Exhibit 99.1
JEFFERSON PILOT REPORTS FOURTH-QUARTER EARNINGS BEFORE REALIZED INVESTMENT
GAINS OF $1.04 PER SHARE
GREENSBORO, N.C., Feb. 7 /PRNewswire-FirstCall/ -- Jefferson-Pilot
Corporation (NYSE: JP), parent of the Jefferson Pilot Financial companies and
one of the nation's leading life insurance, annuity, employee benefits, and
broadcast companies, today reported net income of $1.06 per share for the fourth
quarter of 2004, versus $0.82 for the fourth quarter of 2003. Earnings before
realized investment gains increased 3 percent in the quarter to $1.04 per share
versus $1.01 per share before realized investment losses in the fourth quarter
of 2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040601/JPFLOGO )
For the year 2004, Jefferson Pilot's net income per share increased to
$3.92 from $3.44 for 2003. Earnings before realized investment gains, and
excluding the cumulative effect of a change in accounting principle (SOP 03-1),
increased 5 percent to $3.85 per share versus earnings before realized
investment losses of $3.66 in 2003.
All per-share results are on a diluted basis.
Sales of individual life insurance in Jefferson Pilot's Individual Products
segment totaled $66.0 million in the fourth quarter, a quarterly record and an
increase of 4 percent from the fourth quarter of 2003 and 32 percent from the
third quarter of 2004. In addition, average individual life policyholder fund
balances grew 6 percent for the quarter to $12.9 billion versus $12.2 billion in
the fourth quarter of 2003.
Jefferson Pilot's Individual Products business earned $76.5 million in the
fourth quarter, versus $80.4 million in the fourth quarter of 2003. For the
year, Individual Products earnings declined from $309.4 million to $302.0
million. Earnings for the quarter and year were depressed by spread pressure
from low interest rates and by the decline of older traditional life insurance.
For the quarter, spread pressure was offset by a net $4.4 million enhancement to
segment investment income from commercial mortgage loan prepayments.
Jefferson Pilot's Annuity and Investment Products again produced excellent
sales results in the fourth quarter due to continued success in marketing
equity-indexed annuities. Led by equity-indexed products, fixed annuity sales
were a strong $304.4 million in the quarter, bringing the total for the year to
$1.2 billion, up 61 percent versus 2003. Fixed annuity average fund balances
grew 9 percent for the quarter and the year, reaching $9.4 billion from $8.6
billion a year ago.
Annuity and Investment Products earnings of $20.0 million in the quarter
were below fourth-quarter 2003 earnings of $22.3 million primarily as a result
of a decline in interest spreads and accelerated amortization of deferred
acquisition costs. Spread pressure was offset in the quarter by $3.5 million
from commercial mortgage loan prepayment income and net FAS 133 adjustments. For
the year, Annuity and Investment Products earned $76.4 million versus $85.0
million in 2003, the decline largely due to narrower product interest spreads.
Benefit Partners' non-medical group insurance business performed well in the
quarter, enhanced by the contribution from the Canada Life business acquired
early in 2004. Sales increased to $54.1 million in the fourth quarter from $48.8
million in the fourth quarter of 2003, and earnings were excellent, increasing
23 percent to $20.0 million versus $16.2 million in the fourth quarter of 2003.
Results for the year 2004, with earnings increasing 40 percent to $70.7 million
from $50.7 million, reflected the highly successful integration of the Canada
Life operations.
Jefferson-Pilot Communications completed a strong year, with earnings
growing 8 percent in the fourth quarter to $16.6 million from $15.4 million,
bringing 2004 earnings to $54.4 million, up 20 percent versus 2003. Broadcast
cash flow grew 9 percent in the quarter to $31.8 million, and, for the year,
increased 18 percent to $108.1 million. All Communications divisions -- radio,
television, and sports -- produced strong gains for the year with higher
broadcast cash flow margins and good revenue share performance.
Earnings before realized investment gains in the Corporate and Other segment
totaled $10.3 million versus $9.8 million in the 2003 quarter. Segment earnings
advanced, despite higher interest rates on corporate debt, due to lower general
expenses.
Realized investment gains of $2.4 million brought total Corporate and Other
earnings to $12.6 million for the quarter, compared to a loss of $18.0 million,
including realized investment losses of $27.8 million, in the fourth quarter of
2003. 2004 segment earnings before realized investment gains were nearly flat at
$32.7 million versus $32.1 million in 2003. Total 2004 segment earnings
including realized investment gains of $26.5 million were $59.2 million, versus
$1.2 million including realized investment losses of $30.9 million in 2003.
Average diluted shares outstanding were 137.7 million for the fourth
quarter, versus 142.3 million in the fourth quarter of 2003. For the year, stock
buybacks totaled 5,368,200 shares at a cost of $274.0 million, with none in the
fourth quarter.
