SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
x
ANNUAL REPORT
PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT 0F 1934
For the fiscal year ended December 31, 2009
OR
o
TRANSITION
REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
COMMISSION FILE NUMBER 0-9924
PROTECTIVE LIFE CORPORATION
401(k) AND STOCK OWNERSHIP PLAN
Protective Life Corporation (Issuer)
2801 Highway 280 South
Birmingham, Alabama 35223
(205) 268-1000
TABLE OF CONTENTS
Financial Statements and Exhibits
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Sequentially
Numbered Page(s)
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(a)
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Financial
Statements
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Report
of PricewaterhouseCoopers LLP, Independent Registered Public Accounting
Firm
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3
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(i)
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Statements
of Net Assets Available for Benefits as of December 31, 2009 and 2008
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4
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(ii)
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Statement
of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 2009
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5
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(iii)
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Notes
to Financial Statements December 31, 2009 and 2008
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6-13
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(b)
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Supplemental
Schedule
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I. Schedule H, Line 4i Schedule of Assets
(Held at End of Year) December 31, 2009
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15
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Other
schedules required by Section 2520.103-10 of the Department of Labors
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
(c)
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Exhibits
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23
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Consent
of PricewaterhouseCoopers LLP
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1
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2
Report of Independent Registered Public Accounting Firm
To
the Participants and Administrator of
Protective Life Corporation 401(k) Retirement Plan
In
our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Protective Life Corporation 401(k) Retirement Plan (the Plan) at December 31,
2009 and 2008, and the changes in net assets available for benefits for the
year ended December 31, 2009 in conformity with accounting principles
generally accepted in the United States of America. These financial statements are the
responsibility of the Plans management.
Our responsibility is to express an opinion on these financial
statements based on our audits. We
conducted our audits of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.
The supplemental Schedule of Assets (Held at End of Year) is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labors Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plans management.
The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/PRICEWATERHOUSECOOPERS
LLP
Birmingham,
Alabama
June 28,
2010
3
PROTECTIVE LIFE CORPORATION 401(k) AND STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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As of December 31,
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2009
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2008
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Assets
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Investments, at fair value (Notes 3, 5, and 10):
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Protective Life Corporation common stock
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$
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33,223,626
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$
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24,205,996
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Mutual funds
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49,814,471
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29,925,459
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Collective trust funds
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37,843,622
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38,109,476
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Participant loans
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4,069,987
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4,089,176
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Total investments at fair value
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124,951,706
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96,330,107
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Participant contributions receivable
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256,706
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Employer contributions receivable
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212,387
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453,300
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Accrued interest receivable
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525
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Total assets
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125,164,093
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97,040,638
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Liabilities
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Accrued expenses and other liabilities
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39,565
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Note payable to affiliate (Note 4)
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852,868
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Accrued interest on note payable to affiliate
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63,965
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Total liabilities
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956,398
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Net assets available for benefits at fair value
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125,164,093
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96,084,240
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Adjustment from fair value to contract value for
investment in fully benefit-responsive contract
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263,226
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561,536
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Net assets available for benefits
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$
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125,427,319
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$
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96,645,776
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The accompanying notes are
an integral part of these financial statements.
4
PROTECTIVE LIFE CORPORATION 401(k) AND STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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For The Year Ended
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December 31, 2009
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Additions
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Contributions
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Participant contributions
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$
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8,872,163
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Rollovers
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462,915
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Employer contributions
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5,165,751
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Total contributions
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14,500,829
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Investment income
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Dividends
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1,528,297
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Interest
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251,528
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Net appreciation in the fair value of investments
(Notes 3 and 5)
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22,573,931
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Total investment income
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24,353,756
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Total additions
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38,854,585
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Deductions
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Benefits paid to participants
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9,988,106
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Administrative fees
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84,936
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Total deductions
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10,073,042
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Net increase
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28,781,543
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Net assets available for benefits
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Beginning of year
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96,645,776
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End of year
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$
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125,427,319
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The accompanying notes are
an integral part of these financial statements.
5
PROTECTIVE LIFE CORPORATION 401(k) AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Accounting
The
financial statements of the Protective Life Corporation 401(k) and
Stock Ownership Plan (the Plan) are maintained on the accrual basis of
accounting and have been prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP).
