-----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, DVvKTyXMRVF7Vjd51QnEpOlz4AUHY8p4CW2YucmQHX2qV7kqwu09vAAg7540g68r tr3I3ty5r3G7uKmPKrjuIw== 0000949377-03-000409.txt : 20030508 0000949377-03-000409.hdr.sgml : 20030508 20030508090217 ACCESSION NUMBER: 0000949377-03-000409 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030508 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX COMPANIES INC/DE CENTRAL INDEX KEY: 0001129633 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 060493340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16517 FILM NUMBER: 03687221 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 061025056 BUSINESS PHONE: 8604035000 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 06012 8-K 1 pnx60739-8k.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) Of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): May 8, 2003 THE PHOENIX COMPANIES, INC. (Exact Name of Registrant as Specified in Its Charter)
Delaware 1-16517 06-0493340 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer I.D. Number) Incorporation)
One American Row, Hartford, CT 06102-5056 (Address of Principal Executive Offices) (Zip Code) (860) 403-5000 (Registrant's Telephone Number, including area code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Not applicable. (b) Not applicable. (c) Exhibits. The following exhibits are furnished herewith: Exhibit 99.1 News release of The Phoenix Companies, Inc. dated May 8, 2003, announcing the company's financial results for the quarter ended March 31, 2003 Exhibit 99.2 The Phoenix Companies, Inc. Statistical Supplement for the quarter ended March 31, 2003 ITEM 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION). The following information contained in Item 9 is being furnished under Item 12 - Results of Operations and Financial Condition in accordance with the interim guidance issued by the SEC in Release No. 33-8216. Such information, including the exhibits attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934. On May 8, 2003, The Phoenix Companies, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2003. The release is furnished as Exhibit 99.1 hereto. Additionally, on May 8, 2003, the company made available on its website financial information contained in its Statistical Supplement for the quarter ended March 31, 2003. This supplement is furnished as Exhibit 99.2 hereto. 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 hereunto duly authorized. THE PHOENIX COMPANIES, INC. Date: May 8, 2003 By: /s/ Carole A. Masters ---------------------------------------- Name: Carole A. Masters Title: Vice President EX-99.1 3 pnx60739ex99-1.txt NEWS RELEASE EXHIBIT 99.1 THE PHOENIX COMPANIES, INC. NEWS RELEASE EXHIBIT 99.1 [LOGO] PHOENIX The Phoenix Companies, Inc. N E W S R E L E A S E One American Row PO Box 5056 Hartford CT 06102-5056 PhoenixWealthManagement.com --------------------------- FOR IMMEDIATE RELEASE CONTACTS: MEDIA RELATIONS INVESTOR RELATIONS --------------- ------------------ ALICE S. ERICSON PETER A. HOFMANN 860-403-5946 860-403-7100 PHOENIX REPORTS FIRST QUARTER 2003 RESULTS HARTFORD, CONN., MAY 8, 2003 -The Phoenix Companies, Inc. (NYSE: PNX) today reported first quarter 2003 net income of $3.2 million or $0.03 per share, compared with a net loss of $101.4 million, or a $1.00 loss per share, in the first quarter of 2002. The company also reported total segment income in the first quarter of $16.8 million, or $0.18 per share, compared with total segment income of $12.8 million, or $0.13 per share, in the first quarter of 2002.
EARNINGS SUMMARY FIRST QUARTER FIRST QUARTER 2003 2002 -------------------------- -------------------------- IN PER IN PER MILLIONS SHARE MILLIONS SHARE ----------- ---------- ------------ ---------- Total Segment Income $ 16.8 $0.18 $ 12.8 $ 0.13 Net Realized Investment Gains (Losses) (12.4) (0.13) 1.6 0.02 Management Restructuring Charge (2.5) (0.03) - - Deferred Policy Acquisition Cost Adjustment - - 15.1 0.15 Demutualization Expense - - (0.6) (0.01) Other Income 1.3 0.01 - - Cumulative Effect of Accounting Change - - (130.3) (1.29) ----------- ---------- ------------ ---------- Net Income (Loss) $ 3.2 $0.03 $(101.4) $(1.00) =========== ========== ============ ==========
An explanation of financial measures is provided at the end of this release. "We are encouraged by the progress we have made and the emerging results, particularly given the continued market weakness in the first quarter. We also are pleased to see an upturn in the equity markets since the end of the quarter. With a lower expense base, sharper business focus and a committed senior management team in place, Phoenix is in an excellent position to benefit from improved market conditions and more positive investor sentiment," said Dona D. Young, chairman, president and chief executive officer. Mrs. Young added, "We are on schedule to deliver on each of the four key priorities announced in the fourth quarter to enhance Phoenix's financial performance and position the company for consistent earnings growth. With the addition of Sue Collins to lead the life and annuity business and Dan Geraci to lead the asset management business, we now have the management team in place to further accelerate our progress in the months ahead." Since the start of the year, the company: o Completed the foundation to build a performance culture to drive shareholder value by: - aligning company, department and individual goals and establishing metrics to gauge progress; and - redesigning and rolling out new short- and long-term incentive compensation plans directly linked to achieving those goals; o Continued its effort to lower expenses permanently by: - remaining on track to realize $34 million in annualized savings by the end of 2003; and - identifying further reductions of $5 million in annualized expenses to be achieved by the end of 2004 through more effective vendor management. The company now expects to achieve annualized reductions of $45 million by year-end 2006, including $6 million from a comprehensive facilities plan; o Intensified its focus on core wealth management products and services by: - exiting its operations in Japan and certain of its operations in the U.K.; - announcing the combination of two of its investment affiliates, Capital West Asset Management, LLC, and Duff & Phelps Investment Management Co. under common leadership; and - buying the remaining shares of PFG Holdings, Inc., which specializes in private placement insurance for the high end of the affluent and high-net-worth market, on May 1. Phoenix had been the majority owner of PFG since 1999; o Enhanced capital and resource allocation strategies by: - mitigating potential earnings volatility through the sale of a portion of its venture capital portfolio to third parties and Phoenix Life Insurance Company's closed block; and - completing a review of securitization of the residual assets associated with the company's closed block. The company decided not to proceed with the securitization at this time, but it completed the groundwork and developed a flexible structure that will allow it to use securitization to raise capital if there is a compelling use of proceeds that significantly enhances the position of the life company or produces higher earnings. REGULATION G As a consequence of the SEC's Regulation G, which became effective on March 29, and to provide greater clarity in its financial reporting, Phoenix is no longer reporting non-GAAP financial measures that exclude results of its Venture Capital segment and amortization of identified intangible assets. The company is now presenting operating results on a segment basis, with total segment income representing net income adjusted for realized gains and losses and for certain other items that are not indicative of the ongoing operations of the business segments. In addition, the company is suspending discussion of its return on equity target. The target continues in effect for internal management purposes. SEGMENT RESULTS Phoenix has two operating segments, "Life and Annuity" and "Asset Management", and two reporting segments, "Venture Capital" and "Corporate and Other". The Corporate and Other segment includes unallocated capital, interest expense and other expenses, as well as certain businesses not of sufficient scale to report independently.
SEGMENT INCOME FIRST FIRST (in millions) QUARTER QUARTER 2003 2002 CHANGE -------------- --------------- -------------- Life Insurance $ 22.7 $ 25.6 $ (2.9) Annuities (5.3) 2.6 (7.9) -------------- --------------- -------------- Life and Annuity Segment 17.4 28.2 (10.8) Asset Management Segment (4.6) 1.9 (6.5) Venture Capital Segment 23.9 (5.0) 28.9 Corporate and Other Segment (12.6) (8.7) (3.9) -------------- --------------- -------------- Total Segment Income, before Income Taxes 24.1 16.4 7.7 Applicable Income Taxes 7.3 3.6 3.7 -------------- --------------- -------------- Total Segment Income $16.8 $12.8 $4.0 ============== =============== ==============
LIFE AND ANNUITY Operations and Earnings - This segment reported income before income taxes of $17.4 million in the first quarter of 2003, compared with $28.2 million in the prior year's first quarter. The decrease is primarily attributable to a $7.9 million decline in the annuity product line. The segment result includes income of $22.7 million from the life insurance business, compared with life insurance income of $25.6 million in the first quarter of 2002. The prior year's results included the release of a $2.9 million reserve relating to a policyholder tax contingency. While overall mortality and persistency in life insurance remained strong, universal life experienced negative mortality compared to prior quarters. Higher net reinsurance costs and higher amortization of deferred acquisition costs also affected the result. Total life insurance sales (annualized premium and single premium) were $49.8 million in the first quarter of 2003, compared with $56.5 million in the first quarter of 2002, which included a single, $10.4 million annualized premium, multi-life case. Sales of universal life insurance and private placement insurance rose over the year-ago quarter, while sales of variable life products declined. Annualized premium was $27.7 million in the first quarter of 2003, compared with $37.6 million in the first quarter of 2002. Average face amounts for wholesaled new business passed the $1 million mark for the first time and continued to exceed $1 million for combined wholesaled and private placement policies. New business activity remains strong, with total applications submitted to underwriting during the quarter up 41 percent compared with the year-ago quarter. The segment result includes a loss of $5.3 million from the annuity business, compared with income of $2.6 million in the first quarter of 2002. The decrease is primarily attributable to lower fees and higher amortization of deferred acquisition costs resulting from spread compression and higher surrenders. The company has amended its variable annuity contracts to limit deposits in guaranteed interest accounts for new variable annuity sales effective April 1, 2003. In addition, the company plans to introduce additional product features this summer to mitigate the financial impact of its discontinued Retirement Planner's Edge (RPE) variable annuity. Annuity deposits in the first quarter of 2003 were $432.1 million, compared with $575.4 million in the first quarter of 2002. The company has made significant progress in replacing sales of RPE with other products. Sales of variable annuities, excluding RPE, more than doubled from a year ago, and fixed annuity sales were also strong this quarter, due primarily to increased sales at community and regional banks. Closed Block - Phoenix Life's closed block had continued strong performance in the quarter. Excluding unrealized gains, the policyholder dividend obligation (PDO), which represents accumulated earnings in the closed block, grew by $11.5 million in the current quarter to $80.6 million at March 31, 2003; the PDO was $32.2 million at March 31, 2002. The increase in the current quarter was driven by significantly improved persistency and by a $5 million pre-tax venture capital partnership realized gain. ASSET MANAGEMENT Reflecting the weak financial markets in the first quarter, this segment reported a loss before income taxes of $4.6 million, compared with income before income taxes of $1.9 million in the prior year's first quarter. The result includes amortization of identified intangible assets of $8.4 million in the first quarter of 2003 and $9.6 million in the first quarter of 2002. Management has responded to the lingering market pressures by continuing to seek ways to gain efficiencies and improve margins. Operating expenses declined 12 percent this quarter, but the reductions were not sufficient to offset the decrease in revenues. The earnings decline is largely attributable to lower revenues on assets under management and lower earnings from Aberdeen Asset Management, PLC, in which the company has an equity ownership interest. This quarter the company began to record interest income related to the debt of Aberdeen in the Life and Annuity segment. Assets under management for the segment on March 31, 2003 were $52.9 billion, compared with $60.7 billion on March 31, 2002. Net flows for assets under management were negative $152.3 million in the first quarter of 2003, compared with positive net flows of $399.5 million in the first quarter of 2002, due primarily to lower managed account inflows. Total inflows were $1.7 billion in the first quarter of 2003, compared with $2.3 billion in the prior year's first quarter, reflecting uncertain market conditions and decreased demand for equity products. Total outflows were $1.8 billion in the first quarter of 2003, about even with the $1.9 billion in first quarter 2002 outflows and a third consecutive quarterly improvement. VENTURE CAPITAL The Venture Capital segment had income before income taxes of $23.9 million in the first quarter of 2003, compared with a $5.0 million loss before income taxes in the prior year's first quarter. The improvement was driven by the effect of the reconciliation to the partnerships' audited