, this Agreement shall be void and without effect.

        2.   Definition of Change of Control. For the purposes of this Agreement, a “Change of Control” shall mean (i) a transaction or acquisition as identified in the Company’s Rights Agreement as in effect from time to time; (ii) the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (A) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (B) the shareholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, including any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Protective Life Insurance Company.

        3.   Employment Period. Subject to Section 6, the Company agrees to continue Executive in its employ, and Executive agrees to remain in the employ of the Company, for the period (the “Employment Period”) commencing on the Effective Date and ending on the second anniversary of the Effective Date.

        4   Position and Duties. (a)   No Reduction in Position. During the Employment Period, Executive’s position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately before the Effective Date. Executive’s services shall be performed at the location where Executive was employed immediately before the Effective Date.

        (b)   Business Time. From and after the Effective Date, Executive agrees to devote Executive’s full attention during normal business hours to the business and affairs of the Company and to perform faithfully and efficiently the responsibilities assigned to Executive to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which Executive is entitled. Executive’s continuing to serve on any boards and committees on which Executive is serving or with which Executive is otherwise associated immediately before the Effective Date shall not be deemed to interfere with the performance of Executive’s services for the Company.

        5.   Compensation. (a)   Base Salary. During the Employment Period, Executive shall receive a base salary at a monthly rate at least equal to the monthly base salary paid to Executive by the Company immediately before the Effective Date. The base salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company’s regular practices. Executive’s base salary, as it may be increased from time to time, shall hereafter be referred to as “Base Salary”. Neither the Base Salary nor any increase in Base Salary after the Effective Date shall limit or reduce any other obligation of the Company hereunder.

        (b)   Annual Bonus and Incentive Compensation. During the Employment Period, in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, Executive shall be entitled to receive an (i) annual bonus which is at least equal to the greater of (A) the highest annual bonus, including any bonus provided under the Company’s Annual Incentive Plan (“AIP”), that had been payable to Executive in respect of either of the two fiscal years ended immediately before the Effective Date or (B) the amount that would have been payable to Executive as a target bonus under any bonus program in which Executive participated (including the AIP) for the year in which the Effective Date occurs and (ii) long-term incentive compensation opportunities on terms and conditions no less favorable to Executive than those applicable to Executive before the Effective Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by Executive pursuant to any deferral programs or arrangements that the Company may make available to Executive.

        (c)   Benefit Plans. During the Employment Period, Executive (and, to the extent applicable, Executive’s dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with Executive’s participation in such plans immediately before the Effective Date or, if more favorable to Executive, at the level made available to Executive or other similarly situated employees at any time thereafter. Executive shall also be entitled to receive such perquisites as were generally provided to Executive in accordance with the Company’s policies and practices immediately before the Effective Date.

        (d)   Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the policies and procedures of the Company as in effect immediately before the Effective Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Effective Date to Executive, if such policies and procedures are more favorable to Executive than those in effect immediately before the Effective Date.

        (e)   Indemnification. During and after the Employment Period, the Company shall indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of or related in any way to Executive’s performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company’s Certificate of Incorporation and By-Laws (the “Governing Documents”); provided that in no event shall the protection afforded to Executive hereunder be less than that afforded under the Governing Documents as in effect immediately before the Effective Date.

        6.   Termination of Employment. (a)   Death or Disability. Executive’s employment shall automatically terminate upon Executive’s death or termination of employment due to Disability (as defined below) during the Employment Period. For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform the duties of Executive’s position, as determined in accordance with the policies and procedures applicable with respect to the Company’s long-term disability plan as in effect immediately before the Effective Date.

        (b)   Voluntary Termination. Anything in this Agreement to the contrary notwithstanding, Executive may, upon not less than 10 days’ written notice to the Company, voluntarily terminate employment for any reason (including early retirement under the terms of any of the Company’s retirement plans as in effect from time to time) during the Employment Period; provided that any termination of employment by Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b).

        (c)   Cause. The Company may terminate Executive’s employment for Cause. For purposes of this Agreement, “Cause” shall mean (i) Executive’s conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on Executive’s part which result or are intended to result in material damage to the Company’s business or reputation; or (iii) repeated material violations by Executive of Executive’s obligations under Section 4, which violations are demonstrably willful and deliberate on Executive’s part and which result in material damage to the Company’s business or reputation.

        (d)   Good Reason. Executive may terminate employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, without the express written consent of Executive, after the Effective Date:

(i)   (A) the assignment to Executive of any duties inconsistent in any material adverse respect with Executive’s position (including titles), authority or responsibilities as contemplated by Section 4, or (B) any other material adverse change in such position (including titles), authority or responsibilities;

(ii)   any failure by the Company to comply with any of the provisions of Section 5, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by Executive;

(iii)   the Company’s requiring Executive to be based at any office or location more than 20 miles from that location at which Executive performed services specified under the provisions of Section 4 immediately before the Change of Control, except for travel reasonably required in the performance of Executive’s responsibilities; or

(iv)   any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b).

In no event shall the mere occurrence of a Change of Control, absent any further impact on Executive, be deemed to constitute Good Reason.

        (e)   Notice of Termination. Any termination of Executive’s employment by the Company for Cause or by Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a “Notice of Termination” shall mean a written notice given, in the case of a termination for Cause, within 10 business days of the Company’s having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of Executive’s having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder.

        (f)   Date of Termination. For the purpose of this Agreement, the term “Date of Termination” shall mean (i) in the case of a termination of employment for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, and (ii) in all other cases, the actual date on which Executive’s employment terminates during the Employment Period.

        7.   Obligations of the Company upon Termination. (a)   Death or Disability. If Executive’s employment is terminated during the Employment Period by reason of Executive’s death or Disability, this Agreement shall terminate without further obligations to Executive or Executive’s legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to Executive (or Executive’s beneficiary or estate) (i) Executive’s full Base Salary through the Date of Termination (the “Earned Salary”), (ii) any vested amounts or benefits owing to Executive under the Company’s otherwise applicable employee benefit plans and programs, including any compensation previously deferred by Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the “Accrued Obligations”), and (iii) any other benefits payable due to Executive’s death or Disability under the Company’s plans, policies, programs or arrangements (the “Additional Benefits”).

        Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.

        (b)   Cause and Voluntary Termination. If, during the Employment Period, Executive’s employment is terminated for Cause or voluntarily terminated by Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, policy, program or arrangement.

        (c)   Termination by the Company other than for Cause and Good Reason Termination by Executive.

