10-K

                                                 UNITED STATES
                                       SECURITIES AND EXCHANGE COMMISSION
                                             Washington, D.C. 20549

                                                   FORM 10-K

                                                   (Mark one)
                 ( X )      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                            SECURITIES EXCHANGE ACT OF 1934

                                  For the fiscal year ended December 31, 2003

                                                       OR

                 (   )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                            SECURITIES EXCHANGE ACT OF 1934

                              For the transition period from ________ to ________

                                        Commission file number 333-55268

                                          THE PHOENIX COMPANIES, INC.
                             (Exact name of registrant as specified in its charter)

                         Delaware                                                   06-1599088
              (State or other jurisdiction of                          (I.R.S. Employer Identification No.)
              incorporation or organization)

             One American Row, Hartford, Connecticut                                   06102-5056
             (Address of principal executive offices)                                  (Zip Code)

                               Registrant's telephone number, including area code
                                                 (860) 403-5000

Securities registered pursuant to Section 12(b) of the Act:

                              Title of each class                    Name of each exchange on which registered
                         Common stock, $.01 par value                         New York Stock Exchange
                 7.45% Quarterly Interest Bonds, due 2032                     New York Stock Exchange
                              7.25% Equity Units                              New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
                                            Stock Purchase Contracts

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined I rule 12b-2 of the Act).
YES  X  NO ___

As of March 5, 2004, the aggregate market value of voting common equity held by non-affiliates of the
registrant was $1,347,288,765 based on the last reported sale price of the registrant's common stock on the New
York Stock Exchange. On March 5, 2004, the registrant had 94,546,580 shares of common stock outstanding; it had
no non-voting common equity.

                                      DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days
after the end of the registrant's fiscal year are incorporated by reference in Part III.




                                                       1


                                               TABLE OF CONTENTS

         Item No.  Description                                                                     Page  
Part I      1      Business.....................................................................      3
            2      Properties...................................................................     17
            3      Legal Proceedings............................................................     17
            4      Submission of Matters to a Vote of Security Holders..........................     19
Part II     5      Market of Registrant's Common Equity and Related Stockholder Matters.........     19
            6      Selected Financial Data......................................................     20
            7      Management's Discussion and Analysis of Financial Condition and Results
                     of Operations..............................................................     23
            7A     Quantitative and Qualitative Disclosures About Market Risk...................     75
            8      Financial Statements and Supplementary Data..................................     79
                   Report of Independent Auditors...............................................    F-1
                   Consolidated Balance Sheet as of December 31, 2003 and 2002..................    F-2
                   Consolidated Statement of Income and Comprehensive Income For the
                     Years Ended December 31, 2003, 2002 and 2001...............................    F-3
                   Consolidated Statement of Cash Flows For the Years Ended
                     December 31, 2003, 2002 and 2001...........................................    F-4
                   Consolidated Statement of Changes in Stockholders' Equity and
                     Comprehensive Income For the Years Ended December 31, 2003, 2002 and 2001..    F-5
                   Notes to Consolidated Financial Statements...................................    F-6
            9      Changes in and Disagreements With Accountants on Accounting and
                     Financial Disclosure.......................................................     79
            9A     Controls and Procedures......................................................     79
Part III    10     Directors and Executive Officers of the Registrant...........................     79
            11     Executive Compensation.......................................................     81
            12     Security Ownership of Certain Beneficial Owners and Management...............     81
            13     Certain Relationships and Related Transactions...............................     85
            14     Principal Accountant Fees and Services.......................................     85
Part IV     15     Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............     85
Signatures......................................................................................     87
Exhibit Index...................................................................................    E-1


                                                       2


Unless otherwise stated, at all times on and after June 25, 2001, the effective date of Phoenix Home Life
Mutual Insurance Company's demutualization, "Phoenix," "we," "our" or "us" means The Phoenix Companies, Inc.,
"PNX," and its direct and indirect subsidiaries. At all times prior to June 25, 2001, "we," "our" or "us" means
Phoenix Home Life Mutual Insurance Company (which has been known as Phoenix Life Insurance Company since June
25, 2001) and its direct and indirect subsidiaries. Furthermore, "Phoenix Life" refers to Phoenix Life
Insurance Company, "Life Companies" refers to Phoenix Life and its direct and indirect subsidiaries and
"Phoenix Investment Partners" refers to Phoenix Investment Partners, Ltd. and its direct and indirect
subsidiaries.


                                                     PART I

Item 1.   Business

                                            Description of Business

We are a manufacturer of insurance, annuity and asset management products for the accumulation, preservation
and transfer of wealth. We provide products and services to affluent and high-net-worth individuals through
their advisors and to institutions directly and through consultants. We offer a broad range of life insurance,
annuity and asset management products and services through a variety of distributors.

The affluent and high-net-worth market is a growing market with significant demand for customized products and
services. We define affluent as those households with net worths of $500,000 or greater, excluding their
primary residence. We define high-net-worth, a subset of the affluent category, as those households that have
net worth, excluding primary residence, of over $1,000,000. Our wealth management products and services are
designed to assist advisors and their clients in this target market to achieve three main goals:

         •  the accumulation of wealth, primarily during an individual's working years;

         •  the preservation of income and wealth during retirement and following death; and

         •  the efficient transfer of wealth in a variety of situations, including through estate planning,
            business continuation planning and charitable giving.

We provide our wealth management products and services through various distribution channels, such as:

         •  non-affiliated financial intermediaries such as national and regional broker-dealers, banks,
            financial planning firms, advisor groups and other insurance companies; and

         •  our affiliated retail producers, most of whom are registered representatives of our wholly-owned
            retail broker-dealer WS Griffith Advisors, Inc., or WS Griffith.

Segments

We have two operating segments, Life and Annuity and Asset Management, which include three product lines: life
insurance, annuities and asset management. Both segments serve the affluent and high-net-worth market, which
presents opportunities to leverage our capabilities and relationships. In addition to managing third-party
assets, Asset Management manages both the general accounts of the Life Companies and many of the separate
account portfolios available through variable life and annuity products.

We report our remaining results in two non-operating segments -- Venture Capital and Corporate and Other.
Venture Capital includes limited partnership interests in venture capital funds, leveraged buyout funds and
other


                                                       3


private equity partnerships sponsored and managed by third parties. The segment does not include similar
investments that are part of the closed block. Corporate and Other includes indebtedness; unallocated assets,
liabilities and expenses; and certain businesses not of sufficient scale to report independently. These
segments are significant for financial reporting purposes, but do not contain products or services relevant to
our core manufacturing operations.

         Operating Segments


                                         SUMMARY OF OPERATING SEGMENTS
                                               December 31, 2003

Market Presence                        Distribution Channels                 Products

Life and Annuity
                                       Non-affiliated distribution:          •  Variable universal life
                                                                                insurance
•  $45.5 billion of net life           •  National and regional              •  Universal life insurance
   insurance inforce                      broker-dealers                     •  Term life insurance
                                       •  Financial planning firms           •  Variable annuities
•  $7.1 billion annuity assets         •  Advisor groups                     •  Immediate annuities
   under management                    •  Insurance companies                •  Private placement life
                                       •  Banks                                 insurance and annuities
                                                                             •  Executive benefits
Principal operating subsidiaries:
•  Phoenix Life                        Affiliated distribution:
•  PHL Variable Insurance Company      •  WS Griffith
                                       •  Main Street Management Company


Asset Management
                                       Non-affiliated distribution:          Private client products:
•  $59.2 billion assets under          •  National and regional              •  Managed accounts
   management                             broker-dealers                     •  Mutual funds
                                       •  Advisor groups
                                       •  Institutional asset management
Principal operating subsidiary:           consultants                        Institutional products:
•  Phoenix Investment Partners         •  Financial planning firms           •  Institutional accounts
                                                                             •  Closed-end funds
                                       Affiliated distribution:              •  Structured products
                                       •  Affiliated asset managers          •  Phoenix Life general and
                                       •  WS Griffith Advisors, Inc.            separate accounts
                                       •  Main Street Management Company

Life and Annuity Segment

Our Life and Annuity segment offers a variety of life insurance and annuity products through affiliated and
non-affiliated distributors. We believe our competitive advantage in this segment consists of five main
components:

   •  our innovative products;
   •  our diversified asset management capability;
   •  our distribution relationships with institutions that have access to our target market and the
      value-added the distributors provide those institutions;
   •  our ability to combine products and services that distributors and their clients find attractive; and
   •  our underwriting expertise.

Life and Annuity Products

         Life Products
Our life insurance products include variable universal life, universal life, term life and other insurance
products. Because of our target market, we are a leading writer of second-to-die life insurance. Second-to-die
products are

                                                       4


typically used for estate planning purposes and insure two lives rather than one, with the policy proceeds paid
after the death of both insured individuals.

Variable Universal Life. Variable universal life products provide insurance coverage and give the policyholder
various investment choices, flexible premium payments and coverage amounts and limited guarantees. The
policyholder may direct premiums and cash value into a variety of separate investment accounts, accounts that
are maintained separately from the other assets of the Life Companies and are not part of the general accounts
of the Life Companies, or into the general account. In separate investment accounts, the policyholder bears the
entire risk of the investment results. We collect fees for the management of these various investment accounts
and the net return is credited directly to the policyholder's accounts. With some variable universal products,
by maintaining a certain premium level the policyholder receives guarantees that protect the policy's death
benefit if, due to adverse investment experience, the policyholder's account balance is zero. We retain the
right within limits to adjust the fees we assess for providing administrative services. We also collect fees to
cover mortality costs; these fees may be adjusted by us but may not exceed contractual limits.

Universal Life. Universal life products provide insurance coverage on the same basis as variable universal life
products, except that premiums, and the resulting accumulated balances, are allocated only to our general
account for investment. Universal life products may allow the policyholder to increase or decrease the amount
of death benefit coverage over the term of the policy, and also may allow the policyholder to adjust the
frequency and amount of premium payments. Some universal life products provide guarantees that protect the
policy's death benefit if specified minimum premiums are paid. We credit premiums, net of expenses, to an
account maintained for the policyholder. We credit interest to the account at rates that we determine, subject
to certain minimums. Specific charges are made against the account for expenses. We also collect fees to cover
mortality costs; these fees may be adjusted by us but may not exceed contractual limits.

Term Life. Term life insurance provides a guaranteed benefit upon the death of the insured within a specified
time period, in return for the periodic payment of premiums. Specified coverage periods range from one to
thirty years, but not longer than the period over which premiums are paid. Premiums may be level for the
coverage period or may vary. Term insurance products are sometimes referred to as pure protection products, in
that there are normally no savings or investment elements. Term contracts expire without value at the end of
the coverage period. Our term insurance policies allow policyholders to convert to permanent coverage,
generally without evidence of insurability.

         Annuity Products
We offer a variety of variable annuities to meet the accumulation and preservation needs of the affluent and
high-net-worth market. Deferred annuities, in which funds accumulate for a number of years before periodic
payments begin, enable the contractholder to save for retirement and also provide options that protect against
outliving assets during retirement. Immediate annuities are purchased by means of a single lump sum payment and
begin paying periodic income immediately. We believe this product is especially attractive to those affluent
and high-net-worth retirees who are rolling over pension or retirement plan assets and seek an income stream
based entirely or partly on equity market performance.

Variable annuities are separate account products, which means that the contractholder bears the investment risk
as deposits are directed into a variety of separate investment accounts. The contractholder typically can also
direct funds to a general account option in which case we credit interest at rates we determine, subject to
certain minimums. Contractholders also may elect certain enhanced death benefit guarantees, for which they are
assessed a specific charge. Our major sources of revenues from annuities are mortality and expense fees charged
to the contractholder, generally determined as a percentage of the market value of any underlying separate
account balances, and the excess of investment income over credited interest for funds invested in our general
account.

         Other Products and Services
Life and Annuity is focused on the development of other products and distribution relationships that respond to
the affluent and high-net-worth market's demand for wealth management solutions.

                                                       5


Executive Benefits. Many of our products are also designed to be used by corporations to fund special deferred
compensation plans and benefit programs for key employees, commonly referred to as executive benefits. We view
these products as a source of growing fee-based business.

Private Placement Life and Annuity Products. Private placement products are individually customized life and
annuity offerings that include single premium life, second-to-die life and variable annuity products. These
products have minimum deposits of over $500,000, targeting the wealthiest segment of the high-net-worth market.
The average face amount of life insurance policies sold by Philadelphia Financial Group, our private placement
distributor, in 2003 was $21.9 million and the average annuity deposit was $2.8 million.

Underwriting

Insurance underwriting is the process of examining, accepting or rejecting insurance risks, and classifying
those accepted in order to charge appropriate premiums or mortality charges. Underwriting also involves
determining the amount and type of reinsurance appropriate for a particular type of risk.

We believe we have particular expertise in evaluating the underwriting risks relevant to our target market. We
believe this expertise enables us to make appropriate underwriting decisions, including, in some instances, the
issuance of policies on more competitive terms than other insurers would offer. Phoenix Life has a long
tradition of underwriting innovation. Beginning in 1955, we were among the first insurance companies to offer
reduced rates to women. We believe we were the second company to offer reduced rates to non-smokers, beginning
in 1967. Our underwriting team includes doctors and other medical staff to ensure, among other things, that we
are focused on current developments in medical technology.

Our underwriting standards for life insurance are intended to result in the issuance of policies that produce
mortality experience consistent with the assumptions used in product pricing. The overall profitability of our
life insurance business depends, to a large extent, on the degree to which our mortality experience compares to
our pricing assumptions. Our underwriting is based on our historical mortality experience, as well as on the
experience of the insurance industry and of the general population. We continually compare our underwriting
standards to those of the industry to assist in managing our mortality risk and to stay abreast of industry
trends.

Our life insurance underwriters evaluate policy applications on the basis of the information provided by the
applicant and others. We use a variety of methods to evaluate certain policy applications, such as those where
the size of the policy sought is particularly large, or where the applicant is an older individual, has a known
medical impairment or is engaged in a hazardous occupation or hobby. Consistent with industry practice, we
require medical examinations and other tests depending upon the age of the applicant and the size of the
proposed policy.

In the executive benefits market, we issue life policies covering multiple lives on a guaranteed issue basis,
within specified limits per life insured, whereby the amount of insurance issued per life on a guaranteed basis
is related to the total number of lives being covered and the particular need for which the product is being
purchased. Guaranteed issue underwriting applies to employees actively at work, and product pricing reflects
the additional guaranteed issue underwriting risk.

Reserves

We establish and report liabilities for future policy benefits on our consolidated balance sheet to reflect the
obligations under our insurance policies and contracts. Our liability for variable universal life insurance and
universal life insurance policies and contracts is equal to the cumulative account balances, plus additional
reserves we establish for policy riders. Cumulative account balances include deposits plus credited interest,
less expense and mortality charges and withdrawals. Reserves for future policy benefits for whole life policies
are calculated based on actuarial assumptions that include investment yields and mortality.

