Lehman/A.M. Best Co. 2nd Annual Conference

"Agents understand that insurance will be distributed through many channels." Drayton Nabers Chairman of the Board and Chief Executive Officer Protective Life Corp.

Protective Life CEO: Direct Sales to be Highlight for Company

Protective Life Corp. sees the continued growth from its retail-marketing division and expectations from its direct-sales channel as highlights of the company said Chairman of the Board and Chief Executive Officer Drayton Nabers Jr. Nabers said sales of term life through its direct channel, Matrix Direct, is "where the lion's share of growth is in terms of alternative distribution."

Nabers spoke at the second annual Insurance Conference held in New York, co-sponsored by Lehman Bros. and A.M. Best Co.

Nabers said the growth in the retail-marketing segment of the company over the past five years has changed the face of the company's earnings by division. In 1995, Protective Life saw about 66% of its earnings coming from a mix of individual life, acquisitions and its stable-value products division, which sells guaranteed-investment contracts to 401(k) and other qualified retirement savings plans. In 2000, the earnings by division changed to a mix of 33% individual life, 22% acquisitions and a drop to 13% in stable-value products.

Nabers predicted that the sales of guaranteed-investment contracts will see an uptick as baby boomers look to more stable investments as they get closer to retirement. While its growth in sales in its individual life division beat the industry's growth rate over the last five years, Nabers is looking to this division's direct-distribution channel to excel this year. Protective Life sells its life products through personal producing general agents, brokerage life services and direct response.

He expects Matrix Direct to sell $25 million of term life premium in 2001--up considerably from 2000's $4.7 million. Nabers is enthusiastic about this channel and sees the direct selling of term life insurance as important to Protective Life as well as the industry. "Agents understand that insurance will be distributed through many channels." Nabers also said Protective Life will continue to back up Matrix Life with media buying as long as there are ratios to justify it.

Protective Life is following the trail of its competitors in getting into the long-term-care insurance business. Nabers characterized the initiative as "getting our feet wet" and plans to reinsure 85% of the morbidity risk. The product is in the filing phase.

In a review of the company's first-quarter earnings, Nabers said sales were sluggish in comparison to last year's Triple-X sales, and the slower economy and the declining stock market slowed annuity sales. In the first quarter, Protective Life's total operating income before taxes was $62 million, compared with $65 million for the same quarter last year. The outlook for the year centers on continued retail growth, and Nabers said to expect another acquisition of a life insurance this year for the company.

Protective Life Insurance markets individual life insurance, dental insurance, credit life and disability insurance, guaranteed-investment contracts and annuities primarily in the United States.

A.M. Best Co. rates Protective Life & Annuity A+ (Superior).

(By Lynna Goch, senior associate editor, Best's Review: Lynna.Goch@ambest.com)