Protective Life Insurance POS AM Prospectus update (post-effective amendment)

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As filed with the Securities and Exchange Commission on April 27, 2022

Registration No. 333-235429

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 5

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

☐

PRE-EFFECTIVE AMENDMENT NO.


POST-EFFECTIVE AMENDMENT NO. 5	☒

PROTECTIVE LIFE INSURANCE COMPANY

(Exact name of registrant as specified in its charter)

Tennessee		63-0169720
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2801 Highway 280 South

Birmingham, Alabama 35223

(205) 879-9230

(Address, including zip code, and telephone number, including area code

of registrant’s principal executive offices)

Bradford Rodgers, Esq.

Protective Life Insurance Company

P.O. Box 2606

Birmingham, Alabama 35202

(205) 268-1000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:

Stephen E. Roth, Esq.

Thomas E. Bisset, Esq.

Eversheds Sutherland (US) LLP

700 Sixth Street, NW

Washington, D.C. 20001

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462 (b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐		Non-accelerated filer ☒	Smaller reporting company ☐
		(Do not check if a smaller reporting company)

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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Protective^® Market Defender II Annuity	Protective Life Insurance Company P.O. Box 10648 Birmingham, Alabama 35202-0648 Telephone: 1-800-456-6330 www.protective.com

This Prospectus describes an individual, single premium deferred registered index-linked annuity contract offered by Protective Life Insurance Company (the "Contract"). We will not accept any Purchase Payment after the initial Purchase Payment. The Contract is designed for investors who desire to accumulate capital on a tax deferred basis for retirement or other long-term investment purposes. It may be purchased by individuals, corporations, financial institutions, trusts, and certain retirement plans that qualify for special federal income tax treatment, as well as those that do not qualify for such treatment. Certain Contract features and/or certain Strategies offered under the Contract may not be available through all broker-dealers or in all states. For further details, please contact us at 1-800-456-6330.

The Purchase Payment is generally allocated to the Holding Account, unless the entire Purchase Payment is received before 4 p.m. Eastern Time on the Start Date for your Strategies, in which case we will allocate your Purchase Payment to the Strategy(ies) you selected. On this Start Date, we will allocate the entire Holding Account Value, including any accrued interest, among the various Strategies according to your initial allocation instructions.

You may allocate your Purchase Payment to one or more of the index-linked investment options (each a Strategy) that provide a rate of return, positive, negative, or zero, based on the performance of one or more indices (each an Index) over a period of time. No Purchase Payments beyond the initial Purchase Payment will be accepted. Each Strategy provides the potential for investment gains (Crediting Method) and protection against investment losses (Downside Protection). We offer Crediting Methods in the form of a Participation Rate and a Cap, and Downside Protection in the form of a Buffer or a Floor. When calculating a positive rate of return, the Participation Rate is the percentage of the increase in the Index that we apply, and the Cap is the maximum percentage of positive Index Performance that we will credit to a Strategy. When calculating a negative rate of return, the Buffer establishes the amount of negative Index Performance that we will absorb, and the Floor is maximum amount of negative Index Performance that we will credit to a Strategy. A Strategy with a 0% floor will not be credited with negative Index Performance regardless of the amount of the negative Index Performance.

We only credit interest to or reduce Strategy Value (dollar value of a Strategy before any market value adjustment or deduction for a withdrawal charge) from a Strategy at the end of the Strategy Term or if you make a withdrawal or surrender the Contract during the Term. If you selected a Strategy with a Buffer and you take a withdrawal before the end of the Strategy Term, you will receive only a portion of the Buffer’s protection, if Index performance is negative. If Index performance is positive, you will be credited with only a portion of any return. In each case, this occurs because the elements do not fully vest until the last day of the Strategy. You are always fully vested in the Floor and a withdrawal at any time will reflect any negative index performance down to the Floor.

We currently offer ten Strategies. We reserve the right to change or discontinue a Strategy for renewal Terms, but we guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor(the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%.

Amounts allocated to any Strategy will fluctuate in value based on the performance of the Index and the elements associated with the Strategy that you select. You may lose money that you allocate to a Strategy. If you take a withdrawal or surrender the Contract, we will apply a Market Value Adjustment (MVA) and, if applicable, a withdrawal charge, which may reduce the amount you receive and could result in loss of principal and previously credited interest. Because of the MVA, we may increase or decrease the amount of proceeds payable to you from withdrawals from the Strategies. The MVA applies to the amount withdrawn or surrendered in excess of the annual Free Withdrawal Amount. Application of the MVA to a withdrawal or a surrender that exceeds the annual Free Withdrawal Amount could reduce the Contract Value to less than the amount protected by any applicable Buffer(s) or Floor (s).

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For more information about Risk Factors for this Contract, see "Risk Factors" on p. 13.

During the first six (6) years after we issue the Contract, amounts withdrawn or surrendered from the Contract in excess of the annual Free Withdrawal Amount are subject to a withdrawal charge and any applicable premium tax, in addition to the MVA. The withdrawal charge starts as 9% of the amount withdrawn or surrendered (adjusted for the MVA) in excess of the annual Free Withdrawal Amount and that percentage decreases each year to zero in the sixth year after we issue the Contract. The MVA may increase, decrease, or have no effect on the amount withdrawn to satisfy the withdrawal request. If the MVA increases the proceeds payable upon withdrawal and the withdrawal charge applies, the amount of the withdrawal charge would be higher as a result of the MVA.

This product is a complex insurance and investment vehicle and may not be appropriate for you if you are looking for a short-term investment or if you plan to take withdrawals or surrender the Contract before the end of the withdrawal charge period, MVA Period and/or a Strategy Maturity Date. Before you invest, you should speak with a financial professional about the Contract’s features, benefits, risks and fees and whether the Contract is appropriate for you based on your financial situation and objectives.

This Prospectus sets forth basic information about the Contract that a prospective investor should know before investing. You may obtain an electronic copy of the Prospectus, as well as other material that we file electronically and certain material incorporated by reference, at the SEC web site (http://www.sec.gov).

The Company’s ability to meet its obligations under the Contract is subject to the creditworthiness and claims-paying ability of the Company.

The Prospectus describes all material rights and obligations of purchasers under the Contract, including all state variations.

Please read this Prospectus carefully. You should keep a copy for future reference.The Protective^® Market Defender II Annuity is not a deposit or obligation of, or guaranteed by, any bank or financial institution. It is not insured by the Federal Deposit Insurance Corporation or any other government agency, and it is subject to investment risk, including the possible loss of principal and previously credited interest.

The SEC has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

The date of this Prospectus is May 2, 2022

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TABLE OF CONTENTS

DEFINITIONS		6
SUMMARY		9
Key Features of Your Contract		13
Risk Factors		18
Other Important Information you Should Know		21
HOW YOUR CONTRACT WORKS		22
Purchasing the Contract		22
Use of the Contract in Qualified Plans		25
Allocating your Purchase Payments		25
Holding Account		26
Strategies		26
Effect of an Emergency Close		27
ACCESSING YOUR MONEY		37
Withdrawals and Surrenders		37
Surrender and Withdrawal Restrictions		42
Suspension or Delay in Payments		42
DEATH BENEFIT		42
Payment of the Death Benefit		44
Continuation of the Contract by a Surviving Spouse		45
Escheatment of Death Benefit		45
CHARGES AND DEDUCTIONS		46
Market Value Adjustment		46
Withdrawal Charge		47
Premium Taxes		49
Other Information		49
ANNUITY PAYMENTS		50
Annuity Date		50
Annuity Income Payments		50
Annuity Options		50
Minimum Amounts		51
Death of Annuitant or Owner After Annuity Date		51
FEDERAL TAX MATTERS		52
Introduction		52
Protective’s Tax Status		52
TAXATION OF ANNUITIES IN GENERAL		52
Tax Deferral During Accumulation Period		52
Taxation of Withdrawals and Surrenders		52
Taxation of Annuity Payments		53
Taxation of Death Benefit Proceeds		53
Penalty Tax on Premature Distributions		54
Aggregation of Contracts		54

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Exchanges of Annuity Contracts		55
Medicare Hospital Insurance Tax on Certain Distributions		55
QUALIFIED RETIREMENT PLANS		55
Direct Rollovers		59
FEDERAL INCOME TAX WITHHOLDING		60
THE COMPANY		66
LEGAL PROCEEDINGS		61
CYBER-SECURITY RISKS		61
EXPERTS		62
LEGAL MATTERS		62
REGISTRATION STATEMENT INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE REQUESTING DOCUMENTS PUBLIC INFORMATION		62
GENERAL MATTERS		62
Error in Age or Gender		62
Incontestability		63
Non-Participation		63
Assignment or Transfer of a Contract		63
Notice		63
Modification		63
Reports		63
Settlement		64
Receipt of Payment		64
Protection of Proceeds		64
Minimum Values		64
Application of Law No Default		64
DISTRIBUTION OF THE CONTRACTS		64
Distribution		64
Selling Broker-Dealers		65
Inquiries		66
CEFLI		66
FINANCIAL STATEMENTS		152
APPENDIX A		A-1
APPENDIX B: EXAMPLE OF INDEX SUBSTITUTION		B-1
APPENDIX C: INDEX PUBLISHERS		C-1
APPENDIX D: STATE CONTRACT AVAILABILITY AND VARIATIONS OF CERTAIN FEATURES		D-1

No one is authorized to make any statement that contradicts this prospectus. You must not rely upon any such statement. This prospectus is not an offer to inquire about, or purchase the securities described in any jurisdiction where it is unlawful to do so. You should not assume that the information provided in this prospectus is accurate as of any date other than the date on the front of each such document, regardless of the time of delivery of this prospectus or any sale of a security.

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DEFINITIONS

"We", "us", "our", "Protective Life", and "Company": refer to Protective Life Insurance Company. "You", "your" and "Owner" refer to the person(s) to who a Contract has been issued.

60 Day Rate Lock Period: The time period during which we guarantee the Crediting Method rates for your initial Strategy selection(s). The 60 Day Rate Lock Period begins on the date you sign your application. We will guarantee the rates for your initial Strategy selection(s) for 60 days, even if we declare new rates during this period.

Administrative Office: Protective Life Insurance Company, P. O. Box 10648, Birmingham, Alabama 35202-0648 (for Written Notice sent by U.S. postal service) or Protective Life Insurance Company, 2801 Highway 280 South, Birmingham, Alabama 35223 (for Written Notice sent by a nationally recognized overnight delivery service).

Annuity Date: The date as of which the Contract Value, less any applicable premium tax, is applied to an Annuity Option.

Annuity Option: The method you choose by which we will determine the amount, frequency and term of the annuity income payments beginning on the Annuity Date.

Buffer: One of the Strategy Elements. The maximum percentage of negative Index Performance that we absorb. If negative Index Performance exceeds the Buffer, that excess negative performance will be reflected in the Strategy Value.

Business Day: Any day on which Protective Life is open for regular business and on which every Index used to determine any value under this Contract is compiled and published by its owner. A Business Day ends at 4 p.m. Eastern Time.

Cap: One of the Strategy Elements. The maximum percentage of positive Index Performance that we use to determine Strategy Performance.

Code: The Internal Revenue Code of 1986, as amended.

Contract: The Protective^® Market Defender II Annuity.

Contract Anniversary: The same relative month and day as Contract’s first Strategy Start Date in each subsequent calendar year.

Contract Base: The sum of the Strategy Base(s) at the end of each Business Day.

Contract Value: At the end of each Business Day, the Contract Value is either (i) the Holding Account Value; or (ii) the sum of all the Strategy Values.

Contract Year: The approximate 12-month period beginning on the Contract’s first Strategy Start Date and ending on the same relative month and day in each subsequent calendar year.

Crediting Method: The specific interest credit calculation method(s), in the form of a Participation Rate and/or Cap, that applies to a Strategy.

Default Strategy: A Strategy with a 0% Floor that uses the same Index as the maturing Strategy.

Downside Protection: The level of negative Index Performance risk we assume in the form of a Buffer or Floor.

Due Proof of Death: Receipt at our Administrative Office of a certified death certificate or judicial order from a court of competent jurisdiction or similar tribunal.

Floor: One of the Strategy Elements. The maximum negative Index Performance that we use to determine the Strategy Performance. The Floor is the maximum percentage loss that the Strategy can lose over a Term, even if negative Index Performance exceeds that percentage.

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Free Withdrawal Amount: The amount of Contract Base that may be withdrawn each Contract Year without being subject to the Market Value Adjustment and, if applicable, the withdrawal charge. The available free withdrawal amount is calculated for each withdrawal requested.

Good Order ("Good Order"): A request or transaction generally is considered in "Good Order" if we receive it in our Administrative Office within the time limits, if any, prescribed in this Prospectus for a particular transaction or instruction, it includes all information necessary for us to execute the requested instruction or transaction, and is signed by the individual or individuals authorized to provide the instruction or engage in the transaction. A request or transaction may be rejected or delayed if not in Good Order. Good Order generally means the actual receipt by us of the instructions relating to the request or transaction in writing (or, when permitted, by telephone or Internet as described in the Prospectus) along with all forms, information and supporting legal documentation we require to effect the instruction or transaction. The specific requirements for Good Order for particular transactions are discussed in the relevant section of the Prospectus.

Holding Account: A temporary account used to receive and hold the Purchase Payment (or portions of the Purchase Payment) until being allocated to one or more Strategies according to your allocation instructions.

Holding Account Value: The Purchase Payment we receive plus any accrued interest.

Index Performance: The percentage change (increase or decrease) in the Strategy’s Index between two points in time.

Issue Date: The Business Day as of which we credit the Purchase Payment (or the first portion of it that we receive) to the Contract and the date the Contract takes effect.

Maturity Date: The date on which a Strategy is scheduled to end.

Maturity Value: The value of a Strategy on its Maturity Date.

Market Value Adjustment ("MVA"): An adjustment we make to your Strategy Value if you take a withdrawal in excess of the Free Withdrawal Amount, or to the amount we pay you if you surrender the Contract, during an MVA Period. The MVA helps offset our costs and risks of owning fixed income and other investments used to back the guarantees under your Contract from the Strategy Date to the date you take a withdrawal or surrender the Contract. The MVA may be negative, positive, or zero. This means that the MVA may decrease, increase, or have no effect on the remaining Contract Value or the amount we withdraw from your Contract Value to pay your withdrawal request or the amount we pay you if you surrender the Contract.

MVA Period: A period during which an MVA will apply if you take a withdrawal in excess of the Free Withdrawal Amount, or if you surrender the Contract. The initial MVA Period is the first six (6) Contract Years. Following the initial MVA Period of six (6) Contract Years, the MVA Period is one (1) Contract Year and automatically renews each Contract Anniversary.

Participation Rate: One of the Strategy Elements. The specified percentage of Index Performance we use to calculate Strategy Performance.

Purchase Payment: The amount paid by the Owner and accepted by the Company as consideration for this Contract.

Qualified Contracts: Contracts issued in connection with retirement plans that receive favorable tax treatment under Sections 401, 408, 408A or 457 of the Code.

Qualified Plans: Retirement plans that receive favorable tax treatment under Sections 401, 408, 408A or 457 of the Code.

Start Date: The date on which a Strategy is established. Start Dates occur on the first and third Wednesday of each month,that is also a Business Day. If the first or third Wednesday of a month is not a

Business Day, the Start Date will be the following Business Day.

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Strategy: A specifically defined method for calculating the gain or loss attributable to each allocation you make under the Contract. A Strategy is defined by its Strategy Elements.

Strategy Base: The amount allocated to establish a Strategy on its Start Date, minus an adjustment for subsequent withdrawals.

Strategy Elements: A Strategy’s Term, Crediting Method (it’s Participation Rate and, if applicable, Cap), and Downside Protection (Buffer or Floor).

Strategy Performance: Index Performance after applying the Strategy Elements and Vesting Factor. Strategy Performance generally limits the Index Performance that is applied when calculating the Strategy Value.

Strategy Value: The dollar value of a Strategy as of close of each Business Day, before application of the MVA and deduction of any applicable withdrawal charge, fees and premium tax. It is equal to the Strategy Base, multiplied by the Strategy Performance. On a Start Date, the Strategy Value is equal to the Strategy Base. On a Maturity Date, the Strategy Value is equal to the Maturity Value.

Surrender Value: The amount you are entitled to receive under the Contract in the event the Contract is terminated prior to the Annuity Date. The Surrender Value of the Contract is equal to the Contract Value on the surrender date adjusted by the MVA, minus the withdrawal charge (if the transaction occurs during the withdrawal charge period) and applicable premium tax.

Term: The duration of a Strategy which is generally the approximate one (1) year period from the Start Date through its Maturity Date.

Vesting Factor: A factor used to determine the portion of positive or negative Strategy Performance that we take into account when determining credited interest or a reduction in Strategy Value. The Vesting Factor varies depending upon whether Index Performance is positive or negative and, if applicable, the type of Downside Protection and the day of the Term.

Withdrawal Proceeds: The amount you receive from us after we process your withdrawal request.

Written Notice: A notice or request submitted in writing in a form satisfactory to the Company that we receive at the Administrative Office via U.S. postal service or nationally recognized overnight delivery service. Please note that we use the term "written notice" in lower case to refer to a notice that we may send to you.

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SUMMARY

The Protective^® Market Defender II Annuity is an individual single premium deferred registered index-linked annuity contract issued by Protective Life. We will only accept a Purchase Payment (or portions of it) identified on the application and that we receive on or before the 86th birthday of the oldest Owner or Annuitant. Additional Purchase Payments will not be accepted. Our refusal to accept additional Purchase Payments limits your ability to increase your Contract Value or the Death Benefit. This restriction also prevents you from making future contributions to a Qualified Contract, including periodic contributions to an employer-sponsored retirement plan or an IRA. (See "QUALIFIED RETIREMENT PLANS.").

Purchasing the Contract

We will issue the Contract once we receive the minimum Purchase Payment amount. We will hold your Purchase Payment in the Holding Account, unless we receive the entire Purchase Payment before 4 p.m. Eastern Time on a Start Date. Otherwise, we apply the Purchase Payment, as long as it satisfies the minimum Purchase Payment amount, to the Holding Account, and credit interest daily. Each additional portion will be applied to the Holding Account when we receive it. We must receive all remaining portions of your Purchase Payment within 60 days of the date we issue the Contract, and we will not accept any additional portions after that 60 day period. The interest rate for the Holding Account is declared in advance but may change from time to time in our sole discretion, subject to the minimum interest rate. Interest credited to the Holding Account will always be positive and is paid by Protective Life and subject to our claims paying ability. For more information on factors relevant to our claims paying ability, including our financial condition and the potential economic impacts of the COVID-19 pandemic, please refer to the "Risk Factors" section on p. 13.

Establishing your Strategies

We will establish your initial Strategy(ies) on the first available Start Date following the earlier of (1) when we have collected the entire amount of your Purchase Payment from all sources indicated on the application, or (2) 60 days after the Issue Date, assuming we have received, at least, the minimum Purchase Payment amount ($25,000). This means we will establish your Strategies based on the Purchase Payment amount we have received, even if that amount is less than the Purchase Payment amount stated on your application. Once we have established your Strategies, we will not accept any additional Purchase Payments. On this Start Date, we will allocate the entire Holding Account Value, including any accrued interest, among the various Strategies according to your initial allocation instructions.

The Contract offers Strategies that credit or deduct interest based, in part, on the performance of a broad based securities index over a one-year term. Credited interest is paid by Protective Life and subject to our claims paying ability. We calculate credited interest and reductions in Strategy Value based on percentage changes in the value of the Strategy’s Index, subject to the Strategy’s Crediting Method, Downside Protection, and applicable Vesting Factor. There is no guarantee that an Index will be available during the entire time you own your Contract. We may eliminate or substitute an Index if there is a significant change in the calculation or composition of the Index, the cost to license, the cost to support the Strategies tied to the Index, or the Index is discontinued or otherwise becomes unavailable. Upon substitution of an Index during the Term, we will calculate your Index Performance on the replaced Index up until the date of substitution and the substitute Index from the date of substitution to the Strategy’s Maturity Date or the date we calculate a request for a withdrawal or surrender. Currently the Strategies calculate performance based on the S&P 500^® Price Return Index ("S&P 500 Index") and the MSCI EAFE Price Return Index ("MSCI EAFE Index"). The S&P 500 Index and the MSCI EAFE Index are both "price return" indexes and do not reflect dividends paid on the securities comprising the Index, and therefore the Index Performance under the Contract does not reflect the full investment performance of those securities.

Strategy Elements

We offer Strategies that differ based on the available Strategy Elements. The Strategy Elements are Term, Index, Crediting Method, and Downside Protection. We announce the Strategy Elements for each Strategy prior to the Start Date.

You can obtain information on the Crediting Methods and Downside Protection associated with each Strategy the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

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●	From the financial professional who sold or services your Contract.

Crediting Methods

The Crediting Method creates potential for an investment gain and is provided in the form of a Participation Rate and/or a Cap. The Participation Rate is a specified percentage of positive Index Performance used to calculate Strategy Performance. The Cap establishes the maximum percentage of positive Index Performance that may be used to calculate Strategy Performance. The Participation Rate and Cap will never be less than the minimum Participation Rate and minimum Cap we identify in the narrative following the chart at the end of this Summary. We guarantee the minimum Caps and Participation Rates for the life of the Contract.

Downside Protection

Downside Protection may limit an investment loss and is provided in the form of a Floor or a Buffer. The Floor establishes a limit on the level of negative Index Performance that may be used to calculate negative Strategy Performance. The Buffer establishes the amount of negative Index Performance that we will absorb. If negative Index Performance exceeds the Buffer, the excess will be used to calculate negative Strategy Performance.

We currently offer ten Strategies. We reserve the right to change or discontinue a Strategy for renewal Terms, but we guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%. We will file with the SEC and deliver to you a supplement to this Prospectus before we discontinue a Strategy.

The Strategy Performance and Strategy Value will fluctuate daily based on the Strategy Elements and the applicable Vesting Factor. You may lose money that you allocate to a Strategy. Depending on the performance of the Index, Crediting Method, Downside Protection, and applicable Vesting Factor, such loss may be significant.

Vesting Factor

The Vesting Factor varies depending upon whether Index Performance is positive or negative and, if applicable, the type of Downside Protection and the day of the Term. When applied, the Vesting Factor determines the portion of positive or negative Strategy Performance that we take into account when determining any investment gain or loss. You are always fully vested in the Floor and your Strategy Value will reflect any negative index performance down to the Floor.

For a Strategy with a Buffer, the Vesting Factor is a percentage based on the number of days elapsed since the Strategy’s Start Date. Before the end of the Term, you will receive only a portion of the Buffer’s protection, and your Strategy Value may be significantly reduced if you make a withdrawal or surrender your Contract early during the Term because the vested portion of the Buffer begins at 0% and increases throughout the Term. For example, if the Term is 364 days and 91 days (1/4 of total days in the Term) have elapsed when you take your withdrawal, the Vesting Factor applied to the Buffer will be 25%. This means you will receive only 25% of the protection offered by the Buffer on day 91.

If Index performance is positive, your Strategy Value will reflect only a portion of the return because you do not fully vest in positive performance until the Strategy Maturity Date. For example, before a Maturity Date, either 25% (during first half of a Term) or 50% (during second half of a Term) of any positive Index Performance will be used in determining Strategy Value. This means the Vesting Factor can reduce positive Index performance up to 75% before a Maturity Date. You should consider the Vesting Factor schedule, described in the "Strategies" section, when requesting a withdrawal or surrender before the end of a Term. Please see page 26 - "Vesting Factor" for a schedule that quantifies the Vesting Factor.

Withdrawals and Surrenders

If you make a withdrawal or surrender the Contract, we will apply a Market Value Adjustment to any withdrawal or surrender that exceeds the Free Withdrawal Amount. If interest rates at the time of the withdrawal are higher than at the start of the MVA Period, the MVA will be negative. Conversely, if interest rates at the time of the withdrawal are lower than at the start of the MVA Period, the MVA will be positive. A negative result from the Market Value Adjustment formula reduces the amount you receive or your remaining Contract Value, while a positive result from the Market Value

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Adjustment formula increases the amount you receive or your remaining Contract Value. During the last month of any MVA Period, the MVA is zero and will have no effect on the amount you receive or your remaining Contract Value. Because of the MVA, we may increase or decrease the amount of proceeds payable to you from withdrawals from the Strategies.

Generally, any negative MVA, and therefore the amount we deduct from the amount you receive or your remaining Contract Value when applying the MVA, will be greater if you request a withdrawal or surrender early during an MVA Period, especially during the initial MVA Period.

Application of a negative MVA to a withdrawal request or a surrender that exceeds the Free Withdrawal Amount could reduce the Contract Value to less than the amount protected by any applicable Buffer(s) or Floor (s). The initial MVA Period is the first six (6) Contract Years. Withdrawals and surrenders that exceed the Free Withdrawal Amount in the first six (6) Contract Years (the initial MVA Period or withdrawal charge period) are also subject to a withdrawal charge and any applicable premium tax, in addition to the Market Value Adjustment. The withdrawal charge percentage is a maximum of 9% on the amount of Contract Base that you withdraw, in excess of the Free Withdrawal Amount, and the percentage decreases to zero after the initial MVA Period. Following the initial MVA Period of six (6) Contract Years, the MVA Period is one (1) Contract Year and automatically renews each Contract Anniversary. The MVA may increase, decrease, or have no effect on the amount withdrawn to satisfy the withdrawal request. If the MVA is positive, the amount of the MVA will be added to the amount we withdraw to satisfy your request, which means the amount of the withdrawal charge, if applicable, will also increase.

Note: The application of the withdrawal charge and/or MVA to a withdrawal or surrender request that exceeds the Free Withdrawal Amount could reduce the Contract Value or Surrender Value to less than the amount protected by the Buffer(s) or Floor (s).

Protective Life Insurance Company is not an investment adviser and does not provide any investment advice to you with respect to the Contract.

You may apply to purchase the Contract through Investment Distributors, Inc. ("IDI"), the principal underwriter for the Contract or other broker-dealers that have entered into a selling agreement with IDI.

This product is a complex insurance and investment vehicle. Before you invest, you should speak with a financial professional about the Contract’s features, benefits, risks and fees and whether the Contract is appropriate for you based on your financial situation and objectives.


	CONTRACT CHARGES AND FEES	LOCATION IN PROSPECTUS
Withdrawal Charge	The withdrawal charge, which we assess during the first six (6) Contract Years, is a set percentage of the amount of Contract Base that you withdraw (in excess of the Free Withdrawal Amount) and the percentage starts at 9% (maximum) and decreases each year until it reaches 0% on the 6th Contract Anniversary.	CHARGES AND DEDUCTIONS
Market Value Adjustment (MVA)	The MVA, which we assess on withdrawals and surrenders, can increase or decrease the amount you withdraw or your Contract Value or have no effect on those amounts. The MVA is a percentage that can be negative, positive, or zero. We apply that percentage to the amount of Contract Base that you withdraw (in excess of the Free Withdrawal Amount) to determine the dollar amount of the MVA.	CHARGES AND DEDUCTIONS
Premium Tax	If your state imposes a premium tax, we will deduct the amount of the tax when we accept	CHARGES AND DEDUCTIONS

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		your Purchase Payment or when you take a withdrawal or surrender the Contract. Premium tax rates currently range from 0% to 3.5%.
Return of Purchase Payment Death Benefit Fee (optional)		The annual cost for this optional death benefit is established on the Contract Issue Date and is a percentage of the Death Benefit Value. The current annual cost is 0.20%.		DEATH BENEFIT

HOLDING ACCOUNT

		Minimum Guaranteed Interest Rate
		1%

STRATEGIES

Index	Current Floor		Current Buffer
S&P 500	0	%	—
S&P 500	- 5	%	—
S&P 500	- 10	%	—
S&P 500	- 20	%	—
S&P 500	—		- 15	%
MSCI EAFE	0	%	—
MSCI EAFE	- 5	%	—
MSCI EAFE	- 10	%	—
MSCI EAFE	- 20	%	—
MSCI EAFE	—		- 15	%

For Strategies with both a Participation Rate and a Cap, the Participation Rate will be 100% and the Cap may be greater than but will never be less than 1.5%. Strategy Performance will never exceed the Cap, even if Index Performance multiplied by the Participation Rate is greater than the Cap. For Strategies without a Cap, the Participation Rate may be greater than but will never be less than 50%. A Strategy with a 50% Participation Rate will only be credited with 1/2 of any positive Index Performance on the Maturity Date.

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Key Features of Your Contract
Your Contract	The Contract	The Protective^® Market Defender II Annuity is an individual single premium deferred registered index-linked annuity contract.
	How to Buy	The Contracts are sold through registered representatives of broker-dealers. Protective Life will issue your Contract when it receives and accepts your complete application information and a Purchase Payment through the broker-dealer you have selected.
Purchasing the Contract	Purchase Payment	The minimum Purchase Payment is $25,000. Our prior approval is required for Purchase Payments of more than $1,000,000. Additional Purchase Payments are not accepted. We will only accept a Purchase Payment received on or before the 86th birthday of the oldest Owner or Annuitant.
	Issue Age	The Contract must be issued before the oldest Owner’s or Annuitant’s 86th birthday.
	Right to Cancel	You have the right to return the Contract within a certain number of days (which varies by state, but is never less than ten) after you receive it. The returned Contract will be treated as if it were never issued, and you will receive a refund of the Contract Value (without application of an MVA or being assessed a withdrawal charge), in states where permitted. This amount may be more or less than the Purchase Payment. In other states, we are required to refund the greater of the Contract Value or your Purchase Payment. If the Contract is an IRA and returned to us within seven days after you receive it, we are required to refund the full amount of the Purchase Payment. Please see "Appendix D" for state variations.
Allocating Your Contract Value	Holding Account	The Holding Account is an account designed to receive and hold the Purchase Payment (or portions of it) until it is allocated to one or more Strategies according to your allocation instructions. Because the MVA Period and withdrawal charge period begin on the initial Strategy Start Date, amounts in the Holding Account are not subject to the MVA and withdrawal charge. The interest rate for the Holding Account is declared in advance, but is not guaranteed for any specific period of time. You can obtain information on the current interest rate for the Holding Account the following ways: · Directly from us by calling 1-800-456-6330; · On our website at www.myaccount.protective.com; or · From the financial professional who sold or services your Contract.

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	Strategy	Under a Strategy, we credit interest to or deduct an amount from Strategy Value based, in part, upon the performance of one of the market Indices over the Term of the Strategy. The actual amount of interest credited to or amount deducted from Strategy Value will depend upon the Crediting Method and Downside Protection that you choose, subject to the applicable Vesting Factor. The minimum amount for each initial Strategy is $5,000. This minimum does not apply on renewal Strategies. We offer Crediting Methods in the form of a Participation Rate and/or a Cap and Downside Protection in the form of a Floor or a Buffer. We are currently offering Floor options of 0%, -5%, -10%, and -20%, and a Buffer option of -15%. For renewal Strategies, we may change the Crediting Method applicable to each Strategy, subject to the minimum Cap and Participation Rate. We currently offer ten Strategies. We reserve the right to change or discontinue a Strategy for renewal Terms, but we guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%. You can obtain information on the Crediting Methods associated with each Strategy the following ways: · Directly from us by calling 1-800-456-6330; · On our website at www.myaccount.protective.com; or · From the financial professional who sold or services your Contract.
	Term	The approximate one (1) year period from a Strategy’s Start Date to its Maturity Date.
	Index	The current indices we offer are the S&P 500 Price Return Index and the MSCI EAFE Price Return Index.
	Transfers	At the end of the Strategy Term (i.e., the Maturity Date), you may use all or part of the Maturity Value to renew the Strategy or establish a new Strategy provided you satisfy the requirements for establishing new Strategies. You may not transfer any amounts from one Strategy to another Strategy before the Maturity Date.
Determining the Value of Your Contract	Contract Value	At the end of each Business Day, the Contract Value is either (i) the Holding Account Value, or (ii) the sum of all the Strategy Value(s).

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		Strategy Value		The value of each Strategy at the close of each Business Day is equal to the Strategy Base multiplied by the Strategy Performance. The Strategy Performance is the Strategy’s Index Performance after the Strategy Elements have been applied, then multiplied by a Vesting Factor. On a Start Date, the Strategy Value is equal to the Strategy Base. On a Maturity Date, the Strategy Value is equal to the Maturity Value. The Strategy Value includes any credited interest or reduction in Strategy Value, if any, since the Strategy’s Start Date. We determine any credited interest or reduction in Strategy Value by applying a Vesting Factor. The Vesting Factor varies depending upon whether Index Performance is positive or negative and the type of Downside Protection and the day of the Term. To see how the Vesting Factor affects Strategy Value, see the Vesting Factor schedule and the examples on page 26. If you make a withdrawal or surrender the Contract before a Maturity Date, the Strategy Value may be less than the Strategy Base and may be less than the amount you would receive had you held the Strategy until the Maturity Date. A withdrawal taken before a Maturity Date may result in a reduction of the Strategy Base that is significantly larger than the withdrawal amount requested and could result in loss of principal and previously credited interest.
		Maturity Value		On the Strategy Maturity Date, we multiply the Strategy Base by the Strategy Performance (positive or negative) and add the result to the Strategy Base. The result is the Maturity Value. The Maturity Value may reflect an increase in the Strategy Base from the amount of interest we credit as a result of positive Strategy Performance or a reduction in the Strategy Base as a result of negative Strategy Performance during the Term. For examples showing how we calculate Maturity Value, please see pages 21 and 22.

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Accessing Your Money

Withdrawals and Surrenders

On or before the Annuity Date, you may request a withdrawal of a portion of your Contract Value or surrender your Contract. The amount of the withdrawal request must be at least $100 and the Contract Base after the withdrawal is processed must be at least $25,000 (not required for withdrawals taken to satisfy federal income tax rules concerning minimum distribution requirements applicable to your Contract). During an MVA Period, we will apply a Market Value Adjustment to any withdrawal or surrender of the Contract that exceeds the Free Withdrawal Amount. The initial MVA Period is the first six (6) Contract Years. The initial MVA Period and the withdrawal charge period run concurrently for the first six (6) Contract Years. The withdrawal charge percentage starts at 9% and decreases to zero after the initial MVA Period. During the initial MVA Period, application of the MVA and the withdrawal charge to a withdrawal request that exceeds the Free Withdrawal Amount could reduce the Contract Value to less than the Downside Protection. Following the initial MVA Period of six (6) Contract Years, each subsequent MVA Period is one (1) Contract Year and automatically renews each Contract Anniversary. We only credit interest to or make a deduction from Strategy Value at the end of the Term or if you make a withdrawal or surrender the Contract during the Term. The Strategy Value reflects the positive or negative Index Performance, subject to a Vesting Factor. The Vesting Factor varies depending upon whether Index Performance is positive or negative and, if applicable, the type of Downside Protection and the day of the Term. If you selected a Strategy with a Buffer and take a withdrawal before the end of the Strategy Term, You will receive only a portion of the Buffer’s protection if Index Performance is negative. If Index Performance is positive, you will be credited with only a portion of the Index Performance. In each case, this occurs because the elements do not fully vest until the Strategy Maturity Date. If you selected a Strategy with a Floor, you are always fully vested in the Floor and a withdrawal at any time before the end of the Term will only reflect negative Index Performance down to the Floor. When applied, the Vesting Factor determines the portion of positive or negative Strategy Performance that we take into account when determining interest credited or a reduction in Strategy Value. Please see "HOW YOUR CONTRACT WORKS — Vesting Factor" for a description of the Vesting Factors and how we apply them under the Contract. A withdrawal charge or Market Value Adjustment may reduce your Contract Value or the amount you receive from the requested withdrawal. The Contract Value or Surrender Value of your Contract before the first Strategy Start Date is the Holding Account Value. On and after the first Strategy Start Date it is the Contract Value adjusted by the Market Value Adjustment, minus any applicable withdrawal charge. We will then deduct any applicable premium tax, and any required or requested tax withholding. Withdrawals and surrenders will reduce the amount of the death benefit and may be subject to federal and state income taxes and, if taken before age 59¹/₂, 10% additional tax. Please see "Accessing Your Money — Withdrawals and Surrenders" section for examples.

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	Market Value Adjustment	We apply a Market Value Adjustment ("MVA") when you withdraw all or a portion of your Contract Value, in excess of the Free Withdrawal Amount, during an MVA period. It can decrease, increase, or have no effect on the amount we deduct from your Contract Base or the amount you receive from your withdrawal request. During the last month of any MVA Period, the MVA is zero and has no effect on the amount we deduct from your Contract Base or the amount you receive from your withdrawal request. For a complete description of the MVA and how we apply it, please refer to the "Market Value Adjustment" sections within the "CHARGES AND DEDUCTIONS" section of this Prospectus.
Accessing Your Money	Withdrawal Charges and Premium Taxes	We assess a withdrawal charge, if you withdraw or surrender all or a portion of your Contract Value, in excess of the Free Withdrawal Amount, during the initial MVA Period (first six (6) Contract Years), which is also the withdrawal charge period. After applying the MVA, we determine the amount of the withdrawal charge, by multiplying the Contract Base withdrawn, in excess of the Free Withdrawal Amount, by the applicable withdrawal charge percentage. The maximum withdrawal charge percentage under the Contract is 9%. We will deduct any applicable state premium tax from any of the following: 1) your Purchase Payment, when we collect it, 2) when we process a withdrawal (or surrender) request, 3) from the death benefit, or 4) from the Contract Value, before we apply it to an Annuity Option.
	Death Benefit	The Contract offers two different death benefits: (1) the Contract Value Death Benefit and (2) the Return of Purchase Payment Death Benefit. The Contract Value Death Benefit is the greater of the Contract Value or the Surrender Value, less any applicable premium tax. If you elect the Return of Purchase Payment Death Benefit rider, we will compare the Contract Value and the Surrender Value with your Purchase Payment, and the death benefit will be the greater of those amounts less any applicable premium tax. The Return of Purchase Payment Death Benefit provides extra protection in a down market and guarantees that your beneficiary(ies) will receive at least the amount of your Purchase Payment. Contract Value and Surrender Value are based on the Strategy Value, and the Vesting Factor could have a negative impact if we are determining the death benefit on any date other than a Strategy Maturity Date. In addition, we will factor in the MVA when calculating the Surrender Value. You must select your death benefit option when you purchase the Contract. You may not change your death benefit selection after your Contract is issued. The Contract Value Death Benefit is included with your Contract at no additional charge. You may select the Return of Purchase Payment Death Benefit for an additional fee. Given the same market performance, Contract Base and Contract Value will be lower for Contracts with the Return of Purchase Payment Death Benefit than Contracts with the Contract Value Death Benefit due to payment of the Return of Purchase Payment Death Benefit fee. For information on the Return of Purchase Payment Death Benefit fee, please refer to the Contract Charges and Fees table on page 7 of this Prospectus.
Annuitizing Your Contract	Annuity Options	We currently offer the following Annuity Options: (1) payments for a certain period or (2) life income with or without payments for a certain period for one or two Annuitants.

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Risk Factors

Your Contract has various risks associated with it. We list these risk factors below, as well as other important information you should know before purchasing a Contract.

●Liquidity Risk — The Contract is intended to be a long-term investment that you may use to help save for retirement; it is not designed for short-term investing. While you are always permitted to take withdrawals or surrender the Contract at any time, a surrender or withdrawal in excess of the Free Withdrawal Amount at any time during an MVA Period is subject to a Market Value Adjustment. A surrender or withdrawal in excess of the Free Withdrawal Amount during the initial MVA Period (first six (6) Contract Years) is also subject to a withdrawal charge. A surrender or withdrawal may also be subject to federal and state income taxes and, if taken before age 59¹/₂, an additional 10% penalty tax.

●Risk of Loss — There is a risk of substantial loss of your investment depending upon the performance of the Strategy(ies) to which you allocated your Contract Value. Negative Index Performance may cause your Strategy Performance to be negative down to the amount of the Floor or in excess of the Buffer.

As an example using a Strategy with a Floor, assume on a Start Date you invest $10,000 in an S&P 500 Strategy with a -10% Floor. On the Maturity Date, the S&P 500 Index is down -15%. As a result, your Strategy Performance is -10% and the Strategy will have a Maturity Value of $9,000.

As an example using a Strategy with a Buffer, assume on a Start Date you invest $10,000 in an S&P 500 Strategy with a -10% Buffer. On the Maturity Date, the S&P 500 Index is down -15%. As a result, your Strategy Performance is -5% and the Strategy will have a Maturity Value of $9,500.

Withdrawals and surrenders may reduce the Strategy Value to less than the Strategy Base or less than the amount you would have received had you not withdrawn until the Maturity Date. If you selected a Strategy with a Buffer and take a withdrawal before the end of the Strategy Term, you will receive only a portion of the Buffer’s protection if Index Performance is negative because the vested portion of the Buffer begins at 0% and increases throughout the Term. For example, if the Term is 364 days and you take a withdrawal on day 91 (after the first quarter of the Term has been completed), you will receive only 25% of the protection offered by the Buffer on that day. If Index Performance is positive, you will be credited with only a portion of the Index Performance, and application of the Vesting Factor will reduce positive Index performance by 75% during the first half of the Term and by 50% during the second half of the Term. In each case, this occurs because these elements do not fully vest until the Strategy Maturity Date. If you selected a Strategy with a Floor, you are always fully vested in the Floor and a withdrawal at any time before the end of the Term will only reflect negative Index Performance down to the Floor. You may lose principal and previously credited interest when a withdrawal is taken before a Strategy Maturity Date, in particular if taken earlier during the Term, even if Index Performance has been positive.

In addition, withdrawals and surrenders in excess of the Free Withdrawal Amount during an MVA Period are subject to a Market Value Adjustment or MVA. The MVA protects us from the risk of loss due to a change in market interest rates between the beginning of the MVA Period and the date of the withdrawal. If interest rates at the time of the withdrawal are higher than at the start of the MVA Period, the MVA will be negative. The MVA may increase, decrease, or have no effect on the amount withdrawn to satisfy the withdrawal request. You bear the risk that the MVA may be negative and reduce the amount you receive or your Contract Value. A surrender or withdrawal in excess of the Free Withdrawal Amount taken during the initial MVA Period (first six (6) Contract Years) is also subject to a withdrawal charge. In an increasing interest rate environment, the MVA could reduce the amount received to less than the Downside Protection. Also, if the MVA is positive, the amount of the MVA will be added to the amount we withdraw to satisfy your request, which means the amount of the withdrawal charge, if applicable, will also increase.

Strategy Performance is based on a single point in time. It is not affected by Index Performance on any date between the Strategy Start Date and Strategy Maturity Date. Strategy Performance may be negative even if Index Performance was positive for some or most of the Strategy Term. As a result, your Maturity Value may be less than the Strategy Base, even if Index Performance has been positive through some, or most, of the Strategy Term.

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●Limitation on Allocations among Strategies — You may re-allocate your Contract Value among the available Strategies only on the Maturity Date and only if the Maturity Date occurs before your Annuity Date. For new Strategies, we may change the Crediting Method or Downside Protection applicable to each Strategy. Not more than 45, nor less than 30 calendar days before a Maturity Date, we will advise you of the upcoming Maturity Date and request instructions for allocation of the Maturity Value. The notice we send will include a description of the maturing Strategy’s Strategy Elements, and how to obtain information on the Strategy Elements for each Strategy that will be offered on the upcoming Start Date. Because the notice will be sent to you well in advance of the Maturity Date, the notice will not include the Maturity Value for the Strategy, nor will it provide information on the Strategies that will be offered at that time. On the Start Date, the Company will establish new Strategies that you can invest in by allocating Maturity Value from a maturing Strategy. Two weeks prior to these Start Dates, the Company will declare the Term, Index, Crediting Method(s) and Downside Protection for each Strategy that will be offered on the upcoming Start Date. You may obtain this information the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

●	From the financial professional who sold or services your Contract.

Some Strategies may not be offered in the future, and you assume the risk that the new Strategy Elements for a Strategy may be less favorable than the Strategy Elements under your current Strategy.

If you do not provide instructions for the allocation of your Strategy Maturity Value by 4 p.m. Eastern Time on the Strategy Start Date and you did not opt for automatic rebalancing, we will follow the instructions we have on file and apply the entire Maturity Value to a new Strategy, as long the new Strategy has the same Strategy Term and Downside Protection as the maturing Strategy. You assume the risk that the Cap and Participation Rate for the new Strategy may less favorable than the Cap and Participation Rate under the maturing Strategy and other Strategies that we currently offer. For information on automatic rebalancing, please refer to the "Allocating Your Purchase Payments" section on page 19.

●Strategy Discontinuation — We currently offer ten Strategies. We reserve the right to change or discontinue a Strategy for renewal Terms, but we guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%. We regularly monitor the performance of each of the Strategies. From time to time, it may become necessary to cease offering, completely or temporarily, a particular Strategy. We reserve the right to discontinue making available new Strategies when our ability to offer those Strategies has been reduced due to changes in external forces such as the economic environment or actions taken by competitors. We may also discontinue a particular Strategy if there is insufficient volume to justify the continuation.

The allocation instructions your provide us on your application automatically become your default instructions, and we will follow these default instructions unless (1) you provide us new instructions or (2) we are unable to follow your instructions because we have discontinued a particular Strategy or Strategies. If you instructed us to allocate an amount to a particular Strategy for an upcoming Strategy Start Date, and we do not offer that Strategy on the Start Date, we will attempt to contact you or your financial professional to request new allocation instructions. If we do not receive new allocation instructions by 4 p.m. Eastern Time on the Strategy Start Date, we will transfer the relevant Strategy’s entire Maturity Value to the Default Strategy. You will be notified in writing that this has occurred, and provided the opportunity to reallocate the amount at the end of the Term to the then available Strategies. The amount you instructed us to allocate to that particular (no longer available) Strategy will remain in the Default Strategy, with automatic renewal at the end of each Term, until you provide us new allocation instructions. It is important to note that we will not discontinue a Strategy once its Term has begun.

●Changes to Floors, Buffers, Participation Rates and Caps for New Strategies — Crediting Methods for new and renewal Strategies are set by us at our discretion, with Participation Rates and Caps subject to contractual minimums. You risk the possibility that the Crediting Methods for new and renewal Strategies may not be as favorable as the Crediting Methods for your current Strategies. The Crediting Methods for a Strategy are guaranteed through the Strategy

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Maturity Date; however, they may vary each time a new Strategy starts. Floors and Buffers for new Strategies are also set by us at our discretion, subject to our guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%. You risk the possibility that the Floors and Buffers for new Strategies may not be as favorable as the Floors and Buffers for your current Strategies.

●Risks Associated with the Reference Indices — Because the S&P 500^® Price Return Index and the MSCI EAFE Price Return Index are each comprised of a collection of equity securities, in each case the value of the component securities is subject to market risk, or the risk that market fluctuations may cause the value of the component securities to go up or down, sometimes rapidly and unpredictably. In addition, the value of equity securities may decline for reasons directly related to the issuers of the securities. These market fluctuations may cause losses in Strategies. The S&P 500 Index and the MSCI EAFE Index are both "price return" indexes and do not reflect dividends paid on the securities comprising the Index, and therefore the Index Performance under the Contract does not reflect the full investment performance of those securities.

The COVID-19 pandemic has led to significant volatility and negative returns in the financial markets. Until recently, interest rates in the United States have been at historically low levels as a result of the COVID-19 pandemic. As of the date of this Prospectus, interest rates have started to rise, and they may continue to rise in the future. These market conditions have impacted the performance of the indexes to which the Strategies are linked. If these market conditions continue, and depending on your individual circumstances (e.g., your selected Strategies and the timing of any purchase, transfer, or withdrawal), you may experience (perhaps significant) negative returns under the Contract, including the application of a negative MVA in the case of a withdrawal or surrender. The duration of the COVID-19 pandemic, and the future impact that the pandemic may have on the financial markets and global economy, cannot be foreseen, however. You should consult with a financial professional about how the COVID-19 pandemic and the recent market conditions may impact your future investment decisions related to the Contract, such as purchasing the Contract or making transfers or withdrawals, based on your individual circumstances.

The Russian/Ukraine conflict and the resulting responses by the United States and other governments could create economic disruption that results in increased market volatility and present economic uncertainty. The duration of these events and their future impact on the financial markets and global economy, are difficult to determine. Any such impact could adversely affect the performance of the securities that comprise the reference Indices and may lead to losses on your investment in the Strategies. You should consult with a financial professional about how the COVID-19 pandemic and the recent market conditions may impact your future investment decisions related to the Contract, such as purchasing the Contract or making transfers or withdrawals, based on your individual circumstances.

S&P 500^® Index. The S&P 500^® Index is comprised of equity securities issued by large-capitalization U.S. companies. In general, large-capitalization companies may be unable to respond quickly to new competitive challenges, and also may not be able to attain the high growth rate of successful smaller companies, especially during periods of economic expansion.

MSCI EAFE Index. MSCI EAFE Index is an equity index that captures large and mid-cap representation across developed markets countries around the world. The securities comprising the MSCI EAFE Index are subject to the risks related to investments in foreign markets (e.g., increased price volatility; changing currency exchange rates; and greater political, regulatory, and economic uncertainty). The MSCI EAFE Index is an unmanaged, capitalization-weighted index of companies representing the stock markets of Europe, Australasia and the Far East. It is designed to measure the equity market performance of developed markets, excluding the United States and Canada. The MSCI EAFE Index used in the Contract is expressed in U.S. dollars, and therefore takes into account the performance of the local currency (or currencies) relative to the dollar. In general, foreign markets may be less liquid, more volatile and subject to less government supervision than domestic markets.

See Appendix C for important information regarding the publishers of the Indices.

Note: When you purchase the Contract, you are not investing in a securities index or buying shares of stock.

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●Risk That We May Eliminate or Substitute an Index — There is no guarantee that an Index will be available during the entire time you own your Contract. We may eliminate or substitute an Index, at any time, including before the end of a Term, if there is a significant change in the calculation or composition of the Index, the cost to license, the cost to support the Strategies tied to the Index, or the Index is discontinued or otherwise becomes unavailable. If we substitute the Index, the performance of the new Index may differ from the original Index. This, in turn, may affect the Index Performance and affect how you want to allocate Contract Value among the available Strategies. We will not substitute the Index until the new Index has been approved by the appropriate insurance regulatory authority. Upon substitution of an Index during the Term, we will calculate your Index Performance on the replaced Index up until the date of substitution and the substitute Index from the date of substitution to the Strategy’s Maturity Date or the date we calculate a request for a withdrawal or surrender. An Index substitution will not change the Crediting Method or Downside Protection for an existing Strategy. The performance of the new Index may not be as good as the one that it replaced and as a result your Strategy Performance may have been better if there had been no substitution. See Appendix B for an Index Substitution example. If we substitute the Index and you do not wish to allocate your Contract Value to the Strategies available under the Contract, you may surrender your Contract, but you may be subject to a withdrawal charge and an MVA, which may result in a loss of principal and previously credited interest. A surrender may also be subject to federal and state income taxes and, if taken before age 59¹/₂, a 10% additional tax.

●Creditor and Solvency Risk — Our general account assets support the guarantees under the Contract and are subject to the claims of our creditors. As such, the guarantees under the Contract are subject to our financial strength and claims-paying ability, and therefore, to the risk that we may default on those guarantees. You need to consider our financial strength and claims-paying ability in meeting the guarantees under the Contract. You may obtain information on our financial condition by reviewing our financial statements. The economic impacts of the COVID-19 pandemic have and may continue to negatively affect our results of operations as a result of decreases in new sales, increases in expenses and liabilities, and losses on investments held in our general account. As of the date of this Prospectus, we do not believe that the economic impacts of the COVID-19 pandemic have materially impacted our financial strength and claims-paying ability, and we continue to be subject to significant state solvency regulations that require us to reserve amounts to pay our contractual guarantees. You should understand, however, that the duration of the COVID-19 pandemic, and the future impact that the pandemic may have on the financial markets, the global economy, and our financial strength and claims-paying ability, cannot be predicted with certainty. Additionally, our consolidated financial statements and information concerning our business and operations is included later in this Prospectus.

Other Important Information You Should Know

●No Ownership Rights — You have no ownership rights in the underlying stocks comprising the Index. Purchasing the Contract is not equivalent to investing in the underlying stocks comprising the Index and you do not have any ownership interest or rights arising from the underlying stocks comprising the Index, such as voting rights, dividend payments, or other distributions. Further, if the performance of an Index is greater than your applicable Cap, the interest credited may be lower than the gain you would have received on an investment in a mutual fund or exchange traded fund designed to track the performance of the selected Index.

●No Affiliation with Index or Underlying Stocks — We are not affiliated with the sponsor of the Index or the underlying stocks comprising that Index. Consequently, the Index and the issuers of the underlying stocks comprising the Index have no involvement with the Contract.

●Possible Tax Law Changes — There always is the possibility that the tax treatment of the Contract could change by legislation or otherwise. We have the right to modify the Contract in response to legislative changes that could diminish the favorable tax treatment that Owners receive. You should consult a tax adviser with respect to legislative developments and their effect on the Contract.

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HOW YOUR CONTRACT WORKS

Purchasing the Contract

Purchase Payments

The minimum Purchase Payment is $25,000. We will issue the Contract once, we receive the minimum Purchase Payment amount. You may make the Purchase Payment by check payable to Protective Life Insurance Company or by any other method we deem acceptable. The Purchase Payment is generally allocated to the Holding Account, unless the entire Purchase Payment is received on a Start Date before 4 p.m. Eastern Time in which case we will allocate your Purchase Payment to the Strategy(ies) you selected. If your Purchase Payment is coming from different sources or we expect to receive portions of it at different times, we will issue the Contract, as long as it is in Good Order, when we receive the minimum Purchase Payment amount and apply that amount to the Holding Account. Each additional portion will be applied to the Holding Account when we receive it. We must receive any remaining portions of your Purchase Payment within 60 days of the date we issue the Contract. The Start Date for your initial Strategy(ies) will be the first available Start Dates the earlier of (1) when we have collected the entire amount of your Purchase Payment from all sources indicated on the application, or (2) 60 days after the Issue Date, assuming we have received the minimum Purchase Payment amount. On this Start Date, we will allocate the entire Holding Account Value, including any accrued interest, among the various Strategies according to your initial allocation instructions. Because we only offer Start Dates on the 1st and 3rd Wednesday of each month, your Purchase Payment may remain in the Holding Account for a substantial period of time before being allocated to the Strategies.

We will only accept a Purchase Payment that we receive on or before the 86th birthday of the oldest Owner or Annuitant, regardless of when the order was initiated. For purposes of determining the eligibility of a Purchase Payment, an order for a Contract is initiated when you or your financial adviser submit an electronic ticket order, an application, or signed forms requesting the transfer or exchange of assets from another account or insurance contract. Keep this age limitation for accepting the Purchase Payment in mind when you order to allow sufficient time for us to receive the funds. Under certain circumstances, we may be required by law to reject a Purchase Payment.

We retain the right to limit the maximum Purchase Payment that can be made without prior Administrative Office approval. This amount is currently $1,000,000. We may impose conditions for our acceptance of a Purchase Payment greater than $1,000,000.

We reserve the right to limit, temporarily hold in suspense, or reject any Purchase Payment at any time. We may exercise this right if required by law or if we determine there are suspicious circumstances or activity surrounding your Purchase Payment, or portions of it.

Because of our refusal to accept subsequent Purchase Payments, you are unable to increase your Contract Value (and therefore the Death Benefit payable under the Contract) through subsequent Purchase Payments. In evaluating the purchase of a Qualified Contract, purchasers should take into consideration that they will not be able to make annual contributions to the Qualified Contract because additional Purchase Payments are not permitted. You should consult with your financial professional prior to purchasing the Contract.

60 Day Rate Lock Period

The Crediting Method rates for your initial Strategy selection(s) are guaranteed for 60 days. In order to receive those rates, we must receive your signed application and the minimum Purchase Payment amount at our Administrative Office within 60 days of the date you sign your application. If we do not receive both your signed application and the minimum Purchase Payment amount within 60 days of the date you sign your application, then the Crediting Method rates will be the then-current rates in effect on the Issue Date, as stated on our website. However, our procedures may result in the return of your application if we do not receive your minimum Purchase Payment within 60 days of the date you sign your application. For a state-by-state description of all material variations of this Contract, including whether a different rate lock period applies in your state, see Appendix D later in this Prospectus.

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You can obtain information on the Crediting Method rates associated with your initial Strategy selection(s) the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

●	From the financial professional who sold or services your Contract.

Parties to the Contract

Owner

The Owner is the person or persons who own the Contract and is entitled to exercise all rights and privileges provided in the Contract. Two persons may own the Contract together. In the case of two Owners, provisions relating to action by the Owner means both Owners acting together. However, Protective Life may accept instructions from one Owner on behalf of both Owners. Protective Life will only issue a Contract prior to each Owner’s 86th birthday. Individuals as well as nonnatural persons, such as corporations or trusts, may be Owners. In the case of Owners who are nonnatural persons, age restrictions apply to the Annuitant.

The Owner of this Contract may be changed by Written Notice provided:

(1)each new Owner’s 86^th birthday is after the Issue Date; and

(2)each new Owner’s 95^th birthday is on or after the Annuity Date.

Naming a nonnatural person as an Owner or changing the Owner may result in a tax liability. See "Taxation of Annuities in General."

Beneficiary

The Beneficiary is the person or persons who may receive the benefits of this Contract upon the death of any Owner.

Primary — The Primary Beneficiary is the surviving Owner, if any. If there is no surviving Owner, the Primary Beneficiary is the person or persons designated by the Owner and named in our records.

Contingent — The Contingent Beneficiary is the person or persons designated by the Owner and named in our records to be Beneficiary if the Primary Beneficiary is not living at the time of the Owner’s death.

If no Beneficiary designation is in effect or if no Beneficiary is living at the time of an Owner’s death, the Beneficiary will be the estate of the deceased Owner. If any Owner dies on or after the Annuity Date, the Beneficiary will become the new Owner.

Unless designated irrevocably, the Owner may change the Beneficiary by Written Notice prior to the death of any Owner. An irrevocable Beneficiary is one whose written consent is needed before the Owner can change the Beneficiary designation or exercise certain other rights. In the case of certain Qualified Contracts, Treasury Department regulations prescribe certain limitations on the designation of a Beneficiary.

Annuitant

The Annuitant is the person or persons on whose life annuity income payments may be based. The first Owner shown on the application for the Contract is the Annuitant unless the Owner designates another person as the Annuitant. The Contract must be issued prior to the Annuitant’s 86th birthday. If the Annuitant is not an Owner and dies before the Annuity Date, the Owner will become the new Annuitant unless the Owner designates otherwise. However, if any Owner is a nonnatural person, the death of the Annuitant will be treated as the death of the Owner.

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The Owner may change the Annuitant by Written Notice prior to the Annuity Date. However, if any Owner is not a natural person, then the Annuitant may not be changed. The new Annuitant’s 95^th birthday must be on or after the Annuity Date in effect when the change of Annuitant is requested.

Payee

The Payee is the person or persons designated by the Owner to receive the annuity income payments under the Contract. The Annuitant is the Payee unless the Owner designates another party as the Payee. The Owner may change the Payee at any time.

Issuance of a Contract

To purchase a Contract, you must submit certain application information and a Purchase Payment to Protective Life through a licensed representative of Protective Life. Any such licensed representative must also be a registered representative of a broker/dealer having a distribution agreement with Investment Distributors, Inc. Protective Life reserves the right to accept or decline a request to issue a Contract. Contracts may be sold to or in connection with retirement plans which do not qualify for special tax treatment as well as retirement plans that qualify for special tax treatment under the Code.

If the necessary application information for a Contract accompanies the Purchase Payment, we will issue the Contract. If we do not receive the necessary application information, Protective Life will retain the Purchase Payment for up to five business days while it attempts to complete the information. If the necessary application information is not complete after five business days, Protective Life will inform the applicant of the reason for the delay and return the Purchase Payment immediately unless the applicant specifically consents to Protective Life retaining it until the information is complete. Once the information is complete, we will issue the Contract. We require allocation instructions for your application to be in Good Order. We will apply the Purchase Payment in accordance with your allocation instructions. If you do not provide us with allocation instructions, your application will not be in Good Order. You may transmit information necessary to complete an application to Protective Life by telephone, facsimile, or electronic media.

The Contract is between you and Protective Life. The Contract is not an investment advisory account, and Protective Life is not providing any investment advice or managing the allocations under your Contract. In the absence of a specific written arrangement to the contrary, you, as the owner of the Contract, have the sole authority to make investment allocations and other decisions under the Contract.

Right to Cancel

If for any reason you are not satisfied with your Contract, you have the right to return the Contract within a certain number of days, which is at least ten, after you receive it, along with a written cancellation request, to our Administrative Office or the financial professional who sold it. If state law requires, this "free look" period may be longer than 10 days.

If you cancel your Contract during your "free look" period, we will not assess a withdrawal charge or an MVA. The returned Contract will be treated as if it were never issued, and you will receive a refund of the Contract Value, in states where permitted. This amount may be more or less than your Purchase Payment. In other states, we are required to refund the greater of the Contract Value or your Purchase Payment.

Other material state variations may apply. See Appendix D for information on material state variations. State variations are identified in a special contract form used in that state. If you would like to review a copy of the contract form for your particular state, contact our Customer Service at 1-800-456-6330 or your financial representative.

For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your Purchase Payment. For individual retirement annuities and Contracts issued in states where, upon cancellation, we return at least your Purchase Payment, we reserve the right to keep all or a portion of your Purchase Payment in the Holding Account during the "free look" period. After the expiration of the "free look" period, we will allocate your Purchase Payment according to your allocation instructions on the next Strategy Start Date.

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We may require that you wait six months before you may apply for a Contract with us again if:

●	you cancel your Contract during the free look period; or

●	you change your mind before you receive your Contract whether we have received your Purchase Payment or not.

Please see "Federal Tax Matters" later in this Prospectus for possible consequences of cancelling your Contract. Our Administrative Office, or your financial professional, can provide you with the cancellation instructions.

Use of the Contract in Qualified Plans

You may purchase the Contract on a non-qualified basis. You may also purchase it for use within certain qualified retirement plans or in connection with other employee benefit plans or arrangements that receive favorable tax treatment. Such qualified plans include individual retirement accounts and individual retirement annuities (IRAs), and pension and profit sharing plans (including H.R. 10 Plans). Many of these qualified plans, including IRAs, provide the same type of tax deferral as provided by the Contract. The Contract, however, provides benefits and features not provided by such retirement plans and employee benefit plans or arrangements alone. There may be costs and expenses under the Contract related to these benefits and features. You should consult a qualified tax and/or financial adviser regarding the use of the Contract within a Qualified Plan or in connection with other employee benefit plans or arrangements. You should carefully consider the benefits and features provided by the Contract in relation to their costs as they apply to your particular situation. (See "Qualified Retirement Plans.")

Allocating your Purchase Payment

You must provide us with instructions on how to allocate your Contract Value to the Strategies. Allocations must be in dollars or whole percentages. The allocation instructions your provide us on your application automatically become your default allocation instructions, and we will follow these default instructions unless (1) you provide us new instructions or (2) we are unable to follow your instructions because we have discontinued a particular Strategy or Strategies.

If you instructed us to allocate an amount to a particular Strategy for an upcoming Strategy Start Date, and we do not offer that Strategy on the Start Date, we will attempt to contact you or your financial professional to request new allocation instructions. If we do not receive new allocation instructions by 4 p.m. Eastern Time on the Strategy Start Date, we will transfer the relevant Strategy’s entire Maturity Value to the Default Strategy. You will be notified in writing that this has occurred, and provided the opportunity to reallocate the amount at the end of the Term to the then available Strategies. The amount you instructed us to allocate to that particular (no longer available) Strategy will remain in the Default Strategy, with automatic renewal at the end of each Term, until you provide us new allocation instructions. It is important to note that we will not discontinue a Strategy once its Term has begun.

You can elect to rebalance your Contract Value on a Contract Anniversary. With this option, we will rebalance or reallocate the Contract Value among all of your selected Strategies according to your allocation instructions.

The Purchase Payment is generally allocated to the Holding Account, unless the entire Purchase Payment is received on a Start Date before 4 p.m. Eastern Time. If your Purchase Payment is coming from different sources or we expect to receive portions of it at different times, we will issue the Contract when we receive the minimum Purchase Payment amount and apply that amount to the Holding Account. Each additional portion will be applied to the Holding Account when we receive it. We must receive any remaining portions of your Purchase Payment within 60 days of the Contract Issue Date, and we will not accept any additional portions after that 60 day period. The Start Date for your initial Strategy(ies) will be the first available Start Date following the earlier of (1) when we have collected the entire amount of your Purchase Payment from all sources indicated on the application, or (2) 60 days after the Contract Issue Date, assuming we have received, at least, the minimum Purchase Payment amount ($25,000). Once we have established your Strategies, we will not accept any additional Purchase Payments. The minimum amount for each initial Strategy is $5,000. This minimum does not apply on renewal Strategies.

Owners may change allocation instructions by Written Notice at any time. Owners may also change instructions by telephone, facsimile, automated telephone system or via the Internet at www.protective.com ("non-written instructions"). For non-written instructions regarding allocations, we may require a form of personal identification prior to acting on

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instructions and we will record any telephone voice instructions. If we follow these procedures, we will not be liable for any losses due to unauthorized or fraudulent instructions. We reserve the right to limit or eliminate any of these non-written communication methods for any Contract at any time for any reason.

Holding Account

The Holding Account is a temporary account used exclusively to accumulate and hold the Purchase Payment (or portions of it) until it is applied to the Strategy(ies) on the Contract’s initial Strategy Start Date. The Holding Account is not treated as a Strategy. On and after the Business Day we apply the Holding Account Value to the Strategy(ies) according to your allocation instructions, the Holding Account Value will be $0.

The Purchase Payment is generally allocated to the Holding Account, unless the entire Purchase Payment is received on a Start Date before 4 p.m. Eastern Time in which case we will allocate your Purchase Payment to the Strategy(ies) you selected. The interest rate for the Holding Account is declared in advance, but is not guaranteed for any specific period of time. Generally, we review and declare the interest rate for the Holding Account at certain intervals (for example, every two weeks); however, we reserve the right to declare a new interest rate at any time and without any prior notice to you. We will not declare an interest rate for the Holding Account less than a minimum interest rate of 1%. The minimum interest rate may be higher in some states. You can obtain information on the current interest rate for the Holding Account the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

●	From the financial professional who sold or services your Contract.

Interest rates for the Holding Account have an effective date — the date on which the rate takes effect. The effective date will not be earlier than the day immediately following the day on which the rate is declared, but it may be later. On and after each effective date, that rate applies to the entire Holding Account, and remains in effect until we set a different rate.

Strategies

The Contract offers Strategies for allocating your Contract Value. A Strategy is defined by the dollar amount applied to establish it and the Strategy Elements.

You may establish a Strategy only on its Start Date by allocating all or a portion of your Purchase Payment or by allocating Maturity Value from a maturing Strategy. On the Start Date, we will establish new Strategies according to your allocation instructions.

Not less than two weeks prior to a Start Date, the Company will declare the Strategy Elements for the Strategies that will be available on that date. You may obtain this information the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

●	From the financial professional who sold or services your Contract.

Note: We currently offer ten Strategies. We reserve the right to change or discontinue a Strategy for renewal Terms, but we guarantee that the available Strategy options will always include the following: (i) a Strategy with a 0% Floor (the Default Strategy), (ii) a Strategy with a Floor from -1% to -10%, and (iii) a Strategy with a Buffer between -10% and -25%. If we decline to offer a particular Strategy on a Start Date, it will not impact any Strategies previously established.

The Strategies experience gains or losses based in part on the performance of an Index. Allocating to a Strategy is not an investment in the securities markets, or in underlying mutual funds sometimes known as "index funds."

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Strategy Elements

Each Strategy is defined by the following Strategy Elements: the Index, a Crediting Method, Downside Protection, and a Term.

Index and Index Performance

The Indices we currently offer are the S&P 500 Index and the MSCI EAFE Index. Index Performance is the measure of the percentage increase or decrease in the reference Index between two points in time. We calculate Index Performance on each Business Day for purposes of determining the Strategy Performance and then the Strategy Value. However, any interest credited or amount deducted resulting from Strategy Performance is not actually realized unless that Business Day is: the Strategy’s Maturity Date; or, a day you make a withdrawal from (or a surrender of) your Contract. Strategy Performance is the Strategy’s Index Performance after applying the Strategy Elements, and applicable Vesting Factor. Strategy Performance may be different than Index Performance.

Effect of an Emergency Close or Interruption on an Index

It is possible that the market on which an Index is based could experience an emergency close, or that the compiler of the Index experience an interruption that prevents calculation and/or publication of the closing Index value on a Business Day. This would impact our ability to establish or mature Strategies based on the affected Index. Therefore, if any Index experiences an emergency or interruption of business and cannot publish a closing value, we will delay the Maturity Date or Start Date for the Contract until the next Business Day.

Crediting Methods

Each Strategy will have a Crediting Method. The Crediting Method for a Strategy will not change during the Term of the Strategy. The Crediting Methods we offer include a Participation Rate and may include a Cap and are described in the table below. For Strategies with both a Participation Rate and a Cap, the Participation Rate will be 100% and the Cap may be greater than but will never be less than 1.5%. For Strategies without a Cap, the Participation Rate may be greater than but will never be less than 50%. The Cap, if applicable to the Strategy, will place a limit on the positive Index Performance that we will use to calculate the Strategy Performance and, in turn, limit the interest that may be credited to Strategy Value.

Participation Rate		A Participation Rate is a specified percentage of Index Performance that we use to calculate the Strategy Performance. The Participation Rate only applies to positive Index Performance.
Cap		The Cap is the maximum percentage of positive Index Performance that may be used to calculate Strategy Performance. The Cap will never be less than the minimum Cap we identify in the chart in the Summary section of this Prospectus and on the Schedule of your Contract, regardless of the Participation Rate or Downside Protection. On the Maturity Date, the positive Index Performance used to calculate Strategy Performance will be the lesser of the actual positive percentage change in the value of the Index over the Term or the Strategy Cap.
Participation Rate and a Cap		If a Strategy includes both a Participation Rate and a Cap, the Participation Rate will be 100%. Strategy Performance is the lesser of the Cap, or the Index Performance multiplied by the Participation Rate (100%). We apply the Participation Rate to Index Performance and not the Cap. Strategy Performance will never exceed the Cap, even if Index Performance multiplied by the Participation Rate is greater than the Cap.

Please consult your financial professional for information on current Participation Rates and Caps.

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The following three examples demonstrate three potential Crediting Method scenarios on a Strategy Maturity Date. Assume you invested in an S&P 500 Strategy with a Floor of -10% and a Strategy Base of $10,000. Only positive Index Performance is illustrated, as the Cap only applies to positive performance.

Example 1: 12% Cap and 100% Participation Rate.
		Formula
	S&P 500 Index Performance = 15%
	Strategy Performance = 12%	If (Participation Rate (100%) x Index Performance (15%)) is greater than the Cap (12%), then 12%
	Interest credited ($) = $1,200	$10,000 x Cap (12%)
	Strategy Maturity Value = $11,200	$10,000 + $1,200


Example 2: No Cap and 120% Participation Rate
		Formula
	S&P 500 Index Performance = 15%
	Strategy Performance = 18%	Participation Rate (120%) x Index Performance (15%)
	Interest credited ($) = $1,800	($10,000 x Participation Rate (120%)) x 15%
	Strategy Maturity Value = $11,800	$10,000 + $1,800


Example 3: No Cap and 50% Participation Rate
		Formula
	S&P 500 Index Performance = 15%
	Strategy Performance = 7.5%	Participation Rate (50%) x Index Performance (15%)
	Interest Credited ($) = $750	($10,000 x Participation Rate (50%)) x 15%
	Strategy Maturity Value = $10,750	($10,000 + $750)

Downside Protection

Each Strategy will have Downside Protection that will not change during the Strategy Term. Downside Protection is described in the table below.


Floor	The Floor is a limit on negative Index Performance. The Floor is the maximum percentage loss, due to negative Index Performance, you can experience over the Strategy Term, even if negative Index Performance falls below the Floor. We are currently offering Floor options of 0%, -5%, -10%, and -20%. A 0% floor means you will not experience any loss due to the performance of the Index.
Buffer	The Buffer is a limit on negative Index Performance up to a specified percentage of loss. If negative Index Performance exceeds the Buffer, that excess negative performance will reduce the Strategy Value. Your exposure to negative performance is reduced by the Buffer, but your ultimate exposure can be substantial. We are currently offering a Buffer option of -15%.

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Note: The application of the withdrawal charge and/or MVA to a withdrawal or surrender request that exceeds the Free Withdrawal Amount could reduce the Contract Value or Surrender Value to less than the amount protected by the Buffer(s) or Floor(s).

The following examples demonstrate two potential Downside Protection scenarios on a Strategy Maturity Date with a Floor. Assume you invested in an S&P 500 Strategy with a Floor of -10% and a Strategy Base of $10,000. Only negative Index Performance is illustrated, as the Floor only applies to negative performance.


Example 1: -10% Floor
		Formula
	S&P 500 Index Performance = -5%
	Strategy Performance = -5%	If Index Performance (-5%) is greater than the Floor (-10%), then -5%
	Interest deducted ($) = -$500	$10,000 x Index Performance (-5%)
	Strategy Maturity Value = $9,500	$10,000 – $500


Example 2: -10% Floor
		Formula
	S&P 500 Index Performance = -15%
	Strategy Performance = -10%	If Index Performance (-15%) is less than the Floor (-10%), then -10%
	Interest deducted ($) = -$1,000	$10,000 x Floor (-10%)
	Strategy Maturity Value = $9,000	$10,000 – $1,000

The following examples demonstrate two potential Downside Protection scenarios on a Strategy Maturity Date with a Buffer. Assume you invested in an S&P 500 Strategy with a Buffer of -15% and a Strategy Base of $10,000. Only negative Index Performance is illustrated, as the Buffer only applies to negative performance.


Example 1: -15% Buffer
		Formula
	S&P 500 Index Performance = -5%
	Strategy Performance = -5%	If Index Performance (-5%) is between 0% and the Buffer (-15%), then 0%.
	Interest deducted ($) = $0	$10,000 x Strategy Performance (0%)
	Strategy Maturity Value = $10,000	$10,000 – $0

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Example 2: -15% Buffer
		Formula
	S&P 500 Index Performance = -25%
	Strategy Performance = -10%	If Index Performance (-25%) is less than the Buffer (-15%), then Index Performance (-25%) less the Buffer (-15%).
	Interest deducted ($) = -$1,000	$10,000 x Strategy Performance (-10%)
	Strategy Maturity Value = $9,000	$10,000 – $1,000

Please note, Strategies with greater Downside Protection tend to have lower Caps and Participation Rates than Strategies with less Downside Protection.

Term

The time period beginning on the Strategy Start Date and ending on the Maturity Date (including both of those days) is the Strategy’s Term. Generally, it is one (1) Contract Year. Strategy Elements will not change during the Term.

We establish Strategies only on a Start Date. Start Dates are the 1^st and 3^rd Wednesday of each month, unless a scheduled Start Date is not a Business Day (a holiday, for example). In that case, the next Business Day will be the Start Date.

Strategies mature on their Maturity Date. The Maturity Date is the same Wednesday (1^st or 3^rd) of the month during which the Term ends and corresponds with the Wednesday of the same calendar month in which the Term began. If a scheduled Maturity Date is not a Business Day, the next Business Day will be the Maturity Date.

Note, however, that while Terms are typically described in years, they are Contract Years, not calendar years, and do not correspond to annual calendar dates. So, for example, a one (1) year Term established on the 3^rd Wednesday in January will mature on the 3^rd Wednesday in January in the following calendar year. Accordingly, the Term may contain more or less than 365 days.

Establishing a Strategy

You must provide allocation instructions for your initial Strategies on your application. Initial allocation instructions must be in whole percentages, and must total 100%. If you want to change your allocation instruction, you may give us allocation instructions in either dollar amounts, or in whole percentages. If your instructions are provided in dollar amounts, we will convert the allocation instruction into percentages for reporting and calculation purposes.

You establish one or more Strategies initially by allocating your Purchase Payment and in subsequent Contract Years, by allocating the Maturity Value from a maturing Strategy.

The Start Date for your initial Strategy(ies) will be the first available Start Date following the earlier of (1) when we have collected the entire amount of your Purchase Payment from all sources indicated on the application, or (2) 60 days after the Issue Date, assuming we have received, at least, the minimum Purchase Payment amount ($25,000).

In order to receive the guaranteed Crediting Method rates, we must receive your signed application at our Administrative Office within 60 days of the date you sign your application. If we do not receive your Purchase Payment within 60 days of the date you sign your application, then the Crediting Method rates will be the then-current rates in effect on the Issue Date. On this Start Date, we will allocate the entire Holding Account Value, including any accrued interest, among the various Strategies according to your initial allocation instructions. You may cancel or change any existing allocation instructions provided we receive it not later than 4 p.m. Eastern Time of the Start Date on which the Strategy is scheduled to be established.

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After the first Contract Year, a Strategy’s Start Date is the same Business Day as the maturing Strategy’s Maturity Date. You may re-allocate your Contract Value among the available Strategies only on the Maturity Date and only if the Maturity Date occurs before your Annuity Date.

We may change or modify the requirements and restrictions to establish a Strategy at any time with advance written notice to you. Any change or modification we make will not affect Strategies established before the effective date of the change or modification.

You may not use any part of existing Strategy Value to establish a new Strategy until the existing Strategy’s Maturity Date.

On a Maturity Date, we will follow your current allocation instructions for renewing, reallocating, or establishing new Strategies. The allocation instructions your provide us on your application automatically become your default instructions, and we will follow these default instructions unless (1) you provide us new instructions or (2) we are unable to follow your instructions because we have discontinued a particular Strategy or Strategies. If you instructed us to allocate an amount to a particular Strategy for an upcoming Strategy Start Date, and we do not offer that Strategy on the Start Date, we will attempt to contact you or your financial professional to request new allocation instructions. If we do not receive new allocation instructions by 4 p.m. Eastern Time on the Strategy Start Date, we will transfer the relevant Strategy’s entire Maturity Value to the Default Strategy. You will be notified in writing that this has occurred, and provided the opportunity to reallocate the amount at the end of the Term to the then available Strategies. The amount you instructed us to allocate to that particular (no longer available) Strategy will remain in the Default Strategy, with automatic renewal at the end of each Term, until you provide us new allocation instructions. It is important to note that we will not discontinue a Strategy once its Term has begun.

Strategy Transfers and Renewals

Restrictions on Transfers of During a Strategy Term

You may not transfer all or part of the value of an existing Strategy during its Term to any other existing Strategy.

You may not use all or part of the value of an existing Strategy to establish a new Strategy on any day other than the existing Strategy’s Maturity Date.

Any instruction from you for either of these transactions will be treated as not in Good Order and will not be honored.

Transfer of Maturity Value on a Maturity Date

Not more than 45 days, nor less than 30 days before the Maturity Date for a Strategy, we will advise you of the upcoming Maturity Date and request instructions for allocation of the Maturity Value. The notice we send will include a description of the Strategy Elements for each maturing Strategy. However, because the notice will be sent to you well in advance of the Maturity Date, it will not include the Maturity Value for the Strategy nor will it provide information on the Strategies that will be offered on the Maturity Date.

Not less than two weeks prior to the Maturity Date, you can obtain information about Strategy Elements for each Strategy that will be available on the upcoming Maturity Date (which coincides with the next available Start Date). You may obtain this information the following ways:

●	Directly from us by calling 1-800-456-6330;

●	On our website at www.myaccount.protective.com; or

●	From the financial professional who sold or services your Contract.

On a Maturity Date, you may use the Maturity Value(s) to renew, reallocate, or establish one or more new Strategies from those we are offering at that time. You should obtain information about the Strategy Elements for the new Strategies before making any allocation decisions. We must receive your allocation instructions not later than 4 p.m. Eastern on the

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Maturity Date and your instructions must conform to the requirements and restrictions in effect at that time. (See "Establishing a Strategy".)

If we do not receive new instructions by that time and you have not opted for automatic rebalancing, we will follow the instructions we have on file, and we will apply the Strategy’s entire Maturity Value to a new Strategy, as long as we are offering it at that time, with the same Term, Downside Protection as the maturing Strategy. However, the Cap and Participation Rate for the new Strategy will be those currently offered and may be different that those associated with the maturing Strategy.

Automatic Strategy Renewal

On your application or anytime during a Strategy Term, you may instruct us to automatically renew any Strategy. Automatic renewal means we will allocate the Maturity Value of the maturing Strategy into a new Strategy using the same Strategy Elements, as long as we are offering it at that time. The Crediting Method for the renewal Strategy may or may not be the same Crediting Method of the maturing Strategy, since the Participation Rate and Caps are guaranteed only for the existing Term and Crediting Method elements are declared by us in advance of the Maturity Date.

If you select automatic renewal, it will remain in effect until you change or cancel it. Like all other allocation instructions, an automatic renewal instruction will be accepted and may be modified or cancelled up to 4 p.m. Eastern on the Maturity Date. If you cancel automatic renewal instructions, all future automatic renewals will be terminated as of the date of the request, and you must send a new automatic renewal instructions to begin again.

If you instructed us to automatically renew a particular Strategy on a Maturity Date, and we do not offer that Strategy at that time, we will attempt to contact you or your financial professional to request new allocation instructions. If we do not receive new allocation instructions by 4 p.m. Eastern Time on the Strategy Start Date, we will transfer the Maturity Value to the Default Strategy. You will be notified in writing that this has occurred, and provided the opportunity to reallocate the amount on the Default Strategy’s Maturity Date to the then available Strategies.

Discontinuing a Strategy on Renewal

We reserve the right to not offer a particular Strategy upon renewal. If this occurs and you have a Strategy or Strategies about to mature that are designated to be transferred to the discontinued Strategy(ies), we will attempt to contact you or your financial professional to request new allocation instructions. If we do not receive new allocation instructions by 4 p.m. Eastern Time on the Strategy Start Date, we will allocate the relevant Strategy’s entire Maturity Value to the Default Strategy. We will provide you written notice if we allocate to the Default Strategy because we discontinued the Strategy.

Strategy Base and Strategy Value

On each Business Day, we calculate two values associated with each Strategy: the Strategy Base and Strategy Value.

On any Business Day, the Strategy Base is the dollar amount applied to establish the Strategy on its Start Date, minus a reduction for any withdrawals taken during the Term. A withdrawal will reduce the Strategy Base. If you take a withdrawal, the Strategy Base amount after we process the withdrawal will be less than the Strategy Base amount before we process the withdrawal. If you do not take a withdrawal during the Strategy Term, the Strategy Base will not change and will remain equal to the dollar amount applied on the Start Date.

Strategy Value, on the other hand, is the dollar value of the Strategy. Contract Value is equal to the sum of the Strategy Values. On a Start Date, the Strategy Value is equal to the Strategy Base. On a Maturity Date, the Strategy Value is equal to the Maturity Value. On any other Business Day, Strategy Value is equal to the Strategy Base multiplied by Strategy Performance. Therefore, the Strategy Value changes daily due to fluctuations in the Strategy’s Index, and may be lower or higher than the Strategy Base. The Strategy Value does not include the MVA, withdrawal charge, or applicable fees and premium tax, if any. The Strategy Value is also the starting point for calculating a withdrawal or surrender on a Business Day other than the Maturity Date.

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Calculating Strategy Value

To calculate Strategy Value, we multiply the Strategy Base by the Strategy Performance (positive or negative) and add the result to the Strategy Base.

Note: While Strategy Value incorporates the daily fluctuations of Index Performance after the Strategy Elements and Vesting Factor have been applied, neither the Strategy Value nor Contract Value represent a Surrender Value because they do not factor in the Market Value Adjustment or any applicable withdrawal charge.

Index Performance and Strategy Performance

Index Performance is the measure of the percentage increase or decrease in the Index between two points in time. We calculate the Index Performance percentage separately for each Strategy you have established, according to the formula:

Index Performance % = [(IV_E – IV_S) ÷ IV_S]

where,

IV_E is the Index Value as of the Business Day Index Performance is being calculated; and
IV_S is the Index Value as of the Start Date.

The Index Value is the closing value of each Reference Index at the end of each Business Day, as determined and published by the compiler of that Index. For any day that is not a Business Day, the Index Value is the closing value of the Index as of the next Business Day.

Because Start Dates and Maturity Dates occur on the same day, the Index Value on a Maturity Date for an existing Strategy will be the same as the Index Value of a new Strategy established on that date, provided both Strategies use the same reference Index.

Strategy Performance is the Index Performance after the Strategy Elements and Vesting Factor have been applied. Strategy Performance generally limits the portion of Index Performance that we use when calculating Strategy Value. The way we calculate Strategy Performance depends upon whether Index Performance is positive or negative and the type of Crediting Method and Downside Protection applicable to the Strategy. If a Strategy includes both a Participation Rate and a Cap, Strategy Performance is the lesser of the Cap, or the Index Performance multiplied by the Participation Rate. We only apply the Participation Rate to Index Performance and not the Cap. Strategy Performance will never exceed the Cap, even if Index Performance multiplied by the Participation Rate is greater than the Cap.

WHEN INDEX PERFORMANCE IS POSITIVE (GREATER THAN OR EQUAL TO 0):


Crediting Method	Cap	Strategy Performance = (lesser of (Index Performance x Participation Rate) or Cap) x Vesting Factor
	No Cap	Strategy Performance = (Index Performance x Participation Rate) x Vesting Factor

WHEN INDEX PERFORMANCE IS NEGATIVE (LESS THAN 0):


Downside Protection	Floor	Strategy Performance = (greater of (Index Performance) or (Floor)) x Vesting Factor
	Buffer	Strategy Performance = Index Performance – (Buffer x Vesting Factor)

Vesting Factor

The Strategy Value includes any credited interest or reduction in Strategy Value, if any, since the Strategy’s Start Date. We determine any credited interest or reduction in Strategy Value by applying a Vesting Factor. The Vesting Factor varies

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depending upon whether Index Performance is positive or negative and the type of Downside Protection and the day of the Term. The table below describes the Vesting Factor schedule.

WHEN INDEX PERFORMANCE IS POSITIVE (GREATER THAN OR EQUAL TO 0):

Any day during first half of Term		The Vesting Factor is 25%
Any day during second half of Term but before the Maturity Date		The Vesting Factor is 50%
On the Maturity Date		The Vesting Factor is 100%

Terms are generally 12 months. However, because the Maturity Date for each Term corresponds with the Wednesday of the same calendar month in which the Term began. the number of days in each Term, including the halfway point, will vary. To find out the halfway point specific to your Strategies, please call us at 1-800-456-6330.

WHEN INDEX PERFORMANCE IS NEGATIVE (LESS THAN 0):


Strategy with a Floor		On any day during the Term, the Vesting Factor is 100% and is applied to the Floor percentage.
Strategy with a Buffer		The Vesting Factor is a percentage equal to the number of days¹since the Start Date divided by the total number of days in the Term. The Vesting Factor is multiplied by the Buffer Percentage to determine the percent of negative Index Performance we will absorb.

These examples are intended to show how the Vesting Factor affects the Strategy Performance at two different points during the Term. These exam30.61ples assume a Strategy Base of $10,000.


Example: 12% Cap and 100% Participation Rate and Index Performance is positive
Application of Vesting Factor on any date during 1st half of Term¹
S&P 500 Index Performance =	15%
Strategy Performance =	3%	If Index Performance (15%) is greater than Cap (12%), then Cap (12%) multiplied by the Vesting Factor (25%), which equals 3%
Interest Credited ($) =	$300	($10,000 x Strategy Performance (3%))
Strategy Value on a Business Day in Month 3 =	$10,300	($10,000 + $300)
Application of Vesting Factor on any date during 2nd half of Term²
S&P 500 Index Performance =	15%
Strategy Performance =	6%	If Index Performance (15%) is greater than the Cap (12%), then Cap (12%) multiplied by the Vesting Factor (50%), which equals 6%
Interest Credited ($) =	$600	($10,000 x Strategy Performance (6%))
Strategy Value on a Business Day in Month 6 =	$10,600	($10,000 + $600)

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Example: -10% Floor and Index Performance is negative
Application of Vesting Factor on any date during 1st half of Term
S&P 500 Index Performance =	-5%
Strategy Performance =	-5%	If Index Perfomance (-5%) is greater than the Floor (-10%), then Index Performance (-5%) multiplied by the Vesting Factor (100%), which equals -5%
Interest Deducted ($) =	-$500	($10,000 x Strategy Performance (-5%))
Strategy Value on a Business Day in Month 3 =	$9,500	($10,000 – $500)
Application of Vesting Factor on any date during 2nd half of Term
S&P 500 Index Performance =	-5%
Strategy Performance =	-5%	If Index Perfomance (-5%) is greater than the Floor (-10%), then Index Performance (-5%) multiplied by the Vesting Factor (100%), which equals -5%
Interest Deducted ($) =	-$500	($10,000 x Strategy Performance (-5%))
Strategy Value on a Business Day in Month 6 =	$9,500	($10,000 – $500)

Example: -15% Buffer and Index Performance is negative
Application of Vesting Factor one quarter through Term³
S&P 500 Index Performance =	-5%
Strategy Performance =	-1.25%	Equals negative Index Performance that falls below the result of the Buffer multiplied by the Vesting Factor. The Buffer (-15%) multiplied by the Vesting Factor (25%) equals -3.75%. Negative Index Performance (-5%) that falls below the result of the Buffer x Vesting Factor (-3.75%) equals -1.25%.
Interest Deducted ($) =	-$125	($10,000 x Strategy Performance (-1.25%))
Strategy Value on Business Day 1/4 through Term =	$9,875	($10,000 – $125)

¹ For purposes of this example, assume that the Term is 364 days and that the halfway point is 182 days. For days 1-182, the Vesting Factor is 25%.

² For purposes of this example, assume that the Term is 364 days and that the halfway point is 182 days. For days 183-363, the Vesting Factor is 50%.

³ For purposes of this example, assume that the Term is 364 days and that 91 days (1/4 of total days in the Term) have elapsed since the Start Date. This means that the Vesting Factor on day 91 is 25%.

Application of Vesting Factor halfway through Term⁴
S&P 500 Index Performance =	-5%
Strategy Performance =	0%	Equals negative Index Performance that falls below the result of the Buffer multiplied by the Vesting Factor. The Buffer (-15%) multiplied by the Vesting Factor (50%) equals -7.50%. Negative Index Performance (-5%) does not fall below the result of the Buffer x Vesting Factor (-7.50%). Therefore, the Strategy Performance is 0% and there is no adjustment, either negative or positive, to Strategy Value.
Interest Credited ($) =	$0	($10,000 x Strategy Performance (0%))
Strategy Value on Business Day 1/2 through Term =	$10,000	($10,000 – $0)

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Maturity Value

On the Maturity Date, we apply any credited interest or reduction in Strategy Value to the Strategy Base to determine the Maturity Value.

Maturity Value = Strategy Base +/ – Credited Interest/Reduction in Strategy Value

The credited interest or reduction in Strategy Value is determined by multiplying the Strategy Performance by the Strategy Base.

Note: Your Maturity Value may be less than the Strategy Base, even if Index Performance has been positive through some, or most, of the Term.

The following examples show how interest is credited or amounts deducted in four scenarios. In each scenario, assume that you invested $10,000 in an S&P 500 Strategy with a one (1) Year Term and -10% percent Floor. On the Start Date, the Crediting Method consists of a 13% Cap and a 100% Participation Rate. You do not take any withdrawals.

