Exhibit 99
Jefferson Pilot Reports 10 Percent Increase in Second-Quarter Earnings Per Share
Before Realized Investment Gains, 18 Percent Increase in Net Income Per Share
GREENSBORO, N.C., July 28 /PRNewswire/ -- Jefferson-Pilot Corporation
(NYSE: JP), parent of the Jefferson Pilot Financial companies and one of the
nation's leading providers of universal and variable universal life insurance
and annuities, today reported results for the second quarter of 2003.
Jefferson Pilot earned $0.89 per share before realized investment gains in the
quarter, up 10 percent from second-quarter 2002 earnings before realized gains
of $0.81. Net income per share for the second quarter of 2003 increased 18
percent to $0.98, including net realized investment gains of $0.09 per share,
versus net income per share of $0.83 in the second quarter of 2002, including
net realized investment gains of $0.02.
For the first six months of 2003, Jefferson Pilot's earnings before
realized investment gains increased 9 percent to $1.73 per share from $1.59
per share for the first half of 2002. Net income per share including realized
investment gains was $1.74 for the first half of 2003 versus $1.75 for the
first half of last year.
In addition to net income, the company considers earnings before realized
investment gains and losses (or "reportable segment results"), a non-GAAP
financial measure, to be an important indicator of financial performance. We
believe that the combined presentation and discussion of earnings before
realized investment gains and losses, together with net income, provides
relevant and useful information. Earnings before realized investment gains and
losses differs from net income in that it excludes net after-tax realized
investment gains and losses.
All per-share results are on a diluted basis.
While the second quarter presented a challenging business environment,
Jefferson Pilot's results for the period were marked by good asset growth,
strong financial discipline, and improving investment performance. Compared
with the year-earlier level, total assets at June 30 were up 7 percent to
$31.7 billion and stockholders' equity per share grew 14 percent to $27.31.
Net unrealized securities gains increased significantly in the second quarter,
while bond losses from sales and write-downs declined sharply.
Jefferson Pilot's Individual Products business earned $74.3 million in the
second quarter, compared with $74.8 million in the second quarter of 2002.
Year to date, Individual Product earnings grew to $150.3 million from $144.5
million in the first half of 2002. For the second quarter, strong improvement
in Individual Products' universal life business, particularly in the area of
investment spreads, was offset by a $2.6 million decline in earnings from
older blocks of traditional business, primarily reflecting the lower interest
rate environment, and by a $2.1 million adverse effect from increased
amortization of variable universal life deferred acquisition costs instituted
in the third quarter of 2002.
To enhance understanding of life insurance sales trends, Individual
Products' new sales are being presented, beginning this quarter, in two
categories, "Individual Markets Excluding Community Banks and BOLI" (or
"Individual Markets"), and "Community Banks and BOLI." Historical data using
these measures has been provided for comparison over time.
While annualized new life insurance premium sales from Individual Markets
declined slightly in the second quarter versus the prior-year quarter, year-
to-date sales grew 17 percent. These sales are indicative of the continuing
strong acceptance of Jefferson Pilot's Premier Partnering program in a highly
competitive market, and are resulting in good growth of the individual life
business base. Through the second quarter of 2003, producers qualifying for
Premier Partner status have increased 26 percent over the same period of 2002.
At June 30, 2003, average universal life policyholder fund balances were up 8
percent over the year-earlier level. No Community Bank or BOLI sales were
recorded in the quarter, reflecting Jefferson Pilot's continuing de-emphasis
of those markets in a low interest rate environment.
Earnings from the Annuity and Investment Products segment increased 11
percent in the quarter to $21.5 million from $19.3 million a year earlier.
First-half segment earnings were up 5 percent to $42.7 million versus $40.7
million for the first six months of 2002. These good results for the quarter
were due to effective interest spread management, continued low surrender
rates, and good fixed annuity fund balance growth. Fixed annuity sales of
$132.3 million in the quarter were down substantially from the second-quarter
2002 level of $255.3 million, reflecting Jefferson Pilot's continuing focus on
adequate returns in a challenging pricing environment.
The Benefit Partners group insurance segment earned $12.5 million in the
second quarter, even with second-quarter results last year. Year to date,
Benefit Partners' earnings were $24.4 million, versus $25.4 million for the
first half of 2002. Annualized sales of life, disability, and dental products
increased 9 percent for the quarter and 22 percent year to date. Benefit
Partners' profitability has been adversely affected this year by unusually
high group life insurance claims. While a recently completed consulting
report identified no major issues underlying this trend, the report did
delineate certain areas of potential improvement, and these are being
addressed.
