Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

Jefferson-Pilot Corporation

(336) 691-3000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X]   No [  ]

JEFFERSON-PILOT CORPORATION

INDEX

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES

See Notes to Consolidated Financial Statements

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JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES

See Notes to Consolidated Financial Statements

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JEFFERSON-PILOT CORPORATION

See Notes to Consolidated Financial Statements

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JEFFERSON-PILOT CORPORATION

NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying consolidated unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Operating results for the nine-month period ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. Certain prior year amounts have been reclassified to conform with the current year presentation.

Except as described otherwise herein, all significant accounting policies remain as we described in our Form 10-K for 2003.

2. Significant Accounting Policies

Stock Based Compensation

The Company accounts for stock incentive awards in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and accordingly, recognizes no compensation expense for stock option awards to employees or directors when the option price is not less than the market value of the stock at the date of award. The Company recognizes expense utilizing the fair value method in accordance with SFAS 123 for stock options granted to non-employees, specifically agents.

SFAS 123 requires the presentation of pro forma information as if the Company had accounted for its employee and director stock options under the fair value method of that Statement.

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The following is a reconciliation of reported net income and proforma information as if the Company had adopted SFAS 123 for its employee and director stock option awards:

3. Segment Reporting

The Company has five reportable segments that are defined based on the nature of the products and services offered: Individual Products, Annuity and Investment Products (AIP), Benefit Partners, Communications, and Corporate and Other. The segments remain as we described in our Form 10-K for 2003.

The following table summarizes certain financial information regarding the Company’s reportable segments:

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Default charges paid to the Corporate and Other segment for Individual, AIP and Benefit Partners were $17, $10, $1 and $14, $8, $1 for the nine months ended September 30, 2004 and 2003.

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4. Income from Continuing Operations Per Share of Common Stock

The following table sets forth the computation of earnings per share and earnings per share assuming dilution:

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5. Contingent Liabilities

A life insurance subsidiary is a defendant in a proposed class action suit. The suit alleges that a predecessor company, decades ago, unfairly discriminated in the sale of certain small face amount life insurance policies, and unreasonably priced these policies. Management believes that the life company’s practices have complied with state insurance laws and intends to vigorously defend the claims asserted.

In the normal course of business, the Company and its subsidiaries are parties to various lawsuits. Because of the considerable uncertainties that exist, the Company cannot predict the outcome of pending or future litigation. However, management believes that the resolution of pending legal proceedings will not have a material adverse effect on the Company’s financial position or liquidity, although it could have a material adverse effect on the results of operations for a specified period.

6. Accounting Pronouncements

FIN 46

The Financial Accounting Standards Board (FASB) has issued Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (FIN 46). Under FIN 46, an enterprise consolidates a variable interest entity (VIE), as defined, if the enterprise absorbs a majority of the VIE’s expected losses, receives a majority of its expected residual returns, or both, as a result of ownership, contractual or other financial interests in the VIE. Prior to FIN 46, entities were generally consolidated by an enterprise only when it had a controlling financial interest through ownership of a majority voting interest in the entity. In accordance with FIN 46, effective December 31, 2003, the Company deconsolidated Jefferson Pilot Capital Trust A and Jefferson Pilot Capital Trust B (the Trusts), VIE’s that issued $300 of redeemable preferred securities in private placement transaction in 1997. All periods presented have been restated accordingly. The redeemable preferred securities were previously presented in the Company’s financial statements as Capital Securities in the consolidated balance sheets. Dividends on the Capital Securities were presented in the consolidated statements of income as a deduction to arrive at net income available to common stockholders, and as a financing outflow on the consolidated statements of cash flows. As a result of the deconsolidation of the Trusts, the consolidated balance sheets now reflect junior subordinated debentures purchased from the Company by the Trusts in 1997, which had previously been eliminated in consolidation. Interest expense on the junior subordinated debentures is presented as interest expense in the consolidated statements of income and is presented as an operating cash outflow on the consolidated statements of cash flow.

SOP 03-1

In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AcSEC) issued Statement of Position 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts” (the SOP or SOP 03-1). The SOP addresses: (i) separate account presentation; (ii) accounting for an insurance company’s proportionate interest in separate accounts; (iii) transfers of assets from the general account to a separate account; (iv) valuation of certain insurance liabilities and policy features such as guaranteed minimum death benefits and

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annuitization benefits; and (v) accounting for sales inducements. The SOP was effective January 1, 2004 and was adopted through an adjustment for the cumulative effect of a change in accounting principle originally amounting to $13. During the third quarter, AcSEC issued Technical Practice Aids (the TPAs) addressing certain provisions of the SOP. As a result of this additional guidance, we restated our cumulative effect adjustment as of January 1, 2004 to record an additional $4 of expense. The nine month impact of the TPAs on income before cumulative effect of change in accounting principle has been reflected in results for the third quarter. The following table reflects our results for the first quarter of 2004 as originally reported and as adjusted by the third quarter addition to the cumulative effect adjustment.