Jefferson Pilot's stockholders' equity per share excluding unrealized
investment gains grew 7 percent to $23.76 at the end of 2004 from $22.21 a year
ago. Return on equity remained very strong at 17.9 percent in the fourth
quarter.
Jefferson Pilot CEO Dennis Glass, commenting on these results, said
"Jefferson Pilot's performance for 2004 reflects our fundamental strengths as we
work through a very challenging environment for our life insurance and annuity
businesses. Continued low investment yields are having a broad effect on our
business in the form of reduced investment spreads on life and annuity products
and above-trend surrenders of some older annuity contracts. Nevertheless,
Jefferson Pilot remains an industry leader in expense efficiency, product
pricing discipline, profitability, and financial strength, and we are pursuing
top-line initiatives that will help us expand distribution and achieve
profitable sales growth. Benefit Partners continues to build its business
profitably through internal growth, and the successful integration of the Canada
Life business is tangible evidence of Jefferson Pilot's proven skill in building
through acquisition. Jefferson-Pilot Communications' excellent performance
continues, demonstrating our ability to conceive and implement sound and
profitable strategies."
Glass added, "We will continue to seek to balance financial strength with
good and reliable results for our shareholders. That means continuing to
emphasize profitable growth, including industry-leading return on equity and
strong cash generation from our diversified portfolio of businesses."
**********
Throughout this release, "reportable segment results" (also referred to as
"segment earnings" or "earnings before realized investment gains") is defined as
net income before realized investment gains and losses (and cumulative effect of
change in accounting principle, if applicable). Reportable segment results is a
non-GAAP measure. We believe reportable segment results provides relevant and
useful information to investors, as it represents the basis on which we assess
the performance of our business segments. We deem reportable segment results to
be a meaningful measure for this purpose because, except for losses from
other-than-temporary impairments, realized investment gains and losses occur
primarily at our sole discretion. Note that reportable segment results as
described above may not be comparable to similarly titled measures reported by
other companies.
************
A conference call for the investment community to discuss these results will
be held at 9:00 a.m. EST February 8, 2005. The call will be broadcast live on
the Internet at http://www.jpfinancial.com , and will be archived.
************
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 18 radio stations, and produces
and syndicates sports programming. Additional information on Jefferson Pilot can
be found at http://www.jpfinancial.com .
************
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
significantly affect our actual results or financial condition. These risks and
uncertainties include, among others, general economic conditions, the impact on
the economy from any further terrorist activities or U.S. military engagements,
and interest rate levels, changes and fluctuations, all of which can affect our
sales, investment portfolios, and earnings. Other risks and uncertainties
include competitive factors, including pricing pressures, technological
developments, new product offerings, and the emergence of new competitors;
changes in federal and state taxes; changes in generally accepted or statutory
accounting principles or interpretations; changes in the regulation of the
insurance or 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
2004 Report
Three Months Ended Year Ended
----------------------------- ------------------------------
Dec 31, 2004 Dec 31, 2003 Dec 31, 2004 Dec 31, 2003
------------- ------------- ------------- -------------
Net Income
(Dollars in
thousands)
Individual $ 76,466 $ 80,445 $ 301,994 $ 309,391
AIP 20,007 22,309 76,416 85,022
Benefit Partners 19,953 16,202 70,736 50,653
Communications 16,606 15,391 54,410 45,394
Corporate and Other 10,270 9,804 32,689 32,093
Total reportable
segment results 143,302 144,151 536,245 522,553
Realized investment
gains (losses), net
of taxes 2,361 (27,830) 26,462 (30,942)
Net income before
cumulative effect of
change in accounting
principle 145,663 116,321 562,707 491,611
Cumulative effect of
change in accounting
for long-duration
contracts, net of taxes - - (16,589) -
Net income $ 145,663 $ 116,321 $ 546,118 $ 491,611
Per share information
Income before realized
gains (losses) and
cumulative effect
of change in accounting
principle $ 1.05 $ 1.02 $ 3.89 $ 3.69
Realized investment
gains (losses), net
of taxes 0.02 (0.20) 0.19 (0.22)
Income before cumulative
effect in change in
accounting principle 1.07 0.82 4.08 3.47
Cumulative effect of
change in accounting
principle, net of
taxes - - (0.12) -
Net income $ 1.07 $ 0.82 $ 3.96 $ 3.47
Per share information -
assuming dilution
Income before realized
gains (losses) and
cumulative effect
of change in
accounting principle $ 1.04 $ 1.01 $ 3.85 $ 3.66
Realized investment