Jefferson-Pilot Communications' results were excellent for the second
quarter, with earnings up 10 percent to $11.6 million compared to $10.5
million in the second quarter of 2002. First-half Communications earnings
grew 9 percent to $18.6 million from $17.1 million. Broadcast cash flow for
the quarter reached $23.1 million, up 5 percent from $22.1 million in the
year-earlier quarter, and increased 5 percent to $38.9 million from $37.1
million for the first half of 2003 and 2002, respectively.
The Corporate and Other segment benefited in the second quarter from lower
interest and operating expenses, and from inter-segment default charges
assessed against the operating lines of businesses that increased Corporate
and Other segment earnings by $1.6 million in the quarter. Second-quarter
earnings before realized investment gains in the Corporate and Other segment
increased to $7.1 million from $5.3 million in the second quarter last year.
Realized net investment gains for the quarter totaled $13.1 million,
reflecting $36.3 million of realized investment gains less $14.1 million of
write-downs and losses, before tax and DAC. The level of write-downs and
losses was the lowest in seven quarters, a result of significant improvement
in the corporate credit environment and proactive portfolio management. Total
segment earnings increased to $20.2 million for the quarter, compared to $8.1
million for the second quarter a year ago. For the six months, segment
earnings before realized investment gains were $12.3 million, versus $12.5
million last year, and total segment earnings amounted to $13.1 million versus
$37.2 million.
During the second quarter, Jefferson Pilot bought 500,000 of its shares in
the open market for a total investment of $20.7 million, bringing year-to-date
purchases to a total of 1,500,000 shares at a cost of $58.5 million.
In reviewing the company's results, Jefferson Pilot CEO David A.
Stonecipher observed that, "Jefferson Pilot continues to make good progress in
a difficult economic environment. We believe we've managed well through a
stressful period in the investment area, and we are seeing very significant
improvement in our investment portfolio. Even with the national economy and
advertising climate remaining in a pattern of muted growth, Jefferson-Pilot
Communications once again turned in excellent performance. Premier Partnering
is strengthening our individual life insurance business, with strong sales
progress year to date in our key distribution channels and growing
policyholder fund balances. The growth we are seeing in the number of Premier
Partners creates a tremendous base for sales growth. Attentive spread
management has benefited the profitability of our life insurance and annuity
businesses in an unprecedented period of declining investment yields, and the
recent recovery in bond yields bodes well for the profitability of these
businesses. Benefit Partners continues to build a solid and profitable niche
in group insurance markets by leveraging its strong capabilities in broker and
client service. With Jefferson Pilot's profitability and balance sheet
integrity intact, we will continue building our leadership role in the life
insurance industry with a continually evolving portfolio of attractive
products, the best service available for our distribution partners and
clients, and efficiency management second to none."
Jefferson-Pilot Corporation, a holding company, is one of the nation's
largest shareholder-owned life insurance companies. Jefferson Pilot's life
insurance and annuity companies, principally Jefferson-Pilot Life Insurance
Company, Jefferson Pilot Financial Insurance Company, and Jefferson Pilot
LifeAmerica Insurance Company, together known as Jefferson Pilot Financial,
offer full lines of individual and group life insurance products as well as
annuity and investment products. Jefferson-Pilot Communications Company owns
and operates three network television stations and 17 radio stations, and
produces and syndicates sports programming. Additional information on
Jefferson-Pilot can be found at www.jpfinancial.com.
In this release, the terms "operating earnings," "earnings," "segment
earnings," "earned," and "earnings before realized investment gains or
losses," refer to all elements of net income available to common stockholders
except realized gains or losses on sales, write-downs, or impairments of
investments ("realized investment gains or losses"). Realized investment gains
or losses, as defined, are net of related income taxes, and are reported in
the Corporate and Other segment.
This release includes forward-looking statements, and any forward-looking
statements may turn out to be wrong. They can be affected by inaccurate
assumptions or by known or unknown risks and uncertainties that could affect
our actual results significantly. These risks and uncertainties include, among
others, general economic conditions, the impact on the economy of any further
terrorist activities or any U.S. military engagements, and interest rate
levels, changes and fluctuations, all of which can impact our sales,
investments, and earnings; competitive factors, including pricing pressures,
technological developments, new product offerings, and the emergence of new
competitors; changes in federal and state taxes; changes in the regulation of
the financial services industry; or changes in other laws and regulations and
their impact. We undertake no obligation to publicly correct or update any
forward-looking statements. Readers are advised to consult any further
disclosures we make on related subjects in our press releases and filings with
the SEC; in particular, see the section entitled "External Trends and Forward
Looking Information," and other sections it may reference, in our most recent
10-K report to the SEC, as it may be updated in our subsequent 10-Q and 8-K
reports.