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Reinsurance

While we have underwriting expertise and have experienced favorable mortality trends, we believe it is prudent
to spread the risks associated with our life insurance products through reinsurance. As is customary in the
life insurance industry, our reinsurance program is designed to protect us against adverse mortality experience
generally and to reduce the potential loss we might face from a death claim on any one life.

We cede risk to other insurers under various agreements that cover individual life insurance policies. The
amount of risk ceded depends on our evaluation of the specific risk and applicable retention limits. Under the
terms of our reinsurance agreements, the reinsurer agrees to reimburse us for the ceded amount in the event a
claim is incurred. However, we remain liable to our policyholders for ceded insurance if any reinsurer fails to
meet its obligations. Since we bear the risk of nonpayment by one or more of our reinsurers, we cede business
to well-capitalized, highly rated insurers. While our current retention limit on any one life is $10 million
($12 million on second-to-die cases), we may cede amounts below those limits on a case-by-case basis depending
on the characteristics of a particular risk. Typically our reinsurance contracts allow us to reassume ceded
risks after a specified period. This right is valuable where our mortality experience is sufficiently favorable
to make it financially advantageous for us to reassume the risk rather than continue paying reinsurance
premiums.

We reinsure 80% of the mortality risk on a block of policies acquired from Confederation Life Insurance
Company, or Confederation Life, in 1997. We entered into two separate reinsurance agreements in 1998 and 1999
to reinsure a substantial portion of our otherwise retained individual life insurance business. In addition, we
reinsure up to 90% of the mortality risk on some new issues. As of December 31, 2003, we had ceded $77.2
billion in face amount of reinsurance, representing 62.1% of our total face amount of $122.6 billion of life
insurance inforce.

On January 1, 1996, we entered into a reinsurance arrangement that covers 100% of the excess death benefits and
related reserves for most variable annuity policies issued through December 31, 1999, including subsequent
deposits.

The following table lists our five principal life reinsurers, together with the reinsurance recoverables on a
statutory basis as of December 31, 2003, the face amount of life insurance ceded as of December 31, 2003, and
the reinsurers' A.M. Best ratings.

                                                  Reinsurance       Face Amount of
                                                  Recoverable       Life Insurance        A.M. Best
Reinsurer                                           Balances           Ceded              Rating(1)
                                                 --------------    --------------       ------------
Swiss Re Life & Health America, Inc............  $ 16.8 million    $ 12.6 billion            A+
Allianz Life Insurance Co. of North America....  $  5.5 million    $ 11.6 billion            A+
AEGON USA(2)....................................  $ 16.7 million    $ 11.4 billion            A+
Employers Reassurance Corporation..............  $  9.0 million    $  8.6 billion            A-
RGA Reinsurance Company........................  $  3.1 million    $  7.9 billion            A+
- --------
(1)  A.M. Best ratings are as of December 31, 2003.
(2)  Amounts include cessions to Transamerica Financial Life Insurance Company and Transamerica, both of which
    are subsidiaries of AEGON.

Life and Annuity Financial Information

See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for
Life and Annuity segment financial information.

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Asset Management Segment

We conduct activities in Asset Management with a focus on two customer groups -- private client and
institutional. Through our private client group, we provide asset management services principally on a
discretionary basis, with products consisting of open-end mutual funds and managed accounts. Managed accounts
include intermediary programs sponsored and distributed by non-affiliated broker-dealers, and direct managed
accounts which are sold and administered by us. These two types of managed accounts generally require minimum
investments of $100,000 and $1 million, respectively. Our private client business also provides transfer
agency, accounting and administrative services to most of our open-end mutual funds.

Through our institutional group, we provide discretionary and non-discretionary investment management services
primarily to corporations, multi-employer retirement funds and foundations, as well as to endowments and
special purpose funds. In addition, we manage closed-end funds and alternative financial products such as
structured finance products. Structured finance products include collateralized obligations such as
collateralized debt obligations, or CDOs, backed by portfolios of public high yield bonds, emerging markets
bonds, commercial mortgage-backed or asset-backed securities.

Affiliated Asset Managers

We offer investment management services through our affiliated asset managers. We provide our affiliated asset
managers with a consolidated platform of distribution and administrative support, thereby allowing each manager
to devote a high degree of focus to investment management activities. On an ongoing basis, we monitor the
quality of the affiliates' products by assessing their performance, style consistency and the discipline with
which they apply their investment process.


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Our affiliated managers, and their respective styles, products and assets under management, are as follows:

- ---------------------------------------------------------------------------------------------------------------
                                                                                                Assets Under
                                                                                                Management at
       Affiliated Advisor/                                                                    December 31, 2003
       Ownership/Location               Investment Styles                Products               (in billions)
- ---------------------------------------------------------------------------------------------------------------
GoodwinSM Capital Advisors(1),    Fixed Income -                 Mutual Funds
or Goodwin  / 100% /             Multi-Sector                   Institutional Accounts
Hartford, CT                                                    Structured Finance Products
                                                                Phoenix Life General Account        $20.6
- ---------------------------------------------------------------------------------------------------------------
Seneca Capital Management LLC,   Equities -                     Mutual Funds
or Seneca / 68.4% /              Growth with Controlled Risk    Sponsored Managed Accounts
San Francisco, CA                Earnings-Driven Growth         Direct Managed Accounts
                                 Tax Sensitive Growth           Institutional Accounts
                                 Fixed Income -                 Structured Finance Products
                                 Value Driven                                                       $14.2
- ---------------------------------------------------------------------------------------------------------------
Kayne Anderson Rudnick           Equities -                     Sponsored Managed Accounts
Investment Management, LLC,      Quality at Reasonable Price    Direct Managed Accounts
or Kayne Anderson                                               Institutional Accounts
Rudnick / 60.0% /                                               Mutual Funds
Los Angeles, CA                                                                                     $10.3
- ---------------------------------------------------------------------------------------------------------------
Duff & Phelps Investment         Equities -                     Mutual Funds
Management Co., or DPIM /        REITs                          Sponsored Managed Accounts
100% / Chicago, IL               Large Cap Value                Direct Managed Accounts
                                 Small Cap Core                 Institutional Accounts
                                 Fixed Income -                 Closed-end Funds
                                 Core                                                                $5.2
- ---------------------------------------------------------------------------------------------------------------
Engemann Asset Management,       Equities -                     Mutual Funds
Inc., or Engemann /              Classic Growth                 Sponsored Managed Accounts
100% / Pasadena, CA                                             Direct Managed Accounts              $4.4
- ---------------------------------------------------------------------------------------------------------------
OakhurstSM Asset Managers(1),      Equities -                     Mutual Funds
or Oakhurst / 100% /             Systematic Value
Scotts Valley, CA                                                                                    $2.3
- ---------------------------------------------------------------------------------------------------------------
Zweig Fund Group, or Zweig /     Equities/Fixed Income -        Mutual Funds
100% / New York, NY              Tactical Asset Allocation      Closed-end Funds
                                 Market Neutral                                                      $1.4
- ---------------------------------------------------------------------------------------------------------------
Walnut Asset Management LLC,     Equities -                     Direct Managed Accounts
or Walnut / 79.4% /              Relative Value                 Institutional Accounts
Philadelphia, PA                 Fixed Income -
                                 Quality Fixed Income                                                $0.8
- ---------------------------------------------------------------------------------------------------------------
Total Assets Under Management                                                                       $59.2
- ---------------------------------------------------------------------------------------------------------------

(1)  Goodwin and Oakhurst are divisions of Phoenix Investment Counsel, Inc., an indirect wholly-owned
     subsidiary of Phoenix Investment Partners.

Asset Management Products

         Private Client Products
Managed Accounts. We provide investment management services through participation in 52 intermediary managed
account programs sponsored by various broker-dealers such as Merrill Lynch, Morgan Stanley and Salomon Smith
Barney. These programs enable the sponsor's client to select one or more of Phoenix Investment Partners'
affiliated asset managers as the provider of discretionary portfolio management services, in return for an
asset-based fee paid by the client to the broker-dealer, which then pays a management fee to us. Seven of these
programs include more than one of our affiliated asset managers. As of December 31, 2003, we managed 57,655
accounts relating to such intermediary managed account programs, representing approximately $10.7 billion of
assets under management. In addition, we offer direct managed accounts, which are individual client accounts
sold and administered by us. We managed 3,615 direct managed accounts representing $4.9 billion of assets

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under management.

Mutual Funds. Our affiliated asset managers are investment advisors or sub-advisors to 39 open-end mutual
funds, which had aggregate assets under management of approximately $7.6 billion as of December 31, 2003. These
mutual funds are available primarily to retail investors. Of these funds, 14 are included as investment choices
to purchasers of our variable life and variable annuity products.

         Institutional Products
Institutional Accounts. We have over 750 institutional clients, consisting primarily of medium-sized pension
and profit sharing plans of corporations, government entities and unions, as well as endowments and
foundations, public and multi-employer retirement funds and other special purpose funds. Our institutional
assets under management totaled $12.7 billion as of December 31, 2003.

Closed-End Funds. We manage the assets of five closed-end funds, each of which is traded on the New York Stock
Exchange: DTF Tax-Free Income Inc.; Duff & Phelps Utility and Corporate Bond Trust Inc.; DNP Select Income
Inc.; The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc. Our closed-end fund assets under management
totaled $4.2 billion as of December 31, 2003.

Structured Finance Products. We manage nine structured finance products, and also act as a sub-advisor to a
structured finance product sponsored by a third party. These products are collateralized obligations backed by
portfolios of high yield bonds, emerging markets bonds and/or asset-backed securities. Our structured bond
products assets under management totaled $3.6 billion as of December 31, 2003.

Life Companies' General Accounts and Related Assets. Phoenix Investment Partners manages most of the assets of
the Life Companies' general accounts, as well as certain assets of Phoenix-related entities such as separate
accounts and non-life subsidiaries. As of December 31, 2003, Phoenix Investment Partners managed $15.5 billion
of the Life Companies' assets.



                                                      10


Asset Management Assets under Management

The following table presents information regarding the assets under management by Phoenix Investment Partners
for the years indicated:

Assets Under Management                                          As of December 31,
                                                  --------------------------------------------------
(in millions)                                          2003             2002             2001
                                                  ---------------  ---------------  ---------------
TOTAL
Deposits.......................................... $    7,032.5     $   10,134.4     $    9,528.7
Redemptions and withdrawals.......................     (8,375.5)        (9,950.3)        (9,069.7)
Acquisitions(1)(3)(4) and dispositions............            --            7,755.5            854.4
Performance.......................................      5,788.1         (7,863.2)        (7,254.5)
Other(2)(5).......................................          750.8          1,789.0          1,438.4
                                                  ---------------  ---------------  ---------------
Change in assets under management.................      5,195.9          1,865.4         (4,502.7)
Beginning balance.................................     53,955.5         52,090.1         56,592.8
                                                  ---------------  ---------------  ---------------
Ending balance.................................... $   59,151.4     $   53,955.5     $   52,090.1
                                                  ===============  ===============  ===============
INSTITUTIONAL PRODUCTS
Deposits.......................................... $    2,974.9     $    4,380.4     $    4,989.0
Redemptions and withdrawals.......................     (3,452.2)        (4,480.0)        (3,766.9)
Acquisitions(1)(3) and dispositions...............           --            1,507.7            105.9
Performance.......................................      2,502.3         (2,773.1)        (1,152.2)
Other(2)(5).......................................         (579.2)         1,789.0          1,438.4
                                                  ---------------  ---------------  ---------------
Change in assets under management.................      1,445.8            424.0          1,614.2
Beginning balance.................................     32,454.2         32,030.2         30,416.0
                                                  ---------------  ---------------  ---------------
Ending balance.................................... $   33,900.0     $   32,454.2     $   32,030.2
                                                  ===============  ===============  ===============
PRIVATE CLIENT PRODUCTS
Mutual Funds
Deposits.......................................... $    1,789.6     $    1,332.8     $    1,817.8
Redemptions and withdrawals.......................     (2,266.7)        (2,754.0)        (2,756.4)
Acquisitions(4)...................................          --              333.5             --
Performance.......................................      1,748.0         (1,811.8)        (2,556.5)
                                                  ---------------  ---------------  ---------------
Change in assets under management.................      1,270.9         (2,899.5)        (3,495.1)
Beginning balance.................................      8,322.1         11,221.6         14,716.7
                                                  ---------------  ---------------  ---------------
Ending balance.................................... $    9,593.0     $    8,322.1     $   11,221.6
                                                  ===============  ===============  ===============
Intermediary Managed Account Programs
Deposits.......................................... $    2,064.2     $    4,117.0     $    2,607.7
Redemptions and withdrawals.......................     (2,362.1)        (2,317.9)        (2,316.0)
Acquisitions(3)(4)................................           --            4,723.5             10.7
Performance.......................................      1,590.3         (2,903.1)        (2,886.9)
                                                  ---------------  ---------------  ---------------
Change in assets under management.................      1,292.4          3,619.5         (2,584.5)
Beginning balance.................................      9,439.1          5,819.6          8,404.1
                                                  ---------------  ---------------  ---------------
Ending balance.................................... $   10,731.5     $    9,439.1     $    5,819.6
                                                  ===============  ===============  ===============
Direct Managed Accounts
Deposits.......................................... $      203.8     $      304.2     $      114.2
Redemptions and withdrawals.......................       (294.5)          (398.4)          (230.4)
Acquisitions(1)(3)(4).............................            --            1,190.8            737.8
Performance.......................................        (52.5)          (375.2)          (658.9)
Other(6)..........................................       1,330.0             --               --
                                                  ---------------  ---------------  ---------------
Change in assets under management.................      1,186.8            721.4            (37.3)
Beginning balance.................................      3,740.1          3,018.7          3,056.0
                                                  ---------------  ---------------  ---------------
Ending balance.................................... $    4,926.9     $    3,740.1     $    3,018.7
                                                  ===============  ===============  ===============
_________

(1) Includes assets of $0.7 billion related to the Walnut acquisition in 2001.
(2) Includes assets of $0.9 billion related to the Phoenix initial public offering in 2001.
(3) Includes assets of $0.1 billion from Capital West, now part of DPIM, in 2001.
(4) Includes assets of $7.8 billion from Kayne Anderson Rudnick in 2002.

                                                      11


(5) Includes net change in the Life Companies' general account assets.
(6) Includes reclassification of certain Seneca funds from institutional products to direct managed of $1.3
    billion.

Asset Management Financial Information

See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for
Asset Management segment financial information.

Competition

We face significant competition from a wide variety of financial institutions, including insurance companies
and other asset management companies, as well as from proprietary products offered by our distribution sources
such as banks, broker-dealers and financial planning firms. Our competitors include larger and, in some cases,
more highly-rated insurance companies and other financial services companies. Many competitors offer similar
products, use similar distribution sources, offer less expensive products, have greater access to key
distribution channels and have greater resources than us.

Competition in our businesses is based on several factors including ratings, investment performance, access to
distribution channels, service to advisors and their clients, product features, fees charged and commissions
paid.

As we continue to focus on the development of our non-affiliated distribution system, we increasingly must
compete with other providers of life insurance, annuity and private client products to attract and maintain
relationships with productive distributors that have the ability to sell our products. In particular, our
ability to attract distributors for our products could be adversely affected if for any reason our products
became less competitive or concerns arose about our asset quality or ratings.