1.Index Performance percentage is positive and greater than the Cap. If the calculated Index Performance percentage for the S&P 500 Price Return Index is 20% over the Term, we will calculate the Strategy Maturity Value as follows:

●The Participation Rate multiplied by the Index Performance percentage (100% x 20% = 20%) is greater than the Cap (13%). Under your chosen Crediting Method, the Strategy earns interest at the lower of those two rates. We therefore multiply the Strategy Base by the Cap to determine the interest credited (13% x $10,000 = $1,300). The Maturity Value is the Strategy Base plus the interest earned $10,000 + $1,300 = $11,300.

2.Index Performance percentage is positive, but less than the Cap. If the calculated Index Performance percentage for the S&P 500 Index is 5% over the Term, we will calculate the Strategy Maturity Value as follows:

●The Participation Rate multiplied by the Index Performance percentage (100% x 5% = 5%) is less than the Cap (13%). The Strategy earns interest at the lower of those two rates. We therefore multiply the Strategy Base by the Index Performance percentage to determine that the interest earned is $500 (5% x $10,000 = $500). The Maturity Value is the Strategy Base plus the interest earned $10,000 + $500 = $10,500.

3.Index Performance percentage is negative, but higher than the Floor. If the calculated Index Performance percentage for the S&P 500 Index is -5% over the Term, we will calculate the Strategy Maturity Value as follows:

●Applying the Index Performance percentage (-5%) would result in a smaller reduction in the Strategy Base than the Floor (-10%). We therefore multiply the Strategy Base by the Index Performance to calculate a $500 reduction in the Strategy Base. ($10,000 x -5% = -$500). The Strategy Base is reduced by $500, resulting in a Maturity Value of $9,500.

⁴For purposes of this example, assume that the Term is 364 days and that 182 days (1/2 of total days in the Term) have elapsed since the Start Date. This means that the Vesting Factor on day 182 is 50%.

4.Index Performance percentage is negative and less than the Floor. If the calculated Index Performance percentage for the S&P 500 Index is -15% over the Term, we will apply the Downside Protection and calculate the Strategy Maturity Value as follows:

●The Index Performance percentage (-15%) results in a greater reduction in the Strategy Base than the Floor (-10%). We therefore multiply the Strategy Base by the Floor to calculate a $1,000 reduction in the Strategy Base. ($10,000 x -10% = -$1,000). The Strategy Base is reduced by $1,000, resulting in a Strategy Maturity Value of $9,000.

5.Index Performance percentage is negative, and completely absorbed by the Buffer. If the calculated Index Performance percentage for the S&P 500 Index is -5% over the Term, we will calculate the Strategy Maturity Value as follows:

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●The Index Performance percentage (-5%) is greater than the Buffer (-15%). The Strategy Performance is 0%. We therefore multiply the Strategy Base by the Strategy Performance (0%) to calculate a $0 reduction in the Strategy Base. ($10,000 x 0% = $0). The Strategy Base is reduced by $0, resulting in a Maturity Value of $10,000.

6.Index Performance percentage is negative, but not completely absorbed by the Buffer. If the calculated Index Performance percentage for the S&P 500 Index is -20% over the Term, we will calculate the Strategy Maturity Value as follows:

●The Index Performance percentage (-20%) is less than the Buffer (-15%). The Strategy Performance is -5% (-20% + 15%). We therefore multiply the Strategy Base by the Strategy Performance (-5%) to calculate a $500 reduction in the Strategy Base. ($10,000 x -5% = -$500). The Strategy Base is reduced by $500, resulting in a Maturity Value of $9,500.

ACCESSING YOUR MONEY

Withdrawals and Surrenders

Anytime on or before the Annuity Date you may request a withdrawal from — or a surrender of — your Contract Value, by Written Notice or any other method we permit at that time. Federal and state income taxes may apply to distributions from the Contract, and a 10% additional tax may apply if the distribution occurs before an Owner’s age 59¹/₂. (See "Federal Tax Matters.")

Partial Withdrawals

On or before the Annuity Date, you may request a withdrawal of a portion of your Contract Value, provided:

●	the amount you request is at least $100; and

●the Contract Value after the withdrawal is processed is at least $25,000 (not required for withdrawals taken to satisfy federal income tax rules concerning minimum distribution requirements applicable to your Contract).

If any of these requirements is not met, we will treat your withdrawal request as not in Good Order and will not process the request. If this occurs, we will notify you and provide the opportunity to modify the instruction so the requirements are met.

Surrenders

On or before the Annuity Date, you may request a surrender of your Contract and receive its Surrender Value. If your Contract Value is $50,000 or less, you may request a surrender by telephone if you have previously provided (and we accepted) your written Telephone Authorization form. Unless you instruct us otherwise, we will pay the Surrender Value in a lump sum.

Requests

Requests for a withdrawal or surrender must be by Written Notice, or by any other method we permit at that time. These methods may include facsimile or electronic communications. Provided you have completed our Telephone Authorization form prior to a telephone withdrawal request and we accepted it, you may submit your withdrawal instruction by phone. Currently, we allow an Owner to withdraw up to the lesser of $50,000 or 25% of the Contract Value to be requested by phone. We will require authentication of the Owner’s identity during the call prior to processing a telephone withdrawal request. We may change the requirements for telephone withdrawals or eliminate the privilege completely at any time without prior notice.

If we receive your request for withdrawal or surrender in Good Order before 4 p.m. Eastern Time on a Business Day, we will process the request that Business Day. If we receive the request on or after 4 p.m. Eastern Time on a Business Day, it will be processed the next Business Day.

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We typically pay withdrawal and surrender requests within five (5) Business Days of the date we receive the request in Good Order. However, under certain circumstances it may be necessary to delay payment for up to six months, subject to all necessary approvals from the appropriate state insurance regulatory authorities.

Signature Guarantees

Signature guarantees are required for withdrawals or surrenders of more than $50,000.

Signature guarantees are relied upon as a means of preventing the perpetuation of fraud in financial transactions, including the disbursement of funds or assets from a victim’s account with a financial institution or a provider of financial services. They provide protection to investors by, for example, making it more difficult for a person to take another person’s money by forging a signature on a written request for the disbursement of funds.

An investor can obtain a signature guarantee from more than 7,000 financial institutions across the United States and Canada that participate in a Medallion signature guarantee program. The best source of a signature guarantee is a bank, savings and loan association, brokerage firm, or credit union with which you do business. Guarantor firms may, but frequently do not, charge a fee for their services.

A notary public cannot provide a signature guarantee. Notarization will not substitute for a signature guarantee.

Free Withdrawal Amount

During the first six (6) Contract Years (the initial MVA Period or withdrawal charge period), you can withdraw your Contract Value up to the amount of the Free Withdrawal Amount without being subject to an MVA and withdrawal charge. Although no withdrawal charges will apply after the end of the initial MVA Period, withdrawals in excess of the Free Withdrawal Amount taken during any MVA Period will still be subject to an MVA. If you make a withdrawal before a Maturity Date, the Strategy Value may be less than the Strategy Base and may be less than the amount you would receive had you held the Strategy until the Maturity Date. Taking a withdrawal before a Maturity Date may result in a reduction of the Strategy Base that is significantly larger than the withdrawal amount requested and could result in loss of principal and previously credited interest.

We calculate the available Free Withdrawal Amount with each withdrawal. During the first Contract Year, the Free Withdrawal amount available each Contract Year is equal to 10% of the Contract Base that established the initial Strategies. In subsequent Contract Years, it is equal to 10% of the Contract Base as of the most recent, prior Contract Anniversary.

The Free Withdrawal Amount is not cumulative. Any portion of the Free Withdrawal Amount not taken during a Contract Year does not carry forward to future Contract Years.

How Withdrawals are taken from your Contract Value

Withdrawals will be deducted pro rata from the Strategies. We do not allow withdrawals to be deducted from the Strategies other than on a pro rata basis. This means you cannot instruct us on how to apportion the withdrawal, and we may withdraw amounts from a Strategy that you would prefer be excluded. If we process your withdrawal request while in the Holding Account (i.e., before establishing your initial Strategies), we will deduct the Holding Account Value to pay the withdrawal request. We will not apply the Market Value Adjustment or a withdrawal charge to withdrawals taken from the Holding Account Value. A withdrawal from the Holding Account will reduce the amount applied to establish your initial Strategies.

When you make a withdrawal request, you must instruct us as to whether the amount you request is (1) the amount you want to receive (a "net" withdrawal), or (2) the amount you want us to deduct from your Contract Value (a "gross" withdrawal). The formula is generally the same for a gross or net withdrawal; however, if you request a net withdrawal, the amount we deduct from your Contract Value could be more than the amount of your withdrawal request in order to account for the Market Value Adjustment and withdrawal charge, if applicable. To see how we calculate withdrawals and adjust for a net withdrawal request versus a gross withdrawal request, please refer to scenarios 5-8 in Appendix A.

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Calculating Amounts Associated with a Withdrawal

The steps and formulas below explain how we calculate withdrawals and, more specifically, how we determine the following amounts: (1) the amount we need to deduct from each Strategy to satisfy the withdrawal request; (2) the amount remaining in your Strategy after we process the withdrawal; (3) the MVA and, if applicable, the withdrawal charge applicable to each Strategy; and (4) your withdrawal proceeds.

We use Steps 1 and 2 to calculate the effect of a withdrawal on the Strategy Base (i.e., the amount we deduct and the amount that remains in the Strategy). Steps 3 and 4 show how we calculate the relevant charges and the proceeds you will receive. For examples on how we calculate withdrawals, see Appendix A to this Prospectus.

Step 1: Calculating the Amount We Deduct from Each Strategy Base for the Withdrawal Request

When a withdrawal is taken from your Contract, the Contract Base and Strategy Bases will be reduced. The total amount of the reduction is intended to adjust the Contract Base in the same proportion that the withdrawal amount reduced the Contract Value at the time of the withdrawal. The amount of the reduction to the Contract Base could be greater than the dollar amount of the withdrawal to the Contract Value, if the Contract Value, at the time of the withdrawal, is less than the Contract Base.

The amount of the reduction for an individual Strategy is referred to as the Strategy Base Reduction Amount. This amount is based on 1) the portion of the withdrawal allocated to the individual Strategy, calculated based on the pro rata share of that Strategy’s Base to the total Contract Base, and 2) an adjustment factor based on the ratio of total Contract Base to Contract Value at the time of the withdrawal. This adjustment factor (called the Contract Base Reduction Percentage) is calculated at the Contract level rather than the individual Strategy level, and the adjustment will be proportionally allocated among all Strategies, regardless of the individual performance of each Strategy. Therefore, even if an individual Strategy’s performance is positive, but the overall Contract performance is negative, the impact of the withdrawal to the individual Strategy Base would be to reduce the Strategy Base by an amount greater than the dollar amount the withdrawal reduces the Strategy Value for that Strategy.

The first step in determining the Strategy Base Reduction Amount is to determine the Contract Base Reduction Percentage, which is the percent by which we reduce the Contract Base (that is, the sum of all Strategy Bases) for your withdrawal. We calculate this percent by comparing your Contract Base to your Contract Value (on the date we calculate the withdrawal).

Contract Base Reduction Percentage = A / B

where:

A = Contract Base (sum of all Strategy Bases), and

B = Contract Value.

The next step is to determine how much the requested withdrawal will reduce the Contract Base based on the Contract Value (as of the date we calculate the withdrawal). We do this by applying the Contract Base Reduction Percentage to the withdrawal amount requested.

Contract Base Adjustment Amount = withdrawal amount requested x Contract Base Reduction Percentage

The next step is to determine how much of the Contract Base Adjustment Amount is allocable to each Strategy Base. We refer to this as the Strategy Base allocation percentage, and it is the ratio of Strategy Base to Contract Base (expressed as a percent of the Contract Base). For example, if you have 5 Strategies, and each Strategy Base is $10,000, then the Strategy Base allocation percentage for each Strategy is 20% ($10,000/$50,000). We calculate the Strategy Base

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allocation percentage, and then apportion the Contract Base Adjustment Amount to each Strategy (Strategy Base Reduction Amount) as follows:

Strategy Base Reduction Amount = Contract Base Adjustment Amount x Strategy Base allocation percentage

Step 2: Determining the Strategy Base After the Withdrawal

A withdrawal will reduce the Strategy Base by the Strategy Base Reduction Amount.

Strategy Base after we process withdrawal = A – B

A = Strategy Base before we process withdrawal, and

B = Strategy Base Reduction Amount.

Step 3: Calculating the MVA and Withdrawal Charge Applicable to Each Strategy

A portion of your withdrawal request will be subject to the MVA and, if applicable, withdrawal charge, and those charges will impact the amount you receive from your withdrawal. If interest rates at the time of the withdrawal are higher than at the start of the MVA Period, the MVA will be negative and will reduce your withdrawal proceeds. Conversely, if interest rates at the time of the withdrawal are lower than at the start of the MVA Period, the MVA will be positive. We determine the MVA charge and withdrawal charge applicable to each Strategy based on the amount we withdraw from each Strategy. We then add all the MVA charges together to arrive at the total amount of the MVA and all of the withdrawal charges together to arrive at the total amount of the withdrawal charge that we impose on your withdrawal. To do this, we first apportion the amount of the withdrawal request among the Strategies based on the Strategy Base allocation percentage. The result is the Strategy Withdrawal Amount.

Strategy Withdrawal Amount = A x B

A= withdrawal request amount, and

B = Strategy Base allocation percentage.

Once we determine the Strategy Withdrawal Amount, we calculate the Strategy Free Withdrawal Amount for each Strategy, which is the amount not subject to the MVA or withdrawal charge. For each Strategy:

Strategy Free Withdrawal Amount = A x B

where:

A = Free Withdrawal Amount, and

B = Strategy Base allocation percentage.

For each Strategy, we determine the amount of the withdrawal that will be subject to the MVA, and we refer to this portion as the MVA Strategy Withdrawal Portion. We calculate this amount by deducting the Strategy Free Withdrawal Amount from the Strategy Withdrawal Amount.

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MVA Strategy Withdrawal Portion = A – B

where:

A = Strategy Withdrawal Amount, and

B = Strategy Free Withdrawal Amount.

We then determine the dollar amount of the MVA and, if applicable, the dollar amount of the withdrawal charge for each Strategy. The dollar amount of the MVA could increase, decrease, or have no effect on the amount you will receive from the withdrawal.

The dollar amount of the MVA = A x B

where:

A = MVA Strategy Withdrawal Portion, and

B = MVA Rate (as described in the "Market Value Adjustment" section).

If the withdrawal occurs during the initial MVA Period (withdrawal charge period) we will also assess a withdrawal charge but only on the MVA Strategy Withdrawal Portion after we assess the dollar amount of the MVA. An MVA that increases the MVA Strategy Withdrawal Portion will also increase the withdrawal charge. Similarly, an MVA that decreases the MVA Strategy Withdrawal Portion will also decrease the withdrawal charge.

The dollar amount of the withdrawal charge = (A +/– B) x C

where:

A = MVA Strategy Withdrawal Portion,

B = dollar amount of the MVA (as calculated above) applicable to the Strategy, and

C = withdrawal charge percentage (as described in the "Determining the Withdrawal Charge" section).

Step 4: Determining the Amount of the Withdrawal Proceeds You Will Receive

To calculate the amount you will actually receive from a withdrawal request, we use the following formula:

Withdrawal Proceeds = A +/– B – C – D

where:

A = sum of all Strategy Withdrawal Amounts,

B = sum of the dollar amounts of the MVA for all the Strategies,

C = sum of the dollar amounts of the withdrawal charges for all the Strategies,

D = any required or requested tax withholding.

We follow the steps above and perform the withdrawal calculations as of the end of the Business Day on which we receive your request in Good Order at our Administrative Office. A transaction request will be deemed in Good Order if the transaction service form is fully and accurately completed and signed by the Owner(s) and received by us at our Administrative Office. A Business Day ends at the close of regular trading on the New York Stock Exchange, which is generally at 4:00 p.m. Eastern Time. We will process any request received at our Administrative Office after the end of a Business Day on the next Business Day.

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Effect of a Withdrawal

A withdrawal during a Strategy Term will not change any of the Strategy Elements. However, if you make a withdrawal or surrender the Contract on any day other than the Strategy Maturity Date, you may reduce the Strategy Base. If you make a withdrawal when Strategy Performance is negative, the reduction to the Strategy Base could be significant and will be larger than if Strategy Performance were neutral or positive. The Strategy Base Reduction may be substantially larger than the withdrawal amount requested, could result in loss of principal and previously credited interest, and may have a material impact when we apply credited interest or a reduction in Strategy Value on the Strategy Maturity Date.

In addition, withdrawals during an MVA Period that exceed the Free Withdrawal Amount are subject to an MVA, and withdrawals made during the initial MVA Period (first six (6) Contract Years) are also subject to a withdrawal charge. This means either (1) the amount we deduct from your Contract Value could be more than the amount of your withdrawal request if you request a net withdrawal, or (2) the amount you receive could be less than the amount of your withdrawal request if you request a gross withdrawal.

For examples of how a withdrawal or surrender affects your Contract Value, see Appendix A to this Prospectus.

Surrender and Withdrawal Restrictions

The Owner’s right to make surrenders and withdrawals is subject to any restrictions imposed by applicable law or by the Qualified Contract.

In the case of certain Qualified Plans, federal tax law imposes restrictions on the form and manner in which benefits may be paid. For example, spousal consent may be needed in certain instances before a distribution may be made.

Suspension or Delay in Payments

Payments of a withdrawal or surrender of the Contract Value or death benefit are usually made within five (5) Business Days. However, we may delay such payment of a withdrawal or surrender of the Contract Value or death benefit if a reference Index is not published or your Purchase Payment check has not cleared your bank.

We may delay payment of a withdrawal or surrender for up to six months where permitted.

DEATH BENEFIT

If any Owner dies before the Annuity Date and while the Contract is in force, we will pay a death benefit, less any applicable premium tax, to the Beneficiary. The death benefit is not available after the Annuity Date.

The Contract offers two different death benefits: (1) the Contract Value Death Benefit and (2) the optional Return of Purchase Payment Death Benefit. These death benefits are described more completely below.

You must determine the type of death benefit you want when you apply for your Contract. You may not change your death benefit selection after your Contract is issued. The Contract Value Death Benefit is included with your Contract at no additional charge. You may select the optional Return of Purchase Payment Death Benefit for an additional fee.

You should carefully consider each of these death benefits and consult a qualified financial professional to help you decide which death benefit is best for you. If you select the Return of Purchase Payment Death Benefit, consider the relative costs against the potential benefits and risks as those apply to your particular situation.

Only one death benefit is payable under this Contract, even though the Contract may, in some circumstances, continue beyond an Owner’s death.

We calculate the death benefit as of the date we receive proof of death. We will determine the death benefit as of the end of the Business Day on which we receive at our Administrative Office Due Proof of Death of the Owner, either by certified

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death certificate or by judicial order from a court of competent jurisdiction or similar tribunal. If we receive Due Proof of Death after the end of the Business Day, we will determine the death benefit on the next Business Day.

If any Owner is not a natural person, the death of the Annuitant is treated as the death of an Owner.

The death benefit provisions of the Contract will be interpreted to comply with the requirements of Section 72(s) of the Code in the case of a Non-Qualified Contract and Section 401(a)(9) of the Code in the case of a Qualified Contract. We reserve the right to endorse the Contract, as necessary, to conform with regulatory requirements. We will send you a copy of any endorsement containing such Contract modifications. In the case of certain Qualified Contracts, Treasury Department regulations prescribe certain limitations on the designation of a Beneficiary. The following discussion generally applies to Qualified Contracts and non-Qualified Contracts, except where noted otherwise. In that regard, the post-death distribution requirements for Qualified Contracts and Non-Qualified Contracts are similar, but there are some significant differences. For a discussion of the post-death distribution requirements for Qualified Contracts, see "QUALIFIED RETIREMENT PLANS, Required Minimum Distributions Upon Your Death."

Contract Value Death Benefit

The Contract Value Death Benefit is the greater of the Contract Value or the Surrender Value, less any applicable premium tax.

Optional Return of Purchase Payment Death Benefit

The Optional Return of Purchase Payment Death Benefit will equal the greater of the following, less any applicable premium tax:

(a)the Contract Value;

(b)the Surrender Value; or

(c)the Purchase Payment less an adjustment for each withdrawal.

It is possible that, at the time of an Owner’s death, the Return of Purchase Payment Death Benefit will be no greater than the Contract Value Death Benefit. You should consult a financial professional to carefully consider this possibility and the cost of the Return of Purchase Payment Death Benefit before you decide whether the Return of Purchase Payment Death Benefit is right for you.

Return of Purchase Payment Death Benefit Fee

The annual cost for the Return of Purchase Payment Death Benefit is shown in the Death Benefit Rider Schedule as a percentage of the Death Benefit Value. The Death Benefit Value is the greater of the following, less any applicable premium tax: Contract Value, the Surrender Value, or the Purchase Payment. The annual cost is established on the Contract’s Issue Date and will not change.

On each Start Date, we calculate the portion of the annual cost attributable to each Strategy by multiplying the Death Benefit Value on that date by the annual cost. We divide the result of that calculation by 4 to determine the dollar amount of the Strategy’s contribution to the benefit cost we will collect on each Fee Deduction Date. A Fee Deduction Date is the Business Day that occurs on, or immediately following the date on which each quarter of the Term elapses. Fee Deduction Dates are identified by dividing the number of days in the Strategy Term by 4 (rounding to the nearest whole day), associating each with a calendar date and moving forward to the next Business Day.

We deduct the fee — in arrears — on a quarterly basis. The fee is determined on the Strategy Start Date, and will not be recalculated during the Term, even though the Strategy Base will be reduced by the deduction of fees, and may be reduced further by any withdrawal you request.

We deduct the fee, on a pro rata basis, from each Strategy. On a Fee Deduction date, we deduct the fee prior to processing any withdrawal or surrender requested that Business Day. If you surrender the Contract on any day other than

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a Fee Deduction Date, we will deduct the pro rata share of quarterly fee on the Business Day we execute your surrender request.

We do not apply the MVA or assess a withdrawal charge on the Return of Purchase Payment Death Benefit fee.


Contract Value Death Benefit Example		Return of Premium Death Benefit Example
At Inception:		At Inception:
Contract Base = $100,000		Contract Base = $100,000
Contract Value = $100,000		Contract Value = $100,000
Death Benefit = $100,000		Death Benefit (DB) = $100,000
Cap = 12%		Cap = 12%
Floor = 10%		Floor = 10%
After 1 year (Index Performance = 10%):		After 1 year (Index Performance = 10%):
Contract Base = $110,000		Contract Base¹ = $109,780 (((Starting Contract Base ($100 Death Benefit fee ($200)) x (1 + Index Performance (10%)))
Contract Value = $110,000		Contract Value¹ = $109,780
Death Benefit = $110,000		Death Benefit = $109,780
Fees from Contract Base = $0		Fees from Starting Contract Base = $200 (0.20% x DB)
After 1 year (Index Performance = -10%)		After 1 year (Index Performance = -10%):
Contract Base = $90,000		Contract Base¹ = $89,820 (((Starting Contract Base ($100,000) - Death Benefit fee ($200)) x (1 + Index Performance (-10%)))
Contract Value = $90,000		Contract Value¹ = $89,820
Death Benefit = $90,000		Death Benefit = $100,000
Fees from Contract Base = $0		Fees from Starting Contract Base = $200 (0.20% x DB)

¹ Given the same market performance, Contract Base and Contract Value will be lower for Contracts with the Return of Purchase Payment Death Benefit than Contracts with the Contract Value Death Benefit due to payment of the Return of Purchase Payment Death Benefit fee.

Payment of the Death Benefit

The Beneficiary may take the death benefit in one sum immediately, in which event the Contract will terminate. If the death benefit is not taken in one sum immediately, the death benefit will become the new Contract Value as of the end of the Business Day on which we receive Due Proof of Death of the Owner, and the entire interest in the Contract will be transferred to the Holding Account and must be distributed under one of the following options:

(1)The entire interest must be distributed over the life of the Beneficiary, or over a period not extending beyond the life expectancy of the Beneficiary, with distributions beginning within one year of the Owner’s death, and subject to certain further limits in the case of a Qualified Contract; or,

(2)The entire interest must be distributed within (i) 5 years of the Owner’s death if the Contract is a Non-Qualified Contract or, in some cases, a Qualified Contract, or (ii) within 10 years of the Owner’s death if the Contract is a Qualified Contract and the 5-year requirement does not apply under applicable federal tax rules.

The tax rules for Qualified Contracts differ in some material respects from the tax rules for Non-Qualified Contracts, including by limiting the types of beneficiaries who can elect option a. above and the circumstances in which a 5-year or 10-year distribution requirement will apply. See "QUALIFIED RETIREMENT PLANS, Temporary Rules under the CARES Act and Required Minimum Distributions Upon Your Death."

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If there is more than one Beneficiary, the foregoing provisions apply to each Beneficiary individually.

Continuation of the Contract by a Surviving Spouse

In the case of non-Qualified Contracts and Contracts that are individual retirement annuities within the meaning of Code Section 408(b), if the Beneficiary is the deceased Owner’s spouse, the surviving spouse may elect, in lieu of receiving a death benefit, to continue the Contract and become the new Owner. This election is only available, however, if the deceased Owner’s spouse’s 86^th birthday is after the Issue Date.

If the surviving spouse elects to continue the Contract, no death benefit is paid at that time and the Contract continues in force from the claim date with the surviving spouse as the new Owner. The surviving spouse may select a new Beneficiary to whom the death benefit will be paid upon the surviving spouse’s death. At that time, the Beneficiary may take the death benefit in a lump sum immediately or may elect to have it distributed by one of the two options described in the "Payment of the Death Benefit" section, above.

A Contract may be continued by a surviving spouse only once. This benefit will not be available to any subsequent surviving spouse under the continued Contract.

The rights of a Beneficiary under an annuity contract depend in part upon whether the Beneficiary is recognized as a "spouse" under federal tax law. A Beneficiary who is recognized as a spouse is treated more favorably than a Beneficiary who is not a spouse for federal tax purposes. Specifically, a Beneficiary who is the spouse of the deceased Owner may continue the Contract and become the new Owner, as described above. In contrast, a Beneficiary who is not recognized as a spouse of the deceased Owner generally must surrender the Contract within 5 or 10 years of the Owner’s death, or take distributions from the Contract over the Beneficiary’s life or life expectancy, beginning within one year of the deceased Owner’s death, with the applicable rules different depending on whether the Contract is a Non-Qualified Contract or a Qualified Contract.

U.S. Treasury Department regulations provide that for federal tax purposes, the term "spouse" does not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship that is not denominated as a marriage under the laws of the state where the relationship was entered into, regardless of domicile. In addition, if the Owner and the Beneficiary are no longer married as of the date of death, such individuals are no longer treated as spouses for federal tax law purposes. As a result, if a Beneficiary of a deceased Owner and the Owner were parties to a civil union or domestic partnership, or if the Beneficiary and the deceased Owner were no longer married as of the date of death, the Beneficiary will be required by federal tax law to take distributions from the Contract in the manner applicable to non-spouse Beneficiaries and will not be able to continue the Contract.

If you have questions concerning your status as a spouse for federal tax purposes and how that status might affect your rights under the Contract, you should consult your legal adviser.

Escheatment of Death Benefit

Every state has unclaimed property laws which generally declare annuity contracts to be abandoned after a period of inactivity of 3 to 5 years from the Contract’s Annuity Date or date the death benefit is due and payable. For example, if the payment of a death benefit has been triggered, but, if after a thorough search, we are still unable to locate the beneficiary of the death benefit, or the beneficiary does not come forward to claim the death benefit in a timely manner, the death benefit will be paid to the abandoned property division or unclaimed property office of the state in which the beneficiary or the Owner last resided, as shown on our books and records, or to our state of domicile. Once the death benefit has been paid or "escheated" to the state, however, your designated beneficiary may submit a claim to the state for payment of those funds. The state is obligated to pay the death benefit (without interest) if your beneficiary steps forward to claim the death benefit with the proper documentation. To prevent such escheatment, it is important that you update your beneficiary designations, including addresses, if and as they change. Such updates should be communicated in writing, by telephone, or other approved electronic means to our Administrative Office.

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CHARGES AND DEDUCTIONS

Market Value Adjustment

If you make a withdrawal or surrender your Contract, we will apply a "market value adjustment" or "MVA" to any withdrawal or surrender that exceeds the Free Withdrawal Amount. The MVA is based on the change in market interest rates between the beginning of the MVA Period and the withdrawal date. We use MVA Rates to measure this change in market interest rates. Application of the MVA to a withdrawal or surrender request that exceeds the Free Withdrawal Amount could reduce the Contract Value or Surrender Value to less than the amount protected by the Buffer(s) or Floor(s). We will not apply the MVA to the death benefit or to amounts applied to an Annuity Option on the Annuity Date.

During the last month of any MVA Period, the MVA is zero and will have no effect on the amount you receive or your remaining Contract Value if you take a withdrawal or surrender in that month.

MVA Periods

The initial MVA Period is the first six (6) Contract Years. Withdrawals and surrenders that exceed the Free Withdrawal Amount in the first six (6) Contract Years (the initial MVA Period or withdrawal charge period) are also subject to a withdrawal charge and any applicable premium tax, in addition to the Market Value Adjustment. The withdrawal charge percentage starts at 9% and decreases to zero after the initial MVA Period. Following the initial MVA Period of six (6) Contract Years, the MVA Period is one (1) Contract Year and automatically renews each Contract Anniversary. During an MVA Period other than the initial MVA Period, we will apply only an MVA and any applicable premium tax, but not a withdrawal charge, to any withdrawal requests that exceed the Free Withdrawal Amount.

An MVA Rate is a proprietary measure of market interest rates. We use them in the MVA formula, below.

An MVA Rate is identified on each Business Day during an MVA Period. It is the sum of the prior Business Day’s closing values of:

(a)the Constant Maturity Treasury Rate for a duration equal to the current MVA period; plus,

(b)Barclay’s US Long Credit Option Adjusted Spread ("OAS").

The Constant Maturity Treasury Rate is the yield on actively traded U.S. Treasury securities based on their time to maturity, as obtained by the Federal Reserve Bank of New York. The Barclay’s US Long Credit Option Adjusted Spread is a measure of the average difference between the yield of USD-denominated corporate bonds and U.S. Treasury issues for a similar duration.

Market Value Adjustment Formula

We use the MVA formula to calculate the Market Value Adjustment. For an explanation on how we calculate withdrawals, see "Calculating Amounts Associated with a Withdrawal" in the "ACCESSING YOUR MONEY" section.

Market Value Adjustment = ( I — C ) x ( N/12 ) where,

I = the initial MVA Rate (the MVA Rate on the first day of any MVA Period)

C = the MVA Rate as of the withdrawal date

N = the number of complete months remaining in the MVA Period

The result of the MVA formula is a percentage (negative, positive, or zero). That percentage is multiplied by the amount the requested withdrawal or surrender exceeds the available Free Withdrawal Amount to determine the dollar amount of the MVA. The dollar amount of the MVA will increase, decrease or have no effect on either (1) your withdrawal proceeds or (2) the Contract Value remaining in your Contract. The MVA will always equal zero (i.e. have no effect) during the last month of any MVA Period. If interest rates at the time of the withdrawal are higher than at the start of the MVA Period,

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the MVA will be negative and will reduce your withdrawal proceeds or your Contract Value. Conversely, if interest rates at the time of the withdrawal are lower than at the start of the MVA Period, the MVA will be positive.

For examples of how the MVA can affect a full surrender or withdrawal requested during the withdrawal charge period, see Appendix A to this Prospectus.

Discontinuation of or Substantial Changes to Elements Used to Determine the MVA Rates: If the Constant Maturity Treasury Rates or Barclay’s US Long Credit OAS are no longer available to us, or if the manner in which they are determined is substantially changed, we will substitute equivalent rates or indices, subject to prior approval by the insurance regulatory authority of the state in which this Contract is delivered. We will send you an endorsement describing the substitution prior to the date it becomes effective.

Withdrawal Charge

We do not deduct any charge for sales expenses from your Purchase Payment. However, within certain time limits described below, we deduct a withdrawal charge when you make a surrender or withdrawal, in excess of the Free Withdrawal Amount, before the Annuity Date during the withdrawal charge period. However, we do not assess a withdrawal charge when we pay the death benefit or when we apply your Contract Value to an Annuity Option.

The withdrawal charge period is the first six (6) Contract Years and coincides with the initial MVA Period. The withdrawal charge period begins when you establish your initial Strategies (i.e., the Start Date for the initial Strategy or Strategies) and ends on the 6^th Contract Anniversary.

The withdrawal charge does not apply to withdrawals taken from the Holding Account Value.

Withdrawal Charge Percentage

The withdrawal charge is a set percentage of the amount of the Contract Base withdrawn (or surrendered) in excess of the then available Free Withdrawal Amount. These percentages are set on the Issue Date, and will not change during the life of the Contract.

The withdrawal charge percentage starts at 9%, and the percentage decreases after each full Contract Year. On the 6^th Contract Anniversary, the withdrawal charge drops to 0% and the withdrawal charge period ends.

The withdrawal charge percentages applicable during each Contract Year during the withdrawal charge period are displayed in the table below.

Number of Full Contract Years Elapsed Between the Start Date for the Initial Strategy or Strategies and the Date of a Withdrawal	Withdrawal Charge Percentage
0	9	%
1	8	%
2	7	%
3	6	%
4	5	%
5	4	%
6+	0	%

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Calculating the Withdrawal Charge

The withdrawal charge applies to surrenders and withdrawals, in excess of the Free Withdrawal Amount, taken during the withdrawal charge period. In general, we calculate the withdrawal charge in the following manner:

(1)The available Free Withdrawal Amount is apportioned among the Strategies in accordance with the current allocation instructions.

(2)We subtract the Free Withdrawal Amount attributable to each Strategy from that Strategy’s Base. The result is the portion of the withdrawal from the Strategy Base subject to the withdrawal charge.

(3)That amount is multiplied by the withdrawal charge percentage (according to the table above) to determine the dollar amount of the withdrawal charge attributable to the Strategy.

For a complete description of how withdrawal charges are calculated, please refer to Step 2 of the "Calculating Amounts Associated with a Withdrawal" section within the "ACCESSING YOUR MONEY" section of this prospectus.

Waiver of Withdrawal Charge and Market Value Adjustment

Terminal Condition and Nursing Facility Confinement

We will waive any applicable withdrawal charge and MVA if, at any time after the first Contract Year:

(1)you or your spouse are first diagnosed as having a terminal illness by a physician who is not related to you or the Annuitant; or,

(2)you or your spouse enter, for a period of at least ninety (90) days, a facility which is both

(a)licensed by the state or operated pursuant to state law; and

(b)qualified as a skilled nursing home facility under Medicare or Medicaid.

The term "terminal illness" means that you or your spouse are diagnosed as having a non-correctable medical condition that, with a reasonable degree of medical certainty, will result in you or your spouse’s death in 12 months or less. A "physician" is a medical doctor licensed by a state’s Board of Medical Examiners, or similar authority in the United States, acting within the scope of his or her license. You must submit written proof satisfactory to us of a terminal illness or nursing home confinement. In the case of a claim based on terminal illness, we reserve the right to require an examination by a physician of our choice at our expense.

Once we have granted the waiver of withdrawal charge and MVA, no withdrawal charge or MVA will apply to the Contract in the future. If any Owner is not an individual, this waiver of withdrawal charge and MVA provision will apply to the Annuitant or the Annuitant’s spouse.

The waiver of withdrawal charge and MVA for terminal illness or nursing facility confinement may not be available in all states. See Appendix D to this Prospectus for availability of the waiver of the withdrawal charge and MVA for terminal illness or nursing facility confinement in your state. You may also want to consult with your financial professional.

Unemployment

We will waive any applicable withdrawal charge and MVA if, at any time after the Issue Date, you or your spouse meet the following conditions when you request a withdrawal ("unemployment conditions"):

(1)you or your spouse were employed full-time on the Issue Date;

(2)have been unemployed for at least 60 consecutive calendar days prior to claiming the waiver; and

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(3)remain unemployed on the date the withdrawal is requested.

Once we have granted the waiver of withdrawal charge and MVA, no withdrawal charge or MVA will apply to the Contract in the future as long as the unemployment conditions described above continue.

If any Owner is not an individual, this waiver of withdrawal charge and MVA provision will apply to the Annuitant or the Annuitant’s spouse.

Waiver of Withdrawal Charge

We may decrease or waive the withdrawal charge on Contracts issued to a trustee, employer or similar entity pursuant to a retirement plan or when sales are made in a similar arrangement where offering the Contracts to a group of individuals under such a program lowers our sales expenses. We determine the amount of any decrease or waiver of the withdrawal charge based on our cost savings.

We also will waive withdrawal charge for Contracts issued to employees and registered representatives of any member of the selling group, or to officers, directors, trustees or bona-fide full time employees of Protective Life or their affiliated companies (based upon the Owner’s status at the time the Contract is purchased). In either case, no marketing expenses or sales commissions are associated with such Contracts.

Premium Taxes

Some states impose premium taxes at rates currently ranging up to 3.5%. If premium taxes apply to your Contract, we will deduct them from the Purchase Payment(s) when accepted or from the Contract Value upon a withdrawal or surrender, death or amounts applied to an Annuity Option.

Other Information

We sell the Contracts through registered representatives of broker-dealers. These registered representatives are also appointed and licensed as insurance agents of Protective Life. We pay commissions and other compensation to the broker-dealers for selling the Contracts. You do not directly pay the commissions and other compensation, we do. We intend to recover commissions and other compensation, marketing, administrative and other expenses and costs of Contract benefits through the fees and charges imposed under the Contracts as well as any amounts we earn on investments. See "Distribution of the Contracts" for more information about payments we make to the broker-dealers.

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ANNUITY PAYMENTS

Annuity Date

On the Issue Date, the Annuity Date is the oldest Owner’s or Annuitant’s 95^th birthday. You may elect a different Annuity Date, provided that it is no later than the oldest Owner’s or Annuitant’s 95^th birthday (the "Maximum Annuity Date"). You may not choose an Annuity Date that is earlier than your first Contract Anniversary. If your Annuity Date is set to occur during a Term and not on a Maturity Date, we will allocate your entire Contract Value to the Default Strategy on the Strategy Start Date immediately before your upcoming Annuity Date. We do this to avoid any negative Index Performance that would reduce your Contract Value. If we do not have advanced notice of your Annuity Date or you change your Annuity Date after the Start Date, we will not reallocate your Contract Value to the Default Strategy. Your Contract Value will remain in the Strategy(ies), and we will use those Strategy(ies) Values, which may reflect negative Index Performance, to determine your Contract Value on your Annuity Date. You should also consider the Vesting Factor schedule, described in the "Strategies" section, as it could impact your Contract Value. Annuity Dates that occur or are scheduled to occur at an advanced age for the Annuitant (e.g., past age 95), may in certain circumstances have adverse income tax consequences. (See "Federal Tax Matters".) Distributions from Qualified Contracts may be required before the Annuity Date.

Changing the Annuity Date

The Owner may change the Annuity Date by Written Notice. The new Annuity Date must be at least 30 days after the date we receive the written request and no later than the oldest Owner’s or Annuitant’s 95^th birthday. You may not choose a new Annuity Date that is earlier than your first Contract Anniversary.

PayStream Plus^® Annuitization Benefit

(not available in New Hampshire or Utah)

If your Annuity Date is on or after your 10^th Contract Anniversary and you select Annuity Option B (life income with or without a certain period) with a certain period of at least 10 years, the amount annuitized will be your Contract Value on the Annuity Date plus 2% of the Contract Value on that date, less any applicable premium tax.

Annuity Income Payments

On the Annuity Date, we will apply the Contract Value to the Annuity Option you have selected to determine your annuity income payment.

Annuity Options

You may select an Annuity Option, or change your selection by Written Notice that Protective Life receives no later than 30 days before the Annuity Date. You may not change your selection of an Annuity Option less than 30 days before the Annuity Date. We will send you a notice in advance of your Annuity Date which asks you to select your Annuity Option. Your choice of Annuity Option may be limited, depending on your use of the Contract. If you have not selected an Annuity Option within 30 days of the Annuity Date, we will apply your Contract Value to Option B — Life Income with Payments for a 10 Year Certain Period.

Generally, you may select from among the Annuity Options described below. However, certain Annuity Options and/or certain period durations may not be available, depending on the age of the Annuitant and whether your Contract is a Qualified Contract that is subject to limitations under the Required Minimum Distribution rules of Section 401(a)(9) of the Code. In addition, once annuity payments start under an Annuity Option, it may be necessary to modify those payments following the Annuitant’s death in order to comply with the Required Minimum Distribution rules, if your Annuity is a Qualified Annuity. For a discussion of the post-death distribution requirements for Qualified Contracts, see "QUALIFIED RETIREMENT PLANS, Required Distributions Upon Your Death."

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Option A — Payments For a Certain Period:

We will make payments for the period you select. No certain period may be shorter than 10 years or longer than 30 years, without our consent. Payments under this Annuity Option do not depend on the life of an Annuitant.

Option B — Life Income With Or Without A Certain Period:

Payments are based on the life of the named Annuitant(s). If you elect to include a certain period, we will make payments for the lifetime of the Annuitant(s), with payments guaranteed for the certain period you select. No certain period may be longer than 30 years without our consent. Payments stop at the end of the selected certain period or when the Annuitant(s) dies, whichever is later. We reserve the right to demand proof that the Annuitant(s) is living prior to making any payment under Option B. If no certain period is selected, no payments will be made after the death of the Annuitant(s), no matter how few or how many payments have been made. This means the Payee will receive no annuity payments if the Annuitant(s) dies before the first scheduled payment, will receive only one payment if death occurs before the second scheduled payment, and so on. However, if no certain period is selected and the Annuitant dies within one month of the Annuity Date but before the first income payment has been made, we will terminate this Contract and immediately pay the Beneficiary the amount applied to the Annuity Option in a lump sum.

Additional Option:

You may use the Contract Value to purchase any annuity contract that we offer on the date you elect this option.

When selecting an Annuity Option, you should bear in mind that the amount of each payment for a certain period compared to the amount of each payment for life (either with or without a certain period) depends on the length of the certain period chosen and the life expectancy of the Annuitant(s). The longer the life expectancy, the lower the payments. Generally, the shorter the certain period chosen, the higher the payments. You also should consider that, assuming Annuitants with the same life expectancy, choosing Option B — Life Income Without a Certain Period will result in larger annuity payments than Option B — Life Income with a Certain Period (although the Payee will receive more payments under Option B — Life Income with a Certain Period if the Annuitant dies before the end of the certain period). You should consult your financial professional to discuss which Annuity Option would be most appropriate for your circumstances.

At this time Protective does not allow a "partial annuitization," i.e., we do not allow you to apply a portion of your Contract Value to an annuity option while maintaining the remaining Contract Value available for withdrawals or a surrender. However, in the future we may allow a partial annuitization subject to our then applicable rules and procedures.

Minimum Amounts

If at any time your annuity income payments are less than $20, we reserve the right to change the frequency to an interval that will result in a payment at least equal to the minimum.

Death of Annuitant or Owner After Annuity Date

In the event of the death of any Owner on or after the Annuity Date, the Beneficiary will become the new Owner. If any Owner or Annuitant dies on or after the Annuity Date and before all benefits under the Annuity Option you selected have been paid, we generally will pay any remaining portion of such benefits at least as rapidly as under the Annuity Option in effect when the Owner or Annuitant died. However, in the case of a Qualified Contract, the Required Minimum Distribution rules of Code Section 401(a)(9) may require any remaining portion of such benefits to be paid more rapidly than originally scheduled. In that regard, it is important to understand that in the case of a Qualified Contract, once annuity payments start under an Annuity Option it may be necessary to modify those payments following the Annuitant’s death in order to comply with the Required Minimum Distribution rules. See "QUALIFIED RETIREMENT PLANS, Required Minimum Distributions Upon Your Death." After the death of the Annuitant, any remaining payments shall be payable to the Beneficiary unless you specified otherwise before the Annuitant’s death.

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FEDERAL TAX MATTERS

Introduction

The following discussion of the federal income tax treatment of the Contracts is not exhaustive, does not purport to cover all situations, and is not intended as tax advice. The federal income tax treatment of the Contracts is unclear in certain circumstances, and a qualified tax adviser should always be consulted with regard to the application of law to individual circumstances. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Department regulations, and interpretations existing on the date of this Prospectus. These authorities, however, are subject to change by Congress, the Treasury Department, and judicial decisions.

This discussion does not address federal estate, gift, or generation skipping transfer taxes, or any state or local tax consequences associated with the purchase of the Contracts. In addition, the Company makes no guarantee regarding any tax treatment — federal, state or local — of any Contract or of any transaction involving a Contract.

Protective’s Tax Status

Protective is taxed as a life insurance company under the Code. The assets underlying the Contracts will be owned by Protective, and the income derived from such assets will be includible in Protective’s income for federal income tax purposes.

TAXATION OF ANNUITIES IN GENERAL

Tax Deferral During Accumulation Period

Under existing provisions of the Code (and except as described below), the Contracts should be treated as annuities and any increase in an Owner’s Contract Value is generally not taxable to the Owner or Annuitant until received, either in the form of annuity payments as contemplated by the Contracts, or in some other form of distribution.

As a general rule, Contracts held by "non-natural persons" such as a corporation, trust or other similar entity, as opposed to a natural person, are not treated as annuity contracts for federal tax purposes. The income on such Contracts (as defined in the tax law) is taxed as ordinary income that is received or accrued by the Owner during the taxable year. There are several exceptions to this general rule for Contracts held by non-natural persons. First, Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the Contract as an agent for a natural person.

In addition, exceptions to the general rule for non-natural Contract owners will apply with respect to (1) Contracts acquired by an estate of a decedent by reason of the death of the decedent, (2) Contracts issued in connection with certain Qualified Plans, (3) Contracts purchased by employers upon the termination of certain Qualified Plans, (4) certain Contracts used in connection with structured settlement agreements, and (5) Contracts purchased with a single premium when the annuity starting date is no later than a year from purchase of the Contract and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.

If the Contract’s Annuity Date occurs (or is scheduled to occur) at a time when the Annuitant has reached an advanced age, e.g., past age 95, it is possible that the Contract would not be treated as an annuity for federal income tax purposes. In that event, any increases in the Contract Value could be currently includable in the Owner’s income.

The remainder of this discussion assumes that the Contract will constitute an annuity for federal tax purposes.

Taxation of Withdrawals and Surrenders

In the case of withdrawal, amounts received generally are includible in income to the extent the Owner’s Contract Value before the withdrawal exceeds his or her "investment in the contract" (defined below). All amounts includible in income with respect to the Contract are taxed as ordinary income. No amounts are taxed at the special lower rates applicable to long-term capital gains and corporation dividends. In the case of a surrender, amounts received are includible in income to the extent they exceed the "investment in the contract." A Contract that is canceled is treated for federal tax purposes

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the same as a surrender. For these purposes the "investment in the contract" at any time equals the premiums paid under the Contract (to the extent such premium payments were neither deductible when made nor excludable from income as, for example, in the case of certain contributions to Qualified Contracts) less any amounts previously received from the Contract which were not includible in income.

There is some uncertainty regarding the treatment of the Market Value Adjustment for purposes of determining the amount includible in income as a result of any withdrawal, assignment or pledge or transfer without adequate consideration. Congress has given the Internal Revenue Service ("IRS") regulatory authority to address this uncertainty. However, as of the date of this Prospectus, the IRS has not issued any regulations addressing these determinations. At this time, the Company plans to determine for tax reporting purposes the amount includible in income as a result of any withdrawal, assignment or pledge or transfer without adequate consideration without regard to the Market Value Adjustment. The IRS could disagree with this treatment with the result that, depending on the circumstance, the Owner could have either more or less income than reported by the Company.

Withdrawals, surrenders and amounts includible in income as a result of an assignment, pledge, or transfer without adequate consideration may be subject to a 10% additional tax. (See "Additional Tax on Premature Distributions.") Withdrawals and surrenders may be subject to federal income tax withholding. (See "Federal Income Tax Withholding.")

Taxation of Annuity Payments

Normally, the portion of each annuity income payment equal to the excess of the payment over the excludable amount is the taxable amount. The excludable amount is the amount determined by multiplying (1) the payment by (2) the ratio of the investment in the contract, adjusted for any period certain or refund feature, to the total expected value of annuity payments for the term of the Contract (determined under Treasury Department regulations) which take into account the Annuitant’s life expectancy and the form of annuity benefit selected.

Once the total amount of the investment in the contract is excluded using this ratio, annuity income payments will be fully taxable. If annuity income payments cease because of the death of the Annuitant and before the total amount of the investment in the contract is recovered, the unrecovered amount generally will be allowed as a deduction.

There may be special income tax issues present in situations where the Owner and the Annuitant are not the same person and are not married to one another within the meaning of federal law. A tax advisor should be consulted in these situations.

Annuity income payments may be subject to a 10% additional tax. (See "Additional Tax on Premature Distributions.") Annuity income payments also may be subject to federal income tax withholding. (See "Federal Income Tax Withholding.")

Taxation of Death Benefit Proceeds

Prior to the Annuity Date, amounts may be distributed from a Contract because of the death of an Owner or, in certain circumstances, the death of the Annuitant. Such Death Benefit proceeds are includible in income as follows:

(1)if distributed in a lump sum, they are taxed in the same manner as a surrender, as described above, or

(2)if distributed under an Annuity Option, they are taxed in the same manner as annuity payments, as described above.

After the Annuity Date, if a guaranteed period exists under a life income Annuity Option and the Annuitant dies before the end of that period, payments made to the Beneficiary for the remainder of that period are includible in income as follows:

(1)if received in a lump sum, they are includible in income to the extent that they exceed the unrecovered investment in the contract at that time, or

(2)if distributed in accordance with the existing Annuity Option selected, they are fully excludable from income until the remaining investment in the contract is deemed to be recovered, and all annuity income payments thereafter are fully includible in income.

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Proceeds payable on death may be subject to federal income tax withholding. (See "Federal Income Tax Withholding".)

Assignments, Pledges, and Gratuitous Transfers

Other than in the case of Qualified Contracts (which generally cannot be assigned or pledged), any assignment or pledge of (or agreement to assign or pledge) any portion of the Contract Value is treated as a withdrawal of such amount or portion. If the entire Contract Value is assigned or pledged, subsequent increases in the Contract Value are also treated as withdrawals for as long as the assignment or pledge remains in place. The investment in the contract is increased by the amount included in income with respect to such assignment or pledge, though it is not affected by any other aspect of the assignment or pledge (including its release). If an Owner transfers a Contract without adequate consideration to a person other than the Owner’s spouse (or to a former spouse incident to divorce), the Owner will be taxed on the difference between the "cash surrender value" and the investment in the contract at the time of transfer. In such case, the transferee’s investment in the contract will be increased to reflect the increase in the transferor’s income. The exceptions for transfers to the Owner’s spouse (or to a former spouse) are limited to individuals that are treated as spouses under federal law.

Additional Tax on Premature Distributions

Where a Contract has not been issued in connection with a Qualified Plan, there generally is a 10% additional tax on the taxable amount of any payment from the Contract (e.g., withdrawals, surrenders, annuity income payments, death benefits, assignments, pledges, and gratuitous transfers) that is includible in income unless the payment is:

(a)received on or after the Owner reaches age 59¹/₂;

(b)attributable to the Owner becoming disabled (as defined in the tax law);

(c)made on or after the death of the Owner or, if an Owner is not an individual, on or after the death of the primary annuitant (as defined in the tax law);

(d)made as part of a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the Owner or the joint lives (or joint life expectancies) of the Owner and a designated beneficiary (as defined in the tax law); or

(e)made under a Contract purchased with a single premium when the Annuity Date is no later than a year from purchase of the Contract and substantially equal periodic payments are made, not less frequently than annually, during the annuity period.

Certain other exceptions to the 10% additional tax not described herein may also apply. (Similar rules, described below, generally apply in the case of Qualified Contracts.)

Aggregation of Contracts

In certain circumstances, the IRS may determine the amount of an annuity income payment, a withdrawal, or a surrender from a Contract that is includible in income by combining some or all of the annuity contracts owned by an individual that were not issued in connection with a Qualified Plan. For example, if a person purchases a Contract offered by this Prospectus and also purchases at approximately the same time an immediate annuity issued by Protective or its affiliates, the IRS may treat the two contracts as one contract. In addition, if a person purchases two or more deferred annuity contracts from the same insurance company (or its affiliates) during any calendar year, all such contracts will be treated as one contract for purposes of determining whether any payment not received as an annuity (including withdrawals and surrenders prior to the Annuity Date) is includible in income. The effects of such aggregation are not always clear; however, it could affect the amount of a withdrawal, a surrender, or an annuity income payment that is taxable and the amount which might be subject to the 10% additional tax described above.

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Exchanges of Annuity Contracts

We may issue the Contract in exchange for all or part of another annuity contract that you own. Such an exchange will be tax free if certain requirements are satisfied. If you exchange all of another annuity contract and the exchange is tax free, your investment in the contract immediately after the exchange will generally be the same as that of the annuity contract exchanged, increased by any additional Purchase Payment made as part of the exchange. If you exchange part of another annuity contract and the exchange is tax free, your investment in the contract immediately after the exchange will generally be increased by a pro-rata portion of the investment in the contract exchanged. In either case, your Contract Value immediately after the exchange may exceed your investment in the contract. That excess may be includible in income should amounts subsequently be withdrawn or distributed from the Contract (e.g., as withdrawal, surrender, annuity income payment, or death benefit).

If you exchange part of an existing contract for the Contract, and within 180 days of the exchange you receive a payment other than certain annuity payments (e.g., you make a withdrawal) from either contract, the exchange may not be treated as a tax free exchange. Rather, some or all of the amount exchanged into the Contract could be includible in your income and subject to a 10% additional tax.

You should consult your tax advisor in connection with an exchange of all or part of an annuity contract for the Contract, especially if you may make a withdrawal from either contract within 180 days after the exchange.

Medicare Hospital Insurance Tax on Certain Distributions

A Medicare hospital insurance tax of 3.8% will apply to some types of investment income. This tax will apply to all taxable distributions from non-Qualified Contracts. This tax only applies to taxpayers with "modified adjusted gross income" above $250,000 in the case of married couples filing jointly or a qualifying widow(er) with dependent child, $125,000 in the case of married couples filing separately, and $200,000 for all others. For more information regarding this tax and whether it may apply to you, please consult your tax advisor.

Loss of Interest Deduction Where Contracts Are Held by or for the Benefit of Certain Non-natural Persons

In the case of Contracts issued after June 8, 1997 to a non-natural taxpayer (such as a corporation or a trust), or held for the benefit of such an entity, that entity’s general interest deduction under the Code may be limited. More specifically, a portion of its otherwise deductible interest may not be deductible by the entity, regardless of whether the interest relates to debt used to purchase or carry the Contract. However, this interest deduction disallowance does not affect Contracts where the income on such Contracts is treated as ordinary income that the Owner received or accrued during the taxable year. Entities that are considering purchasing the Contract, or entities that will be Beneficiaries under a Contract, should consult a tax advisor.

QUALIFIED RETIREMENT PLANS

In General

The Contracts are also offered for use in connection with certain types of retirement plans which receive favorable treatment under the Code. Those who are considering the purchase of a Contract for use in connection with a Qualified Plan should consider, in evaluating the suitability of the Contract, that the Contract requires a Purchase Payment of at least $25,000 and that no Purchase Payments may be made after the first year. Many Qualified Plans provide the same type of tax deferral as provided by the Contract. The Contract, however, provides benefits and features not provided by such retirement plans and employee benefit plans alone. Numerous special tax rules apply to participants in Qualified Plans and to Contracts used in connection with Qualified Plans. Therefore, no attempt is made in this prospectus to provide more than general information about the use of the Contracts with the various types of Qualified Plans. State income tax rules applicable to Qualified Plans and Qualified Contracts often differ from federal income rules, and this prospectus does not describe any of these differences. Those who intend to use the Contract in connection with Qualified Plans should seek competent advice.

The tax rules applicable to Qualified Plans vary according to the type of plan and the terms and conditions of the plan itself. For example, both the amount of the contribution that may be made, and the tax deduction or exclusion that you

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and/or your employee may claim for such contribution, are limited under Qualified Plans and vary with the type of plan. Also, in the case of withdrawals, surrenders, and annuity income payments under Qualified Contracts, there may be no "investment in the contract" and the total amount received may be taxable.

Temporary Rules under the CARES Act

On March 27, 2020, Congress passed and the President signed into law the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The CARES Act included temporary relief during 2020 from certain of the tax rules applicable to IRAs and qualified plans. For example, the CARES Act modified the required minimum distribution rules for 2020 and provided more favorable tax treatment for certain qualified "coronavirus-related distributions" in 2020. Some of this temporary relief may continue to impact federal income taxes for years after 2020. You should consult with a tax and/or legal adviser to determine if any CARES Act relief you may have received affects your taxes for years after 2020.

Required Minimum Distributions

In general. In the case of Qualified Contracts, rules imposed by Section 401(a)(9) of the Code determine the time at which distributions must commence to you or your beneficiary and the manner in which the minimum amount of the distribution is computed (the "RMD" rules). Legislation passed in 2019 (the "SECURE Act") changed a number of the RMD rules applicable to distributions after the death of a Qualified Contact owner. These changes were generally effective for deaths occurring after 2019. This discussion describes only those new RMD rules and not those of prior law, which remain applicable in certain circumstances. Failure to comply with the RMD rules may result in the imposition of an excise tax. This excise tax generally equals 50% of the amount by which the minimum required distribution exceeds the actual distribution from the Qualified Plan.

When distributions must begin. Distributions of minimum amounts (as specified in the RMD rules) must commence from Qualified Plans by the "required beginning date." In the case of Individual Retirement Accounts or Annuities (IRAs), this generally means April 1 of the calendar year following the calendar year in which the Owner attains age 72 (or 70¹/₂ for Owners born before July 1, 1949). In the case of certain other Qualified Plans, distributions of such minimum amounts must generally commence by the later of this date or April 1 of the calendar year following the calendar year in which the employee retires.

Annual distribution amount. If you choose to take RMDs in the form of withdrawals, the annual amount to be distributed is determined by dividing your Contract’s account value by the applicable factor from IRS life expectancy tables. The death benefit under the Contract, the Annuitization Bonus, the Waiver of Withdrawal Charge and Market Value Adjustment for Unemployment, the Waiver of Withdrawal Charge and Market Value Adjustment for Terminal Condition or Nursing Facility Confinement, and certain other benefits of your Contract may increase the amount of the minimum required distribution that must be taken from your Contract. If your Contract is an IRA, Protective Life will calculate your RMDs during your lifetime if you ask us to do so.

Death before your required beginning date. In general, if you die before your required beginning date, and you have a designated beneficiary, any remaining interest in your Contract must be distributed within 10 years after your death, unless the designated beneficiary is an "eligible designated beneficiary" ("EDB"). A designated beneficiary is any individual designated as a beneficiary by the IRA owner or an employee-annuitant. An EDB is any designated beneficiary who is (1) your surviving spouse, (2) your minor child, (3) disabled, (4) chronically ill, or (5) an individual not more than 10 years younger than you. An EDB (other than a minor child) can generally stretch distributions over their life or life expectancy if payments begin within a year of your death. Special rules apply to EDBs who are minors and beneficiaries that are not individuals.

Death on or after your required beginning date. In general, if you die on or after your required beginning date, and you have a designated beneficiary who is not an EDB, any remaining interest in your Contract must continue to be distributed over the longer of your remaining life expectancy and your beneficiary’s life expectancy (or more rapidly), but all amounts must be distributed within 10 years of your death. If your beneficiary is an EDB (other than a minor child), distributions must continue over the longer of your remaining life expectancy and the EDB’s life expectancy (or more rapidly), but all

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amounts must be distributed within 10 years of the EDB’s death. Special rules apply to EDBs who are minors, EDBs who are older than the Owner, and beneficiaries that are not individuals.

Spousal continuation. If your beneficiary is your spouse, your surviving spouse can delay the application of the post-death distribution requirements until after their death by transferring the remaining interest tax-free to your surviving spouse’s own IRA, or by treating your IRA as your surviving spouse’s own IRA.

Annuity payments. If you choose to take some or all of your RMDs in the form of annuity payments rather than withdrawals, the payments may be made over your life, your life and the life of your designated beneficiary, for a certain period, or for life with or without a period certain. If you commence taking distributions in the form of an annuity that can continue after your death, such as in the form of a joint and survivor annuity or an annuity with a guaranteed period of more than 10 years, any distributions after your death that are scheduled to be made beyond the applicable distribution period imposed under the new law might need to be accelerated at the end of that period (or otherwise modified after your death if permitted under federal tax law and by Protective Life) in order to comply with the post-death distribution requirements.

The minimum distribution requirements are complex and unclear in numerous respects. The manner in which these requirements will apply will depend on your particular facts and circumstances. You may wish to consult a professional tax adviser for tax advice as to your particular situation.

Additional Tax on Premature Distributions

There is also a 10% additional tax on the taxable amount of payments from Qualified Contracts. There are exceptions to this additional tax which vary depending on the type of Qualified Plan. In the case of an IRA, exceptions provide that the additional tax does not apply to a payment:

(a)received on or after the Owner reaches age 59¹/₂;

(b)received on or after the Owner’s death or because of the Owner’s disability (as defined in the tax law); or

(c)made as part of a series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the Owner or for the joint lives (or joint life expectancies) of the Owner and the Owner’s designated Beneficiary (as defined in the tax law).

These exceptions generally apply to taxable distributions from other Qualified Plans (although, in the case of plans qualified under sections 401 and 403, exception "c" above for substantially equal periodic payments applies only if the Owner has separated from service). In addition, the additional tax does not apply to certain distributions from IRAs which are used for qualified first time home purchases, for higher qualified education expenses, or in the case of a qualified birth or adoption. Special conditions must be met for these three exceptions to the additional tax. Those wishing to take a distribution from an IRA for these purposes should consult their tax advisor. Certain other exceptions to the 10% additional tax not described herein also may apply.

Other Considerations

When issued in connection with a Qualified Plan, we will amend a Contract as generally necessary to conform to the requirements of the plan. However, Owners, Annuitants, and Beneficiaries are cautioned that the rights of any person to any benefits under Qualified Plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract. In addition, the Company shall not be bound by terms and conditions of Qualified Plans to the extent such terms and conditions contradict the Contract, unless the Company consents.

Following are brief descriptions of various types of Qualified Plans in connection with which the Company will generally issue a Contract.

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Individual Retirement Accounts and Annuities

Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an IRA. If you use this Contract in connection with an IRA, the Owner and Annuitant generally must be the same individual and generally may not be changed. IRAs are subject to limits on the amounts that may be contributed and deducted, on the persons who may be eligible, and on the time when distributions may commence. Also, subject to the direct rollover and mandatory withholding requirements (discussed below), distributions from certain Qualified Plans may be "rolled over" on a tax-deferred basis into an IRA.

Special rules apply to conversions from IRAs to Roth IRAs, and recharacterizations from one type of IRA to another type of IRA. A tax advisor should be consulted in these situations.

The Contract may not, however, be used in connection with a "Coverdell Education Savings Account" (formerly known as an "Education IRA") under Section 530 of the Code, a "Simplified Employee Pension" under Section 408(k) of the Code, or as a "SIMPLE IRA" under Section 408(p) of the Code.

Roth IRAs

Section 408A of the Code permits eligible individuals to contribute to a type of IRA known as a "Roth IRA." Roth IRAs are generally subject to the same rules as non-Roth IRAs, but differ in several respects. Among the differences is that, although contributions to a Roth IRA are not deductible, "qualified distributions" from a Roth IRA will be excludable from income.

A qualified distribution is a distribution that satisfies two requirements:

●	First, the distribution must be made in a taxable year that is at least five years after the first taxable year for which a contribution was made to any Roth IRA established for the Owner.

●	Second, the distribution must be either:

1)	made after the Owner reaches age 59¹/₂;

2)	made after the Owner’s death;

3)	attributable to the Owner being disabled; or

4)	a qualified first-time homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Code.

In addition, distributions from Roth IRAs need not commence during the Owner’s lifetime. A Roth IRA may accept a "qualified rollover contribution" from (1) a non-Roth IRA, (2) a "designated Roth account" maintained under a Qualified Plan, and (3) Certain Qualified Plans of eligible individuals. Special rules apply to rollovers to Roth IRAs from Qualified Plans and designated Roth accounts under Qualified Plans. You should seek competent advice before making such a rollover.

A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA.

IRA to IRA Rollovers and Transfers

A rollover contribution is a tax-free movement of amounts from one IRA to another within 60 days after you receive the distribution. In particular, a distribution from a non-Roth IRA generally may be rolled over tax-free within 60 days to another non-Roth IRA, and a distribution from a Roth IRA generally may be rolled over tax-free within 60 days to another Roth IRA. A distribution from a Roth IRA may not be rolled over (or transferred) tax-free to a non-Roth IRA.

A rollover from any one of your IRAs (including IRAs you have with another company) to another IRA is allowed only once within a one-year period. This limitation applies on an aggregate basis and applies to all types of your IRAs, meaning that you cannot make an IRA to IRA rollover if you have made such a rollover involving any of your IRAs in the preceding one-year period. For example, a rollover between your Roth IRAs would preclude a separate rollover within the one-year

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period between your non-Roth IRAs, and vice versa. The one-year period begins on the date that you receive the IRA distribution, not the date it is rolled over into another IRA.

If the IRA distribution does not satisfy the rollover rules, it may be (1) taxable in the year distributed, (2) subject to a 10% tax on early distributions, and (3) treated as a regular contribution to the recipient IRA, which could result in an excess contribution, subject to an additional excise tax.

If you inherit an IRA from your spouse, you generally can roll it over into an IRA established for you, or you can choose to make the inherited IRA your own. If you inherit an IRA from someone other than your spouse, you cannot roll it over, make it your own, or allow it to receive rollover contributions.

A rollover from one IRA to another is different from a direct trustee-to-trustee transfer of your IRA assets from one IRA trustee to another IRA trustee. A "trustee-to-trustee" transfer is not considered a rollover and is not subject to the 60-day rollover requirement or the one rollover per year rule. In addition, a rollover between IRAs is different from a direct rollover from certain Qualified Plans to a non-Roth IRA and a "qualified rollover contribution" to a Roth IRA.

Pension and Profit-Sharing Plans

Section 401(a) of the Code permits employers to establish various types of tax-favored retirement plans for employees. The Self-Employed Individuals’ Tax Retirement Act of 1962, as amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed individuals also to establish such tax-favored retirement plans for themselves and their employees. Such retirement plans may permit the purchase of the Contract in order to provide benefits under the plans. These types of plans may be subject to rules under Sections 401(a)(11) and 417 of the Code that provide rights to a spouse or former spouse of a participant. In such a case, the participant may need the consent of the spouse or former spouse to change annuity options or to make a withdrawal or surrender of the Contract.

Pension and profit sharing plans are also subject to nondiscrimination rules. The nondiscrimination rules generally require that benefits, rights or features of the plan not discriminate in favor of highly compensated employees. In evaluating whether the Contract is suitable for purchase in connection with such a plan, you should consider the extent in to which certain aspects of the Contract, e.g., the $25,000 minimum initial Purchase Payment requirement may affect the plan’s compliance with applicable nondiscrimination requirements. Violation of these rules can cause loss of the plan’s tax favored status under the Code. Employers intending to use the Contract in connection with such plans should seek competent advice.

Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations

Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. Generally, a Contract purchased by a state or local government or a tax-exempt organization under a Section 457 plan will not be treated as an annuity contract for federal income tax purposes. The Contract will be issued in connection with a Section 457 deferred compensation plan sponsored by a state or local government only if the plan has established a trust to hold plan assets, including the Contract.

Direct Rollovers

If your Contract is used in connection with a pension or profit-sharing plan qualified under Section 401(a) of the Code, or is used with an eligible deferred compensation plan that has a government sponsor and that is qualified under Section 457(b) of the Code, any "eligible rollover distribution" from the Contract will be subject to direct rollover and mandatory withholding requirements. An eligible rollover distribution generally is any taxable distribution from a qualified pension plan under Section 401(a) of the Code, or an eligible Section 457(b) deferred compensation plan that has a government sponsor, excluding certain amounts (such as minimum distributions required under Section 401(a)(9) of the Code, distributions which are part of a "series of substantially equal periodic payments" made for life or a specified period of 10 years or more, or hardship distributions as defined in the tax law).

Under these requirements, federal income tax equal to 20% of the eligible rollover distribution will be withheld from the amount of the distribution. Unlike withholding on certain other amounts distributed from the Contract, discussed below,

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you cannot elect out of withholding with respect to an eligible rollover distribution. However, this 20% withholding will not apply if, instead of receiving the eligible rollover distribution, you elect to have it directly transferred to certain eligible retirement plans (such as an IRA). Prior to receiving an eligible rollover distribution, you will receive a notice (from the plan administrator or the Company) explaining generally the direct rollover and mandatory withholding requirements and how to avoid the 20% withholding by electing a direct transfer.

FEDERAL INCOME TAX WITHHOLDING

In General

Protective will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract, including amounts that escheat to the state, unless the distributee notifies Protective at or before the time of the distribution that he or she elects not to have any amounts withheld. In certain circumstances, Protective may be required to withhold tax. The withholding rates applicable to the taxable portion of periodic annuity payments (other than the eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. A 10% withholding rate is applicable to the taxable portion of non-periodic payments (including a surrender or withdrawal prior to the Annuity Date) and conversions of, or rollovers from, non-Roth IRAs and Qualified Plans to Roth IRAs. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. As described above, the withholding rate applicable to eligible rollover distributions is 20%.

Nonresident Aliens and Foreign Corporations

The discussion above provides general information regarding federal withholding tax consequences to annuity contract purchasers or beneficiaries that are U.S. citizens or residents. Purchasers or beneficiaries that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. Prospective purchasers that are not U.S. citizens or residents are advised to consult with a tax advisor regarding federal tax withholding with respect to the distributions from a Contract.

FATCA Withholding

In order for the Company to comply with income tax withholding and information reporting rules which may apply to annuity contracts, the Company may request documentation of "status" for tax purposes. "Status" for tax purposes generally means whether a person is a "U.S. person" or a foreign person with respect to the United States; whether a person is an individual or an entity; and if an entity, the type of entity. Status for tax purposes is best documented on the appropriate IRS Form or substitute certification form (IRS Form W-9 for a U.S. person or the appropriate type of IRS Form W-8 for a foreign person). If the Company does not have appropriate certification or documentation of a person’s status for tax purposes on file, it could affect the rate at which the Company is required to withhold income tax. Information reporting rules could apply not only to specified transactions, but also to contract ownership. For example, under the Foreign Account Tax Compliance Act ("FATCA"), which applies to certain U.S.-source payments, and similar or related withholding and information reporting rules, the Company may be required to report contract values and other information for certain contractholders. For this reason the Company may require appropriate status documentation at purchase, change of ownership, and affected payment transactions, including death benefit payments. FATCA and its related guidance is extraordinarily complex and its effect varies considerably by type of payor,type of payee and type of distributee or recipient.

THE "NON-UNITIZED" SEPARATE ACCOUNT

We hold assets in a "non-unitized" separate account we have established under the Tennessee Insurance Law to support our obligations under the Strategies. We own the assets of the separate account, as well as any favorable investment performance on those assets. As owner of the Contract, you do not participate in the performance of assets held in the separate account and do not have any direct claim on them. The separate account is not registered under the Investment Company Act of 1940. We are obligated to pay all money we owe under the Contract. If the obligation exceeds the assets of the non-unitized separate account, funds will be transferred to the non-unitized separate account from the general

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account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account.

The assets in this separate account are subject to our general liabilities from business operations and are chargeable with those liabilities. The assets in the separate account are subject to claims by our creditors. It is important to note that there is no guarantee that we will always be able to meet our claims-paying obligations, and that there are risks to purchasing any insurance product. For this reason, you should consider our financial strength and claims-paying ability to meet our obligations under the Contract when purchasing a Contract and making investment decisions under the Contract. We encourage both existing and prospective Contract owners to read and understand our financial statements. We prepare our financial statements on both a statutory basis, as required by state regulators, and according to accounting principles generally accepted in the United States of America (GAAP).

Our current plans are to invest separate account assets in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues. We may also invest in interest rate swaps, options and futures. Although the above generally describes our plans for investing the assets supporting our obligations under the Strategies, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws.

LEGAL PROCEEDINGS

Advance Trust & Life Escrow Services, LTA, as Securities Intermediary of Life Partners Position Holder Trust v. Protective Life Insurance Company, Case No. 2:18-CV-01290, is a putative class action that was filed on August 13, 2018 in the United States District Court for the Northern District of Alabama. Plaintiff alleges that the Company required policyholders to pay unlawful and excessive cost of insurance charges. Plaintiff seeks to represent all owners of universal life and variable universal life policies issued or administered by the Company or its predecessors that provide that cost of insurance rates are to be determined based on expectations of future mortality experience. The plaintiff seeks class certification, compensatory damages, pre-judgment and post-judgment interest, costs, and other unspecified relief. The Company is vigorously defending this matter and cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation.

The Company is currently defending two putative class actions (Beverly Allen v. Protective Life Insurance Company, Civil Action No. 1:20-cv-00530-JLT (E.D. Cal. filed Apr. 14, 2020), and Janice Schmidt v. Protective Life Insurance Company, et al., Civil Action No. 1:21-cv-01784-SAB (E.D. Cal. filed Dec. 17, 2021) in which the plaintiffs claim that defendants’ alleged failure to comply with certain California statutes which address contractual grace periods and lapse notice requirements for certain life insurance policies requires that these policies remain in force. The plaintiffs seek unspecified monetary damages and injunctive relief. No class has been certified in either putative class action. In August 2021, the California Supreme Court determined in McHugh v. Protective Life Insurance Company, Case No. D072863, that the statutory requirements apply to life insurance policies issued before the statutes’ effective date and remanded the case back to the Court of Appeal to review the jury’s original verdict in favor of Protective. In continuing to defend these matters, the Company maintains various defenses to the merits of the plaintiffs’ claims and to class certification. However, the Company cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation.

To the knowledge and in the opinion of management, there are no other material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of our properties is the subject.

CYBER-SECURITY RISKS

Our annuity business is highly dependent upon the effective operation of our computer systems and those of our business partners, so that our business is potentially susceptible to operational and information security risks resulting from a cyber-attack. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, denial of service on our website and other operational disruption and unauthorized release of confidential Owner information. Cyber-attacks affecting us, intermediaries and other affiliated or third-party service providers may adversely affect us and your Contract Value. For instance, cyber-attacks may interfere with our processing of Contract transactions, impact our ability to calculate Contract Value, cause the release and possible destruction of

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confidential Owner or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. The risk of cyberattacks may be higher during periods of geopolitical turmoil (such as the Russian invasion of Ukraine and the responses by the United States and other governments). There can be no assurance that we or our service providers will avoid losses affecting your Contract due to cyber-attacks or information security breaches in the future.

EXPERTS

The consolidated financial statements and financial statement schedules of Protective Life Insurance Company and subsidiaries as of December 31, 2021 and 2020, and for each of the years in the three-year period ended December 31, 2021, have been included herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2021 financial statements refers to a change in accounting principle due to the adoption of Accounting Standards Codification (ASC) Topic 326, Financial Instruments — Credit Losses as of January 1, 2020.

LEGAL MATTERS

Eversheds Sutherand (US) LLP of Washington, D.C. has provided advice on certain matters relating to the applicability of federal securities laws to the Contracts.

REGISTRATION STATEMENT

A Registration Statement has been filed with the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended, with respect to the Contracts. This Prospectus does not contain all information set forth in the Registration Statement, its amendments and exhibits, to all of which reference is made for further information concerning Protective Life and the Contracts.

The SEC maintains a web site that contains the complete Registration Statement, including the instruments filed as exhibits to the Registration Statement, and other information that we file electronically pursuant to EDGAR under CIK No. 0000310826. The address of the site is http://www.sec.gov.

You can also review and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, NE., Washington D.C., 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

GENERAL MATTERS

Reliability of Communications System

The internet and telephone systems may not always be available. Any computer or telephone system, whether it is yours, your service providers’, your registered representative’s, or ours, can experience unscheduled outages or slowdowns for a variety of reasons. Such outages or delays may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you experience problems, you can make your transaction request by writing to us.

Suspension of Contracts

If mandated under applicable law, we may be required to reject a Purchase Payment. We also may be required to provide additional information about your account to government regulators or law enforcement authorities. In addition, we may be required to block an Owner’s account and thereby refuse to process any request for transfers, withdrawals, surrenders, or death benefits until instructions are received from the appropriate regulator or law enforcement authorities.

Error in Age or Gender

When a benefit of the Contract is contingent upon any person’s age or gender, we may require proof of such. We may suspend payments until we receive proof. When we receive satisfactory proof, we will make the payments which were due

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during the period of suspension. Where the use of unisex mortality rates is required, we will not determine or adjust benefits based upon gender.

If after we receive proof of age and gender (where applicable), we determine that the information you furnished was not correct, we will adjust any benefit under this Contract to that which would be payable based upon the correct information. If we have underpaid a benefit because of the error, we will make up the underpayment in a lump sum. If the error resulted in an overpayment, we will deduct the amount of the overpayment from any current or future payment due under the Contract. We will deduct up to the full amount of any current or future payment until the overpayment has been fully repaid. Underpayments and overpayments will bear interest at an annual effective interest rate of 3% when permitted by the state of issue.

Incontestability

We will not contest the Contract after it is issued.

Non-Participation

The Contract is not eligible for dividends and will not participate in Protective Life’s surplus or profits.

Assignment or Transfer of a Contract

Generally, you do not have the right to assign or transfer a Qualified Contract. You have the right to assign or transfer a non-qualified Contract if it is permitted by law. We must be properly notified in writing of an assignment. You must submit your written request to assign the Contract to our Administrative Office and your request for assignment is subject to our written approval. To the extent permitted by state law, we reserve the right to refuse to consent to any assignment at any time on a nondiscriminatory basis. We will not consent if the assignment would violate or result in noncompliance with any applicable state or federal law or regulation.

Any annuity payments or surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. Any claim made under an assignment or transfer is subject to proof of the nature and extent of the assignee’s or transferee’s interest before we make a payment. We do not assume responsibility for any assignment or transfer. Assignments and transfers have federal income tax consequences. An assignment or transfer may result in the Owner recognizing taxable income. (See "Taxation of Annuities in General, Assignments, Pledges and Gratuitous Transfers" in the prospectus.)

Notice

All instructions and requests to change or assign the Contract must be in writing in a form acceptable to us, signed by the Owner(s), and received at our Administrative Office. The instruction, change or assignment will relate back to and take effect on the date it was signed, except we will not be responsible for following any instruction or making any change or assignment before we receive it.

Modification

No one is authorized to modify or waive any term or provision of this Contract unless we agree to the modification or waiver in writing and it is signed by our President, Vice-President or Secretary. We reserve the right to change or modify the provisions of this Contract to conform to any applicable laws, rules or regulations issued by a government agency, or to assure continued qualification of the Contract as an annuity contract under the Code. We will send you a copy of the endorsement that modifies the Contract, and where required we will obtain all necessary approvals, including that of the Owner(s).

Reports

At least annually prior to the Annuity Date, we will send to you at the address contained in our records a report showing the current Contract Value and any other information required by law.

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Settlement

Benefits due under this Contract are payable from our Administrative Office. You may apply the settlement proceeds to any payout option we offer for such payments at the time you make the election. Unless directed otherwise in writing, we will make payments according to the Owner’s instructions as contained in our records at the time we make the payment. We shall be discharged from all liability for payment to the extent of any payments we make.

Receipt of Payment

If any Owner, Annuitant, Beneficiary or Payee is incapable of giving a valid receipt for any payment, we may make such payment to whomever has legally assumed his or her care and principal support. Any such payment shall fully discharge us to the extent of that payment.

Protection of Proceeds

To the extent permitted by law and except as provided by an assignment, no benefits payable under this Contract will be subject to the claims of creditors.

Minimum Values

The values available under the Contract are at least equal to the minimum values required in the state where the Contract is delivered.

Application of Law

The provisions of the Contract are to be interpreted in accordance with the laws of the state where the Contract is delivered, with the Code and with applicable regulations.

DISTRIBUTION OF THE CONTRACTS

Distribution

We have entered into an agreement (the "Agreement") with Investment Distributors, Inc. ("IDI") under which IDI has agreed to distribute the Contracts on a "best efforts" basis. Under the agreement, IDI serves as principal underwriter (as defined under Federal securities laws and regulations) for the Contracts. Also under the Agreement, Protective Life agreed to indemnify IDI and its officers, directors, employees and agents, for certain losses and claims that result from an untrue statement of material fact or an omission of a material fact in the registration statement for the Contracts filed under the Securities Act of 1933 or in this prospectus or any document filed under the securities laws of a State in order to qualify the Contracts for sale in the State and for losses and claims that result from a material breach of the Agreement. IDI is a Tennessee corporation and was established in 1993. IDI, a wholly-owned subsidiary of PLC, is an affiliate of and shares the same address as Protective Life. IDI is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the Financial Industry Regulatory Authority ("FINRA").

IDI, together with Protective Life, enters into distribution agreements with other broker-dealers, including Concourse Financial Group Securities, Inc. (formerly ProEquities, Inc.), an affiliate of Protective Life and IDI, (collectively, "Selling Broker-Dealers") for the sale of the Contracts. Registered representatives of the Selling Broker-Dealers sell the Contracts directly to individuals and groups who have established accounts with them. Registered representatives of the Selling Broker-Dealers must be licensed as insurance agents by applicable state insurance authorities and appointed as agents of Protective Life in order to sell the Contracts. IDI may also offer the Contracts directly to members of certain other eligible groups or other eligible individuals.

We pay commissions and may pay additional asset-based compensation to Selling Broker-Dealers through IDI. IDI does not retain any commission payment or other amounts as principal underwriter for the Contracts. We may pay some or all of IDI’s operating and other expenses, however.

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We offer the Contract on a continuous basis. While we anticipate continuing to offer the Contracts, we reserve the right to discontinue the offering at any time.

Selling Broker-Dealers

We pay commissions and may provide some form of non-cash compensation to all Selling Broker-Dealers in connection with the promotion and sale of the Contracts. A portion of any payments made to Selling Broker-Dealers may be passed on to their registered representatives in accordance with their internal compensation programs. We may use any of our corporate assets to pay commissions and other costs of distributing the Contracts, including any profit from the fees and charges imposed under the Contracts. Commissions and other incentives or payments described below are not charged directly to Contract owners. We intend to recoup commissions and other sales expenses through fees and charges deducted under the Contracts or from our general account.

Compensation Paid to All Selling Broker-Dealers. We pay commissions as a percentage of each Purchase Payment. While the amount and timing of commissions may vary depending on the distribution agreement, we do not expect them to exceed 8% of any Purchase Payment. In the normal course of business, we may also provide non-cash compensation in connection with the promotion of the Contracts, including conferences and seminars (including travel, lodging, and meals in connection therewith), and items of relatively small value, such as promotional gifts, meals, or tickets to sporting or entertainment events.

The registered representative who sells you the Contract typically receives a portion of the compensation we pay to his or her Selling Broker-Dealer, depending on the agreement between the Selling Broker-Dealer and your registered representative and the Selling Broker-Dealer’s internal compensation program. These programs may include other types of cash and non-cash compensation and other benefits. If you would like information about what your registered representative and the Selling Broker-Dealer for whom he or she works may receive in connection with your purchase of a Contract, please ask your registered representative.

Additional Compensation Paid to Selected Selling Broker-Dealers. In addition to ordinary commissions and non-cash compensation, we may pay additional asset-based compensation to selected Selling Broker-Dealers. These payments are made through IDI. These payments may be (1) additional amounts as a percentage of Annuity Deposits we receive under the Contracts and other contracts we sell, such as our variable insurance products, (2) additional "trail" commissions, which are periodic payments as a percentage of the Contract Values of the Contracts and of the Contract and policy values or variable contract values of our variable insurance products; and/or (3) marketing allowances as a percentage of fixed annuity assets under management relating to the Contracts. Some or all of these additional asset-based compensation payments may be conditioned upon the Selling Broker-Dealer producing a specified amount of new Annuity Deposits (including Purchase Payments and/or premiums for our variable insurance products) and/or maintaining a specified amount of Contract Value (including contract and policy value for our variable insurance products) with us.

The Selling Broker-Dealers to whom we pay additional asset-based compensation may provide preferential treatment with respect to our products (including the Contracts) in their marketing programs. Preferential treatment of our products by a Selling Broker-Dealer may include any or all of the following: (1) enhanced marketing of our products over non-preferred products; (2) increased access to the Selling Broker-Dealer’s registered representatives; and (3) payment of higher compensation to registered representatives for selling our products (including the Contracts) than for selling non-preferred products.

These additional asset-based compensation arrangements are not offered to all Selling Broker-Dealers. These arrangements are designed to specially encourage the sale of our products (and/or our affiliates’ products) by such Selling Broker-Dealers. The prospect of receiving, or the receipt of, additional asset-based compensation may provide Selling Broker-Dealers and/or their registered representatives with an incentive to favor sales of our Contracts over other market value adjusted annuities or other investments (as well as favoring our variable insurance products over other variable insurance products) with respect to which a Selling Broker-Dealer does not receive additional compensation, or receives lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the Contracts. If you would like information about what your registered representative and the Selling Broker-Dealer for whom he or she works may receive in connection with your purchase of a Contract, please ask your registered representative.

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We may also pay to selected Selling Broker-Dealers, including those listed above as well as others, additional compensation in the form of (1) payments for participation in meetings and conferences that include presentations about our products (including the Contracts), and (2) payments to help defray the costs of sales conferences and educational seminars for the Selling Broker-Dealers’ registered representatives.

Arrangements with Affiliated Selling Broker-Dealer. In addition to the ordinary commissions and non-cash compensation that we pay to all Selling Broker-Dealers, including Concourse Financial Group Securities, Inc., we or our parent company, PLC, pay some of the operating and other expenses of Concourse Financial Group Securities Inc., and may contribute capital to Concourse Financial Group Securities, Inc. Additionally, employees of Concourse Financial Group Securities, Inc., may be eligible to participate in various employee benefit plans offered by PLC.

Inquiries

You may make inquiries regarding a Contract by writing to Protective Life at its Administrative Office.

CEFLI

Protective Life Insurance Company is a member of The Compliance & Ethics Forum for Life Insurers ("CEFLI"), and as such may include the CEFLI logo and information about CEFLI membership in its advertisements. Companies that belong to CEFLI subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities.

THE COMPANY

Protective Life Insurance Company ("Protective Life" or the "Company") is a stock life insurance company founded in 1907. Protective Life is a wholly owned subsidiary of Protective Life Corporation ("PLC"), an insurance holding company and a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Limited ("Dai-ichi Life").

The Company provides financial services primarily in the United States through the production, distribution, and administration of insurance and investment products. Protective Life is currently licensed to transact life insurance business in 49 states and the District of Columbia.

The Company’s home office is located at 2801 Highway 280 South, Birmingham, Alabama. The Company also leases administrative and marketing office space in various cities to support its operations. As of December 31, 2021, PLC and the Company had approximately 3,585 employees across our offices, of which 3,510 were full-time and 70 were part-time employees. The Company believes its people are a critical component for the Company’s long-term success. The Company has strong values and a culture that supports its ability to attract, engage, and retain key talent. In 2020, the Company introduced new Leadership Principles in support of its efforts to further build and integrate leadership as a core capability at the Company. In 2021, the Company piloted new development programs for emerging leaders focused on developing a robust pipeline of diverse talent.

Protective Life relies on the exemption from the reporting requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), provided by Rule 12h-7 under the 1934 Act.

Our Business

The Company divides its business into several operating segments distinguished by products, channels of distribution, and other strategic distinctions. The Company’s primary operating segments are Retail Life and Annuity, Acquisitions, Stable Value Products, and Asset Protection.

Retail Life and Annuity

The Retail Life and Annuity segment markets fixed universal life, indexed universal life, variable universal life, level premium term insurance, bank-owned life insurance, corporate-owned life insurance, fixed annuity, and variable annuity products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent distribution organizations, and affinity groups.

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Acquisitions

The Acquisitions segment focuses on acquiring, converting, and servicing policies and contracts from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. The Company expects acquisition opportunities to continue to be available. However, the Company believes it may face increased competition and evolving capital requirements that may affect the environment and the form of future acquisitions.

Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed, however, some recent acquisitions have included ongoing new business activities. Ongoing new product sales written by the Company from these acquisitions are included in the Retail Life and Annuity segment. As a result, earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage, unless new acquisitions are made. The segment’s revenues and earnings may fluctuate from year to year depending upon the level of acquisition activity. In transactions where some marketing activity was included, the Company may cease future marketing efforts, redirect those efforts to another segment of the Company, or elect to continue marketing new policies as a component of other segments.

The Company believes that its focused and disciplined approach to the acquisition process and its experience in the assimilation, conservation, and servicing of acquired policies provides a significant competitive advantage.

Stable Value Products

The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. The segment also issues funding agreements to institutional investors and the Federal Home Loan Bank ("FHLB") and markets guaranteed investment contracts to 401(k) and other qualified retirement savings plans. Guaranteed investment contracts are contracts which specify a return on funds for a specified period and often provide flexibility for withdrawals at book value in keeping with the benefits provided by the plan. The demand for guaranteed investment contracts is related to the relative attractiveness of the "fixed rate" investment option in a 401(k) plan compared to the equity-based investment options which may be available to plan participants. The Company also has an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors.

The segment’s products complement the Company’s overall asset/liability management in that the terms may be tailored to the needs of the Company as the seller of the contracts. The Company’s emphasis is on a consistent and disciplined approach to product pricing and asset/liability management, careful underwriting of early withdrawal risks, and maintaining low distribution and administration costs. Most guaranteed investment contracts and funding agreements the Company has written have maturities of one to twelve years.

Asset Protection

The Asset Protection segment markets extended service contracts, and other specialized ancillary products to protect consumers’ investments in automobiles, watercraft, and recreational vehicles. In addition, the segment markets a guaranteed asset protection product. Guaranteed asset protection products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset. The Company previously marketed a credit life and disability product but exited that market at the beginning of 2021. The segment’s products are primarily marketed through a national network of approximately 4,820 automobile, marine, powersports, and recreational vehicle dealers. A network of direct employee sales representatives and general agents distribute these products to the dealer market.

In 2021, all of the segment’s sales were through the automobile and recreational vehicle dealer distribution channel and approximately 85.7% of the segment’s sales were extended service contracts. A portion of the sales and resulting premiums are reinsured with producer-affiliated reinsurers.

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Corporate/Other

The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead, and expenses not attributable to the segments above. This segment includes earnings from several non-strategic or runoff lines of business, various financing and investment related transactions, and the operations of several small subsidiaries. The results of this segment may fluctuate from year to year.

Underwriting

The underwriting policies of the Company and its insurance subsidiaries are established by management. With respect to individual insurance, the Company uses information from the application, and in some cases, third party medical information providers, inspection reports, credit reports, motor vehicle records, previous underwriting records, attending physician statements and/or the results of a medical exam, to determine whether a policy should be issued as applied for, other than applied for, or rejected. Substandard risks may be referred to reinsurers for evaluation. The Company does utilize a "simplified issue" approach for certain policies. In the case of "simplified issue" policies, coverage is rejected if the responses to certain health questions contained in the application, or the applicant’s inability to make an unqualified health certification, indicate adverse health of the applicant.

The Company and its insurance subsidiaries generally require blood samples to be drawn with individual insurance applications above certain face amounts based on the applicant’s age. Blood samples are tested for a wide range of chemical values and are screened for antibodies to certain viruses. Applications also contain questions permitted by law regarding certain viruses which must be answered by the proposed insureds.