Jefferson-Pilot Corporation and Subsidiaries
2003 Report
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Basic earnings per share
available to common
stockholders, before gains
from sale of
investments $ 0.90 $ 0.82 $ 1.74 $ 1.60
Gains from sale of
investments, net of
income taxes 0.09 0.02 0.01 0.17
Basic earnings per share
available to common
stockholders $ 0.99 $ 0.84 $ 1.75 $ 1.77
Diluted earnings per share
available to common
stockholders, before gains
from sale of investments $ 0.89 $ 0.81 $ 1.73 $ 1.59
Gains from sale of
investments, net of income
taxes 0.09 0.02 0.01 0.16
Diluted earnings per share
available to common
stockholders $ 0.98 $ 0.83 $ 1.74 $ 1.75
(Dollars in thousands)
Income available to common
stockholders, before
gains from sale of
investments $ 127,015 $ 122,428 $ 248,464 $ 240,137
Gains from sale of
investments, net of
income taxes 13,144 2,845 750 24,708
Net income available to
common stockholders $ 140,159 $ 125,273 $ 249,214 $ 264,845
Average number of shares
outstanding 142,038,270 149,370,907 142,419,088 149,733,120
Average number of shares
outstanding - assuming
dilution 143,055,368 151,033,862 143,356,737 151,417,288
Earnings per share, both basic and diluted, available to common
stockholders before gains from sale of investments and income available to
common stockholders before gains from sale of investments are non-GAAP
measures. Management believes these non-GAAP measures are relevant and useful
information, and they are primary measurements used in assessing the Company's
performance.
Jefferson-Pilot Corporation and Subsidiaries
(Unaudited)
Consolidated Balance Sheets (In
Thousands) June 30, 2003 Dec 31, 2002
Assets:
Cash and investments $ 25,268,896 $ 24,345,420
Accrued investment income 309,535 302,344
Due from reinsurers 1,372,686 1,375,341
Deferred policy acquisition costs 1,577,407 1,524,819
Value of insurance in force 429,353 502,498
Goodwill, net 311,894 311,894
Other assets 492,668 462,157
Separate account assets 1,915,709 1,784,821
$ 31,678,148 $ 30,609,294
Liabilities:
Policy liabilities $ 23,683,187 $ 23,132,411
Debt:
Commercial paper borrowings 528,375 453,442
Obligations under repurchase
agreements 375,555 499,227
Income tax liabilities 509,028 430,795
Accrued expenses and other
liabilities 494,519 468,626
Separate account liabilities 1,915,709 1,784,821
27,506,373 26,769,322
Capital securities 300,000 300,000
Stockholders' equity:
Common stock and paid in capital 177,260 180,120
Retained earnings 2,864,172 2,749,823
Accumulated other comprehensive
income - net unrealized gains on
securities 830,343 610,029
3,871,775 3,539,972
$ 31,678,148 $ 30,609,294
Components of Equity (Dollars in thousands except share amounts)
Common stock and paid in capital $ 177,260 $ 180,120
Retained earnings 2,864,172 2,749,823
Net unrealized gains
Bonds, net of DAC, VOBA and taxes 553,918 370,399
Equities, net of taxes 276,425 239,630
Total unrealized gains 830,343 610,029
Stockholders' equity $ 3,871,775 $ 3,539,972
Shares Outstanding 141,789,519 142,798,768
Per share $ 27.31 $ 24.79
Per share excluding unrealized gains $ 21.45 $ 20.52
Jefferson-Pilot Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(Dollars in
thousands except Three Months Ended Six Months Ended
share amounts) June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
Revenue:
Premiums and
other
considerations $ 238,951 $ 213,133 $ 469,776 $ 414,099
UL & investment
product charges 187,514 177,684 382,985 349,010
Investment income,
net of expenses 412,455 403,111 819,810 807,053
Realized
investment gains 20,222 4,377 1,154 38,012
Communications sales 50,674 49,972 100,777 98,066
Broker-dealer concessions
and other 24,634 29,407 48,215 56,594
Total Revenue 934,450 877,684 1,822,717 1,762,834
Benefits and Expenses:
Insurance and annuity
benefits 523,887 495,005 1,045,140 980,664
Insurance commissions,
net of deferrals 24,603 32,322 49,593 63,295
General and administrative
expenses, net of
deferrals 38,467 35,249 69,873 68,950
Insurance taxes,
licenses and fees 18,444 19,887 39,609 39,570
Amortization of policy
acquisition costs and
value of business
acquired 81,653 69,055 163,190 132,329
Communications
operations 27,536 27,842 62,281 61,502