gains (losses), net
of taxes 0.02 (0.19) 0.19 (0.22)
Income before cumulative
effect in change in
accounting principle 1.06 0.82 4.04 3.44
Cumulative effect of
change in accounting
principle, net of
taxes - - (0.12) -
Net income $ 1.06 $ 0.82 $ 3.92 $ 3.44
Average number of
shares outstanding 136,597,527 140,997,195 137,999,364 141,795,065
Average number of
shares outstanding
- - assuming dilution 137,669,310 142,253,286 139,213,034 142,867,215
Jefferson-Pilot Corporation and Subsidiaries
(Unaudited)
Dec 31, 2004 Dec 31, 2003
------------- -------------
Consolidated Balance Sheets
(In Thousands)
Assets:
Cash and investments $ 27,654,982 $ 25,823,574
Accrued investment income 341,559 326,073
Due from reinsurers 1,341,389 1,340,395
Deferred policy acquisition costs 1,957,843 1,771,174
Value of business acquired 472,150 459,270
Goodwill, net 311,894 311,894
Other assets 651,614 498,428
Separate account assets 2,373,385 2,165,524
$ 35,104,816 $ 32,696,332
Liabilities:
Policy liabilities $ 26,165,901 $ 24,434,641
Debt:
Commercial paper borrowings 187,692 654,232
Obligations under repurchase
agreements 468,287 400,590
Notes payable 599,649 -
Junior subordinated debentures 309,279 309,279
Income tax liabilities 619,900 471,922
Accrued expenses and other
liabilities 446,852 454,247
Separate account liabilities 2,373,385 2,165,524
31,170,945 28,890,435
Stockholders' equity:
Common stock and paid in capital 180,572 175,762
Retained earnings 3,070,525 2,946,869
Accumulated other comprehensive
income - primarily net unrealized gains
on securities 682,774 683,266
3,933,871 3,805,897
$ 35,104,816 $ 32,696,332
Components of Equity (Dollars in
thousands except share amounts)
Common stock and paid in capital $ 180,572 $ 175,762
Retained earnings 3,070,525 2,946,869
Accumulated other comprehensive
income
Net unrealized gains
Bonds, net of DAC, VOBA and taxes 402,508 390,230
Equities, net of taxes 289,928 293,036
Other (9,662) -
Total accumulated other
comprehensive income 682,774 683,266
Stockholders' equity $ 3,933,871 $ 3,805,897
Shares outstanding 136,819,214 140,610,540
Per share $ 28.75 $ 27.07
Per share excluding accumulated other
comprehensive income $ 23.76 $ 22.21
Jefferson-Pilot Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended Year Ended
------------------------------ -------------------------------
Dec 31, 2004 Dec 31, 2003 Dec 31, 2004 Dec 31, 2003
------------- ------------- ------------- -------------
(Dollars in
thousands except share amounts)
Revenue:
Premiums and other
considerations $ 332,902 $ 243,303 $ 1,292,612 $ 950,708
UL & investment
product charges 188,152 171,472 732,356 690,976
Net investment
income 445,264 418,891 1,671,520 1,656,949
Realized investment
gains (losses) 3,631 (42,814) 40,750 (46,795)
Communications sales 67,974 63,792 240,742 216,298
Other 30,136 28,367 124,169 104,788
Total revenue 1,068,059 883,011 4,102,149 3,572,924
Benefits and
Expenses:
Insurance and
annuity benefits 586,089 501,362 2,286,629 2,004,156
Insurance commissions,
net of deferrals 61,304 27,537 250,317 108,463
General and
administrative
expenses, net
of deferrals 49,925 40,754 183,011 149,193
Insurance taxes,
licenses and fees 19,856 14,309 73,347 73,216
Amortization of
policy acquisition
costs and value of
business acquired 89,274 86,880 287,428 341,445
Interest expense 13,201 8,432 48,181 33,857
Communications
operations 36,193 34,664 133,009 125,072
Total benefits
and expenses 855,842 713,938 3,261,922 2,835,402
Income before
income taxes
and cumulative
effect of change
in accounting
principle 212,217 169,073 840,227 737,522
Income taxes 66,554 52,752 277,520 245,911
Income before
cumulative effect
of change in
accounting principle 145,663 116,321 562,707 491,611
Cumulative effect of
change in accounting
for long-duration
contracts, net of
taxes - - (16,589) -
Net income $ 145,663 $ 116,321 $ 546,118 $ 491,611
Average number
of shares
outstanding 136,597,527 140,997,195 137,999,364 141,795,065
Average number
of shares
outstanding -
assuming
dilution 137,669,310 142,253,286 139,213,034 142,867,215
Quarterly return
on equity (1) 17.9% 18.6% 16.8% 17.3%
Earnings Per Share
Earnings per share
before realized
gains (losses)
and cumulative
effect of change
in accounting
principle $ 1.05 $ 1.02 $ 3.89 $ 3.69
Realized investment
gains (losses),
net of taxes 0.02 (0.20) 0.19 (0.22)
Earnings per share
before cumulative
effect of change
in accounting
principle 1.07 0.82 4.08 3.47
Cumulative effect
of change in
accounting principle,
net of taxes - - (0.12) -
Earnings per share $ 1.07 $ 0.82 $ 3.96 $ 3.47
Earnings per share
before realized gains
(losses) and
cumulative effect of
change in accounting
principle $ 1.04 $ 1.01 $ 3.85 $ 3.66
Realized investment
gains (losses),
net of taxes 0.02 (0.19) 0.19 (0.22)
Earnings per share
before cumulative
effect of change in
accounting principle -
assuming dilution 1.06 0.82 4.04 3.44
Cumulative effect of
change in accounting
principle, net of
taxes - assuming
dilution - - (0.12) -
Earnings per share -
assuming dilution $ 1.06 $ 0.82 $ 3.92 $ 3.44
(1) Return on equity is calculated utilizing reportable segment results as the
numerator and average equity excluding the impact of accumulated other
comprehensive income as the denominator.
