Exhibit 99.1
JEFFERSON PILOT REPORTS FIRST-QUARTER NET INCOME OF $1.17 PER SHARE
GREENSBORO, N.C., April 27 /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 $1.17 per share for the first
quarter of 2005, versus $0.87 for the first quarter of 2004. Earnings before
realized investment gains and, in the year-ago period, the cumulative effect of
a change in accounting principle, increased to $1.15 from $0.89.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040601/JPFLOGO )
All per-share results are on a diluted basis.
Sales of individual life insurance in Jefferson Pilot's Individual
Products segment were very solid, with an increase of 15 percent over the first
quarter of 2004. Earnings of $84.3 million in the Individual Products segment
were 12 percent above prior-year results of $75.0 million. During the first
quarter, management actions to reduce discretionary bonuses on certain older
in-force universal life insurance policies resulted in a reserve decrease of
$8.3 million net of taxes and related intangible asset adjustments of $10.7
million net of taxes that increased segment earnings for the quarter by those
amounts. Offsetting the $10.7 million was an unrelated $1.5 million negative
unlocking of deferred acquisition costs, netting to a positive $9.2 million
unlocking of deferred acquisition costs in the quarter, which compares to a
positive $5.5 million in the first quarter of 2004.
Annuity and Investment Products earnings increased 14 percent to $21.7
million in the quarter from $19.1 million in the first quarter of 2004.
Excluding the net effect of SFAS 133, segment earnings for the quarter were
approximately flat compared to the first quarter of 2004. Average fixed annuity
balances increased 6 percent in the quarter to $9.4 billion. Fixed annuity sales
of $244.3 million in the quarter, versus $310.1 million a year ago, reflected
competitive conditions.
In the Benefit Partners segment, sales growth in group life, disability, and
dental products was an excellent 31 percent, with total sales reaching $70.5
million in the first quarter versus $54.0 million in the first quarter a year
ago. Benefit Partners' earnings increased to $33.8 million versus $11.5 million
in the 2004 quarter, reflecting very strong results from the Canada Life
acquisition, which was included in sales and earnings for one month of the
year-earlier quarter. Management steps taken to improve profitability of the
acquired business, along with exceptionally good claims experience, augmented
first-quarter segment earnings by approximately $13 million. While such strong
earnings do not represent ongoing earnings levels, these results do demonstrate
the substantial value of the acquired business as managed by Jefferson Pilot. In
addition to excellent earnings from the acquired business, the base Benefit
Partners business also performed very well in the quarter.
Jefferson-Pilot Communications' earnings grew 5 percent to $11.0 million
from $10.6 million in the first quarter of 2004, and broadcast cash flow also
increased 5 percent to $23.0 million versus $21.8 million in the prior-year
quarter. Communications' Sports and Entertainment business performed
exceptionally well in the quarter.
Earnings before realized investment gains in the Corporate and Other segment
totaled $6.9 million versus $10.4 million in the 2004 quarter. Realized net
investment gains of $3.6 million brought total Corporate and Other earnings to
$10.4 million for the quarter, compared to $25.1 million, including realized
investment gains of $14.7 million, in the first quarter of 2004.
Average diluted shares outstanding were 137.5 million for the first quarter,
versus 142.2 million for the first quarter of 2004. Jefferson Pilot bought back
1,014,600 shares, at a cost of $49.5 million, in the first quarter.
Jefferson Pilot's stockholders' equity per share excluding unrealized
investment gains grew 3 percent to $24.43 at the end of the first quarter of
2005 from $23.76 at the end of 2004, and was up 9 percent at the end of the
quarter compared to year-earlier equity per share of $22.47. Return on equity
for the first quarter was a very strong 19.2 percent.
Jefferson Pilot CEO Dennis Glass commented, "We are very pleased with the
results achieved during the quarter. Earnings growth was driven by focus on
operating fundamentals such as claims management in our group insurance business
- - in both the acquired Canada life business and our historical business - and
actions taken in the individual life line to appropriately balance profitability
and policyholder value. Distribution expansion initiatives in the individual
life and group businesses acted as the catalyst for very strong sales growth in
both lines. JP Communications showed good results against a strong 2004
comparison. Our persistent shareholder focus was illustrated by our return on
equity in excess of 19%, our cash dividend which will increase 10% with our next
payment, and our share buybacks which returned $49 million to shareholders in
the quarter."