Total Benefits
and Expenses 714,590 679,360 1,429,686 1,346,310
Income before taxes 219,860 198,324 393,031 416,524
Income taxes 73,559 66,909 131,534 139,396
Net income 146,301 131,415 261,497 277,128
Dividends on capital
securities (6,142) (6,142) (12,283) (12,283)
Net income available to
common
stockholders $ 140,159 $ 125,273 $ 249,214 $ 264,845
Average number of
shares
outstanding 142,038,270 149,370,907 142,419,088 149,733,120
Average number of shares
outstanding - assuming
dilution 143,055,368 151,033,862 143,356,737 151,417,288
Earnings Per Share
Income before gains
from sale of
investments $ 0.90 $ 0.82 $ 1.74 $ 1.60
Gains from sale of
investments, net
of income taxes 0.09 0.02 0.01 0.17
Earnings Per
Share $ 0.99 $ 0.84 $ 1.75 $ 1.77
Income before gains
from sale of investments
- assuming
dilution $ 0.89 $ 0.81 $ 1.73 $ 1.59
Earnings Per Share -
Assuming
Dilution $ 0.98 $ 0.83 $ 1.74 $ 1.75
Jefferson-Pilot Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In Thousands) 2003 2002 2003 2002
Cash Flows from Operating Activities:
Net income $ 146,301 $ 131,415 $ 261,497 $ 277,128
Adjustments to reconcile net
income to net cash
provided by operating activities:
Change in policy
liabilities 52,078 10,001 93,242 22,711
Net amount credited to
policyholder accounts 31,706 43,952 47,992 84,589
Net deferral of policy
acquisition costs (50,287) (73,407) (118,284) (138,635)
Net amortization of value of
business acquired 14,118 22,106 30,881 39,704
Other (68,923) (93,351) (94,903) (178,191)
Net cash provided by
operations 124,993 40,716 220,425 107,306
Cash Flows from Investing
Activities:
Securities and loans purchased
and sold (292,111) (189,401) (476,478) (644,356)
Other investing activities (1,614) (6,096) 1,596 (9,065)
Net cash used in investing
activities (293,725) (195,497) (474,882) (653,421)
Cash Flows from Financing
Activities:
Policyholder contract
deposits 546,127 727,400 1,183,236 1,352,168
Policyholder contract
withdrawals (343,777) (359,553) (748,352) (684,782)
Net borrowings
(repayments) 33,860 (72,567) (48,739) (18,810)
Net repurchase of common
shares (15,964) (115,737) (45,823) (112,196)
Cash dividends to common and
preferred stockholders (53,032) (51,278) (102,427) (98,716)
Other 656 896 1,843 3,550
Net cash provided by financing
activities 167,870 129,161 239,738 441,214
Decrease in cash and cash
equivalents (862) (25,620) (14,719) (104,901)
Cash and cash equivalents at
beginning of period 52,920 60,183 66,777 139,464
Cash and cash equivalents at end
of period $ 52,058 $ 34,563 $ 52,058 $ 34,563
Supplemental Cash Flow
Information:
Income taxes paid $ 125,610 $ 102,533 $ 166,933 $ 121,120
Interest paid on
borrowed money $ 3,771 $ 4,711 $ 7,190 $ 13,972
Jefferson-Pilot Corporation and Subsidiaries
Business Segment Results
(Unaudited)
Individual Products (In Thousands)
The Individual Products distribution system offers a wide array of life
insurance products to individuals and employers through captive agents
(career and home service agency forces), independent agents (recruited
through independent marketing organizations and a regional marketing
network) and financial institutions. Reportable segment results were:
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Life premiums and
other
considerations $ 42,009 $ 45,642 $ 86,175 $ 92,814
UL and investment
product charges 185,077 174,290 378,249 342,565
Investment
income, net of
expenses 228,977 229,250 456,052 459,198
Other income 1,541 1,807 2,952 3,592
Total revenues 457,604 450,989 923,428 898,169
Policy benefits 266,442 264,842 540,762 536,178
Expenses 76,787 71,094 151,385 139,691
Total benefits
and expenses 343,229 335,936 692,147 675,869
Reportable
segment results
before income
taxes 114,375 115,053 231,281 222,300
Provision for
income taxes 40,031 40,268 80,948 77,805
Reportable
segment results $ 74,344 $ 74,785 $ 150,333 $ 144,495
Operating Measures
Annualized equivalent life
insurance premiums:
-Individual Markets
Excl. Community
Banks and BOLI $ 49,360 $ 51,647 $ 105,682 $ 90,413
-Community Banks and
BOLI -- 19,592 5,120 42,183
$ 49,360 $ 71,239 $ 110,802 $ 132,596
Average UL
policyholder fund
balances $10,507,662 $9,778,948 $10,429,723 $9,644,719
Average VUL separate