(i)   Lump Sum Payments. If either (a) the Company terminates Executive’s employment other than for Cause during the Employment Period or (b) Executive terminates employment for Good Reason at any time during the Employment Period, then the Company shall pay to Executive the following amounts:

                                 (A)   Executive’s Earned Salary;

                                 (B)   a cash amount (the “Severance Amount”) equal to three (3) times the sum of

                                         (1)   Executive’s annual Base Salary; and

(2)   the greater of (i) the average of the bonus amount payable (including any amounts payable under the AIP) to Executive (including any amounts the receipt of which Executive elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Executive was an employee of the Company or its affiliates) immediately before the Change in Control (including, for this purpose, any AIP Payout (as defined in Section 7(c)(i)(C)) or (ii) the average of the bonus amount payable (including any amounts payable under the AIP) to Executive (including any amounts the receipt of which Executive elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Executive was an employee of the Company or its affiliates) immediately before the Date of Termination (including, for this purpose, any AIP Payout); and

(3)   the amount determined by dividing (i) the sum of the Grant Values (as defined below) for the Regular Grants (as defined below) made in the calendar year in which the Change of Control occurred and in the previous two calendar years (or, if the Change of Control occurred in a calendar year in which Executive and other similarly-situated senior executives have not received a Regular Grant, the Regular Grants made in the three calendar years preceding the calendar year in which the Change of Control occurred); provided that any calendar year in which Executive was not an employee of the Company or its affiliates shall be disregarded, by (ii) the number of calendar years taken into account pursuant to clause (i) above. A Regular Grant shall mean any grant or award of performance shares, stock appreciation rights, restricted stock, stock options or other long-term stock-based incentives; provided that any “special” or “one-time” grant or award (as determined by the Committee) shall not be deemed a Regular Grant. The Grant Value of any Regular Grant means (a) the value of each such Regular Grant as of the date of grant (as determined or approved by the Committee), or (b) if no such value has been established by the Committee, the value of each such Regular Grant as of the date of grant as determined by application of the Black-Scholes pricing model or such valuation methodology as may have been regularly used by the Company or its independent compensation consultant before the Change of Control. Notwithstanding the foregoing, (a) the Grant Value of Executive’s Regular Grants in 2002 shall be $______; (b) the Grant Value of Executive’s Regular Grants in 2003 shall be $______; and (c) the Grant Value of Executive’s Regular Grants in 2004 shall be $______.

(C)   if Executive has an annual cash bonus opportunity (including a cash bonus opportunity under the AIP) outstanding and unpaid as of the Date of Termination, a cash payment (the “AIP Payout”) equal to (1) if the Date of Termination is before December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to Executive’s target bonus opportunity under such bonus plan for such fiscal year, and (2) if the Date of Termination is on or after December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to the amount Executive would have received under such bonus plan for such fiscal year based on actual achievement of the performance goals with respect thereto (assuming, for this purpose, that all subjective performance measures are achieved at a level equal to the greater of the level determined by the Company pursuant to the terms of such bonus plan and 100%). Payment of the AIP Payout shall be in lieu of payment of any annual cash bonus opportunity otherwise due and payable with respect to the fiscal year of the Company referred to in this Section 7(c)(i)(C).

                                  (D)   the Accrued Obligations.

The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination. The AIP Payout shall be paid in cash in a single lump sum (a) if payable under Section 7(c)(i)(C)(1), as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (b) if payable under Section 7(c)(i)(C)(2), as soon as practicable, but in no event more than 30 business days (or such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.

(ii)   Supplemental Retirement Payment. If Executive is entitled to receive the Severance Amount described in Section 7(c)(i), Executive shall be entitled to receive a supplemental retirement payment, payable in a cash lump sum, equal in value to the actuarial equivalent (as defined below) of (A) the monthly benefit payable to Executive (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined by adding three years to Executive’s credited service as determined at Executive’s Date of Termination under the terms of Company’s qualified defined benefit pension plan and supplemental or excess pension plan (collectively, the “Pension Plans”) as in effect immediately before the Change in Control (subject to any maximum on credited service set forth in the Pension Plans), minus (B) the monthly benefit payable to Executive (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined pursuant to the terms of all defined benefit pension plans (including the Pension Plans), active or frozen, in which Executive is a participant at Executive’s Date of Termination if such plans are sponsored by the Company or its successors or affiliates.

For purposes of this Agreement, “actuarial equivalent” shall mean a benefit actuarially equal in value to the value of a given benefit in a given form or schedule, based upon (1) the mortality table or tables (including any set backs of ages) used to calculate actuarial equivalents under the Pension Plans as of the date on which an actuarial equivalent is being determined under this Agreement and (2) an interest rate equal to the sum of (A) the yield on U.S. 10-year Treasury Notes at constant maturity as most recently published by the Federal Reserve Bank of New York before Executive’s Date of Termination; provided, however, that if such yield has not been so published within 90 days before Executive’s Date of Termination, the interest rate shall be the yield on substantially similar securities on the business day before Executive’s Date of Termination as determined by AmSouth Bank N.A. upon the request of either the Company or Executive, plus (B) .75%.

For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 5 days of Executive’s receipt of Notice of Termination, but in either event at the Company’s expense, the independent pension consultants most recently used by the Company in connection with its qualified pension plan before the Change in Control shall be engaged and shall certify the benefits due to Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under clause (B) of the first paragraph of this Section 7(c)(ii) has not been determined within 30 days after the Date of Termination, no such offset shall be permitted.

(iii)   Continuation of Benefits. If Executive is entitled to receive the Severance Amount described in Section 7(c)(i), Executive (and, to the extent applicable, Executive’s dependents) shall be entitled, after the Date of Termination and until the earlier of (A) the second anniversary of the Date of Termination (the “End Date”) or (B) the date Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company’s employee welfare benefit plans including the Company’s hospital, medical, accident, disability, and life insurance plans (the “Benefit Plans”) as were generally provided to Executive in accordance with the Company’s policies and practices immediately before the Effective Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company’s general assets. Executive’s participation in the Benefit Plans will be on the same terms and conditions that would have applied had Executive continued to be employed by the Company through the End Date.

        (d)   Discharge of the Company’s Obligations. Except as expressly provided in the last sentence of this Section 7(d), the amounts payable to Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of Executive’s employment shall be in full and complete satisfaction of Executive’s rights under this Agreement and any other claims Executive may have in respect of employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon Executive’s receipt of such amounts, the Company shall be released and discharged from any and all liability to Executive in connection with this Agreement or otherwise in connection with Executive’s employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify Executive and hold Executive harmless as provided in Section 5(e).

        (e)   Certain Further Payments by the Company.

(i)   If any amount or benefit paid or distributed to Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to Executive by the Company or any affiliated company (including any distribution or payment made pursuant to the terms of the Company’s compensation plans or arrangements) (collectively, the “Covered Payments”) are or become subject to the tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar tax that may hereafter be imposed, the Company shall pay to Executive at the time specified in Section 7(e)(v) an additional amount (the “Tax Reimbursement Payment”) such that the net amount retained by Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments.

(ii)   For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and as all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company’s independent certified public accountants appointed before the Effective Date or tax counsel selected by such accountants (collectively, the “Accountants”), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code.

(iii)   For purposes of determining the amount of the Tax Reimbursement Payment, Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year.

(iv)   If the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, if any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to Executive, and interest payable to the Company shall not exceed interest received or credited to Executive by such tax authority for the period it held such portion. Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if Executive’s good faith claim for refund or credit is denied.

If the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined.

(v)   The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) shall be paid to Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. If the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

    8.   Non-exclusivity of Rights. Except as expressly provided herein, nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Executive may qualify, or limit or otherwise prejudice such rights as Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program.

    9.   Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense or other right which the Company may have against Executive or others whether by reason of the subsequent employment of Executive or otherwise.

    10.   Legal Fees and Expenses. If Executive asserts any claim in any contest (whether initiated by Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay Executive’s legal expenses (or cause such expenses to be paid), including Executive’s reasonable attorney’s fees, on a quarterly basis, upon presentation of proof of such expenses; provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement.

