-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GzGDxXQ6K7C7aax1NP8g51EOT2kly8Zsyms4WrTIKrgKq9uhWmZP44gQEB+bgIqK H5xMnAkIPcFHeZd6ewfxTQ== 0000949377-01-500042.txt : 20010516 0000949377-01-500042.hdr.sgml : 20010516 ACCESSION NUMBER: 0000949377-01-500042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHL VARIABLE INSURANCE CO /CT/ CENTRAL INDEX KEY: 0001031223 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-20277 FILM NUMBER: 1638852 BUSINESS ADDRESS: STREET 1: C/O PHOENIX HOME LIFE MUTUAL INSURANCE C STREET 2: ONE AMERICAN ROW CITY: HARTFORD STATE: CT ZIP: 06116 BUSINESS PHONE: 8604035788 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: C/O PHOENIX HOME LIFE MUTUAL INSURANCE C CITY: HARTFORD STATE: CT ZIP: 06116 FORMER COMPANY: FORMER CONFORMED NAME: PHL VARIABLE SEPARATE ACCOUNT MVA1 DATE OF NAME CHANGE: 19970123 10-Q 1 phlv50198-10q.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 333-55240 PHL VARIABLE INSURANCE COMPANY Incorporated in the State of Connecticut 06-1045829 ------------------- (I.R.S. Employer Identification No.) One American Row, Hartford, Connecticut 06102-5056 (Address of principal executive offices) Telephone Number (800) 447-4312 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 ---- ---- As of April 30, 2001, there were outstanding 500 shares of common stock, $5,000 par value per share, of the registrant, all of which were directly owned by PM Holdings, Inc. PHL Variable Insurance Company Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements Page Condensed Balance Sheets as of March 31, 2001 and December 31, 2000 1 Condensed Statements of Income, Comprehensive Income and Equity for the three months ended March 31, 2001 and 2000 2 Condensed Statements of Cash Flows for the three months ended March 31, 2001 and 2000 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K __ Signatures __ PART I. FINANCIAL INFORMATION Item 1. Financial Statements PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) CONDENSED BALANCE SHEETS - --------------------------------------------------------------------------------
AS OF MARCH 31, AS OF DECEMBER 31, 2001 2000 --------------- ------------------ (IN THOUSANDS) Assets: Investments Held-to-maturity debt securities, at amortized cost $ 17,310 $ 13,697 Available-for-sale debt securities, at fair value 296,674 144,217 Policy loans 754 710 Short-term investments 72,375 Other invested assets 1,468 1,618 --------------- --------------- Total investments 316,206 232,617 Cash and cash equivalents 35,839 8,404 Accrued investment income 2,684 1,381 Deferred policy acquisition costs 100,338 84,842 Deferred and uncollected premiums 7,007 6,790 Other assets 4,738 1,942 Goodwill, net 323 349 Separate account assets 1,207,670 1,321,582 --------------- --------------- Total assets $ 1,674,805 $ 1,657,907 =============== =============== Liabilities: Policyholder deposit funds $ 297,779 $ 195,393 Policy liabilities and accruals 24,644 24,062 Deferred income taxes 4,231 3,784 Other liabilities 24,852 18,898 Separate account liabilities 1,207,670 1,321,582 --------------- --------------- Total liabilities 1,559,176 1,563,719 --------------- --------------- Equity: Common stock, $5,000 par value (1,000 shares authorized, 500 shares issued and outstanding) 2,500 2,500 Additional paid-in-capital 99,864 79,864 Retained earnings 12,426 11,553 Accumulated other comprehensive income 839 271 --------------- --------------- Total equity 115,629 94,188 --------------- --------------- Total liabilities and equity $ 1,674,805 $ 1,657,907 =============== ===============
The accompanying notes are an integral part of these statements. PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) CONDENSED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND EQUITY - --------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------------------- 2001 2000 --------------- --------------- (IN THOUSANDS) Revenues Premiums $ 2,423 $ 2,728 Insurance and investment product fees 7,637 7,227 Net investment income 4,491 1,613 Net realized investment gains 45 -------------- ------------- Total revenues 14,596 11,568 -------------- ------------- Benefits and expenses Policy benefits and increase in policy liabilities 5,389 5,679 Amortization of deferred policy acquisition expenses 4,755 2,388 Other operating expenses 3,196 1,367 -------------- ------------- Total benefits and expenses 13,340 9,434 -------------- ------------- Income before income taxes 1,256 2,134 Income taxes 383 746 -------------- ------------- Net income 873 1,388 -------------- ------------- Other comprehensive income, net of income taxes Unrealized gains on securities 600 130 Reclassification adjustment for net realized gains included in net income (32) -------------- ------------- Total other comprehensive income 568 130 -------------- ------------- Comprehensive income 1,441 1,518 Capital contribution 20,000 -------------- ------------- Net increase in equity 21,441 1,518 Equity, beginning of period 94,188 78,189 -------------- ------------- Equity, end of period $ 115,629 $ 79,707 ============== =============
The accompanying notes are an integral part of these statements. PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) CONDENSED STATEMENTS OF CASH FLOWS - --------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------------------- 2001 2000 --------------- --------------- (IN THOUSANDS) Cash flows from operating activities: Net income $ 873 $ 1,388 Adjustments to reconcile net income to net cash from operating activities: Net realized investment gains (45) Amortization of goodwill 26 26 Deferred income taxes 142 1,192 Increase in accrued investment income (1,303) (187) Increase in deferred policy acquisition costs (16,506) (6,881) Change in other assets/other liabilities 3,418 9,813 -------------- ------------- Net cash (used for) provided by operating activities (13,395) 5,351 -------------- ------------- Cash flow from investing activities: Proceeds from sales, maturities or repayments of available-for-sale debt securities 26,094 1,215 Proceeds from maturities or repayments of held-to-maturity debt securities 442 387 Purchase of available-for-sale debt securities (176,423) (12,561) Purchase of held-to-maturity debt securities (4,000) (3,625) Change in short term investments, net 72,375 (6,806) Increase in policy loans (44) (43) -------------- ------------- Net cash used for investing activities (81,556) (21,433) -------------- ------------- Cash flow from financing activities: Capital contribution 20,000 Increase in policyholder deposit funds, net of interest credited 102,386 19,891 -------------- ------------- Net cash provided by financing activities 122,386 19,891 -------------- ------------- Net change in cash and cash equivalents 27,435 3,809 Cash and cash equivalents, beginning of period 8,404 -------------- ------------- Cash and cash equivalents, end of period $ 35,839 $ 3,809 ============== ============= Supplemental cash flow information Income taxes paid, net - -