account assets 1,166,356 1,289,788 1,136,081 1,310,885
Total $11,674,018 $11,068,736 $11,565,804 $10,955,604
Average Face Amount of
Insurance In Force:
- Total $164,139,000 $160,749,000 $163,950,000 $160,129,000
- UL-Type
Contracts $122,716,000 $119,174,000 $122,479,000 $118,684,000
Average assets $16,977,002 $16,300,972 $16,863,588 $16,260,004
Jefferson-Pilot Corporation and Subsidiaries
Business Segment Results
(Unaudited)
Annuity and Investment Products (In Thousands)
Annuity and Investment Products (referred to as AIP) offers fixed and
variable annuities and investment products through proprietary and
independent agents, financial institutions, investment professionals and
broker-dealers. Reportable segment results were:
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Investment product
charges and premiums $ 2,466 $ 2,980 $ 4,506 $ 6,598
Investment income, net
of expenses 147,387 140,886 292,865 281,516
Broker-dealer
concessions and other 23,090 27,215 45,280 52,622
Total revenues 172,943 171,081 342,651 340,736
Policy benefits
(including interest
credited) 103,692 103,157 207,267 203,559
Expenses 36,094 38,180 69,548 74,584
Total benefits and
expenses 139,786 141,337 276,815 278,143
Reportable segment
results before income
taxes 33,157 29,744 65,836 62,593
Provision for income
taxes 11,631 10,411 23,095 21,908
Reportable segment
results $ 21,526 $ 19,333 $ 42,741 $ 40,685
Operating Measures
Fixed annuity premium
sales $ 132,336 $ 255,323 $ 247,675 $ 441,747
Variable annuity premium
sales 589 1,864 1,630 6,928
Total $ 132,925 $ 257,187 $ 249,305 $ 448,675
Investment product
sales $ 662,922 $ 773,001 $1,277,587 $1,516,877
Average Fund Balances :
Fixed annuity $8,319,515 $7,674,120 $8,280,770 $7,603,257
Variable annuity 335,893 454,759 335,630 473,836
Total annuity $8,655,408 $8,128,879 $8,616,400 $8,077,093
Effective investment
spreads for fixed
annuities 1.88% 1.82% 1.89% 1.83%
Fixed annuity surrenders
as a % of beginning
fund balance 7.8% 10.2% 7.9% 9.8%
Fixed annuity general and
administrative expenses
as a % of average
invested assets 0.17% 0.21% 0.19% 0.22%
Average assets $9,449,064 $8,962,901 $9,426,736 $8,898,765
Jefferson-Pilot Corporation and Subsidiaries
Business Segment Results
(Unaudited)
Benefit Partners (In Thousands)
Benefit Partners offers group non-medical products such as term life,
disability and dental insurance to the employer marketplace. These non-
medical products are marketed primarily through a national distribution
system of regional group offices. These offices develop business through
employee benefit firms, brokers, third party administrators and other
employee benefit providers. Reportable segment results were:
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Premiums and other
considerations $ 191,322 $ 162,064 $ 373,114 $ 310,403
Investment income, net of
expenses 16,514 14,565 32,396 29,587
Total revenues 207,836 176,629 405,510 339,990
Policy benefits 147,831 120,840 285,489 230,067
Expenses 40,765 36,521 82,447 70,786
Total benefits and
expenses 188,596 157,361 367,936 300,853
Reportable segment results
before income taxes 19,240 19,268 37,574 39,137
Provision for income
taxes 6,734 6,744 13,151 13,698
Reportable segment
results $ 12,506 $ 12,524 $ 24,423 $ 25,439
Operating Measures
Life, Disability and Dental:
Annualized sales $ 39,764 $ 36,451 $ 112,725 $ 92,552
Loss Ratio 74.7% 73.1% 74.3% 72.4%
Total expenses, % of
premiums 21.4% 22.7% 22.2% 22.9%
Jefferson-Pilot Corporation and Subsidiaries
Business Segment Results
(Unaudited)
Communications (In Thousands)
Jefferson-Pilot Communications Company operates television and radio
broadcast properties and produces syndicated sports and entertainment
programming. Reportable segment results were:
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Communications sales $ 50,674 $ 49,972 $ 101,152 $ 98,615
Operating costs and expenses 27,536 27,842 62,281 61,502
Broadcast cash flow 23,138 22,130 38,871 37,113
Depreciation and amortization 2,087 1,880 4,190 3,788
Corporate general and
administrative expenses 1,155 1,851 2,645 3,191
Net interest expense and other 561 761 1,149 1,548
Reportable segment results before
income taxes 19,335 17,638 30,887 28,586