fourth quarter financials. The Venture Capital segment excludes venture capital investments held by Phoenix Life's closed block and represents approximately 1 percent of the $17.2 billion of invested assets and cash in the general account portfolio. Total distributions by partnerships in the first quarter of 2003 were $3.0 million, compared with $9.4 million in the first quarter of 2002. In addition, the segment received proceeds of $52.2 million from the sale of certain partnership interests to third parties and the transfer of an equal amount to Phoenix Life's closed block. The sale and transfer resulted in a $13.8 million pre-tax realized loss in the first quarter as the reconciliations to the partnerships' audited financial statements were recorded as investment income. Capital contributions to partnerships, pursuant to existing commitments, were $11.6 million in the first quarter of 2003, compared with $13.0 million in the first quarter of 2002. The company made no new commitments to venture capital during the quarter. CORPORATE AND OTHER In the first quarter of 2003, the Corporate and Other segment had a $12.6 million loss before income taxes, compared with a loss before income taxes of $8.7 million in the prior year's first quarter. The higher loss primarily reflects contract adjustment payments on stock purchase contracts related to the fourth quarter 2002 monetization of a significant portion of the company's holdings in Hilb, Rogal and Hamilton Company, as well as increased interest expense related to Phoenix's fourth quarter 2002 equity units offering. INVESTMENT PORTFOLIO The company reported first quarter 2003 net realized investment losses of $12.4 million, compared with net gains of $1.6 million in the first quarter of 2002. This includes after-tax realized losses of $8.9 million ($13.8 million pre-tax) related to the venture capital transactions discussed above. Bond impairments in the first quarter totaled $25.6 million, representing 0.2 percent of the bond portfolio, and included a write-down related to HealthSouth ($8 million) and a further write-down related to National Century Financial ($3 million). While default levels in the credit markets remained high, the company continued to benefit from a very high level of diversification by sector, industry and issuer. During the quarter, the company reduced its exposure to emerging markets debt, a sector that produced exceptionally strong performance in the past year. This reduction contributed to an overall decline in its below investment grade exposure to 8.4 percent of debt securities at March 31, 2003 from 9.0 percent at December 31, 2002. CONFERENCE CALL The Phoenix Companies, Inc. will host a conference call today at 11:00 a.m. Eastern time to discuss with the investment community Phoenix's first quarter financial results. The conference call will be broadcast live over the Internet at www.PhoenixWealthManagement.com in the Investor Relations section. To listen to the live call, please go to the Web site at least fifteen minutes prior to register, download and install any necessary audio software. The call can also be accessed by telephone at 1-973-321-1020. A replay of the call will be available through May 22, 2003 by telephone at 1-973-341-3080 (passcode 3862727) and on Phoenix's Web site, www.PhoenixWealthManagement.com in the Investor Relations section. The Phoenix Companies, Inc. is a leading provider of wealth management products and services to individuals and institutions. Through a variety of advisors and financial services firms, Phoenix helps the affluent and high net worth accumulate, preserve and transfer their wealth with an innovative portfolio of life insurance, annuity and investment management products and services. Phoenix has corporate offices in Hartford, Conn. FORWARD-LOOKING STATEMENT This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company intends these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These include statements relating to trends in, or representing management's beliefs about, the company's future strategies, operations and financial results, as well as other statements including words such as "anticipate", "believe," "plan," "estimate," "expect," "intend," "may," "should" and other similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning trends and future developments and their potential effects on the company. They are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: (i) changes in general economic conditions, including changes in interest and currency exchange rates and the performance of financial markets; (ii) heightened competition, including with respect to pricing, entry of new competitors and the development of new products and services by new and existing competitors; (iii) the company's primary reliance, as a holding company, on dividends and other payments from its subsidiaries to meet debt payment obligations, particularly since the company's insurance subsidiaries' ability to pay dividends is subject to regulatory restrictions; (iv) regulatory, accounting or tax changes that may affect the cost of, or demand for, the products or services of the company's subsidiaries; (v) downgrades in the claims paying ability or financial strength ratings of the company's subsidiaries or in its credit ratings; (vi) discrepancies between actual claims experience and assumptions used in setting prices for the products of insurance subsidiaries and establishing the liabilities of such subsidiaries for future policy benefits and claims relating to such products; (vii) movements in the equity markets that affect our investment results, including those from venture capital, the fees we earn from assets under management and the demand for our variable products; (viii) the company's success in achieving planned expense reductions; and (ix) other risks and uncertainties described in any of the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. FINANCIAL HIGHLIGHTS (UNAUDITED)
FIRST FOURTH FIRST QUARTER QUARTER QUARTER 2003 2002 2002 ------------- ------------- ------------- INCOME STATEMENT SUMMARY ($ IN MILLIONS) Revenues $ 643.4 $ 611.8 $ 593.9 Total Segment Income (1) 16.8 11.3 12.8 Net Income (Loss) 3.2 (14.5) (101.4) - ----------------------------------------------------------------------------- EARNINGS PER SHARE Weighted average shares outstanding (in thousands) (2) 94,046 94,152 101,195 ------------- ------------- ------------- Basic and Diluted ----------------- Total Segment Income Per Share $ 0.18 $ 0.12 $ 0.13 Net Income (Loss) Per Share $ 0.03 $ (0.15) $ (1.00) - ----------------------------------------------------------------------------- BALANCE SHEET SUMMARY ($ IN BILLIONS, EXCEPT PER SHARE DATA) Invested Assets $ 17.2 $ 16.8 $ 14.5 Separate Account and Investment Trust Assets 6.0 5.8 5.7 Total Assets 25.9 25.2 22.9 Total Stockholders' Equity 2.0 2.0 2.2 Common and Equivalent Shares outstanding (in thousands) 95,056 94,617 100,054 ------------- ------------- ------------- Book Value Per Share $ 21.20 $ 21.47 $ 22.17 Assets Under Management $ 63.1 $ 63.8 $ 69.8
(1) In addition to net income presented in accordance with Generally Accepted Accounting Principles ("GAAP"), Phoenix considers total segment income in evaluating its financial performance. See the reconciliation of these measures below. Total segment income is an internal performance measure used by Phoenix in the management of its operations, including it compensation plans and budgeting and planning processes. In addition, management believes that total segment income provides additional insight into the underlying trends in Phoenix's operations. Total segment income represents income from continuing operations, (which is a GAAP measure) before realized gains and losses and certain other items. * Net realized investment gains and losses are excluded from total segment income because their size and timing are frequently subject to our discretion. * Certain other items which result from a business restructuring, a change in regulatory requirements, or other unusual circumstances are excluded from total segment income because we believe they are not indicative of overall operating trends and are items that management believes are infrequent and material. Because certain of these items are excluded based on our discretion and involve judgments by management, inconsistencies in their determination may exist and total segment income may differ from similarly titled measures of other companies. (2) For diluted total segment income and net income per share amounts, weighted average common and equivalent shares outstanding were 95,014, 94,725 and 101,195 for the first quarter 2003, fourth quarter 2002 and first quarter 2002, respectively. Diluted total segment and net income per share amounts are unchanged from the basic total segment and net income per share amounts from the addition of the restricted stock units outstanding to weighted average shares outstanding. CONSOLIDATED BALANCE SHEET March 31, 2003 and December 31, 2002 (in millions, except share data)
2003 2002 ------------- ------------- ASSETS: Available-for-sale debt securities, at fair value $ 12,818.4 $ 11,894.1 Equity securities, at fair value 361.1 391.2 Mortgage loans, at unpaid principal balances 407.3 468.8 Venture capital partnerships, at equity in net assets 227.4 228.6 Affiliate equity securities, at cost plus equity in earnings 131.3 134.7 Policy loans, at unpaid principal balances 2,202.9 2,195.9 Other investments 421.5 398.9 ------------- ------------- Total investments 16,569.9 15,712.2 Cash and cash equivalents 613.0 1,058.5 Accrued investment income 212.1 192.3 Receivables 276.3 217.3 Deferred policy acquisition costs 1,270.0 1,234.1 Deferred income taxes 66.0 41.4 Goodwill and other intangible assets 748.3 762.0 Other general account assets 186.2 225.2 Separate account and investment trust assets 5,990.7 5,793.1 ------------- ------------- Total assets $ 25,932.5 $ 25,236.1 ============= ============= LIABILITIES: Policy liabilities and accruals $ 12,798.4 $ 12,680.0 Policyholder deposit funds 3,679.0 3,395.7 Stock purchase contracts 118.5 137.6 Indebtedness 644.0 644.3 Other general account liabilities 680.0 542.9 Separate account and investment trust liabilities 5,990.7 5,793.1 ------------- ------------- Total liabilities 23,910.6 23,193.6 ============= ============= MINORITY INTEREST: Minority interest in net assets of subsidiaries 6.4 10.8 ------------- ------------- STOCKHOLDERS' EQUITY: Common stock, $0.01 par value, 106,375,583 and 106,374,510 shares issued 1.0 1.0 Additional paid-in capital 2,427.1 2,424.4 Deferred compensation on restricted stock units (2.8) - Accumulated deficit (289.4) (292.6) Accumulated other comprehensive income 74.6 94.6 Treasury stock, at cost: 12,287,667 and 12,330,000 shares (195.0) (195.7) ------------- ------------- Total stockholders' equity 2,015.5 2,031.7 ------------- ------------- Total liabilities, minority interest and stockholders' equity $ 25,932.5 $ 25,236.1 ============= =============
Certain reclassifications have been made to the 2002 financial statements to conform with the March 31, 2003 presentation. CONSOLIDATED STATEMENT OF INCOME (IN MILLIONS)
FIRST FOURTH FIRST QUARTER QUARTER QUARTER 2003 2002 2002 ------------- ------------- ------------- REVENUES: Premiums $ 246.1 $ 268.1 $ 257.4 Insurance and investment product fees 132.9 137.7 140.3 Net investment income 276.7 239.5 231.2 Net realized investment losses (12.3) (33.5) (35.0) ------------- ------------- ------------- Total revenues 643.4 611.8 593.9 ------------- ------------- ------------- BENEFITS AND EXPENSES: Policy benefits 350.8 365.4 333.9 Policyholder dividends 116.5 107.4 74.2 Policy acquisition cost amortization 28.0 17.6 (10.9) Intangible asset amortization 8.4 7.7 8.1 Interest expense 9.8 8.3 7.7 Demutualization expenses - .1 .9 Other operating expenses 126.5 133.8 136.0 ------------- ------------- ------------- Total benefits and expenses 640.0 640.3 549.9 ------------- ------------- ------------- Income (loss) before income taxes and minority interest 3.4 (28.5) 44.0 Applicable income taxes (benefit) (2.6) (16.7) 12.3 ------------- ------------- ------------- Income (loss) before minority interest 6.0 (11.8) 31.7 Minority interest in net income of subsidiaries 2.8 2.7 2.8 ------------- ------------- ------------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 3.2 (14.5) 28.9 Cumulative effect of accounting change for goodwill and other intangible assets - - (130.3) ------------- ------------- ------------- NET INCOME (LOSS) $ 3.2 $ (14.5) $ (101.4) ============= ============= =============
Certain reclassifications have been made to the 2002 financial statements to conform with the 2003 presentation. RECONCILIATION OF INCOME MEASURES (IN MILLIONS)
FIRST FOURTH FIRST QUARTER QUARTER QUARTER 2003 2002 2002 ----------- ----------- ----------- SEGMENT INCOME Life insurance $ 22.7 $ 29.5 $ 25.6 Annuities (5.3) (5.0) 2.6 ----------- ----------- ----------- Life and annuity segment 17.4 24.5 28.2 Asset management segment (4.6) 2.5 1.9 Venture capital segment 23.9 (2.4) (5.0) Corporate and other segment (12.6) (16.6) (8.7) ----------- ----------- ----------- Segment income, before income taxes 24.1 8.0 16.4 Applicable income taxes (benefit) 7.3 (3.3) 3.6 ----------- ----------- ----------- TOTAL SEGMENT INCOME 16.8 11.3 12.8 Realized gains (losses), after income taxes (12.4) (22.6) 1.6 Management restructuring costs (2.5) (3.1) - Deferred policy acquisition cost adjustment - - 15.1 Demutualization related items, net - (0.1) (0.6) Other income 1.3 - - Cumulative effect of accounting change - - (130.3) ----------- ----------- ----------- NET INCOME (LOSS) $ 3.2 $ (14.5) $ (101.4) =========== =========== ===========
