Exhibit 99.1
JEFFERSON PILOT REPORTS SECOND-QUARTER EARNINGS OF $0.98 PER SHARE BEFORE
REALIZED INVESTMENT GAINS, FIRST-HALF EPS BEFORE GAINS UP 15 PERCENT
GREENSBORO, N.C., July 28 /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 earnings before realized investment gains of
$0.98 per share for the second quarter of 2005, versus $0.97 in the second
quarter of 2004. Net income for the quarter was $1.00 per share, including
realized investment gains of $0.02 per share, compared to $1.02, including $0.05
per share of investment gains, in the year-earlier period.
For the first six months of 2005, Jefferson Pilot's earnings per share
before realized investment gains increased to $2.13 from $1.86 for the first
half of 2004. Net income for the first half increased to $2.18 from $2.01
excluding the cumulative effect of a change in accounting principle in the 2004
period.
All per-share results are on a diluted basis.
Jefferson Pilot's Individual Products business reported excellent sales
results in the second quarter, with individual markets annualized premium sales
growing 25 percent to $63.7 million in the quarter from $51.1 million a year
ago. Universal life policyholder fund balances grew 4 percent to $11.5 billion,
and total life fund balances increased 5 percent to $13.2 billion.
For the quarter, Individual Product earnings increased to $75.9 million from
$75.2 million in the second quarter of 2004, bringing six-month earnings to
$160.2 million, 7 percent above first-half 2004 earnings of $150.2 million.
The Annuity and Investment Products segment earned $15.6 million in the
quarter, versus $19.8 million in the second quarter of 2004. Excluding the
effect of FAS 133 adjustments, earnings for the quarter increased 4 percent to
$19.6 million from $18.9 million. For the six months, AIP earnings were $37.2
million versus $38.8 million, and, excluding the effect of FAS 133, were $38.7
million versus $37.8 million. Fixed annuity sales of $290.2 million in the
quarter were level with sales of $290.9 million in the year-earlier quarter.
Average segment fund balances grew 5 percent to $9.9 billion from $9.5 billion a
year earlier, augmented by a modest issue of funding agreements.
The Benefit Partners group insurance segment continued to report strong
results in the second quarter, with earnings increasing 9 percent to $21.3
million versus $19.7 million in the second quarter of 2004. For the year to
date, Benefit Partners' earnings of $55.1 million were sharply higher than
prior-year earnings of $31.1 million due to the successful integration of the
non-medical group insurance business of Canada Life, acquired in the first
quarter of 2004. Group insurance sales were strong in the quarter, increasing 9
percent to $52.3 million, versus $48.1 million in the year-earlier period.
First-half sales grew 20 percent to $122.8 million from $102.0 million in the
2004 first half.
Jefferson-Pilot Communications reported an earnings increase of 9 percent
for the quarter to $15.0 million from $13.7 million. Broadcast cash flow for the
quarter reached $27.8 million versus $27.2 million in the prior-year quarter.
Year to date, Communications' earnings of $26.0 million were 7 percent ahead of
last year's first half earnings of $24.3 million, and broadcast cash flow
increased to $50.8 million from $49.0 million.
Earnings before realized investment gains in the Corporate and Other segment
were $6.1 million versus $6.5 million in the 2004 quarter. Realized investment
gains of $2.9 million brought total Corporate and Other earnings to $9.0 million
for the quarter, compared to $13.6 million, including realized investment gains
of $7.2 million, in the second quarter of 2004. Year-to-date segment earnings
before realized investment gains were $13.0 million in the quarter, compared to
$16.9 million in the 2004 quarter. Segment earnings, including realized
investment gains of $6.5 million, totaled $19.5 million for the six months,
versus $38.8 million for the first half of 2004, including $21.9 million of
investment gains.
During the second quarter, Jefferson Pilot bought back 1,324,400 shares for
a total investment of $64.9 million, bringing year-to-date buybacks to 2,339,000
shares at a cost of $114.4 million.
Jefferson Pilot's return on equity remained excellent at 16.1 percent in the
second quarter.
Jefferson Pilot CEO Dennis Glass commented on the quarter, "We are pleased
with Jefferson Pilot's results this quarter. Continued low interest rates put
pressure on interest margins in our insurance business, making top-line revenue
growth initiatives more important to earnings growth. In the past several
quarters, we have quickened the pace of product development, expanded our
internal and external wholesaler teams, and added technologies that better
interface with our distribution partners and customers in both our individual
and group businesses. These initiatives helped produce the strong sales growth
we have reported this year. Additionally, we are increasing our emphasis on
newer market segments in our insurance businesses to enhance growth prospects.