    11.   Successors. (a) This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

        (b)   This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

    12.   Miscellaneous. (a) Applicable Law; Interpretation. This Agreement shall be governed by and construed and conferred in accordance with the laws of the State of Delaware applied without reference to principles of conflict of laws. If any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The masculine shall include the feminine (and vice versa), the single shall include the plural (and vice versa), and the words “include” and “including” shall be deemed to be followed by the phrase “without limitation” unless the context clearly requires otherwise. This Agreement may be executed by manual or facsimile signature. The headings in this Agreement are solely for convenience and shall not affect the meaning or interpretation of this Agreement.

        (b)   Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.

        (c)   Agreement Term, Termination and Amendment. The initial term of this Agreement shall begin on the date hereof and shall terminate on May 1, 2007. On each May 1 beginning May 1, 2005, the term of this Agreement shall automatically extend by one year unless at least 30 days prior to such May 1 the Board of Directors of the Company determines, and the Company so notifies Executive, that there will be no such extension. The determination made by the Board of Directors as set forth in the preceding sentence shall not be effective if it is reasonably demonstrated by Executive that such determination (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (ii) otherwise arose in connection with or anticipation of a Change of Control. This Agreement may be amended or modified only by a written agreement signed by the parties hereto or by their respective successors and legal representatives.

        (d)   Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein and, without limiting the generality of the foregoing, any Employment Continuation Agreement executed between the Company and Executive before the date of this Agreement is hereby terminated. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive is entering into this Agreement of Executive’s own free will and accord, and with no duress, has read this Agreement, and understands it and its legal consequences.

        (e)   Notices. All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:                    at the home address of Executive as set forth in the records of the Company

If to the Company:              Protective Life Corporation
                                            2801 Highway 280 South
                                            Birmingham, Alabama 35223
                                            Attn: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.

        (f)   Confidentiality. Executive agrees to keep the terms of this Agreement confidential and agrees not to voluntarily disclose any information concerning this Agreement to anyone except Executive’s spouse, parents, legal counsel or accountant and provided that they (each and all) agree at Executive’s risk to keep such information confidential and not disclose it to others; provided that this nondisclosure provision does not prohibit disclosure (1) at the direction or with the consent of the President or an Executive Vice President of the Company, (2) to tax agencies, (3) as required by law or court order, or (4) as may be necessary to enforce Executive’s rights under this Agreement.

        (g)   Tax Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local, or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

        (h)   Waivers. The failure of Executive or the Company to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including the right of Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or of any other provision or right of this Agreement.

        (i)   Employment at Will. Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Executive and the Company, the employment of Executive by the Company is “at will” and, subject to Section 1, Executive’s employment may be terminated by either Executive or the Company at any time prior to the Effective Date, in which case Executive shall have no further rights under this Agreement.

        IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement as of the day and year first above written.

                                            PROTECTIVE LIFE CORPORATION


                                            By:_____________________________
                                            Name:    John D. Johns
                                            Title:   Chairman of the Board, President and
                                                     Chief Executive Officer


                                            EXECUTIVE


                                            Signature:_______________________
                                            Name:

EX-10

EMPLOYMENT CONTINUATION AGREEMENT

        This Employment Continuation Agreement dated as of February 2, 2004 (“Agreement”) is by and between Protective Life Corporation, a Delaware corporation (the “Company”), and ________________ (“Senior Officer”).

W I T N E S S E T H :

        WHEREAS, the Company has determined that Senior Officer holds a position that is critical to the Company;

        WHEREAS, the Company believes that, if it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of shareholders;

        WHEREAS, the Company understands that any such situation could be a distraction to Senior Officer, to the detriment of the Company and its shareholders;

        WHEREAS, the Company desires to assure itself of Senior Officer’s services during the period in which it is confronting such a situation, and to provide Senior Officer with certain financial assurances to enable Senior Officer to perform his or her responsibilities without undue distraction and without bias due to Senior Officer’s personal circumstances; and

        WHEREAS, to achieve these objectives, the Company and Senior Officer desire to enter into an agreement providing the Company and Senior Officer with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2);

        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and Senior Officer hereby agree as follows:

        1.   Effective Date. The effective date of this Agreement (the “Effective Date”) shall be the date on which a Change of Control occurs during the term of this Agreement (as provided in Section 12(c)); provided that (i) anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if Senior Officer’s employment with the Company is terminated before the date on which the Change of Control occurs, and if it is reasonably demonstrated by Senior Officer that such termination of employment (A) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (B) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately before such termination of employment, and (ii) except as provided in clause (i) above, if Senior Officer is not employed by the Company on the date on which a Change of Control occurs, this Agreement shall be void and without effect.

        2.   Definition of Change of Control. For the purposes of this Agreement, a “Change of Control” shall mean (i) a transaction or acquisition as identified in the Company’s Rights Agreement as in effect from time to time; (ii) the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (A) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (B) the shareholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, including any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Protective Life Insurance Company.

        3.   Employment Period. Subject to Section 6, the Company agrees to continue Senior Officer in its employ, and Senior Officer agrees to remain in the employ of the Company, for the period (the “Employment Period”) commencing on the Effective Date and ending on the second anniversary of the Effective Date.

        4.   Position and Duties. (a) No Reduction in Position. During the Employment Period, Senior Officer’s position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately before the Effective Date. Senior Officer’s services shall be performed at the location where Senior Officer was employed immediately before the Effective Date.

        (b)   Business Time. From and after the Effective Date, Senior Officer agrees to devote Senior Officer’s full attention during normal business hours to the business and affairs of the Company and to perform faithfully and efficiently the responsibilities assigned to Senior Officer to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which Senior Officer is entitled. Senior Officer’s continuing to serve on any boards and committees on which Senior Officer is serving or with which Senior Officer is otherwise associated immediately before the Effective Date shall not be deemed to interfere with the performance of Senior Officer’s services for the Company.

        5.   Compensation. (a) Base Salary. During the Employment Period, Senior Officer shall receive a base salary at a monthly rate at least equal to the monthly base salary paid to Senior Officer by the Company immediately before the Effective Date. The base salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company’s regular practices. Senior Officer’s base salary, as it may be increased from time to time, shall hereafter be referred to as “Base Salary”. Neither the Base Salary nor any increase in Base Salary after the Effective Date shall limit or reduce any other obligation of the Company hereunder.

        (b)   Annual Bonus and Incentive Compensation. During the Employment Period, in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, Senior Officer shall be entitled to receive an (i) annual bonus which is at least equal to the greater of (A) the highest annual bonus, including any bonus provided under the Company’s Annual Incentive Plan (“AIP”), that had been payable to Senior Officer in respect of either of the two fiscal years ended immediately before the Effective Date or (B) the amount that would have been payable to Senior Officer as a target bonus under any bonus program in which Senior Officer participated (including the AIP) for the year in which the Effective Date occurs and (ii) long-term incentive compensation opportunities on terms and conditions no less favorable to Senior Officer than those applicable to Senior Officer before the Effective Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by Senior Officer pursuant to any deferral programs or arrangements that the Company may make available to Senior Officer.

        (c)   Benefit Plans. During the Employment Period, Senior Officer (and, to the extent applicable, Senior Officer’s dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with Senior Officer’s participation in such plans immediately before the Effective Date or, if more favorable to Senior Officer, at the level made available to Senior Officer or other similarly situated employees at any time thereafter. Senior Officer shall also be entitled to receive such perquisites as were generally provided to Senior Officer in accordance with the Company’s policies and practices immediately before the Effective Date.