The Company utilizes an advanced underwriting system, TeleLife^®, for certain product lines in its life business. TeleLife^® streamlines the application process through a telephonic interview of the applicant, schedules medical exams, and accelerates the underwriting process and the ultimate issuance of a policy mostly through electronic means. The Company also introduced a streamlined underwriting approach that utilizes the TeleLife^® process and noninvasive risk selection tools to approve some applications without requiring a paramedical exam or lab testing.

The Company’s maximum retention limit on directly issued business is $5,000,000 for any one life on certain of its traditional life and universal life products.

Reinsurance Ceded

The Company and its insurance subsidiaries cede life insurance to other insurance companies. The ceding insurance company remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by it.

For approximately 10 years prior to mid-2005, the Company entered into reinsurance contracts in which the Company ceded approximately 90% of its newly written traditional life insurance business on a first dollar quota share basis under coinsurance contracts. In mid-2005, the Company substantially discontinued coinsuring its newly written traditional life insurance and moved to yearly renewable term reinsurance. The amount of insurance retained by the Company on any one life on traditional life insurance was $500,000 in years prior to mid-2005. In 2005, this retention amount was increased to $1,000,000 for certain policies, and during 2008, was increased to $2,000,000 for certain policies. During 2016, the retention amount was increased to $5,000,000.

For approximately 15 years prior to 2012, the Company reinsured 90% of the mortality risk on the majority of its newly written universal life insurance on a yearly renewable term basis. During 2012, the Company moved to reinsure only amounts in excess of its $2,000,000 retention, which was increased to $5,000,000 during 2016, for the majority of its newly written universal life and level premium term insurance.

Risk Management

Risk management is a critical part of the Company’s business, and the Company has adopted risk management processes in multiple aspects of its operations, including product development and management, business acquisitions, underwriting, investment management, asset-liability management, hedging, and technology. The Company’s Enterprise Risk Management office, under the direction of the Chief Risk Officer, along with other departments, management groups

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and committees, have responsibilities for managing different risks throughout the Company. Risk management includes the assessment of risk, a decision process which includes determining which risks are acceptable and the monitoring and management of identified risks on an ongoing basis. The primary objectives of these risk management processes are to determine the acceptable level of variations the Company experiences from its expected results and to implement strategies designed to limit such variations to these levels.

Investments

As of December 31, 2021, the Company’s investment portfolio was $90.8 billion. The types of assets in which the Company may invest are influenced by various state insurance laws which prescribe qualified investment assets. Within the parameters of these laws, the Company invests in assets giving consideration to such factors as liquidity and capital needs, investment quality, investment return, matching of assets and liabilities, and the overall composition of the investment portfolio by asset type and credit exposure.

The Company invests a portion of its investment portfolio in commercial mortgage loans. As of December 31, 2021, the Company’s commercial mortgage loan holdings were $11 billion, $10.9 billion net of allowance for credit losses. As of December 31, 2020, our commercial mortgage loan holdings were $10.2 billion, $10 billion net of allowance for credit losses. The Company has specialized in making loans on credit-oriented commercial properties. The Company’s underwriting procedures relative to its commercial mortgage loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate types associated with the necessities of life (grocery anchored and credit tenant retail, industrial, multi-family, senior living, and credit tenant and medical office). The Company believes that these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. The majority of the Company’s commercial mortgage loan portfolio was underwritten by the Company. From time to time, the Company may acquire loans in conjunction with an acquisition.

See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for more information about our investment portfolio.

Ratings

Various Nationally Recognized Statistical Rating Organizations ("rating organizations") review the financial performance and condition of insurers, including the Company and its insurance subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder and contract holder obligations. These ratings are important to maintaining public confidence in an insurer’s products, its ability to market its products and its competitive position.

The Company’s ratings are subject to review and change by the rating organizations at any time and without notice. A downgrade or other negative action by a rating organization with respect to the financial strength ratings of the Company and its insurance subsidiaries could adversely affect sales, relationships with distributors, the level of policy surrenders and withdrawals, the Company’s acquisitions strategy or competitive position in the marketplace, and the cost or availability of reinsurance. The rating agencies may take various actions, positive or negative, with respect to the financial strength ratings of the Company and its insurance subsidiaries, including as a result of the Company’s status as an indirect subsidiary of Dai-ichi Life.

Rating organizations also publish credit ratings for the issuers of debt securities, including PLC. Credit ratings are indicators of a debt issuer’s ability to meet the terms of debt obligations in a timely manner. PLC is an important source of funding for the Company, so its credit ratings may affect the Company’s liquidity. These ratings are important in the debt issuer’s overall ability to access credit markets and other types of liquidity. Ratings are not recommendations to buy the PLC’s securities or products. A downgrade or other negative action by a rating organization with respect to PLC’s credit rating could limit PLC’s access to capital markets or increase the cost of issuing debt, and a downgrade of sufficient magnitude, combined with other negative factors, could require PLC to post collateral. The rating organizations may take various actions, positive or negative, with respect to PLC’s debt ratings, including as a result of PLC’s status as an indirect subsidiary of Dai-ichi Life.

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See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for more information about our ratings.

Competition

Life and health insurance is a mature and highly competitive industry. In recent years, the industry’s life insurance sales have been relatively flat, though the aging population has increased the demand for retirement savings products. The Company encounters significant competition in all lines of business, including in the Acquisitions segment.

The Company encounters competition for sales of life insurance and retirement products from other insurance companies, many of which have greater financial resources than the Company and which may have a greater market share, offer a broader range of products, services or features, assume a greater level of risk, have lower operating or financing costs, or have lower profitability expectations. The Company also faces competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products.

The Company’s ability to compete is dependent upon, among other things, its ability to attract and retain distributors 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 adequate ratings from rating organizations.

As technology evolves, a comparison of a particular product of any company for a particular customer with competing products for that customer is more readily available, which could lead to increased competition as well as agent or customer behavior, including persistency, which differs from past behavior.

The Company encounters competition in its Acquisitions segment from other insurance companies as well as from other types of acquirers, including private equity investors. Many of these competitors may have greater financial resources than the Company and may be willing to assume a greater level of risk, have lower operating or financing costs, or have lower profitability expectations.

Regulation

The Company is subject to a wide variety of federal and state laws and regulations. This section provides an overview of the regulatory framework that governs our business.

State Regulation

The Company is subject to government regulation in each of the states in which it conducts business. In many instances, the regulatory models emanate from the National Association of Insurance Commissioners ("NAIC"). Such regulation is vested in state agencies having broad administrative and in some instances discretionary power dealing with many aspects of the Company’s business, which may include, among other things, premium and cost of insurance rates and increases thereto, interest crediting policy, underwriting practices, reserve requirements, marketing practices, advertising, privacy, data security, cybersecurity, policy forms, reinsurance reserve requirements, insurer use of captive reinsurance companies, acquisitions, mergers, capital adequacy, claims practices and the remittance of unclaimed property. In addition, some state insurance departments may enact rules or regulations with extra-territorial application, effectively extending their jurisdiction to areas such as permitted insurance company investments that are normally the province of an insurance company’s domiciliary state regulator.

The Company and its insurance subsidiaries are required to file periodic reports with the regulatory agencies in each of the jurisdictions in which they do business, and their business and accounts are subject to examination by such agencies at any time. Under the rules of the NAIC, insurance companies are examined periodically (generally every three to five years) by one or more of the regulatory agencies on behalf of the states in which they do business. At any given time, a number of financial and/or market conduct examinations of the Company and its subsidiaries may be ongoing. From time to time, regulators raise issues during examinations or audits for the Company and its subsidiaries that could, if determined adversely, have a material adverse impact on the Company. To date, no such insurance department examinations have produced any significant adverse findings regarding any of the Company and any of its insurance company subsidiaries.

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Under the insurance guaranty fund laws in most states, insurance companies doing business in the state can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In addition, legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long-term care insurance and other specialty products, that increases the cost of future assessments or alters future premium tax offsets received in connection with guaranty fund assessments. The Company cannot predict the amount, nature or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations.

In addition, many states, including the states in which the Company and its insurance subsidiaries are domiciled, have enacted legislation or adopted regulations regarding insurance holding company systems. These laws require registration of and periodic reporting by insurance companies domiciled within the jurisdiction which control or are controlled by other corporations or persons so as to constitute an insurance holding company system. These laws also affect the acquisition of control of insurance companies as well as transactions between insurance companies and companies controlling them. Most states, including Tennessee, where the Company is domiciled, require administrative approval of the acquisition of control of an insurance company domiciled in the state or the acquisition of control of an insurance holding company whose insurance subsidiary is incorporated in the state. In Tennessee, the acquisition of 10% of the voting securities of an entity is deemed to be the acquisition of control for the purpose of the insurance holding company statute and requires not only the filing of detailed information concerning the acquiring parties and the plan of acquisition, but also administrative approval prior to the acquisition.

The states in which the Company and its insurance subsidiaries are domiciled also impose certain restrictions on the subsidiaries’ ability to pay dividends to the Company. These restrictions are based in part on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by the insurance commissioner of the state of domicile. In addition, certain states may prohibit the payment of dividends from other than the insurance company’s earned surplus. The insurance subsidiaries may pay, without the approval of the Insurance Commissioners of the state of domicile, $136 million of distributions in 2022. No assurance can be given that more stringent restrictions will not be adopted from time to time by states in which the Company and its insurance subsidiaries are domiciled; such restrictions could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable to the Company by such subsidiaries without prior approval by state regulatory authorities.

State insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, are often made for the benefit of the consumer and may lead to additional expense for the insurer. Furthermore, some NAIC pronouncements, particularly as they affect accounting issues, take effect automatically in various states without affirmative action by those states.

Sales of life insurance policies and annuity contracts offered by the Company are subject to a wide variety of state regulations relating to sales practices. The NAIC finalized revisions to the Suitability in Annuity Transactions Model Regulation which is intended to impose a higher standard of care on insurers who sell annuities. Additionally, several states are considering or have adopted legislation or regulatory measures that would implement new requirements and standards applicable to the sale of annuities and, in some cases, life insurance products. These new and proposed requirements and standards, which vary widely in scope, applicability, and timing of implementation, include requiring insurers, investment advisers, broker-dealer, and/or agents to disclose conflicts of interest to clients or to meet standards that their advice and sales recommendations must be in the customer’s best interest. There remains significant uncertainty surrounding these new and proposed requirements and standards, and the impact they may have on our current distributors and sales of our life insurance policies and annuity contracts.

The insurance laws of U.S. jurisdictions govern the marketplace activities of insurers, affecting the form and content of disclosure to consumers, product illustrations, advertising, product replacement, sales and underwriting practices, and complaint and claims handling, and these provisions are generally enforced through periodic market conduct examinations. Most state insurance laws prohibit insurers from engaging in unfair trade practices. The kinds of practices

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addressed are (i) misrepresentation and false advertising, (ii) unfair discrimination in premiums and policy benefits, (iii) boycott, coercion and intimidation, (iv) discrimination based on race, color, creed or national origin, sex or marital status, and (v) rebating of premium. In January 2019, the New York Department of Financial Services ("DFS") issued a circular letter that relates to use by life insurers of data or information sources that are not directly related to the medical condition of the applicant (with certain exclusions), for certain types of underwriting or rating purposes, including as a proxy for traditional medical underwriting. The circular letter generally prohibits life insurers from using such data or information, including algorithms or predictive models, in this fashion unless: (i) the insurer can establish that the data source does not use and is not based in any way on prohibited criteria, such as race, color, creed, etc.; and (ii) this use is not unfairly discriminatory and otherwise complies with the requirements of the New York insurance laws. In addition, the circular letter requires insurers using such data or information, including predictive models, to make certain additional disclosures to consumers.

Federal Regulation

At the federal level, the executive branch or federal agencies may issue orders or take other action with respect to financial services and life insurance matters, and bills are routinely introduced in both chambers of the United States Congress which could affect the Company’s business. In the past, Congress has considered legislation that would impact insurance companies in numerous ways, such as providing for an optional federal charter or a federal presence for insurance, preempting state law in certain respects regarding the regulation of reinsurance, increasing federal oversight in areas such as consumer protection and solvency regulation, setting tax rates, and other matters. The Company cannot predict whether or in what form legislation will be enacted and, if so, the impact of such legislation on the Company.

The Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Dodd-Frank Act") made sweeping changes to the regulation of financial services entities, products and markets. The Dodd-Frank Act directed existing and newly-created government agencies and bodies to perform studies and promulgate a multitude of regulations implementing the law, a process that has substantially advanced but is not yet complete.

Among other things, the Dodd-Frank Act imposed a comprehensive new regulatory regime on the over-the-counter ("OTC") derivatives marketplace and granted new joint regulatory authority to the Securities and Exchange Commission ("SEC") and the U.S. Commodity Futures Trading Commission ("CFTC") over OTC derivatives. In collaboration with U.S. federal banking regulators, the CFTC has adopted regulations which categorize the Company as a "financial end-user" which is thereby required to post and collect margin in a variety of derivatives transactions. Recommendations and reports from entities created under the Dodd-Frank Act, such as the Federal Insurance Office and the Financial Stability Oversight Council, could also affect the manner in which insurance and reinsurance are regulated in the U.S. and, thereby, the Company’s business. The Dodd-Frank Act also created the Consumer Financial Protection Bureau ("CFPB"), an independent division of the Department of Treasury with jurisdiction over credit, savings, payment, and other consumer financial products and services, other than investment products already regulated by the SEC or the CFTC. The Company and certain of its subsidiaries sell products that may be regulated by the CFPB.

Sales of life insurance policies and annuity contracts offered by the Company are subject to regulations relating to sales practices adopted by a variety of federal regulatory authorities. Certain annuities and life insurance policies such as variable annuities and variable universal life insurance are regulated under the federal securities laws administered by the SEC. On June 30, 2020, the SEC’s Regulation Best Interest ("Regulation BI") went into effect. Regulation BI relates to the standard of conduct applicable to broker-dealers, investment advisers, and their representatives when making certain recommendations to retail customers. Specifically, a broker-dealer is required to act in the best interest of a retail customer when recommending any securities transaction or investment strategy involving securities to the retail customer. Regulation BI also requires broker-dealers and investment advisers to provide each customer with a summary of the nature of the customer’s relationship with the investment professional, and provides a restriction on the use of the terms "adviser" and "advisor" by broker-dealers.

In addition, broker-dealers, insurance agencies and other financial institutions sell the Company’s annuities to employee benefit plans governed by provisions of the Employee Retirement Income Security Act ("ERISA") and Individual Retirement Accounts ("IRA") that are governed by similar provisions under the Internal Revenue Code (the "Code"). Consequently, our activities and those of the firms that sell the Company’s products are subject to restrictions that require ERISA fiduciaries to perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that

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prohibit ERISA fiduciaries from causing a covered plan or retirement account to engage in certain prohibited transactions absent an exemption. Also, on December 31, 2020, the U.S. Department of Labor ("DOL") issued its final investment advice prohibited transaction exemption, with a February 16, 2021 effective date. The final regulation confirmed the reinstatement of the traditional "five-part test" for determining fiduciary status and established a new prohibited transaction exemption that aligns with the SEC’s Regulation BI.

There remains significant uncertainty surrounding the final form that these regulations may take and the impact they may have on our current distributors and sales of our life insurance policies and annuity contracts. In addition, the Company continues to incur expenses in connection with initial and ongoing compliance obligations with respect to these regulations and in the aggregate these expenses may be significant.

The federal securities laws to which certain of our life insurance policies and annuity contracts are subject contain regulatory restrictions and criminal, administrative, and private remedial provisions. From time to time, the SEC and the Financial Industry Regulatory Authority ("FINRA") examine or investigate the activities of insurance companies, broker-dealers and investment advisers, including the Company’s affiliated broker-dealers and investment advisers. These examinations or investigations often focus on the activities of the registered representatives and registered investment advisers doing business through such entities and the entities’ supervision of those persons.

The Company is also subject to various federal laws and regulations intended to promote financial transparency and to identify and prevent money laundering and other financial crimes. Under these laws and regulations, the Company is required to maintain certain internal compliance practices, procedures, and controls for verifying the identity of its customers, monitoring for and reporting suspicious transactions, and responding to requests for information from regulatory authorities and law enforcement agencies.

Cybersecurity and Privacy Regulations

In In response to the growing threat of cyber attacks several jurisdictions enacted cybersecurity measures, including the adoption of cybersecurity regulations that, among other things, would require insurance companies to establish and maintain a cybersecurity program and implement and maintain cybersecurity policies and procedures. Many states have adopted a standard based on or identical to the 2017 NAIC Insurance Data Security Model Law, which serves as model legislation for states to enact in order to govern cybersecurity and data protection practices of insurers, insurance agents, and other licensed entities registered under state insurance laws. Additionally, the DFS issued regulations governing cybersecurity requirements for financial services companies, which became effective in March 2017. The DFS regulations require insurance companies, among others, licensed in New York to assess their specific cyber risk profiles and design cybersecurity programs to address such risks, as well as file annually with DFS a program compliance certification pertaining to their compliance with DFS cybersecurity requirements. The Company continues to monitor whether the other states in which it conducts business, as well as federal governmental agencies, adopt data security laws or regulations.

The Company has implemented information security policies that are designed to address the security of the Company’s information assets, which include personally identifiable information and protected health information, as well as other proprietary and confidential information about the Company, its employees, customers, agents, affiliates, and business partners. Additionally, the Company has an information risk management committee that, among other things, reviews emerging risks and monitors regulatory requirements and industry standards relating to the security of the Company’s information assets, monitors the Company’s cybersecurity initiatives, and approves the Company’s cyber incident response plans. This committee meets regularly, and the Board of Directors receives reports regarding cybersecurity matters. Furthermore, as part of the Company’s information security program, the Company has included security features in its systems that are intended to protect the privacy and integrity of the Company’s information assets, including personally identifiable information and protected health information. Notwithstanding these efforts, cyber threats and related legal and regulatory standards applicable to the insurance industry are rapidly evolving, and the Company’s and the Company’s business partners’ and service providers’ systems may continue to be vulnerable to security breaches, viruses, programming errors, and other similar disruptive problems or incidents.

In addition to laws and regulations relating to cyber security, states have proposed or adopted broad privacy laws and regulations that apply to all types of businesses. In June 2018, California adopted the California Consumer Privacy Act, which grants new data protections and privacy rights to California consumers, which was further expanded in 2020 under

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the California Consumer Privacy Rights Act. The California Consumer Privacy Rights Act will become effective in January of 2023. As part of the Company’s customer privacy programs, the Company has included processes to respond to requests from consumers with respect to their rights under privacy laws and regulations such as the California Consumer Privacy Act. In March 2021, Virginia adopted the Consumer Data Protection Act, which imposes certain restrictions and requirements on businesses that collect consumer data for at least 100,000 consumers in Virginia. The Company continues to monitor whether the other states in which it conducts business, as well as federal governmental agencies, adopt additional customer privacy laws or regulations.

Other Regulation

Other types of regulation that could affect the Company and its subsidiaries include insurance company investment laws and regulations, state statutory accounting practices, tax laws, antitrust laws, minimum solvency requirements, enterprise risk requirements, state securities laws, federal privacy laws, technology and data regulations, insurable interest laws, federal anti-money laundering and anti-terrorism laws, employment and immigration laws and, because the Company owns and operates real property, state, federal, and local environmental laws. The Company may also be subject to regulations influenced by or related to international regulatory authorities or initiatives. PLC’s sole stockholder, Dai-ichi Life, is subject to regulation by the Japanese Financial Services Agency ("JFSA"). Under applicable laws and regulations, Dai-ichi Life is required to provide notice to or obtain the consent of the JFSA prior to taking certain actions or engaging in certain transactions, either directly or indirectly through its subsidiaries, including PLC, the Company, and their respective consolidated subsidiaries. Domestically, the NAIC may be influenced by the initiatives or regulatory structures or schemes of international regulatory bodies, and those initiatives or regulatory structures or schemes may not translate readily into the regulatory structures or schemes of the legal system (including the interpretation or application of standards by juries) under which U.S. insurers must operate. Changes in laws and regulations or in interpretations thereof, or to initiatives or regulatory structures or schemes of international regulatory bodies, which are applicable to the Company could have a significant adverse impact on the Company.

Intellectual Property

The Company relies on a combination of intellectual property laws, confidentiality procedures and policies, and contractual provisions to protect its brand and its intellectual property, which includes copyrights, trademarks, patents, domain names, and trade secrets. The success of the Company’s business depends on its continued ability to use and protect its intellectual property, including its trademark and service mark portfolio which is composed of both United States registered and common law trademarks and service marks, including the Company’s Protective name and logo. The Company’s intellectual property assets are valuable to the Company in maintaining its brand and marketing its products; thus, the Company maintains and protects its intellectual property assets from infringement and dilution.

Risk Factors

This Prospectus includes "forward-looking statements" that represent the Company’s beliefs concerning future operations. 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 meaning. 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 we cannot give assurances that such statements will prove to be correct. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

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 known trends and uncertainties which are discussed more fully below.

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Risks Related to the COVID-19 Pandemic

The coronavirus (COVID-19) global pandemic has adversely impacted the Company’s business, and the ultimate effect on its business, results of operations, and financial condition will depend on future developments that are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

Beginning in 2020, the COVID-19 pandemic created both a public health crisis in the United States and worldwide that impacted the Company’s results of operations. The pandemic disrupted people’s lives, pushed hospital systems to their capacity, created a higher risk of mortality, and negatively impacted the U.S. and global economy. Because of the size and breadth of this pandemic, all of the direct and indirect consequences of COVID-19 are not yet known and may not emerge for some time. The spread of COVID-19 has resulted in excess deaths in the population that can be both directly and indirectly attributed to the virus. In addition, the pandemic prompted lockdowns in the population, business shutdowns, loss of jobs, and reduced supply and demand of goods and services. The rollout of COVID-19 vaccines throughout 2021 mitigated mortality risk but new COVID-19 variants, particularly the Delta and Omicron variants, are still causing significant surges in COVID cases, hospitalizations, and deaths in the U.S., especially among the unvaccinated. Mass vaccinations also led to the lifting of lockdowns and started a slow economic recovery. The resulting increase in consumer demand created significant challenges for supply chains as a result of labor and raw material shortages, which could lead to reduced earnings for many industries.

The extent to which the COVID-19 pandemic could continue to impact the Company’s business, results of operations, or financial condition will depend on future developments which are highly uncertain and cannot be predicted, including rate and long-term efficacy of vaccinations, the impact of new COVID-19 variants, Long COVID, mortality effects of the pandemic indirectly attributed to COVID-19, and actions taken by governmental authorities and other third parties in response to the pandemic.

Risks presented by the ongoing effects of the COVID-19 pandemic include the following:

●Premiums, Policy Fees, and Contractholder Liabilities. The impact of COVID-19 on general economic activity may negatively impact the Company’s premiums, policy fees, other revenues, and its liabilities for certain life and annuity policy/contracts. The degree and type of the impact will depend on the extent and duration of the economic contraction, as well as potential equity market and interest rate volatility associated with the economic environment.

●Claims and Claims Expense. As a result of the pandemic and ensuing conditions, the Company has experienced, and it may continue to experience, an elevated incidence and level of life insurance claims. The Company expects to incur higher claims expense in our life insurance and deferred annuity businesses, partially offset by lower life contingent payments in its payout annuity and structured settlement businesses, as a result of COVID-19 related mortality. In addition, the anticipated and unknown risks related to COVID-19 may cause additional uncertainty in the process of estimating claims expense reserves. For example, the behavior of claimants and policyholders may change in unexpected ways, and actions taken by governmental bodies, both legislative and regulatory, in reaction to COVID-19 and their related impacts are hard to predict. The Company is also subject to credit risk in our insurance operations (both with respect to policyholder receivables and reinsurance receivables) which may be exacerbated in times of economic distress. A prolonged continuation of the pandemic or a significant and protracted increase in claims could have a material and adverse effect on our business, results of operations, or financial condition.

●Investments. The disruption in the financial markets related to COVID-19 has and may in the future adversely affect certain portions of the Company’s investment portfolio, resulting in lower investment income and returns, and lead to further impairments, credit spread widening, credit quality deterioration, ratings downgrades, equity market declines, and the need to establish additional reserves for potential losses related to its commercial mortgage loan portfolio. Additionally, higher volatility in the equity and credit markets increases hedging costs. There is uncertainty regarding future treasury rates and risk spreads, which may lead to lower investment returns and difficulty forecasting financial results. Disruption in financial markets may also influence overall market liquidity and availability of assets for sale and purchase.

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●Legislative and/or Regulatory Action. Federal, state, and local government actions to address and contain the impact of COVID-19 may adversely affect us. During the pandemic, many state insurance departments extended the time allowed for premium payments to avoid policy cancellations. While most of these consumer accommodations have expired, they may be reinstated upon a resurgence in cases, which makes it difficult to anticipate exact financial impacts. Premium waivers as a result of reinstated extensions may significantly exceed the Company’s expectations, and its earnings may be negatively impacted. If policyholder lapse and surrender rates or premium waivers significantly exceed the Company’s expectations, the Company may need to change its assumptions, models, or reserves. Additionally, legislators in some states have introduced or plan to introduce bills that could affect the Company’s ability to underwrite based on an applicant’s COVID-19 vaccination status. While the Company does not collect this data, strict restrictions could negatively impact our future underwriting practices.

●Operational Disruptions and Heightened Cybersecurity Risks. The Company adopted a phased approach to return approximately 44% of its workforce to the office over the course of 2021, while the remaining 56% will continue offsite work arrangements permanently. The current period of transition in work arrangements could introduce additional operational risk, including but not limited to cybersecurity risks, and it could impair the Company’s ability to effectively manage its business. The Company continues to monitor the effects of COVID-19, including the spread of the Delta and Omicron variants, and will take that information into consideration for workforce planning.

In addition, a significant interruption of the Company’s or third-party system capabilities could result in a deterioration of its ability to write and process new business, provide customer service, pay claims in a timely manner, or perform other necessary administrative and business functions. With a partially remote workforce, the Company is more dependent on remote internet and telecommunications services, and it potentially faces a heightened risk of cybersecurity attacks and data security incidents.

Some states have introduced or plan to introduce bills that affect the Company’s ability to request or require COVID-19 vaccination status of its employees or potentially impose private rights of action in the event that an individual’s COVID-19 vaccination status affects their employment. At this time, these bills have not been finalized, so the degree to which they could impact the Company is unclear.

●Financial Reporting and Controls. Currently, the Company does not expect COVID-19 to affect its ability to timely and accurately account for the assets and liabilities on its balance sheet; however, this could change in future periods. Market dislocations, decreases in observable market activity, or unavailability of information arising, in each case, from the spread of COVID-19, may restrict the Company’s access to key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise. Restricted access to such inputs may make the Company’s financial statement balances and estimates and assumptions used to run its business subject to greater variability and subjectivity. It is possible that the lingering effects of COVID-19 could cause the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause the Company to perform an intangible asset impairment test and result in an impairment charge being recorded for that period. Further, as the Company’s office-based employees interact with employees working offsite, new processes, procedures, and controls could be required to respond to changes in its business environment.

●Reliance on the Performance of Third Parties. The Company relies on outside parties, including independent third-party distribution channels, data processing servicers, and investment fund managers, among others. While the Company closely monitors the business continuity activities of these third parties, successful implementation and execution of their business continuity strategies are largely outside of our control. If one or more of these third parties experience operational failures as a result of the impacts from the spread of COVID-19 and governmental reactions thereto, or claim that they cannot perform due to a force majeure, the Company’s business, results of operations, or financial condition could be adversely impacted.

Any of the above events could cause, contribute to, or exacerbate the risks and uncertainties enumerated in this prospectus, and could materially adversely affect the Company’s business, results of operations, or financial condition. The Company has implemented risk management and business continuity plans, performed stress testing, and taken other precautions with respect to the COVID-19 global pandemic. However, such measures may not adequately protect the Company’s business from the full impacts of the pandemic.

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Risks Related to the Financial Environment

Interest rate fluctuations and sustained periods of low or high interest rates could negatively affect the Company’s interest earnings and spread income, or otherwise impact its business.

Significant changes in interest rates expose the Company to the risk of not earning anticipated interest on assets supporting products, or not realizing anticipated spreads between the interest rate earned on investments and the credited interest rates paid on in-force policies and contracts that have significant account balances. Both rising and declining interest rates as well as sustained periods of low interest rates could negatively affect the Company’s interest earnings and spread income.

Lower interest rates may also result in lower sales of certain of the Company’s life insurance and annuity products. Additionally, during periods of declining or low interest rates, certain previously-issued life insurance and annuity products may be relatively more attractive investments to consumers, resulting in increased premium payments on products with flexible premium features, repayment of policy loans, and increased persistency, or a higher percentage of insurance policies remaining in force from year to year during a period when the Company’s investments earn lower returns. Certain of the Company’s life insurance and annuity products guarantee a minimum credited interest rate, and the Company could become unable to earn its spread income or may earn less interest on its investments than it is required to credit to policyholders should interest rates decrease significantly and/or remain low for sustained periods. Additionally, the profitability of certain of the Company’s life insurance products that do not have significant account balances could be reduced should interest rates decrease significantly and/or remain low for sustained periods.

The Company’s expectations for future interest earnings and spreads are important components in amortization of deferred acquisition costs ("DAC") and value of business acquired ("VOBA"), and significantly lower interest earnings or spreads may accelerate amortization, thereby reducing net income in the affected reporting period. Lower interest earnings or spreads may also result in increases to certain policyholder benefit reserves held for some of the Company’s universal life products.

Higher interest rates may create a less favorable environment for the origination of commercial mortgage loans and decrease the investment income the Company receives in the form of prepayment fees, make-whole payments, and commercial mortgage loan participation income. Higher interest rates could also adversely affect the fair value of fixed-income securities within the Company’s investment portfolio and increase the cost of debt and other obligations of the Company having floating rate or rate reset provisions. During periods of increasing market interest rates, the Company may offer higher crediting rates on interest-sensitive products, such as universal life insurance and fixed annuities, and it may increase crediting rates on in-force products to keep these products competitive. In addition, rapidly-rising interest rates may cause increased policy surrenders, withdrawals from life insurance policies and annuity contracts, and requests for policy loans as policyholders and contract holders shift assets into higher yielding investments. Increases in crediting rates, as well as surrenders and withdrawals, could have an adverse effect on the Company’s financial condition and results of operations, including earnings, equity accumulated other comprehensive income, and statutory risk-based capital ("RBC") ratios.

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.

The Company is subject to market and credit risks. These risks could be heightened during periods of extreme volatility or disruption in financial and credit markets.

Significant volatility or disruption in domestic or foreign credit, capital, and equity markets, including as a result of social or political unrest or instability domestically or abroad, could have an adverse impact in several ways on either the Company’s financial condition or results from operations. The Company’s invested assets and derivative financial instruments are subject to risks of credit defaults and changes in fair values which could be heightened by volatility or

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disruption. The factors affecting the financial and credit markets could lead to credit and other losses in the Company’s investment portfolio.

The Company’s exposure to these markets presents a number of risks including:

●The fair value of the Company’s invested assets, derivative financial instruments, and commercial mortgage loans may be affected by interest rate levels, financial market performance, general economic conditions, and conditions affecting certain sectors of the economy, as well as particular circumstances affecting the individual tenants, borrowers, issuers, and guarantors.

●Changes in interest rates and credit spreads could increase unrealized losses in the Company’s investment portfolio and could cause market price and cash flow variability in the Company’s fixed-income instruments.

●Significant volatility and lack of liquidity in the credit markets could cause issuers of the fixed-income securities in the Company’s investment portfolio to default on either principal or interest payments on these securities.

●The Company’s statutory surplus is impacted by widening credit spreads as a result of the accounting for the assets and liabilities on its fixed MVA annuities. Volatile credit markets could result in statutory separate account asset market value losses.

●Volatility or disruption in the credit markets could impact the Company’s ability to efficiently access financial solutions for purposes of issuing long-term debt for financing purposes, its ability to obtain financial solutions for purposes of supporting certain traditional and universal life insurance products for capital management purposes, or result in an increase in the cost of existing securitization structures.

●When the credit and capital markets are disrupted and confidence is eroded the Company may not be able to borrow money, including through the issuance of debt securities, or the cost of borrowing or raising capital may be prohibitively high. If the Company’s internal sources of liquidity are inadequate during such periods, the Company could suffer negative effects from not being able to borrow money, or from having to do so on unfavorable terms. The negative effects could include being forced to sell assets at a loss, a lowering of the Company’s credit ratings and the financial strength ratings of its insurance subsidiaries, and the possibility that customers, lenders, ratings agencies, or regulators develop a negative perception of the Company and its financial prospects.

●Volatility in equity markets may deter prospective purchasers of variable life and annuity products and fixed annuity products that have returns linked to the performance of equity markets and may cause some existing customers to withdraw cash values or reduce investments in those products.

●Equity market volatility can affect the profitability of annuity products with riders, including the estimated cost of providing guaranteed minimum death benefits ("GMDB") and guaranteed living withdrawal benefits ("GLWB") that incorporate various assumptions about the overall performance of equity markets over certain time periods.

●Periods of significant and sustained downturns in equity markets or increased equity market volatility could result in an increase in the valuation of the future policy benefit or policyholder account balance liabilities associated with such products.

●The rate of amortization of DAC and the cost of providing GMDB and GLWB, which incorporate equity market performance assumptions, could increase if equity market performance is worse than assumed.

●Market volatility can make it difficult for the Company to value certain of its assets, especially if trading becomes less frequent. Additionally, valuations may include assumptions or estimates that may have significant period-to-period changes.

In addition, financial markets have been and may in the future be adversely affected by the Russia/Ukraine military conflict as well as terrorism or other geopolitical events.

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The risks described above could have a material adverse impact on the Company’s results of operations, financial condition, statutory capital ratios, RBC ratios, cash flows through realized losses, the allowance for expected credit losses, unrealized loss positions, and may cause increased demands on capital, including obligations to post additional capital and collateral.

Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and may adversely affect our investment portfolio.

There are concerns that the increased frequency and severity of weather-related catastrophes and other losses, such as wildfires, incurred by the industry in recent years is indicative of changing weather patterns, whether as a result of global climate change caused by human activities or otherwise, which could cause such events to persist. The global business community has increased its political and social awareness surrounding the issue, and the United States has entered into international agreements in an attempt to reduce global temperatures, such as reentering the Paris Agreement. Further, the U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change.

The Company cannot predict how legal, regulatory and social responses to concerns about global climate change will impact its business or the value of our investments. Climate change regulation and market forces reacting to climate change may affect the prospects of companies and other entities whose securities we hold, or our willingness to continue to hold their securities. It may also impact other counterparties, including reinsurers, and affect the value of investments, including real estate investments we hold or manage for others. We cannot predict the long-term impacts on us from climate change or related regulation or market impact.

The elimination of LIBOR may adversely affect the interest rates on and value of certain derivatives and floating rate securities we hold and floating rate securities we have issued, the value and profitability of certain real estate lending and other activities we conduct, and any other assets or liabilities whose value is tied to LIBOR.

Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. On March 5, 2021, the IBA announced that it will cease the publication of one week and two-month U.S. Dollar LIBOR and all non-USD (GBP, EUR, CHF and JPY) LIBOR settings at the end of December 2021, but will extend the publication of the remaining U.S. Dollar LIBOR settings (overnight and one, three, six and 12 month U.S. Dollar LIBOR) until the end of June 2023. U.S. bank regulators have advised banks to cease writing, subject to certain limited exceptions, new U.S. Dollar LIBOR contracts by the end of 2021 and the New York Federal Reserve’s ARCC has identified the SOFR as the recommended risk-free alternative rate for USD LIBOR. The extended cessation date for most USD LIBOR tenors will allow for more time for existing legacy USD LIBOR contracts to mature and provide additional time to continue to prepare for the transition from LIBOR on certain derivatives and floating rate securities the Company holds, securities the Company has issued, real estate lending, and other activities the Company conducts, and any other assets or liabilities, as well as contractual rights and obligations, whose value is tied to LIBOR. The value or profitability of these products and instruments may be adversely affected.

The Company uses LIBOR and other interbank offered rates as interest reference rates in certain of its financial instruments. Existing contract fallback provisions, and whether, how, and when the Company and others develop and adopt alternative reference rates, will influence the effect of any changes to or discontinuation of LIBOR on the Company. The Company is identifying, assessing and monitoring market and regulatory developments, assessing agreement terms, and evaluating operational readiness. The Company is utilizing the International Swaps and Derivatives Association, Inc. ("ISDA") 2020 IBOR Fallbacks Protocol to address the transition from LIBOR and other interbank offered rates to other risk-free rates in its OTC bilateral derivatives contracts governed under ISDA Master Agreements with trading counterparties. The Company also monitors the Financial Accounting Standards Board’s, and U.S. Treasury Department’s updates on the accounting and tax implications of reference rate reform. The Company continues to assess current and alternative reference rates’ merits, limitations, risks and suitability for its investment and insurance processes.

The Company’s use of derivative financial instruments within its risk management strategy may not be effective or sufficient.

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The Company uses derivative financial instruments within its risk management strategy to mitigate risks to which it is exposed, including risks related to credit and equity markets, interest rate levels, foreign exchange, and volatility on its fixed indexed annuity and variable annuity products and associated guaranteed benefit features. The Company may also use derivative financial instruments within its risk management strategy to mitigate risks arising from its exposure to investments in individual issuers or sectors of issuers and to mitigate the adverse effects of interest rate levels or volatility on its overall financial condition or results of operations.

These derivative financial instruments may not effectively offset the changes in the carrying value of the exposures due to, among other things, the time lag between changes in the value of such exposures and the changes in the value of the derivative financial instruments purchased by the Company, extreme credit and/or equity market and/or interest rate levels or volatility, contract holder behavior that differs from the Company’s expectations, and basis risk.

The use of derivative financial instruments by the Company generally to hedge various risks that impact generally accepted accounting principles ("GAAP") earnings may have an adverse impact on the level of statutory capital and RBC ratios because earnings are recognized differently under GAAP and statutory accounting methods. The Company may also choose not to hedge, in whole or in part, these or other risks that it has identified, due to, for example, the availability and/or cost of a suitable derivative financial instrument. In addition, the Company may fail to identify risks, or the magnitude of risks, to which it is exposed. The derivative financial instruments used by the Company in its risk management strategy may not be properly designed, may not be properly implemented as designed and/or may be insufficient to hedge the risks in relation to the Company’s obligations. The Company is subject to the risk that its derivative counterparties or clearinghouse may fail or refuse to meet their obligations to the Company, which may result in associated derivative financial instruments becoming ineffective or inefficient.

The above factors, either alone or in combination, may have a material adverse effect on the Company’s financial condition and results of operations.

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

The Company deploys significant amounts of capital to support its sales and acquisitions efforts. Although the Company believes it has sufficient capital to fund its immediate capital needs, the amount of capital available can vary significantly from period to period due to a variety of circumstances, some of which are not predictable or within the Company’s control. Furthermore, our sole shareowner is not obligated to provide us with additional capital. A lack of sufficient capital could have a material adverse impact on the Company’s financial condition and/or results of operations.

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

Many of the products offered by the Company allow policyholders and contract holders to withdraw their funds under defined circumstances. The Company manages its liabilities and configures its investment portfolios so as to provide and maintain sufficient liquidity to support expected withdrawal demands and contract benefits and maturities. While the Company owns a significant amount of liquid assets, a certain portion of its assets are relatively illiquid. If the Company experiences unexpected withdrawal or surrender activity, it could exhaust its liquid assets and be forced to liquidate other assets, perhaps at a loss or on other unfavorable terms. If the Company is forced to dispose of assets at a loss or on unfavorable terms, it could have an adverse effect on the Company’s financial condition, the degree of which would vary in relation to the magnitude of the unexpected surrender or withdrawal activity.

The Company could be adversely affected by an inability to access its credit facility or FHLB lending.

The Company relies on its credit facility as a potential source of liquidity. The availability of these funds could be critical to the Company’s credit and financial strength ratings and its ability to meet obligations, particularly when alternative sources of credit or liquidity are either difficult to access or costly. The availability of the Company’s credit facility is dependent in part on the ability of the lenders to provide funds under the facility. The Company’s credit facility contains various affirmative and negative covenants and events of default, including covenants requiring the Company to maintain a specified minimum consolidated net worth. The Company’s right to make borrowings under the facility is subject to the fulfillment of certain conditions, including its compliance with all covenants. The Company’s failure to comply with the covenants in the credit facility could restrict its ability to access this credit facility when needed. In addition, certain

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subsidiaries of the Company are members of the FHLB of Cincinnati, the FHLB of New York, and the FHLB of Atlanta. Membership provides these subsidiaries with access to FHLB financial services, including advances that provide an attractive funding source for short-term borrowing and for the sale of funding agreements. The ability of its subsidiaries to access liquidity from the FHLB is impacted by other factors that are dependent on market conditions or policies established by the FHLB. Fluctuations in the fair value of collateral can adversely impact available borrowing capacity. The extent to which membership or the FHLB services are available could be impacted by legislative or regulatory action at the state or federal level.

The Company’s inability to access some or all of the line of credit under the credit facility or its subsidiaries’ inability to access some or all of the FHLB financial services could lead to downgrades in our credit and financial strength ratings and have a material adverse effect on its liquidity and/or results of operations.

The amount of statutory capital or RBC that the Company has and the amount of statutory capital or RBC that it must hold to maintain its financial strength and credit ratings and meet other requirements can vary significantly from time to time and such amounts are sensitive to a number of factors outside of the Company’s control.

Insurance regulators have established regulations that provide minimum capitalization requirements based on RBC formulas for life and property and casualty companies. The RBC formula for life insurance companies establishes capital requirements relating to insurance, business, asset, interest rate, and certain other risks. The RBC formula for property and casualty companies establishes capital requirements relating to asset, credit, underwriting, and certain other risks.

In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including, but not limited to, the amount of statutory income or losses generated by the Company and its insurance subsidiaries, the amount of additional capital the Company and its insurance subsidiaries must hold to support business growth, changes in the Company’s statutory reserve requirements, the Company’s ability to secure capital market solutions to provide statutory reserve relief, changes in equity market levels, the value of certain fixed-income and equity securities in its investment portfolio, the credit ratings of investments held in its portfolio, including those issued by, or explicitly or implicitly guaranteed by, a government, the value of certain derivative instruments, changes in interest rates, foreign currency exchange rates or tax rates, credit market volatility, changes in consumer behavior, and changes to the NAIC RBC formulas. Most of these factors are outside of the Company’s control.

The Company’s financial strength and credit ratings are significantly influenced by the statutory surplus amounts and RBC ratios of the Company and its insurance company subsidiaries. Rating organizations may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital the Company must hold in order to maintain its current ratings. In addition, rating agencies may downgrade the investments held in the Company’s portfolio, which could result in a reduction of the Company’s capital and surplus and/or its RBC ratio.

In scenarios of equity market declines, the amount of additional statutory reserves or RBC the Company is required to hold for its variable product guarantees may increase at a rate greater than the rate of change of the markets. Increases in reserves or RBC could result in a reduction to the Company’s capital, surplus, and/or RBC ratio. Also, in environments where there is not a correlative relationship between interest rates and spreads, the Company’s market value adjusted annuity product can have a material adverse effect on the Company’s statutory surplus position.

A ratings downgrade or other negative action by a rating organization could adversely affect the Company.

Various rating organizations review the financial performance and condition of insurers, including the Company’s insurance subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder and contract holder obligations. While financial strength ratings are not a recommendation to buy the Company’s securities or products, these ratings are important to maintaining public confidence in the Company, its products, its ability to market its products, and its competitive position. A downgrade or other negative action by a rating organization with respect to the financial strength ratings of the Company’s insurance subsidiaries or the debt ratings of the Company could adversely affect the Company in many ways, including, but not limited to, reducing new sales of insurance and investment products, adversely affecting relationships with distributors and sales agents, increasing the number or amount of policy surrenders and withdrawals of funds, requiring a reduction in prices for the Company’s insurance products and services in order to remain competitive, negatively impacting the Company’s ability to execute its acquisition strategy, and adversely

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affecting the Company’s ability to obtain reinsurance at a reasonable price, on reasonable terms, or at all. A downgrade of sufficient magnitude could result in the Company, its insurance subsidiaries, or both being required to collateralize reserves, balances, or obligations under certain contractual obligations, including reinsurance, funding, swap, and securitization agreements. A downgrade of sufficient magnitude could also result in the termination of certain funding and swap agreements.

Rating organizations also publish credit ratings for issuers of debt securities, including the Company. Credit ratings are indicators of a debt issuer’s ability to meet the terms of debt obligations in a timely manner. These ratings are important to the Company’s overall ability to access credit markets and other types of liquidity. Credit ratings are not recommendations to buy our securities or products. Downgrades of the Company’s credit ratings, or an announced potential downgrade or other negative action, could have a material adverse effect on our financial conditions and results of operations in many ways, including, but not limited to, limiting the Company’s access to capital markets, increasing the cost of debt, impairing our ability to raise capital to refinance maturing debt obligations, limiting its capacity to support its growth and the growth of its insurance subsidiaries, requiring it to pay higher amounts in connection with certain existing or future financing arrangements or transactions, and making it more difficult to maintain or improve the current financial strength ratings of its insurance subsidiaries. A downgrade of sufficient magnitude, in combination with other factors, could require the Company to post collateral pursuant to certain contractual obligations.

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, ratings of parent companies, and other circumstances outside the rated company’s control. Changes to the models could impact the rating organizations’ judgment of the rating to be assigned to the rated company. Rating organizations may take various actions, positive or negative, with respect to the Company’s debt ratings and its financial strength ratings and the financial strength ratings of our insurance subsidiaries, including as a result of our status as a subsidiary of Dai-ichi Life. Any negative action by a rating organization could have a material adverse impact on the Company’s financial condition or results of operations.

The Company’s securities lending program may subject it to liquidity and other risks.

The Company maintains a securities lending program in which securities are loaned to third parties, including brokerage firms and commercial banks. The borrowers of the Company’s securities provide the Company with collateral, typically in cash, which it separately maintains. The Company invests the collateral in other securities, including primarily short-term government repo and money market funds. Securities loaned under the program may be returned to the Company by the borrower at any time, requiring the Company to return the related cash collateral. In some cases, the Company may use the cash collateral provided to purchase other securities to be held as invested collateral, and the maturity of such securities may exceed the term of the securities loaned under the program and/or the fair value of such securities may fall below the amount of cash collateral that the Company is obligated to return to the borrower of the Company’s loaned securities. If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell the securities held as invested collateral to meet the obligation, the Company may have difficulty selling such securities in a timely manner and/or the Company may be forced to sell the securities in a volatile or illiquid market for less than it otherwise would have been able to realize under normal market conditions. In addition, the Company’s ability to sell securities held as invested collateral may be restricted under stressful market and economic conditions in which liquidity deteriorates.

The Company’s financial condition or results of operations could be adversely impacted if the Company’s assumptions regarding the fair value and future performance of its investments differ from actual experience.

The Company makes assumptions regarding the fair value and expected future performance of its investments. Expectations that the Company’s investments in mortgage-backed and asset-backed securities will continue to perform in accordance with their contractual terms are based on assumptions a market participant would use in determining the current fair value and consider the performance of the underlying assets. It is reasonably possible that the underlying collateral of these investments will perform worse than current market expectations and that such reduced performance may lead to adverse changes in the cash flows on the Company’s holdings of these types of securities. In addition, expectations that the Company’s investments in corporate securities and/or debt obligations will continue to perform in accordance with their contractual terms are based on evidence gathered through its normal credit surveillance process. It

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is possible that issuers of the Company’s investments in corporate securities and/or debt obligations will perform worse than current expectations. The occurrence of any of the foregoing events could lead the Company to recognize write-downs within its portfolio of mortgage and asset-backed securities or its portfolio of corporate securities and/or debt obligations. It is also possible that such unanticipated events would lead the Company to dispose of such investments and recognize the effects of any market movements in its financial statements. The Company also makes certain assumptions when utilizing internal models to value certain of its investments. It is possible that actual results will differ from the Company’s assumptions. Such events could result in a material change in the value of the Company’s investments.

Adverse actions of certain funds or their advisers could have a detrimental impact on the Company’s ability to sell its variable life and annuity products, or maintain current levels of assets in those products.

Certain of the Company’s insurance subsidiaries have arrangements with various open-end investment companies, or "mutual funds", and the investment advisers to those mutual funds, to offer the mutual funds as investment options in the Company’s variable life and annuity products. It is possible that the termination of one or more of those arrangements by a mutual fund or its adviser could have a detrimental impact on the Company’s ability to sell its variable life and annuity products, or maintain current levels of assets in those products, which could have a material adverse effect on the Company’s financial condition and/or results of operations.

Industry and Regulatory Related Risks

The business of the Company is highly regulated and is subject to routine audits, examinations, and actions by regulators, law enforcement agencies, and self-regulatory organizations.

The Company and its insurance subsidiaries are subject to regulation by each of the states in which they conduct business. In many instances, the regulatory models emanate from the NAIC. Such regulation is vested in state agencies having broad administrative and, in some instances, discretionary power dealing with many aspects of the Company’s business, which may include, among other things, premium and cost of insurance rates and increases thereto, interest crediting policy, underwriting practices, reserve requirements, marketing practices, advertising, privacy, cybersecurity, policy forms, reinsurance reserve requirements, insurer use of captive reinsurance companies, acquisitions, mergers, capital adequacy, claims practices, and the remittance of unclaimed property. In addition, some state insurance regulators may enact rules or regulations with extra-territorial application, effectively extending their jurisdiction to areas such as permitted insurance company investments that are normally the province of an insurance company’s domiciliary state regulator. Actions by any of the state insurance regulators could have a material adverse effect on the Company’s business, financial condition and results of operations.

At any given time, a number of financial, market conduct, or other examinations or audits of the Company’s subsidiaries may be ongoing. It is possible that any examination or audit may result in payments of fines and penalties, payments to customers, or both, as well as changes in systems or procedures, or restrictions on business activities, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s insurance subsidiaries are required to obtain state regulatory approval for rate increases for certain health insurance products. The Company’s financial condition and results of operations may be adversely affected if the requested rate increases are not approved in full by regulators in a timely fashion.

State insurance regulators and the NAIC regularly examine existing laws and regulations applicable to insurance companies and their products. Changes in state laws and regulations, or in interpretations thereof, could have a material adverse effect on the Company’s business, financial condition and results of operations.

A number of state treasury departments and administrators of unclaimed property have audited life insurance companies for compliance with state unclaimed property laws, companies’ claims paying practices, and use of a Death Database to identify unreported deaths in their life insurance policies, annuity contracts, and retained asset accounts. The Company and certain of its subsidiaries as well as certain other insurance companies from whom the Company has coinsured blocks of life insurance and annuity policies are subject to such unclaimed property audits. It is possible that additional payments and costs resulting from these audits could materially impact the Company’s financial condition and/or results of operations.

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The Company’s broker-dealer subsidiaries are also subject to regulation by state securities regulators. In many instances, the state regulatory models emanate from the North American Securities Administrators Association. State securities regulators may bring regulatory or other legal actions against the Company’s broker-dealer subsidiaries if, in their view, our practices, or those of our agents or employees, are improper. These actions can result in substantial fines or penalties, or prohibitions or restrictions on our business activities and could have a material adverse effect on our business, financial condition and results of operations.

At the federal level, certain of the Company’s insurance subsidiaries and its broker-dealer subsidiaries are subject to regulation by the SEC and the FINRA. Federal laws and regulations generally grant the SEC and FINRA broad administrative powers, including the power to limit or restrict regulated entities from carrying on their businesses in the event that a regulated entity fails to comply with applicable federal laws and regulations. The SEC and FINRA, as well as the DOL and others, have the authority to review our products and business practices and those of our agents, registered representatives, associated persons, and employees. Adverse action by any of these regulatory bodies against the Company or any of its subsidiaries could have a material adverse effect on the Company’s business, financial condition and results of operations.

The executive branch of the federal government or federal agencies may issue orders or take other action with respect to financial services and life insurance matters, and bills are routinely introduced in both chambers of the United States Congress that could affect the Company and its business. In the past, Congress has considered legislation that would impact insurance companies in numerous ways, such as providing for an optional federal charter or a federal presence for insurance, preempting state law in certain respects regarding the regulation of reinsurance, increasing federal oversight in areas such as consumer protection and solvency regulation, setting tax rates, and other matters. The Company cannot predict whether or in what form administrative actions will take or legislation will be enacted. Such actions or legislation could, however, could have a material adverse effect on the Company’s business, financial condition and results of operations.

Federal regulatory or governmental bodies may bring regulatory or other legal actions against us if, in their view, our practices, or those of our agents or employees, are improper. These actions can result in substantial fines or penalties, or prohibitions or restrictions on our business activities and could have a material adverse effect on our business, financial condition and results of operations.

The Company may be subject to regulations of, or regulations influenced by, international regulatory authorities or initiatives.

The NAIC and the Company’s state regulators may be influenced by the initiatives of international regulatory bodies, and those initiatives may not translate readily into the legal system under which U.S. insurers must operate. There is increasing pressure to conform to international standards due to the globalization of the business of insurance and the systemic nature of recent financial crises. In addition to developments at the NAIC and in the United States, the Financial Stability Board ("FSB"), consisting of representatives of national financial authorities of the G20 nations, and the G20 have issued a series of proposals intended to produce significant changes in how financial companies, particularly companies that are members of large and complex financial groups, should be regulated.

The International Association of Insurance Supervisors ("IAIS"), at the direction of the FSB, has published an evolving method for identifying "global systemically important insurers" ("G-SIIs") and high-level policy measures that will apply to G-SIIs. These policy measures include higher capital requirements and enhanced supervision. Although neither the Company nor Dai-ichi Life has been designated as a G-SII, the list of designated insurers may be updated in the future by the FSB. It is possible that due to the size and reach of the combined Dai-ichi Life group, or a change in the method of identifying G-SIIs, the combined group, including the Company, could be designated as a G-SII. The IAIS has additional regulatory proposals that may affect Dai-ichi and the Company.

The Company’s sole shareowner, Dai-ichi Life, is also subject to regulation by the JFSA. Under applicable laws and regulations, Dai-ichi Life is required to provide notice to or obtain the consent of the JFSA prior to taking certain actions or engaging in certain transactions, either directly or indirectly through its subsidiaries, including the Company, and its consolidated subsidiaries, which could limit the ability of the Company to engage in certain transactions or business initiatives.

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While it is not yet known how or the extent to which the Company will be impacted by these regulations, the Company may experience increased costs of compliance, increased disclosure, less flexibility in capital management, and more burdensome regulation and capital requirements for specific lines of business. In addition, such regulations could impact the business of the Company and its reserve and capital requirements, financial condition, or results of operations.

NAIC actions, pronouncements and initiatives may affect the Company’s product profitability, reserve and capital requirements, financial condition, or results of operations.

Although some NAIC pronouncements, particularly as they affect accounting, reserving and RBC issues, may take effect automatically without affirmative action taken by the states, the NAIC is not a governmental entity and its processes and procedures do not comport with those to which governmental entities typically adhere. Therefore, it is possible that actions could be taken by the NAIC that become effective without the procedural safeguards that would be present if governmental action was required. In addition, with respect to some financial regulations and guidelines, states sometimes defer to the interpretation of the insurance department of a non-domiciliary state. Neither the action of the non-domiciliary state nor the action of the NAIC is binding on a domiciliary state. Accordingly, a state could choose to follow a different interpretation. The Company is also subject to the risk that compliance with any particular regulator’s interpretation of a legal, accounting, or actuarial issue may result in non-compliance with another regulator’s interpretation of the same issue, particularly when compliance is judged in hindsight. There is an additional risk that any particular regulator’s interpretation of a legal, accounting or actuarial issue may change over time to the Company’s detriment, or that changes to the overall legal or market environment may cause the Company to change its practices in ways that may, in some cases, limit its growth or profitability. Statutes, regulations, interpretations, and instructions may be applied with retroactive impact, particularly in areas such as accounting, reserve and RBC requirements. Also, regulatory actions with prospective impact can potentially have a significant impact on currently sold products.

The NAIC is also considering changes to accounting and RBC regulations, RBC calculations, governance practices of insurers, and other items. Additionally, the NAIC has developed a group capital calculation that measures capital across U.S.-based insurance groups using a RBC aggregation method with adjustments for all entities within the insurance holding company system. The Company cannot currently estimate what impact these more focused inquiries or proposed changes, if they occur, will have on its product mix, product profitability, reserve and capital requirements, financial condition, or results of operations.

The Company is subject to insurance guaranty fund laws, rules and regulations that could adversely affect the Company’s financial condition or results of operations.

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. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In 2017, the NAIC adopted revisions to the Life and Health Insurance Guaranty Association Model Act (the "Model Act"), which has been adopted by thirty-four states as of December 2021 and more state are expected to follow suit. As adopted by the NAIC, the Model Act would result in an increase to the percentage of liabilities attributable to any future long term care provider insolvency that can be assessed to life insurers. Legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long term care insurance and other specialty products, that differs from the revised Model Act and which increases the cost of future assessments and/or alters future premium tax offsets received in connection with guaranty fund assessments. Additionally, judicial review may affect liquidation orders against insolvent companies, which could impact the guaranty fund system. The Company cannot predict the amount, nature or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations.

Laws, rules, and regulations promulgated in connection with the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act may adversely affect the results of operations or financial condition of the Company.

The Dodd-Frank Act enacted in July 2010 made sweeping changes to the regulation of financial services entities, products and markets. The Dodd-Frank Act generally provides for enhanced federal supervision of financial institutions, including insurance companies in certain circumstances, and financial activities that represent a systemic risk to financial

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stability or the economy. Certain provisions of the Dodd-Frank Act are or may become applicable to us, our competitors or those entities with which we do business, including, but not limited to: the establishment of a comprehensive federal regulatory regime with respect to derivatives; the establishment of the Federal Insurance Office; changes to the regulation of broker-dealers and investment advisors; changes to the regulation of reinsurance; the imposition of additional regulation over credit rating agencies; the imposition of concentration limits on financial institutions that restrict the amount of credit that may be extended to a single person or entity; and mandatory on-facility execution and clearing of certain derivative contracts. We cannot predict with certainty how the Dodd-Frank Act will continue to affect the financial markets generally, or impact our business, ratings, results of operations, financial condition or liquidity.

Among other things, the Dodd-Frank Act imposed a comprehensive regulatory regime on the OTC derivatives marketplace and granted new joint regulatory authority to the SEC and the CFTC over OTC derivatives. Certain of the Company��s derivatives operations are subject to, among other things, new recordkeeping, reporting and documentation requirements and execution and clearing requirements for certain swap transactions (currently, certain interest rate swaps and index-based credit default swaps; cleared swaps require the posting of margin to a clearinghouse via a futures commission merchant and, in some case, to the futures commission merchant as well). As a result of the transition to central clearing and the margin requirements for OTC derivatives, the Company will be required to hold more cash and highly liquid securities resulting in lower yields in order to satisfy the projected increase in margin required. In addition, increased capital charges imposed by regulators on non-cash collateral held by bank counterparties and central clearinghouses is expected to result in higher hedging costs, causing a reduction in income from investments.

The Dodd-Frank Act authorized the creation of the CFPB, which has supervisory authority over certain non-banks whose activities or products it determines pose risks to consumers.

Certain of the Company’s subsidiaries sell products that may be regulated by the CFPB. The CFPB continues to bring enforcement actions involving a growing number of issues, including actions brought jointly with state Attorneys General, which could directly or indirectly affect the Company or any of its subsidiaries. The Company is unable at this time to predict the impact of these activities on the Company.

New and amended regulations regarding the standard of care or standard of conduct applicable to investment professionals, insurance agencies, and financial institutions that recommend or sell annuities or life insurance products may have a material adverse impact on our ability to sell annuities and other products and to retain in-force business and on our financial condition or results of operations.

Sales of life insurance policies and annuity contracts offered by the Company are subject to regulations relating to sales practices adopted by a variety of federal and state regulatory authorities. Certain annuities and life insurance policies such as variable annuities and variable universal life insurance are regulated under the federal securities laws administered by the SEC. On June 5, 2019, the SEC adopted a comprehensive package of rulemakings and interpretations relating to the standard of conduct applicable to broker-dealers, investment advisers, and their representatives when making certain recommendations to retail customers. Regulation BI, a new rule establishing a "best interest" standard of conduct for broker-dealers and their natural associated persons applies when making recommendations to retail customers of any securities transaction or investment strategy involving securities or regarding the opening of an account. In addition to Regulation BI, the SEC also adopted a new rule and amended existing rules to require broker-dealers and registered investment advisers to provide a brief relationship summary to retail investors ("Form CRS Rules"). The obligations under Regulation BI and Form CRS became effective on June 30, 2020. The rulemaking package also included two interpretations: (i) the investment adviser interpretation, which clarifies certain aspects of the standard of conduct applicable to registered investment advisers under section 206 of the Investment Advisers Act of 1940, and (ii) the "solely incidental" interpretation, which clarifies the broker-dealer exclusion from the definition of "investment adviser" under section 202 of the Investment Advisers Act of 1940.

In addition, broker-dealers, insurance agencies and other financial institutions sell the Company’s annuities to employee benefit plans governed by provisions of the ERISA and IRAs that are governed by similar provisions under the Code. Consequently, our activities and those of the firms that sell the Company’s products are subject to restrictions that require ERISA fiduciaries to perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that prohibit ERISA fiduciaries from causing a covered plan or retirement account to engage in certain prohibited transactions

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absent an exemption. The DOL issued its fiduciary rule package on June 29, 2020 and published in the Federal Register on July 7, 2020.

The NAIC passed revisions to the Suitability in Annuity Transactions Model Regulation which are intended to impose a higher standard of care on insurers who sell annuities. Likewise, several states are considering or have adopted legislation or regulatory measures that would implement new requirements and standards applicable to the sale of annuities and, in some cases, life insurance products. While many states are pursuing uniformity through NAIC’s model, these standards can vary widely in scope, applicability, and timing of implementation. The adoption and enactment of these or any revised standards as law or regulation could have a material adverse effect upon the manner in which the Company’s products are sold and impact the overall market for such products.

There remains significant uncertainty surrounding the final form that these regulations may take. Our current distributors may continue to move forward with their plans to limit the number of products they offer, including the types of products offered by the Company. The Company may find it necessary to change sales representative and/or broker compensation, to limit the assistance or advice it can provide to owners of the Company’s annuities, to replace or engage additional distributors, or otherwise change the manner in which it designs, supervises, and supports sales of its annuities and, where applicable, life insurance products. In addition, the Company continues to incur expenses in connection with initial and ongoing compliance obligations with respect to such rules, and in the aggregate these expenses may be significant. Any of the foregoing regulatory, legislative, or judicial measures or the reaction to such activity by consumers or other members of the insurance industry could have a material adverse impact on our ability to sell annuities and other products, to retain in-force business, and on our financial condition or results of operations.

The Company may be subject to regulation, investigations, enforcement actions, fines and penalties imposed by the SEC, FINRA and other federal and international regulators in connection with its business operations.

Certain life insurance policies, contracts, and annuities offered by the Company are subject to regulation under the federal securities laws administered by the SEC. The federal securities laws contain regulatory restrictions and criminal, administrative, and private remedial provisions. From time to time, the SEC and the FINRA examine or investigate the activities of broker-dealers, insurer’s separate accounts and investment advisors, including the Company’s affiliated broker-dealers and investment advisers. These examinations or investigations often focus on the activities of the registered representatives and registered investment advisers doing business through such entities and the entities’ supervision of those persons. It is possible that any examination or investigation could lead to enforcement action by the regulator and/or may result in payments of fines and penalties, payments to customers, or both, as well as changes in systems or procedures of such entities, any of which could have a material adverse effect on the Company’s financial condition or results of operations.

The Company may also be subject to regulation by governments of the countries in which it currently does, or may in the future, do, business, as well as regulation by the U.S. Government with respect to its operations in foreign countries, such as the Foreign Corrupt Practices Act. Penalties for violating the various laws governing the Company’s business in other countries may include restrictions upon business operations, fines and imprisonment, both within the U.S. and abroad. U.S. enforcement of anti-corruption laws continues to increase in magnitude, and penalties may be substantial.

The Company is subject to conditions and requirements set forth in the Telephone Consumer Protection Act, which places restrictions on the use of automated telephone and facsimile machines. Class action lawsuits alleging violations of the Act have been filed against a number of companies, including life insurance carriers. These class action lawsuits contain allegations that defendant carriers were vicariously liable for the alleged wrongful conduct of agents who violated the Telephone Consumer Protection Act. Some of the class actions have resulted in substantial settlements against other insurers. Any such actions against the Company could result in a material adverse effect upon our financial condition or results of operations.

Other types of regulation that could affect the Company and its subsidiaries include, but are not limited to, insurance company investment laws and regulations, state statutory accounting and reserving practices, antitrust laws, minimum solvency requirements, enterprise risk requirements, state securities laws, federal privacy laws, cybersecurity regulation, technology and data regulations, insurable interest laws, federal anti-money laundering and anti-terrorism laws, employment and immigration laws (including laws in Alabama where over half of the Company’s employees are located),

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and because the Company owns and operates real property, state, federal, and local environmental laws. Under some circumstances, severe penalties may be imposed for breach of these laws.

The Company cannot predict what form any future changes to laws and/or regulations affecting participants in the financial services sector and/or insurance industry, including the Company and its competitors or those entities with which it does business, may take, or what effect, if any, such changes may have.

The Company’s ability to enter into certain transactions is influenced by how such a transaction might affect Dai-ichi Life’s taxation in Japan.

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.

In general, the tax law exempts policyholders from current taxation on the increase in value of their life insurance and annuity products during their accumulation phase. This favorable tax treatment provides most of the Company’s products with a competitive advantage over products offered by non-insurance companies. To the extent that the law is revised to either reduce the tax-favored status of life insurance and annuity products, or instead establishes the tax-favored status of competing products, then all life insurance companies, including the Company and its subsidiaries, would be adversely affected regarding the marketability of their products. Furthermore, absent grandfathering such changes would generally cause increased surrenders of existing life insurance and annuity products. For example, a change in law that further restricts the deductibility of interest expense when a business owns a life insurance product would result in increased surrenders of these products.

The Company is subject to corporate income, excise, franchise, and premium taxes. The tax law provides certain benefits to the Company, such as the dividends-received deduction, the deferral of current taxation on certain financial instruments’ economic income and the current deduction for future policy benefits and claims.

Financial services companies and their subsidiaries are frequently the targets of legal proceedings and increased regulatory scrutiny, including class action litigation which could result in substantial judgments, and law enforcement investigations.

A number of judgments have been returned against insurers, broker-dealers, and other providers of financial services involving, among other things, sales, underwriting practices, product design, product disclosure, product administration, denial or delay of benefits, charging excessive or impermissible fees, recommending unsuitable products to customers, breaching fiduciary or other duties to customers, refund or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or other persons with whom the company does business, employment-related matters, payment of sales or other contingent commissions, and other matters. Often these legal proceedings 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 legal proceeding. Arbitration awards are subject to very limited appellate review. In addition, in some legal proceedings, companies have made material settlement payments. In some instances, substantial judgments may be the result of a party’s perceived ability to satisfy such judgments as opposed to the facts and circumstances regarding the claims.

The financial services and insurance industries also are sometimes the target of law enforcement and regulatory investigations and actions relating to the numerous laws and regulations that govern such companies. Resulting publicity about one company may generate inquiries into or litigation against other financial service providers, even those who do not engage in the business lines or practices at issue in the original action. From time to time, the Company receives subpoenas, requests, or other inquiries and responds to them in the ordinary course of business.

Group health coverage issued through associations and credit insurance coverages have received some negative publicity in the media as well as increased regulatory consideration and review and litigation. The Company has a small closed block of group health insurance coverage that was issued to members of an association.

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A number of lawsuits and investigations regarding the method of paying claims have been initiated against life insurers. The Company offers payment methods that may be similar to those that have been the subject of such lawsuits and investigations.

The Company, like other financial services companies in the ordinary course of business, and its subsidiaries, including the Company, are involved in legal proceedings and regulatory actions. The occurrence of such matters may become more frequent and/or severe when general economic conditions deteriorate. The Company may be unable to predict the outcome of such matters, whether they will expand into other areas not yet contemplated, whether they will result in changes in regulation, whether activities currently thought to be lawful will be characterized as unlawful, or the impact, if any, of such scrutiny on the financial services and insurance industry or the Company, and may be unable to or provide a reasonable range of potential losses. Given the inherent difficulty in predicting the outcome of such matters, it is possible that an adverse outcome in certain such matters could be material to the Company’s results for any particular reporting period.

If our business does not perform well, or economic and/or market conditions change negatively, we may be required to recognize an impairment of our goodwill and/or our indefinite lived intangible assets which could adversely affect our results of operations or financial condition.

Goodwill is the excess of the purchase price in an acquisition over the estimated fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances such as adverse changes in the business climate indicate that the fair value of the reporting units may be less than the carrying value of those reporting units. We perform our annual goodwill impairment testing during the fourth quarter of each year based upon data as of the close of the third quarter. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment, at the reporting unit level.

The estimated fair values of the reporting units are impacted by the performance of the business, as well as other inputs used in the fair value calculation, which may be adversely impacted by prolonged market declines or other circumstances. If it is determined that goodwill has been impaired, we must write down goodwill by the amount of the impairment, with a corresponding charge to net income. Such write downs have occurred, and may occur again in the future. Also, such write downs have adversely affected our results of operations and financial position, and future write downs may have the same effect. As of December 31, 2021, a non-cash impairment charge of $129 million was recognized as a result of the annual assessment of reporting units within the Retail Life and Annuity segment.

The Company’s indefinite lived intangible assets represent the value of the Company’s insurance licenses on the date of the merger with Dai-ichi Life. These assets are not amortized but are tested for impairment at least annually or more frequently if events or circumstances indicate that the fair value of the indefinite lived intangibles is less than the carrying value. We perform our annual impairment testing of indefinite lived intangibles during the fourth quarter of each year. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment. If it is determined that the indefinite lived intangibles have been impaired, we must write them down by the amount of the impairment, with a corresponding charge to net income. Such write downs could have an adverse effect on our results of operations or financial position.

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 differs 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 financial results.

The Company’s reinsurers could fail to meet assumed obligations, increase rates, terminate agreements 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. 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 assumed obligations.

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Therefore, the failure, insolvency, or inability or unwillingness to pay under the terms of the reinsurance agreement with the Company of one or more of the Company’s reinsurers could negatively impact the Company’s earnings and financial position.

The Company’s results and its ability to compete are affected by the availability and cost of reinsurance. Premium rates charged by the Company are based, in part, on the assumption that reinsurance will be available at a certain cost. Certain reinsurers have attempted to or may attempt to increase the rates they charge the Company for reinsurance, including rates for new policies the Company is issuing and rates related to policies that the Company has already issued. The Company may not be able to increase the premium rates it charges for policies it has already issued, and for competitive reasons it may not be able to raise the premium rates it charges for new policies to offset the increase in rates charged by reinsurers. If the cost of reinsurance were to increase, if reinsurance were to become unavailable, if alternatives to reinsurance were not available to the Company, or if a reinsurer should fail to meet its obligations, the Company could be adversely affected.

The number of life reinsurers has remained relatively constant in recent years. If the reinsurance market contracts in the future, the Company’s ability to continue to offer its products on terms favorable to it could be adversely impacted.

In addition, reinsurers may face challenges regarding illiquid credit and/or capital markets, investment downgrades, rating agency downgrades, deterioration of general economic conditions, and other factors negatively impacting the financial services industry. If reinsurers, including those with significant exposure to international markets are unable to meet their obligations, the Company would be adversely impacted.

The Company has implemented a reinsurance program through the use of a captive reinsurer. Under this arrangement, the captive owned by the Company serves as the reinsurer, and the consolidated books and tax returns of the Company reflect a liability consisting of the full reserve amount attributable to the reinsured business. The success of the Company’s captive reinsurance program is dependent on a number of factors outside the control of the Company, including, but not limited to, continued access to financial solutions, a favorable regulatory environment, and the overall tax position of the Company. If the captive reinsurance program is not successful, the Company’s financial condition could be adversely impacted.

The Company’s policy claims fluctuate from period to period resulting in earnings volatility.

The Company’s results may fluctuate from period to period due to fluctuations in the amount of policy claims received. In addition, certain of the Company’s lines of business may experience higher claims if the economy is growing slowly or in recession, or if equity markets decline. Also, insofar as the Company continues to retain a larger percentage of the risk of newly written life insurance products than it has in the past, its financial results may have greater variability due to fluctuations in mortality results.

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

The insurance industry is a mature and highly competitive industry. The Company encounters significant competition in all lines of business from other insurance companies, many of which have greater financial resources and higher ratings than the Company and which may have a greater market share, offer a broader range of products, services or features, assume a greater level of risk, have lower operating or financing costs, or have different profitability expectations than the Company. The Company also faces competition from other providers of financial services. Competition could result in, among other things, lower sales or higher lapses of existing products. Consolidation and expansion among banks, insurance companies, distributors, and other financial service companies with which the Company does business could also have an adverse effect on the Company’s financial condition and results of operations if such companies require more favorable terms than previously offered to the Company or if such companies elect not to continue to do business with the Company following consolidation or expansion.

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 competitive unit costs, and its maintenance of adequate ratings from rating agencies. As technology

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evolves, comparison of a particular product of any company for a particular customer with competing products for that customer is more readily available, which could lead to increased competition as well as agent or customer behavior, including persistency that differs from past behavior.

Developments in technology may impact our business.

Technological developments and unforeseen changes in technology may impact our business. Technology changes are increasing customer choices about how to interact with companies generally. Evolving customer preferences may drive a need to redesign our products, and our distribution channels and customer service areas may need to change to become more automated and available at the place and time of the customer’s choosing. Additionally, changes in technology may impact our operational effectiveness and could have an adverse effect on our unit cost competitiveness. Such changes have the potential to disrupt our business model.

Technology may also have a significant impact on the companies in which we invest. For example, consumers may change their purchasing behavior to favor online shopping activity, which may adversely affect the value of retail properties in which we invest.

Advancements in medical technologies may also impact our business. For example, genetic testing and the availability of that information unequally to consumers and insurers can result in anti-selection risks if data from genetic testing gives our prospective customers a clearer view into their future health and longevity expectations, allowing them to select products protecting them against likelihoods of mortality or longevity with more precision based on information that is not available to us. Also, advancements in medical technologies that extend lives may challenge our actuarial assumptions, especially in the annuity business

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

The Company’s ability to maintain competitive unit costs is dependent upon a number of factors, such as the level of new sales, persistency of existing business, and expense management. A decrease in sales or persistency without a corresponding reduction in expenses may result in higher unit costs. Additionally, a decrease in persistency of existing business may result in higher or more rapid amortization of DAC or VOBA 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 DAC or VOBA 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.

Risks Related to Privacy and Cyber Security

A disruption or cyberattack affecting the electronic, communication and information technology systems or other technologies of the Company or those on whom the Company relies could adversely affect the Company’s business, financial condition, and results of operations.

In conducting its business, the Company relies extensively on various electronic systems, including computer systems, networks, data processing and administrative systems, and communication systems. The Company’s business partners, counterparties, service providers, and distributors also rely on such systems, as do securities exchanges and financial markets that are important to the Company’s ability to conduct its business. These systems or their functionality could be disabled, disrupted, damaged, or destroyed by intentional or unintentional acts or events such as cyberattacks, viruses, sabotage, unauthorized tampering, physical or electronic break-ins or other security breaches, acts of war or terrorism, human error, system failures, failures of power or water supply, or the loss or malfunction of other utilities or services. They may also be disabled, disrupted, damaged, or destroyed by natural events such as storms, tornadoes, fires, floods or earthquakes. Disruption, damage, or destruction of any of these systems could cause the Company or others on whom the Company relies to be unable to conduct business for an extended period of time or could result in significant expenditures to replace, repair, or reinstate functionality, which could materially adversely impact the Company’s business and its financial condition and results of operations.

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While the Company and others on whom it depends try to identify threats and implement measures to protect their systems, such protective measures may not be sufficient. Additionally, the Company may not become aware of sophisticated cyberattacks for some time after they occur, which could increase the Company’s exposure. The Company may have to incur significant costs to address or remediate interruptions, threats, and vulnerabilities in its information and technology systems and to comply with existing and future regulatory requirements related thereto. These risks are heightened as the frequency and sophistication of cyberattacks increase. In February 2022, the DFS issued guidance addressing risks related to the Russian invasion of Ukraine, including elevated cyber risks for the U.S. financial sector. In March 2022, the White House issued a series of warnings that the Russian invasion of Ukraine and sanctions by the United States and other governments in response significantly elevate the cyber risk for U.S. companies.

The Company has relationships with vendors, distributors, and other third parties that provide operational and/or information technology services to the Company. Although the Company conducts due diligence, negotiates contractual provisions, and, in many cases, conducts periodic reviews of such third parties to confirm compliance with its information security standards, the failure of such third parties’ computer systems and/or their disaster recovery plans for any reason might cause significant interruptions to the Company’s operations. The Company maintains cyber liability insurance that provides both third-party liability and first party liability coverages, its insurance may not be sufficient to protect us against all losses.

Confidential information maintained in the systems of the Company or other parties upon which the Company relies could be compromised or misappropriated as a result of security breaches or other related lapses or incidents, damaging the Company’s business and reputation and adversely affecting its financial condition and results of operations.

In the course of conducting its business, the Company retains confidential information, including information about its customers and proprietary business and financial information. The Company retains confidential information in various electronic systems, including computer systems, networks, data processing and administrative systems, and communication systems. The Company maintains physical, administrative, and technical safeguards to protect such information and it relies on commercial technologies to maintain the security of its systems and the transmission of such information to other parties, including its business partners, counterparties and service providers. The Company’s business partners, counterparties and service providers likewise maintain confidential information, including, in some cases, customer information, on behalf of the Company. An intentional breach or unintentional compromise of the security measures of the Company or such other parties could result in the disclosure, misappropriation, misuse, alteration, or destruction of the confidential information retained by or on behalf of the Company, or the inability of the Company to conduct business for an indeterminate amount of time. Any of these events or circumstances could damage the Company’s business and adversely affect its financial condition and results of operations by, among other things, causing harm to the Company’s business operations, reputation and customers, deterring customers and others from doing business with the Company, subjecting the Company to significant regulatory, civil, and criminal liability, and requiring the Company to incur significant legal and other expenses.

Despite the Company’s efforts to ensure the integrity of its systems, it is possible that the Company may not be able to anticipate and implement effective preventative or detective measures against security breaches of all types because the techniques used to attack technologies and data systems change frequently or are not recognized until launched and because cyberattacks can originate from a wide variety of sources or parties. Those parties may also attempt to fraudulently induce employees, customers, or other users of the Company’s system, through phishing, phone calls, or other efforts, to deliberately or inadvertently disclose sensitive information in order to gain access to our data or that of the Company’s customers or clients.

Additionally, cyber threats and related legal and regulatory standards applicable to our business are rapidly evolving and may subject the Company to heightened legal standards, new theories of liability, and material claims and penalties that the Company cannot currently predict or anticipate. As cyber threats and applicable legal standards continue to evolve, the Company may be required to expend significant additional resources to continue to modify or enhance its protective measures and computer systems, and to investigate and remediate any information security vulnerabilities. If the Company experiences cyberattacks or other data security events or other technological failures or lapses, including unauthorized access to, loss of, or acquisition of information collected or maintained by the Company or its business partners or vendors, the Company may be subject to regulatory inquiries or proceedings, litigation or reputational damage, or be required to pay claims, fines, or penalties. Depending on the nature of the information compromised, in the event of

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a data breach or other unauthorized access to the Company’s customer data, the Company may also have obligations to notify customers about the incident, and the Company may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. The Company has experienced cyber and data security events in the past, both directly and indirectly through a third-party relationship. None of those events caused the Company material harm or loss, but there can be no assurance that the Company will not suffer such harm or loss in the future.

Compliance with existing and emerging privacy regulations could result in increased compliance costs and/or lead to changes in business practices and policies, and any failure to protect the confidentiality of consumer information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations.

The collection and maintenance of personal data from customers, beneficiaries, agents, employees, and other consumers, including personally identifiable non-public financial and health information, subjects the Company to regulation under various federal and state privacy laws. These laws require that the Company institute certain policies and procedures in its business to safeguard its consumers’ personal data against improper use or disclosure. The requirements vary by jurisdiction, and it is expected that additional laws and regulations will continue to be enacted. In 2020, California passed the California Privacy Rights Act, which will augment and expand the California Consumer Privacy Act. Comprehensive state privacy laws will also take effect in Colorado and Virginia in 2023. Complying with these and other existing, emerging and changing privacy requirements could cause the Company to incur substantial costs or require it to change its business practices and policies. Non-compliance could result in monetary penalties or significant legal liability.

Many of the associates who conduct our business have access to, and routinely process, personal information of consumers through a variety of media, including information technology systems. The Company relies on various internal processes and controls to protect the confidentiality of consumer information that is accessible to, or in the possession of, its associates. It is possible that an associate could, intentionally or unintentionally, disclose or misappropriate confidential consumer information or our data could be the subject of a cybersecurity attack. If the Company fails to maintain adequate internal controls or if its associates fail to comply with its policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of consumer information could occur. Such internal control inadequacies or non-compliance could materially damage the Company’s reputation or lead to regulatory, civil or criminal investigations and penalties.

In addition, the Company analyzes customer data to better manage our business. There has been increased scrutiny, including from U.S. state and federal regulators, regarding the use of "big data" techniques such as price optimization. In August 2020, members of the NAIC unanimously adopted guiding principles on artificial intelligence, to inform and articulate general expectations for businesses, professionals and stakeholders across the insurance industry as they implement artificial intelligence tools to facilitate operations. The Company cannot predict what, if any, actions may be taken with regard to "big data," but any inquiries and limitations could have a material impact on our business, financial condition and results of operations.

Risk Related to Acquisitions, Dispositions or Other Corporate Structural Matters

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

The Company’s Acquisitions segment focuses on the acquisitions of companies and business operations, and the coinsurance of blocks of insurance business, which have increased the Company’s earnings. However, there can be no assurance that the Company will have future suitable opportunities for, or sufficient capital available to fund, such transactions. The Acquisitions segment faces significant competition, and if our competitors have access to capital on more favorable terms or at a lower cost, lower investment return requirements, advantageous tax treatment, or lower risk tolerances, then our ability to compete for acquisitions may be diminished. In addition, there can be no assurance that the Company will be able to realize any projected operating efficiencies or achieve the anticipated financial results from such transactions.

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The Company may be unable to complete an acquisition transaction. Completion of an acquisition transaction may be more costly or take longer than expected, or may have a different or more costly financing structure than initially contemplated. In addition, the Company may not be able to complete or manage multiple acquisition transactions at the same time, or the completion of such transactions may be delayed or be more costly than initially contemplated. The Company, its affiliates, or other parties to the transaction may be unable to obtain in a timely manner regulatory approvals required to complete an acquisition transaction. If the Company identifies and completes suitable acquisitions, it may not be able to successfully integrate the business in a timely or cost-effective manner, or retain key personnel and business relationships necessary to achieve anticipated financial results. In addition, a number of risks may arise in connection with businesses or blocks of insurance business that the Company acquires or reinsures, including unforeseen liabilities or asset impairments; rating agency reactions; and regulatory requirements that could impact our operations or capital requirements. Additionally, in connection with its acquisition transactions that involve reinsurance, 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.

Assets allocated to the MONY Closed Block benefit only the holders of certain policies; adverse performance of Closed Block assets or adverse experience of Closed Block liabilities may negatively affect the Company.

On October 1, 2013, the Company completed the acquisition of MONY from AXA Financial, Inc. MONY was converted from a mutual insurance company to a stock corporation in accordance with its Plan of Reorganization dated August 14, 1998, as amended. In connection with its demutualization, the Closed Block was established for the benefit of policyholders who owned certain individual insurance policies of MONY in force as of the date of demutualization.

Assets allocated to the Closed Block inure solely to the benefit of the Closed Block’s policyholders as dividend payments and will not revert to the benefit of the Company. However, if the Closed Block has insufficient funds to make guaranteed policy benefit payments after elimination of dividend payments, such payments must be made from assets outside the Closed Block. Adverse financial or investment performance of the Closed Block, or adverse mortality or lapse experience on policies in the Closed Block, may require MONY to pay policyholder benefits using assets outside the Closed Block, which events could have a material adverse impact on the Company’s financial condition or results of operations and negatively affect the Company’s RBC ratios. In addition, regulatory actions could require payment of dividends to policyholders in a larger amount than is anticipated by the Company, which could have a material adverse impact on the Company.

The Company depends on the ability of its subsidiaries to transfer funds to it to meet its obligations.

The Company owns insurance companies. A portion of the Company’s funding comes from dividends from its operating subsidiaries, revenues from investment, data processing, legal, and management services rendered to subsidiaries, investment income, and external financing. These funding sources support the Company’s general corporate needs including its debt service. If the funding the Company receives from its subsidiaries is insufficient for it to fund its debt service and other obligations, it may be required to raise funds through the incurrence of debt, or the sale of assets.

The states in which the Company and its subsidiaries are domiciled impose certain restrictions on the subsidiaries’ ability to pay dividends and make other payments to the Company. State insurance regulators may prohibit the payment of dividends or other payments to the Company by its subsidiaries if they determine that the payments could be adverse to the insurance subsidiary or its policyholders or contract holders. In addition, the amount of surplus that the Company’s subsidiaries could pay as dividends is constrained by the amount of surplus they hold to maintain their financial strength ratings, to provide an additional layer of margin for risk protection and for future investment in our businesses.

The Company’s use of affiliate and captive reinsurance companies to finance statutory reserves related to its fixed annuity and term and universal life products and to reduce volatility affecting its variable annuity products may be limited or adversely affected by regulatory action, pronouncements, and interpretations.

The Company currently uses a captive reinsurance company to finance certain statutory reserves based on a regulation entitled "Valuation of Life Insurance Policies Model Regulation," commonly known as "Regulation XXX," and a supporting guideline entitled "The Application of the Valuation of Life Insurance Policies Model Regulation," commonly known as

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"Guideline AXXX," which are associated with term life insurance and universal life insurance with secondary guarantees, respectively. NAIC and state adoption of Actuarial Guideline XLVIII and the Term and Universal Life Insurance Reserve Financing Model Regulation may make the use of new captive structures in the future less capital efficient and/or lead to lower product returns and could impact the Company’s ability to engage in certain reinsurance transactions with non-affiliates.

The NAIC adopted revisions to the Preamble of the NAIC Financial Regulation Standards and Accreditation Program that includes within the definition of "multi-state insurer" certain insurer-owned captives and special purpose vehicles that are single-state licensed but assume reinsurance from cedants operating in multiple states. The revised definition subjects certain captives, including XXX/AXXX captives, variable annuity and long-term care captives, to all of the accreditation standards applicable to other traditional multi-state insurers, including standards related to capital and surplus requirements, RBC requirements, investment laws, and credit for reinsurance laws. We do not expect the revised definition to affect our existing life insurance captives (or our ability to engage in life insurance captive transactions in the future).

The Company uses an affiliated Bermuda domiciled reinsurance company, PL Re to reinsure certain fixed annuity business. PL Re is licensed as a Class C entity for affiliate reinsurance and holds reserves based on Bermuda insurance regulations.

Any regulatory action or change in interpretation that materially adversely affects the Company’s use or materially increases the Company’s cost of using captives or reinsurers for the affected business, either retroactively or prospectively, could have a material adverse impact on the Company’s financial condition or results of operations. If the Company were required to discontinue its use of captives or affiliate reinsurers for intercompany reinsurance transactions on a retroactive basis, adverse impacts would include early termination fees payable to third party finance providers with respect to certain structures, diminished capital position, and higher cost of capital. Additionally, finding alternative means to support policy liabilities efficiently is an unknown factor that would be dependent, in part, on future market conditions and the Company’s ability to obtain required regulatory approvals. On a prospective basis, discontinuation of the use of captives or affiliate reinsurers could impact the types, amounts and pricing of products offered by the Company’s subsidiaries.

General Risks

The Company is controlled by Dai-ichi Life, which has the ability to make important decisions affecting our business.

As the holder of 100% of our voting stock, Dai-ichi Life is entitled to elect all of our directors, to approve any action requiring the approval of the holders of our voting stock, including adopting amendments to our certificate of incorporation and approving mergers or sales of substantially all of our assets, and to prevent any transaction that requires the approval of stockholders. Dai-ichi Life has effective control over our affairs, policies and operations, such as the appointment of management, future issuances of our securities, the payments of distributions by us, if any, in respect of our common stock, the incurrence of debt by us, and the entering into of extraordinary transactions, and Dai-ichi Life’s interests may not in all cases be aligned with the interests of investors, including holders of our debt securities. Additionally, our credit agreement and indentures permit us to pay dividends and make other restricted payments to Dai-ichi Life under certain circumstances, and Dai-ichi Life may have an interest in our doing so. Dai-ichi Life has no obligation to provide us with any additional debt or equity financing.

The Company is exposed to risks related to natural and man-made disasters and catastrophes, such as diseases, epidemics, pandemics (including the coronavirus, COVID-19), malicious acts, cyberattacks, terrorist acts, and climate change, which could adversely affect the Company’s operations and results.

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 and such measures may not adequately predict the impact on the Company from such events. A natural or man-made disaster or catastrophe, including a severe weather or geological event such as a storm, tornado, fire, flood, earthquake, disease, epidemic, pandemic (e.g. the novel coronavirus COVID-19), malicious act, cyberattack, terrorist act, or the effects of climate change, could cause the Company’s workforce to be unable to engage in operations at one or more of its facilities or result in

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short- or long-term interruptions in the Company’s business operations, any of which could be material to the Company’s operating results for a particular period. Certain of these events could also adversely affect the mortality, morbidity, or other experience of the Company or its reinsurers and have a significant negative impact on the Company. In addition, claims arising from the occurrence of such events or conditions could have a material adverse effect on the Company’s financial condition and results of operations. Such events or conditions could also have an adverse effect on lapses and surrenders of existing policies, as well as sales of new policies. In addition, such events or conditions could result in a decrease or halt in economic activity in large geographic area, as well as additional regulation or restrictions on the Company in the conduct of its business. The possible macroeconomic effects of such events or conditions could also adversely affect the Company’s asset portfolio, as well as many other aspects of the Company’s business, financial condition, and results of operations.

The Company’s results and financial condition may be negatively affected should actual experience differ from management’s models, assumptions, or estimates.

In the conduct of business, the Company makes certain assumptions and utilizes certain internal models regarding mortality, morbidity, persistency, expenses, interest rates, equity markets, tax, business mix, casualty losses, contingent liabilities, investment performance, and other factors appropriate to the type of business it expects to experience in future periods. These assumptions and models are used to estimate the amounts of DAC, VOBA, policy liabilities and accruals, future earnings, and various other components of the Company’s balance sheet. These assumptions and models are also used in the operation of the Company’s business in making decisions crucial to the success of the Company, including the pricing of acquisitions and products. The Company’s actual experience along with estimates of future cash flows are used to prepare the Company’s financial statements. To the extent the Company’s actual experience or estimates of future cash flows differ from original estimates, the Company’s financial condition may be adversely affected.

Mortality, morbidity, and casualty assumptions incorporate underlying assumptions about many factors. Such factors may include, for example, how a product is distributed, for what purpose the product is purchased, the mix of customers purchasing the products, persistency and lapses, future progress in the fields of health and medicine, and the projected level of used vehicle values. Actual mortality, morbidity, and/or casualty experience may differ from expectations derived from the Company’s models. In addition, continued activity in the viatical, stranger-owned, and/or life settlement industry could cause the Company’s level of lapses to differ from its assumptions about premium persistency and lapses, which could negatively impact the Company’s performance.

