-----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, ToyPRL6Wwor1njPZah2EQpsg1PjjIDMDOtf/cL2poLLVFDO2cb/tbXB84jJC+E25 CtMJIMgCdX8CNJi7d8WZsA== 0000949377-01-500230.txt : 20010815 0000949377-01-500230.hdr.sgml : 20010815 ACCESSION NUMBER: 0000949377-01-500230 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHL VARIABLE INSURANCE CO /CT/ CENTRAL INDEX KEY: 0001031223 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-20277 FILM NUMBER: 1713774 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 phl5220510qfiling.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 June 30, 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 15d) 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 August 10, 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. The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format. PHL Variable Insurance Company Table of Contents
PART I. FINANCIAL INFORMATION Item 1. Financial Statements Page Unaudited Interim Balance Sheets as of June 30, 2001 and December 31, 2000 .........................1 Unaudited Interim Statements of Income, Comprehensive Income and Equity for the quarter and six months ended June 30, 2001 and 2000 ................................................2 Unaudited Interim Statements of Cash Flows for the six months ended June 30, 2001 and 2000 .........3 Notes to Unaudited Interim Financial Statements.....................................................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ..............5 Item 3. Quantitative and Qualitative Disclosures About Market Risk..........................................6 PART II. OTHER INFORMATION Item 1. Legal Proceedings ..................................................................................6 Item 2. Changes in Securities and Use of Proceeds ..........................................................6 Item 3. Defaults Upon Senior Securities ....................................................................6 Item 4. Submission of Matters to a Vote of Security Holders.................................................6 Item 5. Other Information ..................................................................................6 Item 6. Exhibits and Reports on Form 8-K....................................................................6 Signature....................................................................................................7
PART I. FINANCIAL INFORMATION Item 1. Financial Statements PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) UNAUDITED INTERIM BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------------------------------- AS OF JUNE 30, AS OF DECEMBER 31, 2001 2000 ------------- ------------------ (IN THOUSANDS) Assets: Investments Held-to-maturity debt securities, at amortized cost $ 20,781 $ 13,697 Available-for-sale debt securities, at fair value 289,888 144,217 Policy loans 781 710 Short-term investments 72,375 Other invested assets 7,173 1,618 ------------------- ------------------- Total investments 318,623 232,617 Cash and cash equivalents 48,957 8,404 Accrued investment income 3,020 1,381 Deferred policy acquisition costs 116,409 84,842 Deferred and uncollected premiums 6,224 6,790 Other assets 11,142 1,942 Goodwill, net 298 349 Separate account assets 1,560,850 1,321,582 ------------------- ------------------- Total assets $ 2,065,523 $ 1,657,907 =================== =================== Liabilities: Policyholder deposit funds $ 325,783 $ 195,393 Policy liabilities and accruals 28,358 24,062 Deferred income taxes 11,512 3,784 Other liabilities 7,194 18,898 Separate account liabilities 1,560,850 1,321,582 ------------------- ------------------- Total liabilities 1,933,697 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 114,864 79,864 Retained earnings 13,936 11,553 Accumulated other comprehensive income 526 271 ------------------- ------------------- Total equity 131,826 94,188 ------------------- ------------------- Total liabilities and equity $ 2,065,523 $ 1,657,907 =================== =================== The accompanying notes are an integral part of these statements.
1 PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) UNAUDITED INTERIM STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND EQUITY
- --------------------------------------------------------------------------------------------------------------------- FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, ------------------------ ------------------------ 2001 2000 2001 2000 ------ ------ ------ ------ (IN THOUSANDS) Revenues Premiums $ (548) $ 392 $ 1,875 $ 3,120 Insurance and investment product fees 7,773 7,257 15,410 14,484 Net investment income 5,107 1,951 9,748 3,546 Net realized investment (losses) gains (183) 20 (288) 38 ----------- ---------- ----------- ---------- Total revenues 12,149 9,620 26,745 21,188 ----------- ---------- ----------- ---------- Benefits and expenses Policy benefits and increase in policy liabilities 6,724 5,244 12,113 10,923 Amortization of deferred policy acquisition expenses (1,914) 2,322 2,841 4,710 Other operating expenses 5,102 908 8,298 2,275 ----------- ---------- ------------ ---------- Total benefits and expenses 9,912 8,474 23,252 17,908 ----------- ---------- ------------ ---------- Income before income taxes 2,237 1,146 3,493 3,280 Income taxes 727 401 1,110 1,147 ----------- ---------- ------------ ---------- Net income 1,510 745 2,383 2,133 ----------- ---------- ------------ ---------- Other comprehensive (loss) income, net of income taxes Unrealized (losses) gains on securities (385) (26) 287 104 Reclassification adjustment for net realized losses (gains) included in net income 72 (32) ----------- ---------- ------------ ---------- Total other comprehensive (loss) income (313) (26) 255 104 ----------- ---------- ------------ ---------- Comprehensive income 1,197 719 2,638 2,237 Capital contribution 15,000 15,000 35,000 15,000 ----------- ---------- ------------ ---------- Net increase in equity 16,197 15,719 37,638 17,237 Equity, beginning of period 115,629 79,707 94,188 78,189 ----------- ---------- ------------ ---------- Equity, end of period $ 131,826 $ 95,426 $ 131,826 $ 95,426 =========== ========== ============ ========== The accompanying notes are an integral part of these statements.