Provision for income taxes 7,762 7,127 12,250 11,530
Reportable segment results $ 11,573 $ 10,511 $ 18,637 $ 17,056
Corporate and Other (In Thousands)
Activities of the parent company and passive investment affiliates,
surplus of the life insurance subsidiaries not otherwise allocated to the
reportable segments including earnings thereon, financing expenses on
corporate debt and debt securities including capital securities, and
federal and state income taxes not otherwise allocated to business
segments are reported in the "Corporate and Other" category. Reportable
segment results were:
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Earnings on investments and other
income $ 22,247 $ 22,091 $ 43,853 $ 43,089
Interest expense on debt and
Exchangeable Securities (2,110) (2,536) (4,603) (4,962)
Operating expenses (6,608) (7,309) (12,954) (12,231)
Provision for income taxes (321) (829) (1,683) (1,151)
13,208 11,417 24,613 24,745
Dividends on Capital Securities (6,142) (6,142) (12,283) (12,283)
Reportable segment results 7,066 5,275 12,330 12,462
Realized investment gains, net 13,144 2,845 750 24,708
Reportable segment results,
including net realized gains $ 20,210 $ 8,120 $ 13,080 $ 37,170
Assets by Segment (In Millions)
Individual Products $ 17,124 $ 16,319
Annuity and Investment Products 9,487 9,022
Benefit Partners 980 852
Communications 201 197
Corporate and Other 3,886 3,268
Total Assets $ 31,678 $ 29,658
Jefferson-Pilot Corporation and Subsidiaries
Quarterly Financial Results by Business Segment
(Unaudited)
June 30, Mar 31, Dec 31, Sept 30, June 30,
(In millions) 2003 2003 2002 2002 2002
Revenues
Individual $ 457.6 $ 465.8 $ 464.3 $ 459.2 $ 451.0
AIP 172.9 169.7 175.1 170.5 171.1
Benefit Partners 207.8 197.7 178.3 180.0 176.6
Communications 50.1 49.9 61.2 49.2 49.2
Corporate and Other 25.9 24.3 21.4 18.0 25.4
Realized investment gains
(losses) 20.2 (19.1) (63.8) 3.8 4.4
Total revenues $ 934.5 $ 888.3 $ 836.5 $ 880.7 $ 877.7
Reportable Segment Results
Individual $ 74.3 $ 76.0 $ 74.7 $ 73.9 $ 74.8
AIP 21.5 21.2 20.7 18.9 19.3
Benefit Partners 12.5 11.9 12.8 9.2 12.5
Communications 11.6 7.1 13.0 9.8 10.5
Corporate and Other 13.2 11.4 (6.4) 10.7 11.5
133.1 127.6 114.8 122.5 128.6
Preferred stock dividends (6.1) (6.1) (6.1) (6.1) (6.1)
Total Reportable Segment
Results 127.0 121.5 108.7 116.4 122.5
Realized gains (losses), net of
tax 13.1 (12.4) (42.1) 2.4 2.8
Reportable Segment Results
including Realized Gains
(Losses) $ 140.1 $ 109.1 $ 66.6 $ 118.8 $ 125.3
Earnings Per Share
Income before gains (losses)
from sale of
investments $ 0.90 $ 0.85 $ 0.76 $ 0.81 $ 0.82
Earnings Per Share $ 0.99 $ 0.76 $ 0.47 $ 0.82 $ 0.84
Income before gains (losses)
from sale of investments -
assuming dilution $ 0.89 $ 0.85 $ 0.75 $ 0.80 $ 0.81
Earnings Per Share - assuming
dilution $ 0.98 $ 0.76 $ 0.46 $ 0.81 $ 0.83
Jefferson-Pilot Corporation and Subsidiaries
Quarterly Financial Results by Business Segment
(Unaudited)
Mar 31, Dec 31, Sept 30, June 30,
(In millions) 2002 2001 2001 2001
Revenues
Individual $ 447.2 $ 441.7 $ 428.8 $ 425.9
AIP 169.7 170.8 158.7 159.4
Benefit Partners 163.4 158.1 156.7 144.2
Communications 47.9 53.1 45.3 47.2
Corporate and Other 23.4 23.6 31.6 21.3
Realized investment gains (losses) 33.6 (45.1) 24.2 30.1
Total revenues $ 885.2 $ 802.2 $ 845.3 $ 828.1
Reportable Segment Results
Individual $ 69.7 $ 78.6 $ 70.0 $ 76.5
AIP 21.4 19.3 17.3 19.0
Benefit Partners 12.9 11.5 12.0 10.5
Communications 6.5 9.9 8.2 8.7
Corporate and Other 13.3 11.4 16.4 6.1
123.8 130.7 123.9 120.8
Preferred stock dividends (6.1) (6.1) (6.1) (6.1)
Total Reportable Segment Results 117.7 124.6 117.8 114.7
Realized gains (losses), net of tax 21.9 (28.2) 15.8 19.6
Reportable Segment Results
including Realized Gains (Losses) $ 139.6 $ 96.4 $ 133.6 $ 134.3
Earnings Per Share
Income before gains (losses) from
sale of investments $ 0.78 $ 0.83 $ 0.78 $ 0.75
Earnings Per Share $ 0.93 $ 0.64 $ 0.88 $ 0.88
Income before gains (losses) from
sale of investments -
assuming dilution $ 0.78 $ 0.82 $ 0.77 $ 0.75
Earnings Per Share - assuming
dilution $ 0.92 $ 0.64 $ 0.87 $ 0.87
The following classification will now be utilized to examine individual
product operation measures.