Jefferson-Pilot Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended Year Ended
------------------------------ ------------------------------
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
------------- ------------- ------------- -------------
(In Thousands)
Cash Flows from Operating
Activities:
Net income $ 145,663 $ 116,321 $ 546,118 $ 491,611
Adjustments to reconcile net
income to net cash provided
by operating activities:
Change in policy
liabilities 69,162 24,342 250,621 120,974
Net amount credited to
policyholder accounts 24,377 27,258 78,362 96,580
Net deferral of policy
acquisition costs and
sales inducements (19,033) (74,325) (232,762) (221,118)
Net amortization of value
of business acquired (21,323) 14,996 (2,847) 52,210
Group coinsurance assumed - - 328,875 -
Other (21,537) (13,681) 22,857 (3,092)
Net cash provided by
operations 177,309 94,911 991,224 537,165
Cash Flows from Investing
Activities:
Securities and loans purchased
and sold (168,745) (555,835) (1,644,185) (1,397,914)
Other investing activities (14,200) (21,727) (141,765) (22,246)
Net cash used in investing
activities (182,945) (577,562) (1,785,950) (1,420,160)
Cash Flows from Financing
Activities:
Policyholder contract deposits 751,180 743,037 2,905,330 2,525,443
Policyholder contract
withdrawals (626,698) (361,482) (1,884,142) (1,443,897)
Net borrowings (repayments) (12,608) 200,880 200,806 102,153
Net issuance (repurchase) of
common shares 12,551 (35,190) (213,161) (122,092)
Cash dividends to common and
preferred stockholders (51,890) (46,624) (202,820) (183,352)
Other (4,433) 4,697 3,917 9,731
Net cash provided by financing
activities 68,102 505,318 809,930 887,986
Decrease in cash and cash
equivalents 62,466 22,667 15,204 4,991
Cash and cash equivalents at
beginning of period 24,506 49,101 71,768 66,777
Cash and cash equivalents at
end of period $ 86,972 $ 71,768 $ 86,972 $ 71,768
Supplemental Cash Flow
Information:
Income taxes paid $ 53,456 $ 43,091 $ 83,272 $ 235,791
Interest paid on borrowed
money $ 3,838 $ 2,574 $ 45,608 $ 37,291
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 Year Ended
Dec 31 Dec 31
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
UL-Type Products:
Net investment
income $ 192,739 $ 189,031 $ 746,578 $ 749,189
Interest credited
to policyholders (128,167) (129,846) (507,073) (515,378)
Interest margin 64,572 59,185 239,505 233,811
Product charge
revenue:
Cost of insurance
charges 133,762 128,210 539,205 511,936
Expense charges 42,802 34,391 148,754 141,625
Surrender charges 10,389 7,888 40,663 34,930
Total product
charge revenue 186,953 170,489 728,622 688,491
Death benefits and
other insurance
benefits (73,803) (63,117) (312,799) (272,415)
Expenses, excluding
amortization of
DAC and VOBA (26,471) (20,696) (97,057) (96,423)
Amortization of
DAC and VOBA (58,526) (47,986) (190,307) (179,038)
Miscellaneous expense (222) (859) (793) (2,115)
UL-type product income
before taxes 92,503 97,016 367,171 372,311
Traditional Products:
Premiums and other
considerations 36,963 44,315 152,260 172,982
Net investment income 38,976 41,309 153,726 165,205
Benefits (42,771) (50,686) (172,822) (197,776)
Expenses, excluding
amortization of
DAC and VOBA (5,525) (6,719) (25,296) (24,161)
Amortization of
DAC and VOBA (4,807) (3,511) (16,679) (16,240)
Traditional product
income before taxes 22,836 24,708 91,189 100,010
Income before income
taxes 115,339 121,724 458,360 472,321
Income taxes (38,873) (41,279) (156,366) (162,930)
Reportable segment
results $ 76,466 $ 80,445 $ 301,994 $ 309,391
Operating Measures
Annualized equivalent life
insurance premium sales:
-Individual
Markets Excl
Community
Banks and BOLI $ 63,212 $ 61,408 $ 210,779 $ 215,613
-Community Banks
and BOLI 2,748 2,189 9,068 9,462
$ 65,960 $ 63,597 $ 219,847 $ 225,075
Average UL
policyholder
fund balances $ 11,305,673 $ 10,823,708 $ 11,131,061 $ 10,584,670
Average VUL
separate account
assets 1,595,509 1,384,892 1,535,282 1,233,520
Total $ 12,901,182 $ 12,208,600 $ 12,666,343 $ 11,818,190
Average Face
Amount of
Insurance In
Force:
- Total $ 165,454,000 $ 165,787,000 $ 165,762,000 $ 164,963,000
- UL-Type
Contracts $ 127,638,000 $ 124,981,000 $ 126,876,000 $ 123,848,000
Average assets $ 18,629,895 $ 17,540,855 $ 18,292,475 $ 17,128,161