Distribution

We target a broad range of distribution relationships with advisors and distribution entities that we consider
to have exceptional access to our target market. We seek to build relationships with distributors who are, or
who have access to, advisors to the affluent and high-net-worth market.

Our distribution strategy is to increase sales of profitable products by increasing the number of producers
selling Phoenix products within existing relationships, by offering a greater array of products through
existing distribution sources and by developing new relationships.

During 2002 and 2003, we focused on increasing the number of producers selling Phoenix products within existing
relationships. In 2003, over 2,600 new producers wrote life insurance business with us, over 2,300 new
producers wrote annuity business with us and over 9,100 new producers placed asset management business with us.

We also engage in collaborative account development among our life insurance, annuity and asset management
wholesalers through joint marketing presentations and specialized services to advisors. We also believe having
many of the same investment choices available in each of our product lines contributes to the success of our
strategy.

Non-affiliated Distribution

We began to use non-affiliated distribution in 1954, primarily by selling life insurance products through
agents of other insurance companies. For many years, non-affiliated distribution has represented a significant
portion of our sales and in recent years we increased our emphasis on this distribution source.

                                                      12


Since late 1999, we have significantly strengthened our wholesaling teams, in order to enhance our
relationships with distributors in each of our product areas. As of December 31, 2003, we employed 69 life
insurance wholesalers, 18 variable annuity wholesalers and 20 asset management wholesalers, compared to 42, one
and 25, respectively, as of December 31, 1999.

During 2003, 2002 and 2001, 85%, 89% and 81%, respectively, of total life insurance sales, as measured by new
annualized and single premiums, were from non-affiliated distribution sources. Annuity sales through
non-affiliated distribution accounted for 84%, 87% and 80% of gross annuity deposits during 2003, 2002 and
2001, respectively. Asset management sales through non-affiliated distribution accounted for 99% of sales in
all three years.

State Farm. In March 2001, we entered into an agreement with a subsidiary of State Farm Mutual Automobile
Insurance Company, or State Farm, to provide our life and annuity products and related services to State Farm's
affluent and high-net-worth customers, through qualified State Farm agents. We are the only third-party
provider of life and annuity products and services at State Farm. By the end of 2003, we had trained and
certified approximately 8,950, or 87%, of State Farm's approximately 10,300 securities licensed agents to sell
Phoenix products. Our relationship with State Farm gives us potential access to approximately 30% of the
high-net-worth households in the U.S. For 2003, State Farm ranked second among our distributors in the sale of
life insurance and third in the sale of annuity products.

National and Regional Broker-Dealers. National and regional broker-dealers are brokerage firms that engage
financial advisors as employees rather than as independent contractors. To meet the evolving wealth management
needs of their customers, national and regional broker-dealers offer products from third-party providers such
as Phoenix. Simultaneously, many of these firms are seeking to reduce the number of relationships they have
with product providers in favor of those that offer a range of products together with services designed to
support advisors' sales efforts. We believe our ability to offer a variety of life insurance, annuity and asset
management products and services positions us to benefit from these trends. We have relationships across all
product lines in many important distribution outlets that target the high-net-worth market including UBS, A.G.
Edwards and Merrill Lynch.

Advisor Groups. The recent industry trend toward affiliations among small independent financial advisory firms
has led to advisor groups becoming a distinct class of distributors. We believe we have a particularly strong
position as a provider of life insurance products through Partners Marketing Group, Inc., or PartnersFinancial,
which, since 1999, has been an important component of the National Financial Partners, or NFP, organization.
Overall life sales with NFP grew 24% in 2002 and an additional 6% in 2003.

Insurance Companies. Insurance companies have been moving their agents into an advisor/planner role, resulting
in a need to provide their agents, particularly their top producers, with a wider selection of life insurance
products to sell. Insurance companies responded to this need, in part, by negotiating arrangements with
third-party providers, including other insurance companies. We have distribution relationships with financial
services providers such as AXA Financial Inc., or AXA, and its brokerage outlet for internal producers, AXA
Network. Life sales through AXA Network almost doubled in 2003. In addition, we continue to maintain
relationships with individual agents of other companies and independent agents.

Financial Planning Firms. Financial planning firms are brokerage firms that engage financial advisors as
independent contractors rather than as employees. Financial planning firms have begun to expand their offerings
to include wealth preservation and transfer products. To capitalize on this trend, we establish relationships
with the financial planning firm, and then build relationships with the individual advisors within the firm.
This approach permits us to maximize the number of individual registered representatives who potentially may
sell our products.

Emerging Distribution Sources. Philadelphia Financial Group offers private placement life and annuity products
through a variety of distribution sources with access to the high-net-worth market including family offices,

                                                      13


financial institutions, accountants and attorneys. We also offer our life and annuity products through
non-traditional sources such as private banks, private banking groups within commercial banks and regional and
commercial banks that are focused on their high-net-worth client base.

Affiliated Distribution

Our affiliated retail distribution channel consists primarily of Phoenix Life career producers. Substantially
all of our career producers are licensed securities representatives of our wholly-owned broker-dealer, WS
Griffith. Our career producers principally sell our Life Companies' products, but may sell the products of
other companies as well. In 2003, our Life Companies' products represented 64% of its total variable annuity
deposits and 62% of its total variable universal life premiums. WS Griffith has over 700 affiliated retail
producers.

Our affiliated distribution capability also includes Main Street Management Company, a wholly-owned
broker-dealer with approximately 250 registered representatives and a strong focus on variable products and
mutual funds.

Institutional Products Distribution

We also have an Institutional marketing group, which markets our institutional product offering to consultants
and other institutional clients. The group also provides coordinated marketing support and services. These
shared services are complemented by experienced institutional salespeople and client service professionals at
several of our affiliated asset managers.

We direct our institutional marketing efforts primarily toward consultants who are retained by institutional
investors to assist in competitive reviews of potential investment managers. These consultants recommend
investment managers to their institutional clients based on their review of investment managers' performance
histories and investment styles. We maintain relationships with these consultants and provide information and
materials to them in order to facilitate their review of our funds.

Support and Services

We believe we have a competitive advantage through the service and support we provide our distributors,
including:

      •  customized advice on estate planning, charitable giving planning, executive benefits and retirement
         planning, provided by a staff of professionals with specialized expertise in the advanced application
         of life insurance and variable annuity products. This staff includes five attorneys with an average of
         approximately twenty years' experience, who combine their advice with tailored presentations,
         educational materials and specimen legal documents;

      •  market research and education programs designed to help advisors better understand which financial
         products the affluent and high-net-worth market demands. We assist advisors in marketing to specific
         customer segments such as senior corporate executives, business owners and high-net-worth households;

      •  nationwide teams of life, annuity and asset management product specialists who provide education and
         sales support to distributors and who can act as part of the advisory team for case design and
         technical support;

      •  asset management and investment allocation strategies, including our Complementary Investment Analysis
         tool, which identifies investment options offered both by us and by third parties that are suitable
         for an individual's allocation needs;

                                                      14


      •  an underwriting team with significant experience in evaluating the financial and medical underwriting
         risks associated with high face-value policies and affluent and high-net-worth individuals; and

      •  internet-accessible information that makes it easier for our distributors to do business with us,
         including interactive product illustrations, educational and sales tools, and online access to forms,
         marketing materials and policyholder account information.

         Non-operating Segments

Venture Capital Segment

We have invested in the venture capital markets for over 25 years through Phoenix Life's investment portfolio.
The Venture Capital segment represented 1% of total investments and cash and cash equivalents as of December
31, 2003 and 2002. The carrying value of partnership investments in the Venture Capital segment was $196.3
million as of December 31, 2003. The segment does not include venture capital investments held within our
closed block.

Our venture capital investments are limited partnership interests in venture capital funds, leveraged buyout
funds and other private equity partnerships sponsored and managed by third parties. We refer to all of these
types of investments as venture capital. We currently have 74 partnership investments through 44 sponsors in
our Venture Capital segment. We believe our long-standing relationships and history of consistent participation
with many well-established venture capital sponsors gives us preferred access to attractive venture capital
opportunities. These assets are investments of Phoenix Life.

Historically, we viewed our venture capital investments as an opportunity to enhance returns on our
participating life products. In the past, we allocated between 1% and 2% of annual investable cash flow to
venture capital investments. Since 2002, we have made new venture capital commitments only in our closed block.
In addition, in February 2003, we sold a 50% interest in certain of our venture capital partnerships to an
outside party and transferred the remaining 50% interest in those partnerships to our closed block. The
carrying value of the partnerships sold and transferred totaled $52.2 million after realizing a loss of $19.4
million ($5.1 million recorded in 2002 and $14.3 million recorded in 2003). The unfunded commitments of the
partnerships sold and transferred totaled $27.2 million; the outside party and the closed block will each fund
half of these commitments.

See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for
Venture Capital segment financial information.

Corporate and Other Segment

The Corporate and Other segment includes indebtedness; unallocated assets, liabilities and expenses; and
certain businesses not of sufficient scale to report independently. Corporate and Other also includes certain
international operations. As of December 31, 2003, we had a total of $139.8 million in these international
holdings. Among our international holdings is Aberdeen Asset Management PLC, or Aberdeen, a Scottish investment
management company with institutional and retail clients in the United Kingdom, as well as in continental
Europe, Asia, Australia and the U.S. At December 31, 2003, our ownership in Aberdeen stock was 16.2%. See
Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 5 of the
consolidated financial statements in this Form 10-K for additional information.

See Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for
Corporate and Other segment financial information.

                                                      15


                                        General Development of Business

PNX was incorporated in Delaware in 2000. Our principal executive offices are located at One American Row,
Hartford, Connecticut 06102-5056. Our telephone number is (860) 403-5000. Our website is located at
PhoenixWealthManagement.com. (This URL is intended to be an inactive textual reference only. It is not intended
to be an active hyperlink to our website. The information on our website is not, and is not intended to be,
part of this Form 10-K and is not incorporated into this report by reference.)

Phoenix Mutual Insurance Company was organized in Connecticut in 1851. In 1992, in connection with its merger
with Home Life Insurance Company, or Home Life, the company redomiciled to New York and changed its name to
Phoenix Home Life Mutual Insurance Company, or Phoenix Home Life.

On June 25, 2001, the effective date of its demutualization, Phoenix Home Life converted from a mutual life
insurance company to a stock life insurance company, became a wholly-owned subsidiary of PNX and changed its
name to Phoenix Life Insurance Company. All policyholder membership interests in the mutual company were
extinguished on the effective date. At the same time, Phoenix Investment Partners became an indirect
wholly-owned subsidiary of PNX.

In addition, on June 25, 2001, PNX completed its initial public offering, or IPO, in which 48.8 million shares
of common stock were issued at a price of $17.50 per share. Net proceeds from the IPO were $807.9 million,
which was contributed to Phoenix Life, as required under the plan of reorganization. On July 24, 2001, Morgan
Stanley & Co. Incorporated exercised its right to purchase 1,395,900 additional shares of the common stock of
PNX at the IPO price of $17.50 per share less underwriter's discount. Net proceeds of $23.2 million were
contributed to Phoenix Life. Our shares outstanding were subsequently reduced through share repurchases through
October 2002.

The following chart illustrates our current corporate structure as of December 31, 2003.

                                       THE PHOENIX COMPANIES, INC.
                   -----------------------------------------------------------------
                   |                   |                     |                     |
                 100%                100%                  100%                  100%
         ----------------- ---------------------- -------------------- -------------------------
            PHOENIX LIFE     PHOENIX INVESTMENT         PHOENIX            PHOENIX NATIONAL
             INSURANCE       MANAGEMENT COMPANY,      DISTRIBUTION           TRUST HOLDING
              COMPANY               INC.            HOLDING COMPANY(1)          COMPANY
         ----------------- ---------------------- -------------------- -------------------------
                      |                      |
                    100%                   100%
           ---------------------    ------------------------------------
              PM HOLDINGS, INC.       PHOENIX INVESTMENT PARTNERS, LTD.
           ---------------------    ------------------------------------
                        |                                |
                    Various %s                       Various %s
                        |                                |
   -----------------------------------------    -----------------------------------------
    OTHER DOMESTIC AND FOREIGN SUBSIDIARIES      OTHER DOMESTIC AND FOREIGN SUBSIDIARIES
   -----------------------------------------    -----------------------------------------

- --------
(1)  Subsidiaries of Phoenix Distribution Holding Company include Main Street Management Company and WS
     Griffith Advisors, Inc.

At December 31, 2003, we employed approximately 1,900 people. We believe our relations with our employees are
good.

                                                      16


Item 2.   Properties

Our executive headquarters consist of our main office building at One American Row and two other buildings in
Hartford, Connecticut. We own these buildings and occupy most of the space contained in them. In addition to
these properties, we own offices in Enfield, Connecticut and East Greenbush, New York for use in the operation
of our business. In February 2004, we announced the execution of an agreement to sell our offices in Enfield,
which sale is expected to close during the second quarter of 2004. Business functions from Enfield will be
relocated to our existing Hartford offices and, if necessary, another facility in the Hartford, Connecticut
area. We also lease office space within and out of the United States of America as needed for our operations,
including use by our sales force.


Item 3.   Legal Proceedings

General

We are regularly involved in litigation, both as a defendant and as a plaintiff. The litigation naming us as a
defendant ordinarily involves our activities as an insurer, employer, investment advisor, investor or taxpayer.
Several current proceedings are discussed below. In addition, state regulatory bodies, the Securities and
Exchange Commission, or SEC, the National Association of Securities Dealers, Inc., and other regulatory bodies
regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our
compliance with, among other things, insurance laws, securities laws, and laws governing the activities of
broker-dealers. For example, during 2003 the New York State Insurance Department began its routine quinquennial
financial and market conduct examination of Phoenix Life and its New York domiciled life insurance subsidiary
and several SEC offices conducted routine reviews of certain Phoenix investment advisors, broker-dealers and
close-end funds. The New York exam and one of these SEC exams are continuing; the other SEC exams conducted in
2003 have been completed and closed. We continue to actively cooperate with both regulators.

Recently, there has been a significant increase in federal and state regulatory activity relating to financial
services companies, particularly mutual fund companies. These regulatory inquiries have focused on a number of
mutual fund issues, including late-trading and valuation issues. Our mutual funds, which we offer directly to
retail investors and qualified retirement plans as well as through the separate accounts associated with
certain of our variable life insurance policies and variable annuity products, entitle us to impose
restrictions on frequent exchanges and trades in the mutual funds and on transfers between sub-accounts and
variable products. We, like many others in the financial services industry, have received requests for
information from the SEC and state authorities, in each case requesting documentation and other information
regarding various mutual fund regulatory issues. We continue to cooperate fully with these regulatory agencies
in responding to these requests. In addition, representatives from the SEC's Office of Compliance Inspections
and Examinations are conducting compliance examinations of our mutual fund, variable annuity and mutual fund
transfer agent operations.