Sequential data has been provided for comparative purposes.
June 30, Mar 31, Dec 31, Sept 30, June 30,
(In thousands) 2003 2003 2002 2002 2002
Annualized equivalent life
insurance premiums:
Individual Markets Excluding
Community Banks and
BOLI $ 49,360 $ 56,031 $ 60,190 $ 51,726 $ 51,647
Community Banks and
BOLI -- 5,411 8,470 7,350 19,592
$ 49,360 $ 61,442 $ 68,660 $ 59,076 $ 71,239
Mar 31, Dec 31, Sept 30, June 30,
(In thousands) 2002 2001 2001 2001
Annualized equivalent life insurance
premiums:
Individual Markets Excluding
Community Banks and BOLI $ 38,766 $ 42,244 $ 34,580 $ 32,065
Community Banks and BOLI 22,591 25,057 15,866 19,316
$ 61,357 $ 67,301 $ 50,446 $ 51,381
Jefferson-Pilot Corporation and Subsidiaries
Investment Summary (Unaudited)
(in Thousands)
June 30, 2003 December 31, 2002
Allocation of Invested Assets Amount Percent Amount Percent
Cash and cash equivalents $ 52,058 0.3% $ 66,777 0.3%
Bonds 20,146,142 79.7% 19,476,765 80.0%
Preferred stocks 27,613 0.1% 25,937 0.1%
Common stocks, unaffiliated 710,874 2.8% 406,956 1.7%
Mortgages loans (net) 3,266,825 12.9% 3,294,258 13.5%
Real estate (net) 131,102 0.5% 132,927 0.5%
Policy loans and other 934,282 3.7% 941,800 3.9%
Invested assets $25,268,896 100.0% $24,345,420 100%
June 30, 2003 December 31, 2002
Bond Portfolio Amount Percent Amount Percent
U.S. Government $ 270,442 1.3% $ 367,349 1.9%
Mortgage-backed 4,415,175 21.9% 5,386,570 27.7%
Private placements 4,304,556 21.4% 4,073,829 20.9%
Public - corporates 11,155,969 55.4% 9,649,017 49.5%
Total bonds $20,146,142 100.0% $19,476,765 100.0%
Yield to maturity 6.59% 6.94%
Average life 6.39 6.22
Duration 4.57 4.00
Average Quality A2 A1
June 30, 2003 December 31, 2002
Bond Portfolio Quality Amount Percent Amount Percent
NAIC Rating S&P
Equivalent
1 AAA - A $12,064,639 59.9% $12,354,785 63.4%
2 BBB 6,570,477 32.6% 5,837,437 30.0%
3-6 BB and lower 1,511,026 7.5% 1,284,543 6.6%
Total Bonds $20,146,142 100.0% $19,476,765 100.0%
Fixed Maturity Securities Unrealized
Gains (Losses) June 30, 2003 December 31, 2002
Gross unrealized gains $1,636,414 $1,350,428
Gross unrealized (losses) (131,176) (287,424)
Net unrealized gains (losses) $1,505,238 $1,063,004
Mortgage Loan Portfolio June 30, 2003 December 31, 2002
Yield to maturity 7.85% 7.90%
Average maturity 6.85 7.14
Total delinquent loans and loans in
foreclosure at amortized cost $ 6,402 $ 11,931
Delinquent loans as a percent of
total ML 0.20% 0.36%
Net book value of real estate
acquired in satisfaction of mortgage
indebtedness $ 3,400 $ 3,400
Second Quarter Second Quarter
Realized Investment Gains/(Losses) 2003 2002
Stock gains $ 13,835 $ 42,137
Bond gains 22,480 9,495
Bond losses from sales and calls (1,941) (7,063)
Bond losses from writedowns (12,088) (39,473)
Other gains and losses (net) (108) (1,038)
Total pretax gains (losses) 22,178 4,058
Tax (7,077) (1,532)
DAC amortization (1,957) 320
Total gains (losses) after tax and
DAC amortization $ 13,144 $ 2,846
Jefferson-Pilot Corporation and Subsidiaries
Insurance Segments Expense Analysis
(In Thousands)