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 Year Ended
Dec 31 Dec 31
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
Investment product
charges and premiums $ 3,111 $ 2,637 $ 12,152 $ 8,788
Net investment income 167,504 148,183 592,907 586,639
Broker-dealer concessions
and other 28,147 26,563 112,618 98,332
Total revenue 198,762 177,383 717,677 693,759
Policy benefits (including
interest credited) 118,549 108,116 426,141 416,586
Insurance expenses 22,546 11,170 67,958 55,815
Broker-dealer expenses 27,217 23,932 107,203 90,741
Total benefits and
expenses 168,312 143,218 601,302 563,142
Income before income
taxes 30,450 34,165 116,375 130,617
Income taxes 10,443 11,856 39,959 45,595
Reportable segment results $ 20,007 $ 22,309 $ 76,416 $ 85,022
Operating Measures
Fixed annuity premium
sales $ 304,416 $ 320,989 $ 1,217,408 $ 756,444
Variable annuity
premium sales 118 0 461 1,843
Total $ 304,534 $ 320,989 $ 1,217,869 $ 758,287
Investment product
sales $ 1,012,867 $ 1,054,345 $ 4,780,355 $ 3,258,228
Average fund balances:
Fixed annuity $ 9,382,128 $ 8,611,290 $ 9,169,098 $ 8,400,286
Variable annuity 315,188 346,699 332,250 340,372
Total annuity $ 9,697,316 $ 8,957,989 $ 9,501,348 $ 8,740,658
Effective investment
spreads for fixed
annuities (1) 2.00% 1.84% 1.76% 1.90%
Effective investment
spreads for fixed
annuities, excluding
FAS 133 1.81% 1.83% 1.73% 1.88%
Fixed annuity
surrenders as a % of
beginning fund
balance 15.8% 9.1% 12.3% 8.4%
Fixed annuity general
and administrative
expenses as a % of average
invested assets 0.21% 0.19% 0.18% 0.16%
Average assets $ 10,491,585 $ 9,761,055 $ 10,359,786 $ 9,537,151
(1) Includes FAS 133
adjustment of: $ 4,160 $ 198 $ 2,879 $ 1,195
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 Year Ended
Dec 31 Dec 31
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Premiums and other
considerations $ 288,807 $ 192,592 $ 1,113,250 $ 756,019
Net investment income 23,607 15,487 88,866 63,762
Total revenue 312,414 208,079 1,202,116 819,781
Policy benefits 215,596 142,397 840,728 576,283
Expenses 66,121 40,755 252,563 165,570
Total benefits and expenses 281,717 183,152 1,093,291 741,853
Income before income taxes 30,697 24,927 108,825 77,928
Income taxes 10,744 8,725 38,089 27,275
Reportable segment results $ 19,953 $ 16,202 $ 70,736 $ 50,653
Operating Measures
Life, Disability and Dental:
Annualized sales $ 54,126 $ 48,753 $ 202,876 $ 200,007
Reportable segment results:
Life $ 11,470 $ 6,575 $ 30,395 $ 17,757
Disability 6,494 7,330 35,604 28,184
Dental 1,850 1,949 4,000 5,229
Other 139 348 737 (517)
Total $ 19,953 $ 16,202 $ 70,736 $ 50,653
Loss Ratios:
Life 68.5% 73.1% 73.5% 77.5%
Disability 77.4% 70.2% 72.9% 69.2%
Dental 73.1% 72.6% 76.8% 75.6%
Combined 73.0% 71.8% 73.7% 73.7%
Total expenses as a % of
premium income 23.0% 21.2% 22.7% 21.9%
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 Year Ended
Dec 31 Dec 31
------------------------- -------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Communications revenues, net $ 67,973 $ 63,792 $ 241,117 $ 216,673
Cost of sales 15,080 15,824 47,779 45,791
Operating expenses 21,113 18,840 85,230 79,281
Broadcast cash flow 31,780 29,128 108,108 91,601
Depreciation and amortization 2,311 2,273 8,833 8,457
Corporate general and
administrative expenses 2,040 2,090 7,285 6,432
Net interest expense and other 510 468 2,115 2,131
Income before income taxes 26,919 24,297 89,875 74,581
Income taxes 10,313 8,906 35,465 29,187
Reportable segment results $ 16,606 $ 15,391 $ 54,410 $ 45,394
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, 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 Year Ended
Dec 31 Dec 31
------------------------ ------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Earnings on investments and other
income(1) $ 22,946 $ 25,378 $ 94,941 $ 93,918
Interest expense on debt(1) (13,198) (8,432) (48,178) (33,857)
Operating expenses (4,567) (10,171) (20,718) (31,190)
Income taxes 5,089 3,028 6,644 3,222
Reportable segment results 10,270 9,803 32,689 32,093
Realized investment gains, net of
taxes 2,361 (27,830) 26,462 (30,942)
Reportable segment results,
including net realized investment
gains $ 12,631 $ (18,027) $ 59,151 $ 1,151
(1) Prior year amounts have been restated to conform to presentation under FIN
46.