Our cumulative effect adjustment of $17 related primarily to the establishment of additional policy liabilities for secondary guarantees contained in our newer products and accounting for sales inducements resident in certain of our older policies. While we had previously provided for these items in our financial statements, the SOP prescribed new methods of valuation. Each of these items was at least partially offset by adjustments to related balances of deferred acquisition costs (DAC) or value of business acquired (VOBA), or in the case of sales inducements, by the establishment of a deferred sales inducement asset. The gross amount of additional policy liabilities established was approximately $15, with $0.1 pertaining to guaranteed minimum death benefits on variable universal life (VUL) products. No additional reserves were necessary related to minimum guaranteed death benefits on variable annuities (VAs), as our already-existing policy liabilities (which were less than $1) proved to be adequate under the new standard with respect to this feature. In addition to the cumulative effect of adoption, the SOP (including the effect of the TPAs) reduced our income before cumulative effect of change in accounting principle for the nine months ended September 30, 2004 by $6.

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The Company has policies in force containing two primary types of sales inducements: 1) day one bonuses on fixed annuities, which are in the form of either an increased interest rate for a stated period or an additional premium credit; and 2) persistency-related interest credited bonuses. The fixed annuity bonuses were previously being capitalized and amortized as a component of DAC. Thus, there was no cumulative impact upon adoption other than a balance sheet reclassification of the deferred amount out of DAC into deferred sales inducements. The persistency-related bonuses were previously expensed on a pay-as-you-go basis. These bonuses are now accrued over the period in which the policy must remain in force for the policyholder to qualify for the inducement. Capitalized sales inducements are amortized using the same methodology and assumptions used to amortize DAC. The following table rolls forward our deferred sales inducement asset for the nine months ended September 30, 2004.

Separate account assets and liabilities represent funds segregated for the benefit of certain policyholders who bear the investment risk. SOP 03-1 did not impact our accounting policies with respect to separate accounts, as they meet the criteria for summary presentation contained in the SOP. Separate account assets and liabilities are equal and are recorded at fair value. Policyholder deposits and withdrawals, investment income and related realized investment gains and losses are excluded from the amounts reported in our income statement. Fees charged on policyholder deposits are included in universal life and investment product charges. The policies reported in our separate accounts are VA and VUL policies. As indicated above, the amounts of minimum guarantees or other similar benefits related to these policies are negligible.

Pro forma disclosure of prior year periods as if the SOP had been retroactively applied has been omitted based on the impracticality of performing the necessary calculations as of those prior year periods.

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7. Retirement Benefit Plans

The following table illustrates the components of net periodic benefit cost for our pension plans:

The Company expects to make payments of $1 to $2 during 2004 related to our nonqualified plans, which are unfunded. Contributions of $0 and $1 were made during the three and nine months ended September 30, 2004.

Other Postretirement Benefit Plans

In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act (the Act) was signed into law. The Act includes a federal subsidy to sponsors of retiree health plans that provide a prescription drug benefit that is at least actuarially equivalent to the benefit to be provided under Medicare Part D. We have evaluated the provisions of the Act and believe that the benefits provided by our plan are actuarially equivalent thereto. As of September 30, 2004, we do not expect the impact of the Act to be material to our results of operations or our financial position.

8. Canada Life Transaction

Effective March 1, 2004, we acquired via a reinsurance transaction substantially all of the in-force U.S. group life, disability and dental business of The Canada Life Assurance Company, an indirect subsidiary of Great-West Lifeco Inc. Upon closing, Canada Life ceded, and the Company assumed, approximately $400 million of policy liabilities. The Company also received assets, primarily cash, to back the liabilities. As a result of the transaction, we initially recorded DAC in the amount of $35 and an intangible asset of $25 representing the value of the sales force acquired as part of the transaction. These amounts may be subject to adjustment in the case of any post-closing adjustments related to the transaction. The DAC will be amortized over 15 years, representing the premium-paying period of the acquired blocks. The sales force asset will be amortized over 30 years, representing the period over which we expect to earn premiums from new sales stemming from the added distribution capacity.