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Individual Products
Commissions $ 66,415 $ 67,385 $ 145,599 $ 130,476
General and administrative
expenses 32,694 32,367 62,790 62,771
Taxes, licenses and fees 12,512 13,915 27,409 28,605
Total commissions and
expenses incurred 111,621 113,667 235,798 221,852
Less commissions and expenses
capitalized (79,520) (81,199) (174,723) (156,367)
Amortization of DAC and
VOBA 44,686 38,626 90,310 74,206
Net expense $ 76,787 $ 71,094 $ 151,385 $ 139,691
Annuity and Investment Products
Commissions - insurance
companies $ 6,955 $ 11,963 $ 13,009 $ 23,128
Commissions - broker/dealer 19,190 22,971 37,261 44,470
General and administrative
expenses 6,281 7,479 12,707 14,300
Taxes, licenses and fees 795 789 1,515 1,531
Total commissions and
expenses incurred 33,221 43,202 64,492 83,429
Less commissions and expenses
capitalized (9,231) (15,168) (18,548) (29,807)
Amortization of DAC and
VOBA 12,104 10,146 23,604 20,962
Net expense $ 36,094 $ 38,180 $ 69,548 $ 74,584
Benefit Partners
Commissions $ 21,539 $ 18,455 $ 42,360 $ 36,137
General and administrative
expenses 18,214 16,746 37,656 33,559
Taxes, licenses and fees 5,061 5,031 10,324 9,024
Total commissions and
expenses incurred 44,814 40,232 90,340 78,720
Less commissions and expenses
capitalized (28,909) (23,990) (57,161) (45,085)
Amortization of DAC and
VOBA 24,860 20,279 49,268 37,151
Net expense $ 40,765 $ 36,521 $ 82,447 $ 70,786
Jefferson-Pilot Corporation and Subsidiaries
DAC and VOBA Balance Sheet Analysis
(In Thousands)
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Balance, beginning of
period $2,067,710 $2,169,713 $2,027,317 $2,069,570
Amount capitalized 117,822 120,357 250,593 231,261
Amortization expense (81,653) (69,055) (163,190) (132,329)
Adjustment for capital
gains and losses (1,957) 320 (2,920) 238
Adjustment for FAS 115 (95,162) (150,810) (105,040) (98,215)
Balance, end of period $2,006,760 $2,070,525 $2,006,760 $2,070,525
Jefferson-Pilot Corporation and Subsidiaries
Shareholder Information
Listed NYSE: JP
Composite Stock Prices and Dividends (Adjusted for 50% stock dividends
effected 04/09/01 and 04/13/98)
High Low Close Cash Dividend
2Q03 43.20 38.34 41.46 0.330
1Q03 40.93 35.75 38.48 0.303
2002 53.00 36.35 38.11 1.184
2001 49.67 38.00 46.27 1.072
2000 50.59 33.25 49.83 0.960
1999 53.09 40.79 45.50 0.857
1998 52.25 32.45 50.00 0.770
Transfer Agent and Dividend Reinvestment Agent
Wachovia Bank Phone: 800/829-8432
Dividend Reinvestment Service Fax: 704/590-7618
1525 West W.T. Harris Blvd., 3C3 Email: equityservices@wachovia.com
Charlotte, NC 28288-1153
Investor Relations
Jefferson-Pilot Corporation Phone: 336/691-3379
Investor Relations - Dept. 3607
P.O. Box 21008
Greensboro, NC 27420
investor.relations@jpfinancial.com
Corporate Website
www.jpfinancial.com
SOURCE Jefferson-Pilot Corporation
-0- 07/28/2003
/CONTACT: John T. Still, III of Jefferson-Pilot Corporation,
+1-336-691-3382/
/Web site: http://www.jpfinancial.com/
(JP)
CO: Jefferson-Pilot Corporation
ST: North Carolina
IN: INS PUB
SU: ERN