FORM 10-Q
------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Numbers 33-31940; 33-39345; 33-57052; 333-02249
PROTECTIVE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Tennessee 63-0169720
(State of incorporation) (IRS Employer Identification Number)
2801 Highway 280 South
Birmingham, Alabama 35223
(Address of principal executive offices)
(205) 879-9230
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Number of shares of Common Stock, $1.00 par value, outstanding as of August 2,
1996: 5,000,000 shares.
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format pursuant to General Instruction H(2).
PROTECTIVE LIFE INSURANCE COMPANY
INDEX
Part I. Financial Information:
Item 1. Financial Statements:
Report of Independent Accountants
Consolidated Condensed Statements of Income for the Three and Six
Months ended June 30, 1996 and 1995 (unaudited)
Consolidated Condensed Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995
Consolidated Condensed Statements of Cash Flows for the
Six Months ended June 30, 1996 and 1995 (unaudited)
Notes to Consolidated Condensed Financial Statements (unaudited)
Item 2. Management's Narrative Analysis of the Results of Operations
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K
Signature
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholder
Protective Life Insurance Company
Birmingham, Alabama
We have reviewed the accompanying consolidated condensed balance sheet of
Protective Life Insurance Company and subsidiaries as of June 30, 1996, and the
related consolidated condensed statements of income for the three-month and
six-month periods ended June 30, 1996 and 1995 and consolidated condensed
statements of cash flows for the six-month periods ended June 30, 1996 and 1995.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated condensed financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of income, stockholder's equity, and cash flows
for the year then ended (not presented herein); and in our report dated February
12, 1996, we expressed an unqualified opinion which contains an explanatory
paragraph regarding the changes in accounting for certain investments in debt
and equity securities in 1993 on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated condensed
balance sheet as of December 31, 1995, is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
July 24, 1996
2
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------ -----------------------
1996 1995 1996 1995
---- ---- ---- ----
REVENUES
Premiums and policy fees (net of reinsurance ceded:
three months: 1996 - $88,232; 1995 - $80,312;
six months: 1996 - $166,535; 1995 - $142,444) $124,134 $107,452 $232,801 $209,466
Net investment income 126,421 113,564 244,764 223,855
Realized investment gains (losses) 600 (555) 5,021 2,106
Other income 1,251 25 3,198 1,379
--------- ---------- ---------- ----------
252,406 220,486 485,784 436,806
-------- -------- --------- --------
BENEFITS AND EXPENSES
Benefits and settlement expenses (net of reinsurance ceded:
three months: 1996 - $61,030; 1995 - $62,213;
six months: 1996 - $117,781; 1995 - $105,122) 159,533 138,754 308,761 274,147
Amortization of deferred policy acquisition costs 29,521 25,225 51,340 45,550
Other operating expenses (net of reinsurance ceded:
three months: 1996 - $25,007; 1995 - $24,204;
six months: 1996 - $42,809; 1995 - $35,473) 30,958 28,748 63,715 60,443
-------- --------- --------- --------
220,012 192,727 423,816 380,140
-------- -------- -------- --------
INCOME BEFORE INCOME TAX 32,394 27,759 61,968 56,666
Income tax expense 10,539 9,161 21,153 18,700
-------- -------- -------- --------
NET INCOME $ 21,855 $ 18,598 $ 40,815 $ 37,966
======== ======== ======== ========
See notes to consolidated condensed financial statements
3
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
JUNE 30 DECEMBER 31
1996 1995
----------- ----------
(Unaudited)
ASSETS
Investments:
Fixed maturities $4,461,977 $3,891,932
Equity securities 45,668 38,711
Mortgage loans on real estate 1,463,770 1,835,057
Investment in real estate, net 19,015 20,788
Policy loans 165,471 143,372
Other long-term investments 23,332 43,875
Short-term investments 87,338 46,891
------------ -----------
Total investments 6,266,571 6,020,626
Cash 13,632 6,198
Accrued investment income 67,461 61,004
Accounts and premiums receivable, net 52,487 35,492
Reinsurance receivables 322,683 271,018
Deferred policy acquisition costs 471,572 410,183
Property and equipment, net 33,745 34,211
Receivables from related parties 1,961
Other assets 13,426 13,096
Assets held in separate accounts 443,406 324,904
----------- -----------