Additionally, the calculations the Company uses to estimate various components of its balance sheet and statement of income are necessarily complex and involve analyzing and interpreting large quantities of data. The systems and procedures that the Company develops in connection with and the Company’s reliance upon third parties could result in errors in the calculations that impact our financial statements or affect our financial condition.

Models, assumptions and estimates involve judgment, and by their nature are imprecise and subject to changes and revisions over time. Accordingly, the Company’s results may be affected, positively or negatively, from time to time, by errors in the design, implementation, or use of its models, 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 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, variable life and annuity deposits are invested in funds managed by third parties, certain modified coinsurance assets are managed by third parties, and the Company enters into derivative transactions with various counterparties and clearinghouses. The Company may rely upon third parties to administer certain portions of its business or business that it reinsures. Any of the other parties upon which the Company depends may default on their obligations to the Company due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud, or other reasons. Such defaults could have a material adverse effect on the Company’s financial condition and results of operations.

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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.

Most of the Company’s products are sold through independent third-party distribution channels. There can be no assurance that the terms of these relationships will remain acceptable to us or the distributors, as they are subject to change as a result of business combinations, mergers, consolidation, or changes in business models, compensation arrangements, or new distribution channels. If one or more key distributors terminated their relationship with us, increased the costs of selling our products, or reduced the amount of sales they produce for us, our results of operations could be adversely affected. If we are unsuccessful in attracting and retaining key associates who conduct our business, sales of our products could decline and our results of operations and financial condition could be materially adversely affected.

Because our products are distributed through unaffiliated third-party distributors, we may not be able to fully monitor or control the manner of their distribution despite our training and compliance programs. If our products are distributed by such firms in an inappropriate manner, or to customers for whom they are unsuitable, we may suffer reputational and other harm to our business. In addition, our distributors may also sell our competitors’ products. If our competitors offer products that are more attractive than ours, or pay higher compensation than we do, these distributors may concentrate their efforts on selling our competitors’ products instead of ours.

The Company’s risk management policies, practices, and procedures could leave it exposed to unidentified or unanticipated risks, which could negatively affect its business or result in losses.

The Company has developed risk management policies and procedures and expects to continue enhancing them in the future. Nonetheless, the Company’s policies and procedures to identify, monitor, and manage both internal and external risks may not predict future exposures, which could be different or significantly greater than expected.

These identified risks may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company may adversely affect its business, financial condition and/or results of operations.

The Company’s strategies for mitigating risks arising from its day-to-day operations may prove ineffective resulting in a material adverse effect on its results of operations and financial condition.

The Company’s performance is highly dependent on its ability to manage risks that arise from a large number of its day-to-day business activities, including, but not limited to, policy pricing, reserving and valuation, underwriting, claims processing, policy administration and servicing, administration of reinsurance, execution of its investment and hedging strategy, financial and tax reporting, and other activities, many of which are very complex. The Company also may rely on third parties for such activities. The Company seeks to monitor and control its exposure to risks arising out of or related to these activities through a variety of internal controls, management review processes, and other mechanisms. However, the occurrence of unanticipated risks, or the occurrence of risks of a greater magnitude than expected, including those arising from a failure in processes, procedures or systems implemented by the Company or a failure on the part of employees or third parties upon which the Company relies in this regard, may have a material adverse effect on the Company’s financial condition or results of operations.

Events that damage our reputation or the reputation of our industry could adversely impact our business, results of operations, or financial condition.

There are events which could harm our reputation, including, but not limited to, regulatory investigations, adverse media commentary, legal proceedings, and cyber or other information security events. Depending on the severity of damage to the Company’s reputation, our sales of new business, and/or retention of existing business could be negatively impacted, and our ability to compete for acquisition transactions or engage in financial transactions may be diminished, all of which could adversely affect our results of operations or financial condition.

As with all financial services companies, the Company’s 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.

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The Company may not be able to protect its intellectual property and may be subject to infringement claims.

The Company relies on a combination of contractual rights and copyright, trademark, patent, and trade secret laws to establish and protect its intellectual property. Although the Company uses a broad range of measures to protect its intellectual property rights, third parties may infringe or misappropriate its intellectual property. The Company may have to litigate to enforce and protect its copyrights, trademarks, patents, trade secrets, and know-how or to determine their scope, validity, or enforceability, which represents a diversion of resources that may be significant in amount and may not prove successful. The loss of intellectual property protection or the inability to secure or enforce the protection of the Company’s intellectual property assets could have a material adverse effect on its business and ability to compete.

The Company also may be subject to costly litigation in the event that another party alleges its operations or activities infringe upon that party’s intellectual property rights. Any such claims and any resulting litigation could result in significant liability for damages. If the Company were found to have infringed third party patent or other intellectual property rights, it could incur substantial liability, and in some circumstances could be enjoined from providing certain products or services to its customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets, or licenses, or alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on the Company’s business, results of operations, and financial condition

The Company may be required to establish a valuation allowance against its deferred tax assets, which could have a material adverse effect on the Company’s results of operations, financial condition, and capital position.

Deferred tax assets are attributable to certain differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets represent future savings of taxes which would otherwise be paid in cash. The realization of deferred tax assets is dependent upon the future generation of an amount of taxable income sufficient enough to ensure that the future tax deductions underlying such assets will result in a tax benefit. Realization may also be limited for other reasons, including but not limited to changes in tax rules or regulations. If it is determined that a certain deferred tax asset cannot be realized, then a deferred tax valuation allowance is established, with a corresponding charge to either adjusted operating income or other comprehensive income (depending on the nature of the deferred tax asset).

Based on the Company’s current assessment of future taxable income, including available tax planning opportunities, it is more likely than not that the Company will generate sufficient taxable income to realize its material deferred tax assets net of any existing valuation allowance. If future events differ from the Company’s current forecasts, an additional valuation allowance will be established, which could have a material adverse effect on the Company’s results of operations, financial condition, or capital position.

New accounting rules, changes to existing accounting rules, or the granting of permitted accounting practices to competitors could negatively impact the Company.

The Company is required to comply with GAAP. A number of organizations are instrumental in the development and interpretation of GAAP such as the SEC, the Financial Accounting Standards Board, and the American Institute of Certified Public Accountants. GAAP is subject to constant review by these organizations and others in an effort to address emerging accounting rules and issue interpretative 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. GAAP includes the requirement to carry certain assets and liabilities at fair value. These fair values are sensitive to various factors including, but not limited to, interest rate movements, credit spreads, and various other factors. Because of this sensitivity, changes in these fair values may cause increased levels of volatility in the Company’s financial statements.

In addition, the Company’s insurance subsidiaries are required to comply with statutory accounting principles ("SAP"). SAP and various components of SAP (such as actuarial reserving methodology) are subject to constant review by the NAIC and its task forces and committees as well as state insurance departments in an effort to address emerging issues and otherwise improve or alter financial reporting. Certain NAIC pronouncements related to accounting and reporting matters take effect automatically without affirmative action by the states, and various proposals either are currently or have previously been pending before committees and task forces of the NAIC, some of which, if enacted, would negatively affect the Company. The NAIC is also currently working to reform model regulation in various areas. The

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Company cannot predict whether or in what form reforms will be enacted by state legislatures and, if so, whether the enacted reforms will positively or negatively affect the Company. In addition, the NAIC Accounting Practices and Procedures manual provides that state insurance departments may permit insurance companies domiciled in the state to depart from SAP by granting them permitted accounting practices. The Company cannot predict whether or when the insurance departments of the states of domicile of its competitors may permit them to utilize advantageous accounting practices that depart from SAP, the use of which is not permitted by the insurance departments of the states of domicile of the Company’s insurance subsidiaries. With respect to regulations and guidelines, states sometimes defer to the interpretation of the insurance department of the state of domicile. Neither the action of the domiciliary state nor action of the NAIC is binding on a state. Accordingly, a state could choose to follow a different interpretation. The Company can give no assurance that future changes to SAP or components of SAP or the granting of permitted accounting practices to its competitors will not have a negative impact on the Company.

Directors and Executive Officers

The following table contains information regarding our current directors and executive officers. All of our executive officers [and directors] are elected annually and serve at the pleasure of our Board of Directors (the "Company Board"). No immediate family relationship exists between any directors of the Company or PLC or executive officers and any other directors or executive officers. Certain of our executive officers also serve as executive officers and/or directors of various of the Company’s subsidiaries. Our directors, Mr. Bielen and Mr. Walker, are officers of the Company and officers and employees of PLC and Mr. Temple is an officer and employee of the Company and an officer of PLC. Accordingly, none of our directors qualifies as an independent director under the independence standards of the NYSE.

Name	Age (as of 2/1/2022)	Title
Richard J. Bielen	61	President, Chief Executive Officer and Director
D. Scott Adams	57	Executive Vice President, Corporate Responsibility, Strategy, and Innovation Officer
Mark L. Drew	60	Executive Vice President, Chief Legal Officer
Wendy Evesque	53	Executive Vice President and Chief Human Resources Officer
Wade Harrison	50	Senior Vice President and President, Protection Division
Lance Black	51	Senior Vice President, Acquisitions and Corporate Development
Scott Karchunas	55	Senior Vice President and President, Asset Protection Division
Philip Passafiume	54	Senior Vice President and Chief Investment Officer
Aaron Seurkamp	41	Senior Vice President and President, Retirement Division
Michael G. Temple	59	Vice Chairman, Chief Operating Officer and Director
Steven G. Walker	62	Executive Vice President, Chief Financial Officer and Director

Mr. Bielen has been Chairman of the Board since July 2017, Chief Executive Officer of the Company and PLC since July 2017, President of the Company since February 2016, and President of PLC since January 2016. Mr. Bielen also served as Chief Operating Officer of the Company and PLC from February 2016 (Company) and January 2016 (PLC) to July 2017. From June 2007 to January 2016, Mr. Bielen served as Vice Chairman and Chief Financial Officer of PLC. Mr. Bielen became a director of the Company on September 11, 2006, and a director of PLC on February 1, 2015. Mr. Bielen has been employed by PLC and its subsidiaries since 1991. Before joining Protective, Mr. Bielen was Senior Vice President of Oppenheimer & Company. Prior to joining Oppenheimer, Mr. Bielen was a Senior Accountant with Arthur Andersen and Company. Mr. Bielen serves on the Board of Directors of the United Way of Central Alabama and as a trustee of Children’s of Alabama. Mr. Bielen is a former Director of the McWane Science Center and previously served on the Board of Directors of Infinity Property and Casualty Corporation until July 2018. Mr. Bielen received his undergraduate degree and Masters of Business Administration from New York University. Mr. Bielen has served on the Board of Directors of the US Chamber of Commerce since March 2020 and the Board of Directors of the American Council of Life Insurers since October 2020. We believe that Mr. Bielen’s background in business; his skills and experience as a senior executive of PLC and Oppenheimer and as a leader in other business, civic, educational and charitable organizations; his knowledge and experience as a leader in the life insurance industry, along with his long-standing knowledge of PLC and his seasoned business judgment, are valuable to us and the Board.

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Mr. Adams has been Executive Vice President, Corporate Responsibility, Strategy, and Innovation Officer of the Company and PLC since February 2020. From March 2018 to February 2020, he served as Executive Vice President and Chief Digital and Innovation Officer of the Company and PLC. From February 2016 to March 2018, Mr. Adams served as Executive Vice President of the Company, and from January 2016 to March 2018, Mr. Adams served as Executive Vice President and Chief Administrative Officer of PLC. Mr. Adams served as Senior Vice President and Chief Human Resources Officer of the Company and PLC from April 2006 to February 2016 (Company) or January 2016 (PLC).

Mr. Drew has been Executive Vice President and Chief Legal Officer of the Company and PLC and Secretary of PLC since March 2020. From August 2018 to March 2020, Mr. Drew served as Executive Vice President and General Counsel of the Company and PLC and Secretary of PLC. From August 2016 to August 2018, Mr. Drew served as Executive Vice President and General Counsel of the Company and PLC. From 2006 to August 2016, Mr. Drew served as Managing Shareholder of Maynard, Cooper & Gale, P.C., a Birmingham, Alabama based law firm, where Mr. Drew worked from 1988 until July 2016.

Ms. Evesque has been an Executive Vice President of the Company since June 2020 and Chief Human Resources Officer of the Company since February 2016. From February 2016 to June 2020, she served as a Senior Vice President of the Company. From July 2015 to February 2016, she served as Vice President, Senior Human Resources Partner of the Company. Additionally, Ms. Evesque has been an Executive Vice President of PLC since March 2020 and Chief Human Resources Officer of PLC since January 2016. From January 2016 to March 2020, she served as a Senior Vice President of PLC. From May 2008 to January 2016, she served as Vice President, Senior Human Resources Partner of PLC.

Mr. Harrison has been a Senior Vice President of the Company since June 2014 and of PLC since February 2020. Mr. Harrison has been President, Protection Division of the Company and PLC since February 2020. From June 2014 to February 2020, Mr. Harrison served as Chief Product Actuary of the Company.

Mr. Black has been Senior Vice President, Acquisitions and Corporate Development of the Company and PLC since June 2021. From June 2007 to June 2021, Mr. Black served as Treasurer of the Company and PLC. Additionally, Mr. Black served as Senior Vice President of the Company from May 2008 to June 2021, and he served as Senior Vice President of PLC from June 2008 to June 2021. Mr. Black has been employed by the Company and its subsidiaries since March 2003.

Mr. Karchunas has been a Senior Vice President of the Company since June 2009 and President, Asset Protection Division of the Company since February 2020. From January 2013 to February 2020, Mr. Karchunas served as the Senior Vice President, Asset Protection Division of the Company. Additionally, Mr. Karchunas has been a Senior Vice President of PLC since May 2010 and President, Asset Protection Division of PLC since February 2020. From January 2013 to February 2020, he served as Senior Vice President, Asset Protection Division of PLC. Mr. Karchunas has been employed by the Company and its subsidiaries since 1988.

Mr. Passafiume has been a Senior Vice President of the Company since June 2008 and Chief Investment Officer of the Company since June 2020. From June 2008 to June 2020, Mr. Passafiume served as Director of Fixed Income of the Company. Additionally, Mr. Passafiume has served as Senior Vice President and Chief Investment Officer of PLC since June 2020. From May 2008 to June 2020, Mr. Passafiume served as Senior Vice President, Director of Fixed Income of PLC. Mr. Passafiume has been employed by the Company and its subsidiaries since January 2003.

Mr. Seurkamp has been a Senior Vice President of the Company since July 2013, and President, Retirement Division of the Company since February 2020. From March 2018 to February 2020, Mr. Seurkamp was Senior Vice President, Life and Annuity Executive of the Company. From August 2016 to March 2018, Mr. Seurkamp was Senior Vice President and Chief Distribution Officer of the Company, and from August 2016 to August 2017, he was also Chief Sales Officer of the Company. Additionally, Mr. Seurkamp has been a Senior Vice President of PLC since March 2018, and he has been President, Retirement Division of PLC since February 2020. From March 2018 to February 2020, Mr. Seurkamp was Senior Vice President, Life and Annuity Executive of PLC. Mr. Seurkamp has been employed by the Company and its subsidiaries since 2004.

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Mr. Temple has been Vice Chairman and Chief Operating Officer of the Company and PLC since June 1, 2019. From March 2018 to June 2019, he served as Vice Chairman, Finance and Risk of the Company and PLC. From November 2016 to March 2018, he served as Executive Vice President, Finance and Risk of the Company and PLC. From February 2016 to November 2016, Mr. Temple served as Executive Vice President, Finance and Risk, and Chief Risk Officer of the Company, and from January 2016 to November 2016, Mr. Temple served as Executive Vice President, Finance and Risk, and Chief Risk Officer of PLC. From December 2012 to February 2016, Mr. Temple served as Executive Vice President and Chief Risk Officer of the Company, and from December 2012 to January 2016, Mr. Temple served as Executive Vice President and Chief Risk Officer of PLC. Prior to joining PLC,

Mr. Temple served as Senior Vice President and Chief Risk Officer at Unum Group, an insurance company in Chattanooga, Tennessee. Additionally, Mr. Temple has served on the Board of Directors of LL Global, Inc. since January 2021. Mr. Temple became a director of the Company on July 21, 2017. Mr. Temple brings to the Board industry and risk management experience, as well as an in-depth knowledge of our business.

Mr. Walker has been Executive Vice President and Chief Financial Officer of the Company since February 2016. From September 2003 to March 2017, Mr. Walker also served as Controller of the Company. From May 2004 to February 2016, Mr. Walker served as Senior Vice President of the Company, and from September 2003 to February 2016, Mr. Walker served as Chief Accounting Officer. Mr. Walker has been Executive Vice President and Chief Financial Officer of PLC since January 2016. From September 2003 to March 2017, Mr. Walker also served as Controller of PLC. From March 2004 to January 2016, Mr. Walker served as Senior Vice President of PLC, and from September 2003 to March 2017, Mr. Walker served as Chief Accounting Officer of PLC. Mr. Walker has been employed by PLC and its subsidiaries since 2002. Mr. Walker became a director of the Company on June 12, 2020. Mr. Walker brings to the Board industry and risk management experience, financial and accounting experience, as well as an in-depth knowledge of our business.

Executive Compensation

The Company does not have a separately designated compensation committee or other board committee which performs equivalent functions. All compensation and related decisions for the named executive officers of Protective Life are made by the Board of Directors of PLC (the "PLC Board") upon the recommendation of the Compensation and Management Succession Committee of the PLC Board (the "PLC Compensation Committee"), which consists of four independent PLC directors. The PLC Compensation Committee retained Meridian Compensation Partners, LLC, as an independent compensation consultant for its 2021 compensation cycle, to review, assess and provide input with respect to certain aspects of the compensation program for our executive officers. The compensation consultant recommends a compensation package for our CEO. Our CEO, with advice from the compensation consultant, recommends compensation packages for our executive officers; however, he does not provide recommendations about his own compensation.

In this section, we describe the material components of PLC’s executive compensation program in 2021 for our named executive officers, whose compensation is set forth in the Summary Compensation Table and other compensation tables contained herein:

Named Executive Officers

●Richard J. Bielen, President and Chief Executive Officer;

●Steven G. Walker, Executive Vice President and Chief Financial Officer;

●Mark L. Drew, Executive Vice President, Chief Legal Officer;

●Michael G. Temple, Vice Chairman and Chief Operating Officer; and

●Aaron Seurkamp, Senior Vice President and President, Retirement Division

Compensation Committee Interlocks and Insider Participation. None of our executive officers has served as a member of the compensation committee (or other committee serving an equivalent function) or board of directors of any

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other entity whose executive officers served as a director of the Company Board or members of the PLC Board or the PLC Compensation Committee.

Compensation Philosophy

The objectives of PLC’s executive compensation program are to: 1) attract and retain the most qualified executives; 2) reward them for achieving high levels of performance; and 3) align the interests of our executives with the interests of Dai-ichi Life, which is the sole stockholder of our corporate parent, PLC. To meet PLC’s executive compensation objectives, PLC designs the compensation program to: 1) align compensation with business goals and results; 2) compete for executive talent; 3) support risk management practices; 4) take into account market and industry pay and practices; and 5) be communicated effectively so that our officers understand how compensation is linked to performance.

The key components of PLC’s executive compensation program for our executive officers are: 1) base salaries; 2) annual cash incentive awards; 3) long-term cash incentives; and 4) retirement and deferred compensation plans. The PLC Board has adopted the Protective Life Corporation Annual Incentive Plan (as amended and restated, the "AIP") and the Protective Life Corporation Long-Term Incentive Plan (as amended and restated, the "LTIP"), under which annual and long-term cash incentives have been made available to our named executive officers.

The PLC Compensation Committee considers each component (separately and with the others) for our executive officers. The PLC Compensation Committee targets the total annual compensation package to be within a market competitive range of median pay levels for a peer group of life insurance and financial services companies that are similar to us in size and business mix. As part of this review, the PLC Compensation Committee considers the total "mix" of the base salary, annual cash incentive and long-term compensation delivered to our executive officers, and compares that compensation mix to the compensation mix of comparable officers at other companies. The annual incentive and long-term incentive components of the program are designed so above-average company performance will result in above-median total compensation, and below-average company performance will result in below-median total compensation. The PLC Compensation Committee does not have formal policies regarding these factors, but tries to make PLC’s practices generally consistent with the practices of the peer group.

To evaluate its implementation of this pay for performance philosophy, the PLC Compensation Committee members consider a wide range of information (including information they receive both as PLC Compensation Committee members and as PLC Board members), including: 1) PLC’s deployment of capital for acquisitions and products; 2) PLC’s adjusted operating earnings, the rate of growth of PLC’s adjusted operating earnings, and the degree of difficulty in achieving PLC’s earnings goals; 3) PLC’s financial strength (as measured by PLC’s statutory capital, RBC, and rating agency ratings); 4) PLC’s budgets, expense management, and budget variances; and 5) pay for performance analyses prepared by the compensation consultant. The PLC Compensation Committee does not place a particular weighting on any of these factors, but instead considers the information as a whole.

Base Salaries

Base salary is the primary fixed portion of executive pay. It compensates individuals for performing their day-to-day duties and responsibilities and provides them with a level of income certainty. Salary adjustments have historically been made in late February/early March and have been effective March 1 of that year. In making its base salary recommendations to the PLC Board, the PLC Compensation Committee considers the responsibilities of the job, individual performance, the relative value of a position, experience, comparisons to salaries for similar positions in other companies, and internal pay equity. For the CEO, the PLC Compensation Committee also considers PLC performance. No particular weighting is given to any of these factors.

The PLC Compensation Committee reviewed the performance and base salaries of our named executive officers at its February 2021 meeting. At the recommendation of the PLC Compensation Committee, the PLC Board approved the following annual base salaries (and the related percentage increases from the previously-effective base salaries) for our named executive officers, effective March 1, 2021: 1) Mr. Bielen, $925,000 (5.7%); 2) Mr. Walker, $535,000 (9.2%); 3) Mr. Seurkamp, $475,000 (2.8%); 4) Mr. Drew, $560,000 (3.3%); and 5); and Mr. Temple, $620,000 (3.3%).

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Annual Incentive Plan Awards

Our executive officers are eligible for annual cash incentive opportunities under the AIP. The AIP’s purpose is to attract, retain, motivate, and reward qualified officers and key employees by providing them with the opportunity to earn competitive compensation directly linked to PLC’s performance.

The PLC Compensation Committee recommends to the PLC Board for its approval the target annual incentive opportunities and performance objectives for our executive officers for the current year. Historically, in recommending these target opportunities, the PLC Compensation Committee has considered the responsibilities of the job, individual performance, the relative value of a position, comparisons to annual incentive opportunities for similar positions in other companies, and internal pay equity. No particular weight has been given to any of these factors. There are no guaranteed minimum payments for any officer under the AIP.

Payment of annual incentives is based on achievement of one or more performance goals. The performance objectives established under the AIP shall be related to one of the following criteria, which may be determined solely by reference to the performance of PLC or a subsidiary or a division or business unit or based on comparative performance relative to other companies: net income; operating income; book value; embedded value or economic value added; return on equity, assets or invested capital; assets, sales or revenues or growth in assets, sales or revenues; efficiency or expense management; capital adequacy (including RBC); investment returns or asset quality; completion of acquisitions, financings, or similar transactions; customer service metrics; the value of new business or sales; or such other reasonable criteria as the PLC Compensation Committee may recommend and the PLC Board may approve. With respect to any executive officer, the PLC Compensation Committee may establish multiple performance objectives.

The PLC Compensation Committee will establish a target amount for each participant in the AIP and that participant’s targeted amounts may be aggregated to create a pool to be allocated in the discretion of the PLC Compensation Committee. The PLC Compensation Committee may establish the pool in respect of any performance objective based on the extent to which the objective is met or exceeded, or the extent to which objectives are only partially achieved. The PLC Compensation Committee may provide that amounts below or in excess of the aggregate of all targets for such performance objective will be funded for performance in excess of, or at stated levels below, targeted performance. The PLC Compensation Committee may also establish a threshold level of achievement for any performance objective below which no amount shall be funded in respect of such performance objective. Additionally, the PLC Compensation Committee may, in its discretion, allocate the pool among divisions or business units, in which case the authorized manager of each division or business unit will then i) make individual determinations regarding the contribution of each participant in his or her respective division or business unit to the achievement of the overall stated performance objectives, and ii) recommend, for approval by the PLC Compensation Committee, the amount payable, if any, from such division or business unit allocation to each such participant.

Any other provision of the AIP to the contrary notwithstanding, (i) the PLC Compensation Committee has the right, in its sole discretion, to pay to any executive officer an annual incentive payment for such year in an amount based on individual performance or any other criteria or the occurrence of any such event that the PLC Compensation Committee deems appropriate, and (ii) the PLC Compensation Committee may, in its sole discretion, provide for a minimum incentive payment to any or all executive officers in respect of any calendar year, regardless of whether any applicable performance objectives are attained.

Termination or Change in Control. Unless the PLC Compensation Committee otherwise determines to pay the executive officer a greater amount, if an officer’s employment terminates due to death, disability or, if after at least six months of employment service to PLC during such year, due to normal or early retirement under the terms of the Qualified Pension Plan, the executive officer will receive an annual incentive payment equal to the amount the executive officer would have received if the named officer had remained employed through the end of the year, pro-rated based on the number of days that elapsed during the year in which the termination occurs; provided, however, no such officer will be eligible to receive an annual incentive payment for such year if such officer is subject to a reduction in force or the recipient of severance. Except as provided in the prior sentence, unless the PLC Compensation Committee determines to authorize a payment, no amount will be payable to an executive officer as an annual incentive award unless the officer is still an employee of PLC or one of its subsidiaries on the date payment is made or such earlier date as the PLC Compensation Committee may specify.

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2021 AIP Performance Goals. For 2021, the PLC Board established, at the recommendation of the PLC Compensation Committee, the following performance goals (weighted as shown in the table) for our named executive officers:


Goal (in millions, except percentages)	Threshold			Target			Maximum
	(25% payout)			(100% payout)			(225% payout)
After-tax Adjusted Operating Income (60%)	$	209		$	348		$	418
	(50% payout)			(100% payout)			(200% payout)
Value of New Business (30%)	$	50		$	100		$	150
Expense Management (10%)⁽¹⁾	$	625		$	607		$	589
RBC below 350% (Negative modifier (20%))		350	%		350	%		350	%

(1)	Does not include expenses related to an acquisition which closed on January 1, 2021.

After-tax adjusted operating income, measured from January 1 through December 31, 2021, is derived from pre-tax adjusted operating income with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Pre-tax adjusted operating income (loss) is calculated by adjusting "income (loss) before income tax" by excluding the following items:

●gains and losses on investments and derivatives,

●losses from the impairment of intangible assets,

●changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

●actual GLWB incurred claims,

●immediate impacts from changes in current market conditions on estimates on future profitability on variable annuity and variable universal life products, including impacts on DAC, VOBA, reserves and other items, and

●the amortization of DAC, VOBA, and certain policy liabilities that is impacted by the exclusion of these items, and

●effective January 1, 2022, changes in the fair value of company-owned life insurance, exclusive of the long-term expected return of the underlying assets.

Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income at the statutory federal income tax rate of twenty-one percent. Income tax expense or benefits allocated to after-tax adjusted operating income can vary period to period based on changes in PLC’s effective income tax rate.

Value of new business is measured as the expected value of new policies written from January 1 through December 31, 2021. The value of new business includes income expected to be realized in both the current year and future years. For purposes of the value of new business goal, the variable annuity business measurement is based on a market consistent embedded value analysis. All other business is measured as present value of expected future earnings from new sales above the assumed cost of capital.

The expense management performance goal provides management with an incentive to prudently manage operating expenses and to maintain efficient operations. The expense management performance goal is measured from January 1 through December 31, 2021 and is defined as other operating expenses before the effect of policy acquisition cost deferrals, excluding interest expense, the effects of reinsurance, certain performance incentives, agent commissions, certain selling costs, certain expenses associated with acquisition-related activity, expenses incurred as part of long-term expense reduction initiatives, certain legal costs, certain regulatory fees or other expenses imposed on PLC, and management fees paid to Dai-ichi Life. In addition, certain expense items are considered variable and are therefore adjusted based on variations in new business volumes.

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RBC is the company action level "risk based capital" percentage of the Company as of December 31, 2021, determined as set forth in the applicable instructions established by the NAIC and filed with the state of Tennessee, and based on SAP. RBC is intended to be a limit on the amount of risk PLC can take, and it requires a company with a higher amount of risk to hold a higher amount of capital. The PLC Board determined that the overall results achieved in adjusted operating earnings, expense management, and capital deployment goals would be reduced by 20% if RBC was less than 350% on December 31, 2021.

The amount payable is based on each of the above-described performance objectives. At the target level of performance, 100% of the allocable portion of the target award will be payable. For achievement between the stated performance levels (i.e., between threshold and target, and between target and maximum), the amount payable will be determined by mathematical interpolation. No amount is payable below the threshold levels of performance. The PLC Compensation Committee recommends to the PLC Board for its determination the achievement of the performance objectives for the incentive opportunities granted to certain of our officers, including our named executive officers in the previous year.

At its February 25, 2022 meeting, the PLC Board determined that, in respect to 2021 performance: 1) PLC’s after-tax adjusted operating income was $357 million; 2) PLC’s value of new business was $224 million; 3) PLC’s expense management amount was $595 million (given that actual expenses were increased to include $15.8 million of expense modifiers); and 4) PLC’s RBC was approximately 477%.

The Grants of Plan-Based Awards Table contains additional information about annual incentive payments under the AIP.

Long-Term Incentive Awards

The PLC Board adopted a long-term incentive plan that established a formula equity value for PLC under which our executive officers receive awards, payable in cash, that will increase or decrease in value as the value determined under this formula changes based on the operation of PLC’s business.

Under the LTIP, our executive officers are eligible to receive three types of incentive awards (collectively, "Awards"):

1."Performance Unit", an Award which becomes vested and non-forfeitable upon the attainment, in whole or in part, of performance objectives, determined by the PLC Compensation Committee, during an award period, and which is payable in cash based amounts set by the PLC Compensation Committee. The 35% Enahnced 2021 Performance Unit Award, discussed in more detail under "2021 LTIP Awards," is subject to the same terms and provisions as Performance Unit Awards and is discussed herein as a Performance Unit Award unless otherwise noted.

2."Restricted Unit", an Award which becomes vested and non-forfeitable, in whole or in part, upon the satisfaction of such conditions as shall be determined by the PLC Compensation Committee, and which is payable in cash based on PLC’s "Tangible Book Value Per Unit", as defined in the LTIP.

3."Parent-Based Award", a cash-denominated Award based on the value of the common stock of PLC’s sole stockholder, Dai-ichi Life or its successor over the life of the Award.

In determining the total target value of long-term incentive awards in a given year, the PLC Compensation Committee considers an executive officer’s responsibilities, performance, previous long-term incentive awards, the amount of long-term cash incentives provided to officers in similar positions at PLC’s peer companies, and internal compensation equity. No particular weight is given to any of these factors.

The PLC Compensation Committee selects the number of Awards each executive officer will be granted, and the performance criteria (if any) for each Award. In the case of Performance Units, the performance objectives shall be related to at least one of the following criteria, which may be determined solely by reference to the performance of PLC or a division or subsidiary or based on comparative performance relative to other companies: (i) pre-tax and/or after-tax adjusted operating income, operating earnings, net income, operating income, book value, embedded value or economic value added of PLC or a subsidiary, division or business unit (including measures on a per share basis) or the accumulated earnings of any of the foregoing, (ii) return on equity, assets or invested capital, (iii) assets, sales or revenues, or growth in assets, sales or revenues, of PLC or a subsidiary, division or business unit, iv) efficiency or expense management (such as unit cost), (v) risk management or third-party ratings, (vi) capital adequacy (including

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RBC), (vii) investment returns or asset quality, (viii) premium income or earned premium, (ix) value of new business or sales, (x) negotiation or completion of acquisitions, financings or similar transactions, xi) customer service metrics, and (xii) such other reasonable criteria as the PLC Compensation Committee may determine.

The PLC Compensation Committee may change the performance objectives applicable with respect to any Performance Units to reflect such factors, including changes in an executive officer’s duties or responsibilities or changes in business objectives, as the PLC Compensation Committee deems necessary or appropriate.

Termination or Change in Control. Upon termination of an executive officer’s employment, awards under the LTIP provide for different vesting and payment terms depending on the type of termination. Unless otherwise noted, any Restricted Unit Awards or Parent-Based Awards that become vested as a result of a termination of employment will be payable in accordance with the normal vesting schedule as if the officer had remained employed through the last vesting date, and any Performance Unit Awards that are earned as a result of a termination of employment will be payable as if the officer had remained employed for the duration of the award period.

●In the case of a termination of an executive officer’s employment due to death, disability, or normal retirement, all Restricted Units and Parent-Based Awards will become fully vested and, unless the PLC Compensation Committee determines to provide for treatment that is more favorable, all Performance Units will vest pro rata based on the officer’s period of employment during the award period relative to the total length of the award period.

●In the case of an early retirement of an executive officer under the terms of the Qualified Pension Plan, unless the PLC Compensation Committee determines to provide for more favorable treatment, all Performance Units, Restricted Units and Parent-Based Awards will vest pro rata based on the officer’s period of employment during the award period relative to the total length of the award period.

●In the case of a special termination of an executive officer, which consists of a termination of employment due to (i) a divestiture of a business segment or a significant portion of the assets of PLC or (ii) a significant reduction by PLC of its work force, the PLC Compensation Committee determines to what extent, and on what terms, any unvested Restricted Unit Awards, Parent-Based Awards, and any outstanding and unpaid Performance Unit Awards will be paid.

●In the case of a termination "for cause" (as defined in the LTIP), all vested and unvested awards are forfeited.

●Otherwise, unvested amounts generally are forfeited upon termination of employment.

The LTIP provides for special payouts of awards upon certain change of control transactions of PLC as defined in the LTIP. In the case of a change in control of PLC:

●Our executive officers will be deemed to have earned the greater of i) 100% of the Performance Units and ii) the percentage of such Performance Units that would derive from applying the usual schedules through the date of the change in control event, and will be settled in cash within 45 days following the date of the change in control event, based upon PLC Change in Control Book Value Per Unit, (as defined in the LTIP), if available within 10 days before such payment date; or, if PLC Change in Control Book Value Per Unit is not then available, then 90% of the value of such Performance Units, based on the PL Tangible Book Value Per Unit, (as defined in the LTIP), determined as of the most recently reported quarterly balance sheet preceding such change in control shall be paid within 45 days of the change in control, followed by an additional payment in respect of such Performance Units within 75 days of such change in control equal to the excess, if any, of i) the Change in Control Book Value Per Unit over ii) 90% of the PL Tangible Book Value Per Unit determined as of the most recently reported quarterly balance sheet preceding such Company change in control;

●The Restricted Units will immediately vest in full and be settled in cash, within 45 days following the date of the change in control event, based upon PLC Change in Control Book Value Per Unit, if available within 10 days before such payment date; or, if PLC Change in Control Book Value Per Unit is not then available, then 90% of the value of such Restricted Units, based on the PL Tangible Book Value Per Unit determined as of the most recently reported quarterly balance sheet preceding such Company change in control shall be paid within 45 days of PLC change in control, followed by an additional payment in respect of such Restricted Units within 75 days of such Company change in control equal to the

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excess, if any, of (i) PLC Change in Control Book Value Per Unit over (ii) 90% of the PL Tangible Book Value Per Unit determined as of the most recently reported quarterly balance sheet preceding such Company change in control; and

●The Parent-Based Awards will vest immediately and be settled in cash within 60 days following the date of the change in control event, based on the Parent Stock Percentage (as defined in the LTIP) but the Final Parent Stock Value (as defined in the LTIP) shall be determined based on the average of the closing prices of Dai-ichi Life common stock on all trading days during the 30-calendar day period ended on the date on which the change in control occurs.

In addition, upon a change of control of Dai-ichi Life that results in the common stock of Dai-ichi Life no longer being actively traded on a public securities exchange ("Parent Change in Control"), the Parent-Based Awards will be converted to Restricted Units as follows: First, the dollar value of the Parent-Based Awards will be determined as of the Parent Change in Control, with the Final Parent Stock Value, (as defined in the LTIP), used to determine the Parent Stock Percentage determined using the average of the closing prices of the Parent common stock on all trading days during the 30-calendar day period ended on the date on which the Parent Change in Control occurs. The resulting dollar value of the Parent-Based Awards shall then be converted into Restricted Units by dividing such dollar value by the PL Tangible Book Value Per Unit determined as of the most recently reported quarterly balance sheet preceding the Parent Change in Control. After such conversion, the converted units will continue to be subject to the terms of the Parent-Based Award Agreement, including but not limited to, the vesting schedule and timing provisions of such agreement.

2021 LTIP Awards. In February 2021, the PLC Compensation Committee and the PLC Board determined a total target value of the long-term incentive awards to be granted to each named executive officer in 2021. Such awards again consisted of Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards, which will vest and may be earned in 2023. In 2021, none of our named executive officers had a guaranteed minimum target amount for awards to be granted under the LTIP.

In October 2021, the PLC Compensation Committee exercised its authority under the LTIP to adjust the calculation of any performance objective or criteria to recognize special or nonrecurring situations or circumstances for PLC by approving the exclusion of the immediate impacts from changes in current market conditions on estimates of future profitability on variable annuity and variable universal life products, including impacts on DAC, VOBA, reserves, and other items from the calculation of after-tax adjusted operating income. In February 2022, the PLC Compensation Committee exercised the same authority to exclude changes in the fair value of company-owned life insurance, exclusive of the long-term expected return of the underlying assets from the calculation of after-tax adjusted operating income.

The PLC Compensation Committee considered a number of factors when it granted long-term incentive awards in 2021, including the desire to maintain the appropriate balance between performance-based and retention-based incentives and information provided by the compensation consultant comparing the value of PLC’s long-term incentive awards granted to named executive officers to the value provided by PLC’s compensation peer group.

The 2021 long-term incentive opportunities for our named executive officers are comprised of four separate awards:

1.Performance Unit Awards: Performance Units are generally designed to vest based on the achievement of two objectives — cumulative after-tax adjusted operating income ("Operating Income Objective") and average return on equity ("ROE Objective") — over the period from January 1, 2021 to December 31, 2023 and generally subject to the named executive officer’s continued employment until the applicable payment date of the earned award (the "Performance Unit Awards");

2.Restricted Unit Awards: Restricted Units are generally designed to vest on December 31, 2023, are valued based on the tangible book value of PLC on the vesting date and are generally subject to the named executive officer’s continued employment until such respective dates (the "Restricted Unit Awards");

3.Parent-Based Awards: A dollar denominated award that is generally designed to vest on December 31, 2023 based on the named executive officer’s continued employment, the value of which will be adjusted to reflect the change in the value of Dai-ichi Life’s common stock over the three-year measurement period from January 1, 2021 to December 31, 2023 (the "Parent-Based Awards"); and

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4.35% Enhanced 2021 Performance Unit Awards: For 2021, the named executive officers also received a 35% Enhanced 2021 Performance Unit Award ("Enhanced PU") pursuant to the same provisions for vesting and performance applicable to Performance Unit Awards. The 2021 Enhanced PU will be discussed herein as a Performance Unit Award unless otherwise noted. The 2021 Enhanced PU is a one-time award equal to 35% of the named executive officer’s 2021 Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards to address the lack of retention value of outstanding long-term incentive opportunities.

Long-Term Incentive Awards Vested in 2021. The following long-term incentive awards were earned in 2021: i) the second tranche of the Restricted Unit Awards that were granted in 2018 (with a four-year vesting period); ii) the first tranche of the Restricted Unit Awards that were granted in 2019 (with a three-year vesting period); and iii) the Parent-Based Awards that were granted in 2019 (with a three-year vesting period). No amounts were earned with respect to the Performance Unit Awards that were granted in 2019 (with a three-year performance period that ended December 31, 2021) for 2021. The performance measures related to such awards had the following levels of achievement.


Restricted Unit Awards
Award	Performance Measure	Beginning Tangible Book Value ($in millions)		Ending Tangible Book Value ($in millions)		Tangible Book Value Per Unit Performance
2018 Restricted Unit Awards (4-year vest)	Tangible Book Value per Unit	$	5,938	$	7,473	$	120.92
2019 Restricted Unit Awards (3-year vest)	Tangible Book Value per Unit	$	6,017	$	7,341	$	117.21


Parent-Based Awards
Award	Performance Measure	Initial Dai-ichi Stock Value	Final Dai- ichi Stock Value	Percentage of Award Earned
2019 Parent-Based Awards	Dai-ichi stock performance	1,726 yen	2,359 yen	136.65	%


Performance Unit Awards
Award	Performance Measure	Beginning Tangible Book Value ($in millions)		Ending Tangible Book Value ($in millions)		Tangible Book Value Per Unit Performance		Actual Result for ROE or COE Performance Measure			Percentage of Award Earned
2019 Performance Unit Awards	50% based on Tangible Book Value per Unit x ROE Performance (%)	$	6,017	$	7,341	$	117.21		4.96	%	0	%
	50% of awards based on Tangible Book Value per Unit x Cumulative Operating Earnings ("COE") Performance ($)	$	6,017	$	7,341	$	117.21	$	1,212		0	%

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The amounts paid to our named executive officers based upon the applicable levels of achievement of these awards are set forth in the "Non-equity incentive plan compensation — 2021" column of the Summary Compensation Table and the applicable footnote thereto.

Performance Unit Awards Granted in 2021. The purpose of the Performance Unit Awards is to encourage our named executive officers to focus on earnings growth and returns on equity. The number of units subject to each Performance Unit Award granted in 2021 is determined by dividing 50% of each named executive officer’s target long-term incentive opportunity by an amount equal to 90% of PLC’s applicable tangible book value per unit as of January 1, 2021. One-half of the units subject to each Performance Unit Award will be subject to achieving the ROE Objective and one-half will be subject to achieving the Operating Income Objective. The amount payable in respect of each unit can range from 0% (for performance against the applicable objective below the threshold level) to 225% (for performance at or above maximum). One hundred percent (100%) of the award will be payable for performance at target. For achievement between the stated performance levels (i.e., between threshold and target, and between target and maximum), the amount will be determined by mathematical interpolation.

Specifically, payment with respect to the ROE Objective will be based on the following schedule:

Average Return on Equity	Percentage of Performance Units Earned Attributable to ROE Objective
Less than 2.98%	—	%
2.98%	25	%
4.77%	100	%
5.61%	225	%

There will be straight-line interpolation between each level of average return on equity to determine the exact percentage of Performance Units earned.

Payment with respect to the Operating Income Objective will be based on the following schedule:

Cumulative After-tax Adjusted Operating Income (Dollars In Millions)	Percentage of Performance Units Earned Attributable to Operating Income Objective
Less than $737	0	%
$737	25	%
$1,228	100	%
$1,474	225	%

There will be straight-line interpolation between each level of cumulative after-tax adjusted operating income to determine the exact percentage of Performance Units earned.

Restricted Unit Awards Granted in 2021. The purpose of the Restricted Unit Awards is to encourage our named executive officers to focus on retention and value creation. The number of Restricted Units subject to each Restricted Unit Award granted in 2021 was determined by dividing 40% of each named executive officer’s target long-term incentive opportunity by an amount equal to PLC’s applicable tangible book value per unit as of January 1, 2021. The Restricted Unit Awards vest on December 31, 2023 and are valued at payout based on the tangible book value of PLC on the applicable vesting date.

Parent-Based Awards Granted in 2021. The purpose of the Parent-Based Awards is to align PLC’s and the Company’s values with our parent company. The initial cash value of the Parent-Based Awards is equal to 10% of the target long-term incentive award opportunity for each named executive officer. At vesting, the amount payable in respect of such Parent-Based Awards shall be such initial value multiplied by the percentage change in the value of the common stock of Dai-ichi Life, whether such value has increased or decreased, over the period from January 1, 2021 to December 31, 2023, as measured based on the average value of such common stock in January 2021 and December 2023, respectively.

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35% Enhanced 2021 Performance Unit Awards Granted in 2021. The purpose of the 2021 Enhanced PUs is to encourage our named executive officers to focus on earnings growth and returns on equity. The number of units subject to the 2021 Enhanced PU granted in 2021 is determined by multiplying the total of the named executive officer’s target long-term incentive opportunity for 2021 (including 2021 Performance Unit Awards, 2021 Restricted Unit Awards, and 2021 Parent-Based Unit Awards) by 35%. The 2021 Enhanced PU is a one-time award for 2021, subject to the same terms and provisions noted above with respect to Performance Unit Awards granted in 2021 (and are discussed herein as Performance Unit Awards, unless otherwise noted), and intended to address the lack of retention value of outstanding long-term incentive opportunities.

The Grants of Plan-Based Awards Table contains additional information about Awards under the LTIP.

Retirement and Deferred Compensation Plans

PLC believes it is important to provide its employees, including our named executive officers, with the opportunity to accumulate retirement savings. All similarly-situated employees earn benefits under PLC’s tax-qualified pension plan ("Qualified Pension Plan") using the same formula. Benefits under the Qualified Pension Plan are limited by the Internal Revenue Code. PLC believes that it should provide retirement savings without imposing the restrictions on benefits contained in the Internal Revenue Code that would otherwise limit PLC’s employees’ retirement security. Therefore, like many large companies, PLC has implemented a nonqualified excess benefit pension plan ("Nonqualified Excess Pension Plan") that makes up the difference between: 1) the benefit determined under the Qualified Pension Plan formula, without applying these limits; and 2) the benefit actually payable under the Qualified Pension Plan, taking these limits into account. All of our named executive officers participate in the Nonqualified Excess Pension Plan.

In addition, PLC provides a nonqualified deferred compensation plan ("DCP") for our named executive officers and other key officers. Through December 31, 2021, eligible officers could defer: 1) up to 75% of their base salary; 2) up to 85% of any annual incentive award; and/or 3) up to 85% of the amounts payable when Performance Unit Awards, Restricted Unit Awards, or Parent-Based Awards are earned (for the Restricted Unit Awards and Parent-Based Awards, percentages are subject to reduction if the employee is eligible for early retirement). Prior to the amendment to the DCP effective on January 1, 2019, certain senior officers were allowed a maximum deferral up to 94% for Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards (for the Restricted Unit Awards and Parent-Based Awards, percentages were subject to reduction if the employee is eligible for early retirement).

Employees that contribute a portion of their salary, overtime and cash incentives to PLC’s tax-qualified 401(k) plan ("401(k) Plan") receive a dollar-for-dollar company matching contribution, which may be at the maximum 4% of the employee’s eligible pay (which is subject to limits imposed by the Internal Revenue Code).

The Pension Benefits Table and Nonqualified Deferred Compensation Arrangements Table contain additional information about our retirement and deferred compensation plans.

Perquisites and Other Benefits

PLC has other programs that help us attract and retain key talent and enhance productivity. In 2021, PLC provided modest perquisites to our named executive officers, including a financial and tax planning program for certain senior officers. PLC also reimburses officers for business-related meals in accordance with our standard business policies. Officers pay for all personal meals. From time to time, our named executive officers may also use PLC sponsored tickets for sporting, cultural and/or other events for personal use. PLC also provides tax gross up payments related to sporting events, sporting club memberships, corporate jet usage, gifts, and spousal travel.

The Summary Compensation Table contains additional information about perquisites and other benefits.

Company Aircraft Policy. PLC does business in every state in the United States and has offices in several states. Our named executive officers routinely use commercial air service for business travel, and PLC generally reimburses them only for the coach fare for domestic air travel. PLC also maintains a company aircraft program in order to provide for timely and cost-effective travel to these wide-spread locations.

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Under this program, PLC does not operate any aircraft, own a hangar, or employ pilots. Instead, PLC has purchased a fractional interest in each of two aircraft. PLC pays a fixed annual fee per aircraft, plus a variable charge for hours actually flown, in exchange for the right to use the two aircraft for an aggregate of approximately 230 hours per year. Our directors, officers, and employees use these aircraft for selected business trips, and, in certain circumstances, a spouse or guest of a director or officer may accompany him or her on business-related travel. All travel under the program must be approved by the Chief Executive Officer. Whether a particular trip will be made on a Company aircraft or on a commercial flight depends, in general, upon the availability of commercial air service at the destination, the schedule and cost of the commercial air travel, the number of employees who are making the trip, the expected travel time, and the need for flexible travel arrangements.

The PLC Compensation Committee has adopted a policy that allows the CEO (and the CEO’s guests) to use PLC aircraft for personal trips for up to 25 hours per year to reduce his personal travel time and thereby increase the time he can effectively conduct Company business. The hours of use under this policy are calculated based on the incremental hourly amount charged by the operating company to PLC, such that, where the operating company charges PLC for hours of use at less than a 1:1 ratio for a particular aircraft, such ratio is applied in determining the total number of hours deemed to be used by the CEO against the 25-hour limit. PLC does not provide tax reimbursement payments with respect to this air travel.

Spousal Travel Policy. If an employee’s spouse travels with the employee on Company business, and the spouse’s presence is deemed necessary and appropriate for the purpose of the trip, PLC will reimburse the employee for the associated travel expenses. Spousal travel is grossed up for tax purposes.

Compensation Policies and Practices as Related to Risk Management

The PLC Compensation Committee meets at least once a year with PLC’s Chief Risk Officer to review incentive compensation arrangements across PLC in order to identify any features that might encourage unnecessary or excessive risk taking. In conducting this review, PLC considered numerous factors pertaining to each such program, including the following: the purpose of the program; the design of the plan, including risk adjustments; the number of participants, as well as key employees or employee groups; the total amount that could be paid under the program; the ability of the participants to take actions that could influence the calculation of the compensation payable; the scope of the risks that could be created by actions taken; alignment with PLC’s risk appetite; and the manner in which PLC’s risk management policies and practices serve to reduce these risks. Based on this review, PLC has concluded that none of PLC’s compensation programs create risks that are reasonably likely to have a material adverse effect on PLC.

COVID-19 and Plan Design Considerations

The COVID-19 pandemic has adversely impacted the Company’s and PLC’s financial performance, which in turn has impacted the performance of its incentive plans. The PLC Compensation Committee made adjustments in 2021 to address concerns related to the ongoing impact of the volatility and uncertainty of the COVID-19 pandemic on PLC’s business and its incentive plan design, and to make certain broader changes related to the mix, alignment, and structure of the program, including (i) widening the performance range and payout range for the After Tax Operating Income goal for the AIP and the After Tax Operating Income and Average Return on Equity goals for the LTIP Performance Unit awards, (ii) providing an enhancement to the 2021 LTIP awards, (iii) shifting the mix of LTIP awards to have a heavier weight on time-based awards, (iv) changing the vesting schedule for Restricted Units to 100% vesting at 3 years (a permanent change), and (v) providing for a possible adjustment of the performance targets for Performance Unit awards, as applicable, if projected results are trending below threshold. In addition to addressing retention concerns, these adjustments will help to align compensation with market practices, ensure that there is reasonable pay for performance alignment for the benefit of Dai-ichi Life, PLC and plan participants, and set incentives to accommodate greater volatility and uncertainty in PLC’s financial and operational performance. The PLC Compensation Committee has carried forward certain adjustments for 2022, including (i) maintaining the wider performance range and payout range for the After Tax Operating Income goal for the AIP and the After Tax Operating Income and Average Return on Equity goals for the LTIP Performance Unit awards, and (ii) maintaining the shift in the mix of LTIP awards to have a heavier weight on time-based awards. Notwithstanding the foregoing, due to ongoing unprecedented uncertainty regarding the effects of the COVID-19 pandemic on the Company’s future financial performance, the PLC Compensation Committee may revisit these program

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adjustments and/or apply discretion if external events out of management control materially adversely impact the performance of the incentive program.

Summary Compensation Table

The following table sets forth the total compensation earned by each of the Company’s named executive officers for the fiscal years ended December 31, 2021, 2020 and 2019.

Summary Compensation Table
Name and principal position with the Company(a)	Year (b)	Salary ($) (c)		Bonus ($) (d)		Non-equity incentive plan compensation(1) ($) (g)		Change in pension value & nonqualified deferred compensation earnings ($) (h)		All other compensation ($) (i)		Total Compensation ($) (j)
Richard J. Bielen	2021	$	916,667	$	—	$	3,707,993	$	1,063,005	$	152,956	$	5,840,621
President and Chief Executive Officer	2020	$	870,833	$	—	$	2,642,039	$	2,833,979	$	120,652	$	6,467,503
(principal executive officer)	2019	$	838,333	$	—	$	5,143,079	$	2,591,758	$	259,340	$	8,832,510
Steven G. Walker	2021	$	527,500	$	—	$	1,104,119	$	81,518	$	47,458	$	1,760,595
Executive Vice President and Chief	2020	$	482,500	$	—	$	723,825	$	151,821	$	45,812	$	1,403,958
Financial Officer (principal financial officer)	2019	$	442,500	$	—	$	1,435,911	$	180,838	$	56,260	$	2,115,509
Aaron Seurkamp(2)	2021	$	472,833	$	—	$	738,337	$	39,279	$	29,963	$	1,280,412
Senior Vice President and President,
Retirement Division
Mark L. Drew	2021	$	557,000	$	—	$	1,058,819	$	55,971	$	51,516	$	1,723,306
Executive Vice President, Chief Legal Officer;	2020	$	535,000	$	—	$	772,535	$	45,387	$	50,328	$	1,403,250
Secretary of PLC	2019	$	497,500	$	—	$	1,456,053	$	41,890	$	61,491	$	2,056,934
Michael G. Temple	2021	$	616,667	$	—	$	1,577,980	$	80,252	$	55,573	$	2,330,472
Vice Chairman and Chief Operating	2020	$	590,000	$	—	$	1,044,395	$	79,505	$	54,180	$	1,768,080
Officer	2019	$	535,833	$	—	$	1,922,079	$	76,401	$	97,514	$	2,631,827

(1)For 2021, these numbers include: (i) the following amounts of cash incentives that were paid on or prior to March 15, 2022, for 2021 performance under PLC’s AIP: Mr. Bielen, $2,363,400; Mr. Walker, $781,100; Mr. Seurkamp, $541,500; Mr. Drew, $735,800; Mr. Temple, $1,131,500; (ii) the following amounts with respect to the second installment of the Restricted Unit Awards that vested on December 31, 2021 (granted in 2018) that were paid in cash on or prior to March 15, 2022: Mr. Bielen, $407,198; Mr. Walker, $104,294; Mr. Seurkamp, $56,228; Mr. Drew, $104,294; Mr. Temple, $149,639; (iii) the following amounts with respect to the first installment of the Restricted Unit Awards that vested on December 31, 2021 (granted in 2019) that were paid in cash on or prior to March 15, 2022: Mr. Bielen, $527,445; Mr. Walker, $123,071; Mr. Seurkamp, $79,117; Mr. Drew, $123,071; Mr. Temple, $167,024; and (iv) the following amounts of Parent-Based Awards that vested on December 31, 2021 (granted in 2019), and that were paid in cash on or prior to March 15, 2022: Mr. Bielen, $409,950; Mr. Walker, $95,655; Mr. Seurkamp, $61,493; Mr. Drew, $95,655; Mr. Temple, $129,818.

(2)Mr. Seurkamp was not a named executive officer for 2019 or 2020.

Column (c)-Salary. These amounts include any portion of the named executive officer’s base salary for the applicable year that such officer contributed to PLC’s 401(k) Plan or deferred under PLC’s DCP. The Nonqualified Deferred Compensation Table has more information about our named executive officers’ participation in PLC’s DCP in 2021.

Column (g)-Non-equity incentive plan compensation. For 2021, these amounts reflect i) the cash incentives paid on or prior to March 15, 2022 for 2021 performance under PLC’s AIP, ii) the second installment of the Restricted Unit Awards that vested on December 31, 2021 (granted in 2018) and that were paid on or before March 15, 2022, iii) the first installment of the Restricted Unit Awards that vested on December 31, 2021 (granted in 2019) and that were paid on or before March 15, 2022, and iv) the Parent-Based Awards that vested on December 31, 2021 (granted in 2019), and that

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were paid on or prior to March 15, 2022. For 2020, these amounts reflect i) the cash incentives paid on or prior to March 15, 2021 for 2020 performance under PLC’s AIP, ii) the first installment of the Restricted Unit Awards that vested on December 31, 2020 (granted in 2018) and that were paid on or before March 15, 2021, iii) the second installment of the Restricted Unit Awards that vested on December 31, 2020 (granted in 2017) and that were paid on or before March 15, 2021, and iv) the Parent-Based Awards that vested on December 31, 2020 (granted in 2018), and that were paid on or prior to March 15, 2021. For 2019, these amounts reflect i) the cash incentives paid in 2020 for 2019 performance under PLC’s AIP, ii) the Performance Unit Awards earned with respect to the 2017-2019 performance period (granted in 2017), and that were paid in 2020, iii) the first installment of the Restricted Unit Awards that vested on December 31, 2019 (granted in 2017) and that were paid in 2020, iv) the second installment of the Restricted Unit Awards that vested on December 31, 2019 (granted in 2016) and that were paid in 2020, and v) the Parent-Based Awards that vested on December 31, 2019 (granted in 2017), and that were paid in 2020. These amounts are based on the achievement of performance goals under the AIP and the LTIP, as determined by the PLC Compensation Committee and the PLC Board. All amounts presented include any portion of the earned incentives that the named executive officer elected to contribute to PLC’s 401(k) Plan or defer under PLC’s DCP.

Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards granted in a particular year are not reflected in the Summary Compensation Table with respect to such year. These awards, which have multi-year performance periods, are instead reflected in the Summary Compensation Table in the year in which they are earned. The Grants of Plan-Based Awards Table and the narrative that accompanies such table provide information about the Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards that were granted in 2021.

Column (h)-Change in pension value and nonqualified deferred compensation earnings. These amounts represent the increase or decrease in the actuarial present value of the named executive officer’s benefits under PLC’s tax Qualified Pension Plan and PLC’s Nonqualified Excess Pension Plan. Changes in interest rates can significantly affect these numbers from year to year. For 2021, the total change in the present value of pension benefits for each named executive officer was divided between the plans as follows:

Name	Qualified Pension Plan		Nonqualified Excess Pension Plan		Total
Bielen	$	56,102	$	1,006,903	$	1,063,005
Walker	$	35,121	$	46,397	$	81,518
Seurkamp	$	6,678	$	32,601	$	39,279
Drew	$	15,027	$	40,944	$	55,971
Temple	$	17,979	$	62,273	$	80,252

The Pension Benefits Table has more information about each officer’s participation in these plans.

All of our named executive officers have account balances in PLC’s DCP. The earnings on a named executive officer’s balance reflect the earnings of notional investments selected by that named executive officer. These earnings are the same as for any other investor in these investments, and PLC does not provide any above-market or preferential earnings rates.

Column (i) — All other compensation. For 2021, these amounts include the following:

All Other Compensation Table
Name	401(k) matching		Nonqualified deferred compensation plan contributions		Financial planning program		Tax Gross Up		Other perquisites		Total
Bielen	$	11,600	$	61,685	$	—	$	984	$	78,687	$	152,956
Walker	$	11,600	$	19,116	$	14,735	$	241	$	1,766	$	47,458
Seurkamp	$	11,600	$	18,228	$	—	$	—	$	135	$	29,963
Drew	$	11,600	$	22,600	$	14,735	$	636	$	1,945	$	51,516
Temple	$	11,600	$	27,752	$	14,735	$	—	$	1,486	$	55,573

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401(k) Matching. PLC’s employees can contribute a portion of their salary, overtime, cash incentives and other eligible compensation to PLC’s 401(k) Plan and receive a dollar-for-dollar company matching contribution. The maximum match is 4% of the employee’s eligible pay (which is subject to limits imposed by the Internal Revenue Code). The table shows the company match received by our named executive officers during 2021.

Nonqualified Deferred Compensation Plan Contributions. The table includes, with respect to each of the executives, supplemental matching contributions that PLC made under PLC’s DCP to each named executive officer’s account in 2021 with respect to the officer’s participation in PLC’s DCP during 2020 ("DCP Supplemental Matching Contribution"). The Nonqualified Deferred Compensation Table and accompanying narrative provide more information about the DCP.

Financial Planning Program. These amounts include fees paid for program services as well as business travel and related expenses of the financial and tax planning third-party provider.

Tax Gross-Ups. A tax gross up occurs when PLC pays the projected tax expense for certain perquisite items. The amounts paid as a tax gross up in 2021 includes i) a sporting club membership for Mr. Drew, and ii) sporting tickets and related entertainment for Mr. Bielen and Mr. Walker.

Other Perquisites. These amounts include: i) the amount we paid for a sporting club membership for Mr. Drew ($1,200); ii) the amount we paid for sporting, cultural or other events for personal use and related entertainment for Mr. Bielen, Mr. Drew, Mr. Temple and Mr. Walker, iii) the amount we paid for gifts for each of the named executive officers, and iv) the estimated incremental cost that we incurred in 2021 for Mr. Bielen and his guests to use the Company aircraft for personal trips ($74,731).

With respect to personal use of the corporate aircraft, the estimated incremental cost is based on incremental hourly charges and fuel allocable to the personal travel time on the aircraft, as well as any international flat fees related to the flight. From time-to-time, friends or family members of our named executive officers are accommodated as additional passengers on flights on Company aircraft. There is no incremental cost to PLC for this perquisite.

Grants of Plan-Based Awards

The long-term incentive opportunities granted to our named executive officers in 2021 are comprised of four separate awards: 1) Performance Unit Awards; 2) Restricted Unit Awards; 3) Parent-Based Awards and 4) the 35% Enhanced 2021 Performance Unit Awards.

PLC’s annual incentive awards for 2021 were granted pursuant to PLC’s AIP, based on target amounts for i) after-tax adjusted operating income, ii) value of new business, iii) expense management, and iv) RBC. For Mr. Seurkamp, his payout is weighted 50% to the foregoing PLC metrics and 50% to PLC’s after-tax adjusted operating income, value of new business, expense management and sales for his business unit (Retirement Division).

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This table presents information about: 1) the awards granted in 2021 pursuant to the LTIP which will vest in 2023 and 2) the awards granted in 2021 pursuant to the AIP, which were paid in March 2022. All awards earned under the AIP and LTIP are payable in cash.

Grants of Plan-Based Awards Table

Estimated Possible Payouts Under

Non-Equity Incentive Plan Awards

Name (a)

Grant
Date
(b)

Compensation
Committee
Meeting Date

Type of
Award

Number of
Units

Threshold
($)
(c)

Target
($)
(d)

Maximum
($)
(e)

Bielen

2/25/21

Annual Incentive Plan

n/a

566,600⁽¹⁾

1,618,800⁽¹⁾

3,480,300⁽¹⁾

3/15/21

2/25/21

Performance Units

34,685⁽²⁾

871,625⁽²⁾

3,486,500⁽²⁾

7,844,625⁽²⁾

3/15/21

2/25/21

Restricted Units

15,400⁽³⁾

n/a

1,540,000⁽³⁾

n/a

3/15/21

2/25/21

Parent Stock-Based

3,850⁽⁴⁾

n/a

385,000⁽⁴⁾

n/a

Walker

2/25/21

Annual Incentive Plan

n/a

187,300⁽¹⁾

535,000⁽¹⁾

1,150,300⁽¹⁾

3/15/21

2/25/21

Performance Units

9,055⁽²⁾

226,375⁽²⁾

905,500⁽²⁾

2,037,375⁽²⁾

3/15/21

2/25/21

Restricted Units

4,000⁽³⁾

n/a

400,000⁽³⁾

n/a

3/15/21

2/25/21

Parent Stock-Based

1,000⁽⁴⁾

n/a

100,000⁽⁴⁾

n/a

Seurkamp

2/25/21

Annual Incentive Plan

n/a

129,100⁽¹⁾

356,300⁽¹⁾

761,500⁽¹⁾

3/15/21

2/25/21

Performance Units

5,435⁽²⁾

135,875⁽²⁾

543,500⁽²⁾

1,222,875⁽²⁾

3/15/21

2/25/21

Restricted Units

2,400⁽³⁾

n/a

240,000⁽³⁾

n/a

3/15/21

2/25/21

Parent Stock-Based

600⁽⁴⁾

n/a

60,000⁽⁴⁾

n/a

Grants of Plan-Based Awards Table

Estimated Possible Payouts Under

Non-Equity Incentive Plan Awards

Name (a)

Grant
Date
(b)

Compensation
Committee
Meeting Date

Type of
Award

Number of
Units

Threshold
($)
(c)

Target
($)
(d)

Maximum
($)
(e)

Drew

2/25/21

Annual Incentive Plan

n/a

176,400⁽¹⁾

504,000⁽¹⁾

1,083,600⁽¹⁾

3/15/21

2/25/21

Performance Units

8,605⁽²⁾

215,125⁽²⁾

860,500⁽²⁾

1,936,125⁽²⁾

3/15/21

2/25/21

Restricted Units

3,800⁽³⁾

n/a

380,000⁽³⁾

n/a

3/15/21

2/25/21

Parent Stock-Based

950⁽⁴⁾

n/a

95,000⁽⁴⁾

n/a

Temple

2/25/21

Annual Incentive Plan

n/a

271,300⁽¹⁾

775,000⁽¹⁾

1,666,300⁽¹⁾

3/15/21

2/25/21

Performance Units

12,680⁽²⁾

317,000⁽²⁾

1,268,000⁽²⁾

2,853,000⁽²⁾

3/15/21

2/25/21

Restricted Units

5,600⁽³⁾

n/a

560,000⁽³⁾

n/a

3/15/21

2/25/21

Parent Stock-Based

1,400⁽⁴⁾

n/a

140,000⁽⁴⁾

n/a

(1)These amounts reflect threshold, target, and maximum payouts to our named executive officers under the AIP. The level of payout is tied to PLC’s after-tax adjusted operating income, value of new business, expense management, and RBC. For Mr. Seurkamp, his payout is weighted 50% to the foregoing PLC metrics and 50% to PLC’s after-tax adjusted operating income, value of new business, expense management and sales for his business unit (Retirement Division). The amount in the "Threshold" column reflects the amount that would be payable to our named executive officers under the AIP if each performance goal were achieved at the threshold level. There is no minimum payout.

(2)These amounts reflect the Performance Unit Awards, including the 2021 Enhanced PUs, granted to each named executive officer under the LTIP, along with the estimated payouts at the threshold, target, and maximum amounts. The number of units subject to the 2021 Enhanced PU granted in 2021 is determined by multiplying the total of the named executive officer’s target long-term incentive opportunity for 2021 (including 2021 Performance Unit Awards, 2021 Restricted Unit Awards, and 2021 Parent-Based Unit Awards) by 35%. The number of Performance Unit Awards (other than the 2021 Enhanced PUs) determined to be granted reflect a discount to the book value to reflect the risk of forfeiture associated with performance conditions. The level of payout for the Performance Unit Awards other than the 2021 Enhanced PUs is tied to PLC’s ROE and cumulative after-tax adjusted operating income. These values reflect a reasonable estimate based on a value of each unit at $100 at the date of grant using the grant-date tangible book value of PLC. The amount in the "Threshold" column reflects the amount that would be payable to our named executive officers under the AIP if each performance goal were achieved at the threshold level. There is no minimum payout.

(3)These amounts reflect the Restricted Unit Awards and target value of Restricted Unit Awards granted to each named executive officer under the LTIP.

(4)These amounts reflect the Parent-Based Awards and target value of the Parent-Based Awards granted to each named executive officer under the LTIP.

Column (b) — Grant date. At its February 25, 2021 meeting, the PLC Compensation Committee granted long-term incentive awards valued in the amounts reflected in the table with a grant date of March 15, 2021.

Column — Number of units. These amounts reflect the number of each of the Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards granted to our named executive officers in 2021. The threshold, target, and maximum value of each award is reflected in columns (c), (d), and (e), respectively.

Columns (e), (d), and (d) — Estimated possible payouts under non-equity incentive plan awards.

In November 2019, the PLC Compensation Committee approved that, in the event that Mr. Temple has a mutually agreed upon separation from service prior to July 1, 2022 (which is the date on which he would be eligible for early retirement under the terms of the Qualified Pension Plan), all of his outstanding awards under the LTIP will vest on a pro rata basis

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(based on the number of months served during the applicable vesting or award period), with such awards to be payable at the same time and in the same manner as they would had Mr. Temple remained employed through the end of each applicable vesting or award period. For any retirement on or after July 1, 2022, all of Mr. Temple’s awards under the LTIP will vest in accordance with the terms of the applicable award agreements. In November 2021, the PLC Compensation Committee revised its previous November 2019 approval to provide for full vesting of his outstanding awards under the LTIP in the event he has a mutually agreed upon retirement in or after June 2022.

In November 2021, the PLC Compensation Committee approved that, in the event that Mr. Temple has a mutually agreed retirement prior to the completion of six months of employment service in the year of his separation, then Mr. Temple will be entitled to receive an annual incentive payment, if earned, of any then outstanding annual incentive plan award (subject to any valid deferral elections under the Deferred Compensation Plan), equal to the amount he would have received if he had remained employed through the end of the year, multiplied by the number of days that elapsed during the year in which his retirement occurs before and including the date of his retirement divided by 365.

See "Annual Incentive Plan Awards" and "Long-Term Incentive Awards" for information about performance targets and estimated possible payouts under non-equity incentive plan awards.

Pension Benefits

The following table contains information about benefits payable to our named executive officers upon their retirement under the terms of PLC’s "defined benefit" pension plans.

Pension Benefits Table
Name (a)	Plan Name (b)	Number of years credited service (#) (c)⁽¹⁾		Present value of accumulated benefit ($) (d)⁽²⁾		Payments during last fiscal year ($) (e)
Bielen	Pension		31	$	1,536,764	$	—
	Excess Pension		31		13,037,835		—
	Total			$	14,574,599	$	—
Walker	Pension		20	$	552,414	$	—
	Excess Pension		20		739,042		—
	Total			$	1,291,456	$	—
Seurkamp	Pension		17	$	298,347	$	—
	Excess Pension		17		328,670		—
	Total			$	627,017	$	—
Drew	Pension		5	$	63,485	$	—
	Excess Pension		5		153,361		—
	Total			$	216,846	$	—
Temple	Pension		9	$	131,316	$	—
	Excess Pension		9		329,620		—
	Total			$	460,936	$	—

(1)	The number of years of service that are used to calculate the named executive officer’s benefit under each plan, as of December 31, 2021.

(2)	The actuarial present value of the named executive officer’s benefit under each plan as of December 31, 2021.

All of PLC’s eligible employees participate in the Qualified Pension Plan. Benefits under the Qualified Pension Plan are fully vested after three years of service. Upon termination of employment for any reason, employees are entitled to receive their vested benefits. Each named executive officer would be entitled to receive the amounts designated as pension benefits represented in the "Present Value of Accumulated Benefit" column of the Pension Benefits Table. The Pension Benefits Table also shows the amounts payable to each named executive officer upon separation from service under Section 409A of the Internal Revenue Code under the Nonqualified Excess Pension Plan.

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Qualified Pension Plan

The Qualified Pension Plan provides different benefit formulas for three different groups: 1) the "grandfathered group" (any employee employed on December 31, 2007 whose age plus years of vesting service total 55 of more as of that date); 2) the "non-grandfathered group" (any employee employed on December 31, 2007 whose age plus years of vesting service was less than 55 as of that date); and 3) the "post-2007 group" (any employee first hired after December 31, 2007 or any former employee who is rehired after that date).

Mr. Bielen is in the grandfathered group; Mr. Walker and Mr. Seurkamp are in the non-grandfathered group; and Mr. Drew and Mr. Temple are in the post-2007 group.

For employees in the grandfathered group and non-grandfathered group, the monthly life annuity benefit payable under the Qualified Pension Plan at normal retirement age (usually age 65) for service before 2008 equals:

●1.1% of the employee’s final average pay times years of service through 2007 (up to 35 years), plus

●0.5% of the employee’s final average pay over the employee’s Social Security covered pay times years of service through 2007 (up to 35 years), plus

●0.55% of the employee’s final average pay times years of service through 2007 (in excess of 35 years).

For service after 2007, employees in the grandfathered group continue to earn a monthly life annuity benefit payable at normal retirement age (usually age 65), calculated as follows:

●1.0% of the employee’s final average pay times years of service after 2007 (up to 35 years minus service before 2008), plus

●0.45% of the employee’s final average pay over the employee’s Social Security covered pay times years of service after 2007 (up to 35 years minus service before 2008), plus

●0.50% of the employee’s final average pay times the lesser of years of service after 2007 and total years of service minus 35 years.

The total benefit payable to employees in the grandfathered group will not be less than the benefit the employee would have received had he been a non-grandfathered employee.

For service after 2007, employees in the non-grandfathered group and post-2007 group earn a hypothetical account balance that is credited with pay credits and interest credits. Interest is credited to a participant’s account effective on December 31 of each year (or a participant’s benefit commencement date in the year payments begin), based on the value of the participant’s account on January 1 of that year. The interest rate is based on the 30-year Treasuries’ constant maturities rate published by the IRS. The rate for a calendar year is the rate published for October of the previous year, but not less than 3.25%. Pay credits for a year are based on a percentage of eligible pay for that year, as follows:

Credited Service	% of Pay Credit
1 - 4 years	4	%
5 - 8 years	5	%
9 - 12 years	6	%
13 - 16 years	7	%
17 or more years	8	%

Final average pay for grandfathered employees is the average of the employee’s eligible pay for the 60 consecutive months that produces the highest average. (However, if the employee’s average eligible pay for any 36 consecutive months as of December 31, 2007 is greater than the 60-consecutive month average, the 36-month number will be used.) For non-grandfathered employees, final average pay is the average of the employee’s eligible pay for the 36 consecutive months before January 1, 2008 that produces the highest average.

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Eligible pay includes components of pay such as base salary, overtime, annual incentive awards and other eligible compensation. Pay does not include payment of certain commissions, performance shares, gains on SAR exercises, vesting of restricted stock units, severance pay, or other extraordinary items.

Social Security covered pay is one-twelfth of the average of the Social Security wage bases for the 35-year period ending when the employee reaches Social Security retirement age. For non-grandfathered participants, Social Security covered pay is determined as of December 31, 2007. The wage base is the maximum amount of pay for a year for which Social Security taxes are paid. Social Security retirement age is between age 65 and 67, depending on the employee’s date of birth.

Unless special IRS rules apply, benefits are not paid before employment ends. An employee may elect to receive:

●a life annuity (monthly payments for the employee’s life only), or

●a 50%, 75%, or 100% joint and survivor annuity (the employee receives a smaller benefit for life, and the employee’s designated survivor receives a benefit of 50%, 75%, or 100% of the reduced amount for life), or

●a five, ten, or 15 year period certain and life annuity benefit (the employee receives a smaller benefit for life and, if the employee dies before the selected period, the employee’s designated survivor receives the reduced amount until the end of the period), or

●a lump sum benefit.

If an employee chooses one of these benefit options, the benefit is adjusted using the interest rate assumptions and mortality tables specified in the Qualified Pension Plan, so it has the same actuarial value as the benefit determined by the Qualified Pension Plan formulas.

An employee whose employment ends before age 65 may begin benefit payments after termination of employment. The benefit for service before 2008 is reduced for commencement before age 65, so the benefit remains the actuarial equivalent of a benefit beginning at age 65.

If an employee retires on or after age 55 with at least 10 years of vesting service, the employee may take an "early retirement" benefit with respect to benefits earned through 2007, beginning immediately after employment ends. Mr. Bielen and Mr. Walker are eligible for early retirement. The early retirement benefit for pre-2008 service is based on the Qualified Pension Plan formula. The benefit is reduced below the level of the age 65 benefit; however, the reduction for an early retirement benefit is not as great as the reduction for early commencement of a vested benefit.

(For example, the early retirement reduction at age 55 is 50%; the actuarial reduction (using the Qualified Pension Plan interest rates and mortality tables) is 62%. At age 62, the early retirement reduction is 20%, and the actuarial reduction is 27%).

Nonqualified Excess Pension Plan

Benefits under PLC’s Qualified Pension Plan are limited by the Internal Revenue Code. PLC believes it should pay PLC’s employees the total pension benefit they have earned, without imposing these Code limits. Therefore, like many large companies, PLC has a Nonqualified Excess Pension Plan that makes up the difference between: (1) the benefit determined under the Qualified Pension Plan formula, without applying these limits; and (2) the benefit actually payable under the Qualified Pension Plan, taking these limits into account.

Pursuant to the Nonqualified Excess Pension Plan’s change of control provision, an employee will receive a lump sum payment of his or her pre-2005 excess pension benefit in January immediately following the employee’s date of termination. Prior to February 1, 2015, benefits under the Nonqualified Excess Pension Plan with respect to service before 2005 were paid at the same time and in the same form as the related benefits under PLC’s Qualified Pension Plan. For an employee’s post-2004 benefit, an employee will receive payment pursuant to the employee’s original payment election (lump sum or annuity) three or six months after termination, as applicable based on whether the employee is a "specified employee" under Section 409A of the Internal Revenue Code. For any distributions to an employee who was a participant

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in the Nonqualified Excess Pension Plan and employed on February 1, 2015, the more favorable lump sum factors will be used to calculate the benefit. These more favorable lump sum factors include the use of (a) the mortality table used for determining lump sum payment amounts under the Qualified Pension Plan, and (b) an interest rate equal to the lesser of (i) the sum of 0.75% and the yield on U.S. 10-year treasury notes at constant maturity as most recently published by the Federal Reserve Bank of New York, and (ii) the interest rate used for determining lump sum payment amounts under the Qualified Pension Plan. Payment is made from PLC’s general assets (and is therefore subject to the claims of PLC’s creditors), and not from the assets of the Qualified Pension Plan.

Nonqualified Deferred Compensation Arrangements

This table presents certain information about our named executive officers’ participation in nonqualified deferred compensation arrangements in 2021.


	Nonqualified Deferred Compensation Table
Name (a)	Executive contributions in last FY ($) (b)⁽¹⁾		Registrant contributions in last FY ($) (c)⁽²⁾		Aggregate earnings in last FY ($) (d)		Aggregate withdrawals/ distributions ($) (e)		Aggregate balance at last FYE ($) (f)⁽³⁾
Bielen	$	131,203	$	61,685	$	554,234	$	2,522,991	$	11,209,813
Walker	$	31,244	$	19,116	$	19,455	$	11,311	$	2,335,549
Seurkamp	$	135,375	$	18,228	$	177,922	$	—	$	1,418,998
Drew	$	50,000	$	22,600	$	124,086	$	—	$	833,476
Temple	$	69,927	$	27,752	$	38,499	$	—	$	554,785

(1)These amounts include:

a.the following amounts that are also included in column (c) (Salary) of the Summary Compensation Table as compensation earned and deferred by the officer in 2021 under the DCP: Mr. Bielen, $36,667 and Mr. Temple, $24,667; and

b.the following amounts that are also included in column (g) (Non-equity incentive plan compensation) of the Summary Compensation Table for 2021 as compensation earned under the AIP with respect to 2021 performance and deferred by the officer in 2022 under the DCP: Mr. Bielen, $94,536; Mr. Walker, $31,244; Mr. Seurkamp, $135,375; Mr. Drew, $50,000; and Mr. Temple, $45,260.

(2)These amounts represent the DCP Supplemental Matching Contributions allocated to the officer’s account in 2021 with respect to the officer’s participation during 2020 in PLC’s DCP, the terms of which provide that the officer will not receive the matching contribution unless the officer is employed on the date of the allocation or terminated due to death, disability, or while eligible for normal or early retirement under PLC’s Qualified Pension Plan. PLC will incur the expense at the time of allocation. These DCP Supplemental Matching Contributions are reported in the Summary Compensation Table as compensation for 2021.

(3)These amounts reflect the following amounts that have been reported as compensation to the officer in previous proxy statements of PLC (with respect to periods prior to February 1, 2015) and Annual Reports on Forms 10-K of PLC and the Company (for periods after February 1, 2015): Mr. Bielen, $12,985,682; Mr. Walker, $2,277,045; Mr. Drew, $636,790; and Mr. Temple, $418,607.

In general, our named executive officers and other key officers can elect to participate in PLC’s unfunded, unsecured DCP. An officer who defers compensation under the DCP does not pay income taxes on the compensation at that time. Instead, the officer pays income taxes on the compensation (and any earnings on the compensation) only when the officer receives the compensation and earnings from the DCP.

Through December 31, 2021, eligible officers could defer: 1) up to 75% of their base salary; 2) up to 85% of any annual incentive award; and/or 3) up to 85% of the amounts payable when Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards are earned (for the Restricted Unit Awards and Parent-Based Awards, percentages are subject to reduction if the employee is eligible for early retirement). Prior to the amendment to the DCP effective on January 1, 2019, certain senior officers were allowed a maximum deferral up to 94% for Performance Unit Awards, Restricted Unit Awards, and Parent-Based Awards (for the Restricted Unit Awards and Parent-Based Awards, percentages were subject to reduction if the employee is eligible for early retirement).

An election to defer base salary for a calendar year must be made by December 31 of the previous year. Generally, an election to defer any annual incentive payout for a calendar year must be made by June 30 of that year. Generally, an election to defer earned Performance Units must be made by June 30 of the last year in the award’s performance period. An election to defer earned Restricted Unit Awards or Parent-Based Awards must be made within 30 days after the date of the award. Deferred compensation accrues earnings based on the participant’s election among notional investment choices available under the DCP.

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For 2021, the investment returns for each of the notional investment choices were:

Investment Choice	Return
Allspring Government Money Market Institutional⁽¹⁾	0.01	%
BlackRock Total Return Fund	(0.68)	%
Columbia Mid Cap Index Fund Institutional 2 Class⁽²⁾	24.50	%
DFA Emerging Markets I	2.53	%
DFA US Small Cap	30.61	%
Dodge & Cox International Stock	11.03	%
Dodge and Cox Stock	31.73	%
Fidelity 500 Index Fund	28.69	%
Fidelity International Index	11.45	%
Fidelity Mid Cap Index	22.56	%
Fidelity US Bond Index	(1.79)	%
JP Morgan Mid-Cap Growth R5	10.93	%
Metropolitan West Low Duration Bond I	0.07	%
PIMCO Real Return Institutional	5.67	%
T. Rowe Price Growth Stock	20.03	%
Templeton Foreign A	5.07	%
Vanguard High-Yield Corporate Admiral	3.78	%
Vanguard Real Estate Index Admiral	40.40	%
Vanguard Total Bond Market Index — Admiral⁽²⁾	(1.67)	%
Protective Life LIBOR Fund	0.85	%

(1)This fund was formerly named the Wells Fargo Government Money Market Institutional. The fund name change, effective November 1, 2021, was made in conjunction with the asset manager name change from Wells Fargo Asset Management to Allspring Global Investments.

(2)These funds were removed on May 4, 2020; however, an inadvertent system error resulted in deferrals being made to the funds throughout 2021.

An officer may elect to receive payments in a lump sum or in up to ten annual installments, which election can be changed under certain circumstances. An officer may elect to receive a deferred amount (and earnings) upon termination of employment and if such election is made, the officer may not change this election. An officer may instead elect to receive a deferred amount (and earnings) on a fixed date (which must be a February 15, and must begin no later than the officer’s 70th birthday), which election can be changed under certain circumstances. An officer may also request a distribution if the officer has an extreme and unexpected financial hardship, as determined under IRS rules.

Each named executive officer is currently fully vested in the amounts reported in the "Aggregate Balance at FYE" column of the Nonqualified Deferred Compensation Table, and, unless a specific date of payment has been selected by the named executive officer, these amounts would be payable to each named executive officer upon termination of employment for any reason. In addition, a named executive officer whose employment terminated due to normal or early retirement, death, or disability would receive the DCP Supplemental Matching Contribution that would have been allocated under PLC’s DCP to each named executive officer’s account with respect to the officer’s service during 2021.

Supplemental Matching. PLC makes supplemental matching contributions to the account of eligible officers under the DCP. These contributions provide matching that PLC would otherwise contribute to PLC’s 401(k) Plan, but which PLC cannot contribute because of Internal Revenue Code limits on 401(k) plan matching. For a calendar year, the supplemental match that an officer receives is:

●the lesser of

●4% of eligible compensation payable during the year, whether received in cash or deferred, and

●the total amount the officer deferred during the year under the 401(k) Plan and deferrals of base salary and cash bonuses under the DCP; minus

●the actual matching contribution the officer received under the 401(k) Plan for that year, as determined while applying the restrictions imposed by the Internal Revenue Code.

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An officer’s supplemental matching contributions may be allocated in one percent increments among the same notional investment funds available for deferrals under the DCP. Supplemental matching is paid only after termination of employment. The officer can elect payment in a lump sum or in up to ten annual installments, and such election cannot be changed.

Other Provisions. Notional investment choices under the DCP must be in one percent increments. An officer may transfer money between the notional investment choices on any business day. PLC does not provide any above-market or preferential earnings rates and do not guarantee that an officer’s notional investments will make money.

Upon an officer’s death or disability, the officer’s plan balance is paid in a lump sum. Account balances are paid in cash.

Potential Payments upon Termination or Change of Control

The following tables and footnotes describe the potential payments to our named executive officers upon a termination of each named executive officer’s employment or a change-in-control of PLC on December 31, 2021. The tables do not include:

●	compensation or benefits previously earned by our named executive officers or incentive awards that were already fully vested;

●	the value of pension benefits that are disclosed in the 2021 Pension Benefits Table, except for any pension enhancement triggered by the event, if applicable;

●	the amounts payable under the DCP that are disclosed in the 2021 Nonqualified Deferred Compensation Table; or

●	the value of any benefits (such as retiree health coverage, life insurance and disability coverage) provided on the same basis to substantially all other employees.

The actual benefit to a named executive officer can only be determined at the time of the change-in-control event or such executive’s separation from PLC. None of our named executive officers are party to any written employment arrangements that provide for payments in the event of a change in control or termination of employment.

Change of Control

The table set forth below shows the cash payments and other benefits that would have been payable to each of our named executive officers had a change of control of PLC occurred on December 31, 2021.

Name	Performance Units⁽¹⁾		Restricted Units⁽¹⁾		Parent-Based Awards⁽¹⁾		Total
Bielen	$	6,343,925	$	4,285,981	$	1,394,219	$	12,024,125
Walker	$	1,658,025	$	1,088,494	$	353,242	$	3,099,761
Seurkamp	$	1,040,538	$	677,775	$	224,549	$	1,942,862
Drew	$	1,609,551	$	1,066,950	$	346,741	$	3,023,242
Temple	$	2,276,050	$	1,496,491	$	481,936	$	4,254,477

(1)The amounts in these columns include i) with respect to LTIP awards with performance periods that ended on December 31, 2021, the amounts that were actually earned and paid to the named executive officer based on actual performance under the terms of the applicable award (which amounts are also reflected in the Summary Compensation Table), and ii) with respect to LTIP awards with performance periods ending after December 31, 2021, an amount that could be earned by the named executive officer under the terms of the applicable awards based on a projected level of achievement as of December 31, 2021. In the event of such a termination of employment on December 31, 2021, the actual amounts, if any, that may be earned and paid to our named executive officers with respect to an LTIP award with a performance period ending after December 31, 2021 is based on the actual performance for the applicable performance period and therefore cannot be determined until after completion of such performance period.

Death or Disability

The table set forth below shows the cash payments and other benefits that would have been payable to each of our named executive officers had his employment been terminated due to death or disability. Pursuant to the plans, upon

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normal retirement, a named executive officer would receive the same amount as he or she would receive due to death or disability. As of December 31, 2021, none of our named executive officers are eligible for normal retirement.


Name	Cash⁽¹⁾		2021 DCP Supplemental Matching Contribution		Performance Units⁽²⁾		Restricted Units⁽²⁾		Parent-Based Awards⁽²⁾		Annual Incentive Payments⁽³⁾		Total⁽¹⁾
Bielen	$	50,000	$	93,319	$	1,413,194	$	4,609,608	$	1,394,219	$	2,363,400	$	9,923,740
Walker	$	50,000	$	28,612	$	367,030	$	1,172,985	$	353,242	$	781,100	$	2,752,969
Seurkamp	$	50,000	$	24,129	$	220,298	$	730,401	$	224,549	$	541,500	$	1,790,877
Drew	$	50,000	$	31,820	$	348,790	$	1,148,665	$	346,741	$	735,800	$	2,661,816
Temple	$	50,000	$	41,147	$	513,962	$	1,612,847	$	481,936	$	1,131,500	$	3,831,392

(1)Represents the amounts that would have been paid to our named executive officers under the Protective Life Corporation Pre-Retirement Death Benefit Plan had his employment been terminated due to death.

(2)The amounts in these columns include i) with respect to LTIP awards with performance periods that ended on December 31, 2021, the amounts that were actually earned and paid to the named executive officer based on actual performance under the terms of the applicable award (which amounts are also reflected in the Summary Compensation Table), and ii) with respect to LTIP awards with performance periods ending after December 31, 2021, an amount that could be earned by the named executive officer under the terms of the applicable awards based on a projected level of achievement as of December 31, 2021. In the event of such a termination of employment on December 31, 2021, the actual amounts, if any, that may be earned and paid to our named executive officers with respect to an LTIP award with a performance period ending after December 31, 2021 is based on the actual performance for the applicable performance period and therefore cannot be determined until after completion of such performance period.

(3)Represents the amounts that were earned and paid to the named executive officer based on actual performance under the terms of the applicable AIP award that was made in 2021 (which amounts are also reflected in the Summary Compensation Table).

Early Retirement

The table set forth below shows the cash payments and other benefits that would have been payable to each of our named executive officers had his employment been terminated due to early retirement on December 31, 2021.

Name	2021 DCP Supplemental Matching Contribution		Performance Units⁽³⁾		Restricted Units⁽³⁾		Parent-Based Awards⁽³⁾		Annual Incentive Payments⁽⁴⁾		Total
Bielen	$	93,319	$	4,239,584	$	4,609,608	$	1,394,219	$	2,363,400	$	12,700,130
Walker	$	28,612	$	1,101,088	$	1,172,985	$	353,242	$	781,100	$	3,437,027
Seurkamp⁽¹⁾	$	—	$	—	$	—	$	—	$	—	$	—
Drew⁽¹⁾	$	—	$	—	$	—	$	—	$	—	$	—
Temple⁽²⁾	$	41,147	$	1,541,888	$	1,612,847	$	481,936	$	1,131,500	$	4,809,318

(1)Mr. Seurkamp and Mr. Drew would not be eligible for early retirement on December 31, 2021.

(2)Mr. Temple would not be eligible for early retirement on December 31, 2021. In November 2019, the PLC Compensation Committee approved that, in the event that Mr. Temple has a mutually agreed upon separation from service prior to July 1, 2022 (which is the date on which he would be eligible for early retirement under the terms of the Qualified Pension Plan), all of his outstanding awards under the LTIP will vest on a pro rata basis (based on the number of months served during the applicable vesting or award period), with such awards to be payable at the same time and in the same manner as they would had Mr. Temple remained employed through the end of each applicable vesting or award period. For any retirement on or after July 1, 2022, all of Mr. Temple’s awards under the LTIP will vest in accordance with the terms of the applicable award agreements. In November 2021, the PLC Compensation Committee revised its previous November 2019 approval to provide for full vesting of his outstanding awards under the LTIP in the event he has a mutually agreed upon retirement in or after June 2022. In November 2021, the PLC Compensation Committee approved that, in the event that Mr. Temple has a mutually agreed retirement prior to the completion of six months of employment service in the year of his separation, then Mr. Temple will be entitled to receive an annual incentive payment, if earned, of any then outstanding annual incentive plan award (subject to any valid deferral elections under the Deferred Compensation Plan), equal to the amount he would have received if he had remained employed through the end of the year, multiplied by the number of days that elapsed during the year in which his retirement occurs before and including the date of his retirement divided by 365.