Investments
and Income Recognition
The
mutual funds and common stock investments are valued at fair value based on
quoted market prices.
Quoted
market prices are based on the last reported sales price on the last business
day of the Plan year as reported by the principal securities exchange on which
the security is traded.
Units
in collective trust funds are valued at the unit value, as reported by the
trustee of the collective trust fund on each valuation date.
Participant
loans are valued at amortized cost, which approximates market value.
Purchases
and sales of investments are reflected as of the trade date. Interest income is
recorded when earned.
Dividend
income is recorded on the ex-dividend date.
The
Plan presents, in the statement of changes in net assets available for
benefits, the net change in the fair value of its investments which consists of
the realized gains or losses and the unrealized appreciations or depreciation
on those investments.
Participant
Contributions Receivable
Participant
contributions are accrued based on unremitted deductions from participating
employees compensation.
Employer
Contributions Receivable
For
the year ended December 21, 2008, Protective Life Corporation and its
subsidiaries (the Employer) made matching contributions in shares of
Employer common stock during the first quarter of the following year. These
Employer contributions were accrued based on participant contributions. The
number of shares to be contributed was calculated based on the average fair
value of the related shares as defined in the Plan document. The receivable was
valued at the quoted market price of the total shares to be contributed based
on the last reported sales price on the last business day of the year as
reported by the principal securities exchange on which the security is traded.
Effective January 1, 2009, the Employer began making matching
contributions in cash. For the year ended December 31, 2009, the Employer
contribution receivable was the accrued cash amount due from the Employer as of
the reporting date.
Payment
of Benefits
Benefits
paid to participants are recorded when paid. As of December 31, 2009, $233
was allocated to accounts of participants who had elected to withdraw from the
Plan but to whom disbursement of funds from the Plan had not yet been made.
Use of
Estimates
The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of net
assets available for benefits and the changes therein. Actual results could differ from those
estimates.
6
Accounting
Pronouncements Recently Adopted
The Plans financial
statements have been prepared in conformity with GAAP. On July 1, 2009,
the Financial Accounting Standards Board (FASB) released the authoritative
version of its new Accounting Standards Codification (the Codification) as
the single source for GAAP, which replaces all previous GAAP accounting
standards. While not intended to change GAAP, the Codification significantly
changes the way in which the accounting literature is organized. The Plan
adopted the Codification to reference GAAP accounting standards in its December 31,
2009 financial statements. The adoption of the Codification did not impact the
Plans financial statements except for references made to authoritative
accounting literature in the footnotes.
In February 2010, the
FASB issued Update No. 2010-09, which amends the Subsequent Events topic
of the Codification. The amendments in this update require entities that are
United States Securities and Exchange Commission (the SEC) filers to evaluate
subsequent events through the date that the financial statements are issued.
Additionally, SEC filers are no longer required to disclose the date through
which subsequent events were evaluated. The amendments in this update were
effective upon issuance. The Plan adopted this amendment for the period ended
December 31, 2009, and we have provided the disclosures required for the
period ended December 31, 2009.
Accounting Pronouncements Not Yet
Adopted
In January 2010, the
FASB issued Update No. 2010-06, which amends the Fair Value Measurements
and Disclosures topic of the Codification. The amendments in this update
require new disclosures about transfers in and out of Level 1 and Level 2 fair
value measurements and the activity in Level 3 fair value measurements and, in
addition, clarify existing disclosures required for levels of disaggregation
and inputs and valuation techniques. These amendments will be effective for
interim and annual reporting periods beginning after December 15, 2009,
except for the disclosures about activity in Level 3 fair value measurements,
which is effective for fiscal years beginning after December 15, 2010, and
for interim periods within those fiscal years. The Plan expects to adopt this
amendment for the period ended December 31, 2010, and will provide the
disclosures required for the period ended December 31, 2010.
2. PLAN DESCRIPTION
Protective
Life Corporation shareowners approved the Plan to provide retirement benefits
for eligible employees of the Employer. The following description of the Plan
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plans provisions.
General
The
Plan is a defined contribution plan subject to the provisions of the Employee
Retirement Income Security Act of 1974. Participation in the Plan is available
to all eligible employees of the Employer, as defined in the Plan document.