EX-99.2 4 pnx60739ex99-2.txt FINANCIAL SUPPLEMENT EXHIBIT 99.2 THE PHOENIX COMPANIES, INC. FINANCIAL SUPPLEMENT March 31, 2003 EXHIBIT 99.2 The Phoenix Companies, Inc. FINANCIAL SUPPLEMENT March 31, 2003 PNX LISTED NYSE [LOGO] PHOENIX WEALTH MANAGEMENT(R) THE PHOENIX COMPANIES, INC. FINANCIAL SUPPLEMENT WALL STREET COVERAGE FIRM ANALYST A.G. Edwards J. Jeffrey Hopson Deutsche Bank Vanessa Wilson Dowling & Partners Len Savage Keefe Bruyette & Woods Jukka Lipponen Langen McAlleney Robert Glasspiegel Legg Mason Thomas G. Gallagher Lehman Brothers E. Stewart Johnson Merrill Lynch Edward A. Spehar Morgan Stanley Nigel Dally UBS Warburg Andrew Kligerman SHAREHOLDER INFORMATION SECURITY LISTINGS The common stock of The Phoenix Companies, Inc. is traded on the New York Stock Exchange (NYSE) under the symbol "PNX." Our 7.25 percent equity units are traded on the NYSE under the symbol "PNX PrA." Our 7.45 percent bond is traded on the NYSE under the symbol "PFX." TRANSFER AGENT AND REGISTRAR For information or assistance regarding your account, please contact our transfer agent and registrar: EquiServe Trust Company, N.A. at: Phoenix Shareholder Services C/O EquiServe Trust Company, P.O. Box 43076, Providence, RI 02940-3076 Toll-free: 1-800-490-4258 TTY 1-800-336-9449 Fax: 1-781-575-3583, e-mail: phoenix@equiserve.com Web: phoenix.equiserve.com FOR MORE INFORMATION To receive additional information, including financial supplements and Securities and Exchange Commission filings along with access to other shareholder services, visit the Investor Relations Section on our Web site at PhoenixWealthManagement.com or contact our Investor Relations Department at: The Phoenix Companies, Inc. Investor Relations One American Row P.O. Box 5056, Hartford, CT 06102-5056 Phone: 1-860-403-7100 Fax: 1-860-403-7880 e-mail: pnx.ir@PhoenixWealthManagement.com For more information on our products and services, call your Phoenix representative or visit our Web site at PhoenixWealthManagement.com. In addition to net income presented in accordance with Generally Accepted Accounting Principles ("GAAP"), Phoenix considers total segment income in evaluating its financial performance. See page 2, Income Statement, for a reconciliation of these measures. Total segment income is an internal performance measure used by Phoenix in the management of its operations, including its compensation plans and budgeting and planning processes. In addition, management believes that total segment income provides additional insight into the underlying trends in Phoenix's operations. Total segment income represents income from continuing operations, (which is a GAAP measure) before realized gains and losses and certain other items. * Net realized investment gains and losses are excluded from total segment income because their size and timing are frequently subject to our discretion. * Certain other items which result from a business restructuring, a change in regulatory requirements, or other unusual circumstances are excluded from total segment income because we believe they are not indicative of overall operating trends and are items that management believes are infrequent and material. Because certain of these items are excluded based on our discretion and involve judgments by management, inconsistencies in their determination may exist and total segment income may differ from similarly titled measures of other companies. THE PHOENIX COMPANIES, INC. FINANCIAL SUPPLEMENT MARCH 2003 (UNAUDITED) TABLE OF CONTENTS FINANCIAL HIGHLIGHTS 1 INCOME STATEMENT 2 LIFE AND ANNUITY EARNINGS SUMMARY 4 VARIABLE UNIVERSAL LIFE 6 UNIVERSAL LIFE / INTEREST SENSITIVE 8 LIFE SALES HIGHLIGHTS 10 ANNUITIES 12 ANNUITIES - NET FLOWS AND FUNDS UNDER MANAGEMENT 14 SUPPLEMENTARY LIFE AND ANNUITY INFORMATION 16 ASSET MANAGEMENT EARNINGS 18 ASSET MANAGEMENT - ASSETS UNDER MANAGEMENT 20 VENTURE CAPITAL SEGMENT 22 CORPORATE AND OTHER 24 CONSOLIDATED STATEMENT OF INCOME - GAAP FORMAT 26 CONSOLIDATING FIRST QUARTER 2003 INCOME STATEMENT 28 CONDENSED CONSOLIDATED BALANCE SHEET 29 INVESTMENT PORTFOLIO SUMMARY 30 REALIZED INVESTMENT GAINS AND LOSSES 31 THE PHOENIX COMPANIES, INC. FINANCIAL HIGHLIGHTS First Quarter 2003 (unaudited) ($ in millions, except per share data)
BALANCE SHEET INFORMATION December 31, March ---------------------------------------------------------------- 2003 2002 2001 2000 1999 -------------- -------------- --------------- -------------- --------------- Invested Assets $ 17,182.9 $ 16,770.7 $ 14,420.4 $ 12,770.6 $ 11,776.8 Separate Account and Investment Trust Assets 5,990.7 5,793.1 5,570.0 5,376.6 5,923.9 Total Assets 25,932.5 25,236.1 22,525.4 20,313.2 20,287.0 Indebtedness 644.0 644.3 599.3 425.1 499.4 Total Stockholders' Equity 2,015.5 2,031.7 2,395.7 1,840.9 1,756.0 Debt to Total Capitalization 24.2% 24.1% 20.0% 18.8% 22.1% Debt (Excluding Equity Units) to Total Capitalization 18.4% 18.3% Book Value Per Share (1) $ 21.20 $ 21.47 $ 23.51 $ 24.75 $ 23.94 Book Value Per Share, excluding SFAS 115 adjustment $ 20.42 $ 20.44 $ 22.72 $ 24.51 $ 23.70 Period-end Common and Equivalent Shares Outstanding (2) 95.1 94.6 101.9 105.0 105.0 ============== - ------------------------------------------------------------------ Indebtedness: -------------- Surplus Notes 175.0 175.0 175.0 175.0 175.0 Equity Units 153.7 153.7 Senior Unsecured Bonds 300.0 300.0 300.0 Interest Rate Swap 15.3 15.6 (.8) Bank Credit Facility 125.1 230.0 260.3 Other 20.1 64.1 -------------- -------------- --------------- -------------- --------------- Total Indebtedness 644.0 644.3 599.3 425.1 499.4 ============== ============== =============== ============== =============== - ------------------------------------------------------------------ -------------- STATUTORY FINANCIAL DATA FOR PHOENIX LIFE INSURANCE COMPANY (3) Capital and Surplus $ 831.3 $ 861.0 $ 1,149.8 $ 1,322.8 $ 1,054.1 Asset Valuation Reserve (AVR) 181.5 147.0 221.5 559.7 368.7 -------------- -------------- --------------- -------------- --------------- Capital, Surplus and AVR $ 1,012.8 $ 1,008.0 $ 1,371.3 $ 1,882.5 $ 1,422.8 ============== ============== =============== ============== =============== Policyholder Dividend Liability $ 562.2 $ 547.3 $ 167.2 Interest Maintenance Reserve $ (14.0) (2.0) $ 11.6 $ (1.4) $ 24.4 Statutory Gain From Operations $ 17.0 $ 44.5 $ 119.9 $ 266.4 $ 150.2 Statutory Net Income (Loss) $ (18.0) $ 7.5 $ (13.9) $ 266.1 $ 131.3 --------------
(1) Book value per share prior to June 30, 2001 is pro forma and assumes net proceeds of $807.9 million, payout of cash and policy credits to policyholders of $41.4 million and estimated remaining expenses of $9.0 million and 105.0 million shares outstanding. (2) Shares outstanding through 2000 are pro forma due to IPO in 2001. (3) Phoenix Life Insurance Company is required to file statements with state regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities. March 2003 amounts are preliminary. 1 THE PHOENIX COMPANIES, INC. FINANCIAL HIGHLIGHTS First Quarter 2003 (unaudited) ($ in millions, except per share data)
INCOME STATEMENT SUMMARY March December 31, --------------------------- ------------------------------------------------------ 2003 2002 2002 2001 2000 1999 ------------ ------------- ------------ ------------ ------------ ------------ SEGMENT INCOME Life Insurance $ 22.7 $ 25.6 $ 99.3 $ 68.6 $ 16.2 $ 41.4 Annuities (5.3) 2.6 (20.6) 10.9 4.2 30.8 ------------ ------------- ------------ ------------ ------------ ------------ Life and Annuity Segment 17.4 28.2 78.7 79.5 20.4 72.2 Asset Management Segment (4.6) 1.9 (60.0) (.2) 71.0 65.7 Venture Capital Segment 23.9 (5.0) (59.3) (159.6) 277.3 139.9 Corporate and Other Segment (12.6) (8.7) (49.8) (43.2) (70.4) (55.5) ------------ ------------- ------------ ------------ ------------ ------------ Total Segment Income (Loss), before income taxes 24.1 16.4 (90.4) (123.5) 298.3 222.3 Applicable Income Taxes (Benefit) 7.3 3.6 (28.7) (46.3) 99.1 76.1 ------------ ------------- ------------ ------------ ------------ ------------ TOTAL SEGMENT OPERATING INCOME (LOSS) 16.8 12.8 (61.7) (77.2) 199.2 146.2 ADJUSTMENTS, AFTER INCOME TAXES: Realized Gains (Losses), after income taxes (12.4) 1.6 (39.3) (43.0) 62.0 49.2 Management Restructuring and Early Retirement Costs (2.5) (28.5) (15.5) (17.6) Deferred Policy Acquisition Cost Adjustments 15.1 15.1 (141.8) Expenses of Purchase of PXP Minority Interest (52.8) Demutualization Related Items, Net (.6) (1.3) (2.9) (24.5) (11.2) Other income 1.3 5.3 (.1) (4.5) Discontinued Operations (11.5) (72.9) Cumulative Effect of Accounting Changes (130.3) (130.3) (16.6) ------------ ------------- ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ 3.2 $ (101.4) $ (246.0) $ (202.7) $ 83.3 $ 89.2 ============ ============= ============ ============ ============ ============ - ----------------------------------------------- EARNINGS PER SHARE Basic Weighted-Average Shares Outstanding (1) 94.0 101.2 97.9 104.6 104.6 104.6 ------------ ------------- ------------ ------------ ------------ ------------ Total Segment Income (Loss) Per Share $ 0.18 $ 0.13 $ (0.63) $ (0.74) $ 1.90 $ 1.40 Net Income (Loss) Per Share $ 0.03 $ (1.00) $ (2.51) $ (1.94) $ 0.80 $ 0.85 ------------ Diluted ------------ Weighted-Average Shares Outstanding (1) 95.0 101.2 98.0 104.6 104.6 104.6 ------------ ------------- ------------ ------------ ------------ ------------ Total Segment Income (Loss) Per Share $ 0.18 $ 0.13 $ (0.63) $ (0.74) $ 1.90 $ 1.40 Net Income (Loss) Per Share $ 0.03 $ (1.00) $ (2.51) $ (1.94) $ 0.80 $ 0.85 ------------
(1) Weighted-average shares outstanding through 2001 are pro forma due to Initial Public Offering (IPO) in 2001. 2 THE PHOENIX COMPANIES, INC. FINANCIAL HIGHLIGHTS First Quarter 2003 (unaudited) ($ in millions, except per share data)
INCOME STATEMENT SUMMARY 2002 March ------------------------------------------------------------ Quarters ended March June September December 2003 ------------ ------------- ------------- ------------ ------------ SEGMENT INCOME Life Insurance $ 25.6 $ 27.2 $ 17.0 $ 29.5 $ 22.7 Annuities 2.6 .7 (18.9) (5.0) (5.3) ------------ ------------- ------------- ------------ ------------ Life and Annuity Segment 28.2 27.9 (1.9) 24.5 17.4 Asset Management Segment 1.9 .8 (65.2) 2.5 (4.6) Venture Capital Segment (5.0) (29.9) (22.0) (2.4) 23.9 Corporate and Other Segment (8.7) (12.0) (12.6) (16.6) (12.6) ------------ ------------- ------------- ------------ ------------ Total Segment Income (Loss), before income taxes 16.4 (13.2) (101.7) 8.0 24.1 Applicable Income Taxes (Benefit) 3.6 (9.1) (19.9) (3.3) 7.3 ------------ ------------- ------------- ------------ ------------ TOTAL SEGMENT INCOME (LOSS) 12.8 (4.1) (81.8) 11.3 16.8 ADJUSTMENTS, AFTER INCOME TAXES: Realized Gains (Losses), after income taxes 1.6 (10.7) (7.6) (22.6) (12.4) Management Restructuring and Early Retirement Costs (21.8) (3.6) (3.1) (2.5) Deferred Policy Acquisition Cost Adjustments 15.1 Demutualization Related Items, Net (.6) (.6) (.1) Other income 1.3 Cumulative Effect of Accounting Changes (130.3) ------------ ------------- ------------- ------------ ------------ NET INCOME (LOSS) $(101.4) $(37.2) $(93.0) $(14.5) $ 3.2 ============ ============= ============= ============ ============ - ----------------------------------------------- EARNINGS PER SHARE Basic Weighted-Average Shares Outstanding (1) 101.2 99.5 96.6 94.2 94.0 ------------ ------------- ------------- ------------ ------------ Total Segment Income (Loss) Per Share $ 0.13 $(0.04) $(0.85) $ 0.12 $ 0.18 Net Income (Loss) Per Share $(1.00) $(0.37) $(0.96) $(0.15) $ 0.03 ------------ Diluted ------------ Weighted-Average Shares Outstanding (1) 101.2 99.5 96.6 94.7 95.0 ------------ ------------- ------------- ------------ ------------ Total Segment Income (Loss) Per Share $ 0.13 $(0.04) $(0.85) $ 0.12 $ 0.18 Net Income (Loss) Per Share $(1.00) $(0.37) $(0.96) $(0.15) $ 0.03 ------------
(1) Weighted-average shares outstanding through 2001 are pro forma due to Initial Public Offering (IPO) in 2001. 3 THE PHOENIX COMPANIES, INC. LIFE AND ANNUITY EARNINGS SUMMARY First Quarter 2003 (unaudited) ($ in millions)
SEGMENT INCOME March December 31, ----------------------------- ----------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------- ------------- ------------- ------------- -------------- ------------- Variable Universal Life $ 6.3 $ 10.0 $ 35.9 $ 30.2 $ 20.1 $ .8 Universal Life (1) 4.7 5.9 26.3 17.4 18.2 19.5 Term Life .4 (.5) 4.7 1.3 (1.0) 1.5 Other Life and Annuity (2) 2.5 (1.8) (.9) (1.7) 1.2 4.0 ------------- ------------- ------------- ------------- -------------- ------------- Total, Non-participating Life 13.9 13.6 66.0 47.2 38.5 25.8 Participating Life 8.8 12.0 33.3 21.4 (22.3) 15.6 ------------- ------------- ------------- ------------- -------------- ------------- Total, Life Insurance 22.7 25.6 99.3 68.6 16.2 41.4 Annuities (5.3) 2.6 (20.6) 10.9 4.2 30.8 ------------- ------------- ------------- ------------- -------------- ------------- Segment Income, before income taxes 17.4 28.2 78.7 79.5 20.4 72.2 Allocated Income Taxes (3) 3.8 10.0 27.7 27.9 7.2 25.3 ------------- ------------- ------------- ------------- -------------- ------------- Segment Income $ 13.6 $ 18.2 $ 51.0 $ 51.6 $ 13.2 $ 46.9 ============= ============= ============= ============= ============== =============
(1) Universal Life includes interest sensitive whole life contracts. (2) Other Life and Annuity includes trust operations and W.S. Griffith. (3) Tax benefits related to tax advantaged investments have been allocated to the Life and Annuity Segment beginning in the quarter ended March 2003. 4 THE PHOENIX COMPANIES, INC. LIFE AND ANNUITY EARNINGS SUMMARY First Quarter 2003 (unaudited) ($ in millions)
SEGMENT INCOME 2002 ----------------------------------------------------------- March Quarters ended March June September December 2003 ------------ ------------- ------------ ------------- ------------- Variable Universal Life $ 10.0 $ 8.1 $ 7.5 $ 10.2 $ 6.3 Universal Life (1) 5.9 8.3 5.0 7.2 4.7 Term Life (.5) 1.9 (.8) 4.1 .4 Other Life and Annuity (2) (1.8) 2.4 (.7) (.8) 2.5 ------------ ------------- ------------ ------------- ------------- Total, Non-participating Life 13.6 20.7 11.0 20.7 13.9 Participating Life 12.0 6.5 6.0 8.8 8.8 ------------ ------------- ------------ ------------- ------------- Total, Life Insurance 25.6 27.2 17.0 29.5 22.7 Annuities 2.6 .7 (18.9) (5.0) (5.3) ------------ ------------- ------------ ------------- ------------- Segment Income (Loss), before income taxes 28.2 27.9 (1.9) 24.5 17.4 Applicable Income Taxes (3) 10.0 9.9 (.7) 8.5 3.8 ------------ ------------- ------------ ------------- ------------- Segment Income (Loss) $ 18.2 $ 18.0 $ (1.2) $ 16.0 $ 13.6 ============ ============= ============ ============= =============