        (d)   Expenses. During the Employment Period, Senior Officer shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Senior Officer in accordance with the policies and procedures of the Company as in effect immediately before the Effective Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Effective Date to Senior Officer, if such policies and procedures are more favorable to Senior Officer than those in effect immediately before the Effective Date.

        (e)   Indemnification. During and after the Employment Period, the Company shall indemnify Senior Officer and hold Senior Officer harmless from and against any claim, loss or cause of action arising from or out of or related in any way to Senior Officer’s performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which Senior Officer serves at the request of the Company to the maximum extent permitted by applicable law and the Company’s Certificate of Incorporation and By-Laws (the “Governing Documents”); provided that in no event shall the protection afforded to Senior Officer hereunder be less than that afforded under the Governing Documents as in effect immediately before the Effective Date.

        6.   Termination of Employment. (a) Death or Disability. Senior Officer’s employment shall automatically terminate upon Senior Officer’s death or termination of employment due to Disability (as defined below) during the Employment Period. For purposes of this Agreement, “Disability” shall mean Senior Officer’s inability to perform the duties of Senior Officer’s position, as determined in accordance with the policies and procedures applicable with respect to the Company’s long-term disability plan as in effect immediately before the Effective Date.

        (b)   Voluntary Termination. Anything in this Agreement to the contrary notwithstanding, Senior Officer may, upon not less than 10 days’ written notice to the Company, voluntarily terminate employment for any reason (including early retirement under the terms of any of the Company’s retirement plans as in effect from time to time) during the Employment Period; provided that any termination of employment by Senior Officer pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b).

        (c)   Cause. The Company may terminate Senior Officer’s employment for Cause. For purposes of this Agreement, “Cause” shall mean (i) Senior Officer’s conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on Senior Officer’s part which result or are intended to result in material damage to the Company’s business or reputation; or (iii) repeated material violations by Senior Officer of Senior Officer’s obligations under Section 4, which violations are demonstrably willful and deliberate on Senior Officer’s part and which result in material damage to the Company’s business or reputation.

        (d)   Good Reason. Senior Officer may terminate employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, without the express written consent of Senior Officer, after the Effective Date:

(i)   (A) the assignment to Senior Officer of any duties inconsistent in any material adverse respect with Senior Officer’s position (including titles), authority or responsibilities as contemplated by Section 4, or (B) any other material adverse change in such position (including titles), authority or responsibilities;

(ii)   any failure by the Company to comply with any of the provisions of Section 5, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by Senior Officer;

(iii)   the Company’s requiring Senior Officer to be based at any office or location more than 20 miles from that location at which Senior Officer performed services specified under the provisions of Section 4 immediately before the Change of Control, except for travel reasonably required in the performance of Senior Officer’s responsibilities; or

(iv)   any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b).

In no event shall the mere occurrence of a Change of Control, absent any further impact on Senior Officer, be deemed to constitute Good Reason.

        (e)   Notice of Termination. Any termination of Senior Officer’s employment by the Company for Cause or by Senior Officer for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a “Notice of Termination” shall mean a written notice given, in the case of a termination for Cause, within 10 business days of the Company’s having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of Senior Officer’s having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Senior Officer’s employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by Senior Officer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Senior Officer hereunder or preclude Senior Officer from asserting such fact or circumstance in enforcing Senior Officer’s rights hereunder.

        (f)   Date of Termination. For the purpose of this Agreement, the term “Date of Termination” shall mean (i) in the case of a termination of employment for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, and (ii) in all other cases, the actual date on which Senior Officer’s employment terminates during the Employment Period.

        7.   Obligations of the Company upon Termination. (a) Death or Disability. If Senior Officer’s employment is terminated during the Employment Period by reason of Senior Officer’s death or Disability, this Agreement shall terminate without further obligations to Senior Officer or Senior Officer’s legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to Senior Officer (or Senior Officer’s beneficiary or estate) (i) Senior Officer’s full Base Salary through the Date of Termination (the “Earned Salary”), (ii) any vested amounts or benefits owing to Senior Officer under the Company’s otherwise applicable employee benefit plans and programs, including any compensation previously deferred by Senior Officer (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the “Accrued Obligations”), and (iii) any other benefits payable due to Senior Officer’s death or Disability under the Company’s plans, policies, programs or arrangements (the “Additional Benefits”).

        Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.

        (b)   Cause and Voluntary Termination. If, during the Employment Period, Senior Officer’s employment is terminated for Cause or voluntarily terminated by Senior Officer (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay Senior Officer (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, policy, program or arrangement.

        (c)   Termination by the Company other than for Cause and Good Reason Termination by Senior Officer.

(i)   Lump Sum Payments. If either (a) the Company terminates Senior Officer’s employment other than for Cause during the Employment Period or (b) Senior Officer terminates employment for Good Reason at any time during the Employment Period, then the Company shall pay to Senior Officer the following amounts:

                                (A)   Senior Officer’s Earned Salary;

                                (B)   a cash amount (the “Severance Amount”) equal to two (2) times the sum of

(1)    Senior Officer’s annual Base Salary; and

(2)    the greater of (i) the average of the bonus amount payable (including any amounts payable under the AIP) to Senior Officer (including any amounts the receipt of which Senior Officer elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Senior Officer was an employee of the Company or its affiliates) immediately before the Change in Control (including, for this purpose, any AIP Payout (as defined in Section 7(c)(i)(C)) or (ii) the average of the bonus amount payable (including any amounts payable under the AIP) to Senior Officer (including any amounts the receipt of which Senior Officer elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Senior Officer was an employee of the Company or its affiliates) immediately before the Date of Termination (including, for this purpose, any AIP Payout); and

 (C)   if Senior Officer has an annual cash bonus opportunity (including a cash bonus opportunity under the AIP) outstanding and unpaid as of the Date of Termination, a cash payment (the “AIP Payout”) equal to (1) if the Date of Termination is before December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to Senior Officer’s target bonus opportunity under such bonus plan for such fiscal year, and (2) if the Date of Termination is on or after December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to the amount Senior Officer would have received under such bonus plan for such fiscal year based on actual achievement of the performance goals with respect thereto (assuming, for this purpose, that all subjective performance measures are achieved at a level equal to the greater of the level determined by the Company pursuant to the terms of such bonus plan and 100%). Payment of the AIP Payout shall be in lieu of payment of any annual cash bonus opportunity otherwise due and payable with respect to the fiscal year of the Company referred to in this Section 7(c)(i)(C).

                               (D)   the Accrued Obligations.

The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination. The AIP Payout shall be paid in cash in a single lump sum (a) if payable under Section 7(c)(i)(C)(1), as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (b) if payable under Section 7(c)(i)(C)(2), as soon as practicable, but in no event more than 30 business days (or such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.

(ii)   Supplemental Retirement Payment. If Senior Officer is entitled to receive the Severance Amount described in Section 7(c)(i), Senior Officer shall be entitled to receive a supplemental retirement payment, payable in a cash lump sum, equal in value to the actuarial equivalent (as defined below) of (A) the monthly benefit payable to Senior Officer (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined by adding three years to Senior Officer’s credited service as determined at Senior Officer’s Date of Termination under the terms of Company’s qualified defined benefit pension plan and supplemental or excess pension plan (collectively, the “Pension Plans”) as in effect immediately before the Change in Control (subject to any maximum on credited service set forth in the Pension Plans), minus (B) the monthly benefit payable to Senior Officer (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined pursuant to the terms of all defined benefit pension plans (including the Pension Plans), active or frozen, in which Senior Officer is a participant at Senior Officer’s Date of Termination if such plans are sponsored by the Company or its successors or affiliates.