A number of companies have announced settlements of enforcement actions with various regulatory agencies,
primarily the SEC and the New York Attorney General's Office. While no such action has been initiated against
us, it is possible that one or more regulatory agencies may pursue an action against us in the future.

These types of lawsuits and regulatory actions may be difficult to assess or quantify, may seek recovery of
indeterminate amounts, including punitive and treble damages, and the nature and magnitude of their outcomes
may remain unknown for substantial periods of time. While it is not feasible to predict or determine the
ultimate outcome of all pending investigations and legal proceedings or to provide reasonable ranges of
potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to
have a material adverse effect on our consolidated financial condition, after consideration of available
insurance and reinsurance and the provisions made in our consolidated financial statements. However, given the
large or indeterminate amounts sought in certain of these matters and litigation's inherent unpredictability,
it is possible that an adverse outcome


                                                      17


in certain matters could, from time to time, have a material adverse effect on our results of operations or
cash flows.

Discontinued Reinsurance Business

During 1999, our Life Companies placed their remaining group accident and health reinsurance business into
run-off, adopting a formal plan to terminate the related contracts as early as contractually permitted and not
entering into any new contracts. As part of the decision to discontinue these reinsurance operations, we
reviewed the run-off block and estimated the amount and timing of future net premiums, claims and expenses. We
also purchased finite aggregate excess-of-loss reinsurance, or finite reinsurance, to further protect us from
unfavorable results from this discontinued business.

We have established reserves for claims and related expenses that we expect to pay on our discontinued group
accident and health reinsurance business. These reserves are a net present value amount that is based on
currently known facts and estimates about, among other things, the amount of insured losses and expenses that
we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will
collect under our finite reinsurance, the amounts we believe we will collect from our retrocessionaires and the
likely legal and administrative costs of winding down the business.

Our total reserves, including coverage available from our finite reinsurance and reserves for amounts
recoverable from retrocessionaires, were $185.0 million and $155.0 million as of December 31, 2003 and 2002,
respectively. Our total amounts recoverable from retrocessionaires related to paid losses were $165.0 million
and $65.0 million as of December 31, 2003 and 2002, respectively. We did not recognize any gains or losses
during the years 2003, 2002 and 2001.

Our Life Companies are involved in disputes relating to reinsurance arrangements under which they reinsured
group accident and health risks. The first of these involves contracts for reinsurance of the life and health
carveout components of workers compensation insurance arising out of a reinsurance pool created and formerly
managed by Unicover Managers, Inc., or Unicover. In one of those, the arbitration panel issued its decision on
October 8, 2002 and confirmed the award on January 4, 2003. The financial implications of this decision are
consistent with our Life Companies' current financial provisions. In our capacity as a retrocessionaire of the
Unicover business, our Life Companies had an extensive program of our own reinsurance in place to protect us
from financial exposure to the risks we had assumed. We are currently involved in separate arbitration
proceedings with three of our own retrocessionaires, which are seeking on various grounds to avoid paying any
amounts to us or have reserved rights. In addition, Phoenix Life is involved in arbitrations and negotiations
pending in the United Kingdom between multiple layers of reinsurers and reinsureds relating to transactions in
which it participated involving certain personal accident excess-of-loss business reinsured in the London
market. See Note 17 to our consolidated financial statements in this Form 10-K for more information.

In light of our provisions for our discontinued reinsurance operations through the establishment of reserves
and the finite reinsurance, based on currently available information, we do not expect these operations,
including the proceedings described above, to have a material adverse effect on our consolidated financial
position. However, given the large and/or indeterminate amounts involved and the inherent unpredictability of
litigation, it is not possible to predict with certainty the ultimate impact on us of all pending matters or of
our discontinued reinsurance operations.

Policyholder Lawsuit Challenging the Plan of Reorganization

A lawsuit, Andrew Kertesz v. Phoenix Home Life Mut. Ins. Co., et al., was filed on April 16, 2001, in the
Supreme Court of the State of New York for New York County challenging Phoenix Life's reorganization and the
adequacy of the information provided to policyholders regarding the plan of reorganization. The plaintiff
sought to maintain a class action on behalf of a putative class consisting of the eligible policyholders of
Phoenix Life as of December 18, 2000, the date the plan of reorganization was adopted. Plaintiff sought
compensatory damages for losses allegedly


                                                      18


sustained by the class as a result of the demutualization, punitive damages and other relief. The defendants
named in the lawsuit include Phoenix Life and PNX and their directors, as well as Morgan Stanley & Co.
Incorporated, financial advisor to Phoenix Life in connection with the plan of reorganization. A motion to
dismiss the claims asserted in this lawsuit was granted. Although, the plaintiff filed a notice of appeal, he
failed to perfect the appeal by the deadline.


Item 4.   Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of our security holders during the fourth quarter of the fiscal year covered
by this report.


                                                    PART II

Item 5.   Market of Registrant's Common Equity and Related Stockholder Matters

Market

Shares of our common stock trade on the New York Stock Exchange under the ticker symbol "PNX".

Unregistered Shares

We issued the following shares of common stock to eligible policyholders of Phoenix Life, effective as of June
25, 2001, in connection with Phoenix Life's demutualization on that date: 56,174,373 shares in 2001; 4,237
shares in 2002; and 1,853 shares (to 16 persons) in 2003. We issued these shares to policyholders in exchange
for their membership interests without registration under the Securities Act of 1933 in reliance on the
exemption under Section 3(a)(10) of the Securities Act of 1933.

In 2003, we also issued 51,855 restricted stock units, or RSUs, to 10 of our independent directors, without
registration under that act in reliance on the exemption under Regulation D for accredited investors. Each RSU
is potentially convertible into one share of our common stock.

Stock Price

The following table presents the intraday high and low prices for our common stock on the New York Stock
Exchange for the years 2003 and 2002. The closing price of our common stock at December 31, 2003 was $12.04.

                                                           2003                              2002
                                             --------------------------------  --------------------------------
                                                  High              Low              High             Low
                                             --------------   ---------------  ---------------  ---------------

First Quarter................................ $       9.25      $       6.03     $      19.75     $      16.84
Second Quarter............................... $       9.80      $       6.95     $      20.25     $      15.50
Third Quarter................................ $      12.10      $       8.60     $      18.01     $      13.30
Fourth Quarter............................... $      12.65      $      10.26     $      13.75     $       6.50

Dividends

In 2003 and 2002, we paid a dividend of $0.16 per share to shareholders of record on June 14, 2003 and June 13,
2002, respectively. For a discussion of restrictions on our ability to pay dividends, see the Liquidity and
Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of
Operations.

                                                      19



Item 6.   Selected Financial Data

Our selected historical consolidated financial data as of and for each of the five years ended December 31,
2003 follows ($ amounts in millions, except earnings per share). We derived the data for the years 2003, 2002
and 2001 from our consolidated financial statements in this Form 10-K. We derived the data for the years 2000
and 1999 from audited consolidated financial statements not in this Form 10-K. Also, we have restated or
reclassified certain amounts for prior years to conform with 2003 presentation as further described in Note 1
of our consolidated financial statements in this Form 10-K. Prior to June 25, 2001, Phoenix Life was the parent
company of our consolidated group. In connection with its demutualization, Phoenix Life became a subsidiary and
PNX became the parent company of our consolidated group.

We prepared the following financial data, other than statutory data, in conformity with generally accepted
accounting principles, or GAAP. We derived the statutory data from the Annual Statements of our Life Companies
filed with insurance regulatory authorities and prepared it in accordance with statutory accounting practices,
which vary in certain respects from GAAP.

You should read the following in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial statements in this Form 10-K.



                                                      20


                                                              2002         2001
                                                 2003       Restated     Restated        2000          1999
                                             ------------ ------------ ------------  ------------  ------------
Income Statement Data(1)
Premiums...................................   $ 1,042.2    $ 1,082.0    $ 1,112.7     $ 1,147.4     $ 1,175.7
Insurance and investment product fees......       565.3        560.5        543.2         624.5         569.1
Net investment income......................     1,107.4        947.7        892.8       1,141.0         961.3
Net realized investment gains (losses).....      (100.5)      (133.9)       (84.9)         89.2          75.8
                                             ------------ ------------ ------------  ------------  ------------
Total revenues.............................   $ 2,614.4    $ 2,456.3    $ 2,463.8     $ 3,002.1     $ 2,781.9
                                             ------------ ------------ ------------  ------------  ------------
Total benefits and expenses................   $ 2,624.6    $ 2,640.8    $ 2,709.1     $ 2,829.6     $ 2,502.0
                                             ------------ ------------ ------------  ------------  ------------

Income (loss) from continuing operations...   $    (4.1)   $  (140.7)   $  (147.3)    $    96.0     $   166.2
Loss from discontinued operations,
  net of income taxes(2)...................          (2.1)        (1.3)        (2.5)        (12.7)        (77.0)
                                             ------------ ------------ ------------  ------------  ------------
Income (loss) before cumulative effect of
  accounting changes.......................        (6.2)      (142.0)      (149.8)         83.3          89.2
Cumulative effect of accounting changes(3).         --         (130.3)       (65.4)         --            --
                                             ------------ ------------ ------------  ------------  ------------
Net income (loss)..........................   $    (6.2)   $  (272.3)   $  (215.2)    $    83.3     $    89.2
                                             ============ ============ ============  ============  ============

Basic and Diluted Earnings Per Share
Income (loss) from continuing operations(4)    $   (0.04)   $   (1.44)   $   (1.41)    $    0.92     $    1.59
                                             ============ ============ ============  ============  ============
Net income (loss)(4).......................    $   (0.07)   $   (2.78)   $   (2.06)    $    0.80     $    0.85
                                             ============ ============ ============  ============  ============

Dividends per share.......................    $    0.16    $    0.16    $    --       $    --       $    --
                                             ============ ============ ============  ============  ============

Ratio of Earnings to Fixed Charges
Ratio of earnings to fixed charges(5)......          0.7         --           --             4.3           7.0
Supplemental ratio of earnings to
  fixed charges - including interest credited
  on policyholder contract balances(6).....          0.9          0.5          0.2           1.8           2.6

Balance Sheet Data
Cash and general account investments.......   $17,229.2    $16,812.8    $14,400.4     $12,767.5     $11,768.8
                                             ============ ============ ============  ============  ============
Total assets...............................   $27,559.2    $25,235.9    $22,535.9     $20,313.5     $20,283.9
                                             ============ ============ ============  ============  ============
Indebtedness...............................   $   639.0    $   644.3    $   599.3     $   425.1     $   499.4
                                             ============ ============ ============  ============  ============
Total liabilities..........................   $25,580.0    $23,381.0    $20,219.0     $18,335.4     $18,430.9
                                             ============ ============ ============  ============  ============
Minority interest in net assets of
  consolidated subsidiaries................   $    31.4    $    28.1    $     8.8     $   136.9     $   100.1
                                             ============ ============ ============  ============  ============
Total stockholders' equity.................   $ 1,947.8    $ 1,826.8    $ 2,307.8     $ 1,840.9     $ 1,756.0
                                             ============ ============ ============  ============  ============

Third-Party Assets Under Management           $42,841.6    $38,568.2    $38,604.3     $44,056.8     $52,082.1
                                             ============ ============ ============  ============  ============

Consolidated Statutory Data
Premiums and deposits......................   $ 3,364.9    $ 3,919.7    $ 3,144.8     $ 2,344.8     $ 2,330.2
                                             ============ ============ ============  ============  ============
Net income (loss)..........................   $   (26.0)   $  (130.7)   $   (66.0)    $   266.1     $   131.3
                                             ============ ============ ============  ============  ============
Capital and surplus(7).....................    $   762.4    $   861.4    $ 1,149.8     $ 1,322.8     $ 1,054.1
Asset valuation reserve (AVR)(8)...........        200.0        147.8        223.4         560.4         373.2
                                             ------------ ------------ ------------  ------------  ------------
Capital, surplus and AVR...................   $   962.4    $ 1,009.2    $ 1,373.2     $ 1,883.2     $ 1,427.3
                                             ============ ============ ============  ============  ============
- --------
(1)   For a summary of our significant accounting policies, refer to the notes to our consolidated financial
     statements in this Form 10-K. Certain 2002 and 2001 amounts have been revised from amounts previously
     reported. See Note 1 to our consolidated financial statements in this Form 10-K for additional
     information.

(2)   During 2003, we signed a definitive purchase and sale agreement to sell Phoenix National Trust Company to
     a third party. This sale is expected to close in the first quarter of 2004. The financial statement effect
     of this transaction is immaterial to our consolidated financial statements.

                                                      21


     During 1999, Phoenix Home Life discontinued the operations of three of its businesses which in prior years
     were reflected as the following reportable business segments: reinsurance operations, group life and
     health insurance operations and real estate management operations.

     The discontinuation of these businesses resulted from the sales of several operations and the
     implementation of plans to withdraw from the remaining businesses. These transactions do not affect the
     comparability of the financial data. The assets and liabilities of the discontinued operations have been
     excluded from the assets and liabilities of continuing operations and separately identified in the balance
     sheet data. Additional information on discontinued operations is included in Note 14 to our consolidated
     financial statements included in this Form 10-K.

(3)   During 2002, we recognized a cumulative effect adjustment of an accounting change for goodwill and other
     intangible assets. Effective January 1, 2002, we adopted the new accounting standard for goodwill and
     other intangible assets, including amounts reflected in equity method investments. This adoption resulted
     in a cumulative effect adjustment of $130.3 million (after income taxes of $11.4 million). Additional
     information on this accounting change is included in Notes 1 and 4 to our consolidated financial
     statements in this Form 10-K.

     During 2001, we recognized cumulative effect adjustments of accounting changes for venture capital
     partnerships, derivative instruments and securitized financial instruments.

     In 2001, we changed our method of applying the equity method of accounting for our venture capital
     partnerships. We recorded a charge of $48.8 million (after income taxes of $26.3 million) representing the
     cumulative effect of this accounting change on the fourth quarter of 2000. The cumulative effect was based
     on the actual fourth quarter 2000 financial results as reported by the partnerships. Additional
     information on this accounting change is included in Notes 1 and 5 to our consolidated financial
     statements in this Form 10-K.

     Effective January 1, 2001, we adopted a new accounting pronouncement for derivative instruments. This
     adoption resulted in a cumulative effect adjustment of $3.9 million (after income taxes of $2.1 million).
     Additional information on this accounting change is included in Notes 1 and 9 to our consolidated
     financial statements in this Form 10-K.

     Effective April 1, 2001, we adopted a new accounting pronouncement for recognition of interest income and
     impairment on certain investments. This pronouncement requires investors in certain asset-backed
     securities to record changes in their estimated yield on a prospective basis and to apply specific
     valuation methods to these securities for an other-than-temporary decline in value. Upon adoption, we
     recorded a $20.5 million charge to net income as a cumulative effect of accounting change, net of income
     taxes. Additional information on this accounting change is included in Notes 1 and 5 to our consolidated
     financial statements in this Form 10-K.