The
assets of the Plan were held and invested by The Northern Trust Company (NT) through
February of 2009. The assets were then transferred to Fidelity Management
Trust Company (the Trustee) who now serves as the Trustee of the Plan. Accordingly, all investment transactions with
the Trustee qualify as party-in-interest transactions. The Trustee or its
affiliates also began providing recordkeeping services for the Plan, replacing
Hewitt Associates.
The
Plan was amended and restated as of January 1, 2008. Effective January 1,
2008, the Plan was amended to permit Roth contributions which can be made in
lieu of some or all of the pre-tax contributions that the participant is
otherwise eligible to make under the Plan. In addition, no profit sharing
contributions shall be made to the Plan with respect to Plan years after 2007.
In
general, full-time and part-time employees of Protective Life Corporation and
its participating subsidiaries who are listed in and paid through the Companys
payroll system, may enroll in the Plan as soon as administratively practicable after
their date of hire. Independent contractors, employees who work for the Company
through a third-party agency (such as a contracting services firm or a
temporary agency) and union members (unless the collective bargaining agreement
provides for participation in the Plan) are not eligible to participate.
Protective
Life Corporation matches employees pre-tax and/or Roth contributions
dollar-for-dollar on the first 4% of eligible pay contributed to the Plan.
Prior to 2009, Employer matching contributions were made in Employer common
stock through an employee stock ownership plan (ESOP) feature. Participants
could transfer the matching contributions to other investment choices available
under the Plan. Beginning January 1, 2009, the Employer adopted cash
matching for participant contributions to the Plan. These cash matching
contributions are invested according to the participants investment elections
for their pre-tax and/or Roth contributions.
7
Participants
Accounts/Benefits
An
account is maintained for each participant in the Plan. The accounts are
credited with the participants pre-tax, Roth and rollover contributions, their
allocated portion of Employer matching and prior profit sharing contributions
(for 2008), employer cash matching (for 2009) and investment earnings.
Distributions, withdrawals, and allocated expenses are subtracted from the
account balances. Participants vested
account balances represent the benefits available to the participants upon
retirement, disability, death, or termination of service.
A
participant may elect to receive a lump-sum distribution equal to the vested
balance of his/her account or may leave it in the Plan if the vested balance is
$1,000 or more. However, benefit payments must commence no later than
April 1 following the year the participant reaches age 70½. Investment of
a participants account in Employer common stock shall be distributed in the
form of a lump-sum distribution of either Employer common stock or cash as the
participant (or beneficiary) elects.
Contributions
The
Plan is funded by pre-tax and designated Roth participant contributions, not to
exceed $16,500 in 2009 (plus certain catch-up contributions for certain
eligible participants), employee rollover contributions, and Employer matching
contributions. Participant contributions
cannot exceed 25% of total employee compensation. Participant contributions,
made on a pre-tax basis qualify as a cash or deferred arrangement under Section 401(k) of
the Internal Revenue Service Code (IRC).
The
Employer matches 100% of participant contributions up to a maximum of 4% of
employee compensation deposited to the Plan during the year. Prior to 2009, the Employer matching
contribution was made in Employer common stock through an ESOP feature. Effective January 1, 2009, the Employer
adopted cash matching for employee contributions to the Plan. On the first pay
period in May 2009, eligible employees received a true up matching
contribution for pay periods from January 1, 2009 through April 30,
2009. Employer matching contributions beginning for the first pay period in May 2009
were made on or about the date of each pay period.
Participating
employees elect to authorize the Employer to withhold amounts from their salary
and deposit the amounts, in varying percentages, into various investment
options offered by the Plan. The Plan currently offers eleven mutual
funds and five collective trust funds, as well as Employer common stock, as
investment options. Beginning in 2009, all Employer matching
contributions are made in cash and are invested according to the participants
elections. Prior to 2009, all Employer matching contributions were invested in
Employer stock through an ESOP. All participants are allowed to diversify
100% of their ESOP balances into other fund options at any time.
Participant
pre-tax contributions and Employer matching contributions, and earnings
thereon, are not subject to Federal income tax until the funds are disbursed
from the Plan. Roth contributions are subject to Federal income tax when made
to the Plan, but are not subject to taxation thereafter; earnings on Roth
contributions are not subject to Federal income tax when distributed from the
Plan if paid as part of a qualified distribution under the IRC.
All
participant contributions, rollover contributions, and Employer matching
contributions are fully vested at all times.