For purposes of this Agreement, “actuarial equivalent” shall mean a benefit actuarially equal in value to the value of a given benefit in a given form or schedule, based upon (1) the mortality table or tables (including any set backs of ages) used to calculate actuarial equivalents under the Pension Plans as of the date on which an actuarial equivalent is being determined under this Agreement and (2) an interest rate equal to the sum of (A) the yield on U.S. 10-year Treasury Notes at constant maturity as most recently published by the Federal Reserve Bank of New York before Senior Officer’s Date of Termination; provided, however, that if such yield has not been so published within 90 days before Senior Officer’s Date of Termination, the interest rate shall be the yield on substantially similar securities on the business day before Senior Officer’s Date of Termination as determined by AmSouth Bank N.A. upon the request of either the Company or Senior Officer, plus (B) .75%.

For purposes of making the foregoing determinations, at the request of Senior Officer in the Notice of Termination given by Senior Officer or in writing within 5 days of Senior Officer’s receipt of Notice of Termination, but in either event at the Company’s expense, the independent pension consultants most recently used by the Company in connection with its qualified pension plan before the Change in Control shall be engaged and shall certify the benefits due to Senior Officer under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under clause (B) of the first paragraph of this Section 7(c)(ii) has not been determined within 30 days after the Date of Termination, no such offset shall be permitted.

(iii)   Continuation of Benefits. If Senior Officer is entitled to receive the Severance Amount described in Section 7(c)(i), Senior Officer (and, to the extent applicable, Senior Officer’s dependents) shall be entitled, after the Date of Termination and until the earlier of (A) the second anniversary of the Date of Termination (the “End Date”) or (B) the date Senior Officer becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company’s employee welfare benefit plans including the Company’s hospital, medical, accident, disability, and life insurance plans (the “Benefit Plans”) as were generally provided to Senior Officer in accordance with the Company’s policies and practices immediately before the Effective Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company’s general assets. Senior Officer’s participation in the Benefit Plans will be on the same terms and conditions that would have applied had Senior Officer continued to be employed by the Company through the End Date.

        (d)   Discharge of the Company’s Obligations. Except as expressly provided in the last sentence of this Section 7(d), the amounts payable to Senior Officer pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of Senior Officer’s employment shall be in full and complete satisfaction of Senior Officer’s rights under this Agreement and any other claims Senior Officer may have in respect of employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon Senior Officer’s receipt of such amounts, the Company shall be released and discharged from any and all liability to Senior Officer in connection with this Agreement or otherwise in connection with Senior Officer’s employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify Senior Officer and hold Senior Officer harmless as provided in Section 5(e).

        (e)   Certain Further Payments by the Company.

(i)   If any amount or benefit paid or distributed to Senior Officer pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to Senior Officer by the Company or any affiliated company (including any distribution or payment made pursuant to the terms of the Company’s compensation plans or arrangements) (collectively, the “Covered Payments”) are or become subject to the tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar tax that may hereafter be imposed, the Company shall pay to Senior Officer at the time specified in Section 7(e)(v) an additional amount (the “Tax Reimbursement Payment”) such that the net amount retained by Senior Officer with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments.

(ii)   For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and as all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company’s independent certified public accountants appointed before the Effective Date or tax counsel selected by such accountants (collectively, the “Accountants”), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code.

(iii)   Officer shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year.

(iv)   If the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, Senior Officer shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, if any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to Senior Officer, and interest payable to the Company shall not exceed interest received or credited to Senior Officer by such tax authority for the period it held such portion. Senior Officer and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if Senior Officer’s good faith claim for refund or credit is denied.

If the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined.

(v)   The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) shall be paid to Senior Officer not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to Senior Officer by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. If the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Senior Officer, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

        8.   Non-exclusivity of Rights. Except as expressly provided herein, nothing in this Agreement shall prevent or limit Senior Officer’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Senior Officer may qualify, or limit or otherwise prejudice such rights as Senior Officer may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which Senior Officer is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program.

        9.   Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense or other right which the Company may have against Senior Officer or others whether by reason of the subsequent employment of Senior Officer or otherwise.

        10.   Legal Fees and Expenses. If Senior Officer asserts any claim in any contest (whether initiated by Senior Officer or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay Senior Officer’s legal expenses (or cause such expenses to be paid), including Senior Officer’s reasonable attorney’s fees, on a quarterly basis, upon presentation of proof of such expenses; provided that Senior Officer shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Senior Officer shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement.

        11.   Successors. (a) This Agreement is personal to Senior Officer and, without the prior written consent of the Company, shall not be assignable by Senior Officer otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Senior Officer’s legal representatives.

        (b)   This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to Senior Officer, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

        12.   Miscellaneous. (a) Applicable Law; Interpretation. This Agreement shall be governed by and construed and conferred in accordance with the laws of the State of Delaware applied without reference to principles of conflict of laws. If any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The masculine shall include the feminine (and vice versa), the single shall include the plural (and vice versa), and the words “include” and “including” shall be deemed to be followed by the phrase “without limitation” unless the context clearly requires otherwise. This Agreement may be executed by manual or facsimile signature. The headings in this Agreement are solely for convenience and shall not affect the meaning or interpretation of this Agreement.

        (b)   Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and Senior Officer. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.

        (c)   Agreement Term, Termination and Amendment. The initial term of this Agreement shall begin on the date hereof and shall terminate on May 1, 2007. On each May 1 beginning May 1, 2005, the term of this Agreement shall automatically extend by one year unless at least 30 days prior to such May 1 the Board of Directors of the Company determines, and the Company so notifies Senior Officer, that there will be no such extension. The determination made by the Board of Directors as set forth in the preceding sentence shall not be effective if it is reasonably demonstrated by Senior Officer that such determination (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (ii) otherwise arose in connection with or anticipation of a Change of Control. This Agreement may be amended or modified only by a written agreement signed by the parties hereto or by their respective successors and legal representatives.

        (d)   Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein and, without limiting the generality of the foregoing, any Employment Continuation Agreement executed between the Company and Senior Officer before the date of this Agreement is hereby terminated. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Senior Officer is entering into this Agreement of Senior Officer’s own free will and accord, and with no duress, has read this Agreement, and understands it and its legal consequences.

        (e)   Notices. All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Senior Officer:              at the home address of Senior Officer as set forth in the records of the Company

If to the Company:                  Protective Life Corporation
                                    2801 Highway 280 South
                                    Birmingham, Alabama  35223
                                    Attn: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.

        (f)   Confidentiality. Senior Officer agrees to keep the terms of this Agreement confidential and agrees not to voluntarily disclose any information concerning this Agreement to anyone except Senior Officer’s spouse, parents, legal counsel or accountant and provided that they (each and all) agree at Senior Officer’s risk to keep such information confidential and not disclose it to others; provided that this nondisclosure provision does not prohibit disclosure (1) at the direction or with the consent of the President or an Executive Vice President of the Company, (2) to tax agencies, (3) as required by law or court order, or (4) as may be necessary to enforce Senior Officer’s rights under this Agreement.

        (g)   this Agreement such Federal, state, local, or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

        (h)   Waivers. The failure of Senior Officer or the Company to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Senior Officer or the Company may have hereunder, including the right of Senior Officer to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or of any other provision or right of this Agreement.