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9. Comprehensive Income

The components of comprehensive income, net of related effects of DAC/VOBA and income taxes, are as follows:

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the consolidated financial condition, changes in financial position and results of operations for the three month and nine month periods ended September 30, 2004, as compared to the same periods of 2003, of Jefferson-Pilot Corporation and consolidated subsidiaries. The discussion supplements Management’s Discussion and Analysis in Form 10-K for the year ended December 31, 2003, and should be read in conjunction with the interim financial statements and notes contained herein. All dollar amounts are in millions except share and per share amounts.

Company Profile

Overview and Segment Revenues

We have five reportable segments: Individual Products, Annuity and Investment Products (AIP), Benefit Partners, Communications, and Corporate and Other. See our Form 10-K for an overview of the Company and our reportable segments and a discussion of key drivers and trends in our businesses, supplemented by the discussion herein.

Our reportable segments’ revenues as a percentage of total revenues, excluding realized investment gains (losses), were as follows:

The higher proportion of revenues from Benefit Partners in 2004 reflects the acquisition of the Canada Life business, discussed later.

Update on Critical Accounting Policies

Our Form 10-K describes our accounting policies that are critical to the understanding of our results of operations and our financial position. They relate to deferred acquisition costs (DAC), value of business acquired (VOBA) and unearned revenue, assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, valuation methods for infrequently traded securities and private placements, and accruals relating to legal and administrative proceedings.

These policies were applied in a consistent manner during the first nine months of 2004. Legal proceedings are discussed in Note 5 to the Consolidated Condensed Financial Statements.

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Results of Operations

The following tables illustrate our results before and after the cumulative effect of change in accounting principle:

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The increase in net income for the third quarter and first nine months of 2004 reflected higher realized gains and earnings growth in the Benefit Partners and Communications segments. The Individual Products and AIP segments declined over the same period. Benefit Partners results for the quarter and year to date periods were favorably impacted by earnings from the business added via the Canada Life transaction, which closed during the first quarter of 2004, and by improved loss ratios during the third quarter and nine months of 2004. Communications achieved market share advances and benefited from increased political advertising revenues in 2004 resulting in earnings growth. Individual Products and AIP results were adversely impacted by spread compression for the quarter and year to date periods due to lower portfolio yields, partially resulting from lower prepayments of mortgage backed securities. Realized investment gains, net of taxes, were $2.2 for the quarter and $24.1 for the first nine months of 2004 versus realized investment losses, net of taxes, of ($3.9) and ($3.1) for the 2003 periods.

The Company adopted SOP 03-1 on January 1, 2004 and adjusted the cumulative effect as of that date during the third quarter of 2004, based on the issuance of new implementation guidance. The implementation of SOP 03-1 created both a cumulative effect upon adoption as well as a reduction to net income in the 2004 periods, as discussed later and in Note 6.

Growth in earnings per share was greater than the growth in dollar earnings amounts for the quarter and nine month period due to repurchases of 5,368,200 shares during the first six months of 2004. Share repurchases during the second half of 2003 also contributed to per share growth in 2004 compared to the 2003 periods.

Results by Business Segment

Throughout this Form 10-Q, “reportable segment results” 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.

We assess profitability by business segment and measure other operating statistics as detailed in the separate segment discussions that follow. Sales are one of the statistics we use to track performance. Sales in the Individual Products and AIP segments have little immediate impact on insurance revenues for these two segments as described in the segment discussions below.

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Results by Reportable Segment

Segment Assets

We assign invested assets backing insurance liabilities to our segments in relation to policyholder funds and reserves. We assign net DAC and VOBA, reinsurance receivables, communications assets and certain other assets to the respective segments where those assets originate. We also assign invested assets to back capital allocated to each segment in relation to our philosophy for managing business risks, reflecting appropriate conservatism. We assign the remainder of invested and other assets, including all defaulted securities, to the Corporate and Other segment.

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Individual Products

The Individual Products segment markets individual life insurance policies primarily through independent general agents, independent national account marketing firms, and agency building general agents. We also sell products through home service agents, broker/dealers, banks and other strategic alliances. Segment results were:

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The following table summarizes key data for Individual Products that we believe are important drivers and indicators of future profitability:

Sales from our Individual Markets excluding Community Banks and bank-owned life insurance (BOLI) were flat for the quarter and were lower than in 2003 for the nine months primarily due to record sales levels in the first quarter of 2003. In recent years, increased competition among providers of Universal Life insurance contracts has resulted in a shortening of the product life cycle. A focus on product development efforts has resulted in a greater distribution of product offerings for our customers, with no single product representing a majority of our life insurance sales. Community Banks and BOLI business will vary widely between periods as we respond to sales opportunities for these single premium products only when the market accommodates our required returns.