TOTAL ASSETS $7,684,983 $7,178,693
========== ==========
LIABILITIES
Policy liabilities and accruals $2,521,726 $2,121,921
Guaranteed investment contract deposits 2,459,727 2,451,693
Annuity deposits 1,253,784 1,280,069
Other policyholders' funds 142,691 134,380
Other liabilities 124,276 109,538
Accrued income taxes 6,265 838
Deferred income taxes 11,333 67,420
Indebtedness to related parties 32,155 34,693
Liabilities related to separate accounts 443,406 324,904
----------- -----------
TOTAL LIABILITIES 6,995,363 6,525,456
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES - NOTE C
REDEEMABLE PREFERRED STOCK, $1 par value,
at redemption value; Shares authorized and issued: 2,000 2,000 2,000
----------- -----------
STOCKHOLDER'S EQUITY
Common Stock, $1 par value
Shares authorized and issued: 5,000,000 5,000 5,000
Additional paid-in capital 223,193 144,494
Net unrealized gains (losses) on investments
(Net of income tax: 1996 - ($13,679); 1995 - $31,157) (25,404) 57,863
Retained earnings 490,410 449,645
Note receivable from PLC
Employee Stock Ownership Plan (5,579) (5,765)
------------ ------------
TOTAL STOCKHOLDER'S EQUITY 687,620 651,237
----------- -----------
$7,684,983 $7,178,693
========== ==========
See notes to consolidated condensed financial statements
4
PROTECTIVE LIFE INSURANCE COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
SIX MONTHS ENDED
JUNE 30
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 40,815 $ 37,966
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred policy acquisition 51,340 45,551
Capitalization of deferred policy acquisition costs (47,830) (39,292)
Depreciation expense 2,617 2,125
Deferred income tax (11,251) (8,508)
Accrued income tax 5,427 3,024
Interest credited to universal life and investment products 135,915 140,650
Policy fees assessed on universal life and investment products (53,936) (48,472)
Change in accrued investment income and other receivables (67,490) (36,209)
Change in policy liabilities and other policyholders'
funds of traditional life and health products 109,036 72,806
Change in other liabilities 14,124 (38,532)
Other (net) (2,453) (927)
----------- ----------
Net cash provided by operating activities 176,314 130,182
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities and principal reductions of investments
Investments available for sale 364,292 110,715
Other 35,649 36,281
Sale of investments
Investments available for sale 550,200 715,811
Other 560,840 3,062
Cost of investments acquired
Investments available for sale (1,628,369) (1,057,842)
Other (244,164) (129,153)
Acquisitions and bulk reinsurance assumptions 172,726
Purchase of property and equipment (2,184) (4,111)
Sale of property and equipment 33 81
------------ -----------
Net cash used in investing activities (190,977) (325,156)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution from PLC 78,699 18,000
Proceeds from borrowings under line of credit arrangements and debt 689,000 683,000
Principal payments on line of credit arrangements and debt (689,000) (683,000)
Principal payment on surplus note to PLC (2,538)
Dividends to PLC (50) (50)
Investment product deposits and change in universal life deposits 425,110 447,884
Investment product withdrawals (479,124) (270,860)
----------- -----------
Net cash provided by financing activities 22,097 194,974
------------ -----------
INCREASE (DECREASE) IN CASH 7,434 0
CASH AT BEGINNING OF PERIOD 6,198 0
------------- -----------
CASH AT END OF PERIOD $ 13,632 $ 0
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period:
Interest on notes and mortgages payable $ (2,663) $ (1,652)
Income taxes $ (26,566) $(24,183)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Reduction of principal on note from ESOP $ 186 $ 171
Acquisitions and bulk reinsurance assumptions
Assets acquired $ 204,435 $ 613
Liabilities assumed (253,480) (21,800)
--------- --------
Net $ (49,045) $(21,187)
========= ========
See notes to consolidated condensed financial statements
5
PROTECTIVE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of
Protective Life Insurance Company ("Protective Life") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the disclosures required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation have been included. Operating
results for the six month period ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. The year-end consolidated condensed balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. For further information, refer to the
consolidated financial statements and notes thereto included in Protective
Life's annual report on Form 10-K for the year ended December 31, 1995.