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. EDT April 28, 2005. The call will be broadcast live on the
Internet at 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 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
2005 Report
(Unaudited)
Three Months Ended
Net Income -----------------------------
(Dollars in thousands) Mar 31, 2005 Mar 31, 2004
- ------------------------------------------ ------------- -------------
Individual $ 84,342 $ 75,027
AIP 21,667 19,070
Benefit Partners 33,763 11,454
Communications 11,049 10,552
Corporate and Other 6,868 10,423
Total reportable segment results 157,689 126,526
Realized investment gains (losses),
net of taxes 3,551 14,705
Income before cumulative effect of
change in accounting principle 161,240 141,231
Cumulative effect of change in accounting
for long-duration contracts, net of taxes - (16,589)
Net income $ 161,240 $ 124,642
Per share information
Income before realized gains (losses)
and cumulative effect of change in
accounting principle $ 1.15 $ 0.90
Realized investment gains (losses),
net of taxes 0.03 0.10
Income before cumulative effect in
change in accounting principle 1.18 1.00
Cumulative effect of change in
accounting principle, net of taxes - (0.12)
Net income $ 1.18 $ 0.88
Per share information - assuming dilution
Income before realized gains (losses)
and cumulative effect of change in
accounting principle $ 1.15 $ 0.89
Realized investment gains (losses),
net of taxes 0.02 0.10
Income before cumulative effect in
change in accounting principle 1.17 0.99
Cumulative effect of change in
accounting principle, net of taxes - (0.12)
Net income $ 1.17 $ 0.87
Average number of shares outstanding 136,611,211 140,659,329
Average number of shares outstanding
- assuming dilution 137,521,411 142,169,281
Jefferson-Pilot Corporation and Subsidiaries
(Unaudited)
Consolidated Balance Sheets
(In Thousands) Mar 31, 2005 Dec 31, 2004
- ------------------------------------------ ------------- -------------
Assets:
Cash and investments $ 27,599,318 $ 27,654,982
Accrued investment income 355,222 341,559
Due from reinsurers 1,321,692 1,341,389
Deferred policy acquisition costs 2,090,836 1,957,843
Value of business acquired 485,872 472,150
Goodwill, net 311,894 311,894
Other assets 661,909 651,614
Separate account assets 2,324,309 2,373,385
$ 35,151,052 $ 35,104,816
Liabilities:
Policy liabilities $ 26,347,318 $ 26,165,901
Debt:
Commercial paper borrowings 154,327 187,692
Obligations under repurchase
agreements 537,490 468,287
Notes payable 599,656 599,649
Junior subordinated debentures 309,279 309,279
Income tax liabilities 594,169 619,900
Accrued expenses and other liabilities 453,212 446,852
Separate account liabilities 2,324,309 2,373,385
31,319,760 31,170,945
Stockholders' equity:
Common stock and paid in capital 170,470 180,572
Retained earnings 3,150,799 3,070,525
Accumulated other comprehensive
income - primarily net unrealized gains
on securities 510,023 682,774
3,831,292 3,933,871
$ 35,151,052 $ 35,104,816
Components of Equity
(Dollars in thousands except share amounts)
- --------------------------------------------
Common stock and paid in capital $ 170,470 $ 180,572
Retained earnings 3,150,799 3,070,525
Accumulated other comprehensive income
Net unrealized gains
Bonds, net of DAC, VOBA and taxes 260,003 402,508
Equities, net of taxes 260,774 289,928
Other (10,754) (9,662)
Total accumulated other
comprehensive income 510,023 682,774
Stockholders' equity $ 3,831,292 $ 3,933,871
Shares outstanding 135,938,302 136,819,214
Per share $ 28.18 $ 28.75
Per share excluding accumulated other
comprehensive income $ 24.43 $ 23.76