Participant
loans
Provisions
of the Plan allow participants to obtain loans based on their individual
account balance. Personal loans are made for terms of twelve to sixty months at
a rate of interest equal to the prime rate plus 1%. Loans to acquire a
principal residence are made for terms up to 15 years. Interest earned on
the loans is reinvested in the Plan. Interest rates on outstanding participant
loans ranged from 4.25% to 10.50% as of December 31, 2009 and 2008.
8
Administrative
Expenses
Administrative
expenses for the Plan are paid by the Employer, except for brokerage
commissions paid on Employer stock fund transactions, investment management
fees, and fees for certain specific types of transactions. Commissions
paid on Employer stock fund transactions are reflected in the financial
statements as either a reduction of participant contributions or reduction of
proceeds on sales. Investment management fees on collective trust funds
of $47,400 were paid by participants in 2009 and are reflected in the statement
of changes in net assets available for benefits. Transaction fees paid by the Plan for 2009
were $37,536, as reflected in the statement of changes in net assets available
for benefits. These transaction fees are collected from the accounts of
the individual participants for whom the specific transactions are executed.
3. INVESTMENTS
Investment
information as of December 31, 2009 and 2008 is as follows:
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Fair Value
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2009
|
|
2008
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*Protective Life Corporation common stock
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$
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33,223,626
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$
|
24,205,996
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Mutual Funds
|
|
|
|
|
|
Columbia Mid Cap Index Fund
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1,322,964
|
|
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Columbia Large Cap Index Fund
|
|
1,720,473
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|
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Dodge & Cox International Stock Fund
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7,815,449
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4,666,172
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|
Dodge & Cox Stock Fund
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13,899,877
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10,251,220
|
|
Neuberger Berman Genesis Trust
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10,520,965
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|
7,782,850
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|
T. Rowe Price Growth Stock Fund
|
|
9,276,237
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|
6,011,048
|
|
T. Rowe Price Retirement 2015 Fund
|
|
1,168,063
|
|
395,724
|
|
T. Rowe Price Retirement 2025 Fund
|
|
1,155,227
|
|
424,168
|
|
T. Rowe Price Retirement 2035 Fund
|
|
750,620
|
|
244,768
|
|
T. Rowe Price Retirement 2045 Fund
|
|
476,145
|
|
149,509
|
|
Vanguard Total Band Market Index Fund
|
|
1,708,451
|
|
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|
Total mutual funds
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|
49,814,471
|
|
29,925,459
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Collective Trust Funds
|
|
|
|
|
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Northern Aggregate Bond Index Fund
|
|
2,722,649
|
|
2,928,078
|
|
Northern Midcap S&P 400 Index Fund
|
|
5,024,925
|
|
4,256,674
|
|
Northern Russell 3000 Index Fund
|
|
1,472,947
|
|
1,371,199
|
|
Northern S&P 500 Index Fund
|
|
6,947,792
|
|
6,425,475
|
|
Stable Value Fund
|
|
21,675,309
|
|
22,304,590
|
|
*Northern Short-Term Investment Fund
|
|
|
|
823,460
|
|
Total collective trust funds
|
|
37,843,622
|
|
38,109,476
|
|
Participant loans
|
|
4,069,987
|
|
4,089,176
|
|
Total investments at fair value
|
|
$
|
124,951,706
|
|
$
|
96,330,107
|
|
During
the year ended December 31, 2009, the Plans investments (including gains
and losses on investments bought and sold, as well as held during the year)
appreciated in value as follows:
Mutual funds
|
|
$
|
13,300,639
|
|
Collective trust funds
|
|
2,248,971
|
|
Protective Life Corporation common stock
|
|
7,024,321
|
|
|
|
$
|
22,573,931
|
|
9
The
following is a summary of assets held in excess of 5% of the Plans net assets
available for benefits as of December 31, 2009 and 2008:
|
|
2009
|
|
2008
|
|
* Protective
Life Corporation common stock
(2,007,386 and 1,686,829 shares, respectively)
|
|
$
|
33,223,626
|
|
$
|
24,205,996
|
|
Dodge and Cox International Stock Fund
|
|
7,815,449
|
|
|
|
Dodge & Cox Stock Fund
|
|
13,899,877
|
|
10,251,220
|
|
Neuberger Berman Genesis Trust
|
|
10,520,965
|
|
7,782,250
|
|
Northern S&P 500 Index Fund
|
|
6,947,792
|
|
6,425,475
|
|
Stable Value Fund, at contract value
|
|
21,938,535
|
|
22,866,126
|
|
T. Rowe Price Growth Stock Fund
|
|
9,276,237
|
|
6,011,048
|
|
|
|
|
|
|
|
|
|
* For 2008, investment includes
both participant-directed and nonparticipant-directed amounts. Beginning January 1,
2009, all investments are participant directed.