Assets by Segment (In Millions)
Dec 31
-----------------------
2004 2003
---------- ----------
Individual Products $ 18,776 $ 17,717
Annuity and Investment Products 10,504 9,941
Benefit Partners 1,839 1,079
Communications 223 210
Corporate and Other 3,763 3,749
Total assets $ 35,105 $ 32,696
Jefferson-Pilot Corporation and Subsidiaries
Quarterly Financial Results by Business Segment
(Unaudited)
Dec 31, Sept 30, June 30, Mar 31,
2004 2004 2004 2004
------------- ------------- ------------- -------------
(In millions)
Revenue:
Individual $ 455.4 $ 437.4 $ 443.8 $ 443.8
AIP 198.8 166.2 177.4 175.3
Benefit Partners 312.4 307.9 331.0 250.9
Communications 67.5 58.7 55.9 58.1
Corporate and Other 30.4 28.5 28.9 33.3
Realized investment gains (losses) 3.6 3.4 10.2 23.4
Total revenues $ 1,068.1 $ 1,002.1 $ 1,047.2 $ 984.8
Reportable Segment Results:
Individual $ 76.5 $ 75.3 $ 75.2 $ 75.0
AIP 20.0 17.6 19.8 19.1
Benefit Partners 20.0 19.7 19.7 11.4
Communications 16.6 13.5 13.7 10.6
Corporate and Other 10.2 5.5 6.5 10.4
Total reportable segment results 143.3 131.6 134.9 126.5
Realized investment gains (losses),
net of taxes 2.4 2.2 7.1 14.7
Net income before cumulative effect
of change in accounting principle 145.7 133.8 142.0 141.2
Cumulative effect of change in
accounting principle, net of taxes(1) - - - (16.6)
Net income $ 145.7 $ 133.8 $ 142.0 $ 124.6
Earnings Per Share
Earnings per share before realized
gains (losses) and cumulative effect
of change in accounting principle $ 1.05 $ 0.96 $ 0.98 $ 0.90
Realized investment gains (losses),
net of taxes 0.02 0.02 0.05 0.10
Earnings per share before cumulative
effect of change in accounting
principle 1.07 0.98 1.03 1.00
Cumulative effect of change in
accounting principle, net of taxes(1) - - - (0.12)
Earnings per share $ 1.07 $ 0.98 $ 1.03 $ 0.88
Earnings per share before realized
gains (losses) and cumulative effect
of change in accounting principle $ 1.04 $ 0.96 $ 0.97 $ 0.89
Realized investment gains (losses),
net of taxes 0.02 0.01 0.05 0.10
Earnings per share before cumulative
effect of change in accounting
principle - assuming dilution 1.06 0.97 1.02 0.99
Cumulative effect of change in
accounting principle, net of taxes -
assuming dilution(1) - - - (0.12)
Earnings per share - assuming
dilution $ 1.06 $ 0.97 $ 1.02 $ 0.87
(1) 1Q04 reflects a $3.7 million impact of adoption of SOP 03-1 implementation
guidance issued in 3Q04.