Jefferson-Pilot Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
Three Months Ended
-----------------------------
(Dollars in thousands except share amounts) Mar 31, 2005 Mar 31, 2004
- ------------------------------------------- ------------- -------------
Revenue:
Premiums and other considerations $ 331,293 $ 279,781
UL & investment product charges 199,708 181,583
Net investment income 408,297 406,461
Realized investment gains (losses) 5,463 23,461
Communications sales 60,500 58,132
Other 31,933 35,398
Total revenue 1,037,194 984,816
Benefits and Expenses:
Insurance and annuity benefits 537,417 540,979
Insurance commissions, net of deferrals 65,587 59,652
General and administrative expenses,
net of deferrals 38,581 37,633
Insurance taxes, licenses and fees 22,695 17,410
Amortization of policy acquisition costs
and value of business acquired 77,926 66,788
Interest expense 13,777 10,748
Communications operations 37,841 36,662
Total benefits and expenses 793,824 769,872
Income before income taxes and cumulative
effect of change in accounting principle 243,370 214,944
Income taxes 82,130 73,713
Income before cumulative effect of
change in accounting principle 161,240 141,231
Cumulative effect of change in accounting
for long-duration contracts, net of taxes - (16,589)
Net income $ 161,240 $ 124,642
Average number of shares outstanding 136,611,211 140,659,329
Average number of shares outstanding
- assuming dilution 137,521,411 142,169,281
Quarterly return on equity (1) 19.2% 16.2%
Earnings Per Share
Earnings per share before realized
gains (losses) and cumulative
effect of change in accounting principle $ 1.15 $ 0.90
Realized investment gains (losses),
net of taxes 0.03 0.10
Earnings per share before cumulative effect
of change in accounting principle 1.18 1.00
Cumulative effect of change in
accounting principle, net of taxes - (0.12)
Earnings per share $ 1.18 $ 0.88
Earnings per share before realized
gains (losses) and cumulative
effect of change in accounting principle $ 1.15 $ 0.89
Realized investment gains (losses),
net of taxes 0.02 0.10
Earnings per share before cumulative effect
of change in accounting principle - assuming
dilution 1.17 0.99
Cumulative effect of change in accounting
principle, net of taxes - assuming dilution - (0.12)
Earnings per share - assuming dilution $ 1.17 $ 0.87
(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
-----------------------------
(In Thousands) Mar 31, 2005 Mar 31, 2004
- ------------------------------------------ ------------- -------------
Cash Flows from Operating Activities:
Net income $ 161,240 $ 124,642
Adjustments to reconcile net income to net
cash provided by operating activities:
Change in policy liabilities 6,946 118,583
Net amount credited to
policyholder accounts (18,904) 26,284
Net deferral of policy acquisition
costs and sales inducements (60,633) (88,972)
Net amortization of value of
business acquired 15,622 (17,678)
Group coinsurance assumed - 327,992
Other 19,995 (8,687)
Net cash provided by operations 124,266 482,164
Cash Flows from Investing Activities:
Securities and loans purchased and sold (378,152) (805,901)
Other investing activities (7,909) (24,463)
Net cash used in investing activities (386,061) (830,364)
Cash Flows from Financing Activities:
Policyholder contract deposits 693,236 729,929
Policyholder contract withdrawals (488,620) (383,020)
Net borrowings (repayments) 35,846 152,757
Net issuance (repurchase) of
common shares (40,226) (63,299)
Cash dividends to common and
preferred stockholders (52,004) (46,653)
Other 826 7,032
Net cash provided by financing
activities 149,058 396,746