(1) Universal Life includes interest sensitive whole life contracts. (2) Other Life and Annuity includes trust operations and W.S. Griffith. (3) Tax benefits related to tax advantaged investments have been allocated to the Life and Annuity Segment beginning in the quarter ended March 2003. 5 THE PHOENIX COMPANIES, INC. VARIABLE UNIVERSAL LIFE First Quarter 2003 (unaudited) ($ in millions)
March December 31, ---------------------------- ---------------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------ ------------- ------------- -------------- -------------- -------------- PRE-TAX INCOME Fees $ 7.6 $ 7.7 $ 31.4 $ 29.5 $ 24.9 $ 22.7 Cost of Insurance (COI) 17.9 15.8 66.4 60.0 46.2 38.5 Interest Earned 1.6 1.8 7.0 4.5 5.7 4.7 Surrender Charges 1.2 .8 4.4 3.3 3.5 3.0 ------------ ------------- ------------- -------------- -------------- -------------- Total Revenues 28.3 26.1 109.2 97.3 80.3 68.9 ------------ ------------- ------------- -------------- -------------- -------------- Net Death and Disability Benefits 5.0 4.5 22.9 15.3 15.5 13.4 Incurred Expenses 16.1 10.6 45.9 48.2 41.5 52.5 Interest Credited .9 .9 3.7 3.6 3.1 2.2 Minority Interest .1 .8 ------------ ------------- ------------- -------------- -------------- -------------- Total Expenses 22.0 16.1 73.3 67.1 60.1 68.1 ------------ ------------- ------------- -------------- -------------- -------------- Pre-tax Income 6.3 10.0 35.9 30.2 20.2 .8 ============ ============= ============= ============== ============== ============== - ----------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions and Concessions 5.2 8.9 36.6 29.5 34.1 23.1 Controllable Expenses and Other 11.4 16.7 60.8 60.1 57.3 60.3 ------------ ------------- ------------- -------------- -------------- -------------- Total Current Expenses 16.6 25.6 97.4 89.6 91.4 83.4 Acquisition Costs Deferred (8.0) (18.4) (68.1) (65.4) (56.9) (42.8) Acquisition Costs Amortized 7.5 3.4 16.6 24.0 7.0 11.9 ------------ ------------- ------------- -------------- -------------- -------------- Incurred Expenses 16.1 10.6 45.9 48.2 41.5 52.5 ============ ============= ============= ============== ============== ============== - ----------------------------------------------------------------------------------------------------------------------------------- FUNDS UNDER MANAGEMENT Deposits 71.8 91.2 465.7 336.1 258.1 204.7 Surrenders (13.7) (6.3) (37.6) (31.2) (34.0) (22.2) Deaths (.2) (.6) (1.8) (1.7) (1.4) (1.7) ------------ ------------- ------------- -------------- -------------- -------------- Net Sales 57.9 84.3 426.3 303.2 222.7 180.8 Performance (8.5) (4.5) (149.8) (194.0) (128.1) 207.6 Fees (8.4) (9.2) (35.8) (34.5) (33.0) (25.8) Cost of Insurance (17.9) (15.8) (66.4) (60.0) (46.2) (38.5) Acquisitions 10.5 ------------ ------------- ------------- -------------- -------------- -------------- Change in Funds Under Management 23.1 54.8 174.3 14.7 15.4 334.6 Beginning Balance 1,270.3 1,096.0 1,096.0 1,081.3 1,065.9 731.3 ------------ ------------- ------------- -------------- -------------- -------------- Ending Balance 1,293.4 1,150.8 1,270.3 1,096.0 1,081.3 1,065.9 ============ ============= ============= ============== ============== ============== LIFE INSURANCE IN FORCE $23,744.4 $21,136.1 $23,788.2 $20,436.1 $17,743.3 $13,740.3 ============ ============= ============= ============== ============== ==============
6 THE PHOENIX COMPANIES, INC. VARIABLE UNIVERSAL LIFE First Quarter 2003 (unaudited) ($ in millions)
2002 ------------------------------------------------------------------ March Quarters ended March June September December 2003 -------------- -------------- -------------- -------------- -------------- PRE-TAX INCOME Fees $ 7.7 $ 6.7 $ 8.6 $ 8.4 $ 7.6 Cost of Insurance (COI) 15.8 15.8 16.6 18.2 17.9 Interest Earned 1.8 1.7 2.0 1.5 1.6 Surrender Charges .8 1.0 1.1 1.5 1.2 -------------- -------------- -------------- -------------- -------------- Total Revenues 26.1 25.2 28.3 29.6 28.3 -------------- -------------- -------------- -------------- -------------- Net Death and Disability Benefits 4.5 5.3 6.9 6.2 5.0 Incurred Expenses 10.6 10.8 12.6 11.9 16.1 Interest Credited .9 .9 1.0 .9 .9 Minority Interest .1 .1 .3 .4 -------------- -------------- -------------- -------------- -------------- Total Expenses 16.1 17.1 20.8 19.4 22.0 -------------- -------------- -------------- -------------- -------------- Pre-tax Income 10.0 8.1 7.5 10.2 6.3 ============== ============== ============== ============== ============== - --------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions and Concessions 8.9 8.6 11.5 7.6 5.2 Controllable Expenses and Other 16.7 18.0 14.4 11.7 11.4 -------------- -------------- -------------- -------------- -------------- Total Current Expenses 25.6 26.6 25.9 19.3 16.6 Acquisition Costs Deferred (18.4) (19.2) (18.6) (11.9) (8.0) Acquisition Costs Amortized 3.4 3.4 5.3 4.5 7.5 -------------- -------------- -------------- -------------- -------------- Incurred Expenses 10.6 10.8 12.6 11.9 16.1 ============== ============== ============== ============== ============== - --------------------------------------------------------------------------------------------------------------------------------- FUNDS UNDER MANAGEMENT Deposits 91.2 81.3 133.6 159.6 71.8 Surrenders (6.3) (9.5) (7.1) (14.7) (13.7) Deaths (.6) (.6) (.3) (.3) (.2) -------------- -------------- -------------- -------------- -------------- Net Sales 84.3 71.2 126.2 144.6 57.9 Performance (4.5) (79.6) (109.5) 43.8 (8.5) Fees (9.2) (8.4) (8.9) (9.3) (8.4) Cost of Insurance (15.8) (15.8) (16.6) (18.2) (17.9) -------------- -------------- -------------- -------------- -------------- Change in Funds Under Management 54.8 (32.6) (8.8) 160.9 23.1 Beginning Balance 1,096.0 1,150.8 1,118.2 1,109.4 1,270.3 -------------- -------------- -------------- -------------- -------------- Ending Balance 1,150.8 1,118.2 1,109.4 1,270.3 1,293.4 ============== ============== ============== ============== ============== LIFE INSURANCE IN FORCE $21,136.1 $22,168.9 $22,719.1 $23,788.2 $23,744.4 ============== ============== ============== ============== ==============
7 THE PHOENIX COMPANIES, INC. UNIVERSAL LIFE / INTEREST SENSITIVE First Quarter 2003 (unaudited) ($ in millions)
March December 31, ------------------------------- -------------------------------------------------------------- 2003 2002 2002 2001 2000 1999 -------------- -------------- -------------- ------------- ------------- ------------- PRE-TAX INCOME Fees $ 4.0 $ 2.6 $ 11.9 $ 8.6 $ 8.4 $ 7.6 Cost of Insurance 18.8 17.2 71.6 66.2 64.8 64.2 Interest Earned 24.7 26.4 108.4 111.9 108.7 112.0 Surrender Charges .7 1.2 3.9 4.0 5.5 7.2 -------------- -------------- -------------- ------------- ------------- ------------- Total Revenues 48.2 47.4 195.8 190.7 187.4 191.0 -------------- -------------- -------------- ------------- ------------- ------------- Net Death Benefits and Supplemental Benefits 12.3 10.1 39.5 48.3 45.4 41.8 Incurred Expenses 11.0 9.9 44.3 34.6 32.5 35.0 Interest Credited 20.2 21.5 85.7 90.4 91.3 94.7 -------------- -------------- -------------- ------------- ------------- ------------- Total Expenses 43.5 41.5 169.5 173.3 169.2 171.5 -------------- -------------- -------------- ------------- ------------- ------------- Pre-tax Income 4.7 5.9 26.3 17.4 18.2 19.5 ============== ============== ============== ============= ============= ============= - ----------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions 6.2 2.0 15.2 9.8 5.8 5.8 Controllable Expenses 16.0 9.6 52.6 32.1 23.7 19.7 -------------- -------------- -------------- ------------- ------------- ------------- Total Current Expenses 22.2 11.6 67.8 41.9 29.5 25.5 Acquisition Cost Deferred (15.3) (5.8) (40.2) (20.0) (8.7) (7.3) Acquisition Cost Amortized 4.1 4.1 16.7 12.7 11.7 16.8 -------------- -------------- -------------- ------------- ------------- ------------- Incurred Expenses 11.0 9.9 44.3 34.6 32.5 35.0 ============== ============== ============== ============= ============= ============= - ----------------------------------------------------------------------------------------------------------------------------------- FUNDS UNDER MANAGEMENT Deposits 45.6 31.6 149.3 104.6 90.9 97.2 Surrenders (30.9) (25.0) (107.4) (99.0) (108.2) (158.5) Deaths (5.9) (7.3) (25.0) (18.5) (20.9) (20.2) -------------- -------------- -------------- ------------- ------------- ------------- Net Sales 8.8 (.7) 16.9 (12.9) (38.2) (81.5) Interest Credited 20.2 21.5 85.8 90.4 91.3 94.7 Fees (5.5) (3.1) (16.7) (10.5) (6.2) (4.6) Cost of Insurance (18.8) (17.2) (71.6) (66.2) (64.8) (64.2) -------------- -------------- -------------- ------------- ------------- ------------- Change in Funds Under Management 4.7 .5 14.4 .8 (17.9) (55.6) Beginning Balance 1,510.0 1,495.6 1,495.6 1,494.8 1,512.7 1,568.3 -------------- -------------- -------------- ------------- ------------- ------------- Ending Fund Balance 1,514.7 1,496.1 1,510.0 1,495.6 1,494.8 1,512.7 ============== ============== ============== ============= ============= ============= LIFE INSURANCE IN FORCE $10,914.9 $ 9,683.1 $10,476.7 $9,465.6 $ 9,644.2 $ 9,955.7 ============== ============== ============== ============= ============= =============
8 THE PHOENIX COMPANIES, INC. UNIVERSAL LIFE / INTEREST SENSITIVE First Quarter 2003 (unaudited) ($ in millions)
PRE-TAX INCOME 2002 ------------------------------------------------------------- March Quarter ended March June September December 2003 ------------- ------------ ------------- -------------- -------------- Fees $ 2.6 $ 2.7 $ 2.9 $ 3.7 $ 4.0 Cost of Insurance 17.2 17.7 17.9 18.8 18.8 Interest Earned 26.4 27.9 26.8 27.3 24.7 Surrender Charges 1.2 1.4 .8 .5 .7 ------------- ------------ ------------- -------------- -------------- Total Revenues 47.4 49.7 48.4 50.3 48.2 ------------- ------------ ------------- -------------- -------------- Net Death Benefits and Supplemental Benefits 10.1 9.6 10.6 9.1 12.3 Incurred Expenses 9.9 10.3 11.5 12.6 11.0 Interest Credited 21.5 21.5 21.3 21.4 20.2 ------------- ------------ ------------- -------------- -------------- Total Expenses 41.5 41.4 43.4 43.1 43.5 ------------- ------------ ------------- -------------- -------------- Pre-tax Income 5.9 8.3 5.0 7.2 4.7 ============= ============ ============= ============== ============== - ----------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions 2.0 3.1 3.7 6.4 6.2 Controllable Expenses 9.6 10.5 12.6 19.9 16.0 ------------- ------------ ------------- -------------- -------------- Total Current Expenses 11.6 13.6 16.3 26.3 22.2 Acquisition Cost Deferred (5.8) (7.2) (10.0) (17.2) (15.3) Acquisition Cost Amortized 4.1 3.9 5.2 3.5 4.1 ------------- ------------ ------------- -------------- -------------- Incurred Expenses 9.9 10.3 11.5 12.6 11.0 ============= ============ ============= ============== ============== - ----------------------------------------------------------------------------------------------------------------------------------- FUNDS UNDER MANAGEMENT Deposits 31.6 34.9 33.3 49.5 45.6 Surrenders (25.0) (30.2) (26.7) (25.5) (30.9) Deaths (7.3) (2.2) (12.9) (2.6) (5.9) ------------- ------------ ------------- -------------- -------------- Net Sales (.7) 2.5 (6.3) 21.4 8.8 Interest Credited 21.5 21.5 21.3 21.5 20.2 Fees (3.1) (3.4) (4.4) (5.8) (5.5) Cost of Insurance (17.2) (17.7) (17.9) (18.8) (18.8) ------------- ------------ ------------- -------------- -------------- Change in Funds Under Management .5 2.9 (7.3) 18.3 4.7 Beginning Balance 1,495.6 1,496.1 1,499.0 1,491.7 1,510.0 ------------- ------------ ------------- -------------- -------------- Ending Fund Balance 1,496.1 1,499.0 1,491.7 1,510.0 1,514.7 ============= ============ ============= ============== ============== LIFE INSURANCE IN FORCE $9,683.1 $9,719.2 $9,907.3 $10,476.7 $10,914.9 ============= ============ ============= ============== ==============
9 THE PHOENIX COMPANIES, INC. LIFE SALES HIGHLIGHTS First Quarter 2003 (unaudited) ($ in millions)
LIFE INSURANCE PREMIUM March December 31, --------------------------- ------------------------------------------------- 2003 2002 2002 2001 2000 1999 ----------- ---------- ---------- ---------- ---------- ----------- Wholesaler Channel Variable Universal Life $ 6.3 $ 22.3 $ 62.5 $ 53.8 $ 61.1 $ 44.8 Private Placement Variable Universal Life 4.4 3.5 51.0 29.5 18.2 ----------- ---------- ---------- ---------- ---------- ----------- Variable Universal Life 10.7 25.8 113.5 83.3 79.3 44.8 Universal Life/Interest Sensitive 11.9 8.0 36.9 14.5 8.0 7.6 Term Life 4.5 2.7 15.1 11.4 14.6 10.5 Participating Whole Life .6 1.1 4.8 9.7 22.6 35.7 ----------- ---------- ---------- ---------- ---------- ----------- Life Insurance Annualized Premium (1) 27.7 37.6 170.3 118.9 124.5 98.6 =========== ========== ========== ========== ========== =========== Wholesaler Channel Variable Universal Life 4.1 4.9 25.1 49.7 46.2 63.2 Private Placement Variable Universal Life 10.8 10.9 129.9 36.9 15.5 ----------- ---------- ---------- ---------- ---------- ----------- Variable Universal Life 14.9 15.8 155.0 86.6 61.7 63.2 Universal Life/Interest Sensitive 7.2 2.7 29.9 14.5 1.8 .3 Participating Whole Life .4 .8 2.4 5.4 24.4 ----------- ---------- ---------- ---------- ---------- ----------- Life Insurance Single Premium 22.1 18.9 185.7 103.5 68.9 87.9 =========== ========== ========== ========== ========== =========== Wholesaler Channel Variable Universal Life 10.4 27.2 87.6 103.5 107.3 108.0 Private Placement Variable Universal Life 15.2 14.4 180.9 66.4 33.7 ----------- ---------- ---------- ---------- ---------- ----------- Variable Universal Life 25.6 41.6 268.5 169.9 141.0 108.0 Universal Life/Interest Sensitive 19.1 10.7 66.8 29.0 9.8 7.9 Term Life 4.5 2.7 15.1 11.4 14.6 10.5 Participating Whole Life .6 1.5 5.6 12.1 28.0 60.1 ----------- ---------- ---------- ---------- ---------- ----------- Total Life Insurance Premium $ 49.8 $ 56.5 $ 356.0 $ 222.4 $ 193.4 $ 186.5 =========== ========== ========== ========== ========== =========== (1) Annualized Premium represents first year premiums on an annual basis. Total Premium represents Annualized and Single premiums.