4. UNALLOCATED SHARES AND NOTE PAYABLE TO
AFFILIATE
During
1990, the Plan acquired 2,080,000 (adjusted for the June 1995 and
April 1998 2-for-1 stock splits) shares of Employer common stock from the
Employer at a cost of $6,890,000. The purchase of these shares was financed
through the issuance of a note payable to the Employer in the amount of
$6,890,000. The note payable was secured by the unallocated shares.
On
January 29, 2009, the Employer satisfied the 2008 matching contribution of
$4,841,582 by allocating to Plan participants 128,995 of the previously
unallocated shares at a total value of $4,192,080, allocating 511 forfeiture
shares at a total value of $16,606, and contributing 19,474 shares at a
total value of $632,896. Amounts forfeited by participants will be applied to
reduce future Employer contributions. The 19,474 shares contributed by the
Employer were accrued by the Plan as Employer contributions receivable
(calculated as discussed in Note 1) in the accompanying statement of net
assets available for benefits as of December 31, 2008 in the amount of
$453,300. The balance of the note as of December 31, 2008 was $852,868.
Due
to the adoption of a cash match for Employee contributions, the principal
balance of the note plus any accrued interest as of December 31, 2008 was
paid in full at the beginning of 2009.
5. NONPARTICIPANT-DIRECTED INVESTMENTS
Beginning
January 1, 2009, the Plan was amended whereby there were no longer nonparticipant-directed
investments within the Plan and the Employer match is now made in cash to be
participant-directed.
As
of December 31, 2008, information about the net assets and the significant
components of the changes in net assets relating to the nonparticipant-directed
investments is as follows:
|
|
As of
|
|
|
|
December 31, 2008
|
|
Assets
|
|
|
|
Protective Life Corporation common stock
|
|
$
|
15,979,199
|
|
Northern Short-Term Investment Fund
|
|
751,906
|
|
Employer contributions receivable
|
|
453,300
|
|
Accrued interest receivable
|
|
452
|
|
Total assets
|
|
17,184,857
|
|
Liabilities
|
|
|
|
Note payable to affiliate
|
|
852,868
|
|
Accrued interest on note payable to affiliate
|
|
63,965
|
|
Total liabilities
|
|
916,833
|
|
Net assets
|
|
$
|
16,268,024
|
|
|
|
For The Year Ended
|
|
|
|
December 31, 2008
|
|
Changes
in net assets
|
|
|
|
Dividends
and interest
|
|
$
|
966,991
|
|
Net
depreciation in the fair value of investments
|
|
(30,590,952
|
)
|
Transfers
to other funds within Plan
|
|
(2,706,778
|
)
|
Employer
contributions
|
|
453,180
|
|
Benefits
paid to participants
|
|
(2,546,290
|
)
|
Interest
expense on note payable to affiliate
|
|
(63,965
|
)
|
Total
changes in net assets
|
|
$
|
(34,487,814
|
)
|
10
6. INCOME TAX STATUS
The
Plan has received a favorable determination letter from the Internal Revenue
Service dated April 4, 2008, related to the Plan document.
The
Plans administrator believes the Plan is currently designed and being operated
in compliance with the applicable requirements of the IRC and therefore, the
Plan continues to qualify under Section 401(a) and continues to be
tax-exempt as of December 31, 2009 and 2008. Therefore, no provision for
income taxes is included in the Plans financial statements.
7. TERMINATION PRIORITIES
In
the event the Plan is terminated, the amount of each participants account
balance becomes fully vested and shall not thereafter be subject to forfeiture.
Any asset not required to be distributed to participants will be returned to
the Employer.
8. RISKS AND UNCERTAINTIES
The
Plan provides for various investment options in any combination of stocks,
mutual funds, collective trust funds, and other investment securities.