        (i)   Employment at Will. Senior Officer and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Senior Officer and the Company, the employment of Senior Officer by the Company is “at will” and, subject to Section 1, Senior Officer’s employment may be terminated by either Senior Officer or the Company at any time prior to the Effective Date, in which case Senior Officer shall have no further rights under this Agreement.

        IN WITNESS WHEREOF, the Company and Senior Officer have duly executed this Agreement as of the day and year first above written.

                                            PROTECTIVE LIFE CORPORATION


                                            By:_____________________________
                                            Name:    John D. Johns
                                            Title:   Chairman of the Board, President and
                                                     Chief Executive Officer


                                            SENIOR OFFICER


                                            Signature:_______________________
                                            Name:

EX-15

Exhibit 15

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We are aware that our report dated May 4, 2004 on our review of interim financial information of Protective Life Corporation and subsidiaries (the “Company”) for the three month periods ended March 31, 2004 and 2003 and included in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2004 is incorporated by reference in the Company’s registration statements on Form S-8 (File Nos. 333-32420, 33-51887 and 33-61847) and Form S-3 (File Nos. 333-86477, 333-39103 and 33-59769).

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Birmingham, Alabama
May 10, 2004

EX-31

Exhibit 31(a)

Certification Pursuant to §302 of the Sarbanes-Oxley Act of 2002

I, John D. Johns, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Protective Life Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2004


/s/ John D. Johns
Title:     President and Chief Executive Officer

EX-31

Exhibit 31(b)

Certification Pursuant to §302 of the Sarbanes-Oxley Act of 2002

I, Allen W. Ritchie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Protective Life Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2004


/s/ Allen W. Ritchie
Title: Executive Vice President and
            Chief Financial Officer

EX-32

[PROTECTIVE LIFE CORPORATION LETTERHEAD]

EXHIBIT 32(a)

CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Protective Life Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John D. Johns, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ John D. Johns
President and Chief Executive Officer
May 10, 2004

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

EX-32

[PROTECTIVE LIFE CORPORATION LETTERHEAD]

EXHIBIT 32(b)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Protective Life Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Allen W. Ritchie, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Allen W. Ritchie
Executive Vice President and
    Chief Financial Officer
May 10, 2004

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

EX-99

Exhibit 99
to
Form 10-Q
of
Protective Life Corporation
for the three months
ended March 31, 2004

Safe Harbor for Forward-Looking Statements

        The Private Securities Litigation Reform Act of 1995 (the “Act”) encourages companies to make “forward-looking statements” by creating a safe harbor to protect the companies from securities law liability in connection with forward-looking statements. All statements based on future expectations rather than on historical facts are forward-looking statements. Forward-looking statements can be identified by use of words such as “expect,” “estimate,” “project,” ” budget,” “forecast,” “anticipate,” “plan,” “may,” and similar expressions. Protective Life Corporation (the “Company”) intends to qualify both its written and oral forward-looking statements for protection under the Act.

        To qualify oral forward-looking statements for protection under the Act, a readily available written document must identify important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company provides the following information to qualify forward-looking statements for the safe harbor protection of the Act.

        The operating results of companies in the insurance industry have historically been subject to significant fluctuations. The factors which could affect the Company’s future results include, but are not limited to, general economic conditions and the known trends and uncertainties which are discussed more fully below.

The Company is exposed to the risks of natural disasters, malicious and terrorist acts that could adversely affect the Company’s operations.

        While the Company has obtained insurance, implemented risk management and contingency plans, and taken preventive measures and other precautions, no predictions of specific scenarios can be made nor can assurance be given that there are not scenarios that could have an adverse effect on the Company. A natural disaster or an outbreak of an easily communicable disease could adversely affect the mortality or morbidity experience of the Company or its reinsurers.

The Company operates in a mature, highly competitive industry, which could limit its ability to gain or maintain its position in the industry.

        Life and health insurance is a mature industry. In recent years, the industry has experienced little growth in life insurance sales, though the aging population has increased the demand for retirement savings products. Life and health insurance is a highly competitive industry. The Company encounters significant competition in all lines of business from other insurance companies, many of which have greater financial resources than the Company, as well as competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products.

        The insurance industry is consolidating, with larger, potentially more efficient organizations emerging from consolidation. Participants in certain of the Company’s independent distribution channels are also consolidating into larger organizations. Some mutual insurance companies are converting to stock ownership, which will give them greater access to capital markets. Additionally, commercial banks, insurance companies, and investment banks may now combine, provided certain requirements are satisfied. The ability of banks to increase their securities-related business or to affiliate with insurance companies may materially and adversely affect sales of all of the Company’s products by substantially increasing the number and financial strength of potential competitors.

        The Company’s ability to compete is dependent upon, among other things, its ability to attract and retain distribution channels to market its insurance and investment products, its ability to develop competitive and profitable products, its ability to maintain low unit costs, and its maintenance of strong ratings from rating agencies.

A ratings downgrade could adversely affect the Company’s ability to compete.

        Rating organizations periodically review the financial performance and condition of insurers, including the Company’s subsidiaries. In recent years, downgrades of insurance companies have occurred with increasing frequency. A downgrade in the rating of the Company’s subsidiaries could adversely affect the Company’s ability to sell its products, retain existing business, and compete for attractive acquisition opportunities. Specifically, a ratings downgrade would materially harm the Company’s ability to sell certain products, including guaranteed investment products and funding agreements.

        Rating organizations assign ratings based upon several factors. While most of the factors relate to the rated company, some of the factors relate to the views of the rating organization, general economic conditions and circumstances outside the rated company’s control. In addition, rating organizations use various models and formulas to assess the strength of a rated company, and from time to time rating organizations have, in their discretion, altered the models. Changes to the models could impact the rating organizations’ judgment of the rating to be assigned to the rated company. The Company cannot predict what actions the rating organizations may take, or what actions the Company may be required to take in response to the actions of the rating organizations, which could adversely affect the Company.

The Company’s policy claims fluctuate from period to period, and actual results could differ from its expectations.

        The Company’s results may fluctuate from period to period due to fluctuations in policy claims received by the Company. Certain of the Company’s businesses may experience higher claims if the economy is growing slowly or in recession, or equity markets decline.

        Mortality, morbidity, and casualty expectations incorporate assumptions about many factors, including for example, how a product is distributed, persistency and lapses, and future progress in the fields of health and medicine. Actual mortality, morbidity, and casualty claims could differ from expectations if actual results differ from those assumptions.

The Company’s results may be negatively affected should actual experience differ from management’s assumptions and estimates.

        In the conduct of business, the Company makes certain assumptions regarding the mortality, persistency, expenses and interest rates, or other factors appropriate to the type of business it expects to experience in future periods. These assumptions are also used to estimate the amounts of deferred policy acquisition costs, policy liabilities and accruals, future earnings, and various components of the Company’s balance sheet. The Company’s actual experience, as well as changes in estimates, are used to prepare the Company’s statements of income.

        The calculations the Company uses to estimate various components of its balance sheet and statements of income are necessarily complex and involve analyzing and interpreting large quantities of data. The Company currently employs various techniques for such calculations and it from time to time will develop and implement more sophisticated administrative systems and procedures capable of facilitating the calculation of more precise estimates.