10 THE PHOENIX COMPANIES, INC. LIFE SALES HIGHLIGHTS First Quarter 2003 (unaudited) ($ in millions)
LIFE INSURANCE PREMIUM 2002 ---------------------------------------------------------- March Quarters ended March June September December 2003 ------------ ------------- ------------ ------------ ------------ Wholesaler Channel Variable Universal Life $ 22.3 $ 16.0 $ 11.3 $ 12.9 $ 6.3 Private Placement Variable Universal Life 3.5 13.2 19.0 15.3 4.4 ------------ ------------- ------------ ------------ ------------ Variable Universal Life 25.8 29.2 30.3 28.2 10.7 Universal Life/Interest Sensitive 8.0 3.6 6.9 18.4 11.9 Term Life 2.7 3.3 3.7 5.3 4.5 Participating Whole Life 1.1 1.6 .7 1.4 .6 ------------ ------------- ------------ ------------ ------------ Life Insurance Annualized Premium (1) 37.6 37.7 41.6 53.3 27.7 ============ ============= ============ ============ ============ Wholesaler Channel Variable Universal Life 4.9 6.8 6.9 6.5 4.1 Private Placement Variable Universal Life 10.9 4.4 47.1 67.5 10.8 ------------ ------------- ------------ ------------ ------------ Variable Universal Life 15.8 11.2 54.0 74.0 14.9 Universal Life/Interest Sensitive 2.7 6.7 6.1 14.5 7.2 Participating Whole Life .4 .3 .1 ------------ ------------- ------------ ------------ ------------ Life Insurance Single Premium 18.9 18.2 60.1 88.6 22.1 ============ ============= ============ ============ ============ Wholesaler Channel Variable Universal Life 27.2 22.8 18.2 19.4 10.4 Private Placement Variable Universal Life 14.4 17.6 66.1 82.8 15.2 ------------ ------------- ------------ ------------ ------------ Variable Universal Life 41.6 40.4 84.3 102.2 25.6 Universal Life/Interest Sensitive 10.7 10.3 13.0 32.9 19.1 Term Life 2.7 3.3 3.7 5.3 4.5 Participating Whole Life 1.5 1.9 .7 1.5 .6 ------------ ------------- ------------ ------------ ------------ Total Life Insurance Premium $ 56.5 $ 55.9 $ 101.7 $ 141.9 $ 49.8 ============ ============= ============ ============ ============ (1) Annualized Premium represents first year premiums on an annual basis. Total Premium represents Annualized and Single premiums.
11 THE PHOENIX COMPANIES, INC. ANNUITIES First Quarter 2003 (unaudited) ($ in millions)
March December 31, ----------------------------- --------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------- ------------- ------------- ------------ ------------ ----------- PRE-TAX INCOME Premiums Fees $ 12.8 $ 15.2 $ 57.1 $ 64.6 $ 78.2 $ 71.9 Interest Earned 34.1 16.6 98.3 40.3 16.3 13.7 Surrender Charges 1.5 1.1 6.6 3.9 5.1 5.5 ------------- ------------- ------------- ------------ ------------ ----------- Total Revenues 48.4 32.9 162.0 108.8 99.6 91.1 ------------- ------------- ------------- ------------ ------------ ----------- Policy Benefits and Change in Reserves Mortality Cost 2.8 1.9 10.8 4.3 3.0 2.7 Incurred Expenses 19.4 13.1 79.8 54.4 77.3 48.9 Interest Credited 31.5 15.3 92.0 39.2 15.1 8.7 ------------- ------------- ------------- ------------ ------------ ----------- Total Expenses 53.7 30.3 182.6 97.9 95.4 60.3 ------------- ------------- ------------- ------------ ------------ ----------- Pre-tax Income (Loss) (5.3) 2.6 (20.6) 10.9 4.2 30.8 ============= ============= ============= ============ ============ =========== - ----------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions/Concessions 16.7 11.4 81.3 44.0 29.2 14.5 Controllable Expenses 18.0 16.3 66.5 75.2 54.1 32.4 ------------- ------------- ------------- ------------ ------------ ----------- Total Current Expenses 34.7 27.7 147.8 119.2 83.2 46.9 Acquisition Cost Deferred (24.7) (18.9) (102.9) (83.8) (43.0) (21.1) Acquisition Cost Amortized 9.4 4.3 34.9 19.0 37.0 23.1 ------------- ------------- ------------- ------------ ------------ ----------- Incurred Expenses $ 19.4 $ 13.1 $ 79.8 $ 54.4 $ 77.3 $ 48.9 ============= ============= ============= ============ ============ ===========
12 THE PHOENIX COMPANIES, INC. ANNUITIES First Quarter 2003 (unaudited) ($ in millions)
PRE-TAX INCOME 2002 ----------------------------------------------------------- March Quarters ended March June September December 2003 ------------- ------------ ------------ ------------ ------------ Premiums Fees $ 15.2 $ 14.4 $ 14.0 $ 13.5 $ 12.8 Interest Earned 16.6 22.8 30.3 28.6 34.1 Surrender Charges 1.1 1.2 2.3 2.0 1.5 ------------- ------------ ------------ ------------ ------------ Total Revenues 32.9 38.4 46.6 44.1 48.4 ------------- ------------ ------------ ------------ ------------ Policy Benefits and Change in Reserves Mortality Cost 1.9 2.0 5.2 1.7 2.8 Incurred Expenses 13.1 16.5 31.0 19.2 19.4 Interest Credited 15.3 19.2 29.3 28.2 31.5 ------------- ------------ ------------ ------------ ------------ Total Expenses 30.3 37.7 65.5 49.1 53.7 ------------- ------------ ------------ ------------ ------------ Pre-tax Income (Loss) 2.6 .7 (18.9) (5.0) (5.3) ============= ============ ============ ============ ============ - --------------------------------------------------------------------------------------------------------------------------------- INCURRED EXPENSES Commissions/Concessions 11.4 17.5 44.1 8.3 16.7 Controllable Expenses 16.3 16.7 16.1 17.4 18.0 ------------- ------------ ------------ ------------ ------------ Total Current Expenses 27.7 34.2 60.2 25.7 34.7 Acquisition Cost Deferred (18.9) (24.6) (48.5) (10.9) (24.7) Acquisition Cost Amortized 4.3 6.9 19.3 4.4 9.4 ------------- ------------ ------------ ------------ ------------ Incurred Expenses $ 13.1 $ 16.5 $ 31.0 $ 19.2 $ 19.4 ============= ============ ============ ============ ============
13
THE PHOENIX COMPANIES, INC. ANNUITIES NET FLOWS AND FUNDS UNDER MANAGEMENT First Quarter 2003 (unaudited) ($ in millions) FUNDS UNDER MANAGEMENT March December 31, ---------------------------- -------------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------- ------------- ------------- -------------- ------------- ------------- Annuities Deposits $ 432.1 $ 575.4 $ 2,258.4 $ 1,492.9 $ 687.0 $ 377.4 Surrenders (231.6) (127.0) (736.7) (482.3) (608.5) (618.1) ------------- ------------- ------------- -------------- ------------- ------------- Net Sales 200.5 448.4 1,521.7 1,010.6 78.5 (240.7) Performance and Interest Credited 20.2 (1.4) (338.0) (563.1) (415.2) 991.1 Fees (11.5) (15.9) (58.8) (67.3) (78.2) (71.9) Deaths (22.6) (7.2) (40.6) (34.3) (24.9) (22.0) Acquisitions 114.9 ------------- ------------- ------------- -------------- ------------- ------------- Change in Funds Under Management 186.6 423.9 1,084.3 345.9 (439.8) 771.4 Beginning Balance 5,833.4 4,749.1 4,749.1 4,403.2 4,843.0 4,072.3 ------------- ------------- ------------- -------------- ------------- ------------- Ending Balance $ 6,020.0 $ 5,173.0 $ 5,833.4 $ 4,749.1 $ 4,403.2 $ 4,843.7 ============= ============= ============= ============== ============= ============= ------------ VA Funds in Guaranteed Interest Accounts (1) $ 2,224.8 $ 1,179.5 $ 2,159.3 $ 955.0 $ 333.5 $ 210.9 ============= ============= ============= ============== ============= ============= ------------- Fixed Annuities (1) $ 921.4 $ 378.1 $ 737.2 $ 267.3 ============= ============= ============= ==============
(1) Amounts are included in the annuities funds under management table above. 14 THE PHOENIX COMPANIES, INC. ANNUITIES NET FLOWS AND FUNDS UNDER MANAGEMENT First Quarter 2003 (unaudited) ($ in millions)
FUNDS UNDER MANAGEMENT 2002 ----------------------------------------------------------- March Quarters ended March June September December 2003 ------------- ------------ ------------ ------------ ------------ Variable Annuities Deposits $ 575.4 $ 661.0 $ 804.2 $ 217.8 $ 432.1 Surrenders (127.0) (189.4) (180.5) (239.8) (231.6) ------------- ------------ ------------ ------------ ------------ Net Sales 448.4 471.6 623.7 (22.0) 200.5 Performance and Interest Credited (1.4) (219.0) (294.7) 177.1 20.2 Fees (15.9) (15.7) (13.8) (13.4) (11.5) Deaths (7.2) (9.0) (11.4) (13.0) (22.6) ------------- ------------ ------------ ------------ ------------ Change in Funds Under Management 423.9 227.9 303.8 128.7 186.6 Beginning Balance 4,749.1 5,173.0 5,400.9 5,704.7 5,833.4 ------------- ------------ ------------ ------------ ------------ Ending Balance $ 5,173.0 $ 5,400.9 $5,704.7 $5,833.4 $ 6,020.0 ============= ============ ============ ============ ============ ------------ VA Funds in Guaranteed Interest Accounts (1) $ 1,179.5 $ 1,534.2 $2,118.1 $2,159.3 $ 2,224.8 ============= ============ ============ ============ ============ ------------ Fixed Annuities (1) $ 378.1 $ 559.7 $ 706.6 $ 737.2 $ 921.4 ============= ============ ============ ============ ============
(1) Amounts are included in the annuities funds under management table above. 15 THE PHOENIX COMPANIES, INC. SUPPLEMENTARY LIFE AND ANNUITY INFORMATION First Quarter 2003 (unaudited) ($ in millions)
March December 31, ----------------------------- ----------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------ -------------- -------------- ------------- ------------- ------------- DEFERRED ACQUISITION COSTS Variable Universal Life $ 310.9 $ 268.6 $ 310.4 $ 252.8 $ 211.4 $ 161.5 Universal Life 172.6 139.1 163.1 134.7 127.4 130.4 Variable Annuities 271.2 219.5 264.9 211.4 147.0 141.0 Fixed Annuities 35.3 6.1 26.3 .4 Participating 556.4 544.8 554.6 517.4 554.8 786.6 Other 22.6 17.7 21.2 17.5 17.4 21.7 Adjustment for Unrealized Gains and Losses (99.0) (3.9) (106.4) (10.5) (39.0) 77.6 ------------ -------------- -------------- ------------- ------------- ------------- Total $ 1,270.0 $ 1,191.9 $ 1,234.1 $ 1,123.7 $ 1,019.0 $ 1,318.8 ============ ============== ============== ============= ============= ============= - ----------------------------------------------------------------------------------------------------------------------------------- VARIABLE ANNUITY GUARANTEED MINIMUM DEATH BENEFITS Death Benefit in Excess of Fund Value $ 1,188.4 $ 337.5 $ 1,148.4 Death Benefit in Excess of Fund Value, Net of Reinsurance 242.3 5.7 234.9 Statutory Reserve 16.1 5.3 15.8 GAAP Reserve 9.2 .3 8.7 ============ ============== ==============