(4)   We calculated earnings per share for each of the three years from 1999 through 2001 on a pro forma basis,
     based on 104.6 million weighted-average shares outstanding. The pro forma weighted-average shares
     outstanding calculation for 2001 is based on the weighted-average shares outstanding for the period from
     the demutualization and IPO to the end of the year.

(5)   Due to our losses during 2003, 2002 and 2001, the ratio of earnings to fixed charges for those years was
     less than 1:1. We would need $13.3 million, $112.3 million and $131.6 million in additional earnings for
     the years 2003, 2002 and 2001, respectively, to achieve a 1:1 coverage ratio.

(6)   Due to our losses during 2003, 2002 and 2001, the ratio coverages, including interest credited on
     policyholder contract balances, were less than 1:1. We would need $13.3 million, $112.3 million and $131.6
     million in additional earnings for the years 2003, 2002 and 2001, respectively, to achieve a 1:1 coverage
     ratio.

(7)   In accordance with accounting practices prescribed by the New York State Insurance Department, Phoenix
     Life's capital and surplus includes $175.0 million principal amount of surplus notes outstanding.

(8)   The AVR is a statutory reserve intended to mitigate changes to the balance sheet as a result of
     fluctuations in asset values.


                                                      22


Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

                                           FORWARD-LOOKING STATEMENT

The following discussion 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 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 SEC. 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.

                                         RISKS RELATED TO OUR BUSINESS

Poor performance of the equity markets could adversely affect sales and assets under management of our asset
management, variable universal life and variable annuity products, as well as the performance of our venture
capital segment and potential future pension plan funding requirements.

While in 2003 the U.S. equity markets experienced strong growth, this growth was preceded by more than two
years of substantial declines. From April 1, 2000 through December 31, 2002, the Nasdaq Composite Index and the
Standard & Poor's 500 Index fell 70.79% and 41.29%, respectively. These market declines were accompanied by
increased volatility.

There are four ways in which market declines and volatility have affected, or have the potential to affect, us
negatively.

   •  First, significant market volatility or declines may cause potential purchasers of our products to
      refrain from investing, and current investors to withdraw from the markets or reduce their level of
      investment. We cannot estimate the impact of prior market declines on our sales.

   •  Second, because the revenues of our asset management and variable products businesses are, to a large
      extent, based on fees related to the value of assets under our management, the poor performance of the
      equity markets in 2000, 2001 and 2002 limited our fee revenues by reducing the value of the assets we
      manage. Our assets under management at December 31, 2002 were 8.4% less than at December 31, 2000. We
      could experience increasing surrenders and redemptions if equity markets perform poorly again. The


                                                      23


      possibility of declines in assets under management is heightened by the fact that, as of December 31,
      2003, approximately 28% of our variable universal life insurance assets under management excluding our
      private placement business, and approximately 56% of our variable annuity assets under management
      excluding our private placement business, were not subject to any surrender penalties. The surrender
      charges applicable to our variable universal life insurance policies and variable annuities typically
      decline over a period of years and generally expire after 10 years. Moreover, surrenders of life
      insurance policies and annuities require faster amortization of deferred policy acquisition costs, which
      would reduce our profitability.

   •  Third, returns on venture capital investments are correlated with the performance of the equity markets.
      During the severe market declines of 2002 and 2001, our venture capital investments decreased our income
      from continuing operations by $38.5 million and $54.9 million, respectively. Conversely, in 2003 venture
      capital decreased the loss from continuing operations by $23.5 million. It is possible we will again
      experience declines related to our venture capital investments comparable to those experienced in 2002
      and 2001.

   •  Fourth, the funding requirements of our pension plan are dependent on the performance of the equity
      markets. The portfolio funding for the company's pension plan currently consists of 63% equities. In a
      severe market decline, the value of the assets supporting the pension plan will decrease, increasing the
      requirement for future funding. This funding requirement will increase expenses and decrease the earnings
      of the company.

We might need to fund deficiencies in our closed block, which would result in a reduction in net income and
could result in a reduction in investments in our on-going business.

We have allocated assets to our closed block to produce cash flows that, together with additional revenues from
the closed block policies, are reasonably expected to support our obligations relating to these policies. Our
allocation of assets to the closed block was based on actuarial assumptions about our payment obligations to
closed block policyholders, the continuation of the non-guaranteed policyholder dividend scales in effect for
2000, as well as assumptions about the investment earnings the closed block assets will generate over time.
Since such assumptions are to some degree uncertain, it is possible that the cash flows generated by the closed
block assets and the anticipated revenues from the policies included in the closed block will prove
insufficient to provide for the benefits guaranteed under these policies. We would have to fund the shortfall
resulting from such an insufficiency.

Recent downgrades to PNX's debt ratings and Phoenix Life's financial strength ratings, as well as the
possibility of future downgrades, could increase policy surrenders and withdrawals, adversely affect
relationships with distributors, reduce new sales and earnings from our life insurance products and increase
our future borrowing costs.

Rating agencies assign Phoenix Life financial strength ratings, and assign us debt ratings, based in each case
on their opinions of the relevant company's ability to meet its financial obligations.

Financial strength ratings indicate a rating agency's view of an insurance company's ability to meet its
obligations to its insureds. These ratings are therefore key factors underlying the competitive position of
life insurers. The current financial strength and debt ratings are set forth in the chart below.


                                                      24



                                          Financial Strength Rating                  Senior Debt Rating
Rating Agency                                  of Phoenix Life                              of PNX
- ---------------------------------   ----------------------------------------   --------------------------------

A.M. Best Company, Inc.             A ("Excellent")                             bbb+ ("Adequate")

Fitch                               AA- ("Very Strong")                         A- ("Strong")

Standard & Poor's                   A ("Strong")                                BBB ("Good")

Moody's                             A3 ("Good")                                 Baa3 ("Adequate")

A.M. Best, Moody's and Standard & Poor's each have a stable outlook for our ratings, while Fitch has a negative
outlook.

Lower ratings increase borrowing costs. Additional downgrades may increase interest costs in connection with
future borrowings. Such increased costs would decrease our earnings and could reduce our ability to finance our
future growth on a profitable basis.

The recent downgrades did not trigger any defaults or repurchase obligations.

In addition, the downgrades could adversely affect Phoenix Life's relationships with its existing distributors
and its ability to establish additional distributor relationships. If this were to occur, we might experience a
decline in sales of certain products and the persistency of existing customers. At this time, we cannot
estimate the impact, either past or future, on sales or persistency. If there were a significant decline in
Phoenix Life's sales or persistency, our results of operations would be materially adversely affected.

We could have material losses in the future from our discontinued reinsurance business.

In 1999, we discontinued our reinsurance operations through a combination of sale, reinsurance and placement of
certain retained group accident and health reinsurance business into run-off. We adopted a formal plan to stop
writing new contracts covering these risks and to end the existing contracts as soon as those contracts would
permit. However, we remain liable for claims under those contracts. We also purchased finite reinsurance to
further protect us from unfavorable results from this discontinued business.

We have established reserves for claims and related expenses that we expect to pay on our discontinued group
accident and health reinsurance business. These reserves are a net present value amount that is based on
currently known facts and estimates about, among other things, the amount of insured losses and expenses that
we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will
collect under our finite reinsurance, the amounts we believe we will collect from our retrocessionaires and the
likely legal and administrative costs of winding down the business. Our total reserves, including coverage
available from our finite reinsurance and reserves for amounts recoverable from retrocessionaires, were $185.0
million as of December 31, 2003. Our total amounts recoverable from retrocessionaires related to paid losses
were $165.0 million as of December 31, 2003.

We expect our reserves and reinsurance to cover the run-off of the business; however, the nature of the
underlying risks is such that the claims may take years to reach the reinsurers involved. Therefore, we expect
to pay claims out of existing estimated reserves for up to ten years as the level of business diminishes. In
addition, unfavorable claims experience is possible and could result in additional future losses. For these
reasons, we cannot know today what our actual claims experience will be.

In addition, we are involved in disputes relating to certain portions of our discontinued group accident and
health reinsurance business. See Note 17 to our consolidated financial statements in this Form 10-K for more
information.


                                                      25



In establishing our reserves described above for the payment of insured losses and expenses on this
discontinued business, we have made assumptions about the likely outcome of the disputes referred to above,
including an assumption that substantial recoveries would be available from our reinsurers on all of our
discontinued reinsurance business. However, the inherent uncertainty of arbitrations and lawsuits, including
the uncertainty of estimating whether any settlements we may enter into in the future would be on favorable
terms, makes it hard to predict outcomes with certainty. Given the need to use estimates in establishing loss
reserves, and the difficulty in predicting the outcome of arbitrations and lawsuits, our actual net ultimate
exposure likely will differ from our current estimate. If future facts and circumstances differ significantly
from our estimates and assumptions about future events with respect to the disputes referred to above or other
portions of our discontinued reinsurance business, our current reserves may need to be increased materially,
with a resulting material adverse effect on our results of operations and financial condition.

Legislation eliminating or modifying either the federal estate tax or the federal taxation of investment income
could adversely affect sales of and revenues from our life and annuity products. In addition, some of the Bush
Administration's legislative proposals would reduce or eliminate the benefit of deferral of taxation for our
insurance and annuity products.

Some of our life insurance products are specifically designed and marketed as policies that help a decedent's
heirs to pay estate tax. In addition, our life insurance and annuity products generally benefit from the
deferral of federal income taxation on the accretion of their value. Legislation reducing the tax on dividends
and capital gains reduces the relative benefits that such deferral provides.

Legislation enacted in the spring of 2001 increased the size of estates exempt from the federal estate tax,
phased in reductions in the estate tax rate between 2002 and 2009 and repealed the estate tax entirely in 2010.
This legislation, despite its reinstatement of the estate tax in 2011, could have a negative effect on our
revenues from the sale of estate planning products including in particular sales of second-to-die life
insurance policies. Second-to-die policies are often purchased by two people whose assets are largely illiquid,
and whose heirs otherwise might have to attempt to liquidate part of the estate in order to pay the tax.
Second-to-die policies represented 21% and 35% of our new life insurance premiums and deposits in 2003 and
2002, respectively. President Bush and members of Congress have expressed a desire to modify the existing
legislation, which could result in faster or more complete reduction or repeal of the estate tax.

The attractiveness to our customers of many of our products is due, in part, to favorable tax treatment.
Current federal income tax laws generally permit the tax-deferred accumulation of earnings on the premiums paid
by the holders of annuities and life insurance products. In 2003, the tax rate on long-term capital gains and
certain dividend income was reduced until 2008. President Bush and members of Congress have expressed a desire
to make these rate reductions permanent. If this happens, it could have a negative impact on our sales and
revenues. In addition, President Bush's Fiscal Year 2005 Budget proposed changes that would have created new
and expanded vehicles for tax-exempt savings. If enacted, the impact of these proposals cannot reasonably be
estimated.

Changes in interest rates could harm cash flow and profitability in our life and annuity businesses.

Our life insurance and annuity businesses are sensitive to interest rate changes. In periods of increasing
interest rates, life insurance policy loans and surrenders and withdrawals may increase as policyholders seek
investments with higher perceived returns. This could require us to sell invested assets at a time when their
prices are depressed by the increase in interest rates, which could cause us to realize investment losses.

Conversely, during periods of declining interest rates, we could experience increased premium payments on
products with flexible premium features, repayment of policy loans and increased percentages of policies
remaining inforce. We would obtain lower returns on investments made with these cash flows. In addition,
borrowers may prepay or redeem mortgages and bonds in our investment portfolio so that we might have to
reinvest those proceeds in lower interest-bearing investments. As a consequence of these factors, we could

                                                      26



experience a decrease in the spread between the returns on our investment portfolio and amounts credited to
policyholders and contractholders, which could adversely affect our profitability.

Our product sales are highly dependent on our relationships with non-affiliated distributors. If these
relationships ended or diminished, our revenues would suffer accordingly.

We sell our products through our affiliated retail producers and non-affiliated advisors, broker-dealers and
other financial intermediaries. There is substantial competition in most of our non-affiliated distributors.
Non-affiliated distribution sources have contributed significantly to our sales in recent years. For example,
Merrill Lynch, with over 13,000 registered representatives, accounted for 29% of our asset management combined
inflows for sponsored managed accounts and mutual funds in 2003. The loss or diminution of our relationships
with non-affiliated distributors could materially reduce our sales and revenues.

The independent trustees of our mutual funds and closed-end funds, as well as intermediary program sponsors,
managed account clients and institutional asset management clients, could terminate their contracts with us.
This would reduce our investment management fee revenues and could also impair our intangible assets.

Each of the mutual funds and closed-end funds for which Phoenix Investment Partners acts as investment advisor
or sub-advisor is registered under the Investment Company Act of 1940 and is governed by a board of trustees or
board of directors. SEC rules require a majority of each board's members to be independent, and proposed
amendments would increase that requirement to 75%. Each fund's board has the duty of deciding annually whether
to renew the contract under which Phoenix Investment Partners manages the fund. Board members have a fiduciary
duty to act in the best interests of the shareholders of their funds. Either the board members or, in limited
circumstances, the shareholders may terminate an advisory contract with Phoenix Investment Partners and move
the assets to another investment advisor. The board members also may deem it to be in the best interests of a
fund's shareholders to make other decisions adverse to us, such as reducing the compensation paid to Phoenix
Investment Partners or imposing restrictions on Phoenix Investment Partners' management of the fund.

Our asset management agreements with institutional clients, intermediary program sponsors (who "wrap," or make
available, our investment products within the management agreements they have with their own clients), direct
managed account clients and institutional clients are generally terminable by these sponsors and clients upon
short notice without penalty. As a result, there would be little impediment to these sponsors or clients
terminating our agreements if they became dissatisfied with our performance.

The termination of any of the above agreements relating to material portion of assets under management would
adversely affect our investment management fee revenues and could impair our intangible assets.

We face strong competition in our businesses from mutual fund companies, banks, asset management firms and
other insurance companies. This competition may impair our ability to retain existing customers, attract new
customers and maintain our profitability.

We face strong competition in each of our businesses, comprising life insurance, annuities and asset
management. We believe that our ability to compete is based on a number of factors, including product features,
investment performance, service, price, distribution, capabilities, scale, commission structure, name
recognition and financial strength ratings. While there is no single company that we identify as a dominant
competitor in our business overall, the nature of these businesses means that our actual and potential
competitors include a large number of mutual fund companies, banks, asset management firms and other insurance
companies, many of which have advantages over us in one or more of the above competitive factors. Recent
industry consolidation, including acquisitions of insurance and other financial services companies in the
United States by international companies, has resulted in larger competitors with financial resources,
marketing and distribution capabilities and brand identities that are stronger than ours. Larger firms also may
be able to offer, due to economies of scale, more competitive pricing than we can. In addition, some of our
competitors are regulated differently than we are,

                                                      27



which may give them a competitive advantage; for example, many non-insurance company providers of financial
services are not subject to the costs and complexities of insurance regulation by multiple states.

Our ability to compete in the asset management business depends in particular on our investment performance. We
may not be able to accumulate and retain assets under management if our investment results underperform the
market or the competition, since such underperformance likely would result in asset withdrawals and reduced
sales. For example, from 1993 through 1999 and again in 2003, we experienced net asset withdrawals in our
private client products. We attribute this in part to underperformance in some of our mutual funds and managed
accounts.

