protective life insurance company 2016 company update

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  • Protective Life Insurance Company2016 Company Update

    April 11, 2016

  • IntroductionIn addition to the information contained in this presentation, we have supplemental financial information availableon our website at www.protective.com. The information found on our website is not a part of this presentation.Also, this presentation includes forward-looking statements which express expectations of future events and/orresults. Actual events and results may differ materially from these expectations. For more information about therisks, uncertainties, and other factors that could affect our future results, please refer to Part I, Item 1A, RiskFactors, of the Companys most recent Annual Report on Form 10-K. Unless context otherwise requires, we,us, and our refer to the consolidated group of the Protective Life Insurance Company (the Company) and itssubsidiaries. In this presentation, PLC refers to Protective Life Corporation.

    Certain information included in this presentation may contain non-GAAP financial measures. For informationrelating to non-GAAP financial measures and the associated reconciliation to GAAP financial measures, pleaserefer to Note 25 to our consolidated financial statements included in our most recent Annual Report on Form 10-K(operating earnings (losses), referenced throughout this presentation, is referred to as segment operating income(loss) in our Annual Report on Form 10-K). The preparation of Company financial statements requiresmanagement to make estimates and assumptions that impact the reported amount of assets and liabilities, thedisclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting periods.

    This presentation is not intended as, and should not be construed as, earnings guidance. This presentation isdated April 11, 2016. We assume no obligation to, and do not intend to update the information contained hereinafter such date.

    2

  • Company Overview

  • About Protective Life Insurance Company

    Solid competitor in the industry

    Founded in 1907

    $767 billion of life insurance in force*

    Over 7 million contracts and policies*

    Track record of strong financial performance

    Healthy retail franchise

    Distinctive acquisition capabilities

    Talented management team in place

    Support from and collaboration with Dai-ichi

    *as of December 31, 20154

  • Protective Life Insurance Company OverviewDiversified Business Operations

    5

    Income frominvested capital

    Interest expenseon debt

    Unallocatedoverhead

    GICs

    FundingAgreements

    Segments

    Life Marketing Acquisitions AnnuitiesStable Value

    Products

    Traditional

    Universal Life

    Annuities

    FixedAnnuities

    VariableAnnuities

    AssetProtection

    CreditInsurance

    ServiceContracts

    GAP

    Products

    Corporate &Other

    Universal Life

    Traditional

    BOLI

  • LifeMarketing

    38%AssetProtection

    9%

    StableValue

    2%

    Annuities12%

    Acquisitions39%

    Asset

    Protection

    4%

    StableValue12%

    Business Mix

    6

    Annuities31%

    Pre-taxOperatingEarnings*

    $470.6million

    2015 results reflect the impact of purchase accounting and include the period from 02/01/15 through 12/31/15.*Excludes the Corporate & Other segment

    TotalRevenues*

    $3.4billion

    Life Marketing12%

    Acquisitions41%

  • Opportunities for Organic Growth in Life and Annuities

    7

    Our MissionTear down the barriers

    Core StrategyImprove and simplify the entire Customer Experience

    Shared ValueReconfigured value chain

    DirectEngage customers directly

    Strengthen ExistingOperational excellence

    Core ValuesDo the Right Thing. Serve People. Build Trust. Simplify Everything.

    7

  • Strong Financial Foundation

    $2.0

    $2.8 $2.9$3.0

    $3.3 $3.2

    $3.9$4.1

    2008 2009 2010 2011 2012 2013 2014 2015

    Total Adjusted Statutory Capital$ in billions

    8

  • Strong Financial Foundation

    298%

    429%455% 434%

    510%

    447%

    562% 562%

    2008 2009 2010 2011 2012 2013 2014 2015

    Risk-Based Capital Ratio

    9

  • Highly Rated

    As of 04/07/2016.Sources: Rating agency documents10

    Protective LifeCorporation

    Protective LifeInsurance Company

    Senior Debt Financial Strength

    Standard &Poors A- AA-

    Moodys Baa1 A2

    Fitch BBB+ A

    A.M. Best a- A+

    Outlook for all ratings is stable

  • Dai-ichi Lifes Global Footprint

    11

    "We are pleased to be entering the U.S. life insurance market by bringing such an outstanding company as Protective into our portfolio. With a strongleadership team, vibrant and growing retail franchise and long track record of profitable growth organically and through the acquisition and integration ofattractive businesses, Protective is the ideal platform for expansion

    - Koichiro Watanabe, President, Dai-ichi LifeJune 3, 2014

  • Protective(1) and Dai-ichi

    12

    About the Dai-ichi GroupTop Global Life Insurers by Assets(3)

    Founded in 1902, headquarteredin Tokyo

    Provides individual and group lifeinsurance and annuity products

    Track record of successful globalacquisitions and continued growth

    Highly rated

    Approximately 60,000 employees

    Total assets of $418.1 billion as of09/30/2015(2)

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200($ in Billions)

    (1) PLC(2) Based on 09/30/15 exchange rate of 119.9 yen/dollar.(3) Based on analysis of data from the Fortune Global 500, Life Insurance Industry (Mutual and Stock companies),originally published July 5, 2015. All company data is presented as of end of prior fiscal year.