16 THE PHOENIX COMPANIES, INC. SUPPLEMENTARY LIFE AND ANNUITY INFORMATION First Quarter 2003 (unaudited) ($ in millions)
2002 ------------------------------------------------------------ March Quarters ended March June September December 2003 ------------- ------------ ------------- ------------- ------------ DEFERRED ACQUISITION COSTS Variable Universal Life $ 268.6 $ 284.3 $ 303.0 $ 310.4 $ 310.9 Universal Life 139.1 142.4 147.2 163.1 172.6 Variable Annuities 219.5 230.9 267.6 264.9 271.2 Fixed Annuities 6.1 12.4 17.0 26.3 35.3 Participating 544.8 557.5 555.6 554.6 556.4 Other 17.7 18.8 19.8 21.2 22.6 Adjustment for Unrealized Gains and Losses (3.9) (34.3) (74.9) (106.4) (99.0) ------------- ------------ ------------- ------------- ------------ Total $1,191.9 $1,212.0 $1,235.3 $ 1,234.1 $1,270.0 ============= ============ ============= ============= ============ - ----------------------------------------------------------------------------------------------------------------------------------- VARIABLE ANNUITY GUARANTEED MINIMUM DEATH BENEFITS Death Benefit in Excess of Fund Value $ 337.5 $ 440.8 $ 822.5 $ 1,148.4 $1,188.4 Death Benefit in Excess of Fund Value, Net of Reinsurance 5.7 10.3 194.3 234.9 242.3 Statutory Reserve 5.3 6.0 16.6 15.8 16.1 GAAP Reserve .3 .5 8.1 8.7 9.2 ============= ============ ============= ============= ============
17 THE PHOENIX COMPANIES, INC. ASSET MANAGEMENT First Quarter 2003 (unaudited) ($ in millions)
SEGMENT INCOME March December 31, ------------------------------- ------------------------------------------------------------ 2003 2002 2002 2001 2000 1999 -------------- -------------- ------------- ------------- -------------- ------------ Investment Management Fees $ 48.7 $ 59.2 $ 227.4 $ 221.6 $ 282.1 $ 247.0 Mutual Funds - Ancillary Fees 4.4 5.4 20.4 24.3 32.4 31.7 Other Revenue 1.6 2.4 10.2 12.9 8.8 4.7 -------------- -------------- ------------- ------------- -------------- ------------ Total Revenues 54.7 67.0 258.0 258.8 323.3 283.4 -------------- -------------- ------------- ------------- -------------- ------------ Employment Expenses 30.7 38.2 140.5 130.0 137.4 114.0 Other Operating Expenses 19.5 18.9 77.7 83.2 79.9 69.7 Amortization of Intangibles 8.4 8.1 32.5 49.0 31.8 30.3 Intangible Asset Impairments 66.3 -------------- -------------- ------------- ------------- -------------- ------------ Total Operating Expenses 58.6 65.2 317.0 262.2 249.1 214.0 -------------- -------------- ------------- ------------- -------------- ------------ Management Income (Loss) (3.9) 1.8 (59.0) (3.4) 74.2 69.4 Other Income (Expense) - Net .9 1.0 1.6 3.7 4.0 Equity in Aberdeen Asset Management Net Income 1.2 3.0 9.9 8.5 9.6 5.7 Minority Interest (2.8) (2.9) (11.9) (6.9) (16.5) (13.4) -------------- -------------- ------------- ------------- -------------- ------------ Segment Income, before income taxes (4.6) 1.9 (60.0) (.2) 71.0 65.7 Applicable Income Taxes (Benefit) (1.7) (.5) (6.0) 5.6 35.4 30.9 -------------- -------------- ------------- ------------- -------------- ------------ Segment Income (Loss) $ (2.9) $ 2.4 $ (54.0) $ (5.8) $ 35.6 $ 34.8 ============== ============== ============= ============= ============== ============ - ------------------------------------------------------------------------------------------------------------------------------------
18 THE PHOENIX COMPANIES, INC. ASSET MANAGEMENT First Quarter 2003 (unaudited) ($ in millions)
2002 SEGMENT INCOME ----------------------------------------------------------- March Quarters ended March June September December 2003 ------------ ------------- ------------ ------------- ------------- Investment Management Fees $59.2 $61.8 $ 55.6 $50.8 $ 48.7 Mutual Funds - Ancillary Fees 5.4 5.3 4.9 4.8 4.4 Other Revenue 2.4 2.7 2.3 2.8 1.6 ------------ ------------- ------------ ------------- ------------- Total Revenues 67.0 69.8 62.8 58.4 54.7 ------------ ------------- ------------ ------------- ------------- Employment Expenses 38.2 40.7 32.8 28.8 30.7 Other Operating Expenses 18.9 21.0 19.8 18.0 19.5 Amortization of Intangibles 8.1 7.8 8.7 7.9 8.4 Intangible Asset Impairments 66.3 ------------ ------------- ------------ ------------- ------------- Total Operating Expenses 65.2 69.5 127.6 54.7 58.6 ------------ ------------- ------------ ------------- ------------- Management Income (Loss) 1.8 .3 (64.8) 3.7 (3.9) Other Income (Expense) - Net .4 .1 .5 .9 Equity in Aberdeen Asset Management Net Income 3.0 3.4 2.6 .9 1.2 Minority Interest (2.9) (3.3) (3.1) (2.6) (2.8) ------------ ------------- ------------ ------------- ------------- Segment Income, before income taxes 1.9 .8 (65.2) 2.5 (4.6) Applicable Income Taxes (Benefit) (.5) (1.4) (5.2) 1.1 (1.7) ------------ ------------- ------------ ------------- ------------- Segment Income (Loss) $ 2.4 $ 2.2 $(60.0) $ 1.4 $ (2.9) ============ ============= ============ ============= ============= - -----------------------------------------------------------------------------------------------------------------------------------
19 THE PHOENIX COMPANIES, INC. ASSET MANAGEMENT NET FLOWS AND ASSETS UNDER MANAGEMENT First Quarter 2003 (unaudited) ($ in millions)
March December 31, ------------------------------- ------------------------------------------------------------ 2003 2002 2002 2001 2000 1999 -------------- -------------- -------------- ------------- ------------- ------------- PRIVATE CLIENT PRODUCTS: Managed Accounts Inflows $ 568.8 $ 1,149.7 $ 4,421.1 $ 2,721.9 $ 3,869.4 $ 2,143.2 Outflows (688.4) (538.0) (2,716.3) (2,546.4) (1,619.8) (1,034.3) -------------- -------------- -------------- ------------- ------------- ------------- Net Flows (119.6) 611.7 1,704.8 175.5 2,249.6 1,108.9 Performance 434.8 661.2 (3,278.2) (3,545.8) (2,859.1) 1,939.0 Acquisitions (Divestitures) 5,809.0 5,914.3 748.5 (130.0) 433.0 -------------- -------------- -------------- ------------- ------------- ------------- Change in Assets Under Management 315.2 7,081.9 4,340.9 (2,621.8) (739.5) 3,480.9 Beginning Balance 13,179.2 8,838.3 8,838.3 11,460.1 12,199.6 8,718.7 -------------- -------------- -------------- ------------- ------------- ------------- Ending Balance 13,494.4 15,920.2 13,179.2 8,838.3 11,460.1 12,199.6 -------------- -------------- -------------- ------------- ------------- ------------- Mutual Funds Inflows 313.3 282.1 1,332.8 1,817.8 2,068.5 1,657.8 Outflows (498.8) (603.7) (2,754.0) (2,756.4) (3,492.0) (3,216.3) -------------- -------------- -------------- ------------- ------------- ------------- Net Flows (185.5) (321.6) (1,421.2) (938.6) (1,423.5) (1,558.5) Performance (101.4) (90.2) (1,811.8) (2,556.5) (1,933.2) 3,124.7 Acquisitions (Divestitures) 333.5 333.5 2,099.8 -------------- -------------- -------------- ------------- ------------- ------------- Change in Assets Under Management (286.9) (78.3) (2,899.5) (3,495.1) (3,356.7) 3,666.0 Beginning Balance 8,322.1 11,221.6 11,221.6 14,716.7 18,073.4 14,407.4 -------------- -------------- -------------- ------------- ------------- ------------- Ending Balance 8,035.2 11,143.3 8,322.1 11,221.6 14,716.7 18,073.4 -------------- -------------- -------------- ------------- ------------- ------------- INSTITUTIONAL PRODUCTS: Inflows 793.7 832.7 4,380.4 4,989.0 5,572.5 5,843.7 Outflows (640.9) (723.3) (4,480.0) (3,766.9) (7,355.6) (5,025.6) -------------- -------------- -------------- ------------- ------------- ------------- Net Flows 152.8 109.4 (99.6) 1,222.1 (1,783.1) 818.1 Performance (1) (1,724.4) (425.9) (2,773.1) (1,152.2) 935.4 1,628.2 Other (1) 496.4 409.4 1,789.0 1,438.4 141.3 274.3 Acquisitions (Divestitures) 1,507.7 1,507.7 105.9 (3,206.0) 1,246.5 -------------- -------------- -------------- ------------- ------------- ------------- Change in Assets Under Management (1,075.2) 1,600.6 424.0 1,614.2 (3,912.4) 3,967.1 Beginning Balance 32,454.2 32,030.2 32,030.2 30,416.0 34,328.4 30,361.3 -------------- -------------- -------------- ------------- ------------- ------------- Ending Balance 31,379.0 33,630.8 32,454.2 32,030.2 30,416.0 34,328.4 -------------- -------------- -------------- ------------- ------------- ------------- TOTAL PRIVATE CLIENT AND INSTITUTIONAL PRODUCTS: Inflows 1,675.8 2,264.5 10,134.3 9,528.7 11,510.4 9,644.7 Outflows (1,828.1) (1,865.0) (9,950.3) (9,069.7) (12,467.4) (9,276.2) -------------- -------------- -------------- ------------- ------------- ------------- Net Flows (152.3) 399.5 184.0 459.0 (957.0) 368.5 Performance (1) (1,391.0) 145.1 (7,863.1) (7,254.5) (3,856.9) 6,691.9 Other (1) 496.4 409.4 1,789.0 1,438.4 141.3 274.3 Acquisitions (Divestitures) 7,650.2 7,755.5 854.4 (3,336.0) 3,779.3 -------------- -------------- -------------- ------------- ------------- ------------- Change in Assets Under Management (1,046.9) 8,604.2 1,865.4 (4,502.7) (8,008.6) 11,114.0 Beginning Balance 53,955.5 52,090.1 52,090.1 56,592.8 64,601.4 53,487.4 -------------- -------------- -------------- ------------- ---------------------------- Ending Balance $52,908.6 $60,694.3 $53,955.5 $52,090.1 $56,592.8 $64,601.4 ============== ============== ============== ============= ============================ (1) Certain reclassifications have been made to prior periods to conform with the current presentation.