Approximately 58% of year to date and 59% of prior year life insurance sales were attributable to products with secondary guarantee benefits. These products were priced considering interest, mortality, withdrawal and termination (lapse) assumptions that are specific to the nature, marketing focus, and funding pattern for each product. The lapse assumptions that we use for pricing are based on multi-scenario modeling techniques and are lower than the assumptions we use for non-guaranteed products, particularly when the secondary guarantee option is “in the money”. Since guaranteed UL policies are relatively new to the marketplace, credible experience has yet to emerge regarding policy and premium persistency; however, our assumptions represent our best estimate of future experience. See Capital Position for discussion of an ongoing industry debate related to statutory-basis reserving methodologies for these types of products.

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Interest margin on UL-type products was essentially flat for the third quarter and first nine months versus 2003. Lower investment yields were mitigated by growth in policyholder fund balances and our management of interest spreads. The lower investment yield was primarily due to the general interest rate environment. We actively manage interest spreads on our fixed UL-type products in response to changes in investment yields by adjusting the rates credited to policyholder fund balances while considering our competitive strategies as well. The average investment spread on fixed UL products declined 17 basis points to 1.91% for the third quarter compared to the 2003 quarter and declined 14 basis points to 1.87% for the nine months. Prepayments of mortgage-backed securities significantly increased during 2003 as a result of declines in long-term mortgage rates, but have been immaterial in 2004. We estimate that prepayments in excess of expected levels increased effective investment yields in the third quarter and first nine months of 2003 by 28 basis points and 19 basis points. The decrease in excess accretion of discount contributed to the decline in effective investment spreads on fixed UL products in 2004. Our ability to manage interest-crediting rates on fixed UL-type products is limited by minimum guaranteed rates provided in policyholder contracts. Therefore, continued low general market interest rates will impact future profitability, as the investment of cash flows at current interest rates reduces our average portfolio yield. At October 1, 2004 and January 1, 2004, our crediting rates were approximately 35 and 49 basis points on average in excess of our minimum guaranteed rates. Policies representing approximately 58% of the UL policyholder fund balances were at their minimum guaranteed rates. The earned rate on investments backing our UL blocks declined to 6.47% versus 6.53% for the second quarter of 2004. By comparison, the earned rate was 6.98% for the third quarter of 2003. Should new money rates decline or remain at current levels, we will experience interest spread compression prospectively.

Product charge revenue declined 1.6% in the third quarter, despite growth in average UL policyholder fund balances of 4.5%, and increased 4.6% for the first nine months, compared to 5.4% growth in average UL policyholder fund balances. The newly adopted SOP 03-1 guidance, discussed further below, reduced the amortization of unearned expense charges by $3.7. The effect of reflecting updated longer-term assumptions in estimated gross profits for certain insurance blocks reduced the amortization of unearned expense charges by $3.0 in the third quarter of 2004 versus a $2.2 increase in the amortization of unearned expense charges in the 2003 quarter. Products issued in recent years are designed to generate a higher proportion of their revenues from expense charges. We defer expense charges received in excess of ultimate annual expense charges and amortize them into income relative to future estimated gross profits. Also contributing to the decrease in product charge revenue in the third quarter of 2004 versus the 2003 quarter is a reinsurance recapture executed in the third quarter of 2003 that increased cost of insurance charges (COIs) in that quarter by $8.4. Excluding the impact of these factors, product charge revenue grew 7.1% for the quarter and 7.6% for the first nine months over 2003. An increase in the average age of our insureds is contributing to growth in COIs in excess of the growth in average UL policyholder fund balances, but will contribute to increased death benefits as well. Surrender activity also increased in the quarter, resulting in higher surrender charges.

UL-type death benefits and other insurance benefits included $9.9 for the third quarter and $12.2 for the first nine months of 2004 related to the impact of SOP 03-1. The January 1, 2004 cumulative effect of the initial adoption of SOP 03-1 was refined in the current quarter due to the issuance of additional implementation guidance that was adopted in the quarter. This change also increased the impact of SOP 03-1 on an ongoing basis, with the nine-month effect of the refinement to insurance benefits amounting to $8.7. See Note 6 for further discussion of this accounting principle. UL-type death benefits for the third quarter of 2003 also included $7.6 for the reinsurance recapture mentioned above. Absent these items, UL-type death benefits and other insurance benefits increased 20% in the third quarter and 13% for the first nine months over 2003. UL-type death benefits, net of reinsurance, per thousand dollars of face amount of insurance in-force were $0.77 in the 2004 quarter compared to $0.70 in the 2003 quarter and $2.34 compared to $2.22 for the nine month periods. Growth and aging of our blocks will contribute to the increased level of UL-type death benefits. While over the long term death benefits should emerge within actuarial expectations, the level of death benefits will fluctuate from quarter to quarter.