Our annuity segment has entered a new market through the sale of $300 million of
funding agreement-backed medium-term notes. This was the first such issue in the
company's history, and Jefferson Pilot's industry-leading credit ratings enabled
us to achieve very attractive rates.
"We also continue to balance carefully the interests of our clients and our
shareholders by providing good product value delivered through manufacturing and
distribution systems that are among the most efficient and cost-effective in our
industry. We have maintained profitability in our core life and annuity
businesses, notwithstanding today's low-yield investment environment, by
effectively managing our interest spreads, and thus have been able to maintain
an industry-leading return on equity while retaining our top- level financial
strength ratings. Our strong profitability also has provided flexibility in
capital management, providing the financial resources to support significant
share buybacks as well as the strong 10 percent cash dividend increase we
implemented in the second 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 July 29, 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 statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are not historical facts, and 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 (including the uncertainty as to the duration and rate of
the current economic recovery), the impact on the economy from further terrorist
activities or US military engagements, and interest rate levels, changes and
fluctuations, all of which can impact our sales, investment portfolios, and
earnings; competitive factors, including pricing pressures, technological
developments, new product offerings and the emergence of new competitors;
changes in federal and state taxes (including recent or future changes to
general tax rates, dividends, capital gains, retirement savings, and estate
taxes); changes in the regulation of the insurance industry or financial
services industry; changes in generally accepted or statutory accounting
principles (such as Actuarial Guideline 38 referred to as AXXX); 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
FINANCIAL HIGHLIGHTS
(In Thousands, Except Share Information, Unaudited)
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
NET INCOME BY SOURCES
Individual Products $ 75,892 $ 75,219 $ 160,234 $ 150,246
Annuity and Investment
Products 15,565 19,761 37,232 38,831
Benefit Partners 21,339 19,661 55,102 31,115
Communications 14,964 13,738 26,013 24,290
Corporate and Other 6,136 6,476 13,004 16,899
Total reportable
segment results 133,896 134,855 291,585 261,381
Realized investment
gains (losses),
net of taxes 2,902 7,160 6,453 21,865
Income before
cumulative effect
of change in
accounting principle 136,798 142,015 298,038 283,246
Cumulative effect of
change in accounting for
long-duration contracts,
net of taxes - - - (16,589)
Net income $ 136,798 $ 142,015 $ 298,038 $ 266,657
SHARE INFORMATION
- ASSUMING DILUTION
Average number of
shares outstanding 136,047,482 139,545,738 136,780,416 140,857,509
Income before
realized gains
(losses) and
cumulative effect
of change in
accounting principle $ 0.98 $ 0.97 $ 2.13 $ 1.86
Realized investment
gains (losses), net
of taxes 0.02 0.05 0.05 0.15
Income before cumulative
effect in change in
accounting principle 1.00 1.02 2.18 2.01
Cumulative effect
of change in
accounting principle,
net of taxes - - - (0.12)
Net income $ 1.00 $ 1.02 $ 2.18 $ 1.89
PERFORMANCE RATIOS
(Annualized)
Return on average equity (1) 16.1% 17.4% 17.7% 16.9%
Dividend yield (2) 3.3% 2.8% 3.2% 2.8%
(1) Calculated as total reportable segment results, divided by average equity
(excluding accumulated other comprehensive income).
(2) Calculated as dividend paid per share, divided by the average market price
per share.