20 THE PHOENIX COMPANIES, INC. ASSET MANAGEMENT NET FLOWS AND ASSETS UNDER MANAGEMENT First Quarter 2003 (unaudited) ($ in millions)
2002 ---------------------------------------------------------------- March Quarters ended March June September December 2003 ------------- -------------- -------------- -------------- --------------- PRIVATE CLIENT PRODUCTS: Managed Accounts Inflows $ 1,149.7 $ 1,732.5 $ 892.2 $ 646.8 $ 568.8 Outflows (538.0) (816.3) (810.1) (551.9) (688.4) ------------- -------------- -------------- -------------- --------------- Net Flows 611.7 916.2 82.1 94.9 (119.6) Performance 661.2 (1,882.0) (2,320.1) 262.6 434.8 Acquisitions (Divestitures) 5,809.0 105.3 ------------- -------------- -------------- -------------- --------------- Change in Assets Under Management 7,081.9 (965.8) (2,132.7) 357.5 315.2 Beginning Balance 8,838.3 15,920.2 14,954.4 12,821.7 13,179.2 ------------- -------------- -------------- -------------- --------------- Ending Balance 15,920.2 14,954.4 12,821.7 13,179.2 13,494.4 ------------- -------------- -------------- -------------- --------------- Mutual Funds Inflows 282.1 370.5 318.4 361.8 313.3 Outflows (603.7) (727.9) (610.6) (811.9) (498.8) ------------- -------------- -------------- -------------- --------------- Net Flows (321.6) (357.4) (292.2) (450.1) (185.5) Performance (90.2) (1,109.9) (994.6) 383.0 (101.4) Acquisitions (Divestitures) 333.5 ------------- -------------- -------------- -------------- --------------- Change in Assets Under Management (78.3) (1,467.3) (1,286.8) (67.1) (286.9) Beginning Balance 11,221.6 11,143.3 9,676.0 8,389.2 8,322.1 ------------- -------------- -------------- -------------- --------------- Ending Balance 11,143.3 9,676.0 8,389.2 8,322.1 8,035.2 ------------- -------------- -------------- -------------- --------------- INSTITUTIONAL PRODUCTS: Inflows 832.7 960.6 1,798.6 788.5 793.7 Outflows (723.3) (2,071.5) (1,178.3) (506.9) (640.9) ------------- -------------- -------------- -------------- --------------- Net Flows 109.4 (1,110.9) 620.3 281.6 152.8 Performance (1) (425.9) (1,112.0) (1,063.1) (172.1) (1,724.4) Other (1) 409.4 518.8 600.3 260.5 496.4 Acquisitions (Divestitures) 1,507.7 ------------- -------------- -------------- -------------- --------------- Change in Assets Under Management 1,600.6 (1,704.1) 157.5 370.0 (1,075.2) Beginning Balance 32,030.2 33,630.8 31,926.7 32,084.2 32,454.2 ------------- -------------- -------------- -------------- --------------- Ending Balance 33,630.8 31,926.7 32,084.2 32,454.2 31,379.0 ------------- -------------- -------------- -------------- --------------- TOTAL PRIVATE CLIENT AND INSTITUTIONAL PRODUCTS: Inflows 2,264.5 3,063.6 3,009.2 1,797.1 1,675.8 Outflows (1,865.0) (3,615.7) (2,599.0) (1,870.7) (1,828.1) ------------- -------------- -------------- -------------- --------------- Net Flows 399.5 (552.1) 410.2 (73.6) (152.3) Performance (1) 145.1 (4,103.9) (4,377.8) 473.5 (1,391.0) Other (1) 409.4 518.8 600.3 260.5 496.4 Acquisitions (Divestitures) 7,650.2 105.3 ------------- -------------- -------------- -------------- --------------- Change in Assets Under Management 8,604.2 (4,137.2) (3,262.0) 660.4 (1,046.9) Beginning Balance 52,090.1 60,694.3 56,557.1 53,295.1 53,955.5 ------------- -------------- -------------- -------------- --------------- Ending Balance $60,694.3 $56,557.1 $53,295.1 $53,955.5 $52,908.6 ============= ============== ============== ============== =============== (1) Certain reclassifications have been made to prior periods to conform with the current presentation.
21 THE PHOENIX COMPANIES, INC. VENTURE CAPITAL SEGMENT First Quarter 2003 (unaudited) ($ in millions)
March December 31, ---------------------------- ---------------------------------------------------- 2003 2002 2002 2001 2000 1999 ----------- ------------ ------------ ------------ ------------ ------------- SEGMENT INCOME Operating Loss $ (.9) $ (2.0) $ (7.4) $ (7.3) $ (7.8) $ (8.9) Realized Gains (Losses) on Cash and Stock Distributions (6.2) (12.5) (4.7) 26.2 222.2 84.7 Change in Unrealized Gains on Investments Held in Partnerships 31.0 9.5 (47.2) (178.5) 62.9 64.1 ----------- ------------ ------------ ------------ ------------ ------------- Equity in Partnership Earnings, before income taxes 23.9 (5.0) (59.3) (159.6) 277.3 139.9 Applicable Income Taxes (Benefit) 8.4 (1.8) (20.7) (55.9) 97.1 49.0 ----------- ------------ ------------ ------------ ------------ ------------- Segment Income (Loss) $ 15.5 $ (3.2) $ (38.6) $ (103.7) $ 180.2 $ 90.9 =========== ============ ============ ============ ============ ============= - ----------------------------------------------------------------------------------------------------------------------------------- VENTURE CAPITAL INVESTMENTS Contributions (Dollars Invested) 11.6 13.0 42.2 47.0 97.0 108.5 Equity In Earnings of Partnerships 23.9 (5.0) (59.3) (159.6) 277.3 139.9 Distributions (3.0) (9.4) (41.8) (63.0) (245.1) (101.5) Sale of partnership interests and transfer to closed block (52.2) Realized Loss on sale of partnership interests and transfer to closed block (13.8) (5.0) ----------- ------------ ------------ ------------ ------------ ------------- Change in Venture Capital Investments (33.5) (1.4) (63.9) (175.6) 129.2 146.9 Beginning Balance 227.8 291.7 291.7 467.3 338.1 191.2 ----------- ------------ ------------ ------------ ------------ ------------- Ending Balance $ 194.3 $ 290.3 $ 227.8 $ 291.7 $ 467.3 $ 338.1 =========== ============ ============ ============ ============ ============= - ----------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO BREAKDOWN Technology 23.5 43.6 25.0 41.3 Telecom 7.4 17.3 10.2 19.1 Biotech 9.8 15.7 11.1 14.1 Healthcare 6.7 8.4 9.2 10.7 ------------ Consumer and Business Products and Services 32.0 Included 45.9 46.6 Financial Services 29.7 in Other 28.1 30.3 ------------ Other 57.7 140.6 50.6 57.8 ----------- ------------ ------------ ------------ Total Private Holdings 166.8 225.6 180.1 219.9 Public Holdings 11.4 39.1 23.0 39.8 Cash and Cash Equivalents 9.2 16.1 21.6 22.5 Other 6.9 9.5 3.1 9.5 ----------- ------------ ------------ ------------ Total $ 194.3 $ 290.3 $ 227.8 $ 291.7 =========== ============ ============ ============
22 THE PHOENIX COMPANIES, INC. VENTURE CAPITAL SEGMENT First Quarter 2003 (unaudited) ($ in millions)
2002 ----------------------------------------------------------- March Quarters ended March June September December 2003 ------------- ------------ ------------- ------------ ------------ SEGMENT INCOME Operating Loss $ (2.0) $ (1.6) $ (2.2) $ (1.6) $ (.9) Realized Gains (Losses) on Cash and Stock Distributions (12.5) 7.4 (2.1) 2.5 (6.2) Change in Unrealized Gains on Investments Held in Partnerships 9.5 (35.7) (17.8) (3.2) 31.0 ------------- ------------ ------------- ------------ ------------ Equity in Partnership Earnings, before income taxes (5.0) (29.9) (22.1) (2.3) 23.9 Applicable Income Taxes (Benefit) (1.8) (10.4) (7.7) (.8) 8.4 ------------- ------------ ------------- ------------ ------------ Segment Income (Loss) (3.2) (19.5) (14.4) (1.5) 15.5 ============= ============ ============= ============ ============ - --------------------------------------------------------------------------------------------------------------------------------- VENTURE CAPITAL INVESTMENTS Contributions (Dollars Invested) 13.0 7.5 10.2 11.5 11.6 Equity In Earnings of Partnerships (5.0) (29.9) (22.1) (2.3) 23.9 Distributions (9.4) (6.1) (19.3) (7.0) (3.0) Sale of partnership interests and transfer to closed block (52.2) Realized Loss on sale of partnership interests and transfer to closed block (5.0) (13.8) ------------- ------------ ------------- ------------ ------------ Change in Venture Capital Investments (1.4) (28.5) (31.2) (2.8) (33.5) Beginning Balance 291.7 290.3 261.8 230.6 227.8 ------------- ------------ ------------- ------------ ------------ Ending Balance 290.3 261.8 230.6 227.8 194.3 ============= ============ ============= ============ ============ - --------------------------------------------------------------------------------------------------------------------------------- PORTFOLIO BREAKDOWN Technology 43.6 29.4 20.3 25 23.5 Telecom 17.3 10.5 8.7 10.2 7.4 Biotech 15.7 9.7 10.4 11.1 9.8 Healthcare 8.4 6.8 8.9 9.2 6.7 -------------------------------------------- Consumer and Business Products and Services Included in Other 45.9 32.0 Financial Services 28.1 29.7 -------------------------------------------- Other 140.6 142.7 118.8 50.6 57.7 ------------- ------------ ------------- ------------ ------------ Total Private Holdings 225.6 199.1 167.1 180.1 166.8 Public Holdings 39.1 29.9 21.5 23.0 11.4 Cash and Cash Equivalents 16.1 24.9 27.2 21.6 9.2 Other 9.5 7.9 14.8 3.1 6.9 ------------- ------------ ------------- ------------ ------------ Total $ 290.3 $ 261.8 $ 230.6 $ 227.8 $ 194.3 ============= ============ ============= ============ ============
23 THE PHOENIX COMPANIES, INC. CORPORATE AND OTHER First Quarter 2003 (unaudited) ($ in millions)
SEGMENT INCOME March December 31, ----------------------------- ---------------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------- ------------- ------------- ---------- ------------- ------------- Corporate Investment Income $ .5 $ 2.7 $ 1.5 $ 7.2 $ 36.7 $ 13.1 Interest Expense (9.8) (7.7) (31.4) (27.3) (32.7) (34.0) Corporate Expenses .1 (4.3) (10.4) (19.9) (53.5) (42.4) International (2.5) .8 (5.7) (.8) 2.5 4.3 Other (.9) (.2) (3.8) (2.4) (23.4) 3.5 ------------- ------------- ------------- ---------- ------------- ------------- Segment Income (Loss), before income taxes (12.6) (8.7) (49.8) (43.2) (70.4) (55.5) Applicable Income Taxes (Benefit) (3.2) (4.1) (29.7) (23.9) (40.6) (29.1) ------------- ------------- ------------- ---------- ------------- ------------- Segment Income (Loss) $ (9.4) $ (4.6) $ (20.1) $ (19.3) $ (29.8) $ (26.4) ============= ============= ============= ========== ============= =============
24 THE PHOENIX COMPANIES, INC. CORPORATE AND OTHER First Quarter 2003 (unaudited) ($ in millions)
SEGMENT INCOME 2002 ------------------------------------------------------------ March Quarters ended March June September December 2003 ------------- ------------ ------------ ------------- ------------- Corporate Investment Income $ 2.7 $ 1.1 $ (.3) $ (1.9) $ .5 Interest Expense (7.7) (7.7) (7.7) (8.3) (9.8) Corporate Expenses (4.3) (2.5) (1.3) (2.3) .1 International .8 (1.5) (2.0) (3.1) (2.5) Other (.2) (1.4) (1.3) (1.0) (.9) ------------- ------------ ------------ ------------- ------------- Segment Income (Loss), before income taxes (8.7) (12.0) (12.6) (16.6) (12.6) Applicable Income Taxes (Benefit) (4.1) (7.2) (6.3) (12.1) (3.2) ------------- ------------ ------------ ------------- ------------- Segment Income (Loss) $ (4.6) $ (4.8) $ (6.2) $ (4.6) $ (9.4) ============= ============ ============ ============= =============
25 THE PHOENIX COMPANIES, INC. CONSOLIDATED STATEMENT OF INCOME - GAAP FORMAT (1) First Quarter 2003 (unaudited) ($ in millions)
March December 31, ------------------------- ---------------------------------------------------- 2003 2002 2002 2001 2000 1999 ------------ ----------- ----------- ------------ ------------ ----------- REVENUES Premiums $ 246.1 $ 257.4 $ 1,082.0 $1,112.7 $ 1,147.4 $ 1,175.7 Insurance and Investment Product Fees 132.9 140.3 563.3 546.4 631.0 574.6 Net Investment Income 276.7 231.2 915.2 843.2 1,137.2 958.6 Net Realized Investment Gains (Losses) (12.3) (35.0) (107.6) (72.4) 89.2 75.8 ------------ ----------- ----------- ------------ ------------ ----------- Total Revenues 643.4 593.9 2,452.9 2,429.9 3,004.8 2,784.7 ------------ ----------- ----------- ------------ ------------ ----------- BENEFITS AND EXPENSES Policy Benefits and Increase in Policy Liabilities 350.8 333.9 1,436.1 1,406.7 1,409.8 1,373.1 Policyholder Dividends 116.5 74.2 401.8 400.1 378.0 360.5 Policy Acquisition Cost Amortization 28.0 (10.9) 59.2 133.0 356.0 147.9 Intangible Asset Amortization 8.4 8.1 98.8 49.4 36.9 40.1 Interest Expense 9.8 7.7 31.4 27.3 32.7 34.0 Demutualization Expenses .9 1.8 25.9 21.8 Other Operating Expenses 126.5 136.0 583.9 628.1 604.5 557.9 ------------ ----------- ----------- ------------ ------------ ----------- Total Expenses 640.0 549.9 2,613.0 2,670.5 2,839.7 2,513.5 ------------ ----------- ----------- ------------ ------------ ----------- Income (Loss) from Continuing Operations Before Income Taxes and Minority Interest 3.4 44.0 (160.1) (240.6) 165.1 271.2 Applicable Income Taxes (Benefit) (2.6) 12.3 (56.8) (110.5) 56.2 99.0 ------------ ----------- ----------- ------------ ------------ ----------- Income (Loss) from Continuing Operations before Minority Interest 6.0 31.7 (103.3) (130.1) 108.9 172.2 Minority Interest in Net Income of Subsidiaries (2.8) (2.8) (12.4) (7.2) (14.1) (10.1) ------------ ----------- ----------- ------------ ------------ ----------- Income (Loss) from Continuing Operations 3.2 28.9 (115.7) (137.3) 94.8 162.1 Discontinued Operations Income from Discontinued Operations 9.4 36.1 Loss on Disposal (20.9) (109.0) ------------ ----------- ----------- ------------ ------------ ----------- Income (Loss) Before Cumulative Effect of Accounting Changes 3.2 28.9 (115.7) (137.3) 83.3 89.2 Cumulative Effect of Accounting Changes: Goodwill and Other Intangible Assets (130.3) (130.3) Venture Capital Partnerships (48.8) Securitized Financial Instruments (20.5) Derivative Financial Instruments 3.9 ------------ ----------- ----------- ------------ ------------ ----------- Net Income (Loss) $ 3.2 $ (101.4) $ (246.0) $ (202.7) $ 83.3 $ 89.2 ============ =========== =========== ============ ============ =========== (1) Certain reclassifications have been made to prior periods to conform with the current presentation.