Decrease in cash and cash equivalents (112,737) 48,546
Cash and cash equivalents at
beginning of period 86,972 71,768
Cash and cash equivalents at end of
period $ (25,765) $ 120,314
Supplemental Cash Flow Information:
Income taxes paid $ 17,996 $ (6,356)
Interest paid on borrowed money $ 25,139 $ 16,264
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
Mar 31
-----------------------------
2005 2004
------------- -------------
UL-Type Products:
Net investment income $ 184,052 $ 184,128
Interest credited to policyholders (127,099) (125,661)
Interest margin 56,953 58,467
Product charge revenue:
Cost of insurance charges 153,188 132,628
Expense charges 37,626 37,424
Surrender charges 7,990 11,096
Total product charge revenue 198,804 181,148
Death benefits and other insurance
benefits (90,313) (77,203)
Expenses, excluding amortization of
DAC and VOBA (18,861) (22,483)
Amortization of DAC and VOBA (38,681) (45,077)
Miscellaneous expense 159 (183)
UL-type product income before taxes 108,061 94,669
Traditional Products:
Premiums and other considerations 36,227 40,145
Net investment income 36,665 38,546
Benefits (43,424) (47,417)
Expenses, excluding amortization of
DAC and VOBA (6,252) (7,160)
Amortization of DAC and VOBA (3,801) (3,962)
Traditional product income before taxes 19,415 20,152
Income before income taxes 127,476 114,821
Income taxes (43,134) (39,794)
Reportable segment results $ 84,342 $ 75,027
Operating Measures
Annualized equivalent life
insurance premium sales:
- Individual Markets Excl
Community Banks and BOLI $ 57,182 $ 48,682
- Community Banks and BOLI 129 945
$ 57,311 $ 49,627
Average UL policyholder fund balances $ 11,410,350 $ 10,930,580
Average VUL separate account assets 1,663,293 1,489,461
Total $ 13,073,643 $ 12,420,041
Average Face Amount of Insurance
In Force:
- Total $ 165,929,000 $ 166,444,000
- UL-Type Contracts $ 128,397,000 $ 126,103,000
Average assets $ 18,870,534 $ 17,936,560
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
Mar 31
-----------------------------
2005 2004
------------- -------------
Investment product charges and premiums $ 2,906 $ 2,406
Net investment income 135,802 143,518
Broker-dealer concessions and other 29,917 29,392
Total revenue 168,625 175,316
Policy benefits (including interest
credited) 82,504 103,612
Insurance expenses 24,697 14,919
Broker-dealer expenses 28,534 27,512
Total benefits and expenses 135,735 146,043
Income before income taxes 32,890 29,273
Income taxes 11,223 10,203
Reportable segment results $ 21,667 $ 19,070
Operating Measures
Fixed annuity premium sales $ 244,338 $ 310,101
Variable annuity premium sales 64 112
Total $ 244,402 $ 310,213
Investment product sales $ 1,297,045 $ 1,323,800
Average fund balances:
Fixed annuity $ 9,445,514 $ 8,875,604
Variable annuity 311,870 350,354
Total annuity $ 9,757,384 $ 9,225,958
Effective investment spreads for
fixed annuities (1) 2.13% 1.71%
Effective investment spreads for
fixed annuities, excluding FAS 133 1.85% 1.71%
Fixed annuity surrenders as a % of
beginning fund balance 12.4% 9.5%
Fixed annuity general and administrative
expenses as a % of average
invested assets 0.17% 0.18%
Average assets $ 10,523,501 $ 10,116,787
(1) Includes FAS 133 adjustment of: $ 6,221 $ 168
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
Mar 31
-----------------------------
2005 2004
------------ ------------
Premiums and other considerations $ 289,481 $ 232,500
Net investment income 23,850 18,382
Total revenue 313,331 250,882
Policy benefits 188,317 180,401
Expenses 73,071 52,859
Total benefits and expenses 261,388 233,260
Income before income taxes 51,943 17,622
Income taxes 18,180 6,168