The accompanying notes are an integral part of these statements. PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) NOTES TO CONDENSED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION AND DESCRIPTION OF BUSINESS PHL Variable Insurance Company (PHL Variable) offers variable annuity and non-participating life insurance products in the United States of America. PHL Variable is a wholly-owned subsidiary of PM Holdings, Inc. (PM Holdings). PM Holdings is a wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company (Phoenix). 2. BASIS OF PRESENTATION The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The State of Connecticut Insurance Department (the Insurance Department) recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company for determining solvency under the Connecticut State Insurance Law. No consideration is given by the Insurance Department to financial statements prepared in accordance with GAAP in making such determination. In the opinion of management, adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation, have been included. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. These unaudited interim condensed financial statements should be read in conjunction with the financial statements of PHL Variable for the year ended December 31, 2000. 3. REORGANIZATION Phoenix's board of directors adopted a plan of reorganization on December 18, 2000 and amended and restated it on January 26, 2001. For the reorganization to be consummated, the plan must be approved by at least two-thirds of Phoenix's eligible policyholders who voted on the plan, and by the New York Superintendent of Insurance after a public hearing. Phoenix's policyholders duly approved the plan in a vote that concluded on April 2, 2001. The public hearing was held on March 19, 2001 and the Superintendent's decision whether to approve the plan is now pending. 4. INCOME TAXES The effective tax rate for the period ended March 31, 2001 was 30.5% compared to a rate of 35% for the comparable period in 2000. This was due primarily to a favorable permanent adjustment attributable to a dividend received deduction on separate accounts being projected for the current year which was not included in the prior year. 5. COMMITMENTS AND CONTINGENCIES In the normal course of its business operations, PHL Variable is involved with litigation from time to time with claimants, beneficiaries and others, and a number of litigation matters were pending as of March 31, 2001. It is the opinion of management, after consultation with counsel, that the ultimate liability with respect to these claims, if any, will not materially affect the financial position or results of operations of PHL Variable. Item 2. Management's Discussion and Analysis of Results of Operations PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000 Premiums, net of reinsurance ceded, were $2.4 million for the three months ended March 31, 2001, a decrease of $0.3 million, or 11%, from $2.7 million for the comparable period in 2000. This decrease is primarily a result of no longer selling term business in PHL Variable. No new premiums were collected for the three months ended March 31, 2001, compared to $3.9 million collected for the three months ended March 31, 2000. Insurance and investment product fees were $7.6 million for the three months ended March 31, 2001, an increase of $0.4 million, or 6%, from $7.2 million for the comparable period in 2000. The growth of insurance and investment product fees is primarily attributable to the growth in our universal life business, where assets under management increased $1.6 million, or 11%, from March 31, 2000. Net investment income was $4.5 million, for the three months ended March 31, 2001, an increase of $2.9 million, or 181%, from $1.6 million for the comparable period in 2000. This increase was primarily the result of higher average invested assets supporting a growing business. The yield on average invested assets was 6.5% for the three months ended March 31, 2001, compared to 6.2% for the comparable period in 2000. Policy benefits and increase in policy liabilities were $5.4 million for the three months ended March 31, 2001, a decrease of $0.3 million, or 5%, from $5.7 million for the comparable period in 2000. Policy liabilities on our term life insurance products decreased as a result of no new sales. This decrease was offset by increases in policy benefits on our variable annuity products, primarily due to increases in interest credited on guaranteed interest account balances from new business growth. Amortization of deferred policy acquisition costs was $4.8 million for the three months ended March 31, 2001, an increase of $2.4 million, or 100%, from $2.4 million for the comparable period in 2000, primarily due to increases in variable annuity amortization expenses due to lower estimated gross margins resulting from lower fund performance and growth in business. Other operating expenses were $3.2 million for the three months ended March 31, 2001, an increase of $1.8 million, or 129%, from $1.4 million for the comparable period in 2000. This increase is primarily related to the increase in sales of our variable annuity and universal life products, offset by decreases in sales of our term products. LIQUIDITY AND CAPITAL RESOURCES PHL Variable's liquidity requirements are met by anticipating and managing the timing of cash uses and sources provided by insurance operations, investing activities and capital contributions from the parent. The growth in sales has created a need for additional cash in order to cover the acquisition costs incurred in operating activities. Those liquidity requirements are currently being met through investing activities and capital contributed by the parent. PM Holdings has made capital contributions of $20.0 million on February 13, 2001 and $15.0 million in 2000. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) PHL Variable Insurance Company did not file any report on Form 8-K during the quarter covered by this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PHL VARIABLE INSURANCE COMPANY May 15, 2001 By /s/Simon Y. Tan ----------------------------- Simon Y. Tan President May 15, 2001 /s/David W. Searfoss ----------------------------- David W. Searfoss Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----