) first quarter results were disappointing. Earnings fell short of estimates and operating trends were mixed. Recent deals should lift EPS and ROE in 2011, but the long term view remains cautious. PL reported 1Q11 operating EPS of $0.72, below JP Morgan's $0.76 estimate and consensus of $0.75. Results included several unusual items, adjusting for which JP Morgan estimates PL would have earned $0.69, still below forecasts, primarily due to poor underwriting margins. Business trends were mixed, with robust annuity and asset protection sales and improved stable value spreads. JP Morgan projects Protective Life's ROE to expand from 7.9% in 2010 to 8.7% in 2012, helped by accretion from the UILIC and Liberty Life deals. Despite the improvement, PL's returns should remain below the life insurance sector for the foreseeable future given low margins on the company's life insurance business. In addition, JP Morgan expects fluctuations in life marketing mortality and trading account income to result in high volatility in quarterly EPS. JP Morgan maintains a Neutral rating and $29 PT. The UILIC and Liberty deals should lift the company's returns, but our long term fundamental outlook is cautious given PL's below-average ROE, limited organic growth potential, and volatile life insurance margins. PL closed Wednesday at $26.08