We compete for distribution sources in our life, annuity and asset management businesses. We believe that our
success in competing for distributors depends on factors such as our financial strength and on the services we
provide to, and the relationships we develop with, these distributors. Our distributors are generally free to
sell products from a variety of providers, which makes it important for us to continually offer distributors
products and services they find attractive. If our products or services fall short of distributors' needs, we
may not be able to establish and maintain satisfactory relationships with distributors of our life insurance,
annuity and asset management products. Accordingly, our revenues and profitability would suffer.

National banks, with their pre-existing customer bases for financial services products, may increasingly
compete with insurers as a result of the Gramm-Leach-Bliley Act of 1999, which permits mergers among commercial
banks, insurers and securities firms under one holding company. Until passage of this act, prior legislation
had limited the ability of banks to engage in securities-related businesses and had restricted banks from being
affiliated with insurance companies. The ability of banks to increase their securities-related business or to
affiliate with insurance companies may materially and adversely affect sales of all of our products by
substantially increasing the number and financial strength of our potential competitors.

Changes in insurance and securities regulation could affect our profitability by imposing further restrictions
on the conduct of our business.

Our life insurance and annuity businesses are subject to comprehensive state regulation and supervision
throughout the United States. State insurance regulators and the National Association of Insurance
Commissioners continually reexamine existing laws and regulations, and may impose changes in the future that
put further regulatory burdens on us, thereby increasing our costs of business. This could materially adversely
affect our results of operations and financial condition.

The U.S. federal government does not directly regulate the insurance business. However, federal legislation and
administrative policies in areas which include employee benefit plan regulation, financial services regulation
and federal taxation and securities laws could significantly affect the insurance industry and our costs.

We and some of the policies, contracts and other products that we offer are subject to various levels of
regulation under the federal securities laws administered by the SEC as well as regulation by those states and
foreign countries in which we provide investment advisory services, offer products or conduct other
securities-related activities. We could be restricted in the conduct of our business for failure to comply with
such laws and regulations. Future laws and regulations, or the interpretation thereof, could materially
adversely affect our results of operations and financial condition by increasing our expenses in having to
comply with these regulations.

                                                      28



                                           MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's discussion and analysis reviews our consolidated financial condition at December 31, 2003 and 2002
restated; our consolidated results of operations for the years 2003, 2002 restated and 2001 restated; and,
where appropriate, factors that may affect our future financial performance. You should read this discussion in
conjunction with "Selected Financial Data" and our consolidated financial statements in this Form 10-K.

Overview

We are a manufacturer of insurance, annuity and asset management products for the accumulation, preservation
and transfer of wealth. We provide products and services to affluent and high-net-worth individuals through
their advisors and to institutions directly and through consultants. We offer a broad range of life insurance,
annuity and asset management products and services through a variety of distributors. These distributors
include affiliated and non-affiliated advisors and financial services firms who make our products and services
available to their clients.

We manufacture our products through two operating segments — Life and Annuity and Asset Management — which
include three product lines — life insurance, annuities and asset management. Through Life and Annuity we offer
a variety of life insurance and annuity products, including universal, variable universal, whole and term life
insurance, and a range of variable annuity offerings. Asset Management comprises two lines of business —
private client and institutional.

Through our private client line of business, we provide investment management services principally on a
discretionary basis, with products consisting of open-end mutual funds and managed accounts. Managed accounts
include intermediary programs sponsored and distributed by non-affiliated broker-dealers and direct managed
accounts sold and administered by us. Managed accounts sponsored and distributed by non-affiliated
broker-dealers generally require minimum investments of $100,000, and direct managed accounts sold and
administered by us generally require minimum investments of $1 million. Our private client business also
provides transfer agency, accounting and administrative services to most of our open-end mutual funds.

We report our remaining activities in two non-operating segments — Venture Capital and Corporate and Other.
Venture Capital includes limited partnership interests in venture capital funds, leveraged buyout funds and
other private equity partnerships sponsored and managed by third parties. These assets are investments of the
general accounts of our Life Companies. See Business—Venture Capital Segment. Corporate and Other includes
indebtedness; unallocated assets, liabilities and expenses; and certain businesses not of sufficient scale to
report independently. See Business—Corporate and Other Segment. These non-operating segments are significant
for financial reporting purposes, but do not contain products or services relevant to our core manufacturing
operations.

We derive our revenues principally from:

   •  premiums on whole life insurance;
   •  insurance and investment product fees on variable life and annuity products and universal life products;
   •  investment management and related fees; and
   •  net investment income and net realized investment gains.

Under GAAP, premium and deposit collections for variable life, universal life and annuity products are not
recorded as revenues. These collections are reflected on our balance sheet as an increase in separate account
liabilities for certain investment options of variable products. Collections for fixed annuities and certain
investment options of variable annuities are reflected on our balance sheet as an increase in policyholder
deposit funds. Collections for other products are reflected on our balance sheet as an increase in policy
liabilities and accruals.

                                                      29



Our expenses consist principally of:

   •  insurance policy benefits provided to policyholders, including interest credited on policyholders; general
      account balances;
   •  policyholder dividends;
   •  deferred policy acquisition costs amortization;
   •  intangible assets amortization;
   •  interest expense;
   •  other operating expenses; and
   •  income taxes.

Our profitability depends principally upon:

   •  the adequacy of our product pricing, which is primarily a function of our:
      •  ability to select underwriting risks;
      •  mortality experience;
      •  ability to generate investment earnings;
      •  ability to maintain expenses in accordance with our pricing assumptions; and
      •  policies' persistency (the percentage of policies remaining inforce from year to year as measured by
         premiums);
   •  the amount and composition of assets under management;
   •  the maintenance of our target spreads between the rate of earnings on our investments and dividend and
      interest rates credited to customers; and
   •  our ability to manage expenses.

Prior to Phoenix Life's demutualization, we focused on participating life insurance products, which pay
policyholder dividends. As of December 31, 2003, 74% of our life insurance reserves were for participating
policies. As a result, a significant portion of our expenses consists, and will continue to consist, of such
policyholder dividends. Our net income is reduced by the amounts of these dividends. Policyholder dividends
expense was $418.8 million during 2003, $401.8 million during 2002 and $400.1 million during 2001.

Our sales and financial results over the last several years have been affected by demographic, industry and
market trends. The baby boom generation has begun to enter its prime savings years. Americans generally have
begun to rely less on defined benefit retirement plans, social security and other government programs to meet
their post-retirement financial needs. Product preferences have shifted between fixed and variable options
depending on market and economic conditions. These factors have had a positive effect on sales of our balanced
product portfolio including universal life, variable life and variable annuity products, as well as a broad
array of mutual funds and managed accounts.

Discontinued Operations

During the fourth quarter of 2003, we entered into a purchase and sale agreement to sell 100% of the common
stock held by us in Phoenix National Trust Company. This sale is expected to close in the first quarter of
2004. The financial statement effect of this transaction is immaterial to our consolidated financial
statements.

During 1999, we discontinued the operations of several businesses that did not align with our business strategy
including reinsurance, group life and health and real estate management operations. See Note 14 to our
consolidated financial statements in this Form 10-K for detailed information regarding our discontinued
operations.

                                                      30



Purchase of Phoenix Investment Partners Minority Interest

In 2001, we acquired the minority interest in Phoenix Investment Partners for $339.3 million. Prior to this
acquisition, Phoenix Investment Partners had been a publicly-held company listed on the New York Stock Exchange
in which we held approximately a 55.1% interest. See Note 4 to our consolidated financial statements in this
Form 10-K for detailed information regarding our acquisition of the Phoenix Investment Partners minority
interest.

Other Recent Acquisitions

Life Annuity

In May 2003, we acquired the remaining interest in PFG Holdings, Inc., or PFG, the holding company for our
private placement operation, not already owned by us for initial consideration of $16.7 million. Under the
terms of the purchase agreement, we may be obligated to pay additional consideration of up to $89.0 million to
the selling shareholders, including $13.0 million during the years 2004 through 2007 based on certain financial
performance targets being met, and the balance in 2008 based on the appraised value of PFG as of December 31,
2007. See Note 3 to our consolidated financial statements in this Form 10-K for further information regarding
PFG.

In 2002, we acquired the variable life and variable annuity business of Valley Forge Life Insurance Company (a
subsidiary of CNA Financial Corporation). See Note 3 to our consolidated financial statements in this Form 10-K
for further information regarding the acquisition of Valley Forge Life Insurance Company.

Asset Management

In 2002, we acquired a 60% interest in Kayne Anderson Rudnick for $102.4 million. In 2001, we acquired a 75%
interest in Walnut for $7.5 million in cash. We also paid $5.5 million in cash for a 65% interest in Capital
West, which is reported as part of DPIM. See Note 4 to our consolidated financial statements in this Form 10-K
for further information regarding Kayne Anderson Rudnick, Walnut and Capital West.

The Demutualization

Phoenix Home Life demutualized on June 25, 2001 by converting from a mutual life insurance company to a stock
life insurance company, became a wholly-owned subsidiary of PNX and changed its name to Phoenix Life Insurance
Company, or Phoenix Life. See Note 3 to our consolidated financial statements in this Form 10-K for detailed
information regarding the demutualization and closed block.

Recently Issued Accounting Standards

Variable Interest Entities. A new accounting standard was issued in January 2003 that interprets the existing
standard on consolidation. This new accounting standard was revised and reissued in December 2003 as FIN 46-R,
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, or FIN 46-R. It clarifies the
application of standards of consolidation to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from other parties ("variable interest
entities"). As of December 31, 2003, we adopted FIN 46-R for special purpose entities where we may hold a
variable interest. Our adoption of FIN 46-R resulted in no additional variable interest entities being
consolidated by us.

In 2003, we revised our method of consolidation for the years 2003, 2002 and 2001 for three collateralized
obligation trusts where we serve as investment advisor. Under the new method, the applicable assets,
liabilities, revenues, expenses and minority interest are presented on a disaggregated basis and investments
pledged as collateral are recorded at fair value with unrealized gains or losses recorded as a component of
accumulated other

                                                      31



comprehensive income, other-than-temporary impairment of investments are recorded as a charge to earnings, and
non-recourse collateralized obligations are recorded at unpaid principal balance. Prior to our revision of
previously reported 2003, 2002 and 2001 amounts, investments pledged as collateral were recorded at fair value
with asset valuation changes directly offset by changes in the corresponding liabilities in a manner similar to
separate accounts. See Note 1 and Note 8 to our consolidated financial statements in this Form 10-K for
additional information.

The effect of our change in method of consolidation for the three consolidated collateralized obligation trusts
was to increase our net loss and to reduce stockholders' equity for the years 2003, 2002 and 2001 as follows ($
amounts in millions):

                                                                2003            2002             2001
                                                          ---------------  ---------------  ---------------

Increase in net loss....................................   $       (2.4)    $      (26.3)    $      (12.5)
                                                          ===============  ===============  ===============
Reduction in stockholders' equity.......................   $      (77.3)    $     (204.9)    $      (87.9)
                                                          ===============  ===============  ===============

The above non-cash charges to earnings and stockholders' equity primarily relate to realized and unrealized
investment losses within the collateralized obligation trusts, that will ultimately be borne by third-party
investors in the non-recourse collateralized obligations. Accordingly, these losses and any future gains or
losses under this method of consolidation will ultimately reverse upon the maturity or other liquidation of the
non-recourse collateralized obligations.

GAAP requires us to consolidate all the assets and liabilities of these collateralized obligation trusts which
results in the recognition of realized and unrealized investment losses even though we have no legal obligation
to fund such losses in the settlement of the collateralized obligations.

The Financial Accounting Standards Board, or FASB, continues to evaluate, through the issuance of FASB staff
positions, the various technical implementation issues related to consolidation accounting. We will continue to
assess the impact of any new implementation guidance issued by the FASB as well as evolving interpretations
among accounting professionals. Additional guidance and interpretations may affect our application of
consolidation accounting in future periods.

See Notes 1 and 8 to our consolidated financial statements in this Form 10-K for additional information on
these revisions to our 2002 and 2001 financial statements and our consolidated collateralized obligation trusts
and other variable interest entities.

Stock-based Compensation. A new standard was issued in December 2002 which amends an existing standard on
accounting for stock-based compensation. The new standard provides methods of transition for a voluntary change
to fair value accounting for stock-based compensation. It also requires annual and quarterly disclosures about
the method of accounting for stock-based compensation and tabular information about the effect of the method of
accounting for stock-based compensation. Effective January 1, 2003 we prospectively changed our accounting for
stock options using the fair value method. See Note 11 to our consolidated financial statements in this Form
10-K for more discussion on the requirements of the new standard as it relates to our business.

Goodwill and Other Intangible Assets. At the beginning of 2002, we adopted a new accounting standard for
goodwill and other intangible assets, including amounts reflected in our carrying value of equity method
investments. Under this new standard, we discontinued recording amortization expense on goodwill and other
intangible assets with indefinite lives, but we continue recording amortization expense for those assets with
definite estimated lives. See Note 4 to our consolidated financial statements in this Form 10-K for a
comprehensive discussion of the adoption of the new standard and its effects on our consolidated financial
statements.

                                                      32



Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with GAAP. GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Critical accounting estimates are reflective of significant judgments, often as a result of the need to make
estimates about the effect of matters that are inherently uncertain. The following are areas that we believe
require significant judgments, together with references to the footnote(s) in which each accounting policy is
discussed in relation to our business:

   •  Deferred Policy Acquisition Costs, or DAC, and Present Value of Future Profits, or PVFP
      The costs of acquiring new business, principally commissions, underwriting, distribution and policy issue
      expenses, all of which vary with and are primarily related to production of new business, are deferred.
      In connection with our 1997 acquisition of the Confederation Life business, we recognized an asset for
      the present value of future profits, or PVFP, representing the present value of estimated net cash flows
      embedded in the existing contracts acquired. This asset is included in deferred acquisition costs, or
      DAC.

      We amortize DAC and PVFP based on the related policy's classification.  For individual participating
      life insurance policies, DAC and PVFP are amortized in proportion to estimated gross margins. For
      universal life, variable universal life and accumulation annuities, DAC and PVFP are amortized in
      proportion to estimated gross profits. Policies may be surrendered for value or exchanged for a different
      one of our products (internal replacement). The DAC balance associated with the replaced or surrendered
      policies is amortized to reflect these surrenders.

      The amortization of DAC and PVFP requires the use of various assumptions, estimates and judgments about
      the future. Significant assumptions include those concerning expenses, investment performance, mortality
      and policy cancellations (i.e., lapses, withdrawals and surrenders). These assumptions are reviewed on a
      regular basis and are generally based on our past experience, industry studies, regulatory requirements
      and judgments about the future. Changes in estimated gross margins and gross profits based on actual
      experiences are reflected as an adjustment to total amortization to date resulting in a charge or credit
      to earnings. Finally, analyses are performed periodically to assess whether there are sufficient gross
      margins or gross profits to amortize the remaining DAC balances.