Reportable segment results $ 33,763 $ 11,454
Operating Measures
Life, Disability and Dental:
Annualized sales $ 70,543 $ 53,898
Premiums and other considerations:
Life $ 108,354 $ 85,483
Disability 117,098 89,442
Dental 32,038 29,408
Other 31,991 28,167
Total $ 289,481 $ 232,500
Reportable segment results:
Life $ 15,972 $ 3,459
Disability 17,247 6,790
Dental (114) 641
Other 658 564
Total $ 33,763 $ 11,454
Loss Ratios:
Life 59.6% 79.0%
Disability 60.2% 72.9%
Dental 78.9% 78.3%
Combined 62.3% 76.2%
Gross general and administrative
expenses as a % of premium income 9.3% 9.9%
Total expenses as a % of premium income 25.3% 22.8%
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
Mar 31
-----------------------------
2005 2004
------------ ------------
Communications revenues, net $ 60,875 $ 58,507
Cost of sales 15,002 14,713
Operating expenses 22,839 21,949
Broadcast cash flow 23,034 21,845
Depreciation and amortization 2,116 2,225
Corporate general and
administrative expenses 1,879 1,599
Net interest expense and other 520 423
Income before income taxes 18,519 17,598
Income taxes 7,470 7,046
Reportable segment results $ 11,049 $ 10,552
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
Mar 31
-----------------------------
2005 2004
------------ ------------
Earnings on investments and other income $ 28,059 $ 25,937
Interest expense on debt (13,778) (10,748)
Operating expenses (7,202) (3,018)
Income taxes (211) (1,748)
Reportable segment results 6,868 10,423
Realized investment gains, net of taxes 3,551 14,705
Reportable segment results, including net
realized investment gains $ 10,419 $ 25,128
Assets by Segment (In Millions)
Mar 31
-----------------------------
2005 2004
------------ ------------
Individual Products $ 18,965 $ 18,087
Annuity and Investment Products 10,543 10,293
Benefit Partners 1,834 1,710
Communications 219 199
Corporate and Other 3,590 3,895
Total assets $ 35,151 $ 34,184
Jefferson-Pilot Corporation and Subsidiaries
Quarterly Financial Results by Business Segment
(Unaudited)
Mar 31, Dec 31, Sept 30, June 30, Mar 31,
(In millions) 2005 2004 2004 2004 2004
- -------------------------------- ------------ ------------ ------------ ------------ ------------
Revenue:
Individual $ 455.9 $ 455.4 $ 437.4 $ 443.8 $ 443.8
AIP 168.6 198.8 166.2 177.4 175.3
Benefit Partners 313.3 312.4 307.9 331.0 250.9
Communications 60.4 67.5 58.7 55.9 58.1
Corporate and Other 33.5 30.4 28.5 28.9 33.3
Realized investment gains
(losses) 5.5 3.6 3.4 10.2 23.4
Total revenues $ 1,037.2 $ 1,068.1 $ 1,002.1 $ 1,047.2 $ 984.8
Reportable Segment
Results:
Individual $ 84.3 $ 76.5 $ 75.3 $ 75.2 $ 75.0
AIP 21.7 20.0 17.6 19.8 19.1
Benefit Partners 33.8 20.0 19.7 19.7 11.4
Communications 11.0 16.6 13.5 13.7 10.6
Corporate and Other 6.9 10.2 5.5 6.5 10.4
Total reportable segment
results 157.7 143.3 131.6 134.9 126.5
Realized investment gains
(losses), net of taxes 3.5 2.4 2.2 7.1 14.7
Income before cumulative
effect of change in
accounting principle 161.2 145.7 133.8 142.0 141.2
Cumulative effect of
change in accounting
principle, net of taxes (1) - - - - (16.6)
Net income $ 161.2 $ 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 $ 1.15 $ 1.05 $ 0.96 $ 0.98 $ 0.90
Realized investment gains
(losses), net of taxes 0.03 0.02 0.02 0.05 0.10
Earnings per share before
cumulative effect of
change in accounting
principle 1.18 1.07 0.98 1.03 1.00
Cumulative effect of
change in accounting
principle, net of taxes (1) - - - - (0.12)
Earnings per share $ 1.18 $ 1.07 $ 0.98 $ 1.03 $ 0.88
Earnings per share before
realized gains (losses)
and cumulative effect of
change in accounting