Protective Life is a wholly-owned subsidiary of Protective Life
Corporation ("PLC").
NOTE B - SALE OF MORTGAGE LOANS
On March 22, 1996, Protective Life sold $554 million of its commercial
mortgage loans in a securitization transaction. Proceeds from the sale consisted
of cash of $400 million, net of expenses, and subordinated mortgaged-backed
securities of $161 million. The transaction resulted in a realized investment
gain of approximately $6.1 million. The cash proceeds were reinvested in fixed
maturity and short-term investments.
NOTE C - COMMITMENTS AND CONTINGENT LIABILITIES
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. Protective Life does not believe any
assessments will be materially different from amounts already provided for in
the financial statements. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's own
financial strength.
Protective Life and its subsidiaries, like other life and health insurers,
from time to time are involved in lawsuits, in which the plaintiff may seek
punitive damage awards as well as compensatory damage awards. To date, no such
lawsuit has resulted in the award of any material amount of damages against
Protective Life. Although the outcome of any litigation cannot be predicted with
certainty, Protective Life believes that no pending or threatened litigation is
reasonably likely to have a material adverse effect on the financial position of
Protective Life.
6
NOTE D - STATUTORY REPORTING PRACTICES
Financial statements prepared in conformity with generally accepted
accounting principles (i.e., GAAP) differ in some respects from the statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. At June 30, 1996 and for the six months then ended, Protective Life
and its life insurance subsidiaries had consolidated stockholder's equity and
net income prepared in conformity with statutory reporting practices of $386.9
million and $43.6 million, respectively.
NOTE E - RECENTLY ADOPTED ACCOUNTING STANDARDS
At December 31, 1993, Protective Life adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." For purposes of adopting SFAS No. 115 Protective
Life has classified all of its investments in fixed maturities, equity
securities, and short-term investments as "available for sale." As prescribed in
SFAS No. 115, these investments are recorded at their market values with the
resulting net unrealized gain or loss, net of income tax and a related
adjustment to deferred policy acquisition costs, recorded as a component of
stockholder's equity.
Protective Life's balance sheets at June 30, 1996 and December 31, 1995,
prepared on the basis of reporting investments at amortized cost rather than at
market values, are as follows:
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(IN THOUSANDS)
Total investments $6,309,748 $5,915,357
Deferred policy acquisition costs 467,479 426,432
All other assets 946,840 747,884
---------- ----------
$7,724,067 $7,089,673
========== ==========
Deferred income taxes $ 25,012 $ 36,263
All other liabilities 6,984,030 6,458,036
---------- ----------
7,009,042 6,494,299
Redeemable preferred stock 2,000 2,000
Stockholder's equity 713,025 593,374
---------- -----------
$7,724,067 $7,089,673
========== ==========
At January 1, 1996, Protective Life adopted SFAS No. 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Contracts"; SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long- Lived Assets to be Disposed of"; and SFAS No.
122, "Accounting for Mortgage Servicing Rights". The adoption of these
accounting standards did not have a material effect on Protective Life's
financial statements.
7
NOTE F - RECLASSIFICATIONS
Certain reclassifications have been made in the previously reported
financial statements and accompanying notes to make the prior year amounts
comparable to those of the current year. Such reclassifications had no effect on
previously reported net income, total assets, or stockholder's equity.
8
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE
RESULTS OF OPERATIONS
Protective Life Insurance Company ("Protective Life") is a wholly-owned
and the principal operating subsidiary of Protective Life Corporation ("PLC"),
an insurance holding company whose common stock is traded on the New York Stock
Exchange. Founded in 1907, Protective Life provides financial services through
the production, distribution, and administration of insurance and investment
products.
In accordance with General Instruction H(2)(a), Protective Life includes
the following analysis with the reduced disclosure format.