  • Protective(1) and Dai-ichi

    13

    Protective is the U.S. growth platform for Dai-ichi Life

    Creates a strong platform in Japan and U.S.

    Two of the largest insurance markets globally

    Diversifies Dai-ichi Lifes business in terms of revenues, profits, and risks

    Protectives experienced management team has remained with the companypost-acquisition

    Dai-ichi is willing to provide capital for acquisitions

    No explicit credit enhancements provided by Dai-ichi

    (1) PLC

  • Investment Portfolio

  • Asset Liability ManagementThe in force block cash flows are well-matched.

    In Force Life Reserves

    15Note: Reflects portfolio over-investment in lines of business.As of 12-31-2015

    In Force Life Reserves

    Asset Balance

    $0

    $5

    $10

    $15

    $20

    $25

    $30

    $35

    $40

    2015 2016 2017 2018

    In Force Life Reserves

    In Force Stable Value and Annuity Reserves

    $ in billions

  • 16

    Investment Portfolio Overview

    80%

    13%

    4%3%

    As of 12/31/2015

    $45.0 BillionInvestedAssets

    Fixed Maturities Mortgage Loans

    Policy Loans

    $36.1 Billion of Fixed Maturities

    Asset Type %

    Corporate Securities 75%

    RMBS 6%

    CMBS 4%

    ABS 3%

    Governments / Agencies 5%

    States, Munis, & Other 7%

    Other

  • Fixed Maturities Portfolio by Credit Quality

    14%

    8%

    32%

    39%

    5% 2%

    AAA

    AA

    A

    BBB

    BB or less

    Not Rated

    As of 12/31/201517

    $36.1 Billion

  • Commercial Mortgage Portfolio

    18

    Total portfolio of 1,757 loans $ 5.7 bil.

    Average Loan Size $ 3.0 mil.

    Wtd. Avg. Amortization 21.4 yrs.

    Wtd. Avg. Coupon 5.30%

    Wtd. Avg. LTV 46.5%

    Wtd. Avg. Debt Coverage Ratio 1.59

    Mortgage Loans by TypeAs of 12/31/15

    As of 12/31/15; amounts include securitized loans.

    61%

    7%

    13%

    9%

    10%

    Retail Apartments

    Office Buildings

    Miscellaneous

    Warehouses

    Commercial Mortgage LoanPortfolio Profile

  • 0.60% 0.68%0.80%

    0.48%

    0.29%

    0.48%

    0.08%

    0.0%

    0.5%

    1.0%

    1.5%

    2.0%

    2009 2010 2011 2012 2013 2014 2015

    Problem Mortgage Loan TrendProblem Loans as Percent of Mortgage Portfolio

    Note: Includes restructured / securitized loans19

  • Our Investment Strategy is Unchanged

    20

    ALM Discipline

    High quality investment grade assets

    Disciplined approach to ratings and diversification

    Not investing in alternative asset classes, such as privateequity and hedge funds

    Only 5% of securities below investment grade*

    Maintaining commercial mortgage loan portfolio quality

    *As of 12/31/2015

  • Business Segments

  • IndependentAgents

    75%

    InstitutionalSales21%

    AffinityChannel &

    Other4%

    Life Marketing

    22

    Markets fixed, indexed, and variableuniversal life

    Distribution includes independent agentsand marketing groups, and financialinstitution representatives

    In 2015, launched Costco productoffering to increase presence in theaffinity channel

    Product is unique to Costco and itsapproximately 81 millioncardholders

    Focus for future growth

    Segment Overview and Highlights 2015 Life Sales by Distribution

    Note: Throughout this presentation, 2015 earnings results are for February 1, 2015 December 31, 2015.

    2015 sales results are for January 1, 2015 December 31, 2015.

  • Life Marketing

    23

    $102 $107$117

    $55

    2012 2013 2014 2015

    Pre-Tax Operating Earnings$ in millions

    $121

    $155