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AND COMMON SHARE DATA
(In Thousands, Except Share Information, Unaudited)
6/30/05 12/31/04
--------------- ---------------
ASSETS
Cash and investments $ 28,346,633 $ 27,654,982
Accrued investment income 348,351 341,559
Due from reinsurers 1,313,826 1,341,389
Deferred policy acquisition costs 2,058,742 1,957,843
Value of business acquired 440,624 472,150
Goodwill 311,894 311,894
Other assets 653,763 651,614
Assets held in separate accounts 2,354,401 2,373,385
Total assets $ 35,828,234 $ 35,104,816
LIABILITIES
Policy liabilities $ 26,807,356 $ 26,165,901
Debt:
Commercial paper borrowings 197,602 187,692
Obligations under repurchase agreements 400,986 468,287
Notes payable 599,664 599,649
Junior subordinated debentures 309,279 309,279
Income tax liabilities 653,751 619,900
Accounts payable, accruals and other
liabilities 444,682 446,852
Liabilities related to separate accounts 2,354,401 2,373,385
Total liabilities 31,767,721 31,170,945
STOCKHOLDERS' EQUITY
Common stock and paid in capital 167,891 180,572
Retained earnings 3,163,915 3,070,525
Accumulated other comprehensive income:
Net unrealized gains:
Bonds, net of DAC, VOBA and taxes 458,793 402,508
Equities, net of taxes 281,646 289,928
Other (11,732) (9,662)
Total accumulated other
comprehensive income 728,707 682,774
Total stockholders' equity 4,060,513 3,933,871
Total liabilities and
stockholders' equity $ 35,828,234 $ 35,104,816
SHARE INFORMATION
Shares outstanding 134,775,029 136,819,214
Book value per share $ 30.13 $ 28.75
Book value per share, excluding
accumulated other comprehensive income $ 24.72 $ 23.76
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands, Except Share Information, Unaudited)
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
REVENUE
Premiums and other
considerations $ 352,519 $ 352,295 $ 683,812 $ 632,076
Universal life and
investment product
charges 191,201 183,552 390,909 365,135
Net investment income 424,468 413,208 832,765 819,669
Realized investment
gains (losses) 4,464 10,178 9,927 33,639
Communications sales 57,198 56,493 117,698 114,625
Broker-dealer
concessions and other 33,364 31,464 65,297 66,862
Total revenue 1,063,214 1,047,190 2,100,408 2,032,006
BENEFITS AND EXPENSES
Insurance and annuity
benefits 601,378 585,295 1,138,795 1,126,274
Insurance commissions,
net of deferrals 67,053 67,406 132,640 127,058
General and administrative
expenses, net of deferrals 47,565 47,382 86,146 85,015
Insurance taxes,
licenses and fees 20,007 19,655 42,702 37,065
Amortization of policy
acquisition costs and
value of business acquired 78,214 74,857 156,140 141,645
Interest expense 14,835 11,728 28,612 22,476
Communications operations 29,439 29,316 67,280 65,978
Total benefits and
expenses 858,491 835,639 1,652,315 1,605,511
Income before income
taxes and cumulative
effect of change in
accounting principle 204,723 211,551 448,093 426,495
Income taxes 67,925 69,536 150,055 143,249
Income before cumulative
effect of change in
accounting principle 136,798 142,015 298,038 283,246
Cumulative effect of
change in accounting
for long-duration
contracts, net of taxes - - - (16,589)
Net income $ 136,798 $ 142,015 $ 298,038 $ 266,657
SHARE INFORMATION -
ASSUMING DILUTION
Average number of
shares outstanding 136,047,482 139,545,738 136,780,416 140,857,509
Earnings per share
before realized gains
(losses) and cumulative
effect of change
in accounting principle $ 0.98 $ 0.97 $ 2.13 $ 1.86
Realized investment
gains (losses), net
of taxes 0.02 0.05 0.05 0.15
Earnings per share
before cumulative
effect of change
in accounting principle 1.00 1.02 2.18 2.01
Cumulative effect of
change in accounting
principle, net of taxes - - - (0.12)
Net income $ 1.00 $ 1.02 $ 2.18 $ 1.89
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 136,798 $ 142,015 $ 298,038 $ 266,657
Adjustments to reconcile net
income to net cash provided
by operating activities:
Change in policy liabilities 37,946 30,963 44,892 149,546