(3)The amounts in these columns include i) with respect to LTIP awards with performance periods that ended on December 31, 2021, the amounts that were actually earned and paid to the named executive officer based on actual performance under the terms of the applicable award (which amounts are also reflected in the Summary Compensation Table), and ii) with respect to LTIP awards with performance periods ending after December 31, 2021, an amount that could be earned by the named executive officer under the terms of the applicable awards based on a projected level of achievement as of December 31, 2021. In the event of such a termination of employment on December 31, 2021, the actual amounts, if any, that may be earned and paid to our named executive officers with respect to an LTIP award with a performance period ending after December 31, 2021 is based on the actual performance for the applicable performance period and therefore cannot be determined until after completion of such performance period.

(4)Represents the amounts that were earned and paid to the named executive officer based on actual performance under the terms of the applicable AIP award that was made in 2021 (which amounts are also reflected in the Summary Compensation Table).

Other Termination (other than for "cause")

The table set forth below shows the cash payments and other benefits that would have been payable to Mr. Temple, Mr. Drew, or Mr. Seurkamp had his employment been terminated (other than for "cause" or for one of the reasons

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specified in the tables above) on December 31, 2021. Mr. Drew, Mr. Temple, and Mr. Seurkamp are our only named executive officers who would not be eligible for normal or early retirement on December 31, 2021. For Mr. Bielen and Mr. Walker, for any termination other than "for cause", the payments are reflected above in the "Early Retirement" table.

Name	Restricted Units⁽¹⁾		Parent-Based Awards		Total
Bielen	$	—	$	—	$	—
Walker	$	—	$	—	$	—
Seurkamp	$	135,345	$	61,493	$	196,838
Drew	$	227,364	$	95,655	$	323,019
Temple	$	316,663	$	129,818	$	446,481

(1)The amounts in these columns include the amounts that were actually earned and paid to the named executive officer based on actual performance under the terms of the second installment of the 2018 Restricted Units (which amounts are also reflected in the Summary Compensation Table).

(2)For Mr. Temple, this table reflects the assumption that he did not have a mutually agreed upon separation from service. The amounts payable to Mr. Temple in the event of a mutually agreed upon separation from service are reflected in the "Early Retirement" table.

CEO Pay Ratio

In accordance with SEC rules, we are providing the following comparison of the annual total compensation of the Company’s employees and the annual total compensation of Mr. Bielen, our CEO and President.

For 2021:

●the median of the annual total compensation of all employees of the Company (other than our CEO) was $88,766; and

●the annual total compensation of our CEO was $5,840,621.

Based on this information, for 2021 our estimate of the ratio of the total compensation of Mr. Bielen, our current CEO and President, to the median of the annual total compensation of all employees was 66 to 1.

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the Company’s median employee and our CEO, the Company took the following steps:

1.We identified the Company’s employee population, consisting of full-time, part-time, and temporary employees, as of December 31, 2021.

2.To identify the "median employee" from the Company’s employee population, we compared the amount of Box 5 earnings (Box 5 is Medicare taxable wages and includes all forms of compensation) of the Company’s employees as reflected in the Company’s payroll records as reported to the Internal Revenue Service on Form W-2 for 2021.

3.We identified a potential median employee using this compensation measure, which was consistently applied to all the Company’s employees included in the calculation.

4.Once we identified the Company’s median employee, we combined all of the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $88,766.

5.With respect to the annual total compensation of our CEO, we included the amounts reported in the 2021 Summary Compensation Table included in this prospectus.

Given the different methodologies that various companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.

Director Compensation

The compensation of each of our directors, Mr. Bielen, Mr. Temple, and Mr. Walker, is discussed above.

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Security Ownership of Certain Beneficial Owners and Management

PLC owns 100% of the outstanding voting stock of the Company. Dai-ichi Life owns 100% of the outstanding common stock of PLC.

Transactions with Related Persons, Promoters and Certain Control Persons

We review all relationships and transactions in which we and "related parties" (our directors, director nominees, executive officers, their immediate family members, and certain affiliated entities) participate to determine if any related party has a direct or indirect material interest. PLC’s Chief Legal Officer’s Office is primarily responsible for developing and implementing processes to obtain the necessary information and for determining, based on the facts and circumstances, whether a direct or indirect material interest exists, and we have written policies in place regarding relationships and transactions with "related parties".

Pursuant to PLC’s policies, if the Chief Legal Officer’s Office determines that a transaction may require disclosure under SEC rules, the Chief Legal Officer’s Office will notify:

●the PLC Governance Committee, if the transaction involves one of our directors or director nominees; otherwise

●the PLC Audit Committee.

The relevant PLC Board committee will approve or ratify the transaction only if it determines that the transaction is in our best interests. In considering the transaction, the committee will consider all relevant factors, including (as applicable):

●our business rationale for entering into the transaction;

●the alternatives to entering into the transactions;

●whether the terms of the transaction are comparable to those that could be obtained in arms-length dealings with an unrelated third party;

●the potential for the transaction to lead to an actual or apparent conflict of interest, and any safeguards imposed to prevent actual or apparent conflicts; and

●the overall fairness of the transaction to us.

Based on the information available to PLC’s Chief Legal Officer’s Office and to the PLC Board, except as described below, there have been no transactions between the Company and any related party since January 1, 2021, nor are any currently proposed, for which disclosure is required under the SEC rules.

The Company provides furnished office space and computers to affiliates through an intercompany agreement. Revenues from this agreement were $9 million, $7 million, and $6 million, for the years ended December 31, 2021, 2020, and 2019, respectively. The Company purchases data processing, legal, investment, and management services from affiliates. The costs of such services were $330 million, $297 million, and $278 million, for the years ended December 31, 2021, 2020, and 2019, respectively. In addition, the Company has an intercompany payable with affiliates as of December 31, 2021 and 2020 of $49 million and $47 million, respectively. There was a $12 million and $13 million intercompany receivable balance as of December 31, 2021 and 2020, respectively.

The Company has joint venture interests in real estate for which the Company holds the underlying real estate’s loan. During 2021, 2020, and 2019, the Company received $7 million, $5 million, and $23 million, respectively, in mortgage loan payments corresponding to the joint venture interests and $16 million in principal was collected on loans that paid off in December 2020.

During the periods ending December 31, 2021, 2020, and 2019, PLC paid a management fee to Dai-ichi Life of $13 million, $12 million, and $11 million, respectively, for certain services provided to the company.

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FINANCIAL INFORMATION

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with our consolidated audited financial statements and related notes included herein.

Our financial condition and results of operations are subject to certain risks and uncertainties. Please refer to the Risk Factors section of this Prospectus for more information about the risks, uncertainties and other factors that could affect our future results.

OVERVIEW

Our Business

We are the largest operating subsidiary of PLC, a wholly owned subsidiary of Dai-ichi Life. We provide financial services through the production, distribution, and administration of insurance and investment products. Our operating segments include Retail Life and Annuity, Acquisitions, Stable Value Products, Asset Protection, and Corporate and Other. Please refer to the "Our Business" section of this Prospectus for more information about our operating segments. Unless the context otherwise requires, the "Company," "we," "us," or "our" refers to the consolidated group of Protective Life Insurance Company and our subsidiaries in this MD&A.

Impact of COVID-19

Beginning in the first quarter of 2020, the outbreak of COVID-19 created significant economic and social disruption in the global economy and financial markets. These events impacted various operational and financial aspects of the Company’s business in 2020 and continued to impact earnings throughout 2021 based on, amongst other factors, the volume and severity of claims related to COVID-19 and the financial disruption caused by the pandemic, which could impact the Company’s investment portfolio. The Company continues to monitor the effects of COVID-19, including the spread of the Delta and Omicron variant.

Retail Life and Annuity segment and Acquisitions segment. The pre-tax adjusted operating income in the Retail Life and Annuity segment and the Acquisitions segment were impacted by the effects of the COVID-19 pandemic on mortality during the year ended December 31, 2021. The COVID-19 pandemic has resulted in an increase in claims in both the life insurance and annuity blocks. The pandemic will continue to impact earnings based on, amongst other factors, the volume and severity of claims related to COVID-19 and the financial disruption caused by the pandemic, which could impact the Company’s investment portfolio. The pandemic has also affected the manner in which our Acquisitions segment conducts due diligence, negotiates transactions, works with counterparties and integrates acquisitions, in each case adapting processes and procedures to reflect the increased reliance on technology and remote interactions as a result of COVID-19.

Asset Protection segment. The primary impacts from COVID-19 on the Asset Protection segment during 2021 included 1) a significant increase in sales in the first half of 2021 related to pent up demand, partly fueled by large government stimulus payments in 2020 and 2021, while the second half of 2021 saw significant reductions in sales related to constrained auto inventories due to supply chain issues, 2) a reduction in GAP claims as a result of the increase in used car values, and 3) lower general and administrative expenses, especially with respect to travel costs. While current trends remain positive, there remains uncertainty around the potential effect of the COVID-19 pandemic on the segment’s 2022 results, including a potential negative impact on sales 1) if a resurgence in COVID-19 cases result in increased shut downs of economic activity or 2) prolonged supply chain issues such as part and chip shortages continue to cause a reduction in auto production and inventories.

Commercial Mortgage Loans. We provide certain relief under the Coronavirus Aid Relief, and Economic Security Act ("the CARES Act") and the Consolidated Appropriations Act (the "CAA") under its COVID-19 Commercial Mortgage Loan Program (the "Loan Modification Program"). During the year ended December 31, 2021, we modified 23 commercial mortgage loans under the Loan Modification Program, representing $475 million in unpaid principal balance. As of December 31, 2021, since the inception of the CARES Act there were 268 total commercial mortgage loans modified

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under the Loan Modification Program, representing $2 billion in unpaid principal balance. At December 31, 2021, $1.9 billion of these loans have resumed regular principal and interest payments in accordance with the terms of the modification agreements and we expect the remaining $69 million in unpaid principal on commercial mortgage loans to resume scheduled payments in accordance with the agreed upon terms. The modifications under this program include agreements to defer principal payments only and/or to defer principal and interest payments for a specified period of time. None of these modifications were considered troubled debt restructurings.

CRITICAL ACCOUNTING POLICIES

Our accounting policies require the use of judgments relating to a variety of assumptions and estimates, including, but not limited to expectations of current and future mortality, morbidity, persistency, expenses, and interest rates, as well as expectations around the valuations of investments, securities, and certain intangible assets. Because of the inherent uncertainty when using the assumptions and estimates, the effect of certain accounting policies under different conditions or assumptions could be materially different from those reported in the consolidated financial statements. A discussion of our various critical accounting policies is presented below.

Fair Value of Financial Instruments — The Financial Accounting Standards Board ("FASB") guidance defines fair value for GAAP and establishes a framework for measuring fair value as well as a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. The term "fair value" in this document is defined in accordance with GAAP. The standard describes three levels of inputs that may be used to measure fair value. For more information, refer to Note 2, Summary of Significant Accounting Policies and Note 5, Fair Value of Financial Instruments, to the consolidated financial statements included in this prospectus.

Available-for-sale securities and trading securities are recorded at fair value, which is primarily based on actively traded markets where prices are based on either direct market quotes or observed transactions. Liquidity is a significant factor in the determination of the fair value for these securities. Market price quotes may not be readily available for some positions or for some positions within a market sector where trading activity has slowed significantly or ceased. These situations are generally triggered by the market’s perception of credit uncertainty regarding a single company or a specific market sector. In these instances, fair value is determined based on limited available market information and other factors, principally from reviewing the issuer’s financial position, changes in credit ratings, and cash flows on the investments. As of December 31, 2021, $2.6 billion of available-for-sale and trading securities, excluding other long-term investments, were classified as Level 3 fair value assets.

For securities that are priced via non-binding independent broker quotations, we assess whether prices received from independent brokers represent a reasonable estimate of fair value through an analysis using internal and external cash flow models developed based on spreads and, when available, market indices. We use a market-based cash flow analysis to validate the reasonableness of prices received from independent brokers. These analytics, which are updated daily, incorporate various metrics (yield curves, credit spreads, prepayment rates, etc.) to determine the valuation of such holdings. As a result of this analysis, if we determine that there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. As of December 31, 2021, we did not adjust any prices received from independent brokers.

Derivatives — We utilize a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, inflation risk, currency exchange risk, volatility risk, and equity market risk. Assessing the effectiveness of the hedging programs and evaluating the carrying values of the related derivatives often involve a variety of assumptions and estimates. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. The fair values of most of our derivatives are determined using exchange prices or independent broker quotes, but certain derivatives, including embedded derivatives, are valued based upon industry standard models which calculate the present-value of the projected cash flows of the derivatives using current and implied future market conditions. These models include market-observable estimates of volatility and interest rates in the determination of fair value. The use of different assumptions may have a material effect on the estimated fair value amounts, as well as the amount of reported net income. In addition, measurements of ineffectiveness of hedging relationships are subject to interpretations and estimations, and any differences may result in material changes to our results of operations. The fair values of derivative assets and liabilities include adjustments for market liquidity, counterparty credit quality, and other deal specific factors,

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where appropriate. The fair values of derivative assets and liabilities traded in the over-the-counter market are determined using quantitative models that require the use of multiple market inputs including interest rates, prices, and indices to generate continuous yield or pricing curves and volatility factors. The predominance of market inputs are actively quoted and can be validated through external sources. Estimation risk is greater for derivative financial instruments that are either option-based or have longer maturity dates where observable market inputs are less readily available or are unobservable, in which case quantitative based extrapolations of rate, price, or index scenarios are used in determining fair values. As of December 31, 2021, the fair value of derivatives reported on our balance sheet in "other long-term investments" and "other liabilities" was $1.4 billion and $2.8 billion, respectively. Of those derivative assets and liabilities, $295 million and $1.9 billion, respectively, were Level 3 fair values determined by quantitative models.

Allowance for Credit Losses — Fixed Maturity and Structured Investments — Each quarter the Company reviews investments with unrealized losses to determine whether such impairments are the result of credit losses. The Company analyzes various factors to make such determination including, but are not limited to: 1) actions taken by rating agencies, 2) default by the issuer, 3) the significance of the decline, 4) an assessment of the Company’s intent to sell the security (including a more likely than not assessment of whether the Company will be required to sell the security) before recovering the security’s amortized cost, 5) an economic analysis of the issuer’s industry, and 6) the financial strength, liquidity, and recoverability of the issuer. Management performs a security by security review each quarter to evaluate whether a credit loss has occurred.

For securities which the Company does not intend to sell and does not expect to be required to sell before recovering the security’s amortized cost basis, analysis of expected cash flows is used to measure the amount of the credit loss. To the extent the amortized cost basis of the security exceeds the present value of future cash flows expected to be collected, this difference represents a credit loss. Beginning on January 1, 2020, credit losses are recorded in net gains (losses) — investments and derivatives with a corresponding adjustment to the allowance for credit losses, except that the credit loss recognized cannot exceed the difference between the book value and fair value of the security as of the date of the analysis. In future periods, recoveries in the present value of expected cash flows are recorded as a reversal of the previously recognized allowance for credit losses with an offsetting adjustment to net gains (losses) — investments and derivatives. The Company considers contractual cash flows and all known market data related to cash flows when developing its estimates of expected cash flows. The Company uses the effective interest rate implicit in the security at the date of acquisition to discount expected cash flows. For floating rate securities, the Company’s policy is to lock in the interest rate at the first instance of an impairment. Estimates of expected cash flows are not probability-weighted but reflect the Company’s best estimate based on past events, current conditions, and reasonable and supportable forecasts of future events. Debt securities that the Company intends to sell or expects to be required to sell before recovery are written down to fair value with the change recognized in net gains (losses) — investments and derivatives.

The Company presents accrued interest receivable separately from other components of the amortized cost basis of its fixed maturity and structured investments and has made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable. The Company’s policy is to write off uncollectible accrued interest receivables through a reversal of interest income in the period in which a credit loss is identified.

Prior to January 1, 2020, on quarterly basis, the Company reviewed investments with unrealized losses for indications of other than temporary impairments. In addition to the factors noted above that are analyzed to determine if impairments are the result of credit losses, the Company also previously considered the duration that the security had been in an unrealized loss position in evaluating the need for any other-than-temporary impairments. Although no set formula was used in this process, the investment performance, collateral position, and continued viability of the issuer were significant measures considered, and in some cases, an analysis regarding the Company’s expectations for recovery of the security’s entire amortized cost basis through the receipt of future cash flows was performed. Once a determination had been made that a specific other-than-temporary impairment existed, the security’s basis was adjusted and an other-than-temporary impairment was recognized. Other-than-temporary impairments to debt securities that the Company did not intend to sell and did not expect to be required to sell before recovering the security’s amortized cost were written down to discounted expected future cash flows ("post impairment cost") and credit losses were recorded in net gains (losses) — investments and derivatives. The difference between the securities’ discounted expected future cash flows and the fair value of the securities on the impairment date was recognized in other comprehensive income (loss) as a non-credit portion impairment. When calculating the post impairment cost for residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), and other asset-backed securities (collectively referred to as asset-

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backed securities or "ABS"), the Company considered all known market data related to cash flows to estimate future cash flows. When calculating the post impairment cost for corporate debt securities, the Company considered all contractual cash flows to estimate expected future cash flows. To calculate the post impairment cost, the expected future cash flows are discounted at the original purchase yield basis.

Our specific accounting policies related to our invested assets are discussed in Note 2, Summary of Significant Accounting Policies, and Note 4, Investment Operations, to the consolidated financial statements. As of December 31, 2021, we held $70.3 billion of available-for-sale investments, including $11.1 billion in investments with a gross unrealized loss of $295 million.

Reinsurance — For each of our reinsurance contracts, we must determine if the contract provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We must review all contractual features, particularly those that may limit the amount of insurance risk to which we are subject or features that delay the timely reimbursement of claims. If we determine that the possibility of a significant loss from insurance risk will occur only under remote circumstances, we record the contract under a deposit method of accounting with the net amount payable/receivable reflected in other reinsurance assets or liabilities on our consolidated balance sheets. Fees earned on the contracts are reflected as other revenues, as opposed to premiums, in our consolidated statements of income.

Our reinsurance is ceded to a diverse group of reinsurers. The collectability of reinsurance is largely a function of the solvency of the individual reinsurers. We perform periodic credit reviews on our reinsurers, focusing on, among other things, financial capacity, stability, trends, and commitment to the reinsurance business. We also require assets in trust, letters of credit, or other acceptable collateral to support balances due from reinsurers not authorized to transact business in the applicable jurisdictions. Despite these measures, a reinsurer’s insolvency, inability, or unwillingness to make payments under the terms of a reinsurance contract could have a material adverse effect on our results of operations and financial condition. As of December 31, 2021, our third party reinsurance receivables amounted to $4.5 billion. These amounts include ceded reserve balances and ceded benefit payments.

We account for reinsurance as required by FASB guidance under the Accounting Standards Codification ("ASC" or "Codification") Financial Services Topic as applicable. In accordance with this guidance, costs for reinsurance are amortized as a level percentage of premiums for traditional life products and a level percentage of estimated gross profits for universal life products. Accordingly, ceded reserve and DAC balances are established using methodologies consistent with those used in establishing direct policyholder reserves and DAC. Establishing these balances requires the use of various assumptions including investment returns, mortality, persistency, and expenses. The assumptions made for establishing ceded reserves and ceded DAC are consistent with those used for establishing direct policyholder reserves and DAC.

Assumptions are also made regarding future reinsurance premium rates and allowance rates. Assumptions made for mortality, persistency, and expenses are consistent with those used for establishing direct policyholder reserves and DAC. Assumptions made for future reinsurance premium and allowance rates are consistent with rates provided for in our various reinsurance agreements. For certain of our reinsurance agreements, premium and allowance rates may be changed by reinsurers on a prospective basis, assuming certain contractual conditions are met (primarily that rates are changed for all companies with which the reinsurer has similar agreements). To the extent that future rates are modified, these assumptions would be revised and both current and future results would be affected. For traditional life products, assumption changes generally do not affect current results. For universal life products, assumptions are periodically updated whenever actual experience and/or expectations for the future differ from that assumed. When assumptions are updated for universal life products, changes are reflected in the income statement as part of an "unlocking" process. During the year ended December 31, 2021, we adjusted our estimates of future reinsurance costs in both the Acquisitions and Retail Life and Annuity segments which did not have a material impact on our financial condition or results of operations.

DAC and VOBA — The estimated present value of future cash flows used in the calculation of the VOBA is based on certain assumptions, including mortality, persistency, expenses, and interest rates that the Company expects to experience in future years. The Company amortizes VOBA in proportion to gross premiums for traditional life products, or estimated gross margins ("EGMs") for participating traditional life products within the MONY block. For interest sensitive products, the Company uses various amortization bases including expected gross profits, revenues, or insurance in-force.

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VOBA amortization included accrued interest credited to account balances of up to approximately 7.86%. VOBA is subject to annual recoverability testing.

We incur significant costs in connection with acquiring new insurance business. Portions of these costs, which are determined to be incremental direct costs associated with successfully acquired policies and coinsurance of blocks of policies, are deferred and amortized over future periods. Some examples of acquisition costs that are subject to deferral include commissions, underwriting testing fees, certain direct underwriting costs, and premium taxes. The determination of which costs are deferrable must be made on a contract-level basis. (All other acquisition-related costs, including market research, administration, management of distribution and underwriting functions, and product development, are considered non-deferrable acquisition costs and must be expensed in the period incurred.) The recovery of the deferred costs is dependent on the future profitability of the related policies. The amount of future profit is dependent principally on investment returns, mortality, morbidity, persistency, and expenses to administer the business and certain economic variables, such as inflation. These costs are amortized over the expected lives of the contracts, based on the level and timing of either gross profits or gross premiums, depending on the type of contract. Revisions to estimates result in changes to the amounts expensed in the reporting period in which the revisions are made and could result in the impairment of the asset and a charge to income if estimated future profits are less than the unamortized deferred amounts. As of December 31, 2021, we had a DAC and VOBA asset of $3.9 billion.

We periodically review, at least annually, and update as appropriate our key assumptions on certain life and annuity products including future mortality, expenses, lapses, premium persistency, investment yields, and interest spreads. Changes to these assumptions result in adjustments which increase or decrease DAC and VOBA amortization and/or benefits and expenses.

Goodwill — Accounting for goodwill requires an estimate of the future profitability of the associated lines of business within the Company’s reporting units to assess the recoverability of the capitalized goodwill. The Company’s material goodwill balances are attributable to certain of its reportable segments. Each of the Company’s reportable segments are considered separate reporting units, with the exception of the Retail Life and Annuity segment. This reportable segment contains the Protection and Retirement divisions which are considered separate reporting units. The Company evaluates the carrying value of goodwill at the reporting unit level at least annually and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such circumstances could include, but are not limited to: 1) a significant adverse change in legal factors or in business climate, 2) unanticipated competition, or 3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company first determines through qualitative analysis whether relevant events and circumstances indicate that it is more likely than not that a reporting unit’s goodwill balances is impaired as of the testing date. If the qualitative analysis does not indicate that an impairment of a reporting unit’s goodwill is more likely than not then no other specific quantitative impairment testing is required.

If it is determined that it is more likely than not that impairment exists, the Company performs a quantitative assessment and compares its estimate of the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The Company utilizes a fair value measurement (which includes a discounted cash flows analysis) to assess the carrying value of the reporting unit in consideration of the recoverability of the goodwill balance assigned to each reporting unit as of the measurement date. The cash flows used to determine the fair value of the Company’s reporting units are dependent on a number of significant assumptions. The Company’s estimates, which consider a market participant view of fair value, are subject to change given the inherent uncertainty in predicting future results and cash flows, which are impacted by such things as policyholder behavior, competitor pricing, capital limitations, new product introductions, and specific industry and market conditions.

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2021, that would impact our conclusion and no such events were identified. Refer to Note 10, Goodwill, to the consolidated financial statements included in this prospectus for further information. As of December 31, 2021, we had a goodwill balance of $697 million.

Insurance Liabilities and Reserves — Establishing an adequate liability for our obligations to policyholders requires the use of assumptions. Estimating liabilities for future policy benefits on life and health insurance products requires the use of assumptions relative to future investment yields, mortality, morbidity, persistency, premium payment patterns, and other assumptions based on our historical experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Determining liabilities for our property and casualty insurance products also requires the use of assumptions, including the frequency and severity of claims, and the effectiveness of internal processes designed to reduce the level of claims. Our results depend significantly upon the extent to which our actual claims experience is consistent with the assumptions that we used in determining our reserves and pricing our products. Our reserve assumptions and estimates require significant judgment and, therefore, are inherently uncertain. We cannot determine with precision the ultimate amounts that we will pay for actual claims or the timing of those payments. As of December 31, 2021, we had total policy liabilities and accruals of $54.9 billion.

Guaranteed Minimum Death Benefits — We establish liabilities for GMDB on our VA products. The methods used to estimate the liabilities employ assumptions about mortality and the performance of equity markets. We assume age-based mortality from the Ruark 2015 ALB adjusted table for company experience. Future declines in the equity market would increase our GMDB liability. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. A portion of our GMDB benefits are subject to a dollar-for-dollar reduction upon withdrawal of related annuity deposits on contracts issued prior to January 1, 2003. As of December 31, 2021, the GMDB liability was $38 million.

Guaranteed Living Withdrawal Benefits — We establish reserves for GLWB on our VA products. The GLWB is valued in accordance with FASB guidance under the ASC Derivatives and Hedging Topic which utilizes the valuation technique prescribed by the ASC Fair Value Measurements and Disclosures Topic, which requires the embedded derivative to be recorded at fair value using current interest rates and implied volatilities for the equity indices. The fair value of the GLWB is impacted by equity market conditions and can result in the GLWB embedded derivative being in an overall net asset or net liability position. In times of favorable equity market conditions the likelihood and severity of claims is reduced and expected fee income increases. Since claims are generally expected later than fees, these favorable equity market conditions can result in the present value of fees being greater than the present value of claims, which results in a net GLWB embedded derivative asset. In times of unfavorable equity market conditions the likelihood and severity of claims is increased and expected fee income decreases and can result in the present value of claims exceeding the present value of fees resulting in a net GLWB embedded derivative liability. The methods used to estimate the embedded derivative employ assumptions about mortality, lapses, policyholder behavior, equity market returns, interest rates, and market volatility. We assume age-based mortality from the Ruark 2015 ALB table adjusted for company experience. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. As of December 31, 2021, our net GLWB liability held was $475 million.

Deferred Taxes and Uncertain Tax Positions — Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Such temporary differences are principally related to net unrealized gains (losses), DAC and VOBA, and future policy benefits and claims. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when such differences reverse.

We evaluate deferred tax assets for impairment quarterly at the taxpaying component level within each tax jurisdiction. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of such assets will not be realized as future reductions of current taxes. In determining the need for a valuation allowance we consider the reversal of existing temporary differences, future taxable income, and tax planning strategies. The determination of any valuation allowance requires management to make certain judgments and assumptions regarding future operations that are based on our historical experience and our expectations of future performance.

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The ASC Income Taxes Topic prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an expected or actual uncertain income tax return position and provides guidance on disclosure. Additionally, in order for us to recognize any degree of benefit in our financial statements from such a position, there must be a greater than 50 percent chance of success with the relevant taxing authority with regard to that position. In making this analysis, we assume that the taxing authority is fully informed of all of the facts regarding any issue. Our judgments and assumptions regarding uncertain tax positions are subject to change over time due to the enactment of new legislation, the issuance of revised or new regulations or rulings by the various tax authorities, and the issuance of new decisions by the courts.

Contingent Liabilities — The assessment of potential obligations for tax, regulatory, and litigation matters inherently involves a variety of estimates of potential future outcomes. We make such estimates after consultation with our advisors and a review of available facts. However, there can be no assurance that future outcomes will not differ from management’s assessments.]

RESULTS OF OPERATIONS

Our management and Board of Directors analyze and assess the operating performance of each segment using "pre-tax adjusted operating income (loss)" and "after-tax adjusted operating income (loss)". Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is our measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting "income (loss) before income tax", by excluding the following items:

●gains and losses on investments and derivatives,

●losses from the impairment of intangible assets,

●changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

●actual GLWB incurred claims,

●the amortization of DAC, VOBA, and certain policy liabilities that is impacted by the exclusion of these items.

After-tax/Pre-tax adjusted operating income (loss)

After-tax adjusted operating income (loss) is derived from pre-tax adjusted operating income (loss) with the inclusion of income tax expense or benefits associated with pre-tax adjusted operating income. Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period. Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in our effective income tax rate.

Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) presented below are non-GAAP financial measures. The items excluded from adjusted operating income (loss) are important to understanding the overall results of operations. During the period ended December 31, 2021, the Company began excluding from pre-tax and after-tax adjusted operating income (loss) the impacts on DAC, VOBA, reserves and other items due to changes in estimated profitability of variable annuity and variable universal life products as a result of changes in current market conditions and non-cash charges incurred as a result of the impairment of intangible assets. Management believes this change enhances the understanding of the underlying performance trends of the Company’s core operations. Pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss) are not substitutes for income before income taxes or net income (loss), respectively. These measures may not be comparable to similarly titled measures reported by other companies. Our belief is that pre-tax and after-tax adjusted operating income (loss) enhances management’s and the Board of Directors’ understanding of the ongoing operations, and the underlying profitability of each segment, and helps facilitate the allocation of resources.

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In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA 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. Net gains (losses) — investments and derivatives and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on policy liabilities net of associated policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.

Unlocking

We periodically review and update as appropriate our key assumptions used to measure certain balances related to insurance products, including future mortality, expenses, lapses, premium persistency, benefit utilization, investment yields, interest rates, and separate account fund returns. Changes to these assumptions result in adjustments which increase or decrease DAC and VOBA amortization and/or benefits and expenses. Assumptions may be updated as part of our annual assumption review process, as well as during our quarterly update of historical business activity. This periodic review and updating of assumptions is collectively referred to as "unlocking." When referring to unlocking the reference is to changes in all balance sheet components associated with these changes. The adjustments associated with unlocking can create significant variability from period to period in the profitability of certain of the Company’s operating segments.

Additional information

Level term policies are policies in which premium rate remains the same for our established level term period (e.g. 20 years). At the end of the level term period, premium rates typically increase significantly and policyholder lapse rates are typically high. Since most of our reinsurance premiums are paid on an annual in advance basis, at each period end, we establish an accrual to adjust for the income effect of policies expected to lapse in the next period. Premiums paid to and refunded by reinsurers are included in reinsurance ceded, while adjustments from the accrual for post level policy lapses are included in the benefits and settlement expenses line in the statements of income (loss). As a result, over time there can be significant volatility in these individual line items due to the impact of business entering the post level period.

Shades Creek Captive Insurance Company

Shades Creek Captive Insurance Company ("Shades Creek") was a direct wholly owned insurance subsidiary of PLC through December 31, 2020. On January 1, 2021, Shades Creek was merged with and into the Company, with the Company being the surviving entity. We accounted for the transaction pursuant to ASC 805-50 "Transactions between Entities under Common Control". The transferred assets and liabilities of Shades Creek were recorded by the Company at their carrying value at the date of transfer. In accordance with ASC 805-50, all prior financial information has been recast to reflect this transaction as of the earliest period presented under common control, January 1, 2019.

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The following table presents a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax expense and net income:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Pre-Tax Adjusted Operating Income (Loss)
Retail Life and Annuity	$	(37)	$	100	$	153
Acquisitions		314		406		347
Stable Value Products		171		90		93
Asset Protection		40		41		37
Corporate and Other		(155)		(247)		(162)
Pre-tax adjusted operating income		333		390		468
Non-operating income (loss)		38		(113)		56
Income before income tax		371		277		524
Income tax expense (benefit)		86		43		97
Net income	$	285	$	234	$	427
Pre-tax adjusted operating income	$	333	$	390	$	468
Adjusted operating income tax (expense) benefit		(51)		(66)		(86)
After-tax adjusted operating income		282		324		382
Non-operating income (loss)		38		(113)		56
Income tax (expense) benefit on adjustments		(35)		23		(11)
Net income	$	285	$	234	$	427
Non-operating income (loss):
Derivative gains (losses), net	$	48	$	(195)	$	(368)
Investments gains (losses), net		102		(40)		309
VA/VUL market impacts⁽¹⁾		21		—		—
Goodwill impairment		(129)		—		—
Less: related amortization⁽²⁾		104		(30)		(24)
Less: VA GLWB economic cost		(100)		(92)		(91)
Total non-operating income (loss)	$	38	$	(113)	$	56

(1)Represents the immediate impacts on DAC, VOBA, reserves and other non-cash items in current period results due to changes in current market conditions on estimates of profitability, which are excluded from pre-tax and after-tax adjusted operating income (loss) beginning in Q1 of 2021.

(2)Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by net gains (losses).

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Retail Life and Annuity

Segment Results of Operations

Segment results were as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
REVENUES
Gross premiums and policy fees	$	2,346	$	2,154	$	2,279
Reinsurance ceded		(872)		(613)		(1,035)
Net premiums and policy fees		1,474		1,541		1,244
Net investment income		1,110		1,015		945
Net gains (losses) — investments and derivatives		(88)		(80)		(84)
Other income		187		165		164
Total operating revenues		2,683		2,641		2,269
BENEFITS AND EXPENSES
Benefits and settlement expenses		2,320		2,169		1,754
Amortization of DAC/VOBA		176		173		153
Other operating expenses		224		199		209
Total operating benefits and expenses		2,720		2,541		2,116
PRE-TAX ADJUSTED OPERATING INCOME (LOSS)		(37)		100		153
Non-operating income (loss):
Net gains (losses) — investments and derivatives		140		(201)		(108)
Related benefits and settlement expenses		—		1		(11)
Related amortization of DAC/VOBA		(57)		57		53
VA/VUL market impacts		15		—		—
Goodwill impairment		(129)		—		—
Total non-operating income (loss)		(31)		(143)		(66)
INCOME (LOSS) BEFORE INCOME TAX	$	(68)	$	(43)	$	87

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The following table summarizes key data for the Retail Life and Annuity segment:

	For The Year Ended December 31,
	2021			2020			2019
	(Dollars In Millions)
Sales By Product
Traditional⁽¹⁾	$	259		$	262		$	241
Universal life⁽¹⁾		97			84			84
BOLI/COLI⁽²⁾		1,033			—			—
Fixed annuity⁽²⁾		1,372			2,294			1,848
Variable annuity⁽²⁾		976			317			211
		3,737			2,957			2,384
Average Life Insurance In-force⁽⁴⁾
Traditional	$	423,896		$	379,707		$	360,145
Universal life		291,121			288,413			287,344
	$	715,017		$	668,120		$	647,489
Average Account Values
Universal life	$	7,844		$	7,682		$	7,791
Variable universal life⁽⁶⁾		1,364			850			811
Fixed annuity⁽³⁾		12,092			10,952			9,851
Variable annuity		12,380			10,896			12,061
	$	33,680		$	30,380		$	30,514
Interest Spread — Fixed Annuities⁽⁵⁾
Net investment income yield		3.66	%		3.67	%		3.67	%
Interest credited to policyholders		2.37	%		2.50	%		2.55	%
Interest spread		1.29	%		1.17	%		1.12	%


	As of December 31,
	2021		2020

	(Dollars In Millions)
VA GLWB Benefit Base	$	9,910	$	9,817
Account value subject to GLWB rider	$	8,369	$	8,035

(1)Sales data for traditional life insurance, other than Single Premium Whole Life ("SPWL") insurance, is based on annualized premiums. SPWL insurance sales are based on total single premium dollars received in the period. Universal life sales are based on annualized planned premiums, or "target" premiums if lesser, plus 6% of amounts received in excess of target premium and 10% of single premiums. "Target" premiums for universal life are those premiums upon which full first year commissions are paid.

(2)Sales are measured based on the amount of purchase payments received less first year surrenders.

(3)Includes general account balances held within VA products. Fixed annuity account value is net of reinsurance ceded.

(4)Amounts are not adjusted for reinsurance ceded.

(5)Interest spread on average general account values.

(6)Includes general account balances held within VUL products.

Annuity Account Values

Annuity account values are a significant driver of our operating results, and are primarily driven by net additions (withdrawals) and the impact of market changes. The income we earn on most of our fee-based products varies with the level of underlying account values as many policy fees are determined by these values. The investment income and interest we credit to policyholders on our spread-based products varies with the level of general account values. To a lesser extent, changes in account values impact our pattern of amortization of DAC and VOBA and general and administrative expenses.

Fixed Annuities. Fixed annuity account values in the rollforward below represent general account reserves for fixed deferred and variable deferred annuities within the annuity account balances line item on the consolidated condensed balance sheet. It also includes the general account reserves associated with immediate annuity policies within the future policy benefits and claims line item on the consolidated condensed balance sheet. These reserves can differ from account

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value on certain products. Immediate annuities do not have an account value, but do maintain a GAAP reserve, which is included in the below rollforward. The entire GAAP reserve for indexed annuities differs from account value due to the bifurcation of the host contract and the embedded derivative. The below rollforward represents the account value associated with fixed funds and reserves associated with the host contract on indexed annuities.

	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Fixed Annuities
Beginning total account value	$	11,411	$	10,027	$	9,279
Deposits and sales		1,464		2,257		1,870
Withdrawals and benefits		(1,123)		(1,061)		(1,374)
Policy fees/surrender charges		(36)		(20)		(3)
Interest credited and other activity		290		208		255
Ending account value	$	12,006	$	11,411	$	10,027

Variable Annuities. Variable annuity account values in the rollforward below represent separate account reserves for variable deferred and immediate annuities. These reserves are a component of the liabilities related to separate accounts line item in the consolidated condensed balance sheet.

	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Variable Account Value
Beginning balance	$	11,763	$	12,162	$	11,741
Increase (decrease) in VA account values:
Deposits		825		210		220
Surrenders		(1,037)		(994)		(1,138)
Contract holder assessments		(242)		(226)		(241)
Change in market value and other activity		1,606		611		1,580
Ending balance	$	12,915	$	11,763	$	12,162

Pre-Tax Adjusted Operating Income (Loss)

2021 to 2020 Annual Comparison. Pre-tax adjusted operating income decreased $137 million primarily driven by:

●Unfavorable mortality experience

●Unfavorable prospective unlocking

●Higher net investment income due to higher liability balances, as well as higher participation income and prepayment fee income on commercial mortgage loans

●Higher fee income due to growth in VA account balances

●Higher insurance operating expenses

●Growth in guaranteed benefit reserves

●Unfavorable impacts due to the exclusion of variable product market impacts from operating income in 2021. In 2021, the operating income definition was revised to exclude the impact of equity market changes on variable products.

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Operating Revenues

2021 to 2020 Annual Comparison. Operating revenues increased $42 million primarily driven by:

●Higher investment income primarily due to higher liability balances, and higher participation income and prepayment fee income on commercial mortgage loans

●Higher annuity fees from the growth in VA account balances due to increases in equity markets and growth in fixed annuity sales with guaranteed benefit riders

●Lower traditional life net premiums of $81 million primarily due to fluctuations in the number of policies entering their post level period at the end of 2019. These policies cause fluctuations in reinsurance premiums between periods for those contracts that enter the grace period and subsequently lapse.

The major categories of net investment income are summarized as follows:

	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Net Investment Income
Fixed Maturities	$	853	$	783	$	747
Commercial mortgage loans		213		193		176
Commercial mortgage loans participant income		14		13		4
Other, net		30		26		18
Total net investment income	$	1,110	$	1,015	$	945

Operating Benefits and Expenses

2021 to 2020 Annual Comparison. Operating benefits and expenses increased $179 million primarily driven by:

●Higher prospective unlocking of $87 million due to annual assumption updates.

●Unfavorable mortality experience primarily due to the impact of COVID-19

●Higher insurance operating expenses driven by higher acquisition expenses, higher maintenance and overhead, and higher sales and commissions on increased VA account values

●Lower increase in traditional life reserves of $109 million, excluding the impact of mortality experience, primarily due to fluctuations in the number of policies entering their post level period at the end of 2019. These policies cause fluctuations in reinsurance premiums between periods for those contracts that enter the grace period and subsequently lapse, which also results in accruals within benefits and settlement expense to adjust for the income effect of policies expected to lapse in the next period

●Growth in guaranteed benefit reserves due to fixed annuity sales and reserve increases in the universal life block

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	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Benefit and settlement expense
Death claims	$	993	$	784	$	635
Change in life reserves		689		770		535
Life surrenders		14		9		3
Change in annuity guaranteed benefit reserves		41		12		1
Payout annuities mortality variance		(14)		(9)		(2)
Interest credited and other expenses		597		603		582
Total benefits and settlement expenses	$	2,320	$	2,169	$	1,754

Reinsurance

Currently, the Retail Life and Annuity segment reinsures significant amounts of its life insurance in-force. Pursuant to the underlying reinsurance contracts, reinsurers pay allowances to the segment as a percentage of both first year and renewal premiums. Reinsurance allowances represent the amount the reinsurer is willing to pay for reimbursement of acquisition costs incurred by the direct writer of the business. A portion of reinsurance allowances received is deferred as part of DAC and a portion is recognized immediately as a reduction of other operating expenses. As the non-deferred portion of allowances reduces operating expenses in the period received, these amounts represent a net increase to operating income during that period.

Reinsurance allowances do not affect the methodology used to amortize DAC or the period over which such DAC is amortized. However, they do affect the amounts recognized as DAC amortization. DAC on universal life-type, limited-payment long duration, and investment contracts business is generally amortized based on the estimated gross profits of the policies in-force. Reinsurance allowances are considered in the determination of estimated gross profits, and therefore, impact DAC amortization on these lines of business. Deferred reinsurance allowances on level term business are recorded as ceded DAC, which is amortized over estimated ceded premiums of the policies in-force. Thus, deferred reinsurance allowances may impact DAC amortization. A more detailed discussion of the components of reinsurance can be found in the Reinsurance section of Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in this prospectus.

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Impact of reinsurance

Reinsurance impacted the Retail Life and Annuity segment line items as shown in the following table:

Retail Life and Annuity Segment

Line Item Impact of Reinsurance

	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
REVENUES
Reinsurance ceded	$	(872)	$	(613)	$	(1,035)
Other income		(4)		(3)		—
Total operating revenues		(876)		(616)		(1,035)
Net gains (losses) — investments and derivatives		(7)		2		—
Total revenues		(883)		(614)		(1,035)
BENEFITS AND EXPENSES
Benefits and settlement expenses		(1,053)		(566)		(875)
Amortization of DAC/VOBA		(7)		(1)		(6)
Other operating expenses⁽¹⁾		(191)		(195)		(191)
Operating benefits and expenses		(1,251)		(762)		(1,072)
Benefits and settlement expenses related to gains (losses)		(3)		(1)		—
Amortization of DAC/VOBA related to gains (losses)		(1)		6		4
Total benefits and expenses		(1,255)		(757)		(1,068)
NET IMPACT OF REINSURANCE	$	372	$	143	$	33

(1)Other operating expenses ceded per the income statement are equal to reinsurance allowances recognized after capitalization.

The table above does not reflect the impact of reinsurance on our net investment income. By ceding business to the assuming companies, we forgo investment income on the reserves ceded. Conversely, the assuming companies will receive investment income on the reserves assumed, which will increase the assuming companies’ profitability on the business that we cede. The net investment income impact to us and the assuming companies has not been quantified. The impact of including foregone investment income would be to substantially reduce the favorable net impact of reinsurance reflected above. The Retail Life and Annuity segment’s reinsurance programs do not materially impact the other income line of our income statement.

2021 to 2020 Annual Comparison. The change in the net impact of reinsurance was favorable by $229 million primarily driven by:

●Higher ceded traditional life premiums of $248 million primarily due to fluctuations in the number of policies entering their post level period at the end of 2019 that exited their grace period at the beginning of 2020. These post level policies cause fluctuations in reinsurance premiums between periods for those contracts that enter the grace period and subsequently lapse. There is an offsetting increase in ceded benefits due to accruals made to adjust for the income effect of policies expected to lapse

●Higher ceded benefits and settlement expenses caused by an increase in life claims primarily due to COVID-19

●Higher impact of prospective unlocking on UL excess benefit reserves and higher ceded UL and traditional life claims.

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Acquisitions

Segment Results of Operations

Segment results were as follows:


	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
REVENUES
Gross premiums and policy fees	$	1,575	$	1,545	$	1,466
Reinsurance ceded		(255)		(228)		(293)
Net premiums and policy fees		1,320		1,317		1,173
Net investment income		1,590		1,648		1,533
Net gains (losses) — investments and derivatives		(12)		(12)		(7)
Other income		39		226		110
Total operating revenues		2,937		3,179		2,809
BENEFITS AND EXPENSES
Benefits and settlement expenses		2,380		2,502		2,228
Amortization of VOBA		9		4		2
Other operating expenses		234		267		232
Total operating benefits and expenses		2,623		2,773		2,462
PRE-TAX ADJUSTED OPERATING INCOME		314		406		347
Non-operating income (loss)
Net gains (losses) — investments and derivatives		47		103		93
Related benefits and settlement expenses		(35)		(8)		(9)
Related amortization of VOBA		(12)		(20)		(9)
VA/VUL market impacts⁽¹⁾		6		—		—
Total non-operating income		6		75		75
INCOME BEFORE INCOME TAX	$	320	$	481	$	422

The following table summarizes key data for the Acquisitions segment:


	For The Year Ended December 31,
	2021			2020			2019
	(Dollars In Millions)
Average Life Insurance In-Force⁽¹⁾
Traditional	$	222,168		$	244,354		$	247,992
Universal life		67,754			67,752			54,704
	$	289,922		$	312,106		$	302,696
Average Account Values
Universal life⁽²⁾	$	15,190		$	15,630		$	11,236
Variable universal life		9,119			8,122			3,821
Fixed annuity⁽²⁾		9,636			10,362			10,550
Variable annuity		5,585			5,178			2,710
	$	39,530		$	39,292		$	28,317
Interest Spread — Fixed Annuities
Net investment income yield		3.93	%		3.94	%		4.01	%
Interest credited to policyholders		3.32			3.27			3.25
Interest spread⁽³⁾		0.61	%		0.67	%		0.76	%

(1)Amounts are not adjusted for reinsurance ceded.

(2)Includes general account balances held within variable annuity products and is net of coinsurance ceded.

(3)Interest spread on average general account values.

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Pre-Tax Adjusted Operating Income

2021 to 2020 Annual Comparison. Pre-tax adjusted operating income decreased $92 million primarily driven by:

●Other income of $109 million recorded in 2020 related to the final settlement of prior acquisitions

●Lower investment income due to expected run off of the in-force blocks of business

Operating Revenues

2021 to 2020 Annual Comparison. Operating revenues decreased $242 million primarily driven by:

●Other income of $109 million recorded in 2020 related to the final settlement of prior acquisitions

●Lower investment income due to expected run off of the in-force blocks of business

The major categories of net investment income are summarized as follows:

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
Net Investment Income
Fixed Maturities	$	1,430	$	1,469	$	1,391
Commercial mortgage loans		68		79		58
Commercial mortgage loans participant income		—		—		—
Other, net		92		100		84
Total net investment income	$	1,590	$	1,648	$	1,533

Operating Benefits and Expenses

2021 to 2020 Annual Comparison. Operating benefits and expenses decreased $150 million primarily driven by:

●Favorable mortality experience on the payout annuity block partially offset by unfavorable mortality experience in the life products

●Lower reserves in the group life and accident and health block

●Lower annuity interest credited primarily due to lower fixed annuity account balances

●Lower expenses of $27 million related to system conversion and integration of acquired blocks

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
Benefit and settlement expense
Death claims	$	(1,232)	$	(1,165)	$	(984)
Change in life reserves		125		207		121
Life surrenders		(209)		(283)		(260)
Change in annuity guaranteed benefit reserves		31		(10)		(21)
Payout annuities mortality variance		(22)		(80)		(35)
Interest credited and other expenses		(1,073)		(1,171)		(1,049)
Total benefits and settlement expenses	$	(2,380)	$	(2,502)	$	(2,228)

Reinsurance

The Acquisitions segment currently reinsures portions of both its life and annuity in-force. The cost of reinsurance to the segment is reflected in the chart shown below. A more detailed discussion of the components of reinsurance can be found

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in the Reinsurance section of Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in this prospectus.

Impact of reinsurance

Reinsurance impacted the Acquisitions segment line items as shown in the following table:

Acquisitions Segment

Line Item Impact of Reinsurance

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
REVENUES
Reinsurance ceded	$	(255)	$	(228)	$	(293)
BENEFITS AND EXPENSES
Benefits and settlement expenses		(262)		(206)		(261)
Amortization of VOBA		(1)		(1)		(1)
Other operating expenses		(27)		(28)		(32)
Total benefits and expenses		(290)		(235)		(294)
NET IMPACT OF REINSURANCE⁽¹⁾	$	35	$	7	$	1

(1)Assumes no investment income on reinsurance. Foregone investment income would substantially reduce the favorable impact of reinsurance.

The segment’s reinsurance programs do not materially impact the other income line of the income statement. In addition, net investment income generally has no direct impact on reinsurance cost. However, by ceding business to the assuming companies, we forgo investment income on the reserves ceded to the assuming companies. Conversely, the assuming companies will receive investment income on the reserves assumed which will increase the assuming companies’ profitability on business assumed from the Company. For business ceded under modified coinsurance arrangements, the amount of investment income attributable to the assuming company is included as part of the overall change in policy reserves and, as such, is reflected in benefit and settlement expenses. The net investment income impact to us and the assuming companies has not been quantified as it is not fully reflected in our consolidated financial statements.

2021 to 2020 Annual Comparison. The change in the net impact of reinsurance was favorable by $28 million primarily driven by:

●Higher ceded traditional life premiums due to fluctuations in the number of policies entering their post level period at the end of 2019. These post level policies cause fluctuations in reinsurance premiums between periods for those contracts that enter the grace period and subsequently lapse

●Higher ceded benefits and settlement expenses primarily due to fluctuations in the number of policies entering their post level period at the end of 2019, due to accruals within benefits and settlement expense to adjust for the income effect of policies expected to lapse in the next period

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Stable Value Products

Segment Results of Operations

Segment results were as follows:

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
REVENUES
Net investment income	$	303	$	230	$	244
Other income		—		—		—
Total operating revenues		303		230		244
BENEFITS AND EXPENSES
Benefits and settlement expenses		124		133		144
Amortization of DAC		5		3		3
Other operating expenses		3		4		4
Total benefits and expenses		132		140		151
PRE-TAX ADJUSTED OPERATING INCOME		171		90		93
Add: net gains (losses) — investments and derivatives		44		(54)		3
INCOME BEFORE INCOME TAX	$	215	$	36	$	96

The following table summarizes key data for the Stable Value Products segment:

	For The Year Ended December 31,
	2021			2020			2019
	(Dollars In Millions)
Sales⁽¹⁾
GICs	$	—		$	78		$	8
Funding agreements		4,355			2,250			1,350
	$	4,355		$	2,328		$	1,358
Average Account Values	$	7,660		$	5,926		$	5,608
Ending Account Values	$	8,526		$	6,056		$	5,444
Operating Spread
Net investment income yield		3.95	%		3.89	%		4.34	%
Interest credited		1.63			2.25			2.57
Operating expenses		0.11			0.13			0.11
Operating spread		2.21	%		1.51	%		1.66	%
Adjusted operating spread⁽²⁾		1.58	%		1.28	%		1.31	%

(1)Sales are measured at the time the purchase payments are received.

(2)Excludes commercial mortgage loan participation income, the impact of called securities, and the impact of commercial mortgage loan prepayments.

Pre-Tax Adjusted Operating Income

2021 to 2020 Annual Comparison. Pre-tax adjusted operating income increased $81 million primarily driven by:

●Increase in net investment income of $36 million due to an increase in participation income and prepayments on commercial mortgage loans and income on called securities

●Increase in net investment income of $27 million due to an increase in the average balance

●Increase in operating income of $18 million due to higher adjusted operating spreads

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	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
Net Investment Income
Fixed Maturities	$	126	$	107	$	131
Participation commercial mortgage loan income		71		37		96
Commercial mortgage loan income		108		88		20
Other income and expenses		(2)		(2)		(3)
Total net investment income	$	303	$	230	$	244

Asset Protection

Segment Results of Operations

Segment results were as follows:

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
REVENUES
Gross premiums and policy fees	$	291	$	293	$	300
Reinsurance ceded		(193)		(186)		(180)
Net premiums and policy fees		98		107		120
Net investment income		20		23		28
Other income		152		145		142
Total operating revenues		270		275		290
BENEFITS AND EXPENSES
Benefits and settlement expenses		59		75		93
Amortization of DAC and VOBA		63		65		62
Other operating expenses		108		94		98
Total benefits and expenses		230		234		253
PRE-TAX ADJUSTED OPERATING INCOME		40		41		37
INCOME BEFORE INCOME TAX	$	40	$	41	$	37

The following table summarizes key data for the Asset Protection segment:

	For The Year Ended December 31,
	2021			2020			2019
	(Dollars In Millions)
Sales⁽¹⁾
Credit insurance	$	—		$	5		$	9
Service contracts		503			394			394
GAP		84			75			78
	$	587		$	474		$	481
Loss Ratios⁽²⁾
Credit insurance		67.9	%		34.4	%		24.6	%
Service contracts		57.7			60.9			64.7
GAP		63.4			111.9			126.0

(1)Sales are based on the amount of single premiums and fees received

(2)Incurred claims as a percentage of earned premiums

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Pre-Tax Adjusted Operating Income

2021 to 2020 Annual Comparison. Pre-tax adjusted operating income decreased $1 million primarily driven by:

●Favorable impact of lower loss ratios from the GAP product line, due to higher used car values

●Higher expenses due to higher sales and commissions in the service contract line

●Increase in sales as a result of positive customer acceptance and gain of market share.

Reinsurance

The majority of the Asset Protection segment’s reinsurance activity relates to the cession of vehicle service contracts, and guaranteed asset protection insurance to producer affiliated reinsurance companies ("PARCs"). These arrangements are coinsurance contracts ceding the business on a first dollar quota share basis generally at 100% to limit the segment’s exposure and allow the PARCs to share in the underwriting income of the product. Reinsurance contracts do not relieve the Asset Protection segment from obligations to policyholders. The Asset Protection segment also carries a catastrophic reinsurance policy for the GAP program. A more detailed discussion of the components of reinsurance can be found in the Reinsurance section of Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in this prospectus.

Reinsurance impacted the Asset Protection segment line items as shown in the following table:

Asset Protection Segment

Line Item Impact of Reinsurance

	For The Year Ended December 31,
	2021		2020		2019
	(Dollars In Millions)
REVENUES
Reinsurance ceded	$	(193)	$	(186)	$	(180)
BENEFITS AND EXPENSES
Benefits and settlement expenses		(77)		(82)		(81)
Amortization of DAC/VOBA		(5)		(4)		(4)
Other operating expenses		(5)		(5)		(4)
Total benefits and expenses		(87)		(91)		(89)
NET IMPACT OF REINSURANCE⁽¹⁾	$	(106)	$	(95)	$	(91)

(1)Assumes no investment income on reinsurance. Foregone investment income would substantially change the impact of reinsurance.

2021 to 2020 Annual Comparison. The change in the net impact of reinsurance was unfavorable by $11 million primarily driven by:

●Decrease in ceded GAP losses as a result of lower loss ratios driven by higher used car prices

●Increase in ceded service contract premiums related to higher service contract premium volume

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Corporate and Other

Segment Results of Operations

Segment results were as follows:

	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
REVENUES
Gross premiums and policy fees	$	10	$	11	$	11
Reinsurance ceded		—		—		—
Net premiums and policy fees		10		11		11
Net investment income		(41)		(27)		75
Other income		1		2		1
Total operating revenues		(30)		(14)		87
BENEFITS AND EXPENSES
Benefits and settlement expenses		14		15		17
Amortization of DAC/VOBA		—		—		—
Other operating expenses		111		218		232
Total benefits and expenses		125		233		249
PRE-TAX ADJUSTED OPERATING INCOME (LOSS)		(155)		(247)		(162)
Add: net gains (losses) — investments and derivatives		19		9		44
INCOME (LOSS) BEFORE INCOME TAX	$	(136)	$	(238)	$	(118)

2021 to 2020 Annual Comparison. The decreased pre-tax adjusted operating loss was primarily due to a captive reinsurance company reorganization in 2020 which included a one-time loss of $70 million related to accelerated amortization and accretion of premiums and discounts recorded against the fixed maturities and non-recourse funding obligations and a decrease in corporate overhead expense.

CONSOLIDATED INVESTMENTS

As of December 31, 2021, our investment portfolio was $90.8 billion. The types of assets in which we may invest are influenced by various state insurance laws which prescribe qualified investment assets. Within the parameters of these laws, we invest in assets giving consideration to such factors as liquidity and capital needs, investment quality, investment return, matching of assets and liabilities, and the overall composition of the investment portfolio by asset type and credit exposure.

Within our fixed maturity investments, we maintain portfolios classified as "available-for-sale", and "trading". We purchase our available-for-sale investments with the intent to hold to maturity by purchasing investments that match future cash flow needs. However, we may sell any of our available-for-sale and trading investments to maintain proper matching of assets and liabilities. Accordingly, we classified $70.3 billion, or 96.2%, of our fixed maturities as "available-for-sale" as of December 31, 2021. These securities are carried at fair value on our consolidated balance sheets. Changes in fair value for our available-for-sale portfolio, net of tax and the related impact on certain insurance assets and liabilities, are recorded directly to shareowner’s equity. Declines in fair value that are due to credit losses are recorded as net gains (losses) — investments and derivatives in the consolidated statements of income. Beginning on January 1, 2020, credit losses are recorded in net gains (losses) — investments and derivatives with a corresponding adjustment to the allowance for credit losses, except that the credit losses recognized cannot exceed the difference between the book value and fair value of the security as of the date of the analysis. In future periods, recoveries in the present value of expected cash flows are recorded as a reversal of the previously recognized allowance for credit losses with an offsetting adjustment to net gains (losses) — investments and derivatives. Prior to January 1, 2020, credit losses were recorded as net gains (losses) — investments and derivatives in the consolidated statements of income, net of any applicable non-credit component of the loss, which was recorded as an adjustment to other comprehensive income (loss).

Trading securities are carried at fair value and changes in fair value are recorded on the income statement as they occur. Our trading portfolio accounted for $2.8 billion, or 3.8%, of our fixed maturities and $82 million of short-term investments

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as of December 31, 2021. Changes in fair value on the Modco trading portfolios, including gains and losses from sales, are passed to third party reinsurers through the contractual terms of the related reinsurance arrangements. Partially offsetting these amounts are corresponding changes in the fair value of the embedded derivative associated with the underlying reinsurance arrangement.

Fair values for private, non-traded securities are determined as follows: 1) we obtain estimates from independent pricing services and 2) we estimate fair value based upon a comparison to quoted issues of the same issuer or issues of other issuers with similar terms and risk characteristics. We analyze the independent pricing services valuation methodologies and related inputs, including an assessment of the observability of market inputs. Upon obtaining this information related to fair value, management makes a determination as to the appropriate valuation amount. For more information about the fair values of our investments please refer to Note 5, Fair Value of Financial Instruments, to the financial statements.

The following table presents the reported values of our invested assets:

	As of December 31,
	2021				2020
					(Recast)
	(Dollars In Millions)
Publicly issued bonds (amortized cost: 2021 — $44,618; 2020 — $44,168)	$	48,632	53.6	%	$	49,571	56.0	%
Privately issued bonds (amortized cost: 2021 — $23,132; 2020 — $21,332)		24,102	26.6			22,817	25.8
Redeemable preferred stocks (amortized cost: 2021 — $305; 2020 — $196)		314	0.3			207	0.2
Fixed maturities		73,048	80.5			72,595	82.0
Equity securities (cost: 2021 — $804; 2020 — $635)		828	0.9			667	0.7
Commercial mortgage loans		10,863	12.0			10,006	11.3
Policy loans		1,527	1.7			1,593	1.8
Other long-term investments		3,646	4.0			3,251	3.7
Short-term investments		862	0.9			462	0.5
Total investments	$	90,774	100.0	%	$	88,574	100.0	%

Included in the preceding table are $2.8 billion and $2.9 billion of fixed maturities and $82 million and $76 million of short-term investments classified as trading securities as of December 31, 2021 and 2020, respectively. All of the fixed maturities in the trading portfolio are invested assets that are held pursuant to Modco arrangements under which the economic risks and benefits of the investments are passed to third party reinsurers.

Fixed Maturity Investments

As of December 31, 2021, our fixed maturity investment holdings were $73.0 billion. The approximate percentage distribution of our fixed maturity investments by quality rating is as follows:

	As of December 31,
Rating	2021				2020
					(Recast)
	(Dollars In Millions)
AAA	$	9,089	12.4	%	$	9,497	13.1	%
AA		7,153	9.8			7,337	10.1
A		22,863	31.4			24,372	33.6
BBB		31,361	42.9			28,654	39.5
Below investment grade		2,582	3.5			2,735	3.7
	$	73,048	100.0	%	$	72,595	100.0	%

We use various Nationally Recognized Statistical Rating Organizations’ ("NRSRO") ratings when classifying securities by quality ratings. When the various NRSRO ratings are not consistent for a security, we use the second-highest convention

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in assigning the rating. When there are no such published ratings, we assign a rating based on the statutory accounting rating system if such ratings are available.

The distribution of our fixed maturity investments by type is as follows:

	As of December 31,
Type	2021		2020
			(Recast)
	(Dollars In Millions)
Corporate securities	$	55,574	$	53,967
Residential mortgage-backed securities		6,938		6,877
Commercial mortgage-backed securities		2,516		2,748
Other asset-backed securities		1,605		1,741
U.S. government-related securities		841		1,606
Other government-related securities		817		747
States, municipals, and political subdivisions		4,442		4,702
Redeemable preferred stocks		315		207
Total fixed income portfolio	$	73,048	$	72,595

We periodically update our industry segmentation based on an industry accepted index. Updates to this index can result in a change in segmentation for certain securities between periods.

The industry segment composition of our fixed maturity securities is presented in the following table:

	As of December 31, 2021		% Fair Value		As of December 31, 2020		% Fair Value
					(Recast)
	(Dollars In Millions)
Banking	$	8,362	11.5	%	$	7,752	10.7	%
Other finance		1,018	1.5			959	1.3
Electric utility		5,727	7.8			5,792	8.0
Energy		4,574	6.3			4,756	6.6
Natural gas		1,302	1.8			1,275	1.8
Insurance		6,534	8.9			6,022	8.3
Communications		2,914	4.0			2,967	4.1
Basic industrial		2,655	3.6			2,532	3.5
Consumer noncyclical		7,331	10.0			7,374	10.2
Consumer cyclical		2,862	3.9			2,833	3.9
Finance companies		506	0.7			319	0.4
Capital goods		3,513	4.8			3,648	5.0
Transportation		2,044	2.8			2,236	3.1
Other industrial		686	0.9			691	1.0
Brokerage		2,065	2.8			1,786	2.5
Technology		3,155	4.3			2,596	3.6
Real estate		577	0.8			587	0.8
Other utility		64	0.1			48	—
Commercial mortgage-backed securities		2,516	3.4			2,748	3.8
Other asset-backed securities		1,605	2.2			1,741	2.4
Residential mortgage-backed non-agency securities		5,742	7.9			5,607	7.7
Residential mortgage-backed agency securities		1,196	1.6			1,270	1.8
U.S. government-related securities		841	1.2			1,607	2.0
Other government-related securities		817	1.1			747	1.0
State, municipals, and political subdivisions		4,442	6.1			4,702	6.5
Total	$	73,048	100.0	%	$	72,595	100.0	%

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The total Modco trading portfolio fixed maturities by rating is as follows:

	As of December 31,
Rating	2021		2020
	(Dollars In Millions)
AAA	$	267	$	340
AA		274		268
A		880		909
BBB		1,243		1,205
Below investment grade		129		140
Total Modco trading fixed maturities	$	2,793	$	2,862

A portion of our bond portfolio is invested in RMBS, CMBS, and ABS. ABS are securities that are backed by a pool of assets. These holdings as of December 31, 2021, were $11.1 billion. Mortgage-backed securities ("MBS") are constructed from pools of mortgages and may have cash flow volatility as a result of changes in the rate at which prepayments of principal occur with respect to the underlying loans. Excluding limitations on access to lending and other extraordinary economic conditions, prepayments of principal on the underlying loans can be expected to accelerate with decreases in market interest rates and diminish with increases in interest rates. The following tables include the percentage of our collateral grouped by rating category and categorize the estimated fair value by year of security origination for our Prime, Non-Prime, Commercial, and Other asset-backed securities as of December 31, 2021 and 2020:


	As of December 31, 2021
	Prime⁽¹⁾						Non-Prime⁽¹⁾						Commercial						Other asset-backed						Total
	Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost
	(Dollars In Millions)
Rating $
AAA	$	5,690		$	5,749		$	1		$	1		$	1,348		$	1,304		$	521		$	509		$	7,560		$	7,563
AA		—			—			—			—			567			555			297			286			864			841
A		1,195			1,206			6			5			460			441			597			594			2,258			2,246
BBB		9			9			1			1			123			122			172			168			305			300
Below		12			13			24			22			18			22			18			18			72			75
	$	6,906		$	6,977		$	32		$	29		$	2,516		$	2,444		$	1,605		$	1,575		$	11,059		$	11,025
Rating %
AAA		82.4	%		82.4	%		3.1	%		3.4	%		53.6	%		53.4	%		32.5	%		32.3	%		68.3	%		68.6	%
AA		—			—			—			—			22.5			22.7			18.5			18.2			7.8			7.6
A		17.3			17.3			18.8			17.2			18.3			18.0			37.2			37.7			20.4			20.4
BBB		0.1			0.1			3.1			3.4			4.9			5.0			10.7			10.7			2.8			2.7
Below		0.2			0.2			75.0			76.0			0.7			0.9			1.1			1.1			0.7			0.7
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%


	Estimated Fair Value of Security by Year of Security Origination
2017 and prior	$	1,236	$	1,217	$	32	$	29	$	2,272	$	2,211	$	1,277	$	1,249	$	4,817	$	4,706
2018		282		278		—		—		145		134		128		127		555		539
2019		363		361		—		—		72		71		11		11		446		443
2020		1,221		1,235		—		—		15		16		40		39		1,276		1,290
2021		3,804		3,886		—		—		12		12		149		149		3,965		4,047
Total	$	6,906	$	6,977	$	32	$	29	$	2,516	$	2,444	$	1,605	$	1,575	$	11,059	$	11,025

(1)Included in Residential Mortgage-Backed securities.

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	As of December 31, 2020 (Recast)
	Prime⁽¹⁾						Non-Prime⁽¹⁾						Commercial						Other asset-backed						Total
	Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost
	(Dollars In Millions)
Rating $
AAA	$	5,541		$	5,420		$	2		$	2		$	1,596		$	1,514		$	543		$	527		$	7,682		$	7,463
AA		—			—			—			—			587			570			277			268			864			838
A		1,268			1,228			8			7			469			449			731			727			2,476			2,411
BBB		4			4			1			1			85			86			164			158			254			249
Below		24			24			29			27			11			19			26			29			90			99
	$	6,837		$	6,676		$	40		$	37		$	2,748		$	2,638		$	1,741		$	1,709		$	11,366		$	11,060
Rating %
AAA		81.1	%		81.2	%		5.3	%		5.6	%		58.1	%		57.4	%		31.2	%		30.8	%		67.6	%		67.5	%
AA		—			—			0.2			0.2			21.4			21.6			15.9			15.7			7.6			7.6
A		18.5			18.3			19.7			18.2			17.0			17.0			42.0			42.6			21.8			21.7
BBB		0.1			0.1			2.8			2.9			3.1			3.3			9.4			9.2			2.2			2.3
Below		0.3			0.4			72.0			73.1			0.4			0.7			1.5			1.7			0.8			0.9
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%


	Estimated Fair Value of Security by Year of Security Origination
2016 and prior	$	1,701	$	1,647	$	38	$	35	$	2,238	$	2,167	$	1,069	$	1,044	$	5,046	$	4,893
2017		737		711		2		2		270		249		402		397		1,411		1,359
2018		1,001		970		—		—		151		136		148		148		1,300		1,254
2019		1,070		1,045		—		—		75		71		92		91		1,237		1,207
2020		2,328		2,303		—		—		14		15		30		29		2,372		2,347
Total	$	6,837	$	6,676	$	40	$	37	$	2,748	$	2,638	$	1,741	$	1,709	$	11,366	$	11,060

(1)Included in Residential Mortgage-Backed securities

The majority of our RMBS holdings as of December 31, 2021 were super senior or senior bonds in the capital structure. Our total non-agency portfolio has a weighted-average life of approximately 6.75 years. The following table categorizes the approximate weighted-average life for our non-agency portfolio, by category of material holdings, as of December 31, 2021.

Non-agency portfolio			Approximate Weighted-Average Life
Prime			6.81
Sub-prime			1.58

Commercial Mortgage Loans

We invest a portion of our investment portfolio in commercial mortgage loans. As of December 31, 2021, our commercial mortgage loan holdings were $11 billion, $10.9 billion, net of allowance for credit losses. As of December 31, 2020, our commercial mortgage loan holdings were $10.2 billion, $10 billion net of allowance for credit losses. We specialize in making commercial mortgage loans on credit-oriented commercial properties. Our underwriting procedures relative to our commercial mortgage loan portfolio are based, in our view, on a conservative and disciplined approach. We concentrate on a small number of commercial real estate asset types associated with the necessities of life (grocery anchored and credit tenant retail, industrial, multi-family, senior living, and credit tenant and medical office). We believe that these asset types tend to weather economic downturns better than other commercial asset classes in which we have chosen not to participate. We believe this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout our history. The majority of our commercial mortgage loan portfolio was underwritten by us. From time to time, we may acquire loans in conjunction with an acquisition.

Our commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of an allowance for loan losses. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts, and prepayment fees are reported in net investment income.

Certain of the commercial mortgage loans have call options that occur within the next 8 years. However, if interest rates were to significantly increase, we may be unable to exercise the call options on our existing commercial mortgage loans

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commensurate with the significantly increased market rates. Assuming the commercial mortgage loans are called at their next call dates, $116 million will be due in 2022, $379 million in 2023 through 2027, and $6 million in 2028 through 2029.

We offer a type of commercial mortgage loan under which we will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of December 31, 2021 and December 31, 2020, $600 million and $806 million, respectively, of our total commercial mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income when received. During the years ended December 31, 2021 and 2020, we recognized $54 million and $26 million, respectively, of participation commercial mortgage loan income.

The following table includes a breakdown of our commercial mortgage loan portfolio:

Commercial Mortgage Loan Portfolio Profile

	As of December 31,
	2021			2020
	(Dollars in Millions)
Number of funded commercial mortgage loans		1,780			1,827
Amortized cost	$	10,966		$	10,228
Unpaid principal balance	$	10,919		$	10,148
Allowance for funded commercial mortgage loan credit losses	$	(103)		$	(222)
Average commercial mortgage loan size	$	6		$	6
Weighted-average amortization		22.4 years			21.4 years
Weighted-average coupon		4.05	%		4.34	%
Weighted-average LTV		54.00	%		53.91	%
Weighted-average debt coverage ratio		1.72			1.72
Total number of unfunded commercial mortgage loan commitments		98			117
Total unfunded mortgage loan commitments	$	994		$	801
Allowance for unfunded commercial mortgage loan commitments credit losses	$	(5)		$	(22)

We record commercial mortgage loans net of an allowance for credit losses. This allowance is calculated through analysis of specific loans that have indicators of potential impairment based on current information and events. As of December 31, 2021 and 2020, there were allowances for funded commercial mortgage loans and unfunded commercial mortgage loans commitments credit losses of $108 million and $244 million, respectively.

While our commercial mortgage loans do not have quoted market values, as of December 31, 2021, we estimated the fair value of our commercial mortgage loans to be $11.4 billion (using an internal fair value model which calculates the value of most loans by using the loan’s discounted cash flows to the loan’s call or maturity date), which was 3.82% more than the amortized cost.

At the time of origination, our commercial mortgage lending criteria targets that the loan-to-value ratio on each commercial mortgage is 75% or less. We target projected rental payments from credit anchors (i.e., excluding rental payments from smaller local tenants) of 70% of the property’s projected operating expenses and debt service.

As of December 31, 2021, we did not have any commercial mortgage loans that were nonperforming, restructured, or foreclosed and were converted to real estate properties. As of December 31, 2020, $3 million of invested assets consisted of nonperforming, restructured, or foreclosed and converted to real estate properties. We do not expect these investments to adversely affect our liquidity or ability to maintain proper matching of assets and liabilities.

During the year ended December 31, 2021 and 2020, we recognized one and four troubled debt restructuring transactions, respectively. These concessions were the result of agreements between the creditor and the debtor. We did not identify any commercial mortgage loans whose principal was permanently impaired during the year ended December 31, 2021, and identified one commercial mortgage loan that was permanently impaired during the year ended December 31, 2020.

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It is our policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place.

We use the same methodology and assumptions to estimate the allowance for unfunded commercial mortgage loan commitments credit losses as for funded commercial mortgage loans. As of December 31, 2021, the allowance for unfunded commercial mortgage loan commitments credit losses was $5 million, which is a decrease of $17 million from December 31, 2020.

Unrealized Gains and Losses — Available-for-Sale Securities

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 December 31, 2021. Information about unrealized gains and losses is subject to rapidly changing conditions, including volatility of financial markets and changes in interest rates. Management considers a number of factors in determining if an unrealized loss is credit-related, including the expected cash to be collected and the intent, likelihood, and/or ability to hold the security until recovery. Consistent with our long-standing practice, we do not utilize a "bright line test" to determine credit losses. On a quarterly basis, we perform an analysis on every security with an unrealized loss to determine if a credit loss has occurred. This analysis includes reviewing several metrics including collateral, expected cash flows, ratings, and liquidity. 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. We had an overall net unrealized gain of $5.0 billion, prior to income tax and the related impact of certain insurance assets and liabilities offsets, as of December 31, 2021, and an overall net unrealized gain of $6.9 billion as of December 31, 2020.

For fixed maturity held that are in an unrealized loss position as of December 31, 2021, the fair value, amortized cost, ACL, unrealized loss, and total time period that the security has been in an unrealized loss position are presented in the table below:

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		ACL		% ACL		Unrealized Loss		% Unrealized Loss
	(Dollars In Millions)
<= 90 days	$	5,851	52.7	%	$	5,939	52.1	%	$	—	—	%	$	(88)	29.8	%
>90 days but <= 180 days		1,393	12.5			1,433	12.6			—	—			(40)	13.6
>180 days but <= 270 days		351	3.2			362	3.2			—	—			(11)	3.7
>270 days but <= 1 year		2,678	24.2			2,778	24.3			—	—			(100)	33.8
>1 year but <= 2 years		462	4.2			488	4.3			—	—			(26)	8.8
>2 years but <= 3 years		104	0.9			109	1.0			—	—			(5)	1.7
>3 years but <= 4 years		78	0.7			82	0.7			—	—			(4)	1.4
>4 years but <= 5 years		45	0.4			49	0.4			—	—			(4)	1.4
>5 years		138	1.2			156	1.4			(1)	100.0			(17)	5.8
Total	$	11,100	100.0	%	$	11,396	100.0	%	$	(1)	100.0	%	$	(295)	100.0	%

The range of maturity dates for securities in an unrealized loss position as of December 31, 2021 varies, with 1.2% maturing in less than 1 year, 9.5% maturing between 1 and 5 years, 41.4% maturing between 5 and 10 years, and 47.9% maturing after 10 years. The following table shows the credit rating of securities in an unrealized loss position as of December 31, 2021:

S&P or Equivalent Designation	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		ACL		% ACL		Unrealized Loss		% Unrealized Loss
	(Dollars In Millions)
AAA/AA/A	$	6,860	61.9	%	$	7,032	61.7	%	$	—	—	%	$	(172)	58.3	%
BBB		3,823	34.4			3,921	34.4			—	—			(98)	33.2
Investment grade		10,683	96.3			10,953	96.1			—	—	%		(270)	91.5
BB		412	3.7			436	3.8			(1)	100.0			(23)	7.8
B		5	—			7	0.1			—	—			(2)	0.7
CCC or lower		—	—			—	—			—	—			—	—
Below investment grade		417	3.7			443	3.9			(1)	100.0	%		(25)	8.5
Total	$	11,100	100.0	%	$	11,396	100.0	%	$	(1)	100.0	%	$	(295)	100.0	%

As of December 31, 2021, the Barclays Investment Grade Index was priced at 90 basis points versus a 10 year average of 124 basis points. Similarly, the Barclays High Yield Index was priced at 321 basis points versus a 10 year average of

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476 basis points. As of December 31, 2021, the five, ten, and thirty-year U.S. Treasury obligations were trading at levels of 1.3%, 1.5%, and 1.9%, as compared to 10 year averages of 1.4%, 2.0%, and 2.7%, respectively.

As of December 31, 2021, 91.5% of the unrealized loss was associated with securities that were rated investment grade. We have examined the performance of the underlying collateral and cash flows and expect that our investments will continue to perform in accordance with their contractual terms. Factors such as credit enhancements within the deal structures and the underlying collateral performance/characteristics support the recoverability of the investments. Based on the factors discussed, we do not consider these unrealized loss positions to be other-than-temporary. However, from time to time, we may sell securities in the ordinary course of managing our portfolio to meet diversification, credit quality, yield enhancement, asset/liability management, and liquidity requirements.

Expectations that investments in mortgage-backed and asset-backed securities will continue to perform in accordance with their contractual terms are based on assumptions that a market participant would use in determining the current fair value. It is reasonably possible that the underlying collateral of these investments will perform worse than current market expectations and that such an event may lead to adverse changes in the cash flows on our holdings of these types of securities. This could lead to potential future write-downs within our portfolio of mortgage-backed and asset-backed securities. Expectations that our investments in corporate securities and/or debt obligations will continue to perform in accordance with their contractual terms are based on evidence gathered through our normal credit surveillance process. Although we do not anticipate such events, it is reasonably possible that issuers of our investments in corporate securities will perform worse than current expectations. Such events may lead us to recognize potential future write-downs within our portfolio of corporate securities. It is also possible that such unanticipated events would lead us to dispose of those certain holdings and recognize the effects of any such market movements in our financial statements.

As of December 31, 2021, we held a total of 742 positions that were in an unrealized loss position. Included in that amount were 44 positions of below investment grade securities with a fair value of $417 million that were in an unrealized loss position. Total unrealized losses related to below investment grade securities were $25 million, $22 million of which had been in an unrealized loss position for more than twelve months. Below investment grade securities in an unrealized loss position were 0.5% of invested assets.

As of December 31, 2021, securities in an unrealized loss position that were rated as below investment grade represented 3.7% of the total fair value and 8.5% of the total unrealized loss. We have the ability and intent to hold these securities to maturity. After a review of each security and its expected cash flows, we believe the decline in fair value to be non-credit related.

The following table includes the fair 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 as of December 31, 2021:


	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		ACL		% ACL		Unrealized Loss		% Unrealized Loss
	(Dollars In Millions)
<= 90 days	$	104	25.0	%	$	105	23.6	%	$	—	—	%	$	(1)	4.0	%
>90 days but <= 180 days		26	6.2			26	5.9			—	—			—	—
>180 days but <= 270 days		—	—			—	—			—	—			—	—
>270 days but <= 1 year		53	12.7			55	12.4			—	—			(2)	8.0
>1 year but <= 2 years		25	6.0			30	6.8			—	—			(5)	20.0
>2 years but <= 3 years		48	11.5			50	11.3			—	—			(2)	8.0
>3 years but <= 4 years		15	3.6			16	3.6			—	—			(1)	4.0
>4 years but <= 5 years		45	10.8			49	11.1			—	—			(4)	16.0
>5 years		101	24.2			112	25.3			(1)	100.0			(10)	40.0
Total	$	417	100.0	%	$	443	100.0	%	$	(1)	100.0	%	$	(25)	100.0	%

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We have no material concentrations of issuers or guarantors of fixed maturity securities. The industry segment composition of all securities in an unrealized loss position held as of December 31, 2021 is presented in the following table:

	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		ACL		% ACL		Unrealized Loss		% Unrealized Loss
	(Dollars In Millions)
Banking	$	1,091	9.8	%	$	1,118	9.8	%	$	—	—	%	$	(27)	9.2	%
Other finance		126	1.1			137	1.2			—	—			(11)	3.7
Electric utility		415	3.7			429	3.8			—	—			(14)	4.7
Energy		331	3.0			343	3.0			—	—			(12)	4.1
Natural gas		113	1.0			118	1.0			—	—			(5)	1.7
Insurance		613	5.5			631	5.5			—	—			(18)	6.1
Communications		242	2.2			248	2.2			(1)	100.0			(5)	1.7
Basic industrial		249	2.2			254	2.2			—	—			(5)	1.7
Consumer noncyclical		623	5.6			642	5.6			—	—			(19)	6.4
Consumer cyclical		413	3.7			427	3.7			—	—			(14)	4.7
Finance companies		172	1.5			175	1.5			—	—			(3)	1.0
Capital goods		259	2.3			264	2.3			—	—			(5)	1.7
Transportation		90	0.8			91	0.8			—	—			(1)	0.3
Other industrial		61	0.5			63	0.6			—	—			(2)	0.7
Brokerage		183	1.6			188	1.6			—	—			(5)	1.7
Technology		354	3.2			364	3.2			—	—			(10)	3.4
Real estate		20	0.2			20	0.2			—	—			—	—
Other utility		21	0.2			21	0.2			—	—			—	—
Commercial mortgage-backed securities		217	2.0			224	2.0			—	—			(7)	2.4
Other asset-backed securities		296	2.7			298	2.6			—	—			(2)	0.7
Residential mortgage-backed non-agency securities		3,908	35.3			3,985	35.0			—	—			(77)	26.1
Residential mortgage-backed agency securities		722	6.5			747	6.6			—	—			(25)	8.5
U.S. government-related securities		464	4.3			489	4.3			—	—			(25)	8.5
Other government-related securities		76	0.7			78	0.7			—	—			(2)	0.7
States, municipals, and political subdivisions		41	0.4			42	0.4			—	—			(1)	0.3
Total	$	11,100	100.0	%	$	11,396	100.0	%	$	(1)	100.0	%	$	(295)	100.0	%

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	Fair Value		% Fair Value		Amortized Cost		% Amortized Cost		ACL		% ACL		Unrealized Loss		% Unrealized Loss
	(Recast)
	(Dollars In Millions)
Banking	$	163	5.1	%	$	165	5.0	%	$	—	—	%	$	(2)	1.2	%
Other finance		95	3.0			103	3.1			—	—			(8)	6.3
Electric utility		221	7.0			231	6.9			—	0.6			(10)	7.6
Energy		431	13.7			482	14.6			(16)	68.2			(35)	26.9
Natural gas		14	0.4			14	0.4			—	1.0			—	0.2
Insurance		87	2.8			100	3.1			—	—			(13)	10.0
Communications		54	1.6			56	1.6			(2)	8.3			—	(0.4)
Basic industrial		—	—			—	—			—	—			—	—
Consumer noncyclical		188	5.9			193	5.8			—	—			(5)	3.9
Consumer cyclical		243	7.6			255	7.6			—	—			(12)	10.4
Finance companies		1	0.1			2	0.1			—	—			(1)	0.7
Capital goods		32	1.0			33	1.0			—	—			(1)	1.0
Transportation		153	4.8			160	4.8			—	—			(7)	5.1
Other industrial		18	0.6			18	0.5			—	—			—	0.1
Brokerage		39	1.2			41	1.2			—	—			(2)	1.3
Technology		52	1.6			55	1.6			—	—			(3)	1.9
Real estate		—	—			—	—			—	—			—	—
Other utility		—	—			—	—			—	—			—	—
Commercial mortgage-backed securities		293	9.2			317	9.5			(4)	15.7			(20)	15.1
Other asset-backed securities		472	14.9			480	14.4			(1)	6.2			(7)	5.1
Residential mortgage-backed non-agency securities		292	9.2			293	8.8			—	—			(1)	0.9
Residential mortgage-backed agency securities		103	3.2			103	3.1			—	—			—	—
U.S. government-related securities		312	5.1			315	5.0			—	—			(3)	1.3
Other government-related securities		26	0.8			27	0.8			—	—			(1)	0.8
States, municipals, and political subdivisions		39	1.2			40	1.1			—	—			(1)	0.6
Total	$	3,328	100.0	%	$	3,483	100.0	%	$	(23)	100.0	%	$	(132)	100.0	%

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Risk Management and Impairment Review

We monitor the overall credit quality of our portfolio within established guidelines. The following table includes our available-for-sale fixed maturities by credit rating as of December 31, 2021:

Rating	Fair Value		Percent of Fair Value
	(Dollars In Millions)
AAA	$	8,822	12.6	%
AA		6,879	9.7
A		21,983	31.3
BBB		30,118	42.9
Investment grade		67,802	96.5
BB		2,360	3.4
B		86	0.1
CCC or lower		7	—
Below investment grade		2,453	3.5
Total	$	70,255	100.0	%

Not included in the table above are $2.7 billion of investment grade and $129 million of below investment grade fixed maturities classified as trading securities.

Limiting bond exposure to any creditor group is another way we manage credit risk. We held no credit default swaps on the positions listed below as of December 31, 2021. The following table summarizes our ten largest maturity exposures to an individual creditor group as of December 31, 2021:


	Fair Value of
Creditor	Funded Securities		Unfunded Exposures		Total Fair Value
	(Dollars In Millions)
Federal Home Loan Bank	$	305.6	$	—	$	305.6
AT&T Corporation		300.5		—		300.5
JPMorgan Chase & Co.		292.3		1.9		294.2
Wells Fargo & Co.		286.0		1.7		287.7
Verizon Communications Inc.		286.9		—		286.9
Berkshire Hathaway Inc.		282.0		—		282.0
UnitedHealth Group Inc.		282.0		—		282.0
TIAA Board of Overseers		278.0		—		278.0
HSBC Holdings, PLC		275.4		0.5		275.9
Morgan Stanley		269.6		6.0		275.6
Total	$	2,858.3	$	10.1	$	2,868.4

Determining whether a decline in the current fair value of invested assets is a credit loss in value is both objective and subjective, and can involve a variety of assumptions and estimates, particularly for investments that are not actively traded in established markets. We review our positions on a monthly basis for possible credit concerns and review our current exposure, credit enhancement, and delinquency experience.

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. Since it is possible for the impairment of one investment to affect other investments, we engage in ongoing risk management to safeguard against and limit any further risk to our investment portfolio. Special attention is given to correlative risks within specific industries, related parties, and business markets.

For certain securitized financial assets with contractual cash flows, including RMBS, CMBS, and ABS, GAAP requires us to periodically update our best estimate of cash flows over the life of the security. If the fair value of a securitized financial asset is less than its cost or amortized cost and there has been a decrease in the present value of the expected cash

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flows since the last revised estimate, considering both timing and amount, a credit loss is recognized. Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third party sources along with certain internal assumptions and judgments regarding the future performance of the underlying collateral. Projections of expected future cash flows may change based upon new information regarding the performance of the underlying collateral. In addition, we consider our intent and ability to retain a temporarily depressed security until recovery.

For securities which the Company has the intent and ability to hold the security until the recovery of the amortized cost basis, analysis of expected cash flows is used to measure the amount of the credit loss, if any, and the Company uses the effective interest rate implicit in the security at the date of acquisition to discount expected cash flows. For floating rate securities, the Company’s policy is to lock in the interest rate at the first instance of an impairment. Estimates of expected cash flows are not probability-weighted, but will reflect the Company’s best estimate based on past events, current conditions, and reasonable and supportable forecasts of future events. To the extent the amortized cost basis of the security exceeds the present value of future cash flows expected to be collected, this difference represents a credit loss. Credit losses are recorded in current earnings with a corresponding adjustment to the allowance for credit losses, except that the credit loss recognized cannot exceed the difference between the book value and fair value of the security as of the date of the analysis. In future periods, recoveries in the present value of expected cash flows are recorded in current earnings as a reversal of the previously recognized allowance for credit losses. Based on our analysis, for the year ended December 31, 2021, we recognized $6 million of credit recoveries in earnings.

There are certain risks and uncertainties associated with determining whether declines in fair values are the result of credit losses. 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. We continuously monitor these factors as they relate to the investment portfolio in determining the status of each investment.

We have deposits with certain financial institutions which exceed federally insured limits. We have reviewed the creditworthiness of these financial institutions and believe that there is minimal risk of a material loss.

Certain European countries have experienced varying degrees of financial stress, which could have a detrimental impact on regional or global economic conditions and on sovereign and non-sovereign obligations. The chart shown below

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includes our non-sovereign fair value exposures in these countries as of December 31, 2021. As of December 31, 2021, we had no material unfunded exposure and had no material direct sovereign fair value exposure.

					Total Gross
	Non-sovereign Debt				Funded
Financial Instrument and Country	Financial		Non-financial		Exposure
	(Dollars In Millions)
Securities:
United Kingdom	$	1,296	$	1,454	$	2,750
France		751		396		1,147
Netherlands		354		336		690
Germany		246		829		1,075
Switzerland		447		153		600
Spain		267		356		623
Belgium		—		200		200
Norway		—		122		122
Finland		107		—		107
Ireland		112		125		237
Italy		74		172		246
Luxembourg		—		34		34
Sweden		—		52		52
Denmark		56		—		56
Portugal		—		25		25
Total securities		3,710		4,254		7,964
Derivatives:
France	$	39	$	—	$	39
United Kingdom		181		—		181
Switzerland		24		—		24
Total derivatives		244		—		244
Total securities and derivatives	$	3,954	$	4,254	$	8,208

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Net Gains and Losses — Investments and Derivatives

The following table sets forth net gains and losses for the periods shown:

	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Fixed maturity gains — sales	$	47	$	51	$	62
Fixed maturity losses — sales		(1)		(5)		(14)
Equity securities		4		—		(3)
Other investments		20		45		9
Total realized gains (losses) — investments, net		70		91		54
Modco trading portfolio		(103)		130		243
Equity securities		(8)		13		50
Change in net expected credit losses — fixed maturities⁽¹⁾		6		(125)		—
Net impairment losses recognized in operations⁽²⁾		—		—		(34)
Commercial mortgage loans		137		(149)		(4)
Net gains (losses) — investments		102		(40)		309
Derivatives related to VA contracts:
Interest rate futures	$	15	$	—	$	(20)
Equity futures		(12)		109		5
Currency futures		11		(10)		3
Equity options		(108)		(30)		(150)
Interest rate swaps		(136)		274		230
Total return swaps		(189)		(49)		(78)
Embedded derivative — GLWB		347		(404)		(198)
Total derivatives related to VA contracts		(72)		(110)		(208)
Derivatives related to FIA contracts:
Embedded derivative		3		(69)		(86)
Funds withheld derivative		(7)		(10)		—
Equity futures		5		(4)		2
Equity options		72		49		84
Other derivatives		(3)		(1)		—
Total derivatives related to FIA contracts		70		(35)		—
Derivatives related to IUL contracts:
Embedded derivative		(28)		4		(13)
Equity futures		—		(2)		—
Equity options		16		9		15
Total derivatives related to IUL contracts		(12)		11		2
Embedded derivative — Modco reinsurance treaties		64		(99)		(187)
Derivatives with PLC⁽³⁾		—		23		27
Other derivatives		(2)		15		(2)
Total gains (losses) — derivatives, net		48		(195)		(368)
Net gains (losses) — investments and derivatives	$	150	$	(235)	$	(59)

(1)Represents net credit losses recognized under FASB ASC 326

(2)Represents other-than-temporary impairment losses recognized in prior periods under FASB ASC 320

(3)The Company and certain of its subsidiaries had an interest support agreement, a yearly renewable term premium support agreement, and portfolio maintenance agreements with PLC through October 1, 2020. These agreements were terminated as part of the Captive Merger and a new portfolio maintenance agreement was entered into with PLC on that date.