2 PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, ------------------------ 2001 2000 ------ ------ (IN THOUSANDS) Cash flows from operating activities: Net income $ 2,383 $ 2,133 Adjustments to reconcile net income to net cash from operating activities: Net realized investment losses 288 (38) Amortization of goodwill 51 51 Deferred income taxes 7,590 6,721 Increase in accrued investment income (1,639) (323) Increase in deferred policy acquisition costs (32,450) (19,250) Change in other assets/other liabilities (16,263) 3,294 ---------- ---------- Net cash used for operating activities (40,040) (7,412) ---------- ---------- Cash flow from investing activities: Proceeds from sales, maturities or repayments of available-for-sale debt securities 62,799 5,240 Proceeds from maturities or repayments of held-to-maturity debt securities 588 522 Purchase of available-for-sale debt securities (206,898) (27,295) Purchase of held-to-maturity debt securities (7,590) (6,483) Change in short term investments, net 72,375 (16,842) Investment in separate accounts (6,000) Increase in policy loans (71) (100) ---------- ----------- Net cash used for investing activities (84,797) (44,958) ---------- ----------- Cash flow from financing activities: Capital contribution from parent 35,000 15,000 Increase in policyholder deposit funds, net of interest credited 130,390 40,019 ---------- ---------- Net cash provided by financing activities 165,390 55,019 ---------- ---------- Net change in cash and cash equivalents 40,553 2,649 Cash and cash equivalents, beginning of period 8,404 ---------- ---------- Cash and cash equivalents, end of period $ 48,957 $ 2,649 ========== ========== Supplemental cash flow information Income taxes paid, net - - The accompanying notes are an integral part of these statements.
3 PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) NOTES TO UNAUDITED INTERIM 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 the former Phoenix Home Life Mutual Insurance Company which was renamed Phoenix Life Insurance Company (Phoenix) as a result of the reorganization and initial public offering. See Note 3 - "Reorganization." 2. BASIS OF PRESENTATION The accompanying unaudited interim 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 six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. These unaudited interim financial statements should be read in conjunction with the financial statements of PHL Variable for the year ended December 31, 2000. 3. REORGANIZATION Under the terms of the plan of reorganization, which the board of directors of Phoenix unanimously adopted on December 18, 2000 and amended and restated on January 26, 2001, on June 25, 2001, the effective date of demutualization, Phoenix Home Life Mutual Insurance Company (the mutual company) converted from a mutual life insurance company to a stock life insurance company and became a wholly owned subsidiary of The Phoenix Companies, Inc. At that time, the mutual company changed its name to Phoenix Life Insurance Company. The Phoenix Companies, Inc. is a publicly traded company and has filed all the material required to be filed pursuant to governing law. 4. 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 June 30, 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. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PHL VARIABLE INSURANCE COMPANY (A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.) MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000 Premiums, net of reinsurance ceded, were $1.9 million for the six months ended June 30, 2001, a decrease of $1.2 million, or 39%, from $3.1 million for the comparable period in 2000. This decrease is primarily a result of shifting new term business to another subsidiary. No new premiums were billed for the six months ended June 30, 2001, compared to $7.7 million billed for the six months ended June 30, 2000. Net investment income was $9.7 million for the six months ended June 30, 2001, an increase of $6.2 million, or 177%, from $3.5 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 6.6% for the six months ended June 30, 2001 compared to 6.3% for the comparable period in 2000. Amortization of deferred policy acquisition costs was $2.8 million for the six months ended June 30, 2001, a decrease of $1.9 million, or 40%, from $4.7 million for the comparable period in 2000. This decrease is primarily due to higher estimated gross margins resulting from favorable market performance. Other operating expenses were $8.3 million for the six months ended June 30, 2001, an increase of $6.0 million, or 261%, from $2.3 million for the comparable period in 2000. This increase is due to increases in sales of our variable annuity and universal life products, offset by decreases in sales of our term products. In addition, in the fourth quarter of 2000, it was determined that PHL Variable should have been allocated more expenses from the parent company to support a growing business. As a result, operating expenses for the six months ended June 30, 2000 were low with respect to the volume of business. An adjustment was made in the fourth quarter of year 2000 to reflect a more appropriate level of expenses. 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 $15.0 million in June 2001, $20.0 million in February 2001 and $15.0 million in 2000. 5 Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. PART II. OTHER INFORMATION Item 1. Legal Proceedings. There were no significant items. Item 2. Changes in Securities and Use of Proceeds. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. Not applicable. 6 SIGNATURE 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 By /s/Simon Y. Tan --------------------------------- Simon Y. Tan President August 14, 2001 7 -----END PRIVACY-ENHANCED MESSAGE-----