Net amount credited to
policyholder accounts 4,703 17,889 (14,201) 44,173
Net deferral of policy
acquisition costs and
sales inducements (64,664) (54,022) (125,297) (142,994)
Net amortization of value
of business acquired 11,501 21,485 27,123 3,807
Group coinsurance assumed - - - 327,992
Other (42,759) 6,780 (22,764) (1,907)
Net cash provided by
operating activities 83,525 165,110 207,791 647,274
CASH FLOWS FROM INVESTING
ACTIVITIES
Securities and loans purchased
and sold (280,652) (346,409) (658,804) (1,152,310)
Other investing activities, net (13,006) (81,070) (20,915) (105,533)
Net cash used in investing
activities (293,658) (427,479) (679,719) (1,257,843)
CASH FLOWS FROM FINANCING
ACTIVITIES
Policyholder contract deposits 713,133 716,970 1,406,369 1,446,899
Policyholder contract
withdrawals (582,214) (378,926) (1,070,834) (761,946)
Funding agreements issuance 300,000 - 300,000 -
Net borrowings (repayments) (93,349) 88,806 (57,503) 241,563
Net issuance (repurchase) of
common shares (66,090) (163,828) (106,316) (227,127)
Cash dividends paid (56,426) (52,412) (108,430) (99,065)
Other financing activities, net 1,857 936 2,683 7,968
Net cash provided by
financing activities 216,911 211,546 365,969 608,292
Net change in cash and cash
equivalents 6,778 (50,823) (105,959) (2,277)
Cash and cash equivalents,
beginning of period (25,765) 120,314 86,972 71,768
Cash and cash equivalents,
end of period $ (18,987) $ 69,491 $ (18,987) $ 69,491
SUPPLEMENTAL CASH FLOW
INFORMATION
Federal income taxes paid $ 118,578 $ 172 $ 136,574 $ (6,184)
Interest paid $ 7,308 $ 1,814 $ 32,447 $ 18,078
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
INDIVIDUAL PRODUCTS
(In Thousands, Unaudited)
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 and performance measures
were:
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
REPORTABLE SEGMENT RESULTS
UL-Type Products:
Net investment
income $ 187,683 $ 184,444 $ 371,735 $ 368,572
Interest credited
to policyholders (126,890) (125,468) (253,989) (251,129)
Interest margin 60,793 58,976 117,746 117,443
Product charge revenue:
Cost of insurance
charges 143,856 135,808 297,044 268,436
Expense charges 37,314 37,798 74,940 75,222
Surrender charges 8,961 9,474 16,951 20,570
Total product
charge revenue 190,131 183,080 388,935 364,228
Death benefits
and other
insurance benefits (84,787) (76,024) (175,100) (153,227)
Expenses, excluding
amortization of
DAC and VOBA (22,608) (24,471) (41,469) (46,954)
Amortization of
DAC and VOBA (52,605) (52,459) (91,286) (97,536)
Miscellaneous
income (expense) (353) (185) (194) (368)
UL-type product
income before
taxes 90,571 88,917 198,632 183,586
Traditional Products:
Premiums and other
considerations 35,551 37,981 71,778 78,126
Net investment income 36,594 38,490 73,259 77,036
Benefits (38,157) (40,846) (81,581) (88,263)
Expenses, excluding
amortization of
DAC and VOBA (7,467) (6,671) (13,719) (13,831)
Amortization of
DAC and VOBA (2,886) (3,600) (6,687) (7,562)
Traditional
product income
before taxes 23,635 25,354 43,050 45,506
Reportable segment
results before
income taxes 114,206 114,271 241,682 229,092
Income taxes (38,314) (39,052) (81,448) (78,846)
Reportable
segment results $ 75,892 $ 75,219 $ 160,234 $ 150,246
PERFORMANCE MEASURES
Annualized life insurance premium sales:
Individual Markets
excluding Community
Banks and BOLI $ 63,698 $ 51,060 $ 120,880 $ 99,742
Community Banks
and BOLI 369 3,111 498 4,056
$ 64,067 $ 54,171 $ 121,378 $ 103,798
Average UL
policyholder fund
balances $ 11,528,903 $ 11,074,084 $ 11,469,145 $ 11,006,439
Average VUL
separate account
assets 1,672,551 1,528,160 1,667,922 1,508,811
$ 13,201,454 $ 12,602,244 $ 13,137,067 $ 12,515,250
Average face amount of insurance in force:
Total $ 166,457,000 $ 165,702,000 $ 166,215,000 $ 165,967,000
UL-Type
Contracts $ 129,087,000 $ 126,587,000 $ 128,752,000 $ 126,369,000
Average assets $ 19,062,439 $ 18,185,235 $ 18,966,486 $ 18,060,897
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