Gains and losses on investments reflect portfolio management activities designed to maintain proper matching of assets and liabilities and to enhance long-term investment portfolio performance. The net gains (losses) — investments, excluding impairments, equities, and Modco trading portfolio activity during the year ended December 31, 2021, primarily

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reflects the normal operation of our asset/liability program within the context of the changing interest rate and spread environment, as well as tax planning strategies designed to utilize capital loss carryforwards.

Net gains (losses) — investments are comprised of credit losses and actual sales of investments. These credit losses resulted from our analysis of circumstances and our belief that credit events, loss severity, changes in credit enhancement, and/or other adverse conditions of the respective issuers have caused, or will lead to, a deficiency in the contractual cash flows related to these investments. These credit losses are presented in the chart below:


		For The Year Ended December 31,
	2021		2020		2019
		(Dollars In Millions)
CMBS	$	3	$	(4)	$	—
Other MBS		—		(1)		—
Corporate securities		3		(120)		(34)
Total	$	6	$	(125)	$	(34)

As previously discussed, management considers several factors when determining whether a credit loss has occurred. Although we purchase securities with the intent to hold them until maturity, we may change our position as a result of a change in circumstances. Any such decision is consistent with our classification of all but a specific portion of our investment portfolio as available-for-sale. For the year ended December 31, 2021, we sold securities in an unrealized loss position with a fair value of $35 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
	(Dollars In Millions)
<= 90 days	$	20	57.1	%	$	—	—	%
>90 days but <= 180 days		—	—			—	—
>180 days but <= 270 days		—	—			—	—
>270 days but <= 1 year		—	—			—	—
>1 year		15	42.9			(1)	100.0
Total	$	35	100.0	%	$	(1)	100.0	%

For the year ended December 31, 2021, we sold securities in an unrealized loss position with a fair value (proceeds) of $35 million. The loss realized on the sale of these securities was $1 million. We made the decision to exit these holdings in conjunction with our overall asset liability management process.

For the year ended December 31, 2021, we sold securities in an unrealized gain position with a fair value of $1.5 billion. The gain realized on the sale of these securities was $47 million.

For the year ended December 31, 2021, net losses of $76 million related to changes in fair value on our Modco trading portfolios were included in investment gains and losses. Of this amount, $26 million of gains were realized through the sale of certain securities, which will be recovered by our reinsurance partners over time through the reinsurance settlement process for this block of business. The Modco embedded derivative associated with the trading portfolios had pre-tax gains of $64 million during the year ended December 31, 2021. The gains on the embedded derivative were due to treasury yields having increased for the year.

Investment gains and losses related to equity securities are primarily driven by changes in fair value due to market fluctuations as changes in fair value of equity securities are recorded in net income.

Derivative gains and losses represent changes in their fair value during the period and termination gains/(losses) on those derivatives that were closed during the period.

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Based on expected cash flows of the underlying hedged items, the Company expects to reclassify $1 million out of accumulated other comprehensive income (loss) into investment gains (losses) during the next twelve months.

We use various derivative instruments to manage risks related to certain life insurance and annuity products. We use these derivatives as economic hedges against risks inherent in the products. These risks have a direct impact on the cost of these products and are correlated with the equity markets, interest rates, foreign currency levels, and overall volatility. The hedged risks are recorded through the recognition of embedded derivatives associated with the related products. These products include the GLWB rider associated with the variable annuity, fixed indexed annuity products, structured annuity products, and indexed universal life products. During the year ended December 31, 2021, we experienced net losses on derivatives related to VA contracts of $72 million. These net losses on derivatives related to VA contracts were affected by capital market impacts, changes in our non-performance risk, variations in actual sub-account fund performance compared to the indices included in our hedging program, as well as updates to certain policyholder assumptions during the year ended December 31, 2021.

The Funds Withheld derivative associated with Protective Life Reinsurance Bermuda, Ltd. ("PL Re") had pre-tax losses of $7 million for the year ended December 31, 2021.

In conjunction with the Captives merger into Golden Gate, the Company terminated its interest support, yearly renewable term premium support, and portfolio maintenance agreements with PLC.

As part of the Captives Merger into Golden Gate, the Company entered into a new portfolio maintenance agreement with PLC. The Company recognized no gains or losses on this agreement for the year ended December 31, 2021.

We also use various swaps and other types of derivatives to mitigate risk related to other exposures. These contracts generated losses of $2 million for the year ended December 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Cash Requirements

Liquidity refers to a company’s ability to generate adequate amounts of cash to meet its needs. We meet our liquidity requirements for both the next twelve months and beyond, primarily through positive cash flows from our operating subsidiaries. Primary sources of cash from the operating subsidiaries are premiums, deposits for policyholder accounts, investment sales and maturities, and investment income. Primary uses of cash include benefit payments, withdrawals from policyholder accounts, investment purchases, policy acquisition costs, interest payments, dividends to PLC, taxes, payroll, and other operating expenses. We believe that we have sufficient liquidity to fund our cash needs under normal operating scenarios in both the short-term and long-term.

Except as discussed below, the Company is not aware of any known trends, events, or uncertainties reasonably likely to have a material effect on its liquidity and capital resources. Additionally, the Company has not been made aware of any recommendations of regulatory authorities, which if implemented, would have such an effect.

In the event of significant unanticipated cash requirements beyond our normal liquidity needs, we have additional sources of liquidity available depending on market conditions and the amount and timing of the liquidity need. These additional sources of liquidity include cash flows from operations, the sale of liquid assets, accessing FHLB funding, our Credit Facility, and other sources described herein. Our decision to sell investment assets could be impacted by accounting rules, including rules relating to the likelihood of a requirement to sell securities before recovery of our cost basis. Under stressful market and economic conditions, liquidity may broadly deteriorate, which could negatively impact our ability to sell investment assets. If we require on short notice significant amounts of cash in excess of normal requirements, we may have difficulty selling investment assets in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both.

The liquidity requirements primarily relate to the liabilities associated with our various insurance and investment products, operating expenses, and income taxes. Liabilities arising from insurance and investment products include the payment of policyholder benefits, as well as cash payments in connection with policy surrenders and withdrawals, policy loans, and obligations to redeem funding agreements.

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We maintain investment strategies intended to provide adequate funds to pay benefits and expected surrenders, withdrawals, loans, and redemption obligations without forced sales of investments. In addition, we hold highly liquid, high-quality short-term investment securities and other liquid investment grade fixed maturity securities to fund our expected operating expenses, surrenders, and withdrawals. We were committed as of December 31, 2021, to fund commercial mortgage loans in the amount of $994 million.

Our cash flows from operations are used to fund an investment portfolio that provides for future benefit payments. We employ a formal asset/liability program to manage the cash flows of our investment portfolio relative to our long-term benefit obligations. As of December 31, 2021, we held cash and short-term investments of $1.3 billion.

The following chart includes the cash flows provided by or used in operating, investing, and financing activities for the following periods:

	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Net cash (used in) provided by operating activities	$	(554)	$	55	$	178
Net cash used in investing activities		(4,644)		(2,039)		(2,123)
Net cash provided by financing activities		4,932		2,427		2,007
Total	$	(266)	$	443	$	62

For The Year Ended December 31, 2021 as compared to The Year Ended December 31, 2020

Net cash (used in) provided by operating activities — Cash flows from operating activities are affected by the timing of premiums received, fees received, investment income, and expenses paid. Principal sources of cash include sales of our products and services. Due to the nature of our business and the fact that many of the products we sell produce financing and investing cash flows it is important to consider cash flows generated by investing and financing activities in conjunction with those generated by operating activities.

Net cash used in investing activities — Changes in cash from investing activities primarily related to our investment portfolio. We had payments for business acquisition of $816 million, net of cash acquired, for the GWL&A acquisition for the year ended December 31, 2019.

Net cash provided by financing activities — Changes in cash from financing activities included $1,076 million of inflows from secured financing liabilities for the year ended December 31, 2021, as compared to $160 million of inflows for the year ended December 31, 2020 and $3.9 billion inflows of investment product and universal life net activity as compared to $2.5 billion in the prior year. Net repayment of non-recourse funding obligations equaled $330 million during the year ended December 31, 2020 which was due to the Captive Merger.

While we anticipate that the cash flows of the Company and its subsidiaries will be sufficient to meet our investment commitments and operating cash needs in a normal credit market environment for both the next twelve months and beyond, we recognize that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, we have established repurchase agreement programs for the Company and its subsidiaries to provide liquidity when needed. We expect that the rate received on its investments will equal or exceed its borrowing rate. Under this program, we may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are typically for a term less than 90 days. The fair value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. Cash received is invested in fixed maturity securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of December 31, 2021, the fair value of securities pledged under the repurchase program was $1,503 million and the repurchase obligation of $1,393 million was included in our consolidated balance sheets (at an average borrowing rate of 13 basis points). During the year ended December 31, 2021, the maximum balance outstanding at any one point in time related to these programs was $1,799 million. The average daily balance was $775 million (at an average borrowing rate of 13 basis points) during the year ended December 31, 2021. As of December 31, 2020, the fair value of securities pledged under the repurchase program was $452 million and the repurchase obligation of $437 million was included in our consolidated balance sheets (at an

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average borrowing rate of 15 basis points). During the year ended December 31, 2020, the maximum balance outstanding at any one point in time related to these programs was $825 million. The average daily balance was $143 million (at an average borrowing rate of 33 basis points) during the year ended December 31, 2020.

We participate in securities lending, primarily as an investment yield enhancement, whereby securities that are held as investments are loaned out to third parties for short periods of time. We require collateral at least equal to 102% of the fair value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis and collateral is adjusted accordingly. We maintain ownership of the securities at all times and are entitled to receive from the borrower any payments for interest received on such securities during the loan term. Securities lending transactions are accounted for as secured borrowings. As of December 31, 2021, securities with a fair value of $174 million were loaned under this program. As collateral for the loaned securities, we receive cash, which is primarily reinvested in short-term repurchase agreements, which are also collateralized by U.S. Government or U.S. Government Agency securities, and government money market funds. These investments are recorded in "short-term investments" with a corresponding liability recorded in "secured financing liabilities" to account for its obligation to return the collateral. As of December 31, 2021 and 2020, the fair value of the collateral related to this program was $179 million and $59 million and we had an obligation to return $179 million and $59 million, respectively, of collateral to the securities borrowers.

FHLB Funding

The Company and certain of its subsidiaries, are members of the FHLB of Cincinnati, the FHLB of New York and the FHLB of Atlanta. FHLB advances provide an attractive funding source for short-term borrowing and for the sale of funding agreements. Membership in the FHLB requires that we purchase FHLB capital stock based on a minimum requirement and a percentage of the dollar amount of advances outstanding. Our borrowing capacity is determined by criteria established by each respective bank. In addition, our obligations under the advances must be collateralized. We maintain control over any such pledged assets, including the right of substitution. As of December 31, 2021, we had $1,652 million of funding agreement-related advances and accrued interest outstanding under the FHLB program.

Credit Facility

On April 5, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Facility") among PLC, the Company, the several lenders from time to time party thereto, and Regions Bank, as administrative agent and swingline lender. Under the Credit Facility, we have the ability to borrow on an unsecured basis up to an aggregated principal amount of $1.5 billion. We have the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $2.0 billion. Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of PLC and the Company, (i) Adjusted Term SOFR Rate plus a spread based on the ratings of PLC’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime Rate, (y) 0.50% above the Federal Funds Rate, or (z) the one-month Adjusted Term SOFR Rate plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt subject to adjustments based upon the achievement of certain environmental, social and governance metrics ("ESG Metrics") by PLC, the Company and their subsidiaries. The Credit Facility also provides for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt, subject to adjustments based upon the achievement of certain ESG Metrics by PLC, the Company and their subsidiaries. The facility fee is calculated based on the aggregate amount of commitments under the Credit Facility, whether used or unused. We are not aware of any non-compliance with the financial debt covenants of the Credit Facility as of April 5, 2022. PLC had an outstanding balance under the Credit Facility of $195 million and $275 million as of April 5, 2022 and December 31, 2021, respectively. The maturity date of current borrowings under the Credit Facility is April 5, 2027, subject to certain extension options available to PLC and the Company.

Cash Requirements

We enter into various obligations to third parties in the ordinary course of our operations. However, we do not believe that our cash flow requirements can be assessed solely based upon an analysis of these obligations. The most significant factors affecting our future cash flows are our ability to earn and collect cash from our customers, and the cash flows arising from our investment program. Future cash outflows, whether they are contractual obligations or not, will also vary based upon our future needs. Although some outflows are fixed, others depend on future events. Examples of fixed obligations include our obligations to pay principal and interest on fixed-rate borrowings. Examples of obligations that will

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vary include obligations to pay interest on variable-rate borrowings and insurance liabilities that depend on future interest rates, mortality rates, market performance, or surrender provisions. Many of our obligations are linked to cash-generating contracts. In addition, our operations involve significant expenditures that are not based upon contractual obligations. These include expenditures for income taxes and payroll.

Primary uses of cash include benefit payments, withdrawals from policyholder accounts, investment purchases, policy acquisition costs, interest payments, dividends to PLC, taxes, payroll, and other operating expenses. We believe that we have sufficient liquidity to fund our cash needs under normal operating scenarios in both the short-term and long-term. We anticipate funding both our long-term and short-term cash requirements through the sources of cash and liquidity described above.

The table below sets forth future maturities of our contractual obligations, which we anticipate will be fulfilled through use of our primary sources of cash described above.

	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(Dollars In Millions)
Subordinated debt	$	174	$	4	$	8	$	8	$	154
Stable value products⁽¹⁾		8,872		2,658		3,683		1,402		1,129
Operating leases⁽²⁾		27		7		8		4		8
Mortgage loan and investment commitments		1,012		805		207		—		—
Secured financing liabilities⁽³⁾		1,572		1,572		—		—		—
Policyholder obligations⁽⁴⁾		70,755		4,645		9,333		5,845		50,932
Total	$	82,412	$	9,691	$	13,239	$	7,259	$	52,223

(1)Anticipated stable value products cash flows including interest.

(2)Includes all lease payments required under operating lease agreements.

(3)Represents secured borrowings and accrued interest as part of our repurchase program as well as liabilities associated with securities lending transactions.

(4)Estimated contractual policyholder obligations are based on mortality, morbidity, and lapse assumptions comparable to our historical experience, modified for recent observed trends. These obligations are based on current balance sheet values and include expected interest crediting, but do not incorporate an expectation of future market growth, or future deposits. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results. As variable separate account obligations are legally insulated from general account obligations, the variable separate account obligations will be fully funded by cash flows from variable separate account assets. We expect to fully fund the general account obligations from cash flows from general account investments.

Statutory Capital

A life insurance company’s statutory capital is computed according to rules prescribed by the NAIC, as modified by state law. Generally speaking, other states in which a company does business defer to the interpretation of the domiciliary state with respect to NAIC rules, unless inconsistent with the other state’s regulations. Statutory accounting rules are different from GAAP and are intended to reflect a more conservative view, for example, requiring immediate expensing of policy acquisition costs. The NAIC’s RBC requirements require insurance companies to calculate and report information under a RBC formula. The achievement of long-term growth will require growth in the statutory capital of our insurance subsidiaries. The subsidiaries may secure additional statutory capital through various sources, such as retained statutory earnings or our equity contributions. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval of the insurance commissioner of the state of domicile. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The insurance subsidiaries may pay, without the approval of the Insurance Commissioners of the state of domicile, $136 million of distributions in 2022.

State insurance regulators and the NAIC have adopted RBC requirements for life insurance companies to evaluate the adequacy of statutory capital and surplus in relation to investment and insurance risks. The requirements provide a means of measuring the minimum amount of statutory surplus appropriate for an insurance company to support its overall business operations based on its size and risk profile. A company’s risk-based statutory surplus is calculated by applying factors and performing calculations relating to various asset, premium, claim, expense, and reserve items. Regulators can then measure the adequacy of a company’s statutory surplus by comparing it to RBC. We manage our capital consumption by using the ratio of our total adjusted capital, as defined by the insurance regulators, to our company action level RBC (known as the RBC ratio), also as defined by insurance regulators. As of December 31, 2021, our total adjusted

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capital and company action level RBC were $6.0 billion and $1.2 billion, respectively, providing an RBC ratio of approximately 477%.

Statutory reserves established for VA contracts are sensitive to changes in the equity markets and are affected by the level of account values relative to the level of any guarantees and product design. As a result, the relationship between reserve changes and equity market performance may be non-linear during any given reporting period. Market conditions greatly influence the capital required due to their impact on the valuation of reserves and derivative investments mitigating the risk in these reserves. Risk mitigation activities may result in material and sometimes counterintuitive impacts on statutory surplus and RBC ratio. Notably, as changes in these market and non-market factors occur, both our potential obligation and the related statutory reserves and/or required capital can vary at a non-linear rate.

Our statutory surplus is impacted by credit spreads as a result of accounting for the assets and liabilities on our fixed MVA annuities. Statutory separate account assets supporting the fixed MVA annuities are recorded at fair value. In determining the statutory reserve for the fixed MVA annuities, we are required to use current crediting rates based on U.S. Treasuries. In many capital market scenarios, current crediting rates based on U.S. Treasuries are highly correlated with market rates implicit in the fair value of statutory separate account assets. As a result, the change in the statutory reserve from period to period will likely substantially offset the change in the fair value of the statutory separate account assets. However, in periods of volatile credit markets, actual credit spreads on investment assets may increase or decrease sharply for certain sub-sectors of the overall credit market, resulting in statutory separate account asset market value gains or losses. As actual credit spreads are not fully reflected in current crediting rates based on U.S. Treasuries, the calculation of statutory reserves will not substantially offset the change in fair value of the statutory separate account assets resulting in a change in statutory surplus. The result of this mismatch had a positive impact to our statutory surplus of $18 million on a pre-tax basis for the year ended December 31, 2021, as compared to a positive impact to our statutory surplus of $9 million on a pre-tax basis for the year ended December 31, 2020.

We cede material amounts of insurance and transfer related assets to other insurance companies through reinsurance. However, notwithstanding the transfer of related assets, we remain liable with respect to ceded insurance should any reinsurer fail to meet the obligations that it assumed. We evaluate the financial condition of our reinsurers and monitor the associated concentration of credit risk. For the year ended December 31, 2021, we ceded premiums to third party reinsurers amounting to $1.3 billion. In addition, we had receivables from reinsurers amounting to $4.5 billion as of December 31, 2021. We review reinsurance receivable amounts for collectability and establish bad debt reserves if deemed appropriate. For additional information related to our reinsurance exposure, refer to Note 13, Reinsurance to the consolidated financial statements included in this prospectus.

Scottish Re (U.S.), Inc. ("SRUS") was placed in rehabilitation on March 6, 2019 by the State of Delaware. Under the related order, the Insurance Commissioner of the State of Delaware has been appointed the receiver of SRUS (the "Receiver") and provided with authority to conduct and continue the business of SRUS in the interest of its cedents, creditors, and stockholder. The order was accompanied by an injunction requiring the continued payment of reinsurance premiums to SRUS and temporarily prohibiting cedents, including the Company, from offsetting premiums payable against receivables from SRUS. On June 20, 2019, the Delaware Court of Chancery (the "Court") entered an order approving a Revised Offset Plan, which allows cedents, including the Company, to offset premiums under certain circumstances.

A proposed Rehabilitation Plan ("Original Rehabilitation Plan") was filed by the Receiver on June 30, 2020. The Original Rehabilitation Plan presents the following two options to each cedent: 1) remain in business with SRUS and be governed by the Rehabilitation Plan, or 2) recapture business ceded to SRUS. Due to SRUS’s financial status, neither option would pay 100% of the Company’s outstanding claims. The Original Rehabilitation Plan would impose certain financial terms and conditions on the cedents based on the election made, the type of business ceded, the manner in which the business is collateralized, and the amount of losses sustained by the cedent. On October 9, 2020, the Receiver filed a proposed order setting forth a schedule to present the Original Rehabilitation Plan for Court approval, which order contemplated possible modifications to the Rehabilitation Plan to be filed with the Court by March 16, 2021. The Court approved the order. On March 16, 2021, the Receiver filed a draft Amended Rehabilitation Plan ("Amended Plan"). The majority of the substance and form of the original Rehabilitation Plan, including its two option structure described above, remained in place.

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For much of 2020 and into early 2021, a group of interested parties collectively requested certain information and financial data from the Receiver that would allow them to more fully evaluate first the Original Rehabilitation Plan and then the Amended Plan, and also had a number of conversations with counsel for the Receiver regarding concerns over the Plan. On July 26, 2021, the Receiver shared with interested parties an outline of a Modified Plan, along with a liquidation analysis. While there are significant changes proposed in the Modified Plan (as compared to the Original Rehabilitation Plan and the Amended Plan), much of the economic substance (including not paying claims in full) of the Original/Amended Rehabilitation Plan are likely to be included in the Modified Plan.

The Court has yet to rule further or to re-establish a schedule for pre-confirmation procedures or a hearing on confirmation.

The Company continues to monitor SRUS and the actions of the receiver through discussions with legal counsel and review of publicly available information. An allowance for credit losses related to SRUS is included in the overall reinsurance allowance for credit losses. As of December 31, 2021, management does not believe that the ultimate outcome of the rehabilitation process will have a material impact on our financial position or results of operations.

Captive Reinsurance Companies

On October 1, 2020, as part of a corporate initiative to consolidate and simplify the Company’s reserve financing structures and reduce related financial and operational costs, Golden Gate II Captive Insurance Company ("Golden Gate II"), Golden Gate III Vermont Captive Insurance Company ("Golden Gate III"), Golden Gate IV Vermont Captive Insurance Company ("Golden Gate IV"), and Golden Gate V Vermont Captive Insurance Company ("Golden Gate V"), all of which are wholly owned captive insurance company subsidiaries of the Company (collectively the "Captives") merged with and into Golden Gate ("Captive Merger").

On October 1, 2020, immediately following the Captive Merger, Golden Gate entered into a transaction with a term of 20 years, that may be extended to up to 25 years, to finance up to a maximum term of $5 billion of "XXX" and "AXXX" reserves related to the term life insurance business and universal life insurance with secondary guarantee business that is reinsured to Golden Gate by the Company and West Coast Life Insurance Company ("WCL"), an indirect wholly owned subsidiary, pursuant to an Excess of Loss Reinsurance Agreement (the "XOL Agreement") with Hannover Life Reassurance Company of America (Bermuda) Ltd., The Canada Life Assurance Company (Barbados Branch) and RGA Reinsurance Company (Barbados) Ltd. (collectively, the "Retrocessionaires"). Pursuant to the XOL Agreement, in exchange for periodic fees, the Retrocessionaires assume, on an excess of loss basis, the obligation to pay (the "XOL Payments") each quarter the lessor of a) the greater of (i) statutory reserves in excess of economic reserves and (ii) the financed amount and b) if total claims for such quarter exceed the available assets (as set forth in the XOL Agreement) of Golden Gate, the amount of such excess. The transaction is "non-recourse" to PLC, WCL, and the Company, meaning that none of these companies are liable to reimburse the Retrocessionaires for any XOL payments required to be made. As of December 31, 2021, the XOL Asset backing the difference in statutory and economic reserve liabilities was $4.267 billion.

The Company and its subsidiaries are subject to a regulation entitled "Valuation of Life Insurance Policies Model Regulation," commonly known as "Regulation XXX," and a supporting guideline entitled "The Application of the Valuation of Life Insurance Policies Model Regulation," commonly known as "Guideline AXXX." The regulation and supporting guideline require insurers to establish statutory reserves for term and universal life insurance policies with long-term premium guarantees that are consistent with the statutory reserves required for other individual life insurance policies with similar guarantees. Many market participants believe that these levels of reserves are non-economic. We utilize a captive reinsurance company to implement reinsurance and capital management actions to satisfy these reserve requirements by financing the non-economic reserves either third-party financial institutions.

Golden Gate assumes business from affiliates only. Golden Gate is capitalized to a level we believe is sufficient to support the contractual risks and other general obligations. Golden Gate is a wholly owned subsidiary of the Company and is subject to regulations in its domiciliary state of Vermont.

NAIC, through various committees, subgroups and dedicated task forces, is reviewing the use of captives and special purpose vehicles used to transfer insurance risk in relation to existing state laws and regulations, and several committees

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have adopted or exposed for comment white papers and reports that, if or when implemented, could impose additional requirements on the use of captives and other reinsurers.

NAIC and state adoption of Actuarial Guideline XLVIII and the Term and Universal Life Insurance Reserve Financing Model Regulation may make the use of new captive structures in the future less capital efficient and/or lead to lower product terms and could impact the Company’s ability to engage in certain reinsurance transactions with non-affiliates.

We use an affiliated Bermuda domiciled reinsurance company, PL Re, to reinsure certain fixed annuity business as a part of our capital management strategy.

For additional information regarding risks, uncertainties, and other factors that could affect our use of captive reinsurers, please see the Risk Factors section.

Ratings

Various Nationally Recognized Statistical Rating Organizations ("rating organizations") review the financial performance and condition of insurers, including us and our subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder and contract holder obligations. These ratings are important to maintaining public confidence in an insurer’s products, its ability to market its products and its competitive position. The following table summarizes the current financial strength ratings of the Company and our significant member companies from the major independent rating organizations:


Ratings	A.M. Best	Fitch	Standard & Poor's	Moody's
Insurance company financial strength rating:
Protective Life Insurance Company	A+	A+	AA-	A1
West Coast Life Insurance Company	A+	A+	AA-	A1
Protective Life and Annuity Insurance Company	A+	A+	AA-	—
Protective Property & Casualty Insurance Company	A	—	—	—
MONY Life Insurance Company	A+	A+	A+	A1

Our ratings are subject to review and change by the rating organizations at any time and without notice. A downgrade or other negative action by a rating organization with respect to our financial strength ratings or those of our insurance subsidiaries could adversely affect sales, relationships with distributors, the level of policy surrenders and withdrawals, competitive position in the marketplace, and the cost or availability of reinsurance. The rating agencies may take various actions, positive or negative, with respect to the debt and financial strength ratings of PLC and its subsidiaries, including as a result of PLC’s status as a subsidiary of Dai-ichi Life.

Rating organizations also publish credit ratings for the issuers of debt securities, including PLC. Credit ratings are indicators of a debt issuer’s ability to meet the terms of debt obligations in a timely manner. PLC is an important source of funding for the Company, so its credit ratings may affect the Company’s liquidity. These ratings are important in the debt issuer’s overall ability to access credit markets and other types of liquidity. Ratings are not recommendations to buy our securities or products. A downgrade or other negative action by a rating organization with respect to PLC’s credit rating could limit its access to capital markets, increase the cost of issuing debt, and a downgrade of sufficient magnitude, combined with other negative factors, could require PLC to post collateral. The rating agencies may take various actions, positive or negative, with respect to PLC’s debt ratings, including as a result of its status as a subsidiary of Dai-ichi Life.

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LIABILITIES

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

As of December 31, 2021, we had policy liabilities and accruals of $54.9 billion. Our interest-sensitive life insurance policies have a weighted average minimum credited interest rate of 3.47%.

OFF-BALANCE SHEET ARRANGEMENTS

We have entered into operating leases that do not result in an obligation being recorded on the balance sheet. Refer to Note 15, Commitments and Contingencies, of the consolidated financial statements for more information.

As of December 31, 2021 and 2020, the Company had total outstanding commercial mortgage loan commitments of $994 million and $801 million, respectively. The Company uses the same methodology and assumptions to estimate the allowance for credit losses for unfunded loan commitments as for funded commercial mortgage loan receivables. As of December 31, 2021 and 2020, the allowance for credit losses for unfunded commitments was $5 million and $22 million, respectively. Refer to Note 8, Commercial Mortgage Loans, of the consolidated financial statements for more information.

MARKET RISK EXPOSURES

Our financial position and earnings are subject to various market risks including changes in interest rates, the yield curve, spreads between risk-adjusted and risk-free interest rates, foreign currency rates, used vehicle prices, equity price risks and issuer defaults. We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, through an integrated asset/liability management process. The primary focus of our asset/liability program is the management of interest rate risk within the insurance operations. Our 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, credit and market risk, and cash flow characteristics to maintain an appropriate balance between risk and profitability for each product category, and for us as a whole.

It is our policy to maintain asset and liability durations within one year of one another, although, from time to time, a broader interval may be allowed.

We are exposed to credit risk within our investment portfolio and through derivative counterparties. Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the instrument or contract. We manage credit risk through established investment policies which attempt to address quality of obligors and counterparties, credit concentration limits, diversification requirements, and acceptable risk levels under expected and stressed scenarios. Derivative counterparty credit risk is measured as the amount owed to us, net of collateral held, based upon current market conditions. In addition, we periodically assess exposure related to potential payment obligations between us and our counterparties. We minimize the credit risk in derivative financial instruments by entering into transactions with high quality counterparties (A-rated or higher at the time we enter into the contract), and we maintain credit support annexes with certain of those counterparties.

We utilize a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through our analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into our risk management program. Refer to Note 6, Derivative Financial Instruments, to the consolidated financial statements included in this prospectus for additional information on our financial instruments.

Derivative instruments expose us to credit and market risk and could result in material changes from period to period. We attempt to minimize our credit risk by entering into transactions with highly rated counterparties. We manage the market risk by establishing and monitoring limits as to the types and degrees of risk that may be undertaken. We monitor our use

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of derivatives in connection with our overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department.

Derivative instruments that are used as part of our interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions.

Derivative instruments that are used as part of the Company’s foreign currency exchange risk management strategy include foreign currency swaps, foreign currency futures, foreign currency options, foreign equity futures, and foreign equity options.

We may use the following types of derivative contracts to mitigate our exposure to certain guaranteed benefits related to VA contracts, fixed indexed annuities, and indexed universal life:

●	Foreign Currency Futures

●	Foreign Currency Options

●	Variance Swaps

●	Interest Rate Futures

●	Equity Options

●	Equity Futures

●	Credit Derivatives

●	Interest Rate Swaps

●	Interest Rate Swaptions

●	Volatility Futures

●	Volatility Options

●	Funds Withheld Agreement

●	Total Return Swaps

Other Derivatives

Certain of our subsidiaries have derivatives with PLC. These derivatives consist of an interest support agreement, yearly renewable term premium support arrangements, and portfolio maintenance agreements with PLC.

We believe that our asset/liability management programs and procedures and certain product features provide protection against the effects of changes in interest rates under various scenarios. Additionally, we believe our asset/liability management programs and procedures provide sufficient liquidity to enable us to fulfill our obligation to pay benefits under our various insurance and deposit contracts. However, our 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, spread movements, implied volatility, policyholder behavior, and other factors, and the effectiveness of our asset/liability management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

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The following table sets forth the estimated fair values of our fixed maturity investments and commercial mortgage loans resulting from a hypothetical immediate 100 basis point increase in interest rates from levels prevailing as of December 31, 2021 and 2020, and the percent change in fair value the following estimated fair values would represent:


As of December 31,	Amount		Percent Change
	(Dollars In Millions)
2021
Fixed maturities	$	66,466	(9.0)	%
Commercial mortgage loans		10,773	(5.4)
2020
Fixed maturities⁽¹⁾		66,352	(8.6)	%
Commercial mortgage loans		10,215	(5.3)

(1)Recast from previously reported financials

Estimated fair values from the hypothetical increase in rates were derived from the durations of our fixed maturities and commercial mortgage loans. Duration measures the change in fair value resulting from a change in interest rates. While these estimated fair values provide an indication of how sensitive the fair values of our fixed maturities and commercial mortgage loans are to changes in interest rates, they do not represent management’s view of future fair value changes or the potential impact of fluctuations in credit spreads. Actual results may differ from these estimates.

In the ordinary course of our commercial mortgage lending operations, we may 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 our financial statements until the commitment is actually funded. The mortgage loan commitment contains terms, including the rate of interest, which may be different than prevailing interest rates.

As of December 31, 2021 and 2020, we had outstanding mortgage loan commitments of $994 million at an average rate of 3.58% and $801 million at an average rate of 3.90%, respectively, with estimated fair values of $1.0 billion and $852 million, respectively (using discounted cash flows from the first call date). The following table sets forth the estimated fair value of our mortgage loan commitments resulting from a hypothetical immediate 100 basis point increase in interest rate levels prevailing as of December 31, 2021 and 2020, and the percent change in fair value that the following estimated fair values would represent:


As of December 31,	Amount		Percent Change
	(Dollars In Millions)
2021	$	987	(4.8)	%
2020	$	810	(4.9)	%

The estimated fair values from the hypothetical increase in rates were derived from the durations of our outstanding mortgage loan commitments. While these estimated fair values provide an indication of how sensitive the fair value of our outstanding commitments are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

As previously discussed, we utilize a risk management strategy that involves the use of derivative financial instruments. Derivative instruments expose us to credit and market risk and could result in material changes from period to period. We minimize our credit risk by entering into transactions with highly rated counterparties. We manage the market risk by establishing and monitoring limits as to the types and degrees of risk that may be undertaken. We monitor our use of derivatives in connection with our overall asset/liability management programs and procedures.

As of December 31, 2021, total derivative contracts with a notional amount of $46.8 billion were in a $1.7 billion net loss position. Included in the $46.8 billion is a notional amount of $4.2 billion in a $217 million net loss position that relates to our Modco trading portfolio. Also included in the total, is $855 million in a $10 million net loss position that relates to our funds withheld derivative, $9.9 billion in a $476 million net loss position that relates to our GLWB embedded derivatives, $4.8 billion in a $596 million net loss position that relates to our FIA embedded derivatives, and $459 million in a $269

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million net loss position that relates to our IUL embedded derivatives, and $448 million in a $87 million net loss position that relates to our other derivatives.

As of December 31, 2020, total derivative contracts with a notional amount of $42.2 billion were in a $1.8 billion net loss position. Included in the $42.2 billion is a notional amount of $4.2 billion in a $288 million net loss position that relates to our Modco trading portfolio. Also included in the total, is $661 million in a $10 million net loss position that relates to our funds withheld derivative, $9.8 billion in a $823 million net loss position that relates to our GLWB embedded derivatives, $4.2 billion in a $573 million net loss position that relates to our FIA embedded derivatives, and $357 million in a $201 million net loss position that relates to our IUL embedded derivatives, and $304 million in a $56 million net loss position that relates to our other derivatives.

We recognized gains of $48 million, losses of $195 million, and losses of $368 million related to derivative financial instruments for the years ended December 31, 2021, 2020, and 2019, respectively.

The following table sets forth the notional amount and fair value of our interest rate risk related derivative financial instruments and the estimated fair value resulting from a hypothetical immediate plus and minus 100 basis points change in interest rates from levels prevailing as of December 31:


		Notional		Fair Value as of		Fair Value Resulting From an Immediate +/- 100 bps Change in the Underlying Reference Interest Rates⁽¹⁾⁽²⁾
		Amount		December 31,		+100 bps		-100 bps
	(Dollars In Millions)
2021
Futures		$	1,290	$	—	$	19	$	(15)
Receive floating pay fixed swaps			50		—		8		(9)
Receive fixed pay floating swaps			2,782		72		249		449
GLWB embedded derivative			9,899		(475)		148		(888)
Total		$	14,021	$	(403)	$	424	$	(463)
2020 (Recast)
Futures		$	1,105	$	1	$	15	$	(12)
Receive floating pay fixed swaps			50		—		9		(11)
Receive fixed pay floating swaps			2,782		185		(191)		633
GLWB embedded derivative			9,816		(822)		(418)		(1,328)
Total		$	13,753	$	(636)	$	(585)	$	(718)

(1)Interest rate change scenario subject to floor, based on treasury rates as of December 31, 2021 and 2020.

(2)Includes an effect for inflation.

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The following table sets forth the notional amount and fair value of our equity risk related derivative financial instruments and the estimated fair value resulting from a hypothetical immediate plus and minus ten percentage point change in equity level from levels prevailing as of December 31:


	Notional		Fair Value as of		Fair Value Resulting From an Immediate +/- 10% Change in the Underlying Reference Index Equity Level
	Amount		December 31,		+10%		-10%

	(Dollars In Millions)
2021
Futures	$	355	$	5	$	33	$	(23)
Options		15,897		289		364		295
Receive floating pay asset swaps		1,165		(36)		(168)		95
Receive asset pay floating swaps		242		5		25		(14)
GLWB embedded derivative		9,899		(475)		(364)		(612)
FIA embedded derivative		4,770		(595)		(650)		(535)
IUL embedded derivative		459		(269)		(274)		(254)
Total	$	32,787	$	(1,076)	$	(1,034)	$	(1,048)
2020 (Recast)
Futures	$	393	$	(1)	$	3	$	(4)
Options		12,707		307		308		320
Receive floating pay asset swaps		1,000		(13)		(114)		89
Receive asset pay floating swaps		161		—		12		(10)
GLWB embedded derivative		9,816		(822)		(692)		(977)
FIA embedded derivative		4,224		(573)		(619)		(517)
IUL embedded derivative		357		(201)		(205)		(190)
Total	$	28,658	$	(1,303)	$	(1,307)	$	(1,289)

The following table sets forth the notional amount and fair value of our currency risk related derivative financial instruments and the estimated fair value resulting from a hypothetical immediate plus and minus ten percentage point change in currency level from levels prevailing as of December 31:


		Notional		Fair Value as of		Fair Value Resulting From an Immediate +/- 10% Change in the Underlying Reference in Currency Level
		Amount		December 31,		+10%		-10%

	(Dollars In Millions)
2021
Futures		$	185	$	(2)	$	(20)	$	17
Receive fixed pay fixed swaps			117		(13)		(1)		(25)
		$	302	$	(15)	$	(21)	$	(8)
2020
Futures		$	265	$	(4)	$	(30)	$	23
Receive fixed pay fixed swaps			117		(10)		3		(24)
		$	382	$	(14)	$	(27)	$	(1)

Estimated gains and losses were derived using pricing models specific to derivative financial instruments. While these estimated gains and losses provide an indication of how sensitive our derivative financial instruments are to changes in interest rates, volatility, equity levels, and credit spreads, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

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Our stable value contract and annuity products tend to be more sensitive to market risks than our non-annuity products. As such, many of these products contain surrender charges and other features that reward persistency and penalize the early withdrawal of funds. Certain stable value and annuity contracts have market-value adjustments that protect us against investment losses if interest rates are higher at the time of surrender than at the time of issue. Additionally, as of December 31, 2021, $8.3 billion of our stable value contracts have no early termination rights.

As of December 31, 2021, we had $8.5 billion of stable value product account balances with an estimated fair value of $8.6 billion (using discounted cash flows) and $15.8 billion of annuity account balances with an estimated fair value of $16.4 billion (using discounted cash flows). As of December 31, 2020, we had $6.1 billion of stable value product account balances with an estimated fair value of $6.2 billion (using discounted cash flows) and $15.5 billion of annuity account balances with an estimated fair value of $16.1 billion (using discounted cash flows).

The following table sets forth the estimated fair values of our stable value and annuity account balances resulting from a hypothetical immediate plus and minus 100 basis points change in interest rates from levels prevailing and the percent change in fair value that the following estimated fair values would represent:


	Fair Value as of		Fair Value Resulting From an Immediate +/- 100 bps Change in the Underlying Reference Interest Rates
	December 31,		+100 bps		-100 bps

	(Dollars In Millions)
2021
Stable value product account balances	$	8,598	$	8,391	$	8,806
Annuity account balances		16,393		16,155		16,632
2020
Stable value product account balances	$	6,231	$	6,089	$	6,373
Annuity account balances		16,092		15,860		16,325

Estimated fair values from the hypothetical changes in interest rates were derived from the durations of our stable value and annuity account balances. While these estimated fair values provide an indication of how sensitive the fair values of our stable value and annuity account balances are to changes in interest rates, they do not represent management’s view of future market changes, and actual market results may differ from these estimates.

Certain of our liabilities relate to products whose profitability could be significantly affected by changes in interest rates. In addition to traditional whole life and term insurance, many universal life policies with secondary guarantees that insurance coverage will remain in force (subject to the payment of specified premiums) have such characteristics. These products do not allow us to adjust policyholder premiums after a policy is issued, and most of these products do not have significant account values upon which we credit interest. If interest rates fall, these products could have both decreased interest earnings and increased amortization of DAC and VOBA, and the converse could occur if interest rates rise.

Impact of Continued Low Interest Rate Environment

Significant changes in interest rates expose us to the risk of not realizing anticipated spreads between the interest rate earned on investments and the interest rate credited to in-force policies and contracts. In addition, certain of our insurance and investment products guarantee a minimum guaranteed interest rate ("MGIR"). In periods of prolonged low interest rates, the interest spread earned may be negatively impacted to the extent our ability to reduce policyholder crediting rates is limited by the guaranteed minimum credited interest rates. Additionally, those policies without account values may exhibit lower profitability in periods of prolonged low interest rates due to reduced investment income.

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The tables below present account values by range of current minimum guaranteed interest rates and current crediting rates for our universal life and deferred fixed annuity products:


Credited Rate Summary December 31, 2021
Minimum Guaranteed Interest Rate Account Value		At MGIR			1 - 50 bps above MGIR			More than 50 bps above MGIR			Total

	(Dollars In Millions)
Universal Life Insurance
2%		$	14		$	982		$	2,709		$	3,705
>2% - 3%			5,615			628			1,093			7,336
>3% - 4%			7,328			384			37			7,749
>4% - 5%			2,173			480			84			2,737
>5% - 6%			309			—			—			309
Subtotal			15,439			2,474			3,923			21,836
Fixed Annuities
1%		$	316		$	1,128		$	1,685		$	3,129
>1% - 2%		��	482			192			2,167			2,841
>2% - 3%			1,340			46			1			1,387
>3% - 4%			253			—			—			253
>4% - 5%			244			—			—			244
Subtotal			2,635			1,366			3,853			7,854
Total		$	18,074		$	3,840		$	7,776		$	29,690
Percentage of Total			61	%		13	%		26	%		100	%


Credit Rate Summary December 31, 2020
Minimum Guaranteed Interest Rate Account Value		At MGIR		1 - 50 bps above MGIR		More than 50 bps above MGIR		Total

	(Dollars In Millions)
Universal Life Insurance
2%		$	—	$	143	$	2,176	$	2,319
>2% - 3%			4,032		1,482		1,244		6,758
>3% - 4%			9,487		472		36		9,995
>4% - 5%			2,261		386		172		2,819
>5% - 6%			316		—		—		316
Subtotal			16,096		2,483		3,628		22,207


Credit Rate Summary December 31, 2020
Minimum Guaranteed Interest Rate Account Value		At MGIR			1 - 50 bps above MGIR			More than 50 bps above MGIR			Total
	(Dollars In Millions)
Fixed Annuities
1%		$	273		$	654		$	1,975		$	2,902
>1% - 2%			517			215			2,185			2,917
>2% - 3%			1,436			52			4			1,492
>3% - 4%			265			—			—			265
>4% - 5%			251			—			—			251
Subtotal			2,742			921			4,164			7,827
Total		$	18,838		$	3,404		$	7,792		$	30,034
Percentage of Total			63	%		11	%		26	%		100	%

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We are active in mitigating the impact of a continued low interest rate environment through product design, as well as adjusting crediting rates on current in-force policies and contracts. We also manage interest rate and reinvestment risks through our asset/liability management process. Our asset/liability management programs and procedures involve the monitoring of asset and liability durations; cash flow testing under various interest rate scenarios; and the regular rebalancing of assets and liabilities with respect to yield, credit and market risk, and cash flow characteristics. These programs also incorporate the use of derivative financial instruments primarily to reduce our exposure to interest rate risk, inflation risk, currency exchange risk, volatility risk, and equity market risk.

IMPACT OF INFLATION

Inflation increases the need for life insurance. Many policyholders who once had adequate insurance programs may increase their life insurance coverage to provide the same relative financial benefit and protection. Higher interest rates may result in higher sales of certain of our investment products.

The higher interest rates that have traditionally accompanied inflation could also affect our operations. Policy loans increase as policy loan interest rates become relatively more attractive. As interest rates increase, disintermediation of stable value and annuity account balances and individual life policy cash values may increase. The fair value of our fixed-rate, long-term investments may decrease, we may be unable to implement fully the interest rate reset and call provisions of our commercial mortgage loans, and our ability to make attractive commercial mortgage loans, including participating commercial mortgage loans, may decrease. In addition, participating mortgage loan income may decrease. The difference between the interest rate earned on investments and the interest rate credited to life insurance and investment products may also be adversely affected by rising interest rates. During the periods covered by this MD&A, we believe inflation has not had a material impact on our business.

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RECENTLY ISSUED ACCOUNTING STANDARDS

Refer to Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in this prospectus for information regarding recently issued accounting standards.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

FINANCIAL STATEMENTS

The audited consolidated balance sheets for Protective Life as of December 31, 2021 and 2020 and the related consolidated statements of income, comprehensive income (loss), shareowner's equity and cash flows for each of the years in the three-year period ended December 31, 2021 as well as the Report of the Independent Registered Public Accounting Firm are included on the pages that follow.

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Report of Independent Registered Public Accounting Firm

To the Shareowner and Board of Directors

Protective Life Insurance Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Protective Life Insurance Company and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income (loss), shareowner’s equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedules III to V (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses as of January 1, 2020 due to the adoption of Accounting Standards Codification (ASC) Topic 326, Financial Instruments — Credit Losses.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Fair value measurement for embedded derivatives and amortization of deferred policy acquisition costs and value of business acquired for variable annuity and fixed indexed annuity contracts

As discussed in Notes 2, 5, 6 and 9 to the consolidated financial statements, the Company has established policies and procedures for determining the fair value of embedded derivatives for guaranteed living withdrawal benefit riders on variable annuity (VA) contracts and equity market contingent return features on fixed indexed annuity (FIA) contracts and for determining the amortization of deferred policy acquisition costs (DAC) and value of business acquired (VOBA) for VA and FIA contracts. As of December 31, 2021, the recorded balance of the VA and FIA embedded derivatives was $475 million and $595 million, respectively, both of which are classified as Level 3 fair value measurements. The Company’s unamortized DAC and VOBA balances are $2,083 million and $1,786 million, respectively, as of December 31, 2021, a portion of each which relates to VA and FIA contracts. The Company estimates the fair value of the VA embedded derivative through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The Company estimates the fair value of the FIA embedded derivative through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder behavior assumptions. DAC and VOBA associated with VA and FIA contracts are amortized over the lives of the contracts in relation to the present value of estimated gross profits (EGPs).

We identified the evaluation of the fair value measurement for embedded derivatives and amortization of DAC and VOBA for VA and FIA contracts as a critical audit matter. Policyholder behavior assumptions, specifically, benefit utilization (VA contracts) and lapse (VA and FIA contracts), used in the determination of fair value and EGPs, required complex auditor judgment due to the high degree of estimation uncertainty. Specialized skills were needed to evaluate the benefit utilization and lapse assumptions and the impact of those assumptions on the fair values of the VA and FIA embedded derivatives and amortization of DAC and VOBA for VA and FIA contracts.

The following are the primary procedures we performed to address this critical audit matter. We evaluated, with the involvement of actuarial professionals, when appropriate, the design and implementation of certain internal controls over the Company’s assumption setting process. This included internal controls related to the determination of the benefit utilization and lapse assumptions. In addition, we involved actuarial professionals with specialized skills and knowledge, who assisted in:

●

evaluating the Company’s methodology to produce a fair value estimate and amortization of DAC and VOBA compliant with U.S. generally accepted accounting principles

●

evaluating the methodology for DAC and VOBA amortization for consistency with generally accepted actuarial methodologies

●

comparing the benefit utilization and lapse assumptions used in developing the estimate to the Company’s actual historical experience

●

evaluating the Company’s decisions to change or not to change the benefit utilization and lapse assumptions based on management’s historical experience and industry studies, where available

●

ensuring assumptions used by the expert in the valuation of the VA embedded derivative are consistent with those provided by the Company

●

developing an estimate of the fair value of the FIA embedded derivative for a select policy based on the assumptions used by the Company and comparing the estimate to the Company’s estimate

●

recalculating the amortization of DAC and VOBA for selected VA and FIA policies based on the assumptions used by the Company and comparing the estimates to the Company’s estimates, and

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●

evaluating the individual components (including assumptions and market movements) identified in the rollforward of changes in VA and FIA embedded derivative fair values prepared by the Company, for reasonableness of direction and relative amounts.

Fair value measurement of the Retirement reporting unit used in the valuation of goodwill

As discussed in Notes 2 and 10 to the consolidated financial statements, the goodwill balance as of December 31, 2021 was $697 million, of which $430 million related to the Retail Life and Annuity reportable segment, a portion of which related to the Retirement reporting unit. The Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of a reporting unit likely exceeds its fair value. This involves estimating the fair value of the reporting units using a discounted cash flow valuation approach. The goodwill allocated to the Retirement reporting unit was determined to be impaired and an impairment loss of $129 million was recorded.

We identified the evaluation of the fair value measurement of the Retirement reporting unit used in the valuation of goodwill as a critical audit matter. Specifically, the projected cash flows and discount rates applied to the projected cash flows used in the determination of the fair value of the reporting unit required the application of subjective auditor judgment and were challenging to test as they represented subjective determinations of future sales, profitability patterns, existing business runoff patterns, as well as market and economic conditions that were also sensitive to variation. Additionally, the audit effort associated with evaluating the projected cash flows and discount rates required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

●

We evaluated the reasonableness of the Company’s projected new business cash flows for the Retirement reporting unit, by (1) comparing the sales assumptions to the Company’s historical sales to assess the Company’s ability to accurately forecast, (2) comparing the sales assumptions to forecasted sales in the industry, and (3) involving an actuarial specialist to evaluate the current pricing assumptions and resulting profitability patterns produced by the actuarial projection system.

●

We evaluated the reasonableness of the Company’s projected existing business cash flows for the Retirement reporting unit, by involving an actuarial specialist to (1) compare selected actuarial assumptions used in developing the estimate to the Company’s actual historical experience and (2) evaluate the existing business runoff patterns for selected products by comparing the patterns to historical experience and expectations of run off patterns based on the nature of the products.

●

In addition, we involved a valuation professional with specialized skills and knowledge, who assisted in evaluating the discount rates used in the valuation, by comparing the inputs to the discount rates to publicly available data for comparable entities and assessing the resulting discount rates utilized by the Company.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

Birmingham, Alabama

March 18, 2022

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PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME


	For The Years Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Revenues
Gross premiums and policy fees	$	4,222	$	4,003	$	4,056
Reinsurance ceded		(1,320)		(1,027)		(1,508)
Net premiums and policy fees		2,902		2,976		2,548
Net investment income		2,982		2,889		2,825
Net gains (losses) — investments and derivatives		150		(235)		(59)
Other income		379		538		417
Total revenues		6,413		6,168		5,731
Benefits and expenses
Benefits and settlement expenses, net of reinsurance ceded: (2021 — $1,423; 2020 — $883; 2019 — $1,244)		4,924		4,901		4,256
Amortization of deferred policy acquisition costs and value of business acquired		309		208		176
Other operating expenses, net of reinsurance ceded: (2021 — $223; 2020 — $229; 2019 — $230)		680		782		775
Goodwill impairment		129		—		—
Total benefits and expenses		6,042		5,891		5,207
Income before income tax		371		277		524
Income tax expense (benefit)
Current		132		118		387
Deferred		(46)		(75)		(290)
Total income tax expense		86		43		97
Net income	$	285	$	234	$	427

See Notes to Consolidated Financial Statements

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PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	For The Years Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Net income	$	285	$	234	$	427
Other comprehensive income (loss):
Change in net unrealized gains (losses) on investments, net of income tax: (2021 — $(294); 2020 — $544; 2019 — $756)		(1,105)		2,048		2,844
Reclassification adjustment for investment amounts included in net income, net of income tax: (2021 — $(11); 2020 — $17; 2019 — $(3))		(41)		63		(11)
Change in net unrealized gains (losses) for which a credit loss has been recognized in net income, net of income tax: (2021 — $—; 2020 — $6)		(1)		24		—
Change in net unrealized (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2019 — $(1))		—		—		(4)
Change in accumulated (loss) gain — derivatives, net of income tax: (2021 — $—; 2020 — $(1); 2019 — $(3))		—		(2)		(10)
Reclassification adjustment for derivative amounts included in net income, net of income tax: (2021 — $—; 2020 — $1; 2019 — $—)		1		2		2
Total other comprehensive income (loss)		(1,146)		2,135		2,821
Total comprehensive income (loss)	$	(861)	$	2,369	$	3,248

See Notes to Consolidated Financial Statements

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PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS


	As of December 31,
	2021		2020
			(Recast)
	(Dollars In Millions)
Assets
Fixed maturities, at fair value (amortized cost: 2021 — $68,055; 2020 — $65,696; allowance for credit losses: 2021 — $1; 2020 — $23)	$	73,048	$	72,595
Equity securities, at fair value (cost: 2021 — $804; 2020 — $635)		828		667
Commercial mortgage loans, net of allowance for credit losses (2021 — $103; 2020 — $222)		10,863		10,006
Policy loans		1,527		1,593
Other long-term investments		3,646		3,251
Short-term investments		862		462
Total investments		90,774		88,574
Cash		390		656
Accrued investment income		704		707
Accounts and premiums receivable		121		127
Reinsurance receivables, net of allowance for credit losses (2021 — $92; 2020 — $94)		4,543		4,596
Deferred policy acquisition costs and value of business acquired		3,869		3,420
Goodwill		697		826
Other intangibles, net of accumulated amortization (2021 — $368; 2020 — $312)		491		540
Property and equipment, net of accumulated depreciation (2021 — $79; 2020 — $61)		203		204
Other assets		267		271
Assets related to separate accounts
Variable annuity		13,648		12,378
Variable universal life		1,982		1,286
Reinsurance assumed		13,883		13,325
Total assets	$	131,572	$	126,910
Liabilities
Future policy benefits and claims	$	54,064	$	54,107
Unearned premiums		845		782
Total policy liabilities and accruals		54,909		54,889
Stable value product account balances		8,526		6,056
Annuity account balances		15,846		15,478
Other policyholders' funds		1,820		1,865
Other liabilities		5,084		5,623
Deferred income taxes		1,428		1,779
Subordinated debt		110		110
Secured financing liabilities		1,572		496
Liabilities related to separate accounts
Variable annuity		13,648		12,378
Variable universal life		1,982		1,286
Reinsurance assumed		13,883		13,325
Total liabilities		118,808		113,285
Commitments and contingencies — Note 15
Shareowner's equity
Preferred Stock; $1 par value, shares authorized: 2; Liquidation preference: $2		0		0
Common Stock, $1 par value, shares authorized and issued: 2021 and 2020 — 5,000		5		5
Additional paid-in-capital		8,525		8,525
Retained earnings		1,832		1,547
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on investments, net of income tax: (2021 — $641; 2020 — $946)		2,412		3,558
Net unrealized losses on investments for which a credit loss has been recognized in earnings, net of income tax: (2021 — $(1); 2020 — $(1))		(3)		(2)
Accumulated loss — derivatives, net of income tax: (2021 — $(2); 2020 — $(2))		(7)		(8)
Total shareowner's equity		12,764		13,625
Total liabilities and shareowner's equity	$	131,572	$	126,910

See Notes to Consolidated Financial Statements

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PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF SHAREOWNER’S EQUITY


									Accumulated
					Additional				Other		Total
	Preferred		Common		Paid-In-		Retained		Comprehensive		Shareowner's
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity

	(Dollars In Millions)
Balance, December 31, 2018 (Recast)	$	0	$	5	$	7,555	$	1,074	$	(1,408)	$	7,226
Net income								427				427
Other comprehensive income										2,821		2,821
Comprehensive income												3,248
Cumulative effect adjustments								(50)				(50)
Capital contributions from parent						850						850
Balance, December 31, 2019 (Recast)	$	0	$	5	$	8,405	$	1,451	$	1,413	$	11,274
Net income								234				234
Other comprehensive income										2,135		2,135
Comprehensive income												2,369
Cumulative effect adjustments								(138)				(138)
Capital contributions from parent						120						120
Balance, December 31, 2020 (Recast)	$	0	$	5	$	8,525	$	1,547	$	3,548	$	13,625
Net income								285				285
Other comprehensive loss										(1,146)		(1,146)
Comprehensive loss												(861)
Balance, December 31, 2021	$	0	$	5	$	8,525	$	1,832	$	2,402	$	12,764

See Notes to Consolidated Financial Statements

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PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For The Years Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Cash flows from operating activities
Net income	$	285	$	234	$	427
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net losses (gains) — investments and derivatives		(150)		235		59
Amortization of deferred acquisition costs and value of business acquired		309		208		176
Capitalization of deferred acquisition costs		(550)		(459)		(408)
Depreciation and amortization expense		77		79		74
Deferred income tax		(46)		(75)		(290)
Accrued income tax		(86)		35		7
Interest credited to universal life and investment products		1,520		1,593		1,343
Goodwill impairment		129		0		0
Trading securities purchases, sales, and maturities, net		10		(139)		97
Other, net		(33)		0		0
Change in:
Policy fees assessed on universal life and investment products		(1,834)		(1,798)		(1,729)
Reinsurance receivables		52		135		115
Accrued investment income and other receivables		(12)		34		(3)
Policy liabilities and other policyholders' funds of traditional life and health products		(487)		(1,076)		(544)
Amortization of premiums and accretion of discounts on investments and commercial mortgage loans		245		382		319
Other liabilities		39		648		347
Other, net		(22)		19		188
Net cash (used in) provided by operating activities		(554)		55		178
Cash flows from investing activities		��
Maturities and principal reductions of investments, available-for-sale		5,859		5,281		1,983
Sale of investments, available-for-sale		3,106		6,248		4,246
Cost of investments acquired, available-for-sale		(11,749)		(13,902)		(6,427)
Commercial mortgage loans:
New loan originations		(2,182)		(1,611)		(1,323)
Repayments		1,415		749		1,017
Change in investment real estate, net		0		0		(3)
Change in policy loans, net		66		82		65
Change in other long-term investments, net		(323)		132		(36)
Purchase of other long-term investments		(500)		0		0
Change in short-term investments, net		(393)		870		(611)
Net unsettled security transactions		86		141		(185)
Purchase of property, equipment, and intangibles		(29)		(29)		(33)
Payment for business acquisitions, net of cash acquired		0		0		(816)
Net cash used in investing activities		(4,644)		(2,039)		(2,123)
Cash flows from financing activities
Issuance (repayment) of non-recourse funding obligations		0		(330)		0
Secured financing liabilities		1,076		160		(160)
Capital contributions from PLC		0		120		850
Deposits to universal life and investments contracts		7,830		6,627		5,184
Withdrawals from universal life and investment contracts		(3,924)		(4,147)		(3,866)
Other financing activities, net		(50)		(3)		(1)
Net cash provided by financing activities		4,932		2,427		2,007
Change in cash		(266)		443		62
Cash at beginning of period		656		213		151
Cash at end of period	$	390	$	656	$	213

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Basis of Presentation

Protective Life Insurance Company (the "Company"), a stock life insurance company, was founded in 1907. The Company is a wholly owned subsidiary of Protective Life Corporation ("PLC"), an insurance holding company. PLC is a wholly owned subsidiary of Dai-ichi Life Holdings, Inc., a kabushiki kaisha organized under the laws of Japan ("Dai-ichi Life"). The Company markets individual life insurance, guaranteed investment contracts, guaranteed funding agreements, fixed and variable annuities, and extended service contracts throughout the United States. The Company also maintains a separate segment devoted to the acquisition of insurance policies from other companies. PLC is a holding company with subsidiaries that provide financial services through the production, distribution, and administration of insurance and investment products.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Such accounting principles differ from statutory reporting practices used by insurance companies in reporting to state regulatory authorities (see also Note 21, Statutory Reporting Practices and Other Regulatory Matters).

The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors.

During 2020, the Company identified $63 million of certain reclassifications needed to appropriately present amounts related to reinsured vehicle service contracts. Also during 2020, the Company identified $195 million of certain cash flows presented in its investing and financing activities that were determined to be non-cash items. The Company determined that the reclassifications were not material to the financial statements for any period. These amounts have been corrected in the consolidated balance sheets, statements of income, and statements of cash flows for the year ended December 31, 2020 and 2019.

Shades Creek Captive Insurance Company ("Shades Creek") was a direct wholly owned insurance subsidiary of PLC through December 31, 2020. On January 1, 2021, Shades Creek was merged with and into the Company, with the Company being the surviving entity. The Company accounted for the transaction pursuant to Accounting Standards Codification ("ASC") 805-50 "Transactions between Entities under Common Control". The transferred assets and liabilities of Shades Creek were recorded by the Company at their carrying value at the date of transfer. In accordance with ASC 805-50, all prior financial information has been recast to reflect this transaction as of the earliest period presented under common control, January 1, 2019.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION – (Continued)

The following table presents the changes as a result of the merger of the entity under common control to previously reported amounts in the audited consolidated statements of operations for the years ended December 31, 2020 and 2019 included in the Company’s annual report on Form 10-K for the year ended December 31, 2020.


			Common
			Control		Total
	As Reported		Entity		(Recast)

		(In Millions)
For The Year Ended December 31, 2020
Net income	$	342	$	(108)	$	234
Total comprehensive income	$	2,471	$	(102)	$	2,369
For The Year Ended December 31, 2019
Net income	$	553	$	(126)	$	427
Total comprehensive income	$	3,365	$	(117)	$	3,248

Beginning in the first quarter of 2020, the outbreak of COVID-19 created significant economic and social disruption and impacted various operational and financial aspects of the Company’s business. Certain impacts from COVID-19 continued into 2021, including increased claims in both the life insurance and annuity blocks. In addition, the Asset Protection segment had a reduction in sales in the second half of 2021 due to supply chain issues. The pandemic may continue to impact the Company’s earnings based on, amongst other factors, the volume and severity of claims related to COVID-19 and the financial disruption caused by the pandemic, which could impact the Company’s investment portfolio.

Entities Included

The consolidated financial statements include the accounts of Protective Life Insurance Company and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in determining deferred policy acquisition costs ("DAC") and related amortization periods, goodwill recoverability, value of business acquired ("VOBA"), certain investments and certain derivatives fair values, the allowance for credit losses, other-than-temporary impairments, future policy benefits, pension and other postretirement benefits, provisions for income taxes, reserves for contingent liabilities, reinsurance risk transfer assessments, and reserves for losses in connection with unresolved legal matters.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Further, certain estimates and assumptions include the direct and indirect impact of the COVID-19 pandemic on the Company’s business, financial condition and results of operations. The economic impact of the pandemic on the Company’s business depends on its severity and duration, which in turn depend on highly uncertain factors such as the nature and extent of containment efforts and the timing and efficacy of vaccines. The high level of uncertainty regarding this economic impact means that management’s estimates and assumptions, specifically those related to investments and certain derivatives fair values, the allowance for credit losses, and future policy benefits are subject to change — perhaps substantial change — as the situation develops and new information becomes available.

Significant Accounting Policies

Income Statement

Net Investment Income

Investment income is recognized when earned, net of applicable management or other fees. Investment income on fixed maturity securities includes coupon interest, amortization of any premium and accretion of any discount. Investment income on equity securities includes dividend income and preferred coupons interest.

Investment income on commercial mortgage-backed securities ("CMBS"), residential mortgage-backed securities ("RMBS"), and other asset-backed securities is initially based upon yield, cash flow and prepayment assumptions at the date of purchase. Subsequent revisions in those assumptions are recorded using the retrospective or prospective method. Under the retrospective method used primarily for mortgage-backed and asset-backed securities of high credit quality which cannot be contractually prepaid in such a manner that we would not recover a substantial portion of the initial investment, amortized cost of the security is adjusted to the amount that would have existed had the revised assumptions been in place at the date of purchase. The adjustments to amortized cost are recorded as a charge or credit to net investment income. Under the prospective method, which is used for all other mortgage-backed and asset-backed securities, future cash flows are estimated and interest income is recognized going forward using the new internal rate of return.

Net gains (losses) — investments and derivatives

Net gains (losses) — investments and derivatives includes realized gains and losses from the sale of investments, which are calculated on the basis of specific identification on the trade date. It also includes gains and losses associated with the fair value changes of equity securities and net credit losses. In addition, it includes the gains and losses on free-standing and embedded derivatives.

Other Income

Other income consists primarily of advisory and administration service fees assessed on investment contract holder account values, marketing and distribution fees, rider charges associated with guaranteed benefits, distribution company revenues and other fees. In addition, any gains related to final settlements related to its acquisitions are included in other income.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Balance Sheet

Valuation of Investment Securities

The Company determines the appropriate classification of investment securities at the time of purchase and periodically re-evaluates such designations. Investment securities are classified as either trading, available-for-sale, or held-to-maturity securities. Investment securities classified as trading are recorded at fair value with changes in fair value recorded in net gains (losses) — investments and derivatives. Investment securities purchased for long term investment purposes are classified as available-for-sale and are recorded at fair value with changes in unrealized gains and losses, net of taxes, reported as a component of other comprehensive income (loss). Investment securities are classified as held-to-maturity when the Company has the intent and ability to hold the securities to maturity and are reported at amortized cost. Interest income on available-for-sale and held-to-maturity securities includes the amortization of premiums and accretion of discounts and are recorded in investment income. As of December 31, 2020, the Company no longer held any held-to-maturity securities.

The fair value of fixed maturity, short-term, and equity securities is determined by management after considering 1 of 3 primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a "waterfall" approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations. Where multiple broker quotes are obtained, the Company reviews the quotes and selects the quote that provides the best estimate of the price a market participant would pay for these specific assets in an arm’s length transaction. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party service or an independent broker quotation. Included in the pricing of other asset-backed securities, collateralized mortgage obligations ("CMOs"), and mortgage-backed securities ("MBS") are estimates of the rate of future prepayments of principal and underlying collateral support over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and rates of prepayments previously experienced at the interest rate levels projected for the underlying collateral. The basis for the cost of securities sold was determined at the Committee on Uniform Securities Identification Procedures ("CUSIP") level on a first in first out basis. The committee supplies a unique nine-character identification, called a CUSIP number, for each class of security approved for trading in the U.S., to facilitate clearing and settlement. These numbers are used when any buy and sell orders are recorded.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Allowance for Credit Losses — Fixed Maturity and Structured Investments

Each quarter the Company reviews investments with unrealized losses to determine whether such impairments are the result of credit losses. The Company analyzes various factors to make such determination including, but are not limited to: 1) actions taken by rating agencies, 2) default by the issuer, 3) the significance of the decline, 4) an assessment of the Company’s intent to sell the security (including a more likely than not assessment of whether the Company will be required to sell the security) before recovering the security’s amortized cost, 5) an economic analysis of the issuer’s industry, and 6) the financial strength, liquidity, and recoverability of the issuer. Management performs a security by security review each quarter to evaluate whether a credit loss has occurred.

For securities which the Company does not intend to sell and does not expect to be required to sell before recovering the security’s amortized cost basis, analysis of expected cash flows is used to measure the amount of the credit loss. To the extent the amortized cost basis of the security exceeds the present value of future cash flows expected to be collected, this difference represents a credit loss. Credit losses are recorded in net gains (losses) — investments and derivatives with a corresponding adjustment to the allowance for credit losses, except that the credit loss recognized cannot exceed the difference between the book value and fair value of the security as of the date of the analysis. In future periods, recoveries in the present value of expected cash flows are recorded as a reversal of the previously recognized allowance for credit losses with an offsetting adjustment to net gains (losses) — investments and derivatives. The Company considers contractual cash flows and all known market data related to cash flows when developing its estimates of expected cash flows. The Company uses the effective interest rate implicit in the security at the date of acquisition to discount expected cash flows. For floating rate securities, the Company’s policy is to lock in the interest rate at the first instance of an impairment. Estimates of expected cash flows are not probability-weighted but reflect the Company’s best estimate based on past events, current conditions, and reasonable and supportable forecasts of future events. Debt securities that the Company intends to sell or expects to be required to sell before recovery are written down to fair value with the change recognized in net gains (losses) — investments and derivatives.

Prior to January 1, 2020, the Company calculated a valuation allowance based on the analysis of specific loans that were believed to have a higher risk of credit impairment consistent with the applicable guidance for loan impairments in ASC Subtopic 310. Due to the Company’s loss experience and nature of the loan portfolio, the Company believed that a collectively evaluated allowance would be inappropriate. Since the Company used the specific identification method for calculating the allowance, it was necessary to review the economic situation of each borrower to determine those that had higher risk of credit impairment. The Company has a team of professionals that monitors borrower conditions such as payment practices, borrower credit, operating performance, and property conditions, as well as ensuring the timely payment of property taxes and insurance. Through this monitoring process, the Company assessed the risk of each loan. When issues were identified, the severity of the issues was assessed and reviewed for possible credit impairment. If a loss was deemed probable, an expected loss calculation was performed and an allowance was established for that loan based on the expected loss. The expected loss was calculated as the excess carrying value of a loan over either the present value of expected future cash flows discounted at the loan’s original effective interest rate, or the current estimated fair value of the loan’s underlying collateral. A loan could be subsequently charged off at such point that the Company no longer expected to receive cash payments, the present value of future expected payments of the renegotiated loan was less than the current principal balance, or at such time that the Company was party to foreclosure or bankruptcy proceedings associated with the borrower and did not expect to recover the principal balance of the loan.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Corporate-Owned Life Insurance

The Company has purchased corporate-owned life insurance ("COLI") on the lives of certain employees. COLI is carried at the cash surrender value of the policies, which is based upon the underlying fair value of the portfolio of assets. Changes in the cash surrender value are reported currently in earnings. COLI is included in other long-term investments on the Company’s balance sheet and the cash surrender value was $710 million and $179 million as of December 31, 2021 and 2020, respectively.

Derivative Financial Instruments

The Company records its derivative financial instruments at fair value in the consolidated balance sheet in other long-term investments and other liabilities. The Company designates derivatives as either a cash flow hedge which hedges the variability of cash flows specific to a recognized asset or liability or forecasted transaction; a fair value hedge, which hedges the fair value of a recognized asset or liability or unrecognized firm commitment; or a derivative that does not qualify for hedge accounting. The Company assesses the effectiveness of a hedge at its inception and subsequently on a quarterly basis. For cash flow hedges, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period during which the hedged item impacts earnings. For fair value hedges, their gain or loss as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in net gains (losses) — investments and derivatives. The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship in net gains (losses) — investments and derivatives. For additional information, refer to Note 6, Derivative Financial Instruments.

Commercial Mortgage Loans

The Company’s commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of the allowance for credit losses ("ACL"). Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income.

Allowance for Credit Losses — Commercial Mortgage Loans and Unfunded Commitments

Effective January 1, 2020, the ACL represents the Company’s best estimate of expected credit losses over the contractual term of the loans. The allowance for credit losses for unfunded loan commitments is recognized as a component of other liabilities on the consolidated condensed balance sheet. Changes in the allowance for credit losses for both funded and unfunded commercial mortgage loans are recognized in net gains (losses) — investments and derivatives. Prior to January 1, 2020, the Company calculated a valuation allowance based on the analysis of specific loans that were believed to have a higher risk of credit impairment consistent with the applicable guidance for loan impairments in ASC Subtopic 310.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

The Company uses a loan-level probability of default ("PD") and loss given default ("LGD") model to calculate the allowance for credit losses for substantially all of its commercial mortgage loans and unfunded loan commitments. Guidance in FASB ASC Topic 326-20 — Credit Losses requires collective assessment of financial assets with similar risk characteristics. Consistent with this guidance, the model used by the Company (the "CML Model") incorporates historical default data for a large number of loans with similar characteristics to the Company’s commercial mortgage loans in the measurement of the allowance for credit losses. Relevant risk characteristics include debt service coverage ratio ("DSCR"), loan-to-value ratio ("LTV"), geographic location, and property type. This historical default data is applied through the CML Model to forecast loan-level risk parameters including PD and LGD which provide the basis for the determination of expected losses.

The CML Model incorporates both current conditions and reasonable and supportable forecasts when estimating the PD and LGD values that are used as the basis for calculating expected losses. Current conditions are incorporated by considering market-specific information, such as vacancy rates and property prices, to reflect the current position in the market cycle. To incorporate reasonable and supportable forecasts, loan-level risk parameters produced by the CML Model are conditioned by multiple probability-weighted macroeconomic forecast scenarios. CML Model results are also subject to adjustments based on other qualitative considerations to reflect management’s best estimate of the impact of future events and circumstances on the ACL.

PDs and LGDs are forecasted over a reasonable and supportable forecast period, which is reassessed on a quarterly basis. After the reasonable and supportable forecast period, the CML Model reverts to the Company’s own historical loss history at a portfolio segment level. The historical loss data used for reversion will be assessed annually in the third quarter, along with certain other model inputs and assumptions.

All or a portion of a loan may be written off at such point that a) the Company no longer expects to receive cash payments, b) the present value of future expected payments of a renegotiated loan is less than the current principal balance, or c) at such time that the Company is party to foreclosure or bankruptcy proceedings associated with the borrower and does not expect to recover the principal balance of the loan. A write-off is recorded by eliminating the allowance against the commercial mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property.

Certain loans which meet the definition of collateral dependent are identified as part of the Company’s ongoing loan surveillance process. Loans are considered to be collateral dependent if foreclosure is deemed probable, or if a borrower is in financial difficulty and repayment is expected to be provided substantially through the operation or sale of the underlying collateral. The ACL for loans identified as collateral dependent is measured based on the fair value of the underlying collateral, less costs to sell.

The Company presents accrued interest receivable separately from other components of the amortized cost basis of its commercial mortgage loans and has made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable. It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. In each scenario, accrued income is reversed through investment income. Refer to Note 8, Commercial Mortgage Loans, for additional information.

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Short-term Investments

Short-term investments primarily consist of highly liquid securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase. These securities and investments are generally carried at fair value or amortized cost that approximates fair value.

Cash

Cash includes all demand deposits reduced by the amount of outstanding checks and drafts. As a result of the Company’s cash management system, checks issued from a particular bank but not yet presented for payment may create negative book cash balances with the bank at certain reporting dates. Such negative balances are included in other liabilities and were $178 million and $185 million as of December 31, 2021 and 2020, respectively. The Company has deposits with certain financial institutions which exceed federally insured limits. The Company has reviewed the creditworthiness of these financial institutions and believes there is minimal risk of a material loss.

Policy Loans

Policy loans are stated at unpaid principal balances. Interest income is recorded as earned using the contractual interest rate. Generally, accrued interest is capitalized on the policy’s anniversary date. Any unpaid principal and accrued interest is deducted from the cash surrender value or the death benefit prior to settlement of the insurance policy.

Deferred Policy Acquisition Costs ("DAC")

The incremental direct costs associated with successfully acquired insurance policies are deferred to the extent such costs are deemed recoverable from future profits. Such costs include commissions, costs of policy issuance and underwriting and certain other costs that are directly related to the successful acquisition of traditional life and health insurance, credit insurance, universal life insurance, and investment products. DAC is subject to recoverability testing at the end of each accounting period. Traditional life and health insurance acquisition costs are amortized over the premium-payment period of the related policies in proportion to the ratio of annual premium income to the present value of the total anticipated premium income. Credit insurance acquisition costs are being amortized in proportion to earned premium. Acquisition costs for universal life and investment products are amortized over the lives of the policies in relation to the present value of estimated gross profits before amortization. Acquisition costs for stable value contracts are amortized over the term of the contracts using the effective yield method.

The Company makes certain assumptions regarding the mortality, persistency, expenses, and interest rates (equal to the rate used to compute liabilities for future policy benefits, currently 1.00% to 7.86%) the Company expects to experience in future periods when determining the present value of estimated gross profits ("EGPs"). These assumptions are best estimates and are periodically updated whenever actual experience and/or expectations for the future change from that assumed. Additionally, DAC is also impacted by unrealized investment gains (losses) which would have been recognized if such gains and losses had been realized. The Company includes the impact of these credits or charges, net of tax, in accumulated other comprehensive income ("AOCI").

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Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Value of Businesses Acquired ("VOBA")

In conjunction with the Merger and the acquisition of insurance policies or investment contracts, a portion of the purchase price is allocated to the right to receive future gross profits from cash flows and earnings of associated insurance policies and investment contracts. This intangible asset, called VOBA, is based on the actuarially estimated present value of future cash flows from associated insurance policies and investment contracts acquired. The estimated present value of future cash flows used in the calculation of the VOBA is based on certain assumptions, including mortality, persistency, expenses, and interest rates that the Company believes to be those of a market participant. The Company amortizes VOBA in proportion to gross premiums for traditional life products, or estimated gross margins ("EGMs") for participating traditional life products within the MONY Life Insurance Company ("MONY") block. For interest sensitive products, the Company uses various amortization bases including EGPs, revenues, account values, or insurance in-force. VOBA is subject to annual recoverability testing.

Included within the deferred policy acquisition costs and value of business acquired line of the Company’s consolidated balance sheets are amounts related to certain contracts or blocks of business that have negative VOBA. These amounts are presented on a net basis with positive VOBA amounts within this line on the Company’s consolidated balance sheets. Negative VOBA is amortized over the life of the related policies based on the amount of insurance in-force (for life insurance) or account values (for annuities). Such amortization is recorded in the amortization of deferred policy acquisition costs and value of business acquired line of the Company’s consolidated statements of income on a net basis with any positive VOBA amortization.

Other Intangible Assets

Other intangible assets with definite lives are amortized over the estimated useful life of the asset and reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Amortizable intangible assets primarily consist of distribution relationships, trade names, technology, and software. Intangible assets with indefinite lives, primarily insurance licenses, are not amortized, but are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Software is generally amortized over a three — five year useful life.

Other intangible assets recognized by the Company included the following:


	As of December 31,				Estimated
	2021		2020		Useful Life

	(Dollars In Millions)				(In Years)
Distribution relationships	$	314	$	340	14-22
Trade names		58		65	13-17
Technology		56		71	7-14
Other		31		32
Total intangible assets subject to amortization		459		508
Insurance licenses		32		32	Indefinite
Total other intangible assets	$	491	$	540

Other identified intangible assets were valued using the excess earnings method, relief from royalty method or cost approach, as appropriate.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Amortizable intangible assets will be amortized straight line over their assigned useful lives. The following is a schedule of future estimated aggregate amortization expense:


Year	Amount
	(Dollars In Millions)
2022	$	54
2023		51
2024		48
2025		43
2026		43

Property and Equipment

The Company depreciates its assets using the straight-line method over the estimated useful lives of the assets. The Company’s home office is depreciated over twenty-five years, furniture is depreciated over a ten year useful life, office equipment and machines are depreciated over a five year useful life, and computers are depreciated over a four year useful life. Land is not depreciated. Major repairs or improvements are capitalized and depreciated over the estimated useful lives of the assets. Other repairs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or retired are removed from the accounts, and resulting gains or losses are included in income. Leases are recorded on the balance sheet as right-of-use assets and liabilities within property and equipment and other liabilities, respectively.

Property and equipment consisted of the following:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Home office building	$	160	$	159
Data processing equipment		39		36
Capital leases		36		25
Other, principally furniture and equipment		22		20
Total property and equipment subject to depreciation		257		240
Accumulated depreciation		(79)		(61)
Land		25		25
Total property and equipment	$	203	$	204

Separate Accounts

The separate account assets represent funds for which the Company does not bear the investment risk. These assets are carried at fair value and are equal to the separate account liabilities, which represent the policyholder’s equity in those assets. The investment income and investment gains and losses on the separate account assets accrue directly to the policyholder. These amounts are reported separately as assets and liabilities related to separate accounts in the accompanying consolidated financial statements. 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 consolidated statements of income. Fees are generally based on the daily net assets of the policyholder’s account value and recognized as revenue when assessed. Assets and liabilities related to separate accounts include balances related to separate accounts assumed through reinsurance. These balances relate to variable annuity and variable life policies that we have reinsured on a modified coinsurance basis.

F-10

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Stable Value Product Account Balances

The Stable Value Products segment sells fixed and floating rate funding agreements directly to qualified institutional investors. The segment also issues funding agreements to the Federal Home Loan Bank ("FHLB"), and markets guaranteed investment contracts ("GICs") to 401(k) and other qualified retirement savings plans. GICs are contracts which specify a return on deposits for a specified period and often provide flexibility for withdrawals at book value in keeping with the benefits provided by the plan.

The Company records its stable value contract liabilities in the consolidated balance sheets in stable value product account balances at the deposit amount plus accrued interest, adjusted for any unamortized premium or discount. Interest on the contracts is accrued based upon contract terms. Any premium or discount is amortized using the effective yield method.

The segment’s products complement the Company’s overall asset/liability management in that the terms may be tailored to the needs of the Company as the seller of the contracts. Stable value product account balances include GICs and funding agreements the Company has issued. As of December 31, 2021 and 2020, the Company had $6,573 million and $4,032 million, respectively, of stable value product account balances marketed through structured programs. Most GICs and funding agreements the Company has written have maturities of one to twelve years.

As of December 31, 2021, future maturities of stable value products were as follows:


Year of
Maturity	Amount
		(Dollars In Millions)
2022	$	2,559
2023-2024		3,551
2025-2026		1,347
Thereafter		1,069

Insurance Liabilities and Reserves

Establishing an adequate liability for the Company’s obligations to policyholders requires the use of certain assumptions. Estimating liabilities for future policy benefits on life and health insurance products requires the use of assumptions relative to future investment yields, mortality, morbidity, persistency, and other assumptions based on the Company’s historical experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Determining liabilities for the Company’s property and casualty insurance products also requires the use of assumptions, including the projected levels of used vehicle prices, the frequency and severity of claims, and the effectiveness of internal processes designed to reduce the level of claims. The Company’s results depend significantly upon the extent to which its actual claims experience is consistent with the assumptions the Company used in determining its reserves and pricing its products. The Company’s reserve assumptions and estimates require significant judgment and, therefore, are inherently uncertain. The Company cannot determine with precision the ultimate amounts that it will pay for actual claims or the timing of those payments.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Guaranteed Living Withdrawal Benefits

The Company also establishes reserves for guaranteed living withdrawal benefits ("GLWB") on its variable annuity ("VA") products. The GLWB is valued in accordance with FASB guidance under the ASC Derivatives and Hedging Topic which utilizes the valuation technique prescribed by the ASC Fair Value Measurements and Disclosures Topic, which requires the embedded derivative to be recorded at fair value using current interest rates and implied volatilities for the equity indices. The fair value of the GLWB is impacted by equity market conditions and can result in the GLWB embedded derivative being in an overall net asset or net liability position. In times of favorable equity market conditions the likelihood and severity of claims is reduced and expected fee income increases. Since claims are generally expected later than fees, these favorable equity market conditions can result in the present value of fees being greater than the present value of claims, which results in a net GLWB embedded derivative asset. In times of unfavorable equity market conditions the likelihood and severity of claims is increased and expected fee income decreases and can result in the present value of claims exceeding the present value of fees resulting in a net GLWB embedded derivative liability. The methods used to estimate the embedded derivative employ assumptions about mortality, lapses, policyholder behavior, equity market returns, interest rates, and market volatility. The Company assumes age-based mortality from the Ruark 2015 ALB table adjusted for company experience. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. As of December 31, 2021 and 2020, our net GLWB liability held was $475 million and $822 million, respectively.

Goodwill

The balance recognized as goodwill is not amortized, but is reviewed for impairment on an annual basis, or more frequently as events or circumstances may warrant, including those circumstances which would more likely than not reduce the fair value of the Company’s reporting units below its carrying amount. Accounting for goodwill requires an estimate of the future profitability of the associated lines of business within the Company’s reporting units to assess the recoverability of the capitalized goodwill. The Company’s material goodwill balances are attributable to certain of its reportable segments. Each of the Company’s reportable segments are considered separate reporting units, with the exception of the Retail Life and Annuity segment. This reportable segment contains the Protection and Retirement divisions which are considered separate reporting units. The Company evaluates the carrying value of goodwill at the reporting units level at least annually and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such circumstances could include, but are not limited to: 1) a significant adverse change in legal factors or in business climate, 2) unanticipated competition, or 3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company first determines through qualitative analysis whether relevant events and circumstances indicate that it is more likely than not that a reporting unit’s goodwill balances is impaired as of the testing date. If the qualitative analysis does not indicate that an impairment of a reporting unit’s goodwill is more likely than not then no other specific quantitative impairment testing is required.

F-12

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Income Taxes

The Company’s income tax returns are included in PLC’s consolidated U.S. income tax return.

The Company uses the asset and liability method of accounting for income taxes. Generally, most items in pretax book income are also included in taxable income in the same year. However, some items are recognized for book purposes and for tax purposes in different years or are never recognized for either book or tax purposes. Those differences that will never be recognized for either book or tax purposes are permanent differences (e.g., investment income not subject to tax). As a result, the effective tax rate reflected in the financial statements may differ from the statutory rate reflected in the tax return. Those differences that are reported in different years for book and tax purposes are temporary and will reverse over time (e.g., the valuation of future policy benefits). These temporary differences are accounted for in the intervening periods as deferred tax assets and liabilities. Deferred tax assets generally represent revenue that is taxable before it is recognized in financial income and expenses that are deductible after they are recognized in financial income. Deferred tax liabilities generally represent revenues that are taxable after they are recognized in financial income or expenses or losses that are deductible before they are recognized in financial income. Components of AOCI are presented net of tax, and it is the Company’s policy to use the aggregate portfolio approach to clear the disproportionate tax effects that remain in AOCI as a result of tax rate changes and certain other events. Under the aggregate portfolio approach, disproportionate tax effects are cleared only when the portfolio of investments that gave rise to the deferred tax item is sold or otherwise disposed of in its entirety.

The Company evaluates the recoverability of the Company’s deferred tax assets and establishes a valuation allowance, if necessary, to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance the Company may consider many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.

F-13

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on tax returns. The application of this guidance is a two-step process, the first step being recognition. The Company determines whether it is more likely than not, based on the technical merits, that the tax position will be sustained upon examination. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step for the tax positions that meet the more likely than not criteria is measurement. The Company measures the tax position as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority that has full knowledge of all relevant information. This measurement considers the amounts and probabilities of the outcomes that could be realized upon ultimate settlement using the facts, circumstances, and information available at the reporting date.

The Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by the Internal Revenue Service ("IRS") or other taxing jurisdictions. Audit periods remain open for review until the statute of limitations expires. Generally, for tax years which produce net operating losses, capital losses or tax credit carryforwards, the statute of limitations does not close until the expiration of the statute of limitations for the tax year in which they are fully utilized. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the liability for income taxes. The Company classifies all interest and penalties related to tax uncertainties as income tax expense. Refer to Note 18, Income Taxes, for additional information regarding income taxes.

Policyholder Liabilities, Revenues, and Benefits Expense

Future Policy Benefits and Claims

Liabilities for life and annuity benefit reserves consist of liabilities for traditional life insurance, cash values associated with universal life insurance, immediate annuity benefit reserves, and other benefits associated with life and annuity benefits. The unpaid life claim liabilities consist of current pending claims as well as an estimate of incurred but not reported life insurance claims.

Other policy benefit reserves consist of certain health insurance policies that are in runoff. The unpaid claim liabilities associated with other policy benefits includes current pending claims, the present value of estimated future claim payments for policies currently receiving benefits and an estimate of claims incurred but not yet reported.

Traditional Life, Health, and Credit Insurance Products

Traditional life insurance products consist principally of those products with fixed and guaranteed premiums and benefits, and they include whole life insurance policies, term and term-like life insurance policies, limited payment life insurance policies, and certain annuities with life contingencies. In accordance with ASC 805, the liabilities for future policy benefits on traditional life insurance products, when combined with the associated VOBA, were recorded at fair value on the date of the Merger. These values, subsequent to the Merger, are computed using assumptions that include interest rates, mortality, lapse rates, expense estimates, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation.

F-14

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Liabilities for future policy benefits on traditional life insurance products have been computed using a net level method including assumptions as to investment yields, mortality, persistency, and other assumptions based on the Company’s experience, modified as necessary to reflect anticipated trends and to include provisions for possible adverse deviation. Reserve investment yield assumptions on December 31, 2021, range from approximately 2.50% to 5.50%. The liability for future policy benefits and claims on traditional life, health, and credit insurance products includes estimated unpaid claims that have been reported to us and claims incurred but not yet reported. Policy claims are charged to expense in the period in which the claims are incurred.

Traditional life insurance premiums are recognized as revenue when due. Health and credit insurance premiums are recognized as revenue over the terms of the policies. Benefits and expenses are associated with earned premiums so that profits are recognized over the life of the contracts. This is accomplished by means of the provision for liabilities for future policy benefits and the amortization of DAC and VOBA. Gross premiums in excess of net premiums related to immediate annuities are deferred and recognized over the life of the policy.

Universal Life and Investment Products

Universal life and investment products include universal life insurance, guaranteed investment contracts, guaranteed funding agreements, deferred annuities, and annuities without life contingencies. Premiums and policy fees for universal life and investment products consist of fees that have been assessed against policy account balances for the costs of insurance, policy administration, and surrenders. Such fees are recognized when assessed and earned. Benefit reserves for universal life and investment products represent policy account balances before applicable surrender charges plus certain deferred policy initiation fees that are recognized in income over the term of the policies. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. Interest rates credited to universal life products ranged from 1.0% to 8.75% and investment products ranged from 0.05% to 9.81% in 2021.

The Company establishes liabilities for fixed indexed annuity ("FIA") products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance. The FIA product is considered a hybrid financial instrument under FASB ASC Topic 815 — Derivatives and Hedging which allows the Company to make the election to value the liabilities of these FIA products at fair value. This election was made for the FIA products issued through 2009. These products are no longer being marketed. The future changes in the fair value of the liability for these FIA products are recorded in Benefit and settlement expenses with the liability being recorded in Annuity account balances. For more information regarding the determination of fair value of annuity account balances please refer to Note 5, Fair Value of Financial Instruments. Premiums and policy fees for these FIA products consist of fees that have been assessed against the policy account balances for surrenders. Such fees are recognized when assessed and earned.

The Company currently markets a deferred fixed annuity with a guaranteed minimum interest rate plus a contingent return based on equity market performance and the products are considered hybrid financial instruments under the FASB’s ASC Topic 815 — Derivatives and Hedging. As a result, the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities. Changes in the fair value of the embedded derivative are recorded in net gains (losses) — investments and derivatives. For more information regarding the determination of fair value of the FIA embedded derivative refer to Note 5, Fair Value of Financial Instruments. The host contract is accounted for as a universal life ("UL") type insurance contract in accordance with ASC Topic 944 — Financial Services — Insurance and is recorded in Annuity account balances with any discount to the minimum account value being accreted using the effective yield method.

F-15

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

The Company markets universal life products with a guaranteed minimum interest rate plus a contingent return based on equity market performance and the products are considered hybrid financial instruments under the FASB’s ASC Topic 815 — Derivatives and Hedging. The Company has not elected to value these indexed universal life ("IUL") products at fair value prior to the Merger date. As a result, the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities. Changes in the fair value of the embedded derivative are recorded in net gains (losses) — investments and derivatives. For more information regarding the determination of fair value of the IUL embedded derivative refer to Note 5, Fair Value of Financial Instruments. The host contract is accounted for as a debt instrument in accordance with ASC Topic 944 — Financial Services — Insurance and is recorded in Future policy benefits and claims with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accrued interest and benefit claims incurred during the period.

The Company’s accounting policies with respect to variable universal life ("VUL") and VA are identical to those noted above for universal life and investment products except that policy account balances (excluding account balances that earn a fixed rate) are valued at fair value and reported as components of assets and liabilities related to separate accounts.

