ex18.htm

We have been provided a copy of PHL Variable Insurance Company’s (the “Company”) Quarterly Report on Form 10-Q for the period ended June 30, 2008. Note 2 therein describes a change in accounting principle relating to the recognition of the cost of reinsurance and a related change in accounting principle for deferred acquisition costs (“DAC”). The Company’s policy for recognizing the cost of reinsurance for certain of its long duration contracts has been changed to recognize reinsurance recoveries in the same period as the related reinsured claim, where previously such recoveries were accounted for as part of the net cost of reinsurance and amortized over the life of the underlying contracts in relation to estimated gross profits (“EGP’s”). In conjunction with this change, the Company has also changed its policy for determining EGP’s for such contracts to include the effects of reinsurance, where previously these effects had not been included. It should be understood that the preferability of one acceptable method of accounting over another for these items has not been addressed in any authoritative accounting literature, and in expressing our concurrence below we have relied on management’s determination that these changes in accounting principles are preferable. Based on our reading of management’s stated reasons and justifications for these changes in accounting principles in the Form 10-Q, and our discussions with management as to their judgment about the relevant business planning factors relating to the changes, we concur with management that such changes represent, in the Company’s circumstances, the adoption of preferable accounting principles in conformity with Statement of Financial Accounting Standard No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3.