Protective Life has six operating divisions: Acquisitions, Financial
Institutions, Group, Guaranteed Interest Contracts, Individual Life, and
Investment Products. Protective Life also has an additional business segment
which is described herein as Corporate and Others.
Revenues
The following table sets forth revenues by source for the period shown:
SIX MONTHS PERCENTAGE
ENDED INCREASE/
JUNE 30 (DECREASE)
---------- ----------
(in Thousands)
1996 1995
---- ----
Premiums and policy fees $232,801 $209,466 11.1%
Net investment income 244,764 223,855 9.3
Realized investment gains 5,021 2,106 138.4
Other income 3,198 1,379 131.9
-------- --------
$485,784 $436,806
======== ========
Premiums and policy fees increased $23.3 million or 11.1% in the first six
months of 1996 over the first six months of 1995. Increases in premiums and
policy fees from the Group, Individual Life and Investment Products Divisions
were $7.8 million, $8.8 million and $2.0 million, respectively. The coinsurance
of a block of policies in the first quarter of 1996 resulted in a $8.9 million
increase in premiums and policy fees. Premiums and policy fees from the
Financial Institutions Division increased $0.8 million in the first six months
of 1996 as compared to the first six months of 1995. This resulted from the
reinsurance of a block of policies in the second quarter of 1996 representing an
$18.2 million increase in premium and policy fees. This increase was largely
offset by decreases resulting from a reinsurance arrangement, begun in 1995,
9
whereby all of the Division's new credit sales are being ceded to a reinsurer.
Decreases in older acquired blocks resulted in a $5.2 million decrease in
premiums and policy fees.
Net investment income in the first six months of 1996 increased by
$20.9 million over the corresponding period of the preceding year, primarily due
to increases in the average amount of invested assets. Invested assets have
increased primarily due to receiving annuity and guaranteed investment contract
("GIC") deposits and to acquisitions. The assumption of a block of policies in
the first quarter of 1996 and a block of policies in the second quarter of 1996
resulted in an increase in net investment income of $9.0 million in the first
six months of 1996 as compared to the same period in 1995.
Protective Life generally purchases its investments with the intent to
hold to maturity by purchasing investments that match future cash-flow needs.
However, Protective Life may sell any of its investments to maintain approximate
matching of assets and liabilities. Accordingly, Protective Life has classified
its fixed maturities and certain other securities as "available for sale." The
sales of investments that have occurred have resulted principally from portfolio
management decisions to maintain approximate matching of assets and liabilities.
Realized investment gains for the first six months of 1996 were $2.9
million higher than the corresponding period of 1995. In the 1996 first quarter,
Protective Life sold $554 million of its commercial mortgage loans in a
securitization transaction, resulting in a $6.1 million realized investment
gain.
Other income consists primarily of fees from
administrative-services-only types of group accident and health insurance
contracts, and from rental of space in its administrative building to PLC.
Income Before Income Tax
The following table sets forth income or loss before income tax by
business segment for the periods shown:
INCOME (LOSS) BEFORE INCOME TAX
SIX MONTHS ENDED JUNE 30
(IN THOUSANDS)
-------------------------------
BUSINESS SEGMENT 1996 1995
- ---------------- ---- ----
Acquisitions $26,122 $23,515
Financial Institutions 3,863 3,557
Group 4,865 4,351
Guaranteed Investment Contracts 15,171 15,363
Individual Life 7,271 9,545
Investment Products 7,244 4,994
Corporate and Other (4,379 (2,704)
Unallocated Realized Investment Gains (Losses) 1,811 (1,955)
------- -------
$61,968 $56,666
======= =======
10
Pretax earnings from the Acquisitions Division increased $2.6 million in
the first six months of 1996 as compared to the same period of 1995. Earnings
from the Acquisitions Division are expected to decline over time (due to the
lapsing of policies resulting from deaths of insureds or terminations of
coverage) unless new acquisitions are made. The Division's two most recent
acquisitions represented a $2.9 million increase. Older acquired blocks
represented a $0.3 million decrease in the first six months of 1996 as compared
to the same period in 1995.
Pretax earnings of the Financial Institutions Division were $0.3 million
higher in the first six months of 1996 as compared to the same period in 1995.