ANNUITY AND INVESTMENT PRODUCTS
(In Thousands, Unaudited)
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 and performance measures were:
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
REPORTABLE SEGMENT RESULTS
Investment product
charges and premiums $ 3,055 $ 3,237 $ 5,961 $ 5,643
Net investment income 149,842 144,667 285,644 288,185
Broker-dealer concessions
and other 31,372 29,538 61,289 58,930
Total revenue 184,269 177,442 352,894 352,758
Policy benefits (including
interest credited) 113,161 103,723 195,665 207,335
Insurance expenses 17,617 15,871 42,314 30,790
Broker-dealer expenses 29,905 27,887 58,439 55,399
Total benefits and
expenses 160,683 147,481 296,418 293,524
Reportable segment results
before income taxes 23,586 29,961 56,476 59,234
Income taxes 8,021 10,200 19,244 20,403
Reportable segment results $ 15,565 $ 19,761 $ 37,232 $ 38,831
PERFORMANCE MEASURES
Fixed annuity
premium sales $ 290,222 $ 290,872 $ 534,560 $ 600,973
Variable annuity
premium sales 51 157 115 269
Total $ 290,273 $ 291,029 $ 534,675 $ 601,242
Funding agreements
issuance $ 300,000 $ - $ 300,000 $ -
Investment product sales $ 1,337,981 $ 1,405,777 $ 2,635,026 $ 2,729,577
Average fixed policyholder
fund balances $ 9,492,274 $ 9,127,597 $ 9,468,894 $ 9,001,600
Average separate
account policyholder
fund balances 294,910 340,513 303,390 345,434
Average funding
agreement balances 150,000 - 75,000 -
$ 9,937,184 $ 9,468,110 $ 9,847,284 $ 9,347,034
Effective investment
spreads for fixed
annuities and
funding agreements 1.53% 1.71% 1.82% 1.71%
Effective investment spreads
for fixed annuities and
funding agreements,
excluding gross FAS 133
impact 1.96% 1.64% 1.91% 1.67%
FAS 133 adjustment, net of
DAC effect and income taxes $ (4,001) $ 909 $ (1,452) $ 1,018
Fixed annuity surrenders
as a % of beginning
fund balance 16.4% 8.5% 14.5% 8.8%
Fixed annuity general and
administrative expenses as a
% of average invested assets 0.20% 0.18% 0.19% 0.18%
Average assets $ 10,511,235 $ 10,368,902 $ 10,517,368 $ 10,242,844
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
BENEFIT PARTNERS
(In Thousands, Unaudited)
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 and performance measures were:
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
REPORTABLE SEGMENT RESULTS
Premiums and other
considerations $ 310,344 $ 307,720 $ 599,825 $ 540,220
Net investment income 23,823 23,231 47,673 41,613
Total revenue 334,167 330,951 647,498 581,833
Policy benefits 231,148 232,729 419,465 413,130
Expenses 70,189 67,974 143,260 120,833
Total benefits and
expenses 301,337 300,703 562,725 533,963
Reportable segment
results before income
taxes 32,830 30,248 84,773 47,870
Income taxes 11,491 10,587 29,671 16,755
Reportable segment
results $ 21,339 $ 19,661 $ 55,102 $ 31,115
PERFORMANCE MEASURES
Life, Disability and
Dental annualized sales $ 52,291 $ 48,126 $ 122,834 $ 102,024
Premiums and other
considerations:
Life $ 108,425 $ 114,904 $ 216,779 $ 200,387
Disability 120,528 110,472 237,626 199,914
Dental 32,367 35,446 64,405 64,854
Other 49,024 46,898 81,015 75,065
Total $ 310,344 $ 307,720 $ 599,825 $ 540,220
Reportable segment
results:
Life $ 12,498 $ 8,321 $ 28,470 $ 11,780
Disability 7,198 10,347 24,445 17,137
Dental 988 422 874 1,063
Other 655 571 1,313 1,135
Total $ 21,339 $ 19,661 $ 55,102 $ 31,115
Loss ratios:
Life 66.8% 73.0% 63.2% 75.5%
Disability 75.1 71.5 67.7 72.2
Dental 76.7 79.4 77.8 78.9
Combined 71.8 73.2 67.1 74.5
Gross general and
administrative expenses
as a % of premium income 9.5 9.4 9.4 9.6
Total expenses as a % of
premium income 22.6 22.1 23.9 22.4
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
COMMUNICATIONS AND CORPORATE AND OTHER
(In Thousands, Unaudited)
Jefferson-Pilot Communications Company ("Communications") operates television
and radio broadcast properties and produces syndicated sports and entertainment
programming.
The Corporate and Other Segment includes 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.