        Assumptions and estimates involve judgment, and by their nature are imprecise and subject to changes and revision over time. Accordingly, the Company’s results may be affected, positively or negatively, from time to time, by actual results differing from assumptions, by changes in estimates, and by changes resulting from implementing more sophisticated administrative systems and procedures that facilitate the calculation of more precise estimates.

The use of reinsurance introduces variability in the Company’s statements of income.

        The timing of premium payments to, and receipt of expense allowances from, reinsurers may differ from the Company’s receipt of customer premium payments and incurrence of expenses. These timing differences introduce variability in certain components of the Company’s statements of income, and may also introduce variability in the Company’s quarterly results.

The Company could be forced to sell investments at a loss to cover policyholder withdrawals.

        Many of the products offered by the Company and its insurance subsidiaries allow policyholders and contract holders to withdraw their funds under defined circumstances. The Company and its insurance subsidiaries manage their liabilities and configure their investment portfolios so as to provide and maintain sufficient liquidity to support anticipated withdrawal demands and contract benefits and maturities. While the Company and its life insurance subsidiaries own a significant amount of liquid assets, a certain portion of their assets are relatively illiquid. If the Company or its subsidiaries experience unanticipated withdrawal or surrender activity, the Company or its subsidiaries could exhaust their liquid assets and be forced to liquidate other assets, perhaps on unfavorable terms. If the Company or its subsidiaries are forced to dispose of assets on unfavorable terms, it could have an adverse effect on the Company’s financial condition.

Interest-rate fluctuations could negatively affect the Company’s spread income or otherwise impact its business.

        Significant changes in interest rates expose insurance companies to the risk of not earning anticipated spreads between the interest rate earned on investments and the credited interest rates paid on outstanding policies and contracts. Both rising and declining interest rates can negatively affect the Company’s spread income. While the Company develops and maintains asset/liability management programs and procedures designed to preserve spread income in rising or falling interest rate environments, no assurance can be given that changes in interest rates will not affect such spreads.

        From time to time, the Company has participated in securities repurchase transactions that have contributed to the Company’s investment income. Such transactions involve some degree of risk that the counterparty may fail to perform its obligations to pay amounts owed and the collateral has insufficient value to satisfy the obligation. No assurance can be given that such transactions will continue to be entered into and contribute to the Company’s investment income in the future.

        Changes in interest rates may also impact its business in other ways. Lower interest rates may result in lower sales of certain of the Company’s insurance and investment products. In addition, certain of the Company’s insurance and investment products guarantee a minimum credited interest rate, and the Company could become unable to earn its spread income should interest rates decrease significantly.

        Higher interest rates may create a less favorable environment for the origination of mortgage loans and decrease the investment income the Company receives in the form of prepayment fees, make-whole payments, and mortgage participation income. Higher interest rates may also increase the cost of debt and other obligations having floating rate or rate reset provisions and may result in lower sales of variable products.

        Additionally, the Company’s asset/liability management programs and procedures incorporate assumptions about the relationship between short-term and long-term interest rates (i.e., the slope of the yield curve) and relationships between risk-adjusted and risk-free interest rates, market liquidity, and other factors. The effectiveness of the Company’s asset/liability management programs and procedures may be negatively affected whenever actual results differ from these assumptions.

        In general terms, the Company’s results are improved when the yield curve is positively sloped (i.e., when long-term interest rates are higher than short-term interest rates), and will be adversely affected by a flat or negatively sloped curve.

Equity market volatility could negatively impact the Company’s business.

        The amount of policy fees received from variable products is affected by the performance of the equity markets, increasing or decreasing as markets rise or fall. Equity market volatility can also affect the profitability of variable products in other ways.

        The amortization of deferred policy acquisition costs relating to variable products and the estimated cost of providing guaranteed minimum death benefits incorporate various assumptions about the overall performance of equity markets over certain time periods. The rate of amortization of deferred policy acquisition costs and the estimated cost of providing guaranteed minimum death benefits could increase if equity market performance is worse than assumed.

A deficiency in the Company’s systems could result in over or underpayments of amounts owed to or by the Company and/or errors in the Company’s critical assumptions or reported financial results.

        The business of insurance necessarily involves the collection and dissemination of large amounts of data using systems operated by the Company. Examples of data collected and analyzed include policy information, policy rates, expenses, mortality and morbidity experience. To the extent that data input errors, systems errors, or systems failures are not identified and corrected by the Company’s internal controls, the information generated by the systems and used by the Company and/or supplied to business partners, policyholders, and others may be incorrect and may result in an overpayment or underpayment of amounts owed to or by the Company and/or the Company using incorrect assumptions in its business decisions or financial reporting.

        In the third quarter of 2002, the Company discovered that the rates payable on certain life insurance policies were incorrectly entered into its reinsurance administrative system in 1991. As a result, the Company overpaid to several reinsurance companies the reinsurance premiums related to such policies of approximately $94.5 million over a period of 10 years beginning in 1992. The Company has received payment from substantially all of the affected reinsurance companies.

Insurance companies are highly regulated and subject to numerous legal restrictions and regulations.

The Company and its subsidiaries are subject to government regulation in each of the states in which they conduct business. Such regulation is vested in state agencies having broad administrative power dealing with many aspects of the Company’s business, which may include premium rates, marketing practices, advertising, privacy, policy forms, and capital adequacy, and is concerned primarily with the protection of policyholders and other customers rather than share owners. At any given time, a number of financial and/or market conduct examinations of the Company’s subsidiaries is ongoing. The Company is required to obtain state regulatory approval for rate increases for certain health insurance products, and the Company’s profits may be adversely affected if the requested rate increases are not approved in full by regulators in a timely fashion. From time to time, regulators raise issues during examinations or audits of the Company’s subsidiaries that could, if determined adversely, have a material impact on the Company. The Company cannot predict whether or when regulatory actions may be taken that could adversely affect the Company or its operations. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas such as health insurance.

        The Company and its insurance subsidiaries may be subject to regulation by the United States Department of Labor when providing a variety of products and services to employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Severe penalties are imposed for breach of duties under ERISA.

        Certain policies, contracts, and annuities offered by the Company and its subsidiaries are subject to regulation under the federal securities laws administered by the Securities and Exchange Commission. The federal securities laws contain regulatory restrictions and criminal, administrative, and private remedial provisions.

        Other types of regulation that could affect the Company and its subsidiaries include insurance company investment laws and regulations, state statutory accounting practices, state anti-trust laws, minimum solvency requirements, state securities laws, federal privacy laws, federal money laundering and anti-terrorism laws, and because the Company owns and operates real property state, federal, and local environmental laws. The Company cannot predict what form any future changes in these or other areas of regulation affecting the insurance industry might take or what effect, if any, such proposals might have on the Company if enacted into law.

Changes to tax law or interpretations of existing tax law could adversely affect the Company and its ability to compete with non-insurance products or reduce the demand for certain insurance products.