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Consistent with the trend in recent years, traditional premiums and other considerations declined from the third quarter and first nine months of 2003, as our life insurance sales efforts are currently focused on UL-type products. Net investment income from our traditional blocks declined period over period due to lower investment yields, partly due to lower prepayments of mortgage-backed securities, and the decreasing size of the block.

Policy benefits on traditional business include death benefits, dividends, surrenders and changes in reserves, with the most significant being death benefits. Policy benefits as a percentage of premiums and other considerations were 112.4% and 112.8% in the third quarter and first nine months compared to 102.4% and 114.3% in the 2003 periods. The increase in the current quarter was primarily attributable to lower policyholder dividends in 2003.

Total expenses (including the net deferral and amortization of DAC and VOBA) were as follows:

Expenses excluding amortization of DAC and VOBA decreased in the third quarter and first nine months of 2004 from the 2003 periods, primarily due to increased efficiencies reflected in our marketing and distribution costs, and lower taxes licenses and fees, stemming from a reduction in our effective premium tax rate and a reduction in state income tax accruals following the filing of the tax returns. The expense amounts we capitalize as DAC include first year commissions and deferrable acquisition expenses. We generally limit our capitalization of deferrable acquisition expenses to the lower of product specific pricing allowables or actual deferrable acquisition costs. See further discussion of DAC and VOBA under the Financial Position section. During the third quarter, we adjusted our assumptions for interest spreads, mortality and lapsation on certain blocks of business, resulting in a $13.8 reduction in DAC amortization for the quarter. Also, the establishment of the additional SOP 03-1 reserves in the quarter changed the pattern of expected gross profits for the related products, resulting in a $7.5 decrease to amortization for the quarter and first nine months. These adjustments to DAC amortization are partially offset by corresponding adjustments to unearned expense charges discussed above. On a year to date basis, DAC unlocking has had the effect of reducing DAC amortization by $27.4. DAC

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unlocking reduced DAC amortization by $2.8 and $12.9 for the third quarter and first nine months of 2003.

The effective income tax rate was lower in 2004 for the quarter and year to date periods, due primarily to an increase in the dividends received deduction on equity securities and to other tax favored investments held in the Individual Products portfolio.

The growth in average Individual Products assets in 2004 was primarily due to growth in UL and VUL policyholder fund balances, partially offset by a decline in assets supporting our traditional block of business.

At September 30, 2004, UL-type products sold to community banks accounted for $2.0 billion in UL policyholder fund balances and have averaged 6% to 9% of earnings for the Individual Products segment in recent years. At September 30, 2004, DAC and VOBA balances, net of unearned revenue reserves, related to these blocks amounted to approximately $100. These policies, which are generally not subject to surrender charges, are owned by several thousand policyholders. These policies were primarily originated through, and continue to be serviced by, two marketing organizations. The surrender rate for this product may increase beyond current experience due to the absence of surrender charges and rising interest rates that may result in returns available to policyholders on competitors’ products being more attractive than on our policies in force. The following factors may influence policyholders to continue these coverages: 1) our ability to adjust credited rates; 2) relatively high minimum rate guarantees; 3) the difficulty of re-underwriting existing and additional covered lives; and 4) unfavorable tax attributes of certain surrenders. Our assumptions for amortizing DAC, VOBA and unearned revenue for these policies reflect a higher expected lapse rate than other UL blocks of business due to the factors noted above.

In addition to the risk factor described above, our financial and operating risks for this segment, some of which are mentioned in our Overview in the Form 10-K, include failure to achieve pricing assumptions for interest margins, mortality, withdrawals and expenses; variances between actual and underlying assumptions of DAC and VOBA; increased lapses when interest rates rise, particularly in those non-variable UL-type products subject to low or no surrender charges; changes in taxation or other regulatory changes related to our products and competing offerings; changes in generally accepted or statutory accounting principles (such as the AXXX actuarial guideline discussed in Capital Resources); and the effects of unresolved litigation. We discuss financial and operating risks in more detail in the Financial Position, Capital Resources and Liquidity, and Market Risk Exposures sections of this filing and in our Form 10-K.

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