26 THE PHOENIX COMPANIES, INC. CONSOLIDATED STATEMENT OF INCOME - GAAP FORMAT (1) First Quarter 2003 (unaudited) ($ in millions)
2002 ---------------------------------------------------------- March Quarters ended March June September December 2003 ------------ ------------- ------------ ------------ ------------ REVENUES Premiums $ 257.4 $ 259.4 $ 297.1 $ 268.1 $ 246.1 Insurance and Investment Product Fees 140.3 145.9 139.4 137.7 132.9 Net Investment Income 231.2 215.7 228.8 239.5 276.7 Net Realized Investment Gains (Losses) (35.0) (28.6) (10.5) (33.5) (12.3) ------------ ------------- ------------ ------------ ------------ Total Revenues 593.9 592.4 654.8 611.8 643.4 ------------ ------------- ------------ ------------ ------------ BENEFITS AND EXPENSES Policy Benefits and Increase in Policy Liabilities 333.9 338.9 397.9 365.4 350.8 Policyholder Dividends 74.2 107.5 112.7 107.4 116.5 Policy Acquisition Cost Amortization (10.9) 11.4 41.1 17.6 28.0 Intangible Asset Amortization 8.1 7.8 75.2 7.7 8.4 Interest Expense 7.7 7.7 7.7 8.3 9.8 Demutualization Expenses .9 .6 .2 .1 Other Operating Expenses 136.0 179.1 135.9 133.8 126.5 ------------ ------------- ------------ ------------ ------------ Total Expenses 549.9 653.0 770.7 640.3 640.0 ------------ ------------- ------------ ------------ ------------ Income (Loss) from Continuing Operations Before Income Taxes and Minority Interest 44.0 (60.6) (115.9) (28.5) 3.4 Applicable Income Taxes (Benefit) 12.3 (26.7) (26.0) (16.7) (2.6) ------------ ------------- ------------ ------------ ------------ Income (Loss) from Continuing Operations before Minority Interest 31.7 (33.9) (89.9) (11.8) 6.0 Minority Interest in Net Income of Subsidiaries (2.8) (3.3) (3.1) (2.7) (2.8) ------------ ------------- ------------ ------------ ------------ Income (Loss) Before Cumulative Effect of Accounting Changes 28.9 (37.2) (93.0) (14.5) 3.2 Cumulative Effect of Accounting Changes: Goodwill and Other Intangible Assets (130.3) ------------ ------------- ------------ ------------ ------------ Net Income (Loss) $ (101.4) $ (37.2) $ (93.0) $ (14.5) $ 3.2 ============ ============= ============ ============ ============ (1) Certain reclassifications have been made to prior periods to conform with the current presentation.
27 THE PHOENIX COMPANIES, INC. CONSOLIDATING FIRST QUARTER 2003 INCOME STATEMENT First Quarter 2003 (unaudited) ($ in millions)
Quarter ended March 31, 2003 Exclusions from Operating Segments Other Segments Segment Income -------------------------- -------------------------- -------------------------- Realized Life & Asset Venture Corporate & Investment Consolidated Annuity Management Capital Other Losses Other ------------ ------------ ------------ ------------ ------------ ------------ ------------ REVENUES Premiums $ 246.1 $ 246.1 Insurance and Investment Product Fees 132.9 78.3 $ 55.5 $ 4.8 $ (5.7) Net Investment Income 276.7 248.4 1.3 $ 23.9 1.0 2.1 Net Realized Investment Gains (Losses) (12.3) $ (12.3) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total Revenues 643.4 572.8 56.8 23.9 5.8 (12.3) (3.6) ------------ ------------ ------------ ------------ ------------ ------------ ------------ BENEFITS AND EXPENSES Policy Benefits and Increase in Policy Liabilities 350.8 347.3 3.5 Policyholder Dividends 116.5 108.0 8.5 Policy Acquisition Cost Amortization 28.0 27.5 .5 Intangible Asset Amortization 8.4 8.4 Intangible Asset Impairments Interest Expense 9.8 9.8 Demutualization Expenses Other Operating Expenses 126.5 72.6 50.2 5.1 (1.4) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total Expenses 640.0 555.4 58.6 18.4 9.0 (1.4) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Income (Loss) from Continuing Operations Before Income Taxes and Minority Interest 3.4 17.4 (1.8) 23.9 (12.6) (21.3) (2.2) Applicable Income Taxes (Benefit) (2.6) 3.8 (1.7) 8.4 (3.2) (8.9) (1.0) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Income (Loss) from Continuing Operations before Minority Interest 6.0 13.6 (.1) 15.5 (9.4) (12.4) (1.2) Minority Interest in Net Income of Subsidiaries (2.8) (2.8) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Income (Loss) from Continuing Operations $ 3.2 $ 13.6 $ (2.9) $ 15.5 $ (9.4) $ (12.4) $ (1.2) ============ ============ ============ ============ ============ ============ ============
28 THE PHOENIX COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET First Quarter 2003 (unaudited) ($ in millions, except par value)
December 31, March -------------------------------------------------------------------- 2003 2002 2001 2000 1999 -------------- --------------- --------------- ---------------- ---------------- ASSETS: Available-for-Sale Debt Securities $ 12,818.4 $ 11,894.1 $ 9,787.7 $ 6,022.3 $ 5,580.6 Held-to-Maturity Debt Securities 2,109.6 1,958.2 Equity Securities 361.1 391.2 290.9 335.5 437.2 Mortgage Loans 407.3 468.8 535.8 593.4 716.8 Real Estate 68.6 69.6 83.1 77.9 92.0 Policy Loans 2,202.9 2,195.9 2,172.2 2,105.2 2,042.6 Venture Capital Partnerships 227.4 228.6 291.7 467.3 338.1 Affiliate Equity Securities, at cost plus equity in earnings 131.3 134.7 150.6 103.7 106.6 Other Investments 352.9 329.3 292.9 235.7 188.0 -------------- --------------- --------------- ---------------- ---------------- Total Investments 16,569.9 15,712.2 13,604.9 12,050.6 11,460.1 Cash and Cash Equivalents 613.0 1,058.5 815.5 720.0 316.7 Deferred Policy Acquisition Costs 1,270.0 1,234.1 1,123.7 1,019.0 1,318.8 Goodwill and Other Intangible Assets 748.3 762.0 858.6 582.6 577.9 Other General Account Assets 740.6 676.2 563.2 564.4 689.6 Separate Account and Investment Trust Assets 5,990.7 5,793.1 5,570.0 5,376.6 5,923.9 -------------- --------------- --------------- ---------------- ---------------- Total Assets 25,932.5 25,236.1 22,535.9 20,313.2 20,287.0 ============== =============== =============== ================ ================ LIABILITIES: Policy Liabilities and Accruals 12,798.4 12,680.0 11,846.4 11,372.6 10,899.8 Policyholder Deposit Funds 3,679.0 3,395.7 1,515.2 678.4 538.2 Indebtedness 644.0 644.3 599.3 425.1 499.4 Delivery Obligations Under Stock Purchase Contracts 118.5 137.6 Other General Account Liabilities 686.4 553.7 614.4 619.6 669.7 Separate Account and Investment Trust Liabilities 5,990.7 5,793.1 5,564.9 5,376.6 5,923.9 ------------- --------------- --------------- ---------------- ---------------- Total Liabilities 23,917.0 23,204.4 20,140.2 18,472.3 18,531.0 ------------- --------------- --------------- ---------------- ---------------- STOCKHOLDERS' EQUITY: Common Stock and Additional Paid-In Capital 2,428.1 2,425.4 2,414.3 Deferred Compensation on Restricted Stock Units (2.8) Retained Earnings (Accumulated Deficit) (289.4) (292.6) (30.8) 1,820.7 1,731.5 Treasury Stock, at Cost (195.0) (195.7) (66.0) Accumulated Other Comprehensive Income 74.6 94.6 78.2 20.2 24.5 ------------- --------------- --------------- ---------------- ---------------- Total Stockholders' Equity 2,015.5 2,031.7 2,395.7 1,840.9 1,756.0 ------------- --------------- --------------- ---------------- ---------------- Total Liabilities and Stockholders' Equity $ 25,932.5 $ 25,236.1 $ 22,535.9 $ 20,313.2 $ 20,287.0 ============= =============== =============== ================ ================
29 THE PHOENIX COMPANIES, INC. INVESTMENT PORTFOLIO SUMMARY First Quarter 2003 (unaudited) ($ in millions, except par value)
Total Debt Securities Public Debt Securities Private Debt Securities ------------------------------- ------------------------------- ------------------------------ 3/31/2003 12/31/2002 3/31/2003 12/31/2002 3/31/2003 12/31/2002 -------------- --------------- -------------- --------------- -------------- -------------- DEBT SECURITIES BY CREDIT QUALITY (CARRYING VALUE) (1) AAA/AA/A $ 8,913.3 $ 7,960.9 $ 7,453.2 $ 6,549.8 $ 1,460.1 $ 1,411.1 BBB 2,781.8 2,811.5 1,768.4 1,767.1 1,013.4 1,044.4 -------------- --------------- -------------- --------------- -------------- -------------- Total Investment Grade 11,695.1 10,772.4 9,221.6 8,316.9 2,473.5 2,455.5 BB 767.9 785.7 544.2 577.4 223.7 208.3 B 155.6 105.4 106.1 82.2 49.5 23.2 CCC and Lower 97.8 118.5 42.0 53.3 55.8 65.2 In or Near Default 53.6 59.4 19.6 25.4 34.0 34.0 -------------- --------------- -------------- --------------- -------------- -------------- Total Debt Securities $ 12,770.0 $ 11,841.4 $ 9,933.5 $ 9,055.2 $ 2,836.5 $ 2,786.2 ============== =============== ============== =============== ============== ============== % Below Investment Grade 8.4% 9.0% 7.2% 8.2% 12.8% 11.9% - ------------------------------------------------------------------------------------------------------------------------------------ UNREALIZED GAINS AND LOSSES ON DEBT AND EQUITY SECURITIES As of March 31, 2003 Total Outside Closed Block Closed Block ------------------------------- ------------------------------- ------------------------------ Gains Losses Gains Losses Gains Losses -------------- --------------- -------------- --------------- -------------- -------------- Total Debt Securities $ 810.6 $ (181.3) $ 255.2 $ (107.4) $ 555.4 $ (73.9) Equity Securities 118.2 (17.3) 118.2 (17.3) -------------- --------------- -------------- --------------- -------------- -------------- Total Unrealized Gains (Losses) 928.8 $ (198.6) 373.4 $ (124.7) 555.4 $ (73.9) -------------- =============== -------------- =============== -------------- ============== Net Unrealized Gains 730.2 248.7 481.5 -------------- -------------- -------------- Applicable Policyholder Dividend Obligation 481.5 481.5 Applicable Deferred Acquisition Cost (Credit) 99.2 99.2 Applicable Deferred Income Tax 52.3 52.3 -------------- -------------- -------------- Total Offsets to Net Unrealized Gains 633.0 151.5 481.5 -------------- -------------- -------------- Net Unrealized Gains $ 97.2 $ 97.2 $ - ============== ============== ==============
(1) Excludes affiliated debt securities 30 THE PHOENIX COMPANIES, INC. REALIZED INVESTMENT GAINS AND LOSSES First Quarter 2003 (unaudited) ($ in millions, except par value)
December 31, March ----------------------------------------------------- 2003 2002 2001 2000 ------------ -------------- ------------- ------------- REALIZED INVESTMENT GAINS AND LOSSES Debt Security Impairments $ (25.6) $ (122.9) $ (72.6) $ (7.5) Equity Security Impairments (9.8) Venture Capital Partnerships Impairments (4.3) (5.1) Mortgage Loan Impairments (.4) (.6) (6.1) (1.8) Real Estate Impairments (6.1) Other Invested Asset Impairments (8.7) (22.6) (3.7) ------------ -------------- ------------- ------------- Total Impairment Losses (39.0) (160.4) (82.4) (15.4) ------------ -------------- ------------- ------------- Debt Security Net Transaction Gains (Losses) 41.3 48.4 21.7 (46.9) Equity Security Net Transaction Gains (Losses) (2.2) 2.1 (8.8) 146.8 Venture Capital Net Investment Gains (Losses) (9.5) Mortgage Loan Net Transaction Gains (Losses) (.4) .2 7.1 4.8 Real Estate Net Transaction Gains (Losses) .5 4.0 (2.5) 1.8 Other Invested Asset Net Transactions Gains (Losses) (3.0) (1.9) (7.5) (1.9) ------------ -------------- ------------- ------------- Total Net Transactions Gains 26.7 52.8 10.0 104.6 ------------ -------------- ------------- ------------- Net Realized Investment Gains (Losses) (12.3) (107.6) (72.4) 89.2 ============ ============== ============= ============= Closed Block Applicable PDO (Reduction) 8.5 (40.3) (15.4) Applicable Deferred Acquisition Costs (Credit) .4 (7.2) 10.5 (10.7) Applicable Deferred Income Tax (Credit) (8.8) (20.8) (24.5) 32.9 ------------ -------------- ------------- ------------- Net Realized Investment Gains (Losses Included in Net Income) $ (12.4) $ (39.3) $ (43.0) $ 67.0 ============ ============== ============= =============
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