principle $ 1.15 $ 1.04 $ 0.96 $ 0.97 $ 0.89
Realized investment gains
(losses), net of taxes 0.02 0.02 0.01 0.05 0.10
Earnings per share before
cumulative effect of
change in accounting
principle - assuming
dilution 1.17 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 $ 1.17 $ 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,
(In millions) 2003 2003 2003 2003
- ------------------------------------------ --------- --------- --------- ---------
Revenue:
Individual $ 444.3 $ 449.7 $ 437.2 $ 442.5
AIP 177.4 173.7 172.9 169.7
Benefit Partners 208.1 206.2 207.8 197.7
Communications 63.3 51.2 50.1 49.9
Corporate and Other 32.7 30.1 28.2 27.0
Realized investment gains (losses) (42.8) (5.1) 20.2 (19.1)
Total revenues $ 883.0 $ 905.8 $ 916.4 $ 867.7
Reportable Segment Results:
Individual $ 80.4 $ 78.6 $ 74.3 $ 76.0
AIP 22.3 20.0 21.5 21.2
Benefit Partners 16.2 10.0 12.5 11.9
Communications 15.4 11.4 11.6 7.1
Corporate and Other 9.8 10.0 7.1 5.3
Total reportable segment results 144.1 130.0 127.0 121.5
Realized investment gains (losses),
net of taxes (27.8) (3.9) 13.1 (12.4)
Income before cumulative effect of
change in accounting principle 116.3 126.1 140.1 109.1
Cumulative effect of change in
accounting principle, net of taxes (1) - - - -
Net income $ 116.3 $ 126.1 $ 140.1 $ 109.1
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
Realized investment gains (losses),
net of taxes (0.20) (0.03) 0.09 (0.09)
Earnings per share before cumulative
effect of change in accounting
principle 0.82 0.89 0.99 0.76
Cumulative effect of change in
accounting principle,
net of taxes (1) - - - -
Earnings per share $ 0.82 $ 0.89 $ 0.99 $ 0.76
Earnings per share before realized
gains (losses) and cumulative
effect of change in accounting
principle $ 1.01 $ 0.91 $ 0.89 $ 0.85
Realized investment gains (losses),
net of taxes (0.19) (0.03) 0.09 (0.09)
Earnings per share before cumulative
effect of change in principle
- assuming dilution 0.82 0.88 0.98 0.76
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
(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)
March 31, 2005 December 31, 2004
---------------------------- ----------------------
Allocation of Invested Assets Amount Percent Amount Percent
- ------------------------------------------ ------------ ------------ ------------ -------
Cash and cash equivalents $ (25,765) -0.1% $ 86,972 0.3%
Bonds 22,132,199 80.3% 22,081,106 79.8%
Preferred stocks 13,651 0.0% 15,247 0.1%
Common stocks, unaffiliated 606,720 2.2% 647,941 2.3%
Mortgages loans, net 3,718,253 13.5% 3,667,291 13.3%
Real estate, net 123,916 0.4% 124,973 0.5%
Policy loans and other 1,030,344 3.7% 1,031,452 3.7%
Invested assets $ 27,599,318 100.0% $ 27,654,982 100.0%
Total Fixed Income Portfolio
Yield to Maturity 6.22% 6.25%
March 31, 2005 December 31, 2004
---------------------------- ----------------------
Bond Portfolio Amount Percent Amount Percent
- ------------------------------------------ ------------ ------------ ------------ -------
U.S. Government $ 237,784 1.1% $ 265,204 1.2%
Mortgage-backed 2,323,935 10.5% 2,358,141 10.7%
Private placements 5,072,544 22.9% 5,126,255 23.2%
Public - corporates 14,497,936 65.5% 14,331,506 64.9%
Total bonds $ 22,132,199 100.0% $ 22,081,106 100.0%
Yield to maturity 6.04% 6.04%
Average life 7.68 yrs 7.55 yrs
Duration 5.28 5.23
Average quality A3 A3
March 31, 2005 December 31, 2004
---------------------------- ----------------------
Bond Portfolio Quality Amount Percent Amount Percent
- ------------------------ ------------ ------------ ------------ -------
NAIC Rating S&P
Equivalent
1 AAA - A $ 12,573,235 56.8% $ 12,472,670 56.5%