      We regularly evaluate our estimated gross profits, or EGP, to determine if actual experience or other
      evidence suggests that earlier estimates should be revised. Several assumptions considered to be
      significant in the development of EGP include separate account fund performance, surrender and lapse
      rates, estimated interest spread and estimated mortality. The separate account fund performance
      assumption is critical to the development of the EGP related to our variable annuity and variable and
      interest-sensitive life insurance businesses. The average long-term rate of assumed separate account fund
      performance used in estimating gross profits was 7% for the variable annuity business and 8% for the
      variable life business at December 31, 2003.

      See Note 3 to our consolidated financial statements and Item 7a, Quantitative and Qualitative Disclosures About
      Market Risk in this Form 10-K for more information.

   •  Policy Liabilities and Accruals
      See Note 3 to our consolidated financial statements and Item 7a, Quantitative and Qualitative Disclosures About
      Market Risk in this Form 10-K for more information.

                                                      33



   •  Goodwill and Other Intangible Assets
      At the beginning of 2002, we adopted the new accounting standard for goodwill and other intangible
      assets, including amounts reflected in our carrying value of equity-method investments. Under this new
      standard, we discontinued recording amortization expense on goodwill and other intangible assets with
      indefinite lives, but we continue recording amortization expense for those intangible assets with
      definite estimated lives. For goodwill and intangible assets, we perform impairment tests at the
      reporting-unit level at least annually. For purposes of the goodwill and indefinite-lived intangible
      assets impairment test, the fair value of the reporting units is based on the sum of: a multiple of
      revenue, plus the fair value of the units' tangible fixed assets. Prior to 2002, we amortized goodwill
      principally over 40 years and investment management contracts and employment contracts over five to 16
      years and three to seven years, respectively. All amortization expense has been and continues, for
      intangible assets with definite lives, to be calculated on a straight-line basis.

      See Note 4 to our consolidated financial statements in this Form 10-K for more information.

   •  Valuation of Debt and Equity Securities
      We classify our debt and equity securities held in our general account, as well as those pledged as
      collateral, as available-for-sale and report them in our balance sheet at fair value. Fair value is based
      on quoted market price, where available. When quoted market prices are not available, we estimate fair
      value by discounting debt security cash flows to reflect interest rates currently being offered on
      similar terms to borrowers of similar credit quality, by quoted market prices of comparable instruments
      and by independent pricing sources or internally developed pricing models.

      The following table identifies the fair value of our general account fixed maturity securities by pricing
      source as of December 31, 2003 ($ amounts in millions):
                                                                               Fixed
                                                                             Maturities         % of Total
                                                                           at Fair Value        Fair Value
                                                                          -----------------  -----------------

      Priced via independent market quotations..........................   $     10,024.5             76%
      Priced via matrices...............................................          2,062.8             16%
      Priced via broker quotations......................................            725.3              5%
      Priced via other methods..........................................            326.5              2%
      Short-term investments*...........................................            133.9              1%
                                                                          -----------------  -----------------
      Total.............................................................   $     13,273.0            100%
                                                                          =================  =================

      *Short-term investments are valued at amortized cost, which approximates fair value

      Investments whose value, in our judgment, is considered to be other-than-temporarily impaired are written
      down to fair value as a charge to realized losses included in our earnings. The cost basis of these
      written-down investments is adjusted to fair value at the date the determination of impairment is made.
      The new cost basis is not changed for subsequent recoveries in value. For mortgage-backed and other
      asset-backed debt securities, we recognize income using a constant effective yield based on anticipated
      prepayments and the estimated economic lives of the securities. When actual prepayments differ
      significantly from anticipated prepayments, the effective yield is recalculated to reflect actual
      payments to date and any resulting adjustment is included in net investment income. For certain
      asset-backed securities, changes in estimated yield are recorded on a prospective basis and specific
      valuation methods are applied to these securities to determine if there has been an other-than-temporary
      decline in value. We report mortgage loans at unpaid principal balances, net of valuation reserves on
      impaired mortgages. We consider a mortgage loan to be impaired if we believe it is probable that we will
      be unable to collect all amounts of contractual interest and principal as scheduled in the loan
      agreement. We do not accrue interest income on impaired mortgage loans when the likelihood of collection
      is doubtful.

                                                      34



      See Note 5 to our consolidated financial statements, the Debt and Equity Securities section of
      Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 7a,
      Quantitative and Qualitative Disclosures About Market Risk in this Form 10-K for more information.

   •  Valuation of Investments in Venture Capital Partnerships
      We record our equity in the earnings of venture capital partnerships in net investment income using the
      most recent financial information received from the partnerships and estimating the earnings for any lag
      in reporting. In the first quarter of 2001, we changed our accounting for venture capital partnership
      earnings to eliminate the quarterly lag in information provided to us. We did this by estimating the
      change in our share of partnership earnings for the quarter. This resulted in a $75.1 million charge
      ($48.8 million after income taxes), representing the cumulative effect of this accounting change on the
      fourth quarter of 2000.

      To estimate the net equity in earnings of the venture capital partnerships for each quarter, we developed
      a methodology to estimate the change in value of the underlying investee companies in the venture capital
      partnerships. For public investee companies, we used quoted market prices at the end of each quarter,
      applying liquidity discounts to these prices in instances where such discounts were applied in the
      underlying partnerships' financial statements. For private investee companies, we applied a public
      industry sector index to roll the value forward each quarter. We apply this methodology consistently each
      quarter with subsequent adjustments to reflect market events reported by the partnerships (e.g., new
      rounds of financing, initial public offerings and writedowns by the general partners). Our methodology
      recognizes downward adjustments based on the indices, but limits upward adjustments to the amounts
      previously reported by the partnerships. In addition, we annually revise the valuations we have assigned
      to the investee companies to reflect the valuations in the audited financial statements received from the
      venture capital partnerships.

      See Note 5 to our consolidated financial statements in this Form 10-K for more information.

   •  Valuation of Investments in Affiliates
      We evaluate our equity method investments for an other-than-temporary impairment at each balance sheet
      date considering quantitative and qualitative factors including quoted market price of underlying equity
      securities, the duration the carrying value is in excess of fair value and historical and projected
      earnings and cash flow capacity.

      See Note 5 to our consolidated financial statements and the Aberdeen Asset Management section of
      Management's Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K
      for more information.

   •  Deferred Income Taxes
      We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. The
      deferred tax assets and/or liabilities are determined by multiplying the differences between the
      financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected
      to be in effect when such differences are recovered or settled. The effect on deferred taxes of a change
      in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances
      on deferred tax assets are estimated based on the Company's assessment of the realizability of such
      amounts.

      We have elected to file a consolidated federal income tax return for 2003 and prior years. Within the
      consolidated tax return, we are required by Internal Revenue Service regulations to segregate the
      entities into two groups: life insurance companies and non-life insurance companies. We are limited as to
      the amount of any operating losses from one group that can be offset against taxable income of the other
      group. These limitations affect the amount of any operating loss carryforwards that we have recorded in
      our deferred tax assets now or in the future.

                                                      35



      As of December 31, 2003, we had deferred tax assets related to net operating losses of $49.7 million for
      federal income tax purposes and $24.3 million for state income tax purposes. The deferred tax assets
      related to the federal net operating losses are scheduled to expire as follows: $7.7 million in 2015,
      $5.4 million in 2016, $19.8 million in 2017, $1.1 million in 2018 and $15.7 in 2023. The deferred tax
      assets related to the state net operating losses relate to the non-life subgroup and are scheduled to
      expire as follows: $12.7 million in 2020 and $11.6 million in 2021. Due to the inability to combine the
      life insurance and non-life insurance subgroups for state income tax purposes, a $24.3 million and a
      $29.0 million valuation allowance has been established at the end of 2003 and 2002, respectively,
      relative to the state net operating loss carryforwards.

      We have determined, based on our earnings and future income, that it is more likely than not that the
      deferred income tax assets after valuation allowance already recorded as of December 31, 2003 and 2002
      will be realized. In determining the adequacy of future income, we have considered projected future
      income, reversal of existing temporary differences and available tax planning strategies that could be
      implemented, if necessary.

      Our federal income tax returns are routinely audited by the Internal Revenue Service, or the IRS, and
      estimated provisions are routinely provided in the financial statements in anticipation of the results of
      these audits. The IRS has examined our consolidated group's federal income tax returns through 1997. The
      IRS is currently examining our federal income tax returns for 1998 through 2001. While it is often
      difficult to predict the outcome of these audits, including the timing of any resolution of any
      particular tax matter, we believe that our reserves, as recorded in other liabilities on the balance
      sheet, have been adequately provided for all open tax years. Unfavorable resolution of any particular
      issue could result in additional use of cash to pay liabilities that would be deemed owed to the IRS.
      Additionally, any unfavorable or favorable resolution of any particular issue could result in an increase
      or decrease, respectively, to our effective income tax rate to the extent that our estimates differ from
      the ultimate resolution.

      See Note 10 to our consolidated financial statements in this Form 10-K for more information related to
      income taxes.

   •  Pension and other Post-employment Benefits
      See Note 11 to our consolidated financial statements in this Form 10-K for more information on our
      pension and other post-employment benefits.

                                                      36



Consolidated Results of Operations

The following table and discussion present summary consolidated financial data for the years 2003, 2002 and
2001 ($ amounts in millions).

                                                                                              Changes
                                                                                     ------------------------
                                                             2002          2001
                                                 2003      Restated      Restated     2003 / 02    2002 / 01
                                             -----------  -----------   -----------  -----------  -----------

REVENUES
Premiums...................................   $  1,042.2   $  1,082.0    $  1,112.7   $    (39.8)  $    (30.7)
Insurance and investment product fees......        565.3        560.5         543.2          4.8         17.3
Investment income, net of expenses.........      1,107.4        947.7         892.8        159.7         54.9
Net realized investment losses.............       (100.5)      (133.9)        (84.9)        33.4        (49.0)
                                             -----------  -----------   -----------  -----------  -----------
Total revenues.............................      2,614.4      2,456.3       2,463.8        158.1         (7.5)
                                             -----------  -----------   -----------  -----------  -----------

BENEFITS AND EXPENSES
Policy benefits, excluding
  policyholder dividends...................      1,454.0      1,436.1       1,406.7         17.9         29.4
Policyholder dividends.....................        418.8        401.8         400.1         17.0          1.7
Policy acquisition cost amortization.......         94.1         59.2         133.0         34.9        (73.8)
Intangible asset amortization..............         33.2         32.5          49.4          0.7        (16.9)
Intangible asset impairments...............         --           66.3          --          (66.3)        66.3
Interest expense on indebtedness...........         39.6         31.4          27.3          8.2          4.1
Interest expense on non-recourse
  collateralized obligations...............         48.9         30.5          42.3         18.4        (11.8)
Demutualization expenses...................         --            1.8          25.9         (1.8)       (24.1)
Other operating expenses...................        536.0        581.2         624.4        (45.2)       (43.2)
                                             -----------  -----------   -----------  -----------  -----------
Total benefits and expenses................      2,624.6      2,640.8       2,709.1        (16.2)       (68.3)
                                             -----------  -----------   -----------  -----------  -----------
Loss before income taxes
  and minority interest....................        (10.2)      (184.5)       (245.3)       174.3         60.8
Applicable income taxes (benefit)..........        (18.5)       (56.2)       (105.2)        37.7         49.0
                                             -----------  -----------   -----------  -----------  -----------
Income (loss) before minority interest.....          8.3       (128.3)       (140.1)       136.6         11.8
Minority interest in net income
  of consolidated subsidiaries.............         12.4         12.4           7.2         --            5.2
                                             -----------  -----------   -----------  -----------  -----------
Loss from continuing operations............         (4.1)      (140.7)       (147.3)       136.6          6.6
Loss from discontinued operations..........         (2.1)        (1.3)         (2.5)        (0.8)         1.2
                                             -----------  -----------   -----------  -----------  -----------
Loss before cumulative effect of
  accounting changes.......................         (6.2)      (142.0)       (149.8)       135.8          7.8
Cumulative effect of accounting changes....         --         (130.3)        (65.4)       130.3        (64.9)
                                             -----------  -----------   -----------  -----------  -----------
Net loss...................................   $     (6.2)  $   (272.3)   $   (215.2)  $    266.1   $    (57.1)
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Premium revenue decreased $39.8 million, or 4%, in 2003 compared to 2002, primarily due to a continued shift in
sales from participating life to universal life and variable universal life products as well as to a continued
decline of the participating life inforce business. Compared to 2002, 2003 premium revenue for participating
life policies decreased by $40.5 million. Since our 2001 demutualization, we no longer sell participating life
policies resulting in a decline in renewal participating life premiums and related inforce.

Insurance and investment product fees increased by $4.8 million, or 1%, in 2003 compared to 2002, primarily due
to higher sales of universal life and variable life products, a growing inforce in universal life and variable
universal life products and slightly higher surrender fees for variable universal life products. These
increases were partially offset by lower fees for our Asset Management segment resulting from decreases in both
private client and institutional average assets under management.

                                                      37



Net investment income increased by $159.7 million, or 17%, in 2003 compared to 2002, primarily due to improved
equity market conditions and the related effect on our earnings from our venture capital segment and to
increased general account spread-type funds under management in our life and annuity segment partially offset
by the impact of reinvesting maturities at lower interest rates. In addition, investment income from our debt
securities pledged as collateral related to our consolidated CDOs increased $21.2 million from 2002, primarily
due to investment income from the Mistic CDO which closed in the third quarter of 2002.

Net realized investment losses decreased $33.4 million, or 25%, in 2003 compared to 2002, primarily due to
lower impairments from improved credit market conditions including a $26.6 million reduction in impairment
losses related to debt securities pledged as collateral related to our consolidated CDOs and higher net
transaction related gains, partially offset by an other-than-temporary impairment ($55.0 million after income
taxes) on our ownership of Aberdeen common stock during the second quarter of 2003. See the Debt and Equity
Securities section of Management's Discussion and Analysis of Financial Condition and Results of Operations and
Note 5 in this Form 10-K for more information.

Policy benefits, including policyholder dividends, increased $34.9 million, or 2%, in 2003 compared to 2002,
primarily due to higher interest credited on guaranteed interest accounts and fixed annuities from higher fund
account balances and higher mortality expense for universal life insurance. Policyholder dividend expense for
2003 was also higher compared to 2002, primarily due to growth in cash values of existing participating life
policies and the growth of our policyholder dividend obligation from favorable results, in part from the
portion of the venture capital funds transferred to the closed block in the first quarter of 2003.

Policy acquisition cost amortization increased $34.9 million, or 59%, in 2003 compared to 2002, primarily due
to higher amortization for participating life insurance and increased amortization for variable universal life
and annuities from a growing inforce and higher margins, partially offset by a $9.0 million acceleration of
amortization annuities related to a revision of long-term market return assumptions and a $4.5 million
impairment charge in the third quarter of 2002.

Interest expense on indebtedness increased $8.2 million, or 26%, in 2003 compared to 2002, due to a
restructuring of debt in late 2002 through the issuance of equity units to paydown borrowings from a lower cost
bank credit facility.