Reportable segment results for Communications and Corporate and Other were:
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
--------------- --------------- --------------- ---------------
REPORTABLE SEGMENT RESULTS -
COMMUNICATIONS
Communications revenues, net $ 57,198 $ 56,493 $ 118,073 $ 115,000
Cost of sales 7,405 7,482 22,407 22,195
Operating expenses 22,034 21,834 44,873 43,783
Broadcast cash flow 27,759 27,177 50,793 49,022
Depreciation and amortization 2,173 2,188 4,289 4,413
Corporate general and administrative
expenses 1,640 1,962 3,519 3,561
Net interest expense and other 500 604 1,020 1,027
Reportable segment results before
income taxes 23,446 22,423 41,965 40,021
Income taxes 8,482 8,685 15,952 15,731
Reportable segment results $ 14,964 $ 13,738 $ 26,013 $ 24,290
REPORTABLE SEGMENT RESULTS -
CORPORATE AND OTHER
Earnings on investments and other
income $ 27,020 $ 22,978 $ 55,079 $ 48,915
Interest expense on debt (14,825) (11,728) (28,603) (22,476)
Operating expenses (6,002) (6,782) (13,204) (9,800)
Income taxes (57) 2,008 (268) 260
Reportable segment results 6,136 6,476 13,004 16,899
Realized investment gains, net of
taxes 2,902 7,160 6,453 21,865
Reportable segment results,
including realized investment
gains $ 9,038 $ 13,636 $ 19,457 $ 38,764
ASSETS BY SEGMENT
(In Millions, Unaudited)
6/30/05 6/30/04
--------------- ---------------
ASSETS BY SEGMENT
Individual Products $ 19,160 $ 18,283
Annuity and Investment Products 10,480 10,445
Benefit Partners 1,859 1,765
Communications 217 214
Corporate and Other 4,112 3,289
Total assets $ 35,828 $ 33,996
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(In Millions, Except Share Information, Unaudited)
Three Months Ended
------------------------------------------------------------------------
6/30/05 3/31/05 12/31/04 9/30/04 6/30/04
------------ ------------ ------------ ------------ ------------
REVENUE
Individual Products $ 449.6 $ 455.9 $ 455.4 $ 437.4 $ 443.8
Annuities and Investment
Products 184.3 168.6 198.8 166.2 177.4
Benefit Partners 334.2 313.3 312.4 307.9 331.0
Communications 56.7 60.4 67.5 58.7 55.9
Corporate and Other 34.0 33.5 30.4 28.5 28.9
Realized investment
gains (losses) 4.4 5.5 3.6 3.4 10.2
Total revenues $ 1,063.2 $ 1,037.2 $ 1,068.1 $ 1,002.1 $ 1,047.2
REPORTABLE SEGMENT
RESULTS
Individual Products $ 75.9 $ 84.3 $ 76.5 $ 75.3 $ 75.2
Annuities and Investment
Products 15.6 21.7 20.0 17.6 19.8
Benefit Partners 21.3 33.8 20.0 19.7 19.7
Communications 15.0 11.0 16.6 13.5 13.7
Corporate and Other 6.1 6.9 10.2 5.5 6.5
Total reportable
segment results 133.9 157.7 143.3 131.6 134.9
Realized investment
gains (losses), net
of taxes 2.9 3.5 2.4 2.2 7.1
Income before cumulative
effect of change in
accounting principle 136.8 161.2 145.7 133.8 142.0
Cumulative effect of
change in accounting
principle, net of
taxes (1) - - - - -
Net income $ 136.8 $ 161.2 $ 145.7 $ 133.8 $ 142.0
PER SHARE - ASSUMING
DILUTION
Earnings before realized
gains (losses) and
cumulative effect
of change in
accounting principle $ 0.98 $ 1.15 $ 1.04 $ 0.96 $ 0.97
Realized investment gains
(losses), net of taxes 0.02 0.02 0.02 0.01 0.05
Earnings before
cumulative effect
of change in
accounting principle 1.00 1.17 1.06 0.97 1.02
Cumulative effect of
change in accounting
principle, net of
taxes (1) - - - - -
Net income $ 1.00 $ 1.17 $ 1.06 $ 0.97 $ 1.02
PERFORMANCE MEASURES
Return on average equity (2) 16.1% 19.2% 17.9% 16.9% 17.4%
Market price per share
(period end) $ 50.42 $ 49.05 $ 51.96 $ 49.66 $ 50.80
Dividends declared per
share $ 0.42 $ 0.38 $ 0.38 $ 0.38 $ 0.38
Dividend yield (3) 3.3% 3.0% 3.0% 2.9% 2.8%
(1) 1Q04 reflects a $3.7 million impact of adoption of SOP 03-1 implementation
guidance issued in 3Q04.
(2) Calculated as total reportable segment results (annualized), divided by
average equity (excluding accumulated other comprehensive income).
(3) Calculated as dividend paid per share (annualized), divided by the average
market price per share.