The reinsurance arrangement begun in 1995 to reinsure all of the Division's new
credit insurance sales and thereby improve the Division's return on investment,
reduced the Division's reported earnings for the first six months of 1996 by
approximately $1.9 million, as contemplated at the date of the arrangement. This
decrease was partially offset by the coinsurance of a block of policies in the
second quarter of 1996 which resulted in a $1.0 million increase in earnings.
Group pretax earnings were $0.5 million higher in the first six months of
1996 as compared to the first six months of 1995. Dental earnings improved $1.2
million which was partially offset by a decline in traditional group health
earnings.
The Guaranteed Investment Contract ("GIC") Division had pretax operating
earnings of $19.6 million in the first six months of 1996 and $15.1 million in
the corresponding period of 1995. This was due to improved operating spreads and
to the growth of GIC deposits placed with Protective Life. At June 30, 1996, GIC
deposits totaled $2.5 billion compared to $2.4 billion one year earlier.
Realized investment losses associated with this Division in the first six months
of 1996 were $4.4 million, as compared to realized investment gains of $0.3
million in the same period last year. As a result, total pretax earnings were
$15.2 million in the first six months of 1996 compared to $15.4 million for the
same period in 1995.
The Individual Life Division had pretax operating earnings of $6.2 million
in the first six months of 1996 as compared to $9.5 million in the same period
of 1995. The decrease was primarily due to higher expenses and to approximately
$0.7 million higher life insurance claims in the first six months of 1996 as
compared to the same period last year. Realized investment gains, net of related
amortization of deferred policy acquisition costs, associated with this Division
were $1.1 million in 1996. As a result, total pretax earnings were $7.3 million
in the first six months of 1996 compared to $9.5 million as in the first six
months of 1995 in which there were no realized investment gains.
Investment Products Division pretax operating earnings were $5.1 million
which was $2.5 million higher in the first six months of 1996 compared to the
same period of 1995. Realized investment gains associated with the Division, net
of related amortization of deferred policy acquisition costs, were $2.1 million
as compared to $2.4 million last year, resulting in total pretax earnings of
$7.2 million in the first quarter of 1996 as compared to $5.0 million in the
same period of 1995.
The Corporate and Other segment consists of several small insurance lines
of business, net investment income and other operating expenses not identified
with the preceding operating divisions (including interest on substantially all
debt), and the operations of a small noninsurance
11
subsidiary. Pretax losses for this segment were $1.7 million higher in the first
six months of 1996 as compared to the first six months of 1995 primarily due to
lower investment income allocated to this segment.
Income Taxes
The following table sets forth the effective tax rates for the periods
shown:
SIX MONTHS
ENDED ESTIMATED EFFECTIVE
JUNE 30 INCOME TAX RATES
---------- -------------------
1996 34.1%
1995 33.0
The effective income tax rate for the full year of 1995 was 34%.
Management's estimate of the effective income tax rate for 1996 is also 34%.
Net Income
The following table sets forth net income for the periods shown:
NET INCOME
----------
SIX MONTHS PERCENTAGE
ENDED TOTAL INCREASE/
JUNE 30 (IN THOUSANDS) (DECREASE)
---------- -------------- ----------
1996 $40,815 7.5%
1995 37,966 17.6
Compared to the same period in 1995, net income in the first six months of
1996 increased $2.8 million, reflecting improved operating earnings in the
Acquisitions, Financial Institutions, Group, and Investment Products Divisions
and higher realized investment gains net of related amortization of deferred
policy acquisition costs which were offset by lower earnings in the Individual
Life and Guaranteed Investment Contracts Divisions and the Corporate and Other
segment.
Recently Issued Accounting Standards
In June 1996 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities". Protective Life
anticipates that the impact of adopting this accounting standard will be
immaterial to its financial condition.
12
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial data schedule
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROTECTIVE LIFE INSURANCE COMPANY
Date: August 12, 1996 /s/ Jerry W. DeFoor
-------------------
Jerry W. DeFoor
Vice President and Controller,
and Chief Accounting Officer
(Duly authorized officer)
13