        Under the Internal Revenue Code of 1986, as amended (the “Code”), income tax payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. This favorable tax treatment may give certain of the Company’s products a competitive advantage over other non-insurance products. To the extent that the Code is revised to reduce the tax-deferred status of life insurance and annuity products, or to increase the tax-deferred status of competing products, all life insurance companies, including the Company and its subsidiaries, would be adversely affected with respect to their ability to sell such products, and, depending upon grandfathering provisions, would be affected by the surrenders of existing annuity contracts and life insurance policies. For example, changes in laws or regulations could restrict or eliminate the advantages of certain corporate or bank-owned life insurance products. Recent changes in tax law, which have reduced the federal income tax rates on corporate dividends in certain circumstances, could make the tax advantages of investing in certain life insurance or annuity products less attractive. Additionally, changes in tax law based on proposals to establish new tax advantaged retirement and life savings plans, if enacted, could reduce the tax advantage of investing in certain life insurance or annuity products. In addition, life insurance products are often used to fund estate tax obligations. Legislation has been enacted that would, over time, reduce and eventually eliminate the estate tax. If the estate tax is significantly reduced or eliminated, the demand for certain life insurance products could be adversely affected. Additionally, the Company is subject to the federal corporation income tax. The Company cannot predict what changes to tax law or interpretations of existing tax law could adversely affect the Company.

Financial services companies are frequently the targets of litigation, including class action litigation, which could result in substantial judgments.

        A number of civil jury verdicts have been returned against insurers, broker-dealers, and other providers of financial services involving sales practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or other persons with whom the insurer does business, and other matters. Increasingly these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive and non-economic compensatory damages, which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments.

        Group health coverage issued through associations has received some negative coverage in the media as well as increased regulatory consideration and review. The Company has a small closed block of group health insurance coverage that was issued to members of an association; a lawsuit is currently pending against the Company in connection with this business.

        The Company, like other financial services companies, in the ordinary course of business is involved in such litigation and arbitration. Although the Company cannot predict the outcome of any such litigation or arbitration, the Company does not believe that any such outcome will have a material impact on the financial condition or results of operations of the Company.

The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency of existing business.

        The Company’s ability to maintain low unit costs is dependent upon the level of new sales and persistency (continuation or renewal) of existing business. A decrease in sales or persistency without a corresponding reduction in expenses may result in higher unit costs.

        Additionally, a decrease in persistency may result in higher or more rapid amortization of deferred policy acquisition costs and thus higher unit costs, and lower reported earnings. Although many of the Company’s products contain surrender charges, the charges decrease over time and may not be sufficient to cover the unamortized deferred policy acquisition costs with respect to the insurance policy or annuity contract being surrendered. Some of the Company’s products do not contain surrender charge features and such products can be surrendered or exchanged without penalty. A decrease in persistency may also result in higher claims.

The Company’s investments are subject to market and credit risks.

        The Company’s invested assets and derivative financial instruments are subject to customary risks of credit defaults and changes in market values. The value of the Company’s commercial mortgage loan portfolio depends in part on the financial condition of the tenants occupying the properties which the Company has financed. Factors that may affect the overall default rate on, and market value of, the Company’s invested assets, derivative financial instruments, and mortgage loans include interest rate levels, financial market performance, and general economic conditions as well as particular circumstances affecting the businesses of individual borrowers and tenants.

The Company may not realize its anticipated financial results from its acquisitions strategy.

        The Company’s acquisitions have increased its earnings in part by allowing the Company to enter new markets and to position itself to realize certain operating efficiencies. There can be no assurance, however, that suitable acquisitions, presenting opportunities for continued growth and operating efficiencies, or capital to fund acquisitions will continue to be available to the Company, or that the Company will realize the anticipated financial results from its acquisitions.

        Additionally, in connection with its acquisitions, the Company assumes or otherwise becomes responsible for the obligations of policies and other liabilities of other insurers. Any regulatory, legal, financial, or other adverse development affecting the other insurer could also have an adverse effect on the Company.

The Company is dependent on the performance of others.

        The Company’s results may be affected by the performance of others because the Company has entered into various arrangements involving other parties. For example, most of the Company’s products are sold through independent distribution channels, and variable annuity deposits are invested in funds managed by third parties. Additionally, the Company’s operations are dependent on various technologies, some of which are provided and/or maintained by other parties.

        Certain of these other parties may act on behalf of the Company or represent the Company in various capacities. Consequently, the Company may be held responsible for obligations that arise from the acts or omissions of these other parties.

        As with all financial services companies, its ability to conduct business is dependent upon consumer confidence in the industry and its products. Actions of competitors and financial difficulties of other companies in the industry could undermine consumer confidence and adversely affect retention of existing business and future sales of the Company’s insurance and investment products.

The Company’s reinsurers could fail to meet assumed obligations, increase rates or be subject to adverse developments that could affect the Company.

        The Company and its insurance subsidiaries cede material amounts of insurance and transfer related assets to other insurance companies through reinsurance. The Company may enter into third-party reinsurance arrangements under which the Company will rely on the third party to collect premiums, pay claims, and/or perform customer service functions. However, notwithstanding the transfer of related assets or other issues, the Company remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by it.

        The Company’s ability to compete is dependent on the availability of reinsurance. Premium rates charged by the Company are based, in part, on the assumption that reinsurance will be available at a certain cost. Under certain reinsurance agreements, the reinsurer may increase the rate it charges the Company for the reinsurance, though the Company does not anticipate increases to occur with respect to existing reinsurance contracts. Therefore, if the cost of reinsurance were to increase or if reinsurance were to become unavailable, or if a reinsurer should fail to meet its obligations, the Company could be adversely affected.

        Recently, certain commentators on the insurance industry have speculated that reinsurance might become more costly or less available in the future, which could have a negative effect on the Company’s ability to compete. In recent years, the number of life reinsurers has decreased as the reinsurance industry has consolidated. The decreased number of participants in the life reinsurance market results in increased concentration risk for insurers, including the Company. In addition, some reinsurers have indicated an unwillingness to continue to reinsure new sales of long-term guarantee products. If the reinsurance markets for these products further contracts, the Company’s ability to continue to offer such products would be adversely impacted.

Computer viruses or network security breaches could affect the data processing systems of the Company or its business partners.

        A computer virus could affect the data processing systems of the Company or its business partners, destroying valuable data or making it difficult to conduct business. In addition, despite our implementation of network security measures, our servers could be subject to physical and electronic break-ins, and similar disruptions from unauthorized tampering with our computer systems.

The Company’s ability to grow depends in large part upon the continued availability of capital.

        The Company has recently deployed significant amounts of capital to support its sales and acquisitions efforts. Capital has also been consumed as the Company increased its reserves on the residual value product. Although positive performance in the equity markets has recently allowed the Company to decrease its GMDB related policy liabilities and accruals, deterioration in these markets could lead to further capital consumption. Although the Company believes it has sufficient capital to fund its immediate growth and capital needs, the amount of capital available can vary significantly from period to period due to a variety of circumstances, some of which are neither predictable nor foreseeable, nor within the Company’s control. A lack of sufficient capital could impair the Company’s ability to grow.

New accounting rules or changes to existing accounting rules could negatively impact the Company’s reported financial results.

        Like all publicly traded companies, the Company is required to comply with accounting principles generally accepted in the United States of America (GAAP). A number of organizations are instrumental in the development of GAAP such as the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the American Institute of Certified Public Accountants (AICPA). GAAP is subject to constant review by these organizations and others in an effort to address emerging issues and otherwise improve financial reporting. In this regard, these organizations adopt new accounting rules and issue interpretive accounting guidance on a continual basis. The Company can give no assurance that future changes to GAAP will not have a negative impact on the Company’s reported financial results.

        Forward-looking statements express expectations of future events and/or results. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, investors are urged not to place undue reliance on forward-looking statements. In addition, the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to projections over time.