Jefferson-Pilot Corporation and Subsidiaries
Quarterly Financial Results by Business Segment
(Unaudited)
Dec 31, Sept 30, June 30, Mar 31, Dec 31,
2003 2003 2003 2003 2002
--------- --------- --------- --------- ---------
(In millions)
Revenue:
Individual $ 444.3 $ 449.7 $ 437.2 $ 442.5 $ 436.7
AIP 177.4 173.7 172.9 169.7 175.1
Benefit Partners 208.1 206.2 207.8 197.7 178.3
Communications 63.3 51.2 50.1 49.9 61.2
Corporate and Other 32.7 30.1 28.2 27.0 24.4
Realized investment gains (losses) (42.8) (5.1) 20.2 (19.1) (63.8)
Total revenues $ 883.0 $ 905.8 $ 916.4 $ 867.7 $ 811.9
Reportable Segment Results:
Individual $ 80.4 $ 78.6 $ 74.3 $ 76.0 $ 74.7
AIP 22.3 20.0 21.5 21.2 20.7
Benefit Partners 16.2 10.0 12.5 11.9 12.8
Communications 15.4 11.4 11.6 7.1 13.0
Corporate and Other 9.8 10.0 7.1 5.3 (12.5)
Total reportable segment results 144.1 130.0 127.0 121.5 108.7
Realized investment gains
(losses), net of taxes (27.8) (3.9) 13.1 (12.4) (42.1)
Net income before cumulative
effect of change in accounting
principle 116.3 126.1 140.1 109.1 66.6
Cumulative effect of change in
accounting principle, net of
taxes(1) - - - - -
Net income $ 116.3 $ 126.1 $ 140.1 $ 109.1 $ 66.6
Earnings Per Share
Earnings per share before
realized gains (losses) and
cumulative effect of change in
accounting principle $ 1.02 $ 0.92 $ 0.90 $ 0.85 $ 0.76
Realized investment gains
(losses), net of taxes (0.20) (0.03) 0.09 (0.09) (0.29)
Earnings per share before
cumulative effect of change in
accounting principle 0.82 0.89 0.99 0.76 0.47
Cumulative effect of change in
accounting principle, net of
taxes(1) - - - - -
Earnings per share $ 0.82 $ 0.89 $ 0.99 $ 0.76 $ 0.47
Earnings per share before
realized gains (losses) and
cumulative effect of change in
accounting principle $ 1.01 $ 0.91 $ 0.89 $ 0.85 $ 0.75
Realized investment gains
(losses), net of taxes (0.19) (0.03) 0.09 (0.09) (0.29)
Earnings per share before
cumulative effect of change in
accounting principle - assuming
dilution 0.82 0.88 0.98 0.76 0.46
Cumulative effect of change in
accounting principle,
net of taxes - assuming
dilution(1) - - - - -
Earnings per share - assuming
dilution $ 0.82 $ 0.88 $ 0.98 $ 0.76 $ 0.46
(1) 1Q04 reflects a $3.7 million impact of adoption of SOP 03-1 implementation
guidance issued in 3Q04.
Jefferson-Pilot Corporation and Subsidiaries
Investment Summary (Unaudited)
(in Thousands)
December 31, 2004 December 31, 2003
------------------------- -------------------------
Amount Percent Amount Percent
----------- ----------- ----------- -----------
Allocation of Invested Assets
Cash and cash equivalents $ 86,972 0.3% $ 71,768 0.3%
Bonds 22,081,106 79.8% 20,443,770 79.2%
Preferred stocks 15,247 0.1% 16,463 0.1%
Common stocks, unaffiliated 647,941 2.3% 753,958 2.9%
Mortgages loans, net 3,667,291 13.3% 3,472,340 13.4%
Real estate, net 124,973 0.5% 131,600 0.5%
Policy loans and other 1,031,452 3.7% 933,675 3.6%
Invested assets $27,654,982 100.0% $25,823,574 100.0%
Total Fixed Income Portfolio
Yield to Maturity 6.25% 6.52%
December 31, 2004 December 31, 2003
----------------------- -----------------------
Amount Percent Amount Percent
---------- ---------- ---------- ----------
Bond Portfolio
U.S. Government $ 265,204 1.2% $ 267,847 1.3%
Mortgage-backed 2,358,141 10.7% 2,904,444 14.2%
Private placements 5,126,255 23.2% 4,504,954 22.0%
Public - corporates 14,331,506 64.9% 12,766,525 62.5%
Total bonds $22,081,106 100.0% $20,443,770 100.0%
Yield to maturity 6.04% 6.33%
Average life 7.55 yrs 7.36 yrs
Duration 5.23 5.08
Average quality A3 A2
December 31, 2004 December 31, 2003
----------------------- -----------------------
Amount Percent Amount Percent
------------- ------- ------------ -------
Bond Portfolio Quality
NAIC Rating S&P
Equivalent
1 AAA - A $ 12,472,670 56.5% $ 11,707,882 57.3%
2 BBB 8,309,596 37.6% 7,284,384 35.6%
3-6 BB and lower 1,298,840 5.9% 1,451,504 7.1%
Total Bonds $ 22,081,106 100.0% $ 20,443,770 100.0%
December 31, 2004 December 31, 2003
----------------- -----------------
Fixed Maturity Securities Unrealized
Gains (Losses)
Gross unrealized gains $ 1,119,001 $ 1,179,211
Gross unrealized losses (65,951) (126,275)
Net unrealized gains $ 1,053,050 $ 1,052,936