Generally, all investments are exposed to various risks, such as interest rate,
market and credit risks. Due to the
level of risk associated with certain investments and the level of uncertainty
related to changes in the value of investments, it is at least reasonably
possible that changes in risks in the near term could materially affect
participants account balances, the amounts reported in the statements of net
assets available for benefits and the amounts reported in the statement of
changes in net assets available for benefits.
9. RECONCILIATION OF FINANCIAL STATEMENTS TO
FORM 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
|
|
As of December 31,
|
|
|
|
2009
|
|
2008
|
|
Net assets available for benefits per the
financial statements
|
|
$
|
125,427,319
|
|
$
|
96,645,776
|
|
Amounts allocated to withdrawing participants
|
|
(233
|
)
|
(11,641
|
)
|
Fair value adjustment
|
|
(263,226
|
)
|
(561,536
|
)
|
Net assets available for benefits per
Form 5500
|
|
$
|
125,163,860
|
|
$
|
96,072,599
|
|
The
following is a reconciliation to the changes in net assets available for benefits
per the financial statements to the Form 5500:
|
|
For The Year Ended
|
|
|
|
December 31, 2009
|
|
Net
increase per the financial statements
|
|
$
|
28,781,543
|
|
Change
in adjustment from contract value to fair value for investment in fully
benefit-responsive contract
|
|
298,310
|
|
Change
in amounts allocated to withdrawing participants
|
|
11,408
|
|
Net
increase per Form 5500
|
|
$
|
29,091,261
|
|
The
following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
|
|
For The Year Ended
|
|
|
|
December 31, 2009
|
|
Benefits paid to participants per the financial
statements
|
|
$
|
9,988,106
|
|
Add: Amounts allocated to withdrawing participants
at December 31, 2009
|
|
233
|
|
Less: Amounts allocated to withdrawing
participants at December 31, 2008
|
|
(11,641
|
)
|
Benefits paid per Form 5500
|
|
$
|
9,976,698
|
|
10. FAIR VALUE MEASUREMENTS
The Fair Value Measurements
and Disclosures Topic of the Codification provides a definition of fair value
that focuses on an exit price rather than an entry price, establishes a
framework for measuring fair value which emphasizes that fair value is a
market-based measurement and not an entity-specific measurement, and requires
expanded disclosures about fair value measurements. In accordance with the Fair
Value Measurements and Disclosures Topic, the Plan may use valuation techniques
consistent with the market, income and cost approaches to measure fair value.
To increase consistency and
comparability in fair value measurement and related disclosures, the Plan
utilizes the fair value hierarchy required by the Fair Value Measurements and
Disclosures Topic which prioritizes the inputs to valuation techniques used to
measure fair value into three broad levels:
·
Level 1 Quoted prices in
active markets for identical debt and equity securities.
·
Level 2 Prices determined
using other significant observable inputs that other market participants would
use in pricing a security, including quoted prices for similar securities.
11
·
Level 3 Prices determined
using significant unobservable inputs. Unobservable inputs reflect the Plans
own assumptions about the factors that other market participants would use in
pricing an investment that would be based on the best information available in
the circumstances.
There have been no changes
in the valuation methodologies used at December 31, 2009 and 2008 to value
the Plans assets at fair value, a summary of which is as follows:
Mutual funds are valued at
the Net Asset Value of shares held by the Plan at year end.
The collective trust funds
are valued at the unit value, which approximates fair value, as reported by the
trustee of the collective trust fund on each valuation date. The fund does not,
to the best of our knowledge, have any unfunded commitments. It has daily
liquidity with trades settling between one and three days and is fully benefit
responsive to participant transactions at the measurement date.
The Protective Life
Corporation common stock is valued based on the closing price of the common
stock as quoted on the NASDAQ Global Select Market.
Participant loans are valued
at amortized cost, which approximates fair value.
The valuation methodologies
described above may produce a fair value calculation that may not be indicative
of net realizable value or reflective of future fair values. Furthermore, while
the Plan believes its valuation methods are appropriate and consistent with
other market participants, the use of different methodologies or assumptions to
determine fair value of certain financial instruments could result in a
different fair value measurement at the reporting date.