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(In Millions, Except Share Information, Unaudited)
Three Months Ended
--------------------------------------------------------------------
3/31/04 12/31/03 9/30/03 6/30/03
-------------- -------------- -------------- --------------
REVENUE
Individual Products $ 443.8 $ 444.3 $ 449.7 $ 437.2
Annuities and Investment Products 175.3 177.4 173.7 172.9
Benefit Partners 250.9 208.1 206.2 207.8
Communications 58.1 63.3 51.2 50.1
Corporate and Other 33.3 32.7 30.1 28.2
Realized investment gains (losses) 23.4 (42.8) (5.1) 20.2
Total revenues $ 984.8 $ 883.0 $ 905.8 $ 916.4
REPORTABLE SEGMENT RESULTS
Individual Products $ 75.0 $ 80.4 $ 78.6 $ 74.3
Annuities and Investment Products 19.1 22.3 20.0 21.5
Benefit Partners 11.4 16.2 10.0 12.5
Communications 10.6 15.4 11.4 11.6
Corporate and Other 10.4 9.8 10.0 7.1
Total reportable segment results 126.5 144.1 130.0 127.0
Realized investment gains (losses),
net of taxes 14.7 (27.8) (3.9) 13.1
Income before cumulative effect of
change in accounting principle 141.2 116.3 126.1 140.1
Cumulative effect of change in
accounting principle, net of
taxes (1) (16.6) - - -
Net income $ 124.6 $ 116.3 $ 126.1 $ 140.1
PER SHARE - ASSUMING DILUTION
Earnings before realized gains
(losses) and cumulative effect
of change in accounting principle $ 0.89 $ 1.01 $ 0.91 $ 0.89
Realized investment gains (losses),
net of taxes 0.10 (0.19) (0.03) 0.09
Earnings before cumulative effect
of change in accounting principle 0.99 0.82 0.88 0.98
Cumulative effect of change in
accounting principle, net of
taxes (1) (0.12) - - -
Net income $ 0.87 $ 0.82 $ 0.88 $ 0.98
PERFORMANCE MEASURES
Return on average equity (2) 16.2% 18.6% 17.0% 16.9%
Market price per share (period end) $ 55.01 $ 50.65 $ 44.38 $ 41.46
Dividends declared per share $ 0.33 $ 0.33 $ 0.33 $ 0.33
Dividend yield (3) 2.5% 2.7% 3.0% 3.2%
(1) 1Q04 reflects a $3.7 million impact of adoption of SOP 03-1 implementation
guidance issued in 3Q04.
(2) Calculated as total reportable segment results (annualized), divided by
average equity (excluding accumulated other comprehensive income).
(3) Calculated as dividend paid per share (annualized), divided by the average
market price per share.
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
INVESTMENT PORTFOLIO ANALYSIS
(In Thousands, Unaudited)
6/30/05 12/31/04
------------------------------- -------------------------------
Amount Percent Amount Percent
-------------- -------------- -------------- --------------
INVESTED ASSETS COMPOSITION
Cash and cash equivalents $ (18,987) (0.1)% $ 86,972 0.3%
Bonds 22,733,844 80.3 22,081,106 79.8
Preferred stocks 13,641 0.1 15,247 0.1
Common stocks,
unaffiliated 635,114 2.2 647,941 2.3
Mortgages loans, net 3,811,003 13.4 3,667,291 13.3
Real estate, net 123,571 0.4 124,973 0.5
Policy loans and other 1,048,447 3.7 1,031,452 3.7
Total invested assets $ 28,346,633 100.0% $ 27,654,982 100.0%
TOTAL FIXED INCOME
PORTFOLIO YIELD-TO-
MATURITY 6.18% 6.25%
BOND PORTFOLIO
COMPOSITION
U.S. government $ 237,013 1.0% $ 265,204 1.2%
Mortgage-backed 2,498,820 11.0 2,358,141 10.7
Private placements 5,154,190 22.7 5,126,255 23.2
Public - corporates 14,843,821 65.3 14,331,506 64.9
Total bonds $ 22,733,844 100.0% $ 22,081,106 100.0%
Yield-to-maturity 6.01% 6.04%
Average life 7.62yrs 7.55yrs
Duration 5.28 5.23
Average quality A3 A3
BOND PORTFOLIO QUALITY
NAIC Rating S&P
Equivalent
1 AAA - A $ 12,967,122 57.0% $ 12,472,670 56.5%
2 BBB 8,310,382 36.6 8,309,596 37.6
3-6 BB and lower 1,456,340 6.4 1,298,840 5.9
Total Bonds $ 22,733,844 100.0% $ 22,081,106 100.0%
FIXED MATURITY SECURITIES
Gross unrealized gains $ 1,244,205 $ 1,119,001
Gross unrealized losses (73,429) (65,951)
Net unrealized gains $ 1,170,776 $ 1,053,050
MORTGAGE LOAN PORTFOLIO
Yield-to-maturity 7.15% 7.29%
Average maturity 7.08yrs 7.09yrs
Total delinquent loans