2 BBB 8,261,838 37.3% 8,309,596 37.6%
3-6 BB and lower 1,297,126 5.9% 1,298,840 5.9%
Total Bonds $ 22,132,199 100.0% $ 22,081,106 100.0%
Fixed Maturity Securities Unrealized
Gains (Losses) March 31, 2005 December 31, 2004
- ----------------------------------------------------- -------------- -----------------
Gross unrealized gains $ 894,484 $ 1,119,001
Gross unrealized losses (188,549) (65,951)
Net unrealized gains $ 705,935 $ 1,053,050
Mortgage Loan Portfolio March 31, 2005 December 31, 2004
- ----------------------------------------------------- -------------- -----------------
Yield to maturity 7.23% 7.29%
Average maturity 7.07 yrs 7.09 yrs
Total delinquent loans and loans in
foreclosure at amortized cost $ 6,623 $ 5,987
Delinquent loans as a percent of total ML 0.18% 0.16%
Net book value of real estate acquired in
satisfaction of mortgage indebtedness $ 3,700 $ 3,700
Realized Investment Gains/(Losses) First Quarter 2005 First Quarter 2004
- --------------------------------------- ------------------ -----------------
Stock gains $ 6,375 $ 28,564
Stock losses (1,142) (2,392)
Bond gains 8,240 17,665
Bond losses from sales and calls (4,447) (3,503)
Bond losses from writedowns (5,767) (15,907)
Other gains (losses), net 2,642 2
Total pretax gains (losses) 5,901 24,429
Amortization of DAC/VOBA and deferred
sales inducements (438) (968)
Income taxes (1,912) (8,756)
Realized investment gains (losses),
net of taxes $ 3,551 $ 14,705
Jefferson-Pilot Corporation and Subsidiaries
Insurance Segments Expense Analysis (Unaudited)
(In Thousands)
Three Months Ended
Mar 31
-----------------------------
2005 2004
------------ ------------
Individual Products
Commissions $ 80,348 $ 63,769
General and administrative expenses 26,793 29,801
Taxes, licenses and fees 12,704 11,063
Total commissions and expenses
incurred 119,845 104,633
Less commissions and expenses
capitalized (94,732) (74,990)
Amortization of DAC and VOBA 42,482 49,039
Net expense $ 67,595 $ 78,682
Annuity and Investment Products
Insurance companies:
Commissions - insurance companies $ 14,266 $ 18,454
General and administrative expenses 5,320 4,860
Taxes, licenses and fees 851 646
Gross commissions and expenses
incurred 20,437 23,960
Less commissions and expenses
capitalized (16,520) (20,539)
Amortization of DAC and VOBA 20,780 11,498
Net expense - insurance companies 24,697 14,919
Broker/Dealer:
Commissions 25,800 24,767
Other 2,734 2,745
Net expense - broker/dealer 28,534 27,512
Net expense $ 53,231 $ 42,431
Benefit Partners
Commissions $ 34,164 $ 26,881
General and administrative expenses 26,806 22,952
Taxes, licenses and fees 8,010 4,981
Total commissions and expenses
incurred 68,980 54,814
Less commissions and expenses
capitalized (10,569) (8,201)
Amortization of DAC and VOBA 14,660 6,246
Net expense $ 73,071 $ 52,859
Jefferson-Pilot Corporation and Subsidiaries
DAC and VOBA Balance Sheet Analysis (Unaudited)
(In Thousands)
Three Months Ended
Mar 31
-----------------------------
2005 2004
------------ ------------
Balance, beginning of period $ 2,429,993 $ 2,230,444
Cumulative effect of change in
accounting principle - 1,864
Group coinsurance assumed - 34,795
Amount capitalized 121,822 103,729
Amortization expense (77,926) (66,788)
Adjustment for capital gains and losses (445) (904)
Adjustment for FAS 115 103,264 (107,451)
Balance, end of period $ 2,576,708 $ 2,195,689
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
------ ------ ------ --------
1Q05 51.00 47.18 49.05 0.418
2004 56.39 46.56 51.96 1.470
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- 04/27/2005
/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/
_