The
following table sets forth by level, within the fair value hierarchy, the Plans
assets at fair value as of December 31, 2009 and 2008:
2009
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
funds
|
|
|
|
|
|
|
|
|
|
Index
funds
|
|
$
|
4,751,888
|
|
$
|
|
|
$
|
|
|
$
|
4,751,888
|
|
Growth
funds
|
|
41,512,528
|
|
|
|
|
|
|
|
41,512,528
|
|
Balanced
funds
|
|
3,550,055
|
|
|
|
|
|
3,550,055
|
|
Employer
common stock
|
|
33,223,626
|
|
|
|
|
|
33,223,626
|
|
Collective
trust funds
|
|
|
|
|
|
|
|
|
|
Index
funds
|
|
|
|
16,168,313
|
|
|
|
16,168,313
|
|
Income/Bond
|
|
|
|
21,675,309
|
|
|
|
21,675,309
|
|
Participation
loans
|
|
|
|
|
|
4,069,987
|
|
4,069,987
|
|
Total
assets at fair value
|
|
$
|
83,038,097
|
|
$
|
37,843,622
|
|
$
|
4,069,987
|
|
$
|
124,951,706
|
|
2008
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
$
|
29,925,459
|
|
$
|
|
|
$
|
|
|
$
|
29,925,459
|
|
Employer common stock
|
|
24,205,996
|
|
|
|
|
|
24,205,996
|
|
Collective trust funds
|
|
|
|
38,109,476
|
|
|
|
38,109,476
|
|
Participation loans
|
|
|
|
|
|
4,089,176
|
|
4,089,176
|
|
Total assets at fair value
|
|
$
|
54,131,455
|
|
$
|
38,109,476
|
|
$
|
4,089,176
|
|
$
|
96,330,107
|
|
The
table sets forth a summary of changes in the fair value of the Plans Level 3
assets for the year ended December 31, 2009:
|
|
Level 3
|
|
|
|
|
|
Balance, beginning of year
|
|
$
|
4,089,176
|
|
Purchases, sales, issuances and settlements (net)
|
|
(19,189
|
)
|
Balance, end of year
|
|
$
|
4,069,987
|
|
11. RELATED PARTY TRANSACTIONS
The Plan allows for
transactions with certain parties who may perform services or have fiduciary
responsibilities to the Plan, including the Company. The Plan invests in shares
of mutual funds or commingled trust funds managed by an affiliate of the
trustee. The Plan invests in common stock of the Company and issues loans to
participants, which are secured by the balances in the participants accounts.
During the year ended December 31, 2009, the Plan purchased 568,553 units
of Protective Life Corporation Common Stock for $15,913,377 and disposed of
222,320 units for $3,409,477. Quarterly dividends of $0.12 per share were
declared and paid by the Company on various dates throughout the year. The Plan
received $384,319 in dividend payments related to the common stock of the
Company for the year ended December 31, 2009. These transactions qualify
as party-in-interest transactions.
12
12. SUBSEQUENT EVENTS
Effective February 16,
2010, the Legg Mason Batterymarch
Emerging Markets Trust and the
P1MCO Real Return Fund were added as new investment options under the Plan. These
new funds were added to further enhance the Plans investment options by
offering more choices in the foreign equities and fixed income investment
classes.
Effective March 31,
2010, the Plan initiated the systematic process of liquidating the remaining
assets that are still invested in the Northern Trust funds. Once each Northern Trust
fund is completely liquidated, the balance will be automatically mapped to the
corresponding fund already offered in the Plan as described below:
Northern Trust Funds
|
|
Fidelity
Offered Funds
|
Northern S&P 500 Index
Fund
|
|
Columbia Large Cap Index
Fund
|
Northern Aggregate Bond
Index Fund
|
|
Vanguard Total Band Market
Index Fund
|
Northern Russell 3000
Index Fund
|
|
Columbia Large Cap Index
Fund
|
Northern Midcap S&P
400 Index Fund
|
|
Columbia Mid Cap Index
Fund
|
It is not known at this time
how long it will take to fully liquidate these funds.
Effective April 1,
2010, the Plan began collecting a quarterly fee from Plan participants to share
in administrative expenses.
Management has evaluated the
effects of events subsequent to December 31, 2009, and through the date we
filed the financial statements of the Plan with the United States Securities
and Exchange Commission included herein. All accounting and disclosure requirements
related to subsequent events are included in our financial statements.