and loans in
foreclosure, at
amortized cost $ 5,987 $ 5,987
Delinquent loans as a
percentage of mortgage
loans 0.16% 0.16%
Net book value of real
estate acquired in
satisfaction of
mortgage indebtedness $ 3,700 $ 3,700
Three Months Ended Six Months Ended
------------------------------- -------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
-------------- -------------- -------------- --------------
REALIZED INVESTMENT GAINS (LOSSES)
Stock gains $ 4,132 $ 35,051 $ 10,507 $ 63,615
Stock losses 504 (559) (638) (2,951)
Bond gains 10,806 7,813 19,046 25,478
Bond losses from sales and calls (6,445) (22,813) (10,892) (26,316)
Bond losses from writedowns (4,511) (16,417) (10,278) (32,324)
Other gains (losses), net 402 2,175 3,044 2,177
Total pretax gains (losses) 4,888 5,250 10,789 29,679
Amortization of DAC, VOBA and deferred
sales inducements (424) 4,928 (862) 3,960
Income taxes (1,562) (3,018) (3,474) (11,774)
Realized investment gains
(losses), net of taxes $ 2,902 $ 7,160 $ 6,453 $ 21,865
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
INSURANCE SEGMENTS' EXPENSE AND DAC AND VOBA ANALYSIS
(In Thousands, Unaudited)
Three Months Ended Six Months Ended
------------------------------- -------------------------------
6/30/05 6/30/04 6/30/05 6/30/04
-------------- -------------- -------------- --------------
INSURANCE SEGMENT EXPENSE
ANALYSIS
Individual Products:
Commissions $ 80,620 $ 65,617 $ 160,968 $ 129,386
General and
administrative expenses 32,350 30,350 59,143 60,151
Taxes, licenses and fees 10,990 11,242 23,694 22,305
Total commissions and
expenses incurred 123,960 107,209 243,805 211,842
Less: commissions and
expenses capitalized (93,885) (76,067) (188,617) (151,057)
Amortization of DAC and
VOBA 55,491 56,059 97,973 105,098
Net expense $ 85,566 $ 87,201 $ 153,161 $ 165,883
Annuity and Investment
Products:
Insurance companies:
Commissions - insurance
companies $ 18,886 $ 17,506 $ 33,152 $ 35,960
General and
administrative expenses 7,245 5,172 12,565 10,032
Taxes, licenses and fees 767 599 1,618 1,245
Gross commissions and
expenses incurred 26,898 23,277 47,335 47,237
Less: commissions and
expenses capitalized (23,554) (19,562) (40,074) (40,101)
Amortization of DAC and
VOBA 14,273 12,156 35,053 23,654
Net expense - insurance
companies 17,617 15,871 42,314 30,790
Broker/Dealer:
Commissions 26,859 24,814 52,659 49,581
Other 3,046 3,073 5,780 5,818
Net expense -
broker/dealer 29,905 27,887 58,439 55,399
Net expense $ 47,522 $ 43,758 $ 100,753 $ 86,189
Benefit Partners:
Commissions $ 34,960 $ 34,743 $ 69,124 $ 61,624
General and
administrative expenses 29,357 29,054 56,163 52,006
Taxes, licenses and fees 7,766 7,318 15,776 12,299
Total commissions and
expenses incurred 72,083 71,115 141,063 125,929
Less: commissions and
expenses capitalized (10,343) (9,781) (20,912) (17,982)
Amortization of DAC and
VOBA 8,449 6,640 23,109 12,886
Net expense $ 70,189 $ 67,974 $ 143,260 $ 120,833
DAC AND VOBA ANALYSIS
Balance, beginning of
period $ 2,576,708 $ 2,195,689 $ 2,429,993 $ 2,230,444
Cumulative effect of
change in accounting
principle - - - 1,864
Group coinsurance assumed - 2,580 - 37,375
Amount capitalized 127,970 105,587 249,792 209,316
Amortization expense (78,215) (74,857) (156,141) (141,645)
Adjustment for realized
capital gains and losses (391) 4,833 (836) 3,929
Adjustment for FAS 115 (127,353) 252,847 (24,089) 145,396
Balance, end of period $ 2,498,719 $ 2,486,679 $ 2,498,719 $ 2,486,679
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
--------- --------- --------- ---------
2Q05 $ 51.39 $ 47.11 $ 50.42 $ 0.418
1Q05 51.00 47.18 49.05 0.380
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- 07/28/2005
/CONTACT: Investment Community, John Still, +1-336-691-3382, or News
Media, Paul Mason, +1-336-691-3313, both of Jefferson-Pilot Corporation/
/Web site: http://www.jpfinancial.com/