The Company establishes liabilities for guaranteed minimum death benefits ("GMDB") on its VA products. The methods used to estimate the liabilities employ assumptions about mortality and the performance of equity markets. The Company assumes age-based mortality from the Ruark 2015 ALB table adjusted for company experience. Future declines in the equity market would increase the Company’s GMDB liability. Differences between the actual experience and the assumptions used result in variances in profit and could result in losses. A portion of the Company’s GMDB is subject to a dollar-for-dollar reduction upon withdrawal of related annuity deposits on contracts issued prior to January 1, 2003. As of December 31, 2021 and 2020, the GMDB reserve was $38 million and $43 million.

Annuity Account Balances and Other Policyholders’ Funds

Annuity account balances consists of the fixed account value of deferred annuities and the host contract value of indexed annuities. Other policyholders’ funds consists of immediate benefit accounts and supplementary contracts without life contingencies.

Property and Casualty Insurance Products

Property and casualty insurance products include service contract business, surety bonds, and guaranteed asset protection ("GAP"). Premiums and fees associated with service contracts and GAP products are recognized based on expected claim patterns. For all other products, premiums are generally recognized over the terms of the contract on a pro-rata basis. Commissions and fee income associated with other products are recognized as earned when the related services are provided to the customer. Unearned premium reserves are maintained for the portion of the premiums that is related to the unexpired period of the policy. Such reserves are computed by pro rata methods or methods related to anticipated claims. Benefit reserves are recorded when insured events occur. Benefit reserves include case basis reserves for known but unpaid claims as of the balance sheet date as well as incurred but not reported ("IBNR") reserves for claims where the insured event has occurred but has not been reported to the Company as of the balance sheet date. The case basis reserves and IBNR are calculated based on historical experience and on assumptions relating to claim severity and frequency, the level of used vehicle prices, and other factors. These assumptions are modified as necessary to reflect anticipated trends.

F-16

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Reinsurance

The Company uses reinsurance extensively in certain of its segments and accounts for reinsurance and the recognition of the impact of reinsurance costs in accordance with the ASC Financial Services — Insurance Topic. The following summarizes some of the key aspects of the Company’s accounting policies for reinsurance.

Reinsurance Accounting Methodology — Ceded premiums of the Company’s traditional life insurance products are treated as an offset to direct premium and policy fee revenue and are recognized when due to the assuming company. Ceded claims are treated as an offset to direct benefits and settlement expenses and are recognized when the claim is incurred on a direct basis. Ceded policy reserve changes are also treated as an offset to benefits and settlement expenses and are recognized during the applicable financial reporting period. Expense allowances paid by the assuming companies which are allocable to the current period are treated as an offset to other operating expenses. Since reinsurance treaties typically provide for allowance percentages that decrease over the lifetime of a policy, allowances in excess of the "ultimate" or final level allowance are capitalized. Amortization of capitalized reinsurance expense allowances representing recovery of acquisition costs is treated as an offset to direct amortization of DAC or VOBA. Amortization of deferred expense allowances is calculated as a level percentage of expected premiums in all durations given expected future lapses and mortality and accretion due to interest.

The Company utilizes reinsurance on certain short duration insurance contracts (primarily issued through the Asset Protection segment). As part of these reinsurance transactions the Company receives reinsurance allowances which reimburse the Company for acquisition costs such as commissions and premium taxes. A ceding fee is also collected to cover other administrative costs and profits for the Company. As a component of reinsurance costs, reinsurance allowances are accounted for in accordance with the relevant provisions of ASC Financial Services — Insurance Topic, which state that reinsurance costs should be amortized over the contract period of the reinsurance if the contract is short-duration. Accordingly, reinsurance allowances received related to short-duration contracts are capitalized and charged to expense in proportion to premiums earned. Ceded unamortized acquisition costs are netted with direct unamortized acquisition costs in the balance sheet.

Ceded premiums and policy fees on the Company’s fixed universal life ("UL"), VUL, bank-owned life insurance ("BOLI"), and annuity products reduce premiums and policy fees recognized by the Company. Ceded claims are treated as an offset to direct benefits and settlement expenses and are recognized when the claim is incurred on a direct basis. Ceded policy reserve changes are also treated as an offset to benefits and settlement expenses and are recognized during the applicable valuation period.

Since reinsurance treaties typically provide for allowance percentages that decrease over the lifetime of a policy, allowances in excess of the "ultimate" or final level allowance are capitalized. Amortization of capitalized reinsurance expense allowances are amortized based on future expected gross profits. Assumptions regarding mortality, lapses, and interest rates are continuously reviewed and may be periodically changed. These changes will result in "unlocking" that changes the balance in the ceded deferred acquisition cost and can affect the amortization of DAC and VOBA. Ceded unearned revenue liabilities are also amortized based on expected gross profits. Assumptions are based on the best current estimate of expected mortality, lapses and interest spread.

The Company has also assumed certain policy risks written by other insurance companies through reinsurance agreements. Premiums and policy fees as well as Benefits and settlement expenses include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Assumed reinsurance is accounted for in accordance with ASC Financial Services — Insurance Topic.

F-17

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Reinsurance Allowances — Long-Duration Contracts — Reinsurance allowances are intended to reimburse the ceding company for some portion of the ceding company’s commissions, expenses, and taxes. The amount and timing of reinsurance allowances (both first year and renewal allowances) are contractually determined by the applicable reinsurance contract and do not necessarily bear a relationship to the amount and incidence of expenses actually paid by the ceding company in any given year.

Ultimate reinsurance allowances are defined as the lowest allowance percentage paid by the reinsurer in any policy duration over the lifetime of a universal life policy (or through the end of the level term period for a traditional life policy). Ultimate reinsurance allowances are determined during the negotiation of each reinsurance agreement and will differ between agreements.

The Company determines its "cost of reinsurance" to include amounts paid to the reinsurer (ceded premiums) net of amounts reimbursed by the reinsurer (in the form of allowances). As noted within ASC 944, Financial Services — Insurance Topic, "The difference, if any, between amounts paid for a reinsurance contract and the amount of the liabilities for policy benefits relating to the underlying reinsured contracts is part of the estimated cost to be amortized." The Company’s policy is to amortize the cost of reinsurance over the life of the underlying reinsured contracts (for long-duration policies) in a manner consistent with the way in which benefits and expenses on the underlying contracts are recognized. For the Company’s long-duration contracts, it is the Company’s practice to defer reinsurance allowances as a component of the cost of reinsurance and recognize the portion related to the recovery of acquisition costs as a reduction of applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense in proportion to net revenue recognized. The remaining balance of reinsurance allowances are included as a component of the cost of reinsurance and those allowances which are allocable to the current period are recorded as an offset to operating expenses in the current period consistent with the recognition of benefits and expenses on the underlying reinsured contracts. This practice is consistent with the Company’s practice of capitalizing direct expenses (e.g. commissions), and results in the recognition of reinsurance allowances on a systematic basis over the life of the reinsured policies on a basis consistent with the way in which acquisition costs on the underlying reinsured contracts would be recognized. In some cases reinsurance allowances allocable to the current period may exceed non-deferred direct costs, which may cause net other operating expenses (related to specific contracts) to be negative.

Amortization of Reinsurance Allowances — Reinsurance allowances do not affect the methodology used to amortize DAC and VOBA, or the period over which such DAC and VOBA are amortized. Reinsurance allowances offset the direct expenses capitalized, reducing the net amount that is capitalized. DAC and VOBA on traditional life policies are amortized based on the pattern of estimated gross premiums of the policies in force. Reinsurance allowances do not affect the gross premiums, so therefore they do not impact traditional life amortization patterns. DAC and VOBA on universal life products are amortized based on the pattern of estimated gross profits of the policies in force. Reinsurance allowances are considered in the determination of estimated gross profits, and therefore do impact amortization patterns.

Reinsurance Assets and Liabilities — Claim liabilities and policy benefits are calculated consistently for all policies, regardless of whether or not the policy is reinsured. Once the claim liabilities and policy benefits for the underlying policies are estimated, the amounts recoverable from the reinsurers are estimated based on a number of factors including the terms of the reinsurance contracts, historical payment patterns of reinsurance partners, and the financial strength and credit worthiness of reinsurance partners and recorded as Reinsurance receivables on the balance sheet.

Liabilities for unpaid reinsurance claims are produced from claims and reinsurance system records, which contain the relevant terms of the individual reinsurance contracts. The Company monitors claims due from reinsurers to ensure that balances are settled on a timely basis. Incurred but not reported claims are reviewed to ensure that appropriate amounts are ceded.

F-18

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

The Company analyzes and monitors the credit worthiness of each of its reinsurance partners to minimize collection issues. For newly executed reinsurance contracts with reinsurance companies that do not meet predetermined standards, the Company requires collateral such as assets held in trusts or letters of credit.

Reinsurance assets and liabilities related to agreements with funds withheld at interest where no net risk is retained by the Company are presented on a net basis. Reinsurance receivables were presented net of approximately $2.3 billion in reinsurance liabilities as of December 31, 2021 and 2020, respectively.

Allowance for Credit Losses — Reinsurance Receivables

The Company establishes an allowance for current expected credit losses related to amounts receivable from reinsurers (the "Reinsurance ACL"). Changes in the Reinsurance ACL are recognized as a component of benefits and settlement expenses. The Reinsurance ACL is remeasured on a quarterly basis using an internally developed probability of default ("PD") and loss given default ("LGD") model. Key inputs to the calculation are a conditional probability of insurer liquidation by issuer credit rating and exposure at default derived from a runoff projection of ceded reserves by reinsurer to forecast future loss amounts. Management’s position is that the rate of return implicit in the financial asset (i.e. the ceded reserves) is associated with the discount rate used to value the underlying insurance reserves; that is, the rate of return on the asset portfolio(s) supporting the reserves. For reinsurance receivable exposures that do not share similar risk characteristics with other receivables, including those associated with counterparties that have experienced significant credit deterioration, the Company measures the allowance for credit losses individually, based on facts and circumstances associated with the specific reinsurer or transaction.

As of December 31, 2021 and 2020, the Reinsurance ACL was $92 million and $94 million, respectively. There were 0 write-offs or recoveries during the year ended December 31, 2021 and 2020.

The Company had total reinsurance receivables of $4.5 billion as of December 31, 2021, which includes both ceded policy benefit reserves and receivables for claims. Receivables for claims represented approximately 11% of total reinsurance receivables as of December 31, 2021. Receivables for claims are short-term in nature, and generally carry minimal credit risk. Of reserves ceded as of December 31, 2021, approximately 84% were receivables from reinsurers rated by A.M. Best Company. Of the total rated by A.M. Best, 54% were rated A+ or better, 16% were rated A, and 30% were rated A- or lower. The Company monitors the concentration of credit risk the Company has with any reinsurer, as well as the financial condition of its reinsurers, on an ongoing basis. Certain of the Company’s reinsurance receivables are supported by letters of credit, funds held or trust agreements.

Components of Reinsurance Cost — The following income statement lines are affected by reinsurance cost:

Premiums and policy fees ("reinsurance ceded" on the Company’s financial statements) represent consideration paid to the assuming company for accepting the ceding company’s risks. Ceded premiums and policy fees increase reinsurance cost.

Benefits and settlement expenses include incurred claim amounts ceded and changes in ceded policy reserves. Ceded benefits and settlement expenses decrease reinsurance cost.

Amortization of deferred acquisition cost and value of business acquired reflects the amortization of capitalized reinsurance allowances representing recovery of acquisition costs. Ceded amortization decreases reinsurance cost.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Other expenses include reinsurance allowances paid by assuming companies to the Company less amounts representing recovery of acquisition costs. Reinsurance allowances decrease reinsurance cost.

The Company’s reinsurance programs do not materially impact the other income line of the Company’s income statement. In addition, net investment income generally has no direct impact on the Company’s reinsurance cost. However, it should be noted that by ceding business to the assuming companies, the Company forgoes investment income on the reserves ceded to the assuming companies. Conversely, the assuming companies will receive investment income on the reserves assumed which will increase the assuming companies’ profitability on business assumed from the Company.

Accounting Pronouncements Recently Adopted

ASU No. 2019-12 — Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this Update remove certain exceptions to the general principles in Topic 740 related to intraperiod tax allocations, interim tax calculations, and outside basis differences. The amendments also clarify and amend guidance in certain other areas of Topic 740 in order to eliminate diversity in practice. The amendments in this Update became effective for public business entities in fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update did not have a material impact on the Company’s operations and financial results.

Accounting Pronouncements Not Yet Adopted

ASU No. 2018-12 — Financial Services — Insurance (Topic 944): Targeted Improvements to Accounting for Long-Duration Contracts. The amendments in this Update are designed to make improvements to the existing recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The new amendments require insurance entities to provide a more current measure of the liability for future policy benefits for traditional and limited-payment contracts by regularly refining the liability for actual past experience and updated future assumptions. This differs from current requirements where assumptions are locked-in at contract issuance for these contract types. In addition, the updated liability will be discounted using an upper-medium grade (low-credit-risk) fixed income instrument yield that reflects the characteristics of the liability which differs from currently used rates based on the invested assets supporting the liability. In addition, the amendments introduce new requirements to assess market-based insurance contract options and guarantees for Market Risk Benefits and measure them at fair value. This Update also requires insurance entities to amortize deferred acquisition costs on a constant-level basis over the expected life of the contract. Finally, this Update requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement. In November 2020, FASB issued ASU No. 2020-11 — Financial Services — Insurance (Topic 944); Effective Date and Early Application which deferred the effective date until the year ending December 31, 2025. The Company is currently reviewing its policies, processes, and applicable systems to determine the impact this standard will have on its operations and financial results.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT TRANSACTIONS

Captive Merger

On October 1, 2020, as part of a corporate initiative to consolidate and simplify PLC’s reserve financing structures and reduce related financial and operational costs, Golden Gate II Captive Insurance Company ("Golden Gate II"), Golden Gate III Vermont Captive Insurance Company ("Golden Gate III"), Golden Gate IV Vermont Captive Insurance Company ("Golden Gate IV"), and Golden Gate V Vermont Captive Insurance Company ("Golden Gate V"), all of which are wholly owned captive insurance company subsidiaries of the Company (collectively the "Captives") merged with and into (the "Captive Merger") Golden Gate Captive Insurance Company ("Golden Gate"), a Vermont special purpose financial insurance company and a wholly owned subsidiary of the Company.

In conjunction with the Captive Merger, Golden Gate and Steel City, LLC ("Steel City"), a wholly owned subsidiary of PLC, terminated the financing facility into which Golden Gate and Steel City had entered in 2016. This termination included redeeming the fixed maturity securities issued by Steel City to Golden Gate and the non-recourse funding obligation issued by Golden Gate to Steel City. This non cash transaction resulted in a reduction to the carrying value of fixed maturities, at amortized cost on the balance sheet as well as a reduction to the carrying value of non-recourse funding obligations on the balance sheet of $1,858 million. These redemptions did not have an impact on income before taxes. Refer to Note 4, Investment Operations and Note 14, Debt and Other Obligations, for additional detail around the impacted balances.

In conjunction with the Captive Merger, Golden Gate II redeemed the full outstanding principal amount of floating rate non-recourse funding obligations due July 15, 2052. These non-recourse funding obligations were previously marked to fair value in conjunction with the Merger. The redemption required the acceleration of the accretion of the discount associated with the non-recourse funding obligation. The impact of this non-cash acceleration was a $54 million reduction to income before taxes for the year ended December 31, 2020. Additionally, this redemption required a $330 million cash payment, of which $21 million was held by external parties and $309 million was held by nonconsolidated affiliates, to third parties in order to settle the outstanding principal associated with the non-recourse funding obligation. Refer to Note 14, Debt and Other Obligations, for additional detail around the impacted balances.

Also in conjunction with the Captive Merger, Golden Gate V and Red Mountain, LLC ("Red Mountain"), a wholly owned subsidiary of the Company, terminated the financing facility into which Golden Gate V and Red Mountain had entered into in 2012. This termination included redeeming the $822 million of fixed maturity securities issued by Red Mountain to Golden Gate V and the $806 million of non-recourse funding obligation issued by Golden Gate V to Red Mountain. As a result of these redemptions, the amortization of premiums recorded against the fixed maturities and non-recourse funding obligations which were previously marked to fair value in conjunction with the Merger was accelerated. The net impact of this non-cash acceleration of amortization was a $16 million reduction to income before taxes for the year ended December 31, 2020. This net impact was comprised of a reduction to net investment income of $72 million and a reduction to other operating expenses of $56 million. Refer to Note 4, Investment Operations and Note 14, Debt and Other Obligations, for additional detail around the impacted balances.

Also in conjunction with the Captive Merger, the interest support and YRT premium support agreements that were entered into with PLC by certain of the Company’s affiliates were terminated. As discussed in Note 5, Fair Value of Financial Instruments, these agreements met the definition of a derivative financial instrument and were accounted for at fair value in the consolidated financial statements. PLC settled its obligation under these agreements during the fourth quarter of 2020 and made a payment of $135 million to Golden Gate.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT TRANSACTIONS – (Continued)

On October 1, 2020, immediately following the Captive Merger, Golden Gate entered into a transaction with a term of 20 years, that may be extended to up to 25 years, to finance up to a maximum term of $5 billion of "XXX" and "AXXX" reserves related to the term life insurance business and universal life insurance with secondary guarantee business that is reinsured to Golden Gate by the Company and West Coast Life Insurance Company ("WCL"), an indirect wholly owned subsidiary, pursuant to an Excess of Loss Reinsurance Agreement (the "XOL Agreement") with Hannover Life Reassurance Company of America (Bermuda) Ltd., The Canada Life Assurance Company (Barbados Branch) and RGA Reinsurance Company (Barbados) Ltd. (collectively, the "Retrocessionaires"). Pursuant to the XOL Agreement, in exchange for periodic fees, the Retrocessionaires assume, on an excess of loss basis, the obligation to pay (the "XOL Payments") each quarter the lessor of a) the greater of (i) statutory reserves in excess of economic reserves and (ii) the financed amount and b) if total claims for such quarter exceed the available assets (as set forth in the XOL Agreement) of Golden Gate, the amount of such excess. The transaction is "non-recourse" to PLC, WCL, and the Company, meaning that none of these companies are liable to reimburse the Retrocessionaires for any XOL payments required to be made. As of December 31, 2020, the XOL Asset backing the difference in statutory and economic reserve liabilities was $4.58 billion.

Great-West Life & Annuity Insurance Company

On January 23, 2019, the Company entered into a Master Transaction Agreement (the "GWL&A Master Transaction Agreement") with Great-West Life & Annuity Insurance Company ("GWL&A"), Great-West Life & Annuity Insurance Company of New York ("GWL&A of NY"), The Canada Life Assurance Company ("CLAC") and The Great-West Life Assurance Company ("GWL" and, together with GWL&A, GWL&A of NY and CLAC, the "Sellers"), pursuant to which the Company will acquire via reinsurance (the "Transaction") substantially all of the Sellers’ individual life insurance and annuity business (the "GW Individual Life Business").

On June 3, 2019, the Company and PLAIC completed the Transaction (the "GWL&A Closing"). Pursuant to the GWL&A Master Transaction Agreement, the Company and PLAIC entered into reinsurance agreements (the "GWL&A Reinsurance Agreements") and related ancillary documents at the GWL&A Closing. On the terms and subject to the conditions of the GWL&A Reinsurance Agreements, the Sellers ceded to the Company and PLAIC, effective as of the date of the GWL&A Closing, substantially all of the insurance policies related to the Individual Life Business on a 100% indemnity basis net of reinsurance recoveries. The aggregate ceding commission for the reinsurance of the Individual Life Business paid at the GWL&A Closing was $766 million. All policies issued in states other than New York were ceded to the Company under reinsurance agreements between the applicable Seller and the Company, and all policies issued in New York were ceded to PLAIC under a reinsurance agreement between GWL&A of NY and PLAIC. On October 30, 2020, the Company reached a final settlement on all of the remaining pending items from the closing balance sheet. As the one year purchase price measurement period had concluded, the Company recognized $94 million in other income during the quarter ended December 31, 2020 related to the final settlement. Of the $94 million, $24 million was a cash settlement and $70 million resulted from reserve adjustments. To support its obligations under the GWL&A Reinsurance Agreements, the Company established trust accounts for the benefit of GWL&A, CLAC and GWL, and PLAIC established a trust account for the benefit of GWL&A of NY. The Sellers retained a block of participating policies, which are administered by the Company.

The GWL&A Master Transaction Agreement and other transaction documents contain certain customary representations and warranties made by each of the parties, and certain customary covenants regarding the Sellers and the Individual Life Business, and provide for indemnification, among other things, for breaches of those representations, warranties, and covenants. The terms of the GWL&A Reinsurance Agreements resulted in an acquisition of the Individual Life Business by PLC in accordance with ASC Topic 805, Business Combinations.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT TRANSACTIONS – (Continued)

The following table details the final allocation of assets acquired and liabilities assumed from the Individual Life Business reinsurance transaction as of the date of the GWL&A Closing.


	Fair Value
	As of
	June 1, 2019
	(Dollars In Millions)
Assets
Fixed maturities	$	8,698
Commercial mortgage loans		1,386
Policy loans		44
Other long-term investments		1,522
Total investments		11,650
Cash		35
Accrued investment income		101
Reinsurance receivables		0
Accounts and premiums receivable		2
Value of business acquired		535
Other intangibles		21
Other assets		6
Assets related to separate accounts		9,583
Total assets	$	21,933
Liabilities
Future policy benefits and claims	$	11,022
Annuity account balances		220
Other policyholders' funds		220
Other liabilities		75
Liabilities related to separate accounts		9,583
Total liabilities		21,120
Net assets acquired	$	813

Assets related to separate accounts and liabilities related to separate accounts represent amounts receivable and payable for variable annuity and variable universal life products reinsured on a modified co-insurance basis.

The following unaudited pro forma condensed consolidated results of operations assumes that the aforementioned transactions of the Individual Life Business were completed as of January 1, 2018. The unaudited pro forma condensed results of operations are presented solely for informational purposes and are not necessarily indicative of the consolidated condensed results of operations that might have been achieved had the transaction been completed as of the date indicated:


	Unaudited
	For The Year Ended
	December 31,
	(Recast)
	2019		2018

	(Dollars In Millions)
Revenue	$	6,165	$	5,592
Net income	$	444	$	253

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS

Major categories of net investment income are summarized as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Fixed maturities	$	2,513	$	2,481	$	2,471
Equity securities		27		24		31
Commercial mortgage loans		505		443		389
Investment real estate		1		1		1
Other investment income		156		139		119
		3,202		3,088		3,011
Investment expenses		220		199		186
Net investment income	$	2,982	$	2,889	$	2,825

Net gains (losses) — investments and derivatives are summarized as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Realized gains (losses) — investments, net
Fixed maturities	$	46	$	46	$	48
Equity securities		4		0		(3)
Other investments		20		45		9
Total realized gains (losses) — investments, net		70		91		54
Modco trading portfolio		(103)		130		243
Equity securities		(8)		13		50
Change in net expected credit losses — fixed maturities(1)		6		(125)		0
Net impairment losses recognized in operations(2)		0		0		(34)
Commercial mortgage loans		137		(149)		(4)
Gains (losses) — derivatives, net(3)		48		(195)		(368)
Net gains (losses) — investments and derivatives	$	150	$	(235)	$	(59)

(1)	Represents net credit losses recognized under FASB ASC 326

(2)	Represents other-than-temporary impairment losses recognized in prior periods under FASB ASC 320

(3)	Refer to Note 6, Derivative Financial Instruments

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS – (Continued)

The chart below summarizes the sales proceeds and gains (losses) realized on securities classified as AFS.


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Securities in an unrealized gain position:
Sales proceeds	$	1,537	$	2,000	$	2,514
Realized gains	$	47	$	51	$	62
Securities in an unrealized loss position:
Sales proceeds	$	35	$	34	$	547
Realized losses	$	(1)	$	(5)	$	(14)

The net gains (losses) from equity securities still held at period end, was ($8) million, $13 million, $50 million for the year ended December 31, 2021, 2020, and 2019, respectively. The Company recognized gains (losses) of $4 million and ($3) million on equity securities sold during the period for the year ended December 31, 2021 and 2020, respectively and immaterial gains for the year ended December 31, 2020.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS – (Continued)

The amortized cost, gross unrealized gains, gross unrealized losses, allowance for expected credit losses, and fair value of the Company’s investments classified as AFS are as follows:


			Gross		Gross		Allowance for
	Amortized		Unrealized		Unrealized		Expected
	Cost		Gains		Losses		Credit Losses		Fair Value

	(Dollars In Millions)
As of December 31, 2021
Fixed maturities:(1)
Residential mortgage-backed securities	$	6,876	$	31	$	(102)	$	0	$	6,805
Commercial mortgage-backed securities		2,239		75		(7)		0		2,307
Other asset-backed securities		1,391		31		(2)		0		1,420
U.S. government-related securities		821		12		(25)		0		808
Other government-related securities	��	680		75		(2)		0		753
States, municipals, and political subdivisions		3,747		410		(1)		0		4,156
Corporate securities		49,211		4,645		(156)		(1)		53,699
Redeemable preferred stocks		297		10		0		0		307
		65,262		5,289		(295)		(1)		70,255
Short-term investments		780		0		0		0		780
	$	66,042	$	5,289	$	(295)	$	(1)	$	71,035

(1)

Included in the total above, as of December 31, 2021, the Company had public utility securities that had an amortized cost and fair value of $6.5 billion and $7.0 billion, respectively and foreign government securities that had an amortized cost and fair value of $620 million and $687 million, respectively.


As of December 31, 2020 (Recast)
Fixed maturities:(2)
Residential mortgage-backed securities	$	6,510	$	159	$	(1)	$	0	$	6,668
Commercial mortgage-backed securities		2,429		128		(19)		(4)		2,534
Other asset-backed securities		1,546		40		(7)		(1)		1,578
U.S. government-related securities		1,492		26		(3)		0		1,515
Other government-related securities		622		96		(1)		0		717
States, municipals, and political subdivisions		3,902		519		(1)		0		4,420
Corporate securities		46,150		6,074		(99)		(18)		52,107
Redeemable preferred stocks		183		11		0		0		194
		62,834		7,053		(131)		(23)		69,733
Short-term investments		386		0		0		0		386
	$	63,220	$	7,053	$	(131)	$	(23)	$	70,119

(2)

Included in the total above, as of December 31, 2020, the Company had public utility securities that had an amortized cost and fair value of $6.3 billion and $7.0 billion, respectively and foreign government securities that had an amortized cost and fair value of $557 million and $644 million, respectively.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS – (Continued)

The Company holds certain investments pursuant to certain modified coinsurance ("Modco") arrangements. The fixed maturities, equity securities, and short-term investments held as part of these arrangements are classified as trading securities. The fair value of the investments held pursuant to these Modco arrangements are as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Fixed maturities:(1)
Residential mortgage-backed securities	$	133	$	209
Commercial mortgage-backed securities		209		214
Other asset-backed securities		185		163
U.S. government-related securities		33		91
Other government-related securities		64		30
States, municipals, and political subdivisions		286		282
Corporate securities		1,875		1,860
Redeemable preferred stocks		8		13
		2,793		2,862
Equity securities		13		20
Short-term investments		82		76
	$	2,888	$	2,958

(1)

Included in the total above, as of December 31, 2021, the Company had public utility and foreign government securities that had a fair value of $134 million and $44 million, respectively and as of December 31, 2020, the Company had public utility and foreign government securities that had a fair value of $144 million and $30 million, respectively.

The amortized cost and fair value of available-for-sale fixed maturities as of December 31, 2021, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.


	Available-for-sale
	Amortized		Fair
	Cost		Value

	(Dollars In Millions)
Due in one year or less	$	1,707	$	1,719
Due after one year through five years		11,046		11,453
Due after five years through ten years		15,434		16,135
Due after ten years		37,075		40,948
	$	65,262	$	70,255

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS – (Continued)

The following chart is a rollforward of the allowance for expected credit losses on fixed maturities classified as AFS:


	For The Year Ended December 31, 2021								For The Year Ended December 31, 2020
	Corporate								Corporate
	Securities		CMBS		ABS		Total		Securities		CMBS		ABS		Total

	(Dollars In Millions)								(Dollars In Millions)
Beginning Balance	$	18	$	4	$	1	$	23	$	0	$	0	$	0	$	0
Additions for securities for which an allowance was not previously recorded		0		0		0		0		62		4		1		67
Adjustments on previously recorded allowances due to change in expected cash flows		(1)		(4)		0		(5)		20		0		1		21
Reductions on previously recorded allowances due to disposal of security in the current period		0		0		(1)		(1)		(1)		0		(1)		(2)
Write-offs of previously recorded allowances due to intent or requirement to sell		(16)		0		0		(16)		(63)		0		0		(63)
Ending Balance	$	1	$	0	$	0	$	1	$	18	$	4	$	1	$	23

The following table includes the gross unrealized losses and fair value of the Company’s AFS fixed maturities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2021:


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss

	(Dollars In Millions)
Residential mortgage-backed securities	$	4,615	$	(102)	$	15	$	0	$	4,630	$	(102)
Commercial mortgage-backed securities		129		(1)		88		(6)		217		(7)
Other asset-backed securities		249		(1)		47		(1)		296		(2)
U.S. government-related securities		306		(13)		158		(12)		464		(25)
Other government-related securities		76		(2)		0		0		76		(2)
States, municipalities, and political subdivisions	$	37	$	(1)	$	4	$	0	$	41	$	(1)
Corporate securities		4,841		(119)		515		(37)		5,356		(156)
Redeemable preferred stocks		20		0		0		0		20		0
	$	10,273	$	(239)	$	827	$	(56)	$	11,100	$	(295)

The corporate securities category had gross unrealized losses greater than twelve months of $37 million as of December 31, 2021, excluding losses of $1 million that were considered credit related. These losses are deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, interest rate movement, and other pertinent information.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENT OPERATIONS – (Continued)

As of December 31, 2021, the Company had a total of 742 positions that were in an unrealized loss position, including 5 positions for which an allowance for credit losses was established. For unrealized losses for which an allowance for credit losses was not established, the Company does not consider these unrealized loss positions to be credit related. This is based on the aggregate factors discussed previously and because the Company has the ability and intent to hold these investments until the fair values recover. The Company does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss

	(Recast)
	(Dollars In Millions)
Residential mortgage-backed securities	$	386	$	(1)	$	9	$	—	$	395	$	(1)
Commercial mortgage-backed securities		263		(16)		30		(4)		293		(20)
Other asset-backed securities		146		(2)		326		(5)		472		(7)
U.S. government-related securities		311		(3)		1		—		312		(3)
Other government-related securities		19		—		7		(1)		26		(1)
States, municipalities, and political subdivisions		34		(1)		5		—		39		(1)
Corporate securities	$	1,063	$	(33)	$	728	$	(66)	$	1,791	$	(99)
Redeemable preferred stocks		—		—		—		—		—		—
	$	2,222	$	(56)	$	1,106	$	(76)	$	3,328	$	(132)

As of December 31, 2021, the Company had securities in its available-for-sale portfolio which were rated below investment grade with a fair value of $2.5 billion and had an amortized cost of $2.3 billion. In addition, included in the Company’s trading portfolio, the Company held $129 million of securities which were rated below investment grade. The Company held $550 million of the below investment grade securities that were not publicly traded.

The change in unrealized gains (losses), net of allowance for expected credit losses and income taxes, on fixed maturities classified as AFS is summarized as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Fixed maturities	$	(1,523)	$	3,271	$	4,219

The Company held $21 million and $28 million of non-income producing securities for the year ended December 31, 2021 and 2020, respectively.

Included in the Company’s invested assets are $1.5 billion and $1.6 billion of policy loans as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the interest rates on standard policy loans range from 3.0% to 8.0%.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company determined the fair value of its financial instruments based on the fair value hierarchy established in FASB guidance referenced in the Fair Value Measurements and Disclosures Topic which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company has adopted the provisions from the FASB guidance that is referenced in the Fair Value Measurements and Disclosures Topic for non-financial assets and liabilities (such as property and equipment, goodwill, and other intangible assets) that are required to be measured at fair value on a periodic basis. The effect on the Company’s periodic fair value measurements for non-financial assets and liabilities was not material.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized as follows:

●

Level 1: Unadjusted quoted prices for identical assets or liabilities in an active market.

●

Level 2: Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in non-active markets;

Inputs other than quoted market prices that are observable; and

Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

●

Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own estimates about the assumptions a market participant would use in pricing the asset or liability.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2021:


	Measurement
	Category	Level 1		Level 2		Level 3		Total

	(Dollars In Millions)
Assets:
Fixed maturity securities — AFS Residential mortgage-backed securities	4	$	0	$	6,765	$	40	$	6,805
Commercial mortgage-backed securities	4		0		2,127		180		2,307
Other asset-backed securities	4		0		905		515		1,420
U.S. government-related securities	4		411		397		0		808
State, municipalities, and political subdivisions	4		0		4,156		0		4,156
Other government-related securities	4		0		753		0		753
Corporate securities	4		0		52,117		1,582		53,699
Redeemable preferred stocks	4		307		0		0		307
Total fixed maturity securities — AFS			718		67,220		2,317		70,255
Fixed maturity securities — trading Residential mortgage-backed securities	3		0		133		0		133
Commercial mortgage-backed securities	3		0		209		0		209
Other asset-backed securities	3		0		92		93		185
U.S. government-related securities	3		27		6		0		33
State, municipalities, and political subdivisions	3		0		286		0		286
Other government-related securities	3		0		48		16		64
Corporate securities	3		0		1,867		8		1,875
Redeemable preferred stocks	3		8		0		0		8
Total fixed maturity securities — trading			35		2,641		117		2,793
Total fixed maturity securities		$	753	$	69,861	$	2,434	$	73,048
Equity securities	3		633		40		155		828
Other long-term investments(1)	3&4		59		1,093		295		1,447
Short-term investments	3		683		179		0		862
Total investments			2,128		71,173		2,884		76,185
Cash	3		390		0		0		390
Assets related to separate accounts
Variable annuity	3		13,648		0		0		13,648
Variable universal life	3		1,982		0		0		1,982
Total assets measured at fair value on a recurring basis		$	18,148	$	71,173	$	2,884	$	92,205
Liabilities:
Annuity account balances(2)	3	$	0	$	0	$	63	$	63
Other liabilities(1)	3&4		20		820		1,939		2,779
Total liabilities measured at fair value on a recurring basis		$	20	$	820	$	2,002	$	2,842

Measurement category 3 represents fair value through net income and 4 represents fair value through other comprehensive income (loss).

(1)	Includes certain freestanding and embedded derivatives.

(2)	Represents liabilities related to fixed indexed annuities.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2020:


	Measurement
	Category	Level 1		Level 2		Level 3		Total

	(Recast)
	(Dollars In Millions)
Assets:
Fixed maturity securities — AFS Residential mortgage-backed securities	4	$	0	$	6,668	$	0	$	6,668
Commercial mortgage-backed securities	4		0		2,502		32		2,534
Other asset-backed securities	4		0		1,143		435		1,578
U.S. government-related securities	4		1,014		501		0		1,515
State, municipalities, and political subdivisions	4		0		4,420		0		4,420
Other government-related securities	4		0		717		0		717
Corporate securities	4		0		50,675		1,432		52,107
Redeemable preferred stocks	4		125		69		0		194
Total fixed maturity securities — AFS			1,139		66,695		1,899		69,733
Fixed maturity securities — trading Residential mortgage-backed securities	3		0		209		0		209
Commercial mortgage-backed securities	3		0		214		0		214
Other asset-backed securities	3		0		92		71		163
U.S. government-related securities	3		79		12		0		91
State, municipalities, and political subdivisions	3		0		282		0		282
Other government-related securities	3		0		30		0		30
Corporate securities	3		0		1,842		18		1,860
Redeemable preferred stocks	3		13		0		0		13
Total fixed maturity securities — trading			92		2,681		89		2,862
Total fixed maturity securities			1,231		69,376		1,988		72,595
Equity securities	3		566		0		101		667
Other long-term investments(1)	3&4		52		1,285		298		1,635
Short-term investments	3		403		59		0		462
Total investments			2,252		70,720		2,387		75,359
Cash	3		656		0		0		656
Assets related to separate accounts Variable annuity	3		12,378		0		0		12,378
Variable universal life	3		1,287		0		0		1,287
Total assets measured at fair value on a recurring basis		$	16,573	$	70,720	$	2,387	$	89,680
Liabilities:
Annuity account balances(2)	3	$	0	$	0	$	67	$	67
Other liabilities(1)	3&4		14		867		2,239		3,120
Total liabilities measured at fair value on a recurring basis		$	14	$	867	$	2,306	$	3,187

Measurement category 3 represents fair value through net income and 4 represents fair value through other comprehensive income (loss).

(1)	Includes certain freestanding and embedded derivatives.

(2)	Represents liabilities related to fixed indexed annuities.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

Determination of Fair Values

The valuation methodologies used to determine the fair values of assets and liabilities reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments as listed in the above table.

The fair value of fixed maturity, short-term, and equity securities is determined by management after considering 1 of 3 primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a "waterfall" approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these 3 pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Third party pricing services price 91.87% of the Company’s available-for-sale and trading fixed maturity securities. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations. When using non-binding independent broker quotations, when available the Company obtains 2 quotes per security. Where multiple broker quotes are obtained, the Company reviews the quotes and selects the quote that provides the best estimate of the price a market participant would pay for these specific assets in an arm’s length transaction. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party pricing service or an independent broker quotation.

The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, assigned by brokers, incorporate the issuer’s credit rating, liquidity discounts, weighted- average of contracted cash flows, risk premium, if warranted, due to the issuer’s industry, and the security’s time to maturity. The Company uses credit ratings provided by nationally recognized rating agencies.

For securities that are priced via non-binding independent broker quotations, the Company assesses whether prices received from independent brokers represent a reasonable estimate of fair value. The Company’s assessment incorporates various metrics (yield curves, credit spreads, prepayment rates, etc.) along with other information available to the Company from both internal and external sources to determine the valuation of such holdings. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. The Company did not adjust any quotes or prices received from brokers during the years ended December 31, 2021 and 2020.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The Company has analyzed the third party pricing services’ valuation methodologies and related inputs and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs that is in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the significant inputs used in pricing the securities are market observable and the observable inputs are corroborated by the Company. Since the matrix pricing of certain debt securities includes significant non-observable inputs, they are classified as Level 3.

Asset-Backed Securities

This category mainly consists of RMBS, CMBS, and other asset-backed securities (collectively referred to as asset-backed securities or "ABS"). As of December 31, 2021, the Company held $10.2 billion of ABS classified as Level 2. These securities are priced from information provided by a third party pricing service and independent broker quotes. The third party pricing services and brokers mainly value securities using both a market and income approach to valuation. As part of this valuation process they consider the following characteristics of the item being measured to be relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, and 7) credit ratings of the securities.

After reviewing these characteristics of the ABS, the third party pricing service and brokers use certain inputs to determine the value of the security. For ABS classified as Level 2, the valuation would consist of predominantly market observable inputs such as, but not limited to: 1) monthly principal and interest payments on the underlying assets, 2) average life of the security, 3) prepayment speeds, 4) credit spreads, 5) treasury and swap yield curves, and 6) discount margin. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

As of December 31, 2021, the Company held $828 million of Level 3 ABS, which included $735 million of other asset-backed securities classified as available-for-sale and $93 million of other asset-backed securities classified as trading. These securities are predominantly ARS whose underlying collateral is at least 97% guaranteed by the FFELP. As a result of the ARS market collapse during 2008, the Company prices its ARS using an income approach valuation model. As part of the valuation process the Company reviews the following characteristics of the ARS in determining the relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, 7) credit ratings of the securities, 8) liquidity premium, and 9) paydown rate. In periods where market activity increases and there are transactions at a price that is not the result of a distressed or forced sale we consider those prices as part of our valuation. If the market activity during a period is solely the result of the issuer redeeming positions we consider those transactions in our valuation, but still consider them to be level three measurements due to the nature of the transaction.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

Corporate Securities, Redeemable Preferred Stocks, U.S. Government-Related Securities, States, Municipals, and Political Subdivisions, and Other Government Related Securities

As of December 31, 2021, the Company classified $59.6 billion of corporate securities, redeemable preferred stocks, U.S. government-related securities, states, municipals, and political subdivisions, and other government-related securities as Level 2. The fair value of the Level 2 securities is predominantly priced by broker quotes and a third party pricing service. The Company has reviewed the valuation techniques of the brokers and third party pricing service and has determined that such techniques used Level 2 market observable inputs. The following characteristics of the securities are considered to be the primary relevant inputs to the valuation: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) seniority, and 4) credit ratings. The Company reviews the methodologies and valuation techniques (including the ability to observe inputs) in assessing the information received from external pricing services and in consideration of the fair value presentation.

The brokers and third party pricing service utilize valuation models that consist of a hybrid methodology that utilizes a cash flow analysis and market approach to valuation. The pricing models utilize the following inputs: 1) principal and interest payments, 2) treasury yield curve, 3) credit spreads from new issue and secondary trading markets, 4) dealer quotes with adjustments for issues with early redemption features, 5) liquidity premiums present on private placements, and 6) discount margins from dealers in the new issue market.

As of December 31, 2021, the Company classified $1.6 billion of securities as Level 3 valuations. Level 3 securities primarily represent investments in illiquid bonds for which no price is readily available. To determine a price, the Company uses a discounted cash flow model with both observable and unobservable inputs. These inputs are entered into an industry standard pricing model to determine the final price of the security. These inputs include: 1) principal and interest payments, 2) coupon rate, 3) sector and issuer level spread over treasury, 4) underlying collateral, 5) credit ratings, 6) maturity, 7) embedded options, 8) recent new issuance, 9) comparative bond analysis, and 10) an illiquidity premium.

Equities

As of December 31, 2021, the Company held $155 million of equity securities classified as Level 3. Of this total, $148 million represents FHLB stock. The Company believes that the cost of the FHLB stock approximates fair value.

Other Long-Term Investments and Other Liabilities

Derivative Financial Instruments

Other long-term investments and other liabilities include free-standing and embedded derivative financial instruments. Refer to Note 6, Derivative Financial Instruments for additional information related to derivatives. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. Excluding embedded derivatives, as of December 31, 2021, 83.9% of derivatives based upon notional values were priced using exchange prices or independent broker quotations. Inputs used to value derivatives include, but are not limited to, interest swap rates, credit spreads, interest rate and equity market volatility indices, equity index levels, and treasury rates. The Company performs monthly analysis on derivative valuations that includes both quantitative and qualitative analyses.

Derivative instruments classified as Level 1 generally include futures and options, which are traded on active exchange markets.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

Derivative instruments classified as Level 2 primarily include swaps, options, and swaptions, which are traded over-the-counter. Level 2 also includes certain centrally cleared derivatives. These derivative valuations are determined using independent broker quotations, which are corroborated with observable market inputs.

Derivative instruments classified as Level 3 were embedded derivatives and include at least one significant non-observable input. A derivative instrument containing Level 1 and Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has at least one significant Level 3 input.

The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the changes in fair value on derivatives reported in Level 3 may not reflect the offsetting impact of the changes in fair value of the associated assets and liabilities.

Embedded derivatives are carried at fair value in other long-term investments and other liabilities on the Company’s consolidated balance sheet. The changes in fair value of embedded derivatives are recorded as net gains (losses) — investments and derivatives. Refer to Note 6, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses.

The fair value of the GLWB embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The risk neutral scenarios are generated using the current swap curve and projected equity volatilities and correlations. The projected equity volatilities are based on a blend of historical volatility and near- term equity market implied volatilities. The equity correlations are based on historical price observations. For policyholder behavior assumptions, expected lapse and utilization assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the Ruark 2015 ALB table with attained age factors varying from 88% — 100% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR plus a credit spread (to represent the Company’s non-performance risk). For expected lapse and utilization, assumptions are used and updated for actual experience, as necessary, using an internal predictive model developed by the Company. As a result of using significant unobservable inputs, the GLWB embedded derivative is categorized as Level 3. Policyholder assumptions are reviewed on an annual basis.

The balance of the FIA embedded derivative is impacted by policyholder cash flows associated with the FIA product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the FIA embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the 2015 Ruark ALB mortality table, with attained age factors varying from 88% — 100% based on company experience. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the FIA embedded derivative is categorized as Level 3.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The balance of the indexed universal life ("IUL") embedded derivative is impacted by policyholder cash flows associated with the IUL product that are allocated to the embedded derivative in addition to changes in the fair value of the embedded derivative during the reporting period. The fair value of the IUL embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality factors varying from 43% — 110% that are applied to the base table, which is defined as 90% of 2015 VBT Primary Tables adjusted for 5.5 years of 2020 SOA HMI. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the IUL embedded derivative is categorized as Level 3.

The Company has assumed and ceded certain blocks of policies under modified coinsurance agreements in which the investment results of the underlying portfolios inure directly to the reinsurers. Funds withheld arrangements related to such agreements contain embedded derivatives that are reported at fair value. Changes in their fair value are reported in net gains (losses) — investments and derivatives. The fair value of embedded derivatives related to funds withheld under modified coinsurance agreements are a function of the unrealized gains or losses on the underlying assets and are calculated in a manner consistent with the terms of the agreements. The investments supporting certain of these agreements are designated as "trading securities"; therefore changes in their fair value are also reported in net gains (losses) — investments and derivatives. The fair value of embedded derivatives is estimated based on market standard valuation methodology and is considered a Level 3 valuation.

In conjunction with the Captive Merger, PLC terminated its interest support, yearly renewable term ("YRT") premium support, and portfolio maintenance agreements with Golden Gate, Golden Gate II, Golden Gate V, and WCL. The interest support agreement provided that PLC would make payments to Golden Gate II if actual investment income on certain of Golden Gate II’s asset portfolios fell below a calculated investment income amount as defined in the interest support agreement, the YRT premium support agreements provided that PLC would make payments to Golden Gate and Golden Gate II in the event that YRT premium rates increased, and the portfolio maintenance agreements provided that PLC would make payments to Golden Gate, Golden Gate V, and WCL in the event of other-than-temporary impairments on investments that exceeded defined thresholds.

As part of the Captive Merger, PLC entered into a new portfolio maintenance agreement with Golden Gate. This agreement meets the definition of a derivative and is accounted for at fair value and is considered Level 3 valuation. The fair value of this derivative is included in Other long-term investments. For information regarding gains on these derivatives please refer to Note 6, Derivative Financial Instruments.

The portfolio maintenance agreement provides that PLC will make payments to Golden Gate in the event of credit losses on investments that exceed defined thresholds. The derivative is valued using an internal discounted cash flow model. The significant unobservable inputs are the projected probability and severity of credit losses used to project future cash flows on the investment portfolios.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The Funds Withheld derivative results from reinsurance agreements with Protective Life Reinsurance Bermuda LTD, a wholly owned subsidiary of PLC ("PL Re") where the economic performance of certain hedging instruments held by the Company are ceded to PL Re. The value of the Funds Withheld derivative is directly tied to the value of the hedging instruments held in the funds withheld accounts. The hedging instruments consist of derivative instruments, the fair values of which are classified as a Level 2 measurement; as such, the fair value of the Funds Withheld derivative has been classified as a Level 2 measurement. The fair value of the Funds Withheld derivative as of December 31, 2021, was a liability of $10 million.

Annuity Account Balances

The Company records a certain legacy block of FIA reserves at fair value. Based on the characteristics of these reserves, the Company believes that the fund value approximates fair value. The fair value measurement of these reserves is considered a Level 3 valuation due to the unobservable nature of the fund values.

Separate Accounts

Separate account variable annuity and variable life assets represent segregated funds that are invested for certain customers which are invested in open-ended mutual funds and are included in Level 1. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s consolidated balance sheets.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

Valuation of Level 3 Financial Instruments

The following table presents the valuation method for material financial instruments included in Level 3 as of December 31, 2021, as well as the unobservable inputs used in the valuation of those financial instruments:


	Fair Value
	As of
	December 31,		Valuation	Unobservable	Range
	2021		Technique	Input	(Weighted Average)
	(Dollars In
	Millions)
Assets:
Residential mortgage-backed securities	$	40	Trade Price	Spread	1.03% - 1.10% (1.07%)
Commercial mortgage-backed securities		180	Discounted cash flow	Spread over treasury	1.04% - 2.47% (1.30%)
Other asset-backed securities		436	Liquidation	Liquidation value	$98.63 - $99.75 ($99.07)
			Discounted cash flow	Liquidity premium	0.11% - 2.14% (1.54%)
				Paydown Rate	11.20% - 13.41% (12.30%)
				Liquidation value	$60.00 - 113.88% (112.92%)
Corporate securities		1,588	Discounted cash flow	Spread over treasury	0.00% - 4.00% (1.50%)
Liabilities:(1)(2)
Embedded derivatives — GLWB	$	475	Actuarial cash flow model	Mortality	88% to 100% of Ruark 2015 ALB Table
				Lapse	PL-RBA Predictive Model
				Utilization	PL-RBA Predictive Model
				Nonperformance risk	0.19% - 0.82%
Embedded derivative — FIA		595	Actuarial cash flow model	Expenses	$214 per policy
				Withdrawal rate	0.4% - 2.4% prior to age 70 RMD for ages 70+ or WB withdrawal rate Assume underutilized RMD for nonWB policies ages 72 - 88
				Mortality	88% to 100% of Ruark 2015 ALB table
				Lapse	0.2% - 50.0%, depending on duration/surrender charge period. Dynamically adjusted for WB moneyness and projected market rates vs credited rates.
				Nonperformance risk	0.19% - 0.82%
Embedded derivative — IUL	$	269	Actuarial cash flow model	Mortality	43% - 110% of base table (90% of 2015 VBT Primary Tables adjusted for 5.5 years of 2020 SOA HMI) 94% - 248% of duration 8 point in scale 2015 VBT Primary Tables, depending on type of business
				Lapse	0.375% - 7.5%, depending on duration/distribution channel and smoking class
				Nonperformance risk	0.19% - 0.82%

(1)	Excludes modified coinsurance arrangements.

(2)	Fair value is presented as a net liability.

The chart above excludes Level 3 financial instruments that are valued using broker quotes and those for which book value approximates fair value. Unobservable inputs were weighted by the relative fair value of instruments, except for other asset-backed securities which were weighted by the relative par amounts.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The Company has considered all reasonably available quantitative inputs as of December 31, 2021, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $197 million of financial instruments being classified as Level 3 as of December 31, 2021. Of the $197 million, $172 million are other asset-backed securities, $3 million are corporate securities, $16 million are other government securities, and $6 million are equity securities.

In certain cases the Company has determined that book value materially approximates fair value. As of December 31, 2021, the Company held $148 million of financial instruments where book value approximates fair value which are predominantly FHLB stock.

The following table presents the valuation method for material financial instruments included in Level 3, as of December 31, 2020, as well as the unobservable inputs used in the valuation of those financial instruments:


	Fair Value
	As of
	December 31,		Valuation	Unobservable	Range
	2020		Technique	Input	(Weighted Average)
	(Recast)
	(Dollars In
	Millions)
Assets:
Commercial mortgage-backed securities	$	32	Discounted cash flow	Spread over treasury	2.78% - 2.92% (2.87%)
Other asset-backed securities		435	Liquidation	Liquidation value	$95.00 - $97.00 ($96.19)
			Discounted cash flow	Liquidity premium	0.54% - 2.30% (1.63%)
				Paydown Rate	8.79% - 12.49% (11.39%)
Corporate securities		1,432	Discounted cash flow	Spread over treasury	0.00% - 4.75% (1.89%)
Liabilities:(1)(2)
Embedded derivatives — GLWB	$	822	Actuarial cash flow model	Mortality	88% to 100% of Ruark 2015 ALB Table
				Lapse	PL RBA Predictive Model
				Utilization	PL RBA Predictive Model
				Nonperformance risk	0.19% - 0.81%
Embedded derivative — FIA		573	Actuarial cash flow model	Expenses	$207 per policy
				Withdrawal rate	0.4% - 2.4% prior to age 70 RMD for ages 70+ or WB withdrawal rate. Assume underutilized RMD for non WB policies age 72 - 88
				Mortality	88% to 100% of Ruark 2015 ALB table
				Lapse	0.2% - 50.0%, depending on duration/surrender charge period. Dynamically adjusted for WB moneyness and projected market rates vs credited rates.
				Nonperformance risk	0.19% - 0.81%
Embedded derivative — IUL	$	201	Actuarial cash flow model	Mortality	36% - 161% of 2015 VBT Primary Tables. 94% - 248% of duration 8 point in scale 2015 VBT Primary Tables, depending on type of business
				Lapse	0.375% - 10%, depending on duration/distribution channel and smoking class
				Nonperformance risk	0.19% - 0.81%

(1)	Excludes modified coinsurance arrangements.

(2)	Fair value is presented as a net liability.

F-40

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The chart above excludes Level 3 financial instruments that are valued using broker quotes and those for which book value approximates fair value.

The Company has considered all reasonably available quantitative inputs as of December 31, 2020, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $116 million of financial instruments being classified as Level 3 as of December 31, 2020. Of the $116 million, $88 million are other asset backed securities, $17 million are corporate securities, and $11 million are equity securities.

In certain cases the Company determined that book value materially approximates fair value. As of December 31, 2020, the Company held $90 million of financial instruments where book value approximates fair value which are predominantly FHLB stock.

The asset-backed securities classified as Level 3 are predominantly ARS. A change in the paydown rate (the projected annual rate of principal reduction) of the ARS can significantly impact the fair value of these securities. A decrease in the paydown rate would increase the projected weighted average life of the ARS and increase the sensitivity of the ARS’ fair value to changes in interest rates. An increase in the liquidity premium would result in a decrease in the fair value of the securities, while a decrease in the liquidity premium would increase the fair value of these securities. The liquidation value for these securities are sensitive to the issuer’s available cash flows and ability to redeem the securities, as well as the current holders’ willingness to liquidate at the specified price.

The fair value of corporate bonds classified as Level 3 is sensitive to changes in the interest rate spread over the corresponding U.S. Treasury rate. This spread represents a risk premium that is impacted by company specific and market factors. An increase in the spread can be caused by a perceived increase in credit risk of a specific issuer and/or an increase in the overall market risk premium associated with similar securities. The fair values of corporate bonds are sensitive to changes in spread. When holding the treasury rate constant, the fair value of corporate bonds increases when spreads decrease, and decreases when spreads increase.

The fair value of the GLWB embedded derivative is sensitive to changes in the discount rate which includes the Company’s nonperformance risk, volatility, lapse, and mortality assumptions. The volatility assumption is an observable input as it is based on market inputs. The Company’s nonperformance risk, lapse, and mortality are unobservable. An increase in the three unobservable assumptions would result in a decrease in the fair value of the liability and conversely, if there is a decrease in the assumptions the fair value would increase. The fair value is also dependent on the assumed policyholder utilization of the GLWB where an increase in assumed utilization would result in an increase in the fair value of the liability and conversely, if there is a decrease in the assumption, the fair value would decrease.

The fair value of the FIA embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the FIA embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and nonperformance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

The fair value of the IUL embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the IUL embedded derivative is sensitive to non-performance risk, which is unobservable. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and non-performance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns.

F-41

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2021, for which the Company has used significant unobservable inputs (Level 3):


			Total				Total
			Realized and Unrealized				Realized and Unrealized
			Gains				Losses
					Included in				Included in
					Other				Other
	Beginning		Included in		Comprehensive		Included in		Comprehensive
	Balance		Net Income		Income		Net Income		Income

	(Dollars In Millions)
Assets:
Fixed maturity securities AFS
Residential mortgage-backed securities	$	0	$	0	$	0	$	0	$	0
Commercial mortgage-backed securities		32		0		0		0		(2)
Other asset-backed securities		435		0		3		0		(1)
Corporate securities		1,432		0		11		0		(34)
Total fixed maturity securities — AFS		1,899		0		14		0		(37)
Fixed maturity securities — trading
Other asset-backed securities		71		0		3		0		0
Other government-related securities		0		0		0		0		0
Corporate securities		18		0		0		0		(1)
Total fixed maturity securities — trading		89		0		3		0		(1)
Total fixed maturity securities		1,988		0		17		0		(38)
Equity securities		101		0		0		0		0
Other long-term investments(1)		298		185		0		(188)		0
Total investments		2,387		185		17		(188)		(38)
Total assets measured at fair value on a recurring basis	$	2,387	$	185	$	17	$	(188)	$	(38)
Liabilities:
Annuity account balances(2)	$	67	$	0	$	0	$	(4)	$	0
Other liabilities(1)		2,239		877		0		(577)		0
Total liabilities measured at fair value on a recurring basis	$	2,306	$	877	$	0	$	(581)	$	0

(1)	Represents certain freestanding and embedded derivatives.

(2)	Represents liabilities related to fixed indexed annuities.

For the year ended December 31, 2021, there were $336 million of securities transferred into Level 3 from Level 2. These transfers resulted from securities that were priced by independent pricing services or brokers in previous periods but were priced internally using significant unobservable inputs where market observable inputs were not available as of December 31, 2021.

F-42

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

For the year ended December 31, 2021, there were $38 million of securities transferred into Level 2 from Level 3.


															Total Gains
															(losses)
															included in
															Net Income
															Related to
															Instruments
									Transfers						Still Held at
									in/out of				Ending		the Reporting
	Purchases		Sales		Issuances		Settlements		Level 3		Other		Balance		Date

	(Dollars In Millions)
Assets:
Fixed maturity securities AFS
Residential mortgage-backed securities	$	40	$	0	$	0	$	0	$	0	$	0	$	40	$	0
Commercial mortgage-backed securities		0		0		0		0		150		0		180		0
Other asset-backed securities		67		(4)		0		0		14		1		515		0
Corporate securities		274		(212)		0		0		112		(1)		1,582		0
Total fixed maturity securities — AFS		381		(216)		0		0		276		0		2,317		0
Fixed maturity securities — trading
Other asset-backed securities		22		(19)		0		0		16		0		93		0
Other government-related securities		0		0		0		0		16		0		16		0
Corporate securities		2		(6)		0		0		(5)		0		8		0
Total fixed maturity securities — trading		24		(25)		0		0		27		0		117		0
Total fixed maturity securities		405		(241)		0		0		303		0		2,434		0
Equity securities		91		(32)		0		0		(5)		0		155		0
Other long-term investments(1)		0		0		0		0		0		0		295		(3)
Total investments		496		(273)		0		0		298		0		2,884		(3)
Total assets measured at fair value on a recurring basis	$	496	$	(273)	$	0	$	0	$	298	$	0	$	2,884	$	(3)
Liabilities:
Annuity account balances(2)	$	0	$	0	$	0	$	8	$	0	$	0	$	63	$	0
Other liabilities(1)		0		0		0		0		0		0		1,939		300
Total liabilities measured at fair value on a recurring basis	$	0	$	0	$	0	$	8	$	0	$	0	$	2,002	$	300

F-43

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2020, for which the Company has used significant unobservable inputs (Level 3):


			Total				Total
			Realized and Unrealized				Realized and Unrealized
			Gains				Losses
					Included in
					Other				Included In
	Beginning		Included in		Comprehensive		Included in		Other Comprehensive
	Balance		Net Income		Income		Net Income		Income

	(Recast)
	(Dollars In Millions)
Assets:
Fixed maturity securities AFS
Commercial mortgage-backed securities	$	10	$	0	$	1	$	0	$	(1)
Other asset-backed securities		421		0		8		0		(13)
Corporate securities		1,374		0		135		0		(83)
Total fixed maturity securities — AFS		1,805		0		144		0		(97)
Fixed maturity securities — trading
Other asset-backed securities		65		6		0		(9)		0
Corporate securities		11		1		0		0		0
Total fixed maturity securities — trading		76		7		0		(9)		0
Total fixed maturity securities		1,881		7		144		(9)		(97)
Equity securities		73		1		0		0		0
Other long-term investments(1)		292		404		0		(300)		0
Total investments		2,246		412		144		(309)		(97)
Total assets measured at fair value on a recurring basis	$	2,246	$	412	$	144	$	(309)	$	(97)
Liabilities:
Annuity account balances(2)	$	70	$	0	$	0	$	(3)	$	0
Other liabilities(1)		1,332		926		0		(1,833)		0
Total liabilities measured at fair value on a recurring basis	$	1,402	$	926	$	0	$	(1,836)	$	0

(1)	Represents certain freestanding and embedded derivatives.

(2)	Represents liabilities related to fixed indexed annuities.

For the year ended December 31, 2020, there were $184 million of securities transferred into Level 3 from Level 2. These transfers resulted from securities that were priced by independent pricing services or brokers in previous periods but were priced internally using significant unobservable inputs where market observable inputs were not available as of December 31, 2020.

F-44

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

For the year ended December 31, 2020, there were $1 million of securities transferred into Level 2 from Level 3.


															Total Gains
															(losses)
															included in
															Net Income
															Related to
															Instruments
									Transfers						Still Held at
									in/out of				Ending		the Reporting
	Purchases		Sales		Issuances		Settlements		Level 3		Other		Balance		Date

	(Recast)
	(Dollars In Millions)
Assets:
Fixed maturity securities AFS
Commercial mortgage-backed securities	$	0	$	0	$	0	$	0	$	22	$	0	$	32	$	0
Other asset-backed securities		0		(2)		0		0		22		(1)		435		0
Corporate securities		436		(562)		0		0		135		(3)		1,432		0
Total fixed maturity securities — AFS		436		(564)		0		0		179		(4)		1,899		0
Fixed maturity securities — trading
Other asset-backed securities		12		(2)		0		0		(1)		0		71		2
Corporate securities		8		(2)		0		0		0		0		18		0
Total fixed maturity securities — trading		20		(4)		0		0		(1)		0		89		2
Total fixed maturity securities		456		(568)		0		0		178		(4)		1,988		2
Equity securities		27		(5)		0		0		5		0		101		0
Other long-term investments(1)		41		(135)		0		(4)		0		0		298		81
Total investments		524		(708)		0		(4)		183		(4)		2,387		83
Total assets measured at fair value on a recurring basis	$	524	$	(708)	$	0	$	(4)	$	183	$	(4)	$	2,387	$	83
Liabilities:
Annuity account balances(2)	$	0	$	0	$	0	$	6	$	0	$	0	$	67	$	0
Other liabilities(1)		0		0		0		0		0		0		2,239		(906)
Total liabilities measured at fair value on a recurring basis	$	0	$	0	$	0	$	6	$	0	$	0	$	2,306	$	(906)

Total realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either net gains (losses) — investments and derivatives within the consolidated statements of income or other comprehensive income within shareowner’s equity based on the appropriate accounting treatment for the item.

Purchases, sales, issuances, and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily relates to purchases and sales of fixed maturity securities and issuances and settlements of fixed indexed annuities.

F-45

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. The asset transfers in the table(s) above primarily related to positions moved from Level 3 to Level 2 as the Company determined that certain inputs were observable.

The amount of total gains (losses) for assets and liabilities still held as of the reporting date primarily represents changes in fair value of trading securities and certain derivatives that exist as of the reporting date and the change in fair value of fixed indexed annuities.

Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments that are not reported at fair value as of the periods shown below are as follows:


		As of December 31,
		2021				2020
	Fair Value	Carrying				Carrying
	Level	Amounts		Fair Values		Amounts		Fair Values

	(Dollars In Millions)
Assets:
Commercial mortgage loans(1)	3	$	10,863	$	11,386	$	10,006	$	10,788
Policy loans	3		1,527		1,527		1,593		1,593
Other long-term investments(2)	3		1,930		1,990		1,186		1,283
Liabilities:
Stable value product account balances	3	$	8,526	$	8,598	$	6,056	$	6,231
Future policy benefits and claims(3)	3		1,457		1,504		1,580		1,603
Other policyholders' funds(4)	3		102		108		102		108
Debt:(5)
Subordinated funding obligations	3	$	110	$	116	$	110	$	121

Except as noted below, fair values were estimated using quoted market prices.

(1)	The carrying amount is net of allowance for credit losses.

(2)

Other long-term investments represents a modco receivable, which is related to invested assets such as fixed income and structured securities, which are legally owned by the ceding company. The fair value is determined in a manner consistent with other similar invested assets held by the Company. In addition, it includes the cash surrender value of the Company’s COLI policy.

(3)	Single premium immediate annuity without life contingencies.

(4)	Supplementary contracts without life contingencies.

(5)	Excludes immaterial capital lease obligations.

Fair Value Measurements

Commercial Mortgage Loans

The Company estimates the fair value of commercial mortgage loans using an internally developed model. This model includes inputs derived by the Company based on assumed discount rates relative to the Company’s current commercial mortgage loan lending rate and an expected cash flow analysis based on a review of the commercial mortgage loan terms. The model also contains the Company’s determined representative risk adjustment assumptions related to credit and liquidity risks.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS – (Continued)

Policy Loans

The Company believes the fair value of policy loans approximates book value. Policy loans are funds provided to policyholders in return for a claim on the policy. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of repayments, the Company believes the carrying value of policy loans approximates fair value.

Other Long-Term Investments

In addition to free-standing and embedded derivative financial instruments discussed above, other long-term investments includes $1.2 billion of amounts receivable under certain modified coinsurance agreements and $710 million cash surrender value of the Company’s COLI policies. The amounts receivable under the modified coinsurance agreements represent funds withheld in connection with certain reinsurance agreements in which the Company acts as the reinsurer. Under the terms of these agreements, assets equal to statutory reserves are withheld and legally owned by the ceding company, and any excess or shortfall is settled periodically. In some cases, these modified coinsurance agreements contain embedded derivatives which are discussed in more detail above. The fair value of amounts receivable under modified coinsurance agreements, including the embedded derivative component, correspond to the fair value of the underlying assets withheld. The COLI amounts are based on the fair value of the underlying assets.

Stable Value Product and Other Investment Contract Balances

The Company estimates the fair value of stable value product account balances and other investment contract balances (included in Future policy benefits and claims as well as Other policyholders’ funds line items on our consolidated balance sheet) using models based on discounted expected cash flows. The discount rates used in the models are based on a current market rate for similar financial instruments.

Funding Obligations

The Company estimates the fair value of its subordinated and non-recourse funding obligations using internal discounted cash flow models. The discount rates used in the model are based on a current market yield for similar financial instruments.

6. DERIVATIVE FINANCIAL INSTRUMENTS

Types of Derivative Instruments and Derivative Strategies

The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through the Company’s analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into the Company’s risk management program.

Derivative instruments expose the Company to credit and market risk and could result in material changes from period to period. The Company attempts to minimize its credit in connection with its overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department.

F-47

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS – (Continued)

Derivatives Related to Interest Rate Risk Management

Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions.

Derivatives Related to Foreign Currency Exchange Risk Management

Derivatives Related to Risk Mitigation of Certain Annuity Contracts

The Company may use the following types of derivative contracts to mitigate its exposure to certain guaranteed benefits related to VA contracts, fixed indexed annuities, and indexed universal life contracts:

●	Foreign Currency Futures

●	Variance Swaps

●	Interest Rate Futures

●	Equity Options

●	Equity Futures

●	Credit Derivatives

●	Interest Rate Swaps

●	Interest Rate Swaptions

●	Volatility Futures

●	Volatility Options

●	Total Return Swaps

Other Derivatives

PLC terminated its derivatives with Golden Gate, Golden Gate II, Golden Gate V, and WCL as part of the Captive Merger and entered into a new portfolio maintenance agreement with Golden Gate, also as part of the Captive Merger. The derivatives terminated included an interest support agreement, YRT premium support agreements, and portfolio maintenance agreements.

The Company has funds withheld accounts that consist of various derivative instruments held by us that are used to hedge certain fixed indexed annuity products. The economic performance of derivatives in the funds withheld accounts are ceded PL Re. The funds withheld accounts are accounted for as a derivative financial instrument.

We believe that our asset/liability management programs and procedures and certain product features provide protection against the effects of changes in interest rates under various scenarios. Additionally, we believe our asset/liability management programs and procedures provide sufficient liquidity to enable us to fulfill our obligation to pay benefits under our various insurance and deposit contracts. However, our 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, spread movements, implied volatility, policyholder behavior, and other factors, and the effectiveness of our asset/liability management programs and procedures may be negatively affected whenever actual results differ from those assumptions.

F-48

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS – (Continued)

Accounting for Derivative Instruments

GAAP requires that all derivative instruments be recognized in the balance sheet at fair value. The Company records its derivative financial instruments in the consolidated balance sheet in other long-term investments and other liabilities. The change in the fair value of derivative financial instruments is reported either in the statement of income or in other comprehensive income (loss), depending upon whether it qualified for and also has been properly identified as being part of a hedging relationship, and also on the type of hedging relationship that exists.

It is the Company’s policy not to offset assets and liabilities associated with open derivative contracts. However, the Chicago Mercantile Exchange ("CME") rules characterize variation margin transfers as settlement payments, as opposed to adjustments to collateral. As a result, derivative assets and liabilities associated with centrally cleared derivatives for which the CME serves as the central clearing party are presented as if these derivatives had been settled as of the reporting date.

For a derivative financial instrument to be accounted for as an accounting hedge, it must be identified and documented as such on the date of designation. For cash flow hedges, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged item impacts earnings. For fair value hedge derivatives, their gain or loss as well as the offsetting loss or gain attributable to the hedged risk of the hedged item is recognized in current earnings. Effectiveness of the Company’s hedge relationships is assessed on a quarterly basis.

The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship through operations in the period of change. Changes in the fair value of those derivatives are recognized in net gains (losses) — investments and derivatives.

Derivative Instruments Designated and Qualifying as Hedging Instruments

Cash-Flow Hedges

●

To hedge a fixed rate note denominated in a foreign currency, the Company entered into a fixed-to-fixed foreign currency swap in order to hedge the foreign currency exchange risk associated with the note. The cash flows received on the swap are identical to the cash flows paid on the note.

●

To hedge a floating rate note, the Company entered into an interest rate swap to exchange the floating rate on the note for a fixed rate in order to hedge the interest rate risk associated with the note. The cash flows received on the swap are identical to the cash flow variability paid on the note.

Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments

The Company uses various other derivative instruments for risk management purposes that do not qualify for hedge accounting treatment. Changes in the fair value of these derivatives are recognized in net gains (losses) — investments and derivatives during the period of change.

F-49

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS – (Continued)

Derivatives Related to Variable Annuity Contracts

●

The Company uses equity futures, equity options, total return swaps, interest rate futures, interest rate swaps, interest rate swaptions, currency futures, currency options, volatility futures, volatility options, and variance swaps to mitigate the risk related to certain guaranteed minimum benefits, including GLWB, within its VA products. In general, the cost of such benefits varies with the level of equity and interest rate markets, foreign currency levels, and overall volatility.

●

The Company markets certain VA products with a GLWB rider. The GLWB component is considered an embedded derivative, not considered to be clearly and closely related to the host contract.

Derivatives Related to Fixed Indexed Annuity Contracts

●

The Company uses equity futures and options to mitigate the risk within its fixed indexed annuity products. In general, the cost of such benefits varies with the level of equity and overall volatility.

●

The Company markets certain fixed indexed annuity products. The FIA component is considered an embedded derivative as it is, not considered to be clearly and closely related to the host contract.

●

The Company has a funds withheld account that consists of various derivative instruments held by the Company that are used to hedge the fixed indexed annuity products. The economic performance of derivatives in the funds withheld account is ceded to PL Re. The funds withheld account is accounted for as a derivative financial instrument.

Derivatives Related to Indexed Universal Life Contracts

●

The Company uses equity futures and options to mitigate the risk within its indexed universal life products. In general, the cost of such benefits varies with the level of equity markets.

●

The Company markets certain IUL products. The IUL component is considered an embedded derivative, as it is not considered to be clearly and closely related to the host contract.

Other Derivatives

●

The Company uses various swaps and other types of derivatives to manage risk related to other exposures.

●

The Company is involved in various modified coinsurance and funds withheld arrangements which contain embedded derivatives. Changes in their fair value are recorded in net gains (losses) — investments and derivatives. The investment portfolios that support the related modified coinsurance reserves and funds withheld arrangements had fair value changes which substantially offset the gains or losses on these embedded derivatives.

●

Certain of the Company and its subsidiaries had an interest support agreement, YRT premium support agreements, and portfolio maintenance agreements with PLC through October 1, 2020. These agreements were terminated as part of the Captive Merger and a new portfolio maintenance agreement was entered into between Golden Gate and PLC on that date.

F-50

Table of Contents

PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS – (Continued)

The following table sets forth net gains and losses for the periods shown:

Gains (losses) — derivative financial instruments


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Derivatives related to VA contracts:
Interest rate futures	$	15	$	0	$	(20)
Equity futures		(12)		109		5
Currency futures		11		(10)		3
Equity options		(108)		(30)		(150)
Interest rate swaps		(136)		274		230
Total return swaps		(189)		(49)		(78)
Embedded derivative — GLWB		347		(404)		(198)
Total derivatives related to VA contracts		(72)		(110)		(208)
Derivatives related to FIA contracts:
Embedded derivative		3		(69)		(86)
Funds withheld derivative		(7)		(10)		0
Equity futures		5		(4)		2
Equity options		72		49		84
Other derivatives		(3)		(1)		0
Total derivatives related to FIA contracts		70		(35)		0
Derivatives related to IUL contracts:
Embedded derivative	$	(28)	$	4	$	(13)
Equity futures		0		(2)		0
Equity options		16		9		15
Total derivatives related to IUL contracts		(12)		11		2
Embedded derivative — Modco reinsurance treaties		64		(99)		(187)
Derivatives with PLC(1)		0		23		27
Other derivatives		(2)		15		(2)
Total gains (losses) — derivatives, net	$	48	$	(195)	$	(368)

(1)

The Company and certain of its subsidiaries had an interest support agreement, YRT premium support agreements, and portfolio maintenance agreements with PLC through October 1, 2020. These agreements were terminated as part of the Captive Merger and a new portfolio maintenance agreement was entered into with PLC on that date.

Based on expected cash flows of the underlying hedged items, the Company expects to reclassify $1 million out of accumulated other comprehensive income (loss) into net gains (losses) — investments and derivatives during the next twelve months.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. DERIVATIVE FINANCIAL INSTRUMENTS – (Continued)

The table below presents information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated financial statements for the periods presented below:


	As of December 31,
	2021				2020
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value

					(Recast)
	(Dollars In Millions)
Other long-term investments
Derivatives not designated as hedging instruments:
Interest rate swaps	$	1,478	$	72	$	1,478	$	185
Total return swaps		239		8		158		2
Derivatives with PLC(1)		4,085		0		4,076		0
Embedded derivative — Modco reinsurance treaties		1,268		62		1,249		101
Embedded derivative — GLWB		3,066		169		2,067		138
Embedded derivative — FIA		398		64		335		60
Interest rate futures		561		5		690		4
Equity futures		312		6		203		4
Currency futures		27		0		0		0
Equity options		8,852		1,061		7,208		1,142
	$	20,286	$	1,447	$	17,464	$	1,636
Other liabilities
Cash flow hedges:
Foreign currency swaps	$	117	$	13	$	117	$	10
Derivatives not designated as hedging instruments:
Interest rate swaps		1,354		0		1,354		0
Total return swaps		1,168		39		1,003		15
Embedded derivative — Modco reinsurance treaties		2,974		280		2,911		389
Funds withheld derivative		855		10		661		10
Embedded derivative — GLWB		6,833		644		7,749		960
Embedded derivative — FIA		4,372		659		3,889		633
Embedded derivative — IUL		459		269		357		201
Interest rate futures		729		4		415		3
Equity futures		42		1		190		5
Currency futures		158		2		264		4
Equity options		7,044		771		5,499		834
Other		448		87		304		55
	$	26,553	$	2,779	$	24,713	$	3,119

(1)

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. OFFSETTING OF ASSETS AND LIABILITIES

Certain of the Company’s derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Company and a counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event either minimum thresholds, or in certain cases ratings levels, have been reached. Additionally, certain of the Company’s repurchase agreements provide for net settlement on termination of the agreement. Refer to Note 14, Debt and Other Obligations for details of the Company’s repurchase agreement programs.

Collateral received includes both cash and non-cash collateral. Cash collateral received by the Company is recorded on the consolidated balance sheet as "cash", with a corresponding amount recorded in "other liabilities" to represent the Company’s obligation to return the collateral. Non-cash collateral received by the Company is not recognized on the consolidated balance sheet unless the Company exercises its right to sell or re-pledge the underlying asset. As of December 31, 2021 and 2020, there was no fair value of non-cash collateral received.

The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2021:


					Net Amounts
			Gross		of Assets		Gross Amounts
	Gross		Amounts		Presented in		Not Offset
	Amounts Off		Offset in the		the		in the Balance Sheet
	Recognized		Balance		Balance		Financial		Collateral
	Assets		Sheet		Sheet		Instruments		Received		Net Amount

	(Dollars In Millions)
Offsetting of Derivative Assets
Derivatives:
Free-Standing derivatives	$	1,152	$	0	$	1,152	$	806	$	178	$	168
Total derivatives, subject to a master netting arrangement or similar arrangement		1,152		0		1,152		806		178		168
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative — Modco reinsurance treaties		62		0		62		0		0		62
Embedded derivative — GLWB		169		0		169		0		0		169
Derivatives with PLC		0		0		0		0		0		0
Embedded derivative — FIA		64		0		64		0		0		64
Total derivatives, not subject to a master netting arrangement or similar arrangement		295		0		295		0		0		295
Total derivatives		1,447		0		1,447		806		178		463
Total Assets	$	1,447	$	0	$	1,447	$	806	$	178	$	463

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. OFFSETTING OF ASSETS AND LIABILITIES – (Continued)


					Net Amounts
			Gross		of Assets		Gross Amounts
	Gross		Amounts		Presented in		Not Offset
	Amounts Off		Offset in the		the		in the Balance Sheet
	Recognized		Balance		Balance		Financial		Collateral
	Assets		Sheet		Sheet		Instruments		Received		Net Amount

	(Dollars In Millions)
Offsetting of Derivative Liabilities
Derivatives:
Free-Standing derivatives	$	830	$	0	$	830	$	806	$	22	$	2
Total derivatives, subject to a master netting arrangement or similar arrangement		830		0		830		806		22		2
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative — Modco reinsurance treaties		280		0		280		0		0		280
Funds withheld derivative		10		0		10		0		0		10
Embedded derivative — GLWB		644		0		644		0		0		644
Embedded derivative — FIA		659		0		659		0		0		659
Embedded derivative — IUL		269		0		269		0		0		269
Other		87		0		87		0		0		87
Total derivatives, not subject to a master netting arrangement or similar arrangement		1,949		0		1,949		0		0		1,949
Total derivatives		2,779		0		2,779		806		22		1,951
Repurchase agreements(1)		1,393		0		1,393		0		0		1,393
Total Liabilities	$	4,172	$	0	$	4,172	$	806	$	22	$	3,344

(1)	Borrowings under repurchase agreements are for a term less than 90 days.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. OFFSETTING OF ASSETS AND LIABILITIES – (Continued)

The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2020.


					Net Amounts
			Gross		of Assets		Gross Amounts
	Gross		Amounts		Presented in		Not Offset
	Amounts Off		Offset in the		the		in the Balance Sheet
	Recognized		Balance		Balance		Financial		Collateral
	Assets		Sheet		Sheet		Instruments		Received		Net Amount

	(Recast)
	(Dollars In Millions)
Offsetting of Derivative Assets
Derivatives:
Free-Standing derivatives	$	1,337	$	0	$	1,337	$	865	$	290	$	182
Total derivatives, subject to a master netting arrangement or similar arrangement		1,337		0		1,337		865		290		182
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative — Modco reinsurance treaties		101		0		101		0		0		101
Embedded derivative — GLWB		138		0		138		0		0		138
Other		60		0		60		0		0		60
Total derivatives, not subject to a master netting arrangement or similar arrangement		299		0		299		0		0		299
Total derivatives		1,636		0		1,636		865		290		481
Total Assets	$	1,636	$	0	$	1,636	$	865	$	290	$	481

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. OFFSETTING OF ASSETS AND LIABILITIES – (Continued)


					Net Amounts
			Gross		of Assets		Gross Amounts
	Gross		Amounts		Presented in		Not Offset
	Amounts Off		Offset in the		the		in the Balance Sheet
	Recognized		Balance		Balance		Financial		Collateral
	Assets		Sheet		Sheet		Instruments		Received		Net Amount

	(Recast)
	(Dollars In Millions)
Offsetting of Derivative Liabilities
Derivatives:
Free-Standing derivatives	$	871	$	0	$	871	$	865	$	4	$	2
Total derivatives, subject to a master netting arrangement or similar arrangement		871		0		871		865		4		2
Derivatives not subject to a master netting arrangement or similar arrangement
Embedded derivative — Modco reinsurance treaties		389		0		389		0		0		389
Funds withheld derivative		10		0		10		0		0		10
Embedded derivative — GLWB		960		0		960		0		0		960
Embedded derivative — FIA		633		0		633		0		0		633
Embedded derivative — IUL		201		0		201		0		0		201
Other		55		0		55		0		0		55
Total derivatives, not subject to a master netting arrangement or similar arrangement		2,248		0		2,248		0		0		2,248
Total derivatives		3,119		0		3,119		865		4		2,250
Repurchase agreements(1)		437		0		437		0		0		437
Total Liabilities	$	3,556	$	0	$	3,556	$	865	$	4	$	2,687

(1)	Borrowings under repurchase agreements are for a term less than 90 days.

8.COMMERCIAL MORTGAGE LOANS

The Company invests a portion of its investment portfolio in commercial mortgage loans. As of December 31, 2021, the Company’s commercial mortgage loan holdings were $11.0 billion, or $10.9 billion net of allowance for credit losses. As of December 31, 2020, the Company’s commercial mortgage loan holdings were $10.2 billion, $10 billion net of allowance for credit losses. The Company specializes in making commercial mortgage loans on credit-oriented commercial properties. The Company’s underwriting procedures relative to its commercial mortgage loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate asset types associated with the necessities of life (grocery anchored and credit tenant retail, industrial, multi-family, senior living, and credit tenant and medical office). The Company believes that these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. The majority of the Company’s commercial mortgage loan portfolio was underwritten by the Company. From time to time, the Company may acquire commercial mortgage loans in conjunction with an acquisition.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.COMMERCIAL MORTGAGE LOANS – (Continued)

The following table includes a breakdown of the Company’s commercial mortgage loan portfolio by property type as of December 31:


	Percentage of
	Commercial
	Mortgage Loans
Type	2021		2020
Retail	30.3	%	34.9	%
Office buildings	13.8		15.1
Apartments	17.2		12.7
Warehouses	16.5		16.0
Senior housing	17.0		16.2
Other	5.2		5.1
	100.0	%	100.0	%

The Company specializes in making commercial mortgage loans on credit-oriented commercial properties. NaN single tenant’s exposure represents more than 0.9% of the commercial mortgage loan portfolio.

The following states represent the primary locations of the Company’s commercial mortgage loans as of December 31:


Percentage of Commercial Mortgage Loans
State	2021		State	2020
California	10.1	%	California	11.3	%
Texas	7.3		Texas	7.3
Florida	7.2		Alabama	6.7
Alabama	6.3		Florida	6.2
North Carolina	5.6		Georgia	5.3
Ohio	4.6		North Carolina	4.9
Michigan	4.6		Ohio	4.7
Georgia	4.2		Michigan	4.4
Utah	4.0		Utah	4.2
Tennessee	3.5		Tennessee	3.5
	57.4	%		58.5	%

During the year ended December 31, 2021, the Company funded $2.0 billion of new commercial mortgage loans, with an average commercial mortgage loan size of $11 million. The average size commercial mortgage loan in the portfolio as of December 31, 2021, was $6 million and the weighted-average interest rate was 4.1%. The largest single commercial mortgage loan at December 31, 2021 was $78 million.

During the year ended December 31, 2020, the Company funded $1.4 billion of new commercial mortgage loans loans, with an average loan size of $8 million. The average size commercial mortgage loan in the portfolio as of December 31, 2020, was $6 million and the weighted-average interest rate was 4.3%. The largest single commercial mortgage loan at December 31, 2020 was $78 million.

During the year ended December 31, 2019, the Company funded $1.2 billion of new commercial mortgage loans, with an average loan size of $8 million. The average size commercial mortgage loan in the portfolio as of December 31, 2019, was $5 million and the weighted-average interest rate was 4.5%. The largest single commercial mortgage loan at December 31, 2019 was $78 million.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.COMMERCIAL MORTGAGE LOANS – (Continued)

Certain of the commercial mortgage loans have call options that occur within the next eight years. However, if interest rates were to significantly increase, the Company may be unable to exercise the call options on its existing commercial mortgage loans commensurate with the significantly increased market rates. Assuming the commercial mortgage loans are called at their next call dates, $116 million would become due in 2022, $379 million in 2023 through 2027, and $6 million in 2028 through 2029.

The Company offers a type of commercial mortgage loan under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of December 31, 2021 and 2020, $600 million and $806 million, respectively, of the Company’s total commercial mortgage loans principal balance have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the years ended December 31, 2021, 2020, and 2019, the Company recognized $54 million, $26 million, and $23 million of participation commercial mortgage loan income, respectively.

As of December 31, 2021, the Company did not have any commercial mortgage loans that were nonperforming, restructured, or foreclosed and converted to real estate properties. As of December 31, 2020, $3 million of invested assets consisted of commercial mortgage loans that were nonperforming, restructured or foreclosed and converted to real estate properties. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities. For all commercial mortgage loans, the impact of troubled debt restructurings is reflected in our investment balance and in the allowance for commercial mortgage loan credit losses.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized 1, 4, and 4 troubled debt restructurings transactions, respectively, as a result of granting concessions to borrowers which included loan terms unavailable from other lenders. These concessions were the result of agreements between the creditor and the debtor. The Company did not identify any commercial mortgage loans whose principal was permanently impaired during the year ended December 31, 2021 and identified one loan that was permanently impaired during the year ended December 31, 2020.

The Company provides certain relief under the Coronavirus Aid Relief, and Economic Security Act (the "CARES Act"), and the Consolidated Appropriations Act (the "CAA") under its COVID-19 Commercial Mortgage Loan Program (the "Loan Modification Program"). During the year ended December 31, 2021, the Company modified 23 commercial mortgage loans under the Loan Modification Program, representing $475 million in unpaid principal balance. As of December 31, 2021, since the inception of the CARES Act, there were 268 total commercial mortgage loans modified under the Loan Modification Program, representing $2.0 billion in unpaid principal balance. At December 31, 2021, $1.9 billion of these loans have resumed regular principal and interest payments in accordance with the terms of the modification agreements and the Company expects the remaining $69 million in unpaid principal on commercial mortgage loans to resume scheduled payments in accordance with the agreed upon terms. The modifications under this program include agreements to defer principal payments only and/or to defer principal and interest payments for a specified period of time. None of these modifications were considered troubled debt restructurings.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.COMMERCIAL MORTGAGE LOANS – (Continued)

As of December 31, 2021 and 2020, the amortized cost basis of the Company’s commercial mortgage loan receivables by origination year, net of the allowance, for credit losses is as follows:


	Term Loans Amortized Cost Basis by Origination Year
	2021		2020		2019		2018		2017		Prior		Total

	(Dollars In Millions)
As of December 31, 2021
Commercial mortgage loans:
Performing	$	2,063	$	1,439	$	2,034	$	1,404	$	1,224	$	2,802	$	10,966
Non-performing		0		0		0		0		0		0		0
Amortized cost	$	2,063	$	1,439	$	2,034	$	1,404	$	1,224	$	2,802	$	10,966
Allowance for credit losses		(12)		(10)		(21)		(18)		(12)		(30)		(103)
Total commercial mortgage loans	$	2,051	$	1,429	$	2,013	$	1,386	$	1,212	$	2,772	$	10,863


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Total

	(Dollars In Millions)
As of December 31, 2020
Commercial mortgage loans:
Performing	$	1,463	$	2,442	$	1,577	$	1,344	$	943	$	2,458	$	10,227
Non-performing		0		0		0		0		0		1		1
Amortized cost	$	1,463	$	2,442	$	1,577	$	1,344	$	943	$	2,459	$	10,228
Allowance for credit losses		(21)		(46)		(55)		(37)		(25)		(38)		(222)
Total commercial mortgage loans	$	1,442	$	2,396	$	1,522	$	1,307	$	918	$	2,421	$	10,006

The following tables provide a comparative view of the key credit quality indicators of the loan-to-value and debt service coverage ratio ("DSCR") as of December 31, 2021 and 2020:


	As of December 31, 2021					As of December 31, 2020
	Amortized					Amortized
	Cost		% of Total		DSCR(2)	Cost		% of Total		DSCR(2)

	(Dollars In Millions)
Loan-to-value(1) Greater than 75%	$	285	3	%	1.32	$	399	4	%	1.29
50% - 75%		7,241	66	%	1.59		6,557	64	%	1.61
Less than 50%		3,440	31	%	2.04		3,272	32	%	2.01
Total commercial mortgage loans	$	10,966	100	%		$	10,228	100	%

(1)	The loan-to-value ratio compares the current unpaid principal of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 54% at both December 31, 2021 and December 31, 2020.

(2)	The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio for December 31, 2021 and December 31, 2020 was 1.72x and 1.72x, respectively.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.COMMERCIAL MORTGAGE LOANS – (Continued)

The following provides a summary of the rollforward of the allowance for credit losses for funded commercial mortgage loans and unfunded commercial mortgage loan commitments for the periods included.


	For The		For The
	Year Ended		Year Ended
	December 31, 2021		December 31, 2020

	(Dollars In Millions)
Allowance for Funded Commercial Mortgage Loan Credit Losses
Beginning balance	$	222	$	5
Cumulative effect adjustment		0		80
Charge offs		0		0
Recoveries		(7)		(3)
Provision		(112)		140
Ending balance	$	103	$	222
Allowance for Unfunded Commercial Mortgage Loan Commitments Credit Losses
Beginning balance	$	22	$	0
Cumulative effect adjustment		0		10
Charge offs		0		0
Recoveries		0		0
Provision		(17)		12
Ending balance	$	5	$	22

As of December 31, 2021, the Company had 1 commercial mortgage loan of $28 million that was 30-59 days delinquent. As of December 31, 2020, the Company had 1 commercial mortgage loan of $1 million that was 60-89 days delinquent.

The Company’s commercial mortgage loan portfolio consists of commercial mortgage loans that are collateralized by real estate. Due to the collateralized nature of the commercial mortgage loans, any assessment of impairment and ultimate loss given a default on the commercial mortgage loans is based upon a consideration of the estimated fair value of the real estate.

The Company limits accrued interest income on commercial mortgage loans to ninety days of interest. For loans in nonaccrual status, interest income is recognized on a cash basis. For the year ended December 31, 2021, the Company did not have any of accrued interest was excluded from the amortized cost basis pursuant to the Company’s nonaccrual policy.