13
PROTECTIVE LIFE CORPORATION 401(k) and STOCK
OWNERSHIP PLAN
EIN 95-2492236 Plan 003
SUPPLEMENTAL SCHEDULE I
SCHEDULE H, Line 4i - SCHEDULE OF ASSETS (HELD AT END
OF YEAR)
December 31, 2009
a.
|
|
b. Identity of Issue
Borrower, Lessor, or Similar Party
|
|
c. Description of Investments
|
|
d. Cost
|
|
e. Current Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Protective
Life Corporation
|
|
Common
Stock
|
|
2,007,386
|
shares
|
|
A
|
|
$
|
|
33,223,626
|
|
|
|
Columbia
Mid Cap Index Fund
|
|
Mutual
Fund
|
|
143,178
|
shares
|
|
A
|
|
1,322,964
|
|
|
|
Columbia
Large Cap Index Fund
|
|
Mutual
Fund
|
|
79,985
|
shares
|
|
A
|
|
1,720,473
|
|
|
|
Dodge &
Cox International Stock Fund
|
|
Mutual
Fund
|
|
245,383
|
shares
|
|
A
|
|
7,815,449
|
|
|
|
Dodge &
Cox Stock Fund
|
|
Mutual
Fund
|
|
144,580
|
shares
|
|
A
|
|
13,899,877
|
|
|
|
Neuberger
Berman Genesis Trust
|
|
Mutual
Fund
|
|
268,050
|
shares
|
|
A
|
|
10,520,965
|
|
|
|
T.
Rowe Price Growth Stock Fund
|
|
Mutual
Fund
|
|
337,195
|
shares
|
|
A
|
|
9,276,237
|
|
|
|
T.
Rowe Price Retirement 2015 Fund
|
|
Mutual
Fund
|
|
109,472
|
shares
|
|
A
|
|
1,168,063
|
|
|
|
T.
Rowe Price Retirement 2025 Fund
|
|
Mutual
Fund
|
|
108,881
|
shares
|
|
A
|
|
1,155,227
|
|
|
|
T.
Rowe Price Retirement 2035 Fund
|
|
Mutual
Fund
|
|
70,481
|
shares
|
|
A
|
|
750,620
|
|
|
|
T.
Rowe Price Retirement 2045 Fund
|
|
Mutual
Fund
|
|
47,143
|
shares
|
|
A
|
|
476,145
|
|
|
|
Vanguard
Total Band Market Index Fund
|
|
Mutual
Fund
|
|
165,068
|
shares
|
|
A
|
|
1,708,451
|
|
*
|
|
Northern
Aggregate Bond Index Fund
|
|
Collective
Trust Fund
|
|
24,577
|
shares
|
|
A
|
|
2,722,649
|
|
*
|
|
Northern
Midcap S&P 400 Index Fund
|
|
Collective
Trust Fund
|
|
534,947
|
shares
|
|
A
|
|
5,024,925
|
|
*
|
|
Northern
Russell 3000 Index Fund
|
|
Collective
Trust Fund
|
|
9,536
|
shares
|
|
A
|
|
1,472,947
|
|
*
|
|
Northern
S&P 500 Index Fund
|
|
Collective
Trust Fund
|
|
50,048
|
shares
|
|
A
|
|
6,947,792
|
|
*
|
|
Stable
Value Fund
|
|
Collective
Trust Fund
|
|
21,675,309
|
shares
|
|
A
|
|
21,675,309
|
|
*
|
|
Participant
loans
|
|
Loans,
various maturities and interest rates ranging from 4.25% to 10.50%
|
|
|
|
|
A
|
|
4,069,987
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
124,951,706
|
|
*
|
|
Party-in-interest
|
|
|
|
|
|
|
|
|
|
|
A.
|
|
Cost
of participant-directed investments is not required
|
|
|
|
|
|
|
|
|
|
|
15
SIGNATURE PAGE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
PROTECTIVE
LIFE CORPORATION
|
|
401(k) AND
STOCK OWNERSHIP PLAN
|
|
|
|
BY:
|
PROTECTIVE
LIFE CORPORATION
|
|
|
RETIREMENT
COMMITTEE
|
|
|
(Plan
Administrator)
|
|
|
|
|
|
|
|
By:
|
/s/
Steven G. Walker
|
|
|
Steven
G. Walker
|
Date: June 28, 2010
16
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