Mortgage Loan Portfolio December 31, 2004 December 31, 2003
- ---------------------------------------- ----------------- -----------------
Yield to maturity 7.29% 7.63%
Average maturity 7.09 yrs 6.99 yrs
Total delinquent loans and loans in
foreclosure at amortized cost $ 5,987 $ 10,984
Delinquent loans as a percent of
total ML 0.16% 0.32%
Net book value of real estate
acquired in satisfaction of mortgage
indebtedness $ 3,700 $ 6,276
Fourth Fourth
Quarter Quarter
Realized Investment Gains/(Losses) 2004 2003
- ---------------------------------- ---------- ----------
Stock gains $ 13,200 $ -
Stock losses (640) -
Bond gains 5,671 13,299
Bond losses from sales and calls (5,754) (16,070)
Bond losses from writedowns (9,741) (38,863)
Other gains (losses), net (216) (2,419)
Total pretax gains (losses) 2,520 (44,053)
Amortization of DAC/VOBA and deferred
sales inducements 1,111 1,239
Income taxes (1,271) 14,984
Realized investment gains (losses),
net of taxes $ 2,360 $ (27,830)
Jefferson-Pilot Corporation and Subsidiaries
Insurance Segments Expense Analysis (Unaudited)
(In Thousands)
Three Months Ended Year Ended
Dec 31 Dec 31
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Individual Products
Commissions $ 78,460 $ 83,370 $ 276,703 $ 295,585
General and administrative
expenses 33,250 31,738 122,786 123,200
Taxes, licenses and fees 12,467 9,558 44,340 50,293
Total commissions and
expenses incurred 124,177 124,666 443,829 469,078
Less commissions and expenses
capitalized (92,181) (97,251) (321,476) (348,495)
Amortization of DAC and VOBA 63,333 51,497 206,986 195,279
Net expense $ 95,329 $ 78,912 $ 329,339 $ 315,862
Annuity and Investment Products
Insurance companies:
Commissions - insurance companies $ 19,744 $ 15,087 $ 76,225 $ 36,730
General and administrative
expenses 6,089 5,248 21,292 18,189
Taxes, licenses and fees 999 564 2,783 1,938
Gross commissions and
expenses incurred 26,832 20,899 100,300 56,857
Less commissions and expenses
capitalized (22,778) (19,799) (85,398) (47,246)
Amortization of DAC and VOBA 18,493 10,070 53,056 46,204
Net expense - insurance
companies 22,547 11,170 67,958 55,815
Broker/Dealer:
Commissions 24,092 21,312 95,447 80,574
Other 3,125 2,620 11,756 10,167
Net expense - broker/dealer 27,217 23,932 107,203 90,741
Net expense $ 49,764 $ 35,102 $ 175,161 $ 146,556
Benefit Partners
Commissions $ 31,118 $ 21,079 $ 125,103 $ 85,264
General and administrative
expenses 30,635 19,721 112,232 75,624
Taxes, licenses and fees 7,361 3,804 25,981 19,188
Total commissions and
expenses incurred 69,114 44,604 263,316 180,076
Less commissions and expenses
capitalized (10,437) (29,156) (38,123) (114,451)
Amortization of DAC and VOBA 7,444 25,307 27,370 99,945
Net expense $ 66,121 $ 40,755 $ 252,563 $ 165,570
Jefferson-Pilot Corporation and Subsidiaries
DAC and VOBA Balance Sheet Analysis (Unaudited)
(In Thousands)
Three Months Ended Year Ended
Dec 31 Dec 31
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Balance, beginning of
period $ 2,386,071 $ 2,111,305 $ 2,230,444 $ 2,027,317
Cumulative effect of
change in accounting
principle - - 1,864 -
Group coinsurance
assumed - - 37,445 -
Amount capitalized 125,395 146,208 445,173 510,353
Amortization expense (89,274) (86,880) (287,428) (341,445)
Adjustment for capital
gains and losses 1,012 1,239 1,888 14,411
Adjustment for FAS 115 6,789 58,572 607 19,808
Balance, end of period $ 2,429,993 $ 2,230,444 $ 2,429,993 $ 2,230,444
Jefferson-Pilot Corporation and Subsidiaries
Shareholder Information
Listed NYSE: JP
Composite Stock Price and Dividends (Adjusted for 50% stock dividend effected
04/09/01)
Cash
High Low Close Dividend
----- ----- ----- --------
4Q04 52.64 46.56 51.96 0.380
3Q04 50.20 47.01 49.66 0.380
2Q04 56.39 47.40 50.80 0.380
1Q04 55.08 48.97 55.01 0.330
2003 50.72 35.75 50.65 1.293
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
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- 02/07/2005
/CONTACT: Investment Community, John Still, +1-336-691-3382, or News
Media, Paul Mason, +1-336-691-3313, both of Jefferson-Pilot Corporation/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20040601/JPFLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com /
/Web site: http://www.jpfinancial.com /