As of December 31, 2021, the Company did not have any commercial mortgage loans in nonaccrual status. As of December 31, 2020, the Company had 1 commercial mortgage loan in nonaccrual status with no related allowance recorded. The recorded investment, unpaid principal balance, and average recorded investment was $1 million.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred Policy Acquisition Costs

The balances and changes in DAC are as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Balance, beginning of period	$	1,628	$	1,480
Capitalization of commissions, sales, and issue expenses		550		459
Amortization		(200)		(163)
Change due to unrealized gains and losses		105		(152)
Implementation of ASU 2016‑13		0		4
Balance, end of period	$	2,083	$	1,628

Value of Business Acquired

The balances and changes in VOBA are as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Balance, beginning of period	$	1,792	$	2,040
Amortization		(109)		(45)
Change due to unrealized gains and losses		80		(192)
Other		23		(11)
Balance, end of period	$	1,786	$	1,792

Based on the balance recorded as of December 31, 2021, the expected amortization of VOBA for the next five years is as follows:


	Expected
Years	Amortization
	(Dollars In Millions)
2022	$	121
2023		123
2024		123
2025		116
2026		99

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. GOODWILL

The changes in the carrying value of goodwill by segment are as follows:


	Retail Life				Stable Value		Asset		Total
	and Annuity		Acquisitions		Products		Protection		Consolidated

	(Dollars In Millions)
Balance as of December 31, 2019	$	559	$	24	$	114	$	129	$	826
Balance as of December 31, 2020		559		24		114		129		826
Impairment		(129)		0		0		0		(129)
Balance as of December 31, 2021	$	430	$	24	$	114	$	129	$	697

In connection with its annual goodwill impairment testing, the Company elected to perform a quantitative assessment of goodwill associated with the reporting units within the Retail Life and Annuity segment, in which the fair value of each reporting unit was compared to that reporting unit’s carrying amount, including goodwill. To estimate the fair value of the reporting units, the Company utilized the income (i.e. discounted cash flow) valuation approach. This quantitative assessment indicated that an impairment existed as of December 31, 2021 within the Retirement reporting unit primarily due to the impact of interest rates and a longer period of sustained equity volatility on the weighted-average cost of capital used to discount the reporting unit’s cash flows. Guidance in ASC 350-20, Intangibles-Goodwill and Other, requires that an impairment loss be recognized in the amount that the carrying amount of a reporting unit exceeds its fair value. As a result, the Company recorded a non-cash impairment charge of $129 million.

The Company also performed its annual qualitative evaluation of goodwill with respect to its other reporting units based on the circumstances that existed as of October 1, 2021 and determined that there was no indication that the goodwill was associated with the other reporting units more likely than not impaired and therefore no adjustment to impair goodwill was necessary. The Company has assessed whether events have occurred subsequent to October 1, 2021 that would impact the Company’s conclusions and no such events were identified.

11. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS

The Company issues variable universal life and VA products through its separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder. The Company also offers, for our VA products, certain GMDB riders. The most significant of these guarantees involve 1) return of the highest anniversary date account value, or 2) return of the greater of the highest anniversary date account value or the last anniversary date account value compounded at 5% interest or 3) return of premium. The GLWB rider provides the contract holder with protection against certain adverse market impacts on the amount they can withdraw and is classified as an embedded derivative and is carried at fair value on the Company’s balance sheet. The VA separate account balances subject to GLWB were $9.2 billion and $8.9 billion as of December 31, 2021 and 2020, respectively. For more information regarding the valuation of and income impact of GLWB, please refer to Note 2, Summary of Significant Accounting Policies, Note 5, Fair Value of Financial Instruments, and Note 6, Derivative Financial Instruments.

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 6.73%, age-based mortality from the Ruark 2015 ALB table adjusted for company and industry experience, lapse rates determined by a dynamic formula, and an average discount rate of 4.85%. Changes in the GMDB reserve are included in benefits and settlement expenses in the accompanying consolidated statements of income.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS – (Continued)

The VA separate account balances subject to GMDB were $14.6 billion and $14.8 billion as of December 31, 2021 and 2020, respectively. The total GMDB amount payable based on VA account balances as of December 31, 2021 and 2020, was $85 million and $126 million with a GMDB reserve of $38 million and $43 million, respectively. The average attained age of contract holders as of December 31, 2021 and 2020 for the Company was 73 and 72.

These amounts exclude certain VA business which has been 100% reinsured to Commonwealth Annuity and Life Insurance Company (formerly known as Allmerica Financial Life Insurance and Annuity Company) ("CALIC") under a Modco agreement. The guaranteed amount payable associated with the annuities reinsured to CALIC was $6 million and $6 million, as of December 31, 2021 and 2020, respectively. The average attained age of contract holders as of December 31, 2021 and 2020, was 69 and 69.

Activity relating to GMDB reserves (excluding those 100% ceded under the Modco agreement) is as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Beginning balance	$	43	$	46	$	44
Great West beginning balance		0		0		7
Incurred guarantee benefits		0		2		(1)
Less: Paid guarantee benefits		5		5		4
Ending balance	$	38	$	43	$	46

Account balances of variable annuities with guarantees invested in VA separate accounts are as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Equity funds	$	9,732	$	10,425
Fixed income funds		5,236		4,631
Total	$	14,968	$	15,056

Certain of the Company’s fixed annuities and universal life products have a sales inducement in the form of a retroactive interest credit ("RIC"). In addition, certain annuity contracts provide a sales inducement in the form of a bonus interest credit. 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 DAC.

Activity in the Company’s deferred sales inducement asset, recorded on the balance sheet in other assets was as follows:


	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Deferred asset, beginning of period	$	41	$	43	$	40
Amounts deferred		3		2		6
Amortization		(7)		(4)		(3)
Deferred asset, end of period	$	37	$	41	$	43

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. MONY CLOSED BLOCK OF BUSINESS

In 1998, MONY Life Insurance Company ("MONY") converted from a mutual insurance company to a stock corporation ("demutualization"). In connection with its demutualization, an accounting mechanism known as a closed block (the "Closed Block") was established for certain individuals’ participating policies in force as of the date of demutualization. Assets, liabilities, and earnings of the Closed Block are specifically identified to support its participating policyholders. The Company acquired the Closed Block in conjunction with the acquisition of MONY in 2013.

Assets allocated to the Closed Block inure solely to the benefit of the Closed Block’s policyholders and will not revert to the benefit of MONY or the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of MONY’s general account, any of MONY’s separate accounts or any affiliate of MONY without the approval of the Superintendent of The New York State Department of Financial Services (the "Superintendent"). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the general account.

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in AOCI) at the acquisition date of October 1, 2013, represented the estimated maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. In connection with the acquisition of MONY, the Company developed an actuarial calculation of the expected timing of MONY’s Closed Block’s earnings as of October 1, 2013. Pursuant to the acquisition of the Company by Dai-ichi Life on February 1, 2015, this actuarial calculation of the expected timing of MONY’s Closed Block earnings was recalculated and reset on that date, along with the establishment of a policyholder dividend obligation as of such date.

If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in the Company’s net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of VOBA, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. MONY CLOSED BLOCK OF BUSINESS – (Continued)

Summarized financial information for the Closed Block is as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Closed block liabilities
Future policy benefits, policyholders’ account balances and other policyholder liabilities	$	5,277	$	5,406
Policyholder dividend obligation		401		580
Other liabilities		10		7
Total closed block liabilities		5,688		5,993
Closed block assets
Fixed maturities, available-for-sale, at fair value		4,633		4,903
Commercial mortgage loans on real estate		68		68
Policy loans		557		596
Cash and other invested assets		73		46
Other assets		83		91
Total closed block assets		5,414		5,704
Excess of reported closed block liabilities over closed block assets		274		289
Portion of above representing accumulated other comprehensive income:
Net unrealized investments gains (losses) net of policyholder dividend obligation: $323 and $493; and net of income tax: $(68) and $(104)		0		0
Future earnings to be recognized from closed block assets and closed block liabilities	$	274	$	289

Reconciliation of the policyholder dividend obligation is as follows:


	For The Year Ended
	December 31,
	2021		2020

	(Dollars In Millions)
Policyholder dividend obligation, beginning balance	$	580	$	279
Applicable to net revenue		(9)		(25)
Change in net unrealized investment gains allocated to policyholder dividend obligation		(170)		326
Policyholder dividend obligation, ending balance	$	401	$	580

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. MONY CLOSED BLOCK OF BUSINESS – (Continued)

Closed Block revenues and expenses were as follows:


	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Revenues
Premiums and other income	$	144	$	154	$	162
Net investment income		189		202		207
Net gains (losses) — investments and derivatives		28		(2)		(2)
Total revenues		361		354		367
Benefits and other deductions
Benefits and settlement expenses		342		332		337
Other operating expenses		1		2		1
Total benefits and other deductions		343		334		338
Net revenues before income taxes		18		20		29
Income tax expense		5		4		6
Net revenues	$	13	$	16	$	23

13. REINSURANCE

The Company reinsures certain of its risks with (cedes), and assumes risks from, other insurers under yearly renewable term, coinsurance, and modified coinsurance agreements. Under yearly renewable term agreements, the Company reinsures only the mortality risk, while under coinsurance the Company reinsures a proportionate share of all risks arising under the reinsured policy. Under coinsurance, the reinsurer receives a proportionate share of the premiums less commissions and is liable for a corresponding share of all benefit payments. Modified coinsurance is accounted for in a manner similar to coinsurance except that the liability for future policy benefits is held by the ceding company, and settlements are made on a net basis between the companies.

Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to us under the terms of the reinsurance agreements. The Company monitors the concentration of credit risk the Company has with any reinsurer, as well as the financial condition of its reinsurers. As of December 31, 2021, the Company had reinsured approximately 22% of the face value of its life insurance in-force. The Company has reinsured approximately 10% of the face value of its life insurance in-force with the following 3 reinsurers:

●	Security Life of Denver Insurance Co. (currently administered by Hannover Re)

●	Swiss Re Life & Health America Inc.

●	The Lincoln National Life Insurance Co. (currently administered by Swiss Re Life & Health America Inc.)

The Company has not experienced any credit losses for the years ended December 31, 2021, 2020, or 2019 related to these reinsurers. The Company has set limits on the amount of insurance retained on the life of any one person. The amount of insurance retained by the Company on any one life on traditional life insurance was $500,000 in years prior to mid-2005. In 2005, this retention amount was increased to $1,000,000 for certain policies, and during 2008, it was increased to $2,000,000 for certain policies. During 2016, the retention amount was increased to $5,000,000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. REINSURANCE – (Continued)

Reinsurance premiums, commissions, expense reimbursements, benefits, and reserves related to reinsured long-duration contracts are accounted for over the life of the underlying reinsured contracts using assumptions consistent with those used to account for the underlying contracts. The cost of reinsurance related to short-duration contracts is accounted for over the reinsurance contract period. Amounts recoverable from reinsurers, for both short- and long-duration reinsurance arrangements, are estimated in a manner consistent with the claim liabilities and policy benefits associated with reinsured policies.

The following table presents total net life insurance in-force:


	As of December 31,
	2021			2020

	(Dollars In Millions)
Direct life insurance in-force	$	829,253		$	785,197
Amounts assumed from other companies		191,110			206,050
Amounts ceded to other companies		(222,865)			(244,588)
Net life insurance in-force	$	797,498		$	746,659
Percentage of amount assumed to net		24	%		28	%

The following table reflects the effect of reinsurance on life, accident/health, and property and liability insurance premiums written and earned:


					Assumed
			Ceded to		from
	Gross		Other		Other		Net
	Amount		Companies		Companies		Amount

	(Dollars In Millions)
For The Year Ended December 31, 2021
Premiums and policy fees:
Life insurance	$	2,843	$	(1,113)	$	1,037	$	2,767	(1)
Accident/health insurance		32		(19)		28		41
Property and liability insurance		281		(188)		1		94
Total	$	3,156	$	(1,320)	$	1,066	$	2,902
For The Year Ended December 31, 2020 (Recast)
Premiums and policy fees:
Life insurance	$	2,661	$	(826)	$	934	$	2,769	(1)
Accident/health insurance		37		(23)		90		104
Property and liability insurance		279		(178)		2		103
Total	$	2,977	$	(1,027)	$	1,026	$	2,976
For The Year Ended December 31, 2019 (Recast)
Premiums and policy fees:
Life insurance	$	2,853	$	(1,312)	$	836	$	2,377	(1)
Accident/health insurance		42		(90)		41		(7)
Property and liability insurance		281		(106)		3		178
Total	$	3,176	$	(1,508)	$	880	$	2,548

(1)	Includes annuity policy fees of $199 million, $163 million, and $164 million, for the years ended December 31, 2021, 2020, and 2019, respectively.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. REINSURANCE – (Continued)

As of December 31, 2021 and 2020, policy and claim reserves relating to insurance ceded of $4.6 billion and $4.7 billion, respectively, are included in reinsurance receivables. Should any of the reinsurers be unable to meet its obligation at the time of the claim, the Company would be obligated to pay such claims. As of December 31, 2021 and 2020, the Company had paid $157 million and $135 million, respectively, of ceded benefits which are recoverable from reinsurers. In addition, as of December 31, 2021 and 2020, the Company had receivables of $64 million and $64 million, respectively, related to insurance assumed.

The Company’s third party reinsurance receivables amounted to $4.5 billion and $4.6 billion as of December 31, 2021 and 2020, respectively. These amounts include ceded reserve balances and ceded benefit payments. The ceded benefit payments are recoverable from reinsurers. The following table sets forth the receivables attributable to our more significant reinsurance partners:


	As of December 31,
	2021			2020
	Reinsurance		A.M. Best	Reinsurance		A.M. Best
	Receivable		Rating	Receivable		Rating

	(Dollars In Millions)
Security Life of Denver Insurance Company	$	500.5	A-	$	548.5	NR
Swiss Re Life & Health America, Inc.		480.1	A+		489.6	A+
Lincoln National Life Insurance Co.		337.3	A+		370.7	A+
Somerset Re		335.1	A-		259.9	A-
Transamerica Life Insurance Co.		226.4	A		240.3	A
RGA Reinsurance Company		204.6	A+		210.5	A+
American United Life Insurance Company		187.6	A+		199.1	A+
Centre Reinsurance (Bermuda) Ltd		149.3	A		167.3	NR
Employers Reassurance Corporation		139.4	B+		162.0	NR
The Canada Life Assurance Company		123.2	A+		134.0	A+

The Company’s reinsurance contracts typically do not have a fixed term. In general, the reinsurers’ ability to terminate coverage for existing cessions is limited to such circumstances as material breach of contract or non-payment of premiums by the ceding company. The reinsurance contracts generally contain provisions intended to provide the ceding company with the ability to cede future business on a basis consistent with historical terms. However, either party may terminate any of the contracts with respect to future business upon appropriate notice to the other party.

Generally, the reinsurance contracts do not limit the overall amount of the loss that can be incurred by the reinsurer. The amount of liabilities ceded under contracts that provide for the payment of experience refunds is immaterial.

14. DEBT AND OTHER OBLIGATIONS

Under a revolving line of credit arrangement (the "Credit Facility"), PLC and the Company have the ability to borrow on an unsecured basis up to a combined aggregate principal amount of $1 billion. Under certain circumstances, the Credit Facility allows for a request that the commitment be increased up to a maximum principal amount of $1.5 billion. Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of PLC’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate, (y) 0.50% above the Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt. The Credit Facility also provided for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt and that is calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The Credit

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. DEBT AND OTHER OBLIGATIONS – (Continued)

Facility provides that PLC is liable for the full amount of any obligations for borrowings or letters of credit, including those of the Company, under the Credit Facility. The maturity date of the Credit Facility is May 3, 2023. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of December 31, 2021. PLC had an outstanding balance of $275 million and $190 million as of December 31, 2021 and 2020.

During 2018, the Company issued $110 million of Subordinated Funding Obligations as a rate of 3.55% due 2038.

Secured Financing Transactions

Repurchase Program Borrowings

While the Company anticipates that the cash flows of its operating subsidiaries will be sufficient to meet its investment commitments and operating cash needs in a normal credit market environment, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has established repurchase agreement programs for certain of its insurance subsidiaries to provide liquidity when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Under this program, the Company may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are typically for a term less than 90 days. The fair value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. Cash received is invested in fixed maturity securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of December 31, 2021, the fair value of securities pledged under the repurchase program was $1,503 million and the repurchase obligation of $1,393 million was included in the Company’s consolidated balance sheets (at an average borrowing rate of 13 basis points). During the year ended December 31, 2021, the maximum balance outstanding at any one point in time related to these programs was $1,799 million. The average daily balance was $775 million (at an average borrowing rate of 13 basis points) during the year ended December 31, 2021. As of December 31, 2020, the fair value of securities pledged under the repurchase program was $452 million and the repurchase obligation of $437 million was included in the Company’s consolidated balance sheets (at an average borrowing rate of 15 basis points). During the year ended December 31, 2020, the maximum balance outstanding at any one point in time related to these programs was $825 million. The average daily balance was $143 million (at an average borrowing rate of 33 basis points) during the year ended December 31, 2020.

Securities Lending

The Company participates in securities lending, primarily as an investment yield enhancement, whereby securities that are held as investments are loaned out to third parties for short periods of time. The Company requires collateral at least equal to 102% of the fair value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis and collateral is adjusted accordingly. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest received on such securities during the loan term. Securities lending transactions are accounted for as secured borrowings. As of December 31, 2021 and 2020, securities with a fair value of $174 million and $57 million were loaned under this program. As collateral for the loaned securities, the Company receives cash, which is primarily reinvested in short term repurchase agreements, which are also collateralized by U.S. Government or U.S. Government Agency securities, and government money market funds. These investments are recorded in "short-term investments" with a corresponding liability recorded in "secured financing liabilities" to account for its obligation to return the collateral. As of December 31, 2021 and 2020, the fair value of the collateral related to this program was $179 million and $59 million, and the Company has an obligation to return $179 million and $59 million, respectively, of collateral to the securities borrowers.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. DEBT AND OTHER OBLIGATIONS – (Continued)

The following table provides the fair value of collateral pledged for repurchase agreements, grouped by asset class, as of December 31, 2021 and 2020:

Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings


	Remaining Contractual Maturity of the Agreements
	As of December 31, 2021
	(Dollars In Millions)
	Overnight and						Greater Than
	Continuous		Up to 30 days		30-90 days		90 days		Total
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities	$	1,070	$	0	$	0	$	0	$	1,070
Corporate securities		69		0		0		0		69
Commercial mortgage loans		364		0		0		0		364
Total repurchase agreements and repurchase-to-maturity transactions	$	1,503	$	0	$	0	$	0	$	1,503
Securities lending transactions
Fixed maturity securities		171		0		0		0		171
Equity securities		1		0		0		0		1
Redeemable preferred stocks		2		0		0		0		2
Total securities lending transactions		174		0		0		0		174
Total securities	$	1,677	$	0	$	0	$	0	$	1,677


	Remaining Contractual Maturity of the Agreements
	As of December 31, 2020
	(Dollars In Millions)
	Overnight and						Greater Than
	Continuous		Up to 30 days		30-90 days		90 days		Total
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities	$	366	$	86	$	0	$	0	$	452
Commercial mortgage loans		0		0		0		0		0
Total repurchase agreements and repurchase-to-maturity transactions	$	366	$	86	$	0	$	0	$	452
Securities lending transactions
Corporate securities		49		0		0		0		49
Equity securities		7		0		0		0		7
Redeemable preferred stocks		1		0		0		0		1
Total securities lending transactions		57		0		0		0		57
Total securities	$	423	$	86	$	0	$	0	$	509

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. DEBT AND OTHER OBLIGATIONS – (Continued)

Golden Gate Captive Insurance Company

On October 1, 2020, Golden Gate Captive Insurance Company ("Golden Gate"), a Vermont special purpose financial insurance company and a wholly owned subsidiary of the Company, entered into a transaction with a term of 20 years, that may be extended to a maximum of 25 years, to finance up to $5 billion of "XXX" and "AXXX" reserves related to the term life insurance business and universal life insurance with secondary guarantee business that is reinsured to Golden Gate by the Company and West Coast Life Insurance Company ("WCL"), a wholly owned subsidiary of the Company, pursuant to an Excess of Loss Reinsurance Agreement (the "XOL Agreement") with Hannover Life Reassurance Company of America (Bermuda) Ltd., The Canada Life Assurance Company (Barbados Branch) and RGA Reinsurance Company (Barbados) Ltd. (collectively, the "Retrocessionaires"). The transaction is "non-recourse" to the Company, WCL, and PLC, meaning that none of these companies are liable to reimburse the Retrocessionaires for any XOL payments required to be made. As of December 31, 2021, the XOL Asset backing the difference in statutory and economic reserve liabilities was $4.267 billion.

Other Obligations

The Company routinely receives from or pays to affiliates, under the control of PLC, reimbursements for expenses incurred on one another’s behalf. Receivables and payables among affiliates are generally settled monthly.

Interest Expense

Interest expense is summarized as follows:


	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Subordinated funding obligations	$	3.9	$	3.9	$	3.9
Non-recourse funding obligations, other obligations, and repurchase agreements	$	11	$	133.2	$	175.8
Total interest expense	$	14.9	$	137.1	$	179.7

15. COMMITMENTS AND CONTINGENCIES

The Company leases administrative and marketing office space as well as various office equipment. Most leases have terms ranging from two to twenty-five years. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. The Company accounts for lease components separately from non-lease components (e.g., common area maintenance). Certain of the Company’s lease agreements include options to renew at the Company’s discretion. Management has concluded that the Company is not reasonably certain to elect any of these renewal options. The Company will use the interest rates received on its funding agreement backed notes as the collateralized discount rate when calculating the present value of remaining lease payments when the rate implicit in the lease is unavailable.

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. COMMITMENTS AND CONTINGENCIES – (Continued)

The Company had rental expense of $1 million, $4 million, and $6 million for the years ended December 31, 2021, 2020, and 2019, respectively. The following is a schedule by year of future minimum rental payments required under these leases:


Year	Amount
	(Dollars In Millions)
2022	$	7
2023		4
2024		4
2025		2
2026		1
Thereafter		8

As of December 31, 2021 and 2020, the Company had outstanding commercial mortgage loan commitments of $994 million at an average rate of 3.58% and $801 million at an average rate of 3.90%, respectively.

Under the 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. From time to time, companies may be asked to contribute amounts beyond prescribed limits. It is possible that the Company could be assessed with respect to product lines not offered by the Company. In addition, legislation may be introduced in various states with respect to guaranty fund assessment laws related to insurance products, including long term care insurance and other specialty products, that increases the cost of future assessments or alters future premium tax offsets received in connection with guaranty fund assessments. The Company cannot predict the amount, nature or timing of any future assessments or legislation, any of which could have a material and adverse impact on the Company’s financial condition or results of operations.

A number of civil jury verdicts have been returned against insurers, broker dealers and other providers of financial services involving sales, refund or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Often 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 limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. The financial services and insurance industries in particular are also sometimes the target of law enforcement and regulatory investigations relating to the numerous laws and regulations that govern such companies. Some companies have been the subject of law enforcement or regulatory actions or other actions resulting from such investigations. The Company, in the ordinary course of business, is involved in such matters.

The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. For such matters, the Company may provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company reviews relevant information with respect to litigation and regulatory matters on a quarterly and annual basis and updates its established liabilities, disclosures and estimates of reasonably possible losses or range of loss based on such reviews.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. COMMITMENTS AND CONTINGENCIES – (Continued)

The Company is currently defending 2 cases, including 1 putative class action (Beverly Allen v. Protective Life Insurance Company, Civil Action No. 1:20-cv-00530-JLT) where the plaintiffs generally allege that the defendants failed to comply with certain California statutes which address contractual grace periods and lapse notice requirements for certain life insurance policies. Plaintiffs claim that these statutes apply to life insurance policies that existed before the statutes’ effective date. The plaintiffs seek damages and injunctive relief. No class has been certified in Beverly Allen v. Protective Life Insurance Company. In August 2021, the California Supreme Court determined in McHugh v. Protective Life Insurance Company, Case No. D072863, that the statutory requirements apply to life insurance policies issued before the statutes’ effective date. In continuing to defend these matters, the Company maintains various defenses to the merits of the plaintiffs’ claims and to class certification. However, the Company cannot predict the outcome of or reasonably estimate the possible loss or range of loss that might result from this litigation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. COMMITMENTS AND CONTINGENCIES – (Continued)

For much of 2020 and into early 2021, a group of interested parties collectively requested certain information and financial data from the Receiver that would allow them to more fully evaluate first the Original Rehabilitation Plan and then the Amended Plan. This group also had a number of conversations with counsel for the Receiver regarding concerns over the Plan. On July 26, 2021, the Receiver shared with interested parties an outline of a Modified Plan, along with a liquidation analysis. While there are significant changes proposed in the Modified Plan (as compared to the Original Rehabilitation Plan and the Amended Plan), much of the economic substance (including not paying claims in full) of the Original Rehabilitation Plan and the Amended Rehabilitation Plan are likely to be included in the Modified Plan.

The Court has yet to rule further or to re-establish a schedule for pre-confirmation procedures or a hearing on confirmation.

The Company continues to monitor SRUS and the actions of the Receiver through discussions with legal counsel and review of publicly available information. An allowance for credit losses related to SRUS is included in the overall reinsurance allowance for credit losses. As of December 31, 2021, management does not believe that the ultimate outcome of the rehabilitation process will have a material impact on our financial position or results of operations

Certain insurance companies for which the Company has coinsured blocks of life insurance and annuity policies, are under audit for compliance with the unclaimed property laws of a number of states. The audits are being conducted on behalf of the treasury departments or unclaimed property administrators in such states. The focus of the audits is on whether there have been unreported deaths, maturities, or policies that have exceeded limiting age with respect to which death benefits or other payments under life insurance or annuity policies should be treated as unclaimed property that should be escheated to the state. The Company is presently unable to estimate the reasonably possible loss or range of loss that may result from the audits due to a number of factors, including the early stages of the audits being conducted, and uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with certain co-insured policies. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with the audits reasonably estimable.

16. SHAREOWNER’S EQUITY

PLC owns all of the 2,000 shares of non-voting preferred stock issued by the Company’s subsidiary, PLAIC. The stock pays, when and if declared, noncumulative participating dividends to the extent PLAIC’s statutory earnings for the immediately preceding fiscal year exceeded $1 million. In 2021, 2020, and 2019, PLAIC paid 0 dividends to PLC on its preferred stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in the accumulated balances for each component of AOCI as of December 31, 2021, 2020, and 2019.

Changes in Accumulated Other Comprehensive Income (Loss) by Component


					Total
					Accumulated
	Unrealized		Accumulated		Other
	Gains and Losses		Gain and Loss		Comprehensive
	on Investments(2)		on Derivatives		Income (Loss)

	(Dollars In Millions, Net of Tax)
Balance, December 31, 2018 (Recast)	$	(1,408)	$	0	$	(1,408)
Other comprehensive income (loss) before reclassifications		2,844		(10)		2,834
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings		(4)		0		(4)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		(11)		2		(9)
Balance, December 31, 2019 (Recast)	$	1,421	$	(8)	$	1,413
Other comprehensive income (loss) before reclassifications		2,048		(2)		2,046
Other comprehensive income (loss) relating to other-than-temporary impaired investments for which a portion has been recognized in operations		24		0		24
Amounts reclassified from accumulated other comprehensive income (loss)(1)		63		2		65
Balance, December 31, 2020 (Recast)	$	3,556	$	(8)	$	3,548
Other comprehensive income (loss) before reclassifications		(1,105)		0		(1,105)
Other comprehensive income (loss) on investments for which a credit loss has been recognized in operations		(1)		0		(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		(41)		1		(40)
Balance, December 31, 2021	$	2,409	$	(7)	$	2,402

(1)	See Reclassification table below for details.

(2)

As of December 31, 2019, 2020 and 2021, net unrealized losses reported in AOCI were offset by $(777) million, $(2.0) billion and $(1.9) billion, respectively, due to the impact those net unrealized losses would have had on certain of the Company’s insurance assets and liabilities if the net unrealized losses had been recognized in net income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) – (Continued)

The following tables summarize the reclassifications amounts out of AOCI for the years ended December 31, 2021, 2020, and 2019.


	Affected Line Item in the Consolidated
Gains/(losses) in net income:	Statements of Income	For The Year Ended December 31,
		2021		2020		2019

		(Dollars In Millions)
Derivative instruments	Benefits and settlement expenses, net of reinsurance ceded(1)	$	(1)	$	(3)	$	(2)
	Tax (expense) benefit		0		1		0
		$	(1)	$	(2)	$	(2)
Unrealized gains and losses on available-for-sale securities	Net gains (losses): investments	$	46	$	46	$	48
	Net impairment losses recognized in earnings		6		(125)		(34)
	Tax (expense) or benefit		(11)		17		(3)
		$	41	$	(62)	$	11

(1)	Refer to Note 6, Derivative Financial Instruments for additional information

18. INCOME TAXES

The Company’s effective income tax rate related to continuing operations varied from the maximum federal income tax rate as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
Statutory federal income tax rate applied to pre-tax income	21.0	%	21.0	%	21.0	%
State income taxes	0.2		(0.4)		0.5
Investment income not subject to tax	(5.1)		(3.6)		(2.1)
Prior period adjustments	0.5		(0.7)		0.1
Goodwill impairment	7.3		0		0
Other	(0.7)		(0.9)		(1.0)
	23.2	%	15.4	%	18.5	%

The annual provision for federal income tax in these financial statements differs from the annual amounts of income tax expense reported in the respective income tax returns. Certain significant revenues and expenses are appropriately reported in different years with respect to the financial statements and the tax returns.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. INCOME TAXES – (Continued)

The components of the Company’s income tax are as follows:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Current income tax expense (benefit):
Federal	$	129	$	123	$	378
State		3		(5)		9
Total current	$	132	$	118	$	387
Deferred income tax expense (benefit):
Federal	$	(44)	$	(79)	$	(284)
State		(2)		4		(6)
Total deferred	$	(46)	$	(75)	$	(290)

The components of the Company’s net deferred income tax liability are as follows:


	As of December 31,
	2021		2020
			(Recast)
	(Dollars In Millions)
Deferred income tax assets:
Loss and credit carryforwards	$	168	$	146
Deferred compensation		51		54
Deferred policy acquisition costs		67		143
Valuation allowance		(10)		(9)
		276		334
Deferred income tax liabilities:
Premium receivables and policy liabilities		200		250
VOBA and other intangibles		552		582
Invested assets (other than unrealized gains (losses))		264		283
Net unrealized gains on investments		640		945
Other		48		53
		1,704		2,113
Net deferred income tax liability	$	(1,428)	$	(1,779)

The deferred tax assets reported above include certain deferred tax assets related to nonqualified deferred compensation and other employee benefit liabilities that were assumed by AXA and they were not acquired by the Company in connection with the acquisition of MONY. The future tax deductions stemming from these liabilities will be claimed by the Company on MONY’s tax returns in its post-acquisition periods. These deferred tax assets have been estimated as of the December 31, 2021 reporting date based on all available information. However, it is possible that these estimates may be adjusted in future reporting periods based on actuarial changes to the projected future payments associated with these liabilities. Any such adjustments will be recognized by the Company as an adjustment to income tax expense during the period in which they are realized.

The CARES Act, as described in Note 8, Commercial Mortgage Loans, includes tax provisions relevant to businesses. The income tax related impacts of the CARES Act are not material to the Company’s consolidated financial statements for the year ended December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. INCOME TAXES – (Continued)

In management’s judgment, the gross deferred income tax asset as of December 31, 2021 will more likely than not be fully realized. The Company has recognized a valuation allowance of $10 million and $9 million as of December 31, 2021 and 2020, respectively, related to certain intercompany non-life federal NOL’s and state-based future deductible temporary differences that it has determined are more likely than not to expire unutilized. This resulting unfavorable change of $1 million, before the federal benefit of state income taxes, increased income tax expense in 2021 by the same amount.

At December 31, 2021, the Company has intercompany loss carryforwards of $758 million that are available to offset future taxable income of certain non-life subsidiaries under the terms of the tax sharing agreement with PLC. Approximately $23 million of these loss carryforwards will expire between 2036 and 2038 and the remaining loss carryforwards of $735 million have no expiration.

At December 31, 2020, the Company had intercompany loss carryforwards of $658 million that was available to offset future taxable income of certain non-life subsidiaries under the terms of the tax sharing agreement with PLC. $28 million of these loss carryforwards will expire between 2036 and 2037 and the remaining loss carryforwards of $630 million have no expiration.

Included in the deferred income tax assets above are approximately $10 million in state net operating loss carryforwards attributable to certain jurisdictions, which are available to offset future taxable income in the respective state jurisdictions, expiring between 2022 and 2041.

As of December 31, 2021 and 2020, some of the Company’s fixed maturities were reported at an unrealized loss, although the net amount is an unrealized gain as of December 31, 2021. If the Company were to realize a tax-basis net capital loss for a year, then such loss could not be deducted against that year’s other taxable income. However, such a loss could be carried back and forward against any prior year or future year tax-basis net capital gains. Therefore, the Company has relied upon a prudent and feasible tax-planning strategy regarding its fixed maturities that were reported at an unrealized loss. The Company has the ability and the intent to either hold such fixed maturities to maturity, thereby avoiding a realized loss, or to generate an offsetting realized gain from unrealized gain fixed maturities if such unrealized loss fixed maturities are sold at a loss prior to maturity.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	As of December 31,
	2021		2020		2019

	(Dollars In Millions)
Balance, beginning of period	$	2	$	2	$	7
Additions for tax positions of the current year		0		0		0
Additions for tax positions of prior years		0		0		0
Reductions of tax positions of prior years:
Changes in judgment		0		0		0
Settlements during the period		0		0		(5)
Lapses of applicable statute of limitations		(2)		0		0
Balance, end of period	$	0	$	2	$	2

Included in the end of period balances above, there were no unrecognized tax benefits for which the ultimate deductibility is certain but for which there is uncertainty about the timing of such deductions. The total amount of unrecognized tax benefits, if recognized, that would affect the effective income tax rate is 0ne, $2 million, and $2 million, for the years ended December 31, 2021, 2020, and 2019, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. INCOME TAXES – (Continued)

Any accrued interest related to the unrecognized tax benefits and other accrued income taxes have been included in income tax expense. There were no amounts included in any period ending in 2021, 2020, or 2019, as PLC maintains responsibility for the interest on unrecognized tax benefits.

The lapse of the 2017 statute of limitations is the reason for the reductions in the unrecognized tax benefits shown in the above chart. In general, the Company is 0 longer subject to income tax examinations by taxing authorities for tax years that began before 2018.

Due to IRS adjustments to the Company’s 2014 through 2016 reported taxable income, the Company has amended certain of its 2014 through 2016 state income tax returns. Such amendments will cause such years to remain open, pending the states’ acceptances of the returns.

19. SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information:


	For The Year Ended December 31,
	2021		2020		2019

	(Dollars In Millions)
Cash paid / (received) during the year:
Interest expense	$	15	$	177	$	182
Income taxes		236		80		383

20. RELATED PARTY TRANSACTIONS

Certain corporations with which PLC’s directors were affiliated paid us premiums and policy fees or other amounts for various types of insurance and investment products, interest on bonds we own and commissions on securities underwritings in which our affiliates participated. Such amounts were immaterial for the years ended December 31, 2021 and 2020 and $6 million for the year ended December 31, 2019. The Company and/or PLC paid commissions, interest on debt and investment products, and fees to these same corporations totaling $2 million for the year ended December 31, 2019. The Company did 0t make any payments for the year ended December 31, 2021 and 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. RELATED PARTY TRANSACTIONS – (Continued)

PLC had guaranteed the Company’s obligations for borrowings or letters of credit under the revolving line of credit arrangement to which PLC is also a party. PLC had also issued guarantees, entered into support agreements and/or assumed a duty to indemnify its indirect wholly owned captive insurance companies in certain respects. In connection with the Captive Merger on October 1, 2020, certain captive related guarantees, support agreements and indemnification obligations were terminated, amended or replaced.

The Company has agreements with certain of its subsidiaries under which it provides administrative services for a fee. These services include but are not limited to accounting, financial reporting, compliance, policy administration, reserve computations, and projections. In addition, the Company and its subsidiaries pay PLC for investment, legal and data processing services.

The Company and/or certain of its affiliates have reinsurance agreements in place with companies owned by PLC. These agreements relate to certain portions of our service contract business which is included within the Asset Protection segment. These transactions are eliminated at the PLC consolidated level.

The Company has reinsured certain riders related to its fixed and deferred annuity business to PL Re, a wholly owned subsidiary of PLC. PLC owns all of the shares of common stock issued by PL Re.

21. STATUTORY REPORTING PRACTICES AND OTHER REGULATORY MATTERS

The Company and its insurance subsidiaries prepare statutory financial statements for regulatory purposes in accordance with accounting practices prescribed by the National Association of Insurance Commissioners ("NAIC") and the applicable state insurance department laws and regulations. These financial statements vary materially from GAAP. Statutory accounting practices include publications of the NAIC, state laws, regulations, general administrative rules as well as certain permitted accounting practices granted by the respective state insurance department. Generally, the most significant differences are that statutory financial statements do not reflect 1) deferred acquisition costs and VOBA, 2) benefit liabilities that are calculated using Company estimates of expected mortality, interest, and withdrawals, 3) deferred income taxes that are not subject to statutory limits, 4) recognition of realized gains and losses on the sale of securities in the period they are sold, and 5) fixed maturities recorded at fair values, but instead at amortized cost.

Statutory net income for the Company was $426 million, $692 million, and $(625) million for the years ended December 31, 2021, 2020, and 2019, respectively. Statutory capital and surplus for the Company was $5.3 billion and $5.4 billion as of December 31, 2021 and 2020, respectively.

The Company and its insurance subsidiaries are subject to various state statutory and regulatory restrictions on the insurance subsidiaries’ ability to pay dividends to the Company and the Company’s ability to pay dividends to Protective Life Corporation. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval of the insurance commissioner of the state of domicile. Dividends in larger amounts are considered extraordinary and are subject to affirmative prior approval by such commissioner. The insurance subsidiaries may pay, without the approval of the Insurance Commissioners of the state of domicile, $136 million of distributions in 2022. Additionally, as of December 31, 2021, $1.8 billion of consolidated shareowner’s equity, excluding net unrealized gains on investments, represented restricted net assets of the Company and its insurance subsidiaries needed to maintain the minimum capital required by the insurance subsidiaries’ respective state insurance departments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. STATUTORY REPORTING PRACTICES AND OTHER REGULATORY MATTERS – (Continued)

State insurance regulators and the NAIC have adopted risk-based capital ("RBC") requirements for life insurance companies to evaluate the adequacy of statutory capital and surplus in relation to investment and insurance risks. The requirements provide a means of measuring the minimum amount of statutory surplus appropriate for an insurance company to support its overall business operations based on its size and risk profile. A company’s risk-based statutory surplus is calculated by applying factors and performing calculations relating to various asset, premium, claim, expense, and reserve items. Regulators can then measure the adequacy of a company’s statutory surplus by comparing it to RBC. The Company manages its capital consumption by using the ratio of its total adjusted capital, as defined by the insurance regulators, to the Company’s action level RBC (known as the RBC ratio), also defined by insurance regulators. As of December 31, 2021 and 2020, the Company and its insurance subsidiaries all exceeded the minimum RBC requirements.

Additionally, the Company has certain assets that are on deposit with state regulatory authorities and restricted from use. As of December 31, 2021, the Company and its insurance subsidiaries had on deposit with regulatory authorities, fixed maturity and short-term investments with a fair value of $43 million.

The State of Tennessee has adopted certain prescribed accounting practices that differ from those found in NAIC Statutory Accounting Principles ("SAP"). Specifically, Tennessee Insurance Law requires that goodwill arising from the purchase of a subsidiary, controlled or affiliated entity is charged directly to surplus in the year it originates. In NAIC SAP, goodwill in amounts not to exceed 10% of an insurer’s capital and surplus may be capitalized and all amounts are amortized as a component of unrealized gains and losses on investments over periods not to exceed 10 years.

Certain prescribed and permitted practices impact the statutory surplus of the Company. These practices include the non-admission of goodwill as an asset for statutory reporting.

The favorable (unfavorable) effects on the Company and its statutory surplus, compared to NAIC statutory surplus, from the use of this prescribed practice was as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Non-admission of goodwill	$	(66)	$	(105)
Total (net)	$	(66)	$	(105)

PLC also has certain permitted practices which are applied at the subsidiary level and do not have a direct impact on the statutory surplus of the Company. These practices include permission to follow the actuarial guidelines of the domiciliary state of the ceding insurer for certain captive reinsurers, accounting for the XOL Asset Value, and a reserve difference related to a captive insurance company.

The favorable (unfavorable) effects on the statutory surplus of the Company and its insurance subsidiaries, compared to NAIC statutory surplus, from the use of these permitted practices were as follows:


	As of December 31,
	2021		2020

	(Dollars In Millions)
Accounting for XOL Asset Value as an admitted asset	$	4,267	$	4,579
Reserving based on state specific actuarial practices		101		94
Reserving difference related to a captive insurance company		0		(218)
Total (net)	$	4,368	$	4,455

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. OPERATING SEGMENTS

The Company has several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments and makes adjustments to its segment reporting as needed. A brief description of each segment follows.

●

The Retail Life and Annuity segment primarily markets fixed UL, IUL, VUL, level premium term insurance ("traditional"), fixed annuity, and VA products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent distribution organizations, and affinity groups.

●

The Acquisitions segment focuses on acquiring, converting, and servicing policies and contracts acquired from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. Additionally, this segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed, however, some recent acquisitions have included ongoing new business activities. Ongoing new product sales written by the Company from these acquisitions are included in the Retail Life and Annuity segment. As a result, earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.

●

The Asset Protection segment markets extended service contracts, GAP products, and other specialized ancillary products to protect consumers’ investments in automobiles and recreational vehicles. GAP products are designed to cover the difference between the scheduled loan pay-off amount and an asset’s actual cash value in the case of a total loss. Each type of specialized ancillary product protects against damage or other loss to a particular aspect of the underlying asset. The Company previously marketed a credit life and disability product but exited that market at the beginning of 2021.

●

The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead and expenses not attributable to the segments above. This segment includes earnings from several non-strategic or runoff lines of business, various financing and investment related transactions, and the operations of several small subsidiaries.

The Company’s management and Board of Directors analyzes and assesses the operating performance of each segment using pre-tax adjusted operating income (loss) and after-tax adjusted operating income (loss). Consistent with GAAP accounting guidance for segment reporting, pre-tax adjusted operating income (loss) is the Company’s measure of segment performance. Pre-tax adjusted operating income (loss) is calculated by adjusting income (loss) before income tax, by excluding the following items:

●

gains and losses on investments and derivatives,

●

losses from the impairment of intangible assets,

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22. OPERATING SEGMENTS – (Continued)

●

changes in the GLWB embedded derivatives exclusive of the portion attributable to the economic cost of the GLWB,

●

actual GLWB incurred claims,

●

immediate impacts from changes in current market conditions on estimates of future profitability on variable annuity and variable universal life products, including impacts on DAC, VOBA, reserves and other items, and

●

the amortization of DAC, VOBA, and certain policy liabilities that is impacted by the exclusion of these items.

Income tax expense or benefits is allocated to the items excluded from pre-tax adjusted operating income (loss) at the statutory federal income tax rate for the associated period. Income tax expense or benefits allocated to after-tax adjusted operating income (loss) can vary period to period based on changes in the Company’s effective income tax rate.

In determining the components of the pre-tax adjusted operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA 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. Net gains (losses) — investments and derivatives and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.

There were no significant intersegment transactions during the years ended December 31, 2021, 2020, and 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. OPERATING SEGMENTS – (Continued)

The following tables present a summary of results and reconciles pre-tax adjusted operating income (loss) to consolidated income before income tax and net income:


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Revenues
Retail Life and Annuity	$	2,823	$	2,440	$	2,161
Acquisitions		2,984		3,282		2,902
Stable Value Products		347		176		247
Asset Protection		270		275		290
Corporate and Other		(11)		(5)		131
Total revenues	$	6,413	$	6,168	$	5,731
Pre-tax Adjusted Operating Income (Loss)
Retail Life and Annuity	$	(37)	$	100	$	153
Acquisitions		314		406		347
Stable Value Products		171		90		93
Asset Protection		40		41		37
Corporate and Other		(155)		(247)		(162)
Pre-tax adjusted operating income		333		390		468
Non-operating income (loss)		38		(113)		56
Income before income tax		371		277		524
Income tax expense (benefit)		86		43		97
Net income	$	285	$	234	$	427
Pre-tax adjusted operating income	$	333	$	390	$	468
Adjusted operating income tax (expense) benefit		(51)		(66)		(86)
After-tax adjusted operating income		282		324		382
Non-operating income (loss)		38		(113)		56
Income tax (expense) benefit on adjustments		(35)		23		(11)
Net income	$	285	$	234	$	427
Non-operating income (loss)
Derivative gains (losses), net	$	48	$	(195)	$	(368)
Investment gains (losses), net		102		(40)		309
VA/VUL market impacts(1)		21		0		0
Goodwill impairment		(129)		0		0
Less: related amortization(2)		104		(30)		(24)
Less: VA GLWB economic cost		(100)		(92)		(91)
Total non-operating income (loss)	$	38	$	(113)	$	56

(1)	Represents the immediate impacts on DAC, VOBA, reserves, and other non-cash items in current period results due to changes in current market conditions on estimates of profitability, which are excluded from pre-tax and after-tax adjusted operating income (loss) beginning in Q1 of 2021.

(2)	Includes amortization of DAC/VOBA and benefits and settlement expenses that are impacted by net gains (losses).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. OPERATING SEGMENTS – (Continued)


	For The Year Ended December 31,
	2021		2020		2019
			(Recast)		(Recast)
	(Dollars In Millions)
Net Investment Income
Retail Life and Annuity	$	1,110	$	1,015	$	945
Acquisitions		1,590		1,648		1,533
Stable Value Products		303		230		244
Asset Protection		20		23		28
Corporate and Other		(41)		(27)		75
Total net investment income	$	2,982	$	2,889	$	2,825
Amortization of DAC and VOBA
Retail Life and Annuity	$	222	$	116	$	100
Acquisitions		19		24		11
Stable Value Products		5		3		3
Asset Protection		63		65		62
Corporate and Other		0		0		0
Total amortization of DAC and VOBA	$	309	$	208	$	176


	Operating Segments
	As of December 31, 2021
	(Dollars In Millions)
	Retail Life and				Stable Value
	Annuity		Acquisitions		Products
Investments and other assets	$	44,549	$	54,561	$	8,392
DAC and VOBA		2,806		870		15
Other intangibles		334		29		5
Goodwill		430		24		114
Total assets	$	48,119	$	55,484	$	8,526


	Asset		Corporate		Total
	Protection		and Other		Consolidated
Investments and other assets	$	950	$	18,063	$	126,515
DAC and VOBA		178		0		3,869
Other intangibles		90		33		491
Goodwill		129		0		697
Total assets	$	1,347	$	18,096	$	131,572


	Operating Segment Assets
	As of December 31, 2020
	(Recast)
	(Dollars In Millions)
	Retail Life and				Stable Value
	Annuity		Acquisitions		Products
Investments and other assets	$	40,194	$	55,628	$	5,928
DAC and VOBA		2,480		762		8
Other intangibles		367		33		6
Goodwill		559		24		114
Total assets	$	43,600	$	56,447	$	6,056

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. OPERATING SEGMENTS – (Continued)


	Asset		Corporate		Total
	Protection		and Other		Consolidated
Investments and other assets	$	881	$	19,493	$	122,124
DAC and VOBA		170		0		3,420
Other intangibles		101		33		540
Goodwill		129		0		826
Total assets	$	1,281	$	19,526	$	126,910

23. CONSOLIDATED QUARTERLY RESULTS — UNAUDITED

The Company’s unaudited consolidated quarterly operating data for the years ended December 31, 2021 and 2020 is presented below. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair statement of quarterly results have been reflected in the following data. It is also management’s opinion, however, that quarterly operating data for insurance enterprises are not necessarily indicative of results that may be expected in succeeding quarters or years. In order to obtain a more accurate indication of performance, there should be a review of operating results, changes in shareowner’s equity, and cash flows for a period of several quarters.


	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter(1)

	(Dollars In Millions)
For The Year Ended December 31, 2021
Gross premiums and policy fees	$	1,095	$	1,026	$	1,054	$	1,047
Reinsurance ceded		(317)		(326)		(311)		(366)
Net premiums and policy fees		778		700		743		681
Net investment income		720		742		753		767
Net gains (losses) — investments and derivatives		127		(33)		67		(11)
Other income		88		100		89		102
Total revenues		1,713		1,509		1,652		1,539
Total benefits and expenses		1,586		1,308		1,593		1,555
Income (loss) before income tax		127		201		59		(16)
Income tax expense		25		39		10		12
Net income (loss)	$	102	$	162	$	49	$	(28)

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PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23. CONSOLIDATED QUARTERLY RESULTS — UNAUDITED – (Continued)


	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter

	(Dollars In Millions)
For The Year Ended December 31, 2020 (Recast)
Gross premiums and policy fees	$	896	$	1,009	$	1,045	$	1,053
Reinsurance ceded		(36)		(360)		(287)		(344)
Net premiums and policy fees		860		649		758		709
Net investment income		754		742		740		653
Net gains (losses) — investments and derivatives		(301)		(34)		111		(11)
Other income		128		111		115		184
Total revenues		1,441		1,468		1,724		1,535
Total benefits and expenses		1,600		1,294		1,564		1,433
Income (loss) before income tax		(159)		174		160		102
Income tax (benefit) expense		(30)		32		29		12
Net income (loss)	$	(129)	$	142	$	131	$	90

(1)	The Company recorded a non-cash impairment charge of $129 million Q4 2021. Refer to Note 10, Goodwill for additional information.

24. SUBSEQUENT EVENTS

The Company has evaluated the effects of events subsequent to December 31, 2021, and through the date we filed our consolidated financial statements with the United States Securities and Exchange Commission. All accounting and disclosure requirements related to subsequent events are included in our consolidated financial statements.

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SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION

PROTECTIVE LIFE INSURANCE COMPANY AND SUBSIDIARIES


															Amortization
	Deferred						Stable Value								of Deferred
	Policy						Products,								Policy
	Acquisition		Future				Annuity								Acquisitions
	Costs and		Policy				Contracts and		Net				Benefits		Costs and
	Value of		Benefits				Other		Premiums		Net		and		Value of		Other
	Businesses		and		Unearned		Policyholders'		and Policy		Investment		Settlement		Businesses		Operating		Premiums
Segment	Acquired		Claims		Premiums		Funds		Fees		Income(1)		Expenses		Acquired		Expenses(1)		Written(2)

	(Dollars In Millions)
For The Year Ended December 31, 2021
Retail Life and Annuity	$	2,806	$	19,506	$	0	$	11,674	$	1,474	$	1,110	$	2,316	$	222	$	224	$	0
Acquisitions		870		34,478		1		5,914		1,320		1,590		2,411		19		234		28
Stable Value Products		15		0		0		8,526		0		303		124		5		3		0
Asset Protection		178		34		843		0		98		20		59		63		108		97
Corporate and Other		0		46		1		78		10		(41)		14		0		111		10
Total	$	3,869	$	54,064	$	845	$	26,192	$	2,902	$	2,982	$	4,924	$	309	$	680	$	135
For The Year Ended December 31, 2020 (Recast)
Retail Life and Annuity	$	2,480	$	18,483	$	0	$	10,914	$	1,541	$	1,015	$	2,168	$	116	$	199	$	0
Acquisitions		762		35,537		2		6,361		1,317		1,648		2,510		24		267		90
Stable Value Products		8		0		0		6,056		0		230		133		3		4		0
Asset Protection		170		40		779		0		107		23		75		65		94		105
Corporate and Other		0		47		1		68		11		(27)		15		0		218		11
Total	$	3,420	$	54,107	$	782	$	23,399	$	2,976	$	2,889	$	4,901	$	208	$	782	$	206
For The Year Ended December 31, 2019 (Recast)
Retail Life and Annuity	$	2,417	$	17,674	$	0	$	9,402	$	1,244	$	945	$	1,765	$	100	$	209	$	0
Acquisitions		924		36,176		2		6,387		1,173		1,533		2,237		11		232		42
Stable Value Products		5		0		0		5,444		0		244		144		3		4		0
Asset Protection		174		44		792		0		120		28		93		62		98		180
Corporate and Other		0		51		1		78		11		75		17		0		232		12
Total	$	3,520	$	53,945	$	795	$	21,311	$	2,548	$	2,825	$	4,256	$	176	$	775	$	234

(1)	Allocations of Net Investment Income and Other Operating Expenses are based on a number of assumptions and estimates and results would change if different methods were applied.

(2)	Excludes Life Insurance.

See the accompanying Report of Independent Registered Public Accounting Firm

Table of Contents

SCHEDULE IV — REINSURANCE

PROTECTIVE LIFE INSURANCE COMPANY AND SUBSIDIARIES


					Assumed					Percentage of
			Ceded to		from					Amount
	Gross		Other		Other		Net			Assumed to
	Amount		Companies		Companies		Amount			Net

	(Dollars In Millions)
For The Year Ended December 31, 2021:
Life insurance in-force	$	829,253	$	(222,865)	$	191,110	$	797,498		24.0	%
Premiums and policy fees:
Life insurance		2,843		(1,113)		1,037		2,767	(1)	37.5	%
Accident/health insurance		32		(19)		28		41		68.3
Property and liability insurance		281		(188)		1		94		1.1
Total	$	3,156	$	(1,320)	$	1,066	$	2,902
For The Year Ended December 31, 2020 (Recast):
Life insurance in-force	$	785,197	$	(244,588)	$	206,050	$	746,659		27.6	%
Premiums and policy fees:
Life insurance		2,661		(826)		934		2,769	(1)	33.7	%
Accident/health insurance		37		(23)		90		104		86.5
Property and liability insurance		279		(178)		2		103		1.9
Total	$	2,977	$	(1,027)	$	1,026	$	2,976
For The Year Ended December 31, 2019 (Recast):
Life insurance in-force	$	766,197	$	(271,601)	$	212,574	$	707,170		30.1	%
Premiums and policy fees:
Life insurance		2,853		(1,312)		836		2,377	(1)	35.2	%
Accident/health insurance		42		(90)		41		(7)		(585.7)
Property and liability insurance		281		(106)		3		178		1.7
Total	$	3,176	$	(1,508)	$	880	$	2,548

(1)	Includes annuity policy fees of $199 million, $163 million, and $164 million, and for the years ended December 31, 2021, 2020, and 2019, respectively.

See the accompanying Report of Independent Registered Public Accounting Firm

Table of Contents

SCHEDULE V — VALUATION AND QUALIFYING ACCOUNTS

PROTECTIVE LIFE INSURANCE COMPANY AND SUBSIDIARIES


			Additions
	Balance		Charged to		Charges				Balance
	at beginning		costs and		to other				at end of
Description	of period		expenses		accounts		Deductions		period

	(Dollars In Millions)
As of December 31, 2021
Allowance for funded commercial mortgage loan credit losses	$	222	$	0	$	0	$	(119)	$	103
As of December 31, 2020
Allowance for funded commercial mortgage loan credit losses	$	5	$	140	$	80	$	(3)	$	222

See the accompanying Report of Independent Registered Public Accounting Firm

Table of Contents

APPENDIX A

The following examples illustrate how the vesting factors and market value adjustment (MVA) impact withdrawals and surrenders in eight scenarios:

Scenario 1: Full Surrender Example when Index Performance is Negative and MVA is Negative


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		-15	%
Downside Protection Vesting Factor		100	%
Strategy Value	$	90,000		($100,000 + $100,000 * max (-10.0% * 100%, -15.0%))
Contract Value:	$	90,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		6.00	%
Withdrawal Charge Percentage:		9	%
Gross Withdrawal Amount:	$	90,000.00
MVA:		-5.08	%	(5.00% – 6.00%) * (61/12)
Contract Base Reduction Percentage:		111	%	($100,000 / $90,000)
Contract Base Adjustment Amount:	$	100,000.00		(111% * $90,000.00)
Strategy Base Reduction Amount:	$	100,000.00		($100,000.00 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	80,000		($90,000.00 – $10,000)
Market Value Adjustment (MVA):	-$	4,066.67		($80,000.00 * -5.08%)
Withdrawal Charge:	$	7,566.00		($90,000.00 – $10,000 + -$4,066.67) * (9%)
Post Withdrawal Strategy Base:	$	0.00		($100,000 – $100,000.00)
Withdrawal Proceeds:	$	78,367.33		($90,000.00 – $7,566.00 + -$4,066.67)

Scenario 2: Full Surrender Example when Index Performance is Negative and MVA is Positive


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base				($100,000 /
Allocation Percentage:		100	%	$100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		-15	%
Downside Protection Vesting Factor		100	%
Strategy Value	$	90,000		($100,000 + $100,000 * max (-10.0% * 100%, -15.0%))
Contract Value:	$	90,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%

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Current MVA rate:		4.00	%
Withdrawal Charge Percentage:		9	%
Gross Withdrawal Amount:	$	90,000.00
MVA:		5.08	%	(5.00% – 4.00%) * (61/12)
Contract Base Reduction Percentage:		111	%	($100,000 / $90,000)
Contract Base Adjustment Amount:	$	100,000.00		(111% * $90,000.00)
Strategy Base Reduction Amount:	$	100,000.00		($100,000.00 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	80,000		($90,000.00 – $10,000)
Market Value Adjustment (MVA):	$	4,066.67		($80,000.00 * 5.08%)
Withdrawal Charge:	$	6,834.00		($90,000.00 – $10,000 + $4,066.67) * (9%)
Post Withdrawal Strategy Base:	$	0.00		($100,000 – $100,000.00)
Withdrawal Proceeds:	$	87,232.67		($90,000.00 – $6,834.00 + $4,066.67)

Scenario 3: Full Surrender Example when Index Performance is Positive and MVA is Negative


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		15	%
Crediting Method Vesting Factor		50	%
Strategy Value	$	106,000		($100,000 + $100,000 * 50.0% * min (15.0%, 12.0%))
Contract Value:	$	106,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		6.00	%
Withdrawal Charge Percentage:		9	%
Gross Withdrawal Amount:	$	106,000.00
MVA:		-5.08	%	(5.00% – 6.00%) * (61/12)
Contract Base Reduction Percentage:		94	%	($100,000 / $106,000)
Contract Base Adjustment Amount:	$	100,000.00		(94% * $106,000.00)
Strategy Base Reduction Amount:	$	100,000.00		($100,000.00 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	96,000		($106,000.00 – $10,000)
Market Value Adjustment (MVA):		-$4,880.00		($96,000.00 * -5.08%)
Withdrawal Charge:	$	9,079.20		($106,000.00 – $10,000 + -$4,880.00) * (9%)
Post Withdrawal Strategy Base:	$	0.00		($100,000 – $100,000.00)
Withdrawal Proceeds:	$	92,040.80		($106,000.00 – $9,079.20 + -$4,880.00)

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Scenario 4: Full Surrender Example when Index Performance is Positive and MVA is Positive


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		15	%
Crediting Method Vesting Factor		50	%
Strategy Value	$	106,000		($100,000 + $100,000 * 50.0% * min (15.0%, 12.0%))
Contract Value:	$	106,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		4.00	%
Withdrawal Charge Percentage:		9	%
Gross Withdrawal Amount:	$	106,000.00
MVA:		5.08	%	(5.00% – 4.00%) * (61/12)
Contract Base Reduction Percentage:		94	%	($100,000 / $106,000)
Contract Base Adjustment Amount:	$	100,000.00		(94% * $106,000.00)
Strategy Base Reduction Amount:	$	100,000.00		($100,000.00 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	96,000		($106,000.00 – $10,000)
Market Value Adjustment (MVA):	$	4,880.00		($96,000.00 * 5.08%)
Withdrawal Charge:	$	8,200.80		($106,000.00 – $10,000 + $4,880.00) * (9%)
Post Withdrawal Strategy Base:	$	0.00		($100,000 – $100,000.00)
Withdrawal Proceeds:	$	102,679.20		($106,000.00 – $8,200.80 + $4,880.00)

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Scenario 5: Partial Withdrawal Example when Index Performance is Negative and MVA is Negative


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		-15	%
Downside Protection Vesting Factor		100	%
Strategy Value	$	90,000		($100,000 + $100,000 * max (- 10.0% * 100%, -15.0%))
Contract Value:	$	90,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		6.00	%
Withdrawal Charge Percentage:		9	%
Net Withdrawal Amount:	$	25,000.00
Gross Withdrawal Amount:	$	27,552.24		(amount needed to yield withdrawal proceeds of $25,000)
MVA:		-5.08	%	(5.00% – 6.00%) * (61/12)
Contract Base Reduction Percentage:		111	%	($100,000 / $90,000)
Contract Base Adjustment Amount:	$	30,613.60		(111% * $27,552.24)
Strategy Base Reduction Amount:	$	30,613.60		($30,613.60 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	17,552		($27,552.24 – $10,000)
Market Value Adjustment (MVA):		-$892.24		($17,552.24 * -5.08%)
Withdrawal Charge:	$	1,660.00		($27,552.24 – $10,000 + -$892.24) * (9%)
Post Withdrawal Strategy Base:	$	69,386.40		($100,000 – $30,613.60)
Withdrawal Proceeds:	$	25,000.00		($27,552.24 – $1,660.00 + -$892.24)

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Scenario 6: Partial Withdrawal Example when Index Performance is Negative and MVA is Positive


Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		-15	%
Downside Protection Vesting Factor		100	%
Strategy Value	$	90,000		($100,000 + $100,000 * max (-10.0% * 100%, -15.0%))
Contract Value:	$	90,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		4.00	%
Withdrawal Charge Percentage:		9	%
Net Withdrawal Amount:	$	25,000.00
Gross Withdrawal Amount:	$	25,537.47		(amount needed to yield withdrawal proceeds of $25,000)
MVA:		5.08	%	(5.00% – 4.00%) * (61/12)
Contract Base Reduction Percentage:		111	%	($100,000 / $90,000)
Contract Base Adjustment Amount:	$	28,374.96		(111% * $25,537.47)
Strategy Base Reduction Amount:	$	28,374.96		($28,374.96 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	15,537		($25,537.47 – $10,000)
Market Value Adjustment (MVA):	$	789.82		($15,537.47 * 5.08%)
Withdrawal Charge:	$	1,327.29		($25,537.47 – $10,000 + $789.82) * (9%)
Post Withdrawal Strategy Base:	$	71,625.04		($100,000 – $28,374.96)
Withdrawal Proceeds:	$	25,000.00		($25,537.47 – $1,327.29 + $789.82)

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Scenario 7: Partial Withdrawal Example when Index Performance is Positive and MVA is Negative

Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		15	%
Crediting Method Vesting Factor		50	%
Strategy Value	$	106,000		($100,000 + $100,000 * 50.0% * min (15.0%, 12.0%))
Contract Value:	$	106,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		6.00	%
Withdrawal Charge Percentage:		9	%
Net Withdrawal Amount:	$	25,000.00
Gross Withdrawal Amount:	$	27,552.24		(amount needed to yield withdrawal proceeds of $25,000)
MVA:		-5.08	%	(5.00% – 6.00%) * (61/12)
Contract Base Reduction Percentage:		94	%	($100,000 / $106,000)
Contract Base Adjustment Amount:	$	25,992.68		(94% * $27,552.24)
Strategy Base Reduction Amount:	$	25,992.68		($25,992.68 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	17,552		($27,552.24 – $10,000)
Market Value Adjustment (MVA):		-$892.24		($17,552.24 * -5.08%)
Withdrawal Charge:	$	1,660.00		($27,552.24 – $10,000 + -$892.24) * (9%)
Post Withdrawal Strategy Base:	$	74,007.32		($100,000 – $25,992.68)
Withdrawal Proceeds:	$	25,000.00		($27,552.24 – $1,660.00 + -$892.24)

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Scenario 8: Partial Withdrawal Example when Index Performance is Positive and MVA is Positive

Index:		S&P500
Strategy Base:	$	100,000
Contract Base:	$	100,000
Strategy Base Allocation Percentage:		100	%	($100,000 / $100,000)
Cap:		12	%
Floor:		-10	%
Participation Rate:		100	%
Index Performance (on date we calculate withdrawal):		15	%
Crediting Method Vesting Factor		50	%
Strategy Value	$	106,000		($100,000 + $100,000 * 50.0%* min (15.0%, 12.0%))
Contract Value:	$	106,000
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		4.00	%
Withdrawal Charge Percentage:		9	%
Net Withdrawal Amount:	$	25,000.00
Gross Withdrawal Amount:	$	25,537.47		(amount needed to yield withdrawal proceeds of $25,000)
MVA:		5.08	%	(5.00% – 4.00%) * (61/12)
Contract Base Reduction Percentage:		94	%	($100,000 / $106,000)
Contract Base Adjustment Amount:	$	24,091.95		(94% * $25,537.47)
Strategy Base Reduction Amount:	$	24,091.95		($24,091.95 * 100%)
Strategy Free Withdrawal Amount:	$	10,000		(10% * $100,000)
Excess Withdrawal/Surrender Amount:	$	15,537		($25,537.47 – $10,000)
Market Value Adjustment (MVA):	$	789.82		($15,537.47 * 5.08%)
Withdrawal Charge:	$	1,327.29		($25,537.47 – $10,000 + $789.82) * (9%)
Post Withdrawal Strategy Base:	$	75,908.05		($100,000 – $24,091.95)
Withdrawal Proceeds:	$	25,000.00		($25,537.47 – $1,327.29 + $789.82)

Scenario 9: Partial Withdrawal Example with Multiple Strategies


Strategy 1
Strategy 1 Index		S&P500
Strategy 1 Strategy Base	$	20,000.00
Strategy 1 Cap:		12	%
Strategy 1 Floor:		-10	%
Strategy 1 Participation Rate:		100	%
Strategy 1 Index Performance (on date we calculate withdrawal):		15	%
Strategy 1 Crediting Method Vesting Factor		50	%
Strategy 1 Strategy Value	$	21,200		($20,000 + $20,000 * 50.0% * min (15.0%, 12.0%))
Strategy 2
Strategy 2 Index		MSCI EAFE
Strategy 2 Strategy Base	$	80,000.00
Strategy 2 Cap:		8	%
Strategy 2 Floor:		-5	%
Strategy 2 Participation Rate:		100	%
Strategy 2 Index Performance (on date we calculate withdrawal):		-15	%
Strategy 2 Crediting Method Vesting Factor		100	%

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Strategy 2 Strategy Value	$	76,000		($80,000 + $80,000 * max (-5.0% * 100%, -15.0%))
Contract Base	$	100,000		($20,000 + $80,000)
Contract Value	$	97,200		($21,200 + $76,000)
Months Elapsed in Strategy Term		10
Months Remaining in Withdrawal Charge Period:		61
Initial MVA Rate:		5.00	%
Current MVA rate:		6.00	%
Withdrawal Charge Percentage:		9	%
Net Withdrawal Amount:	$	25,000.00
Gross Withdrawal Amount:	$	27,552.24		(amount needed to yield withdrawal proceeds of $25,000)
MVA:		-5.08	%	(5.00% – 6.00%) * (61/12)
Contract Base Reduction Percentage:		103	%	($100,000 / $97,200)
Contract Base Adjustment Amount:	$	28,345.93		(103% * $27,552.24)
Strategy 1
Strategy 1 Strategy Base Reduction Amount:	$	5,669.19		($28,345.93 * 20%)
Strategy 1 Strategy Free Withdrawal Amount:	$	2,000		(10% * $20,000)
Strategy 1 Excess Withdrawal/Surrender Amount:	$	3,510.45		($27,552.24 * 20% – $2,000)
Strategy 1 Market Value Adjustment (MVA):		-$178.45		($3,510.45 * -5.08%)
Strategy 1 Withdrawal Charge:	$	332.00		($3,510.45 – $2,000 + -$178.45) * (9%)
Strategy 1 Post Withdrawal Strategy Base:	$	14,330.81		($20,000 – $5,669.19)
Strategy 1 Withdrawal Proceeds:	$	5,000.00		($27,552.24 – $332.00 + -$178.45)
Strategy 2
Strategy 2 Strategy Base Reduction Amount:	$	22,677		($28,345.93 * 80%)
Strategy 2 Strategy Free Withdrawal Amount:	$	8,000		(10% * $80,000)
Strategy 2 Excess Withdrawal/Surrender Amount:	$	14,041.79		($27,552.24 * 80% – $8,000)
Strategy 2 Market Value Adjustment (MVA):		-$713.79		($14,041.79 * -5.08%)
Strategy 2 Withdrawal Charge:	$	1,328.00		($14,041.79 – $8,000 + -$713.79) * (9%)
Strategy 2 Post Withdrawal Strategy Base:	$	57,323.26		($80,000 – $22,676.74)
Strategy 2 Withdrawal Proceeds:	$	20,000.00		($27,552.24 – $1,328.00 + -$713.79)
Post Withdrawal Contract Base	$	71,654.07		($14,041.79 + $57,323.26)
Total Withdrawal Proceeds	$	25,000.00		($5,000 + $20,000)

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APPENDIX B

EXAMPLE OF INDEX SUBSTITUTION

The following example demonstrates how we would determine credited interest or a reduction in Strategy Value on the Maturity Date of a Strategy when there has been an Index substitution. This example assumes a S&P 500 Strategy with a $100,000 Strategy Base/ -10% Floor/ 12% Cap / 100% Participation Rate.

Strategy:

Strategy Base	$100,000
Term	1-Year
Index	S&P 500 Index
Initial S&P 500 Index Level	1,000
Floor	-10%
Cap	12%
Participation Rate	100%

Assume the MSCI EAFE Index is substituted for the S&P 500 Index during the Term of the Strategy above.

S&P 500 Index Performance at the Date of Substitution:

Index	S&P 500 Index
Initial S&P 500 Index Level	1,000
S&P 500 Index Level at Date of Substitution	900
Index Performance	-10%

MSCI EAFE Index Performance for the Remainder of the Term:

Index	MSCI EAFE Index
MSCI EAFE Index Level at Date of Substitution	2,000
MSCI EAFE Index Level at Maturity Date	2,400
Index Performance	20%

Calculation of Credited Interest or Reduction in Strategy Value and Maturity Value:

S&P 500 Index Performance	-10%
MSCI EAFE Index Performance	20%
Combined Index Performance^(A)	8%
Credited Interest or Reduction in Strategy Value^(B)	$8,000
Maturity Value	$108,000

^(A)The Combined Index Performance is calculated as follows:(1 + 1^st Index Performance) x (1 + 2^nd Index Performance) – 1 = (1 + -10%) x (1 + 20%) – 1 = 8%

^(B)Because the Combined Index Performance is positive, the credited interest or reduction in Strategy Value is calculated as follows: (Strategy Base) x (lesser of Cap or (combined Index Performance x Participation Rate)) = $100,000 x (lesser of Cap or (combined Index Performance x 100%)) = $8,000

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APPENDIX C

INDEX PUBLISHERS

Protective Life uses the Index under license from the Indices’ respective publishers. The following information about the Indices is included in this prospectus in accordance with Protective Life’s license agreements with the publishers of the Indices:

S&P 500^® Index Information

The "S&P 500 Index" is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates ("SPDJI"), and has been licensed for use by Protective Life. Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global ("S&P"); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). It is not possible to invest directly in an index. Protective Market Defender II is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, "S&P Dow Jones Indices"). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the Protective Market Defender or any member of the public regarding the advisability of investing in securities generally or in Protective Market Defender particularly or the ability of the S&P 500 Index to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices only relationship to Protective Life with respect to the S&P 500 Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P 500 Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Protective Life or the Protective Market Defender II. S&P Dow Jones Indices have no obligation to take the needs of Protective Life or the owners of Protective Market Defender II into consideration in determining, composing or calculating the S&P 500 Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of Protective Market Defender II or the timing of the issuance or sale of Protective Market Defender II or in the determination or calculation of the equation by which Protective Market Defender II is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of Protective Market Defender II. There is no assurance that investment products based on the S&P 500 Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment or tax advisor. A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY PROTECTIVE LIFE, OWNERS OF THE PROTECTIVE MARKET DEFENDER, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO.

WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND PROTECTIVE LIFE, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

MSCI EAFE Index Information

THIS PRODUCT IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC. ("MSCI"), ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX (COLLECTIVELY, THE "MSCI PARTIES"). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY PROTECTIVE LIFE. NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR

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IMPLIED, TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN PRODUCTS GENERALLY OR IN THIS PRODUCT PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS PRODUCT OR THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS PRODUCT TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE CONSIDERATION INTO WHICH THIS PRODUCT IS REDEEMABLE. FURTHER, NONE OF THE MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR OFFERING OF THIS PRODUCT.

ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER OF THE PRODUCT, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A

PARTICULAR PURPOSE, WITH RESPECT TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

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APPENDIX D

STATE CONTRACT AVAILABILITY AND VARIATIONS OF CERTAIN FEATURES

The following chart describes the material variations of certain features and/or benefits of the Contract in the states where the Contract has been approved as of the date of this Prospectus. Please consult your financial professional for more information about availability in your state.

STATE	FEATURE	VARIATION
Arizona	Right to Cancel	The Contract’s return and the cancellation request must be made within 10 days of your receipt of the Contract; or within 30 days of receipt if either: the Contract is issued in replacement of an existing contract; or, any Owner or Annuitant is 65 years of age or older on the date of application.
Connecticut	Unemployment: waiver of applicable withdrawal charge and MVA	The waiver of withdrawal charge and MVA for unemployment is not available.
Florida	Right to Cancel	You may cancel this Contract within 21 days after you receive it by returning it to our administrative office, or to the agent who sold it to you, with a written request for cancellation.
Idaho	Right to Cancel	You may cancel this Contract within 20 days after you receive it by returning it to our administrative office, or to the agent who sold it to you, with a written request for cancellation.
Kansas	Right to Cancel	If this Contract is a replacement of an existing annuity contract, you may return it to us (or the agent who sold it to you) within 30 days after you receive it.
Louisiana	Right to Cancel	If this Contract is a replacement of an existing annuity contract, you may return it to us (or the agent who sold it to you) within 30 days after you receive it.
Massachusetts	Annuitization Rates	We will use a unisex table of annuity payment rates.
	Right to Cancel	We will promptly return your Contract Value. This amount may be more or less than your Purchase Payment In states where specifically required, we will promptly return the greater of your Purchase Payment, or the Contract Value. If this Contract is a replacement of an existing annuity contract, you may return it to us (or the agent who sold it to you) within 20 days after you receive it.
Missouri	Right to Cancel	We will promptly return the greater of your Contract Value or all Purchase Payments.
Montana	Annuitization Rates	We will use a unisex table of annuity payment rates.
Nevada	Right to Cancel	If this Contract is a replacement of an existing annuity contract, you may return it to us (or the agent who sold it to you) within 30 days after you receive it.
New Hampshire	Annuitization Benefit	PayStream Plus^® Annuitization Benefit is not available.
North Dakota	Right to Cancel	You may cancel this Contract within 20 days after you receive it by returning it to our administrative office, or to the agent who sold it to you, with a written request for cancellation.
Oklahoma	Right to Cancel	If we do not process the cancellation within 30 days of your request, the amount we refund will be the required amount plus interest accrued as calculated under applicable Oklahoma law.

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STATE		FEATURE		VARIATION
Wyoming		Right to Cancel		this Contract is a replacement of an existing annuity contract, you may return it to us (or the agent who sold it to you) within 30 days after you receive it.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.*

The expenses of the issuance and distribution of the Contracts, other than any underwriting discounts and commissions, are as follows:

Securities and Exchange Commission Registration Fees	$	0
Printing and engraving		50,000
Accounting fees and expenses		15,000
Legal fees and expenses		15,000
Miscellaneous		0
TOTAL EXPENSES	$	80,000

*	Estimated.

Item 14. Indemnification of Directors and Officers.

Section 6.5 of Article VI of the Certificate of Incorporation of Protective Life Corporation (“PLC”) provides, in substance, that any of PLC’s directors and officers and certain directors and officers of Protective Life, who is a party or is threatened to be made a party to any action, suit or proceeding, other than an action by or in the right of PLC, by reason of the fact that he is or was an officer or director, shall be indemnified by PLC against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of PLC and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. If the action or suit is or was by or in the right of PLC to procure a judgment in its favor, such person shall be indemnified by PLC against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to PLC unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. To the extent that any officer or director has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense of any issue or matter therein, he shall be indemnified by PLC against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith without the necessity of any action being taken by PLC other than the determination, in good faith, that such defense has been successful. In all other cases, unless ordered by a court, indemnification shall be made by PLC only as authorized in the specific case upon a determination that indemnification of the officer or director is proper in the circumstances because he has met the applicable standard of conduct. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion or (c) by the holders of a majority of the shares of capital stock of PLC entitled to vote thereon. By means of a by-law, Protective Life offers its directors and certain executive officers similar indemnification.

In addition, the executive officers and directors are insured by PLC’s Directors’ and Officers’ Liability Insurance Policy including Company Reimbursement and are indemnified by a written contract with PLC which supplements such coverage.

Item 15. Recent Sales of Unregistered Securities.

None.

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Item 16. (a) Exhibits.

1. (a) Underwriting Agreement by and among Protective Life Insurance Company (“Protective”) and Protective Equity Services, Inc. (“PES”) is incorporated herein by reference to the Registration Statement on Form S-3 (File No. 333-229837) filed on February 25, 2019.

1. (b) Second Amended Distribution Agreement between Protective Life Insurance Company (“Insurer”) and Investment Distributors, Inc. (“Distributor”) as revised June 18, 2018, is incorporated herein by reference to the Registration Statement on Form S-3/A (File No. 333-222086) filed on June 28, 2018.

2(a) Master Agreement by and among AXA Equitable Financial Services LLC, AXA Financial Inc. and Protective Life Insurance Company, dated as of April 10, 2013, incorporated herein by reference to the Registration Statement on Form 10-Q (File No. 001-31901) filed on August 12, 2013.

2(b) Master Transaction Agreement by and among Protective Life Insurance Company, Protective Life Corporation, The Lincoln National Life Insurance Company, Lincoln National Corporation, Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company and Liberty Mutual Group Inc., dated as of January 18, 2018, incorporated by reference to the Registration Statement on Form 8-K (File No. 001-31901) filed on January 23, 2018.

2(c) Master Transaction Agreement by and among Protective Life Insurance Company, Great-West Life & Annuity Insurance Company, Great-West Life & Annuity Insurance Company of New York, The Canada Life Assurance Company and The Great-West Life Assurance Company, dated as of January 23, 2019, incorporated by reference to the Registration Statement on Form 8-K (File No. 001-31901) filed on January 23, 2019.

3(a) 2011 Amended and Restated Charter of Protective Life Insurance Company dated as of June 27, 2011, filed as Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed March 29, 2012 (No. 001-31901).

3(b) 2011 Amended and Restated By-Laws of Protective Life Insurance Company dated as of June 27, 2011, filed as Exhibit 3(b) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed March 29, 2012 (No. 001-31901).

4(a) Form of Individual Single Premium Deferred Registered Index - Linked Annuity Contract, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(b) Form of Application for Individual Single Premium Deferred Registered Index - Linked Annuity Contract, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(c) Qualified Plan Endorsement, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(d) Return of Purchase Payments Death Benefit Rider, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(e) Waiver of Withdrawal Charge and Market Value Adjustment for Unemployment Endorsement, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(f) Waiver of Withdrawal Charge and Market Value Adjustment for Terminal Condition or Nursing Facility Confinement Endorsement, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

4(g) Annuitization Bonus Endorsement, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020.

5 Opinion of Alyson Saad, Esq, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-235429) filed on May 22, 2020..

8. Opinion re Tax Matters. Not Applicable.

9 Voting Trust Agreement, Not Applicable.

10(a) Bond Purchase Agreement dated as of December 30, 1985, among Protective Life Corporation and National Westminster Bank USA, filed as Exhibit 10(a) to the Company’s Annual Report on Form 10-K filed March 21, 2018 (No. 001-31901).

10(b) Escrow Agreement dated as of December 30, 1985, among Protective Life Corporation and National Westminster Bank USA, filed as Exhibit 10(b) to the Company’s Annual Report on Form 10-K filed March 21, 2018 (No. 001-31901).

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10(c) Amended and Restated Credit Agreement dated as of February 2, 2015, among Protective Life Corporation and Protective Life Insurance Company, as borrowers, the several lenders from time to time a party thereto, Regions Bank, as Administrative Agent, and Wells Fargo Bank, National Association, as Syndication Agent, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 3, 2015 (No. 001-31901).

10(d) First Amendment to Amended and Restated Credit Agreement, dated as of May 3, 2018, among Protective Life Corporation and Protective Life Insurance Company, as Borrowers, the several lenders from time to time thereto, and Regions Bank, as Administrative Agent for Lenders, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 9, 2018 (No. 001-31901).

10(e) Amendment and Clarification of the Tax Allocation Agreement dated January 1, 1988 by and among Protective Life Corporation and its subsidiaries, filed as Exhibit 10(h) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 filed March 31, 2005 (No. 001-31901).

10(f) Third Amended and Restated Reimbursement Agreement dated as of June 25, 2014 between Golden Gate III Vermont Captive Insurance Company and UBS AG, Stamford Branch, filed as Exhibit 10 to the Company’s Quarterly Report on Form 10-Q filed August 13, 2014 (No. 001-31901).

10(g) Stock Purchase Agreement by and among RBC Insurance Holdings (USA), Inc., Athene Holding Ltd., Protective Life Insurance Company and RBC USA Holdco Corporation (solely for the purposes of Sections 5.14-5.17 and Articles 7, 8 and 10), dated as of October 22, 2010, filed as Exhibit 10.01 to the Company’s Current Report on Form 8-K filed October 28, 2010 (No. 001-31901).

10(h) Reimbursement Agreement dated as of December 10, 2010 between Golden Gate IV Vermont Captive Insurance Company and UBS AG, Stamford Branch, filed as Exhibit 10(j) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 filed March 30, 2011 (No. 001-31901).

10(I) Coinsurance Agreement by and between Liberty Life Insurance Company and Protective Life Insurance Company, filed as Exhibit 10.02 to the Company’s Current Report on Form 8-K filed October 28, 2010 (No. 001-31901).

10(j) Master Agreement by and between Protective Life Insurance Company and Genworth Life and Annuity Insurance Company, dated as of September 30, 2015, filed as Exhibit 10 to the Company’s Quarterly Report on Form 10-Q filed November 10, 2015 (No. 001-31901).

10(k) Distribution Agreement by and between Protective Life Insurance Company and Investment Distributors, Inc., dated as of June 16, 2011, filed as Exhibit 1(a) to the Company’s Registration Statement on Form S-3 filed December 15, 2017 (No. 333-222086).

10(l) Second Amended Distribution Agreement between Protective Life Insurance Company (“Insurer”) and Investment Distributors, Inc. (“Distributor”) as revised June 18, 2018, filed as Exhibit 1(b) to the Company’s Registration Statement on Form S-3/A filed on June 28, 2018 (File No. 333-222086).

10(m) Protective Life Corporation’s Excess Benefit Plan, Amended and Restated as of December 31, 2008 and Reflecting the Terms of the December 31, 2010 Amendment, filed as Exhibit 10(c) to Protective Life Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012 filed February 28, 2013 (No. 001-11339).

10(n) Amendment to Protective Life Corporation’s Excess Benefit Plan, dated as of April 17, 2014, filed as Exhibit 10(a) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 8, 2014 (No. 001-11339).

10(o) 2016 Amendment to Protective Life Corporation’s Excess Benefit Plan, dated as of December 19, 2016, filed as Exhibit 10(a)(3) to Protective Life Corporation’s Annual Report on Form 10-K filed February 24, 2017 (No. 001-11339).

10(p) Protective Life Corporation Annual Incentive Plan, effective January 1, 2018, filed as Exhibit 10.1 to Protective Life Corporation’s Current Report on Form 8-K filed November 13, 2017 (No. 001-11339).

10(q) Amended and Restated Protective Life Corporation Annual Incentive Plan, amended and restated as of November 6, 2018, filed as Exhibit 10.2(b) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019 (No. 001-11339).

10(r) Protective Life Corporation 2017 Annual Incentive Plan, filed as Exhibit 10(a) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 3, 2017 (No. 001-11339).

10(s) Amended and Restated Protective Life Corporation Annual Incentive Plan, effective January 1, 2020, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 24, 2020. (No. 001-31901).

10(t) Protective Life Corporation Long-Term Incentive Plan, effective January 1, 2018, filed as Exhibit 10.2 to Protective Life Corporation’s Current Report on Form 8-K filed November 13, 2017 (No. 001-11339).

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10(s) Amendment One to the Protective Life Corporation Long-Term Incentive Plan, filed as Exhibit 10 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 11, 2018 (No. 001-11339).

10(t) Amended and Restated Protective Life Corporation Long-Term Incentive Plan, filed as Exhibit 10.1 to Protective Life Corporation’s Current Report on Form 8-K filed November 13, 2018 (No. 001-11339).

10(u) Amended and Restated Protective Life Corporation Long-Term Incentive Plan, effective January 1, 2020, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 24, 2020.

10(v) 2019 Long-Term Incentive Plan Awards Acceptance Form, filed as Exhibit 10.11 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019 (No. 001-11339).

10(w) 2018 Long-Term Incentive Plan Awards Acceptance Form, filed as Exhibit 10.3(d) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019 (No. 001-11339).

10(x) 2019 Parent-Based Award Letter of Protective Life Corporation, filed as Exhibit 10.2 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019 (No. 001-11339).

10(y) 2019 Parent-Based Award Provisions of Protective Life Corporation, filed as Exhibit 10.3 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019 (No. 001-11339).

10(z) 2018 Parent-Based Award Letter of Protective Life Corporation, filed as Exhibit 10.4(a) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019 (No. 001-11339).

10(aa) 2018 Parent-Based Award Provisions of Protective Life Corporation, filed as Exhibit 10.4(b) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019 (No. 001-11339).

10(bb) 2017 Parent-Based Award Letter of Protective Life Corporation, filed as Exhibit 10.16(c)(1) to Protective Life Corporation’s Annual Report on Form 10-K filed March 25, 2020 (001-31901).

10(cc) 2019 Performance Units Award Letter (for key officers) of Protective Life Corporation, filed as Exhibit 10.4 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019 (No. 001-11339).

10(dd) 2019 Performance Units Provisions (for key officers) of Protective Life Corporation, filed as Exhibit 10.5 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019 (No. 001-11339).

10(ee) 2018 Performance Units Award Letter (for key officers) of Protective Life Corporation, filed as Exhibit 10.5(a) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019

10(ff) 2018 Performance Units Provisions (for key officers) of Protective Life Corporation, filed as Exhibit 10.5(b) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019

10(gg) 2017 Performance Units Award Letter (for key officers) of Protective Life Corporation, filed as Exhibit 10.17(c)(1) to Protective Life Corporation’s Annual Report on Form 10-K filed March 25, 2020 (001-31901).

10(hh) 2017 Performance Units Provisions (for key officers) of Protective Life Corporation, filed as Exhibit 10(c) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 3, 2017

10(ii) 2019 Restricted Units Award Letter of Protective Life Corporation (for key officers), filed as Exhibit 10.8 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019

10(jj) 2019 Restricted Units Provisions of Protective Life Corporation, filed as Exhibit 10.10 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019

10(kk) 2018 Restricted Units Award Letter (for key officers) of Protective Life Corporation, filed as Exhibit 10.7(a) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019

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10(ll) 2018 Restricted Units Provisions of Protective Life Corporation, filed as Exhibit 10.7(c) to Protective Life Corporation’s Annual Report on Form 10-K filed March 5, 2019

10(mm) 2017 Restricted Units Award Letter (for key officers) of Protective Life Corporation, filed as Exhibit 10.18(c)(1) to Protective Life Corporation’s Annual Report on Form 10-K filed March 25, 2020 (001-31901).

10(nn) 2017 Restricted Units Provisions of Protective Life Corporation, filed as Exhibit 10(e) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 3, 2017

10(oo) 2016 Restricted Units Award Letter of Protective Life Corporation, filed as Exhibit 10.18(d)(1) to Protective Life Corporation’s Annual Report on Form 10-K filed March 25, 2020 (001-31901).

10(pp) 2016 Restricted Units Provisions of Protective Life Corporation, filed as Exhibit 10(e) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 6, 2016

10(qq) Protective Life Corporation’s Indemnity Agreement for Officers, filed as Exhibit 10(h) to Protective Life Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, filed March 2, 2018

10(rr) Protective Life Corporation’s Director Indemnity Agreement, filed as Exhibit 10(c) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 5, 2010

10(ss) Confidentiality and Non-Competition Agreement, dated as of November 28, 2017, between Protective Life Corporation and John D. Johns, filed as Exhibit 10.2 to Protective Life Corporation’s Current Report on Form 8-K filed December 4, 2017

10(tt) Employment Agreement between Protective Life Corporation and Executive Vice President, filed as Exhibit 10(c) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 8, 2014

10(uu) Employment Agreement between Protective Life Corporation and Senior Vice President, filed as Exhibit 10(d) to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 8, 2014

10(vv) Protective Life Corporation’s Deferred Compensation Plan, as Amended and Restated as of January 1, 2019, filed as Exhibit 10.1 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed May 7, 2019.

10(ww) Protective Life Corporation’s Deferred Compensation Plan for Officers, as Amended and Restated as of August 1, 2016, filed as Exhibit 10 to Protective Life Corporation’s Quarterly Report on Form 10-Q filed August 5, 2016

10(xx) Excess Benefit Plan Settlement Agreement, dated as of September 30, 2016, between Protective Life Corporation and John D. Johns, filed as Exhibit 10 to Protective Life Corporation’s Quarterly Report of Form 10-Q filed November 7, 2016

10(yy) Office Space Letter, dated as of November 4, 2019, between Protective Life Corporation and John D. Johns, filed as Exhibit 10.26 to Protective Life Corporation’s Annual Report on Form 10-K filed March 25, 2020 (001-31901).

10(zz) Underwriting Agreement by and among the Company and Protective Equity Services, Inc., filed as Exhibit 1(a) to the Company’s Registration Statement on Form S-3 (File No. 333-229837) filed on February 25, 2019.

15. Letter re Unaudited Interim Financial Information. Not Applicable.

16. Letter re Change in Certifying Accountant. Not Applicable.

21. Subsidiaries of the Registrant, filed herein.

22. Subsidiary guarantors and issuers of guaranteed securities and affiliates whose securities collateralize securities of the registrant. Not Applicable.

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23. (a) Consent of KPMG LLP, filed herein.

23. (b) Consent of Eversheds-Sutherland LLP, filed herein.

24. Power of Attorney. Not Applicable.

25. Statement of Eligibility of Trustee. Not Applicable.

96. Technical Report Summary. Not Applicable.

99. Additional Exhibits. Not Applicable.

101. Interactive Data File. Not Applicable.

107. Filing Fee Table. Not Applicable.

Item 16(b). Financial Statement Schedules

All required financial statement schedules of Protective Life Insurance Company are included in Part I of this Registration Statement.

Item 17. Undertakings.

(A)	The undersigned Registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or

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prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(B)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officers or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Birmingham, State of Alabama, on April 27, 2022.

	PROTECTIVE LIFE INSURANCE COMPANY

	By:	/s/ RICHARD J. BIELEN
		Richard J. Bielen
		Chairman of the Board and Chief
		Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date

(i) Principal Executive Officer


/s/ RICHARD J. BIELEN	Chairman of the Board and Chief Executive Officer	April 27, 2022
Richard J. Bielen	Chairman of the Board and Chief Executive Officer


(ii) Principal Financial Officer


/s/ STEVEN G. WALKER	Executive Vice President and Chief Financial Officer	April 27, 2022
Steven G. Walker	Executive Vice President and Chief Financial Officer


(iii) Principal Accounting Officer


/s/ PAUL R. WELLS	Senior Vice President, Chief Accounting Officer and Controller	April 27, 2022
Paul R. Wells


(iv) Board of Directors:


/s/ RICHARD J. BIELEN	Director	April 27, 2022
Richard J. Bielen

/s/ MICHAEL G. TEMPLE	Director	April 27, 2022
Michael G. Temple

/s/ STEVEN G. WALKER	Director	April 27, 2022
Steven G.Walker

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EXHIBIT INDEX


Number		Description
21		Subsidiaries of the Registrant.

23. (a)		Consent of KPMG LLP, filed herein.

23. (b)		Consent of Eversheds-Sutherland LLP, filed herein.

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Protective Life Insurance POS AMProspectus update (post-effective amendment)