SCHEDULE II

PROTECTIVE INSURANCE CORPORATION AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS - PARENT COMPANY ONLY

(in thousands)

	December 31
	2019		2018
Assets
Investment in subsidiaries	$	398,725	$	401,260
Due from affiliates		1,579		1,152
Investments other than subsidiaries:
Fixed income securities		23,979		22,302
Limited partnerships		206		215
		24,185		22,517
Cash and cash equivalents		7,059		15,185
Accounts receivable		5,606		2,276
Other assets		22,153		28,794
Total assets	$	459,307	$	471,184

Liabilities and shareholders' equity

Liabilities:
Premiums payable	$	20,238	$	22,964
Deposits from insureds		42,067		58,748
Short-term borrowings		20,000		20,000
Other liabilities		12,686		13,390
		94,991		115,102
Shareholders' equity:
Common stock:
Class A		111		112
Class B		499		522
Additional paid-in capital		53,349		54,720
Accumulated other comprehensive income (loss)		9,369		(7,347	)
Retained earnings		300,988		308,075
		364,316		356,082

Total liabilities and shareholders' equity	$	459,307	$	471,184

SCHEDULE II

PROTECTIVE INSURANCE CORPORATION AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS - PARENT COMPANY ONLY

(in thousands)

	Year Ended December 31
	2019			2018			2017
Revenue:
Commissions and service fees	$	14,149		$	17,456		$	18,863
Cash dividends from subsidiaries		–			5,000			10,000
Net investment income		692			569			348
Net realized gains (losses) on investments		(46	)		(192	)		308
Other		17			51			(106	)
		14,812			22,884			29,413
Expenses:
Salary and related items		11,804			20,158			18,140
Other		10,386			11,724			9,686
		22,190			31,882			27,826
Income (loss) before federal income tax benefit and equity in undistributed income of subsidiaries		(7,378	)		(8,998	)		1,587
Federal income tax benefit		(1,452	)		(2,862	)		(2,971	)
		(5,926	)		(6,136	)		4,558
Equity in undistributed income of subsidiaries		13,273			(27,939	)		13,765

Net income (loss)	$	7,347		$	(34,075	)	$	18,323

SCHEDULE II

PROTECTIVE INSURANCE CORPORATION AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - PARENT COMPANY ONLY

(in thousands)

	Year Ended December 31
	2019		2018			2017
Net income (loss)	$	7,347	$	(34,075	)	$	18,323

Other comprehensive income (loss), net of tax:
Unrealized net gains (losses) on fixed income securities		16,071		(6,868	)		12,649

Foreign currency translation adjustments		645		(830	)		522

Other comprehensive income (loss)		16,716		(7,698	)		13,171

Comprehensive income (loss)	$	24,063	$	(41,773	)	$	31,494

SCHEDULE II

PROTECTIVE INSURANCE CORPORATION AND SUBSIDIARIES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS - PARENT COMPANY ONLY

(in thousands)

	Year Ended December 31
	2019			2018			2017
Net cash provided by operating activities	$	10,643		$	14,019		$	44,998

Investing activities:
Purchases of investments		(4,967	)		(11,435	)		(21,365	)
Sales or maturities of investments		3,935			11,213			9,146
Net sales of short-term investments		–			–			–
Distributions from limited partnerships		1			–			298
Net purchases of property and equipment		(380	)		(3,677	)		(3,394	)
Net cash used in investing activities		(1,411	)		(3,899	)		(15,315	)

Financing activities:
Dividends paid to shareholders		(5,857	)		(16,835	)		(16,302	)
Repurchase of common shares		(11,501	)		(4,596	)		(1,880	)
Net cash used in financing activities		(17,358	)		(21,431	)		(18,182	)

Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents		(8,126	)		(11,311	)		11,501
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year		15,185			26,496			14,995
Cash, cash equivalents and restricted cash and cash equivalents at end of year	$	7,059		$	15,185		$	26,496

Note to Condensed Financial Statements -- Basis of Presentation

The Company's investment in subsidiaries is stated at cost plus equity in the undistributed earnings of subsidiaries since the date of acquisition. The Company's share of net income of its subsidiaries is included in income using the equity method. These financial statements should be read in conjunction with the Company's consolidated financial statements.