Interest expense on non-recourse collateralized obligations increased $18.4 million, or 60%, in 2003 compared
to 2002, primarily due to interest expense from the Mistic CDO which closed in the third quarter of 2002.

Other operating expenses decreased $45.2 million, or 8%, in 2003 compared to 2002, primarily due to lower
management restructuring costs and lower overall operating expenses.

Our income tax benefit of $18.5 million applicable to income before income taxes and minority interest for 2003
differed from the statutory U.S. federal income tax benefit of $3.6 million, primarily as a result of the tax
benefits associated with low income housing tax credits, non-taxable dividend and interest income and income
related to the minority interest in various non-taxable entities. The income tax benefit of $56.2 million for
2002 also differed from the statutory U.S. federal income tax benefit of $64.6 million, primarily as a result
of tax benefits associated with low income housing tax credits, non-taxable dividend and interest income, the
recovery of non-taxable amounts related to an IRS settlement offset by non-deductible charges for the
impairment of intangible assets and realized investment losses of $26.3 million related to debt securities
pledged as collateral from our consolidated CDOs for which there is no tax benefit.

2002 vs. 2001

Premium revenue declined $30.7 million, or 3%, in 2002, primarily as the result of a shift in sales from
traditional life products to variable universal life, universal life and annuity products. Since our 2001
demutualization, we no

                                                      38



longer sell participating life policies resulting in a decline in renewal participating life premiums and the
related inforce. Insurance and investment product fees increased $17.3 million, 3%, in 2002. Variable universal
life and universal life fees increased $9.4 million and $8.6 million, respectively, due to higher funds under
management driven by strong sales of universal life and variable universal life product, particularly in 2001
and 2002. Annuity fees declined $4.8 million as the result of lower funds under management in variable
sub-accounts.

The fluctuation in both premiums and insurance and investment product fees reflect our continued emphasis on
variable universal life, universal life and annuity product sales, rather than on traditional life product
sales. Investment product fees remained constant compared to 2001. The acquisition of a 60% interest in Kayne
Anderson Rudnick in January 2002 increased investment product fees, but was offset by a corresponding decrease
resulting from reductions in other assets under management and changes to fee structures.

Net investment income increased $54.9 million, or 6%, in 2002 as compared to 2001, primarily as the result of
an increase of invested assets related to the guaranteed interest account portion of our annuity business,
principally from the late 2001 and 2002 sales of the Retirement Planners Edge, or RPE, variable annuity.
Increases in net investment income for variable universal life were offset by a modest decrease in universal
life net investment income from lower new money rates, reinvestment rates and asset defaults. Interest spread,
or the excess of interest earned on guaranteed interest accounts as compared to interest credited on guaranteed
interest accounts, increased by $8.8 million as compared to 2001. Improved interest spread on annuity
guaranteed interest accounts is the result of a $1.2 billion increase in guaranteed interest account balances
at December 31, 2002 as compared to December 31, 2001, offset by lower new money rates and the investment of
related assets in short term, more liquid instruments. We experienced a decline in interest spread in the
second half of 2002 as further described in the General Account section of Management's Discussion and Analysis
of Financial Condition and Results of Operations. The yield on average invested assets, excluding venture
capital partnerships, was 6.6% for the year 2002, compared to 7.3% for the year 2001. The increase in net
investment income was also offset by lower earnings from debt securities pledged as collateral related to our
consolidated CDOs in 2002 compared to 2001.

The increase in realized investment losses was primarily due to higher credit related losses in the
telecommunications industry, primarily in the closed block, and debt securities pledged as collateral related
to our consolidated CDOs. See Debt and Equity Securities section of Management's Discussion and Analysis of
Financial Condition and Results of Operations in this Form 10-K for additional information.

The increase in policy benefits of $29.4 million, or 2%, in 2002 compared to 2001 is primarily due to a $48.2
million increase in interest credited on the guaranteed interest accounts portion of our annuity business,
primarily from late 2001 and 2002 sales of RPE (see the General Account section of Management's Discussion and
Analysis of Financial Condition and Results of Operations). In addition, expense related to minimum death
benefit guarantees on certain of our variable annuity products increased $8.7 million during 2002 as the result
of an increase in net minimum death benefit exposure from $5.8 million at December 31, 2001 to $234.9 million
at December 31, 2002. Of this increase in exposure, $176.6 million was the result of the acquisition of a block
of annuity business from Valley Forge Life Insurance Company, with the remaining increase in exposure resulting
from the impact of the overall decline in equity markets on fund balances.

The increase in policyholder dividends was primarily due to the increase in cash values for existing
participating life policies plus growth of our policyholder dividend obligation resulting from favorable
mortality and persistency experience.

The decrease in policy acquisition cost amortization of $73.8 million, or 55%, in 2002 compared to 2001 was
primarily due to favorable mortality and persistency experience on life products, offset by a $13.5 million
acceleration of DAC amortization expense related to our annuity business in 2002. This offset resulted from a
revision of our long-term market return assumption for annuities from 8% to 7% and an impairment charge related
to the recoverability of our DAC asset related to our variable annuities business. The Valley Forge block we
acquired in 2002, which experienced significant declines in assets due to equity market declines, accounts for
$4.5 million of this acceleration. DAC for individual participating life insurance policies is amortized in

                                                      39



proportion to estimated gross margins. The amortization process requires the use of various assumptions,
estimates and judgments about the future. The primary assumptions involve expenses, investment performance,
mortality and contract cancellations (i.e., lapses, withdrawals and surrenders). These assumptions are reviewed
on a regular basis and are generally based on our past experience, industry studies, regulatory requirements
and judgments about the future. In 2002, we revised the assumptions on traditional life products used in the
development of estimated gross margins to reflect favorable experience and, as a result, the amortization cost
expense decreased.

The decrease in intangible asset amortization of $16.9 million, or 34%, in 2002 compared to 2001 was due to our
adoption of a new standard on goodwill and intangible assets with indefinite lives which requires that, upon
adoption, amortization cease for goodwill and intangible assets with indefinite lives. See Note 4 to our
consolidated financial statements in this Form 10-K for more information.

As a result of adopting the new standard on goodwill and intangible assets with indefinite lives, an impairment
charge of $66.3 million was recorded during the third quarter as discussed further in Note 4 to our
consolidated financial statements in this Form 10-K.

Interest expense on indebtedness increased $4.1 million, or 15%, in 2002 compared to 2001, due to higher levels
of average indebtedness in 2002 than in 2001. Average borrowings were higher during 2002, due to the issuance
of $300.0 million senior bonds in December 2001.

Interest expense on non-recourse collateralized obligations decreased $11.8 million, or 28%, in 2002 compared
to 2001, primarily due to reduced interest income received (discussed above) resulting in lower distributions
to investment holders.

The decrease in other operating expenses of $43.2 million, or 7%, in 2002 compared to 2001 was due mostly to
lower non-recurring charges and Corporate and Other segment expenses. This decrease was partially offset by
increases in Life and Annuity and Asset Management segment expenses. Life and Annuity expenses were higher due
primarily to pension costs, slightly higher compensation and increased corporate overhead absorption. Asset
Management expenses were higher due to the expenses of an acquired company, Kayne Anderson Rudnick. We acquired
a majority interest in Kayne Anderson Rudnick in 2002, as further described in Note 4 to our consolidated
financial statements in this Form 10-K

Our 2002 effective income tax benefit rate of 30.5% differed from the statutory U.S. federal income tax benefit
rate of 35% as a result of the tax benefits associated with tax advantaged investment income (low income
housing tax credits and non-taxable dividend and interest income) and the recovery of amounts related to an IRS
settlement, offset by the tax on non-deductible goodwill impairment charges and realized losses from
investments pledged as collateral for which there is no tax benefit. In 2001, the effective income tax benefit
rate of 45.2% differed from the statutory income tax benefit rate of 35% as a result of the non-deductible
demutualization expenses and realized losses from our securities pledged as collateral related to our
consolidated CDOs, for which there is no tax benefit, offset by the tax benefits associated with tax advantaged
investment income and the elimination of the surplus tax liability.

The increase in minority interest expense was the result of our 2002 acquisition of a majority interest in
Kayne Anderson Rudnick.

In 2002, we adopted the new accounting standard related to the accounting for goodwill and other intangible
assets resulting in a $130.3 million cumulative effect of accounting change, as further described in Notes 1
and 4 to our consolidated financial statements in this Form 10-K.

                                                      40



Effects of Inflation

For the years 2003, 2002 and 2001, we do not believe inflation had a material effect on our consolidated
results of operations, except to the extent inflation may have affected interest rates.

Results of Operations by Segment

We evaluate segment performance on the basis of segment income. Realized investment gains and losses and
certain other items are excluded because we do not consider them when evaluating the financial performance of
the segments. The size and timing of realized investment gains and losses are often subject to our discretion.
Certain items are removed from segment after-tax income if, in our opinion, they are not indicative of overall
operating trends. While some of these items may be significant components of net income reported in accordance
with GAAP, we believe that segment income is an appropriate measure that represents the earnings attributable
to the ongoing operations of the business. Investment income on debt and equity securities pledged as
collateral as well as interest expense on non-recourse collateralized obligations, both related to three
consolidated collateralized obligation trusts we sponsor, are included in the Corporate and Other segment.
Excess investment income on debt and equity securities pledged as collateral represents investment advisory
fees earned by our asset management subsidiary and are allocated to the Asset Management segment as investment
product fees for segment reporting purposes only. Also, all interest expense is included in the Corporate and
Other segment, as are several smaller subsidiaries and investment activities which do not meet the thresholds
of reportable segments. These include our remaining international operations and the run-off of our group
pension and guaranteed investment contract businesses.

The criteria used to identify an item that will be excluded from segment income include: whether the item is
infrequent and is material to the segment's income; or whether it results from a business restructuring or a
change in the regulatory requirements, or relates to other unusual circumstances (e.g., non-routine
litigation). We include information on other items allocated to our segments in their respective notes for
information only. Items excluded from segment income may vary from period to period. Because these items are
excluded based on our discretion, inconsistencies in the application of our selection criteria may exist.
Segment income is not a substitute for net income determined in accordance with GAAP and may be different from
similarly titled measures of other companies.

The following amounts, net of applicable income taxes and other offsets, are included in income (loss) from
continuing operations for the years 2003, 2002 and 2001 but are excluded from our operating segment results ($
amounts in millions):
                                                                                             Changes
                                                                                     ------------------------
                                                             2002          2001
                                                 2003      Restated      Restated      2003/02      2002/01
                                             -----------  -----------   -----------  -----------  -----------

Net realized investment losses.............   $  (54.2)    $  (65.6)     $  (55.5)    $   11.4     $  (10.1)
Management restructuring charges and
  early retirement costs...................       (8.5)       (28.5)        (15.5)        20.0        (13.0)
Deferred policy acquisition
  cost adjustment..........................       --           15.1          --          (15.1)        15.1
Mutual life surplus tax....................       --           --            21.0         --          (21.0)
Expenses of purchase of Phoenix
  Investment Partners' minority interest...       --           --           (52.8)        --           52.8
Other income...............................        1.3         --             5.3          1.3         (5.3)
Demutualization expense....................       --           (1.3)        (23.9)         1.3         22.6
                                             -----------  -----------   -----------  -----------  -----------
Total......................................   $  (61.4)    $  (80.3)     $ (121.4)    $   18.9     $   41.1
                                             ===========  ===========   ===========  ===========  ===========

Segment Allocations

We allocate capital to our Life and Annuity segment based on risk-based capital, or RBC, for our insurance
products. We used 300% RBC levels for 2003 and 2002 and 250% RBC levels prior thereto. Capital within our

                                                      41



Life Companies that is unallocated is included in our Corporate and Other segment. We allocate capital to our
Asset Management segment on the basis of the historical capital within that segment. We allocate net investment
income based on the assets allocated to the segments. We allocate tax benefits related to tax-advantaged
investments to the segment that holds the investment. We allocate certain costs and expenses to the segments
based on a review of the nature of the costs, time studies and other methodologies.

Life and Annuity Segment

The following table and discussion presents summary financial data relating to Life and Annuity for 2003, 2002
and 2001 ($ amounts in millions).

                                                                                              Changes
                                                                                     ------------------------
                                                 2003        2002          2001       2003 / 02    2002 / 01
                                             -----------  -----------   -----------  -----------  -----------
Results of Operations
Premiums...................................   $ 1,042.2    $ 1,082.0     $ 1,112.7    $   (39.8)   $   (30.7)
Insurance and investment product fees......       333.0        315.1         303.1         17.9         12.0
Net investment income......................       993.2        947.4         890.8         45.8         56.6
                                             -----------  -----------   -----------  -----------  -----------
Total segment revenues.....................     2,368.4      2,344.5       2,306.6         23.9         37.9
                                             -----------  -----------   -----------  -----------  -----------
Policy benefits, including
  policyholder dividends...................     1,869.9      1,867.6       1,812.6          2.3         55.0
Policy acquisition cost amortization.......        98.2         88.6         122.5          9.6        (33.9)
Other operating expenses...................       300.5        307.4         288.3         (6.9)        19.1
                                             -----------  -----------   -----------  -----------  -----------
Total segment benefits and expenses........     2,268.6      2,263.6       2,223.4          5.0         40.2
                                             -----------  -----------   -----------  -----------  -----------
Segment income before
  income taxes and minority interest.......        99.8         80.9          83.2         18.9         (2.3)
Allocated income taxes.....................        31.1         28.0          28.8          3.1         (0.8)
                                             -----------  -----------   -----------  -----------  -----------
Segment income before minority interest....        68.7         52.9          54.4         15.8         (1.5)
Minority interest in net income
  of consolidated subsidiaries.............         0.4          0.6           0.3         (0.2)         0.3
                                             -----------  -----------   -----------  -----------  -----------
Segment income.............................        68.3         52.3          54.1         16.0         (1.8)
Net realized investment losses,
  net of income taxes and other offsets....        (4.7)       (15.0)        (16.6)        10.3          1.6
Deferred acquisition cost adjustment,
  net of income taxes......................        (1.3)        14.4          --          (15.7)        14.4
Other adjustments, net of income taxes.....         --           0.7          --           (0.7)         0.7
                                             -----------  -----------   -----------  -----------  -----------
Segment net income.........................   $    62.3     $   52.4     $    37.5    $     9.9    $    14.9
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Premium revenue for 2003 decreased by $39.8 million, or 4%, compared to 2002, primarily due to a continued
shift in sales from participating life to universal life and variable universal life products as well as to a
continued decline of the participating life inforce business. Compared to the prior year, the 2003 premium
revenue for participating life insurance policies decreased by $40.5 million. Since our 2001 demutualization,
we no longer sell participating life policies, resulting in a decline in renewal participating life premiums
and related inforce.

Investment product fees for 2003 increased by $17.9 million, or 6%, compared to 2002, primarily due to higher
sales in universal life products, a growing inforce in universal life and variable universal life products and
slightly higher surrender fees for variable universal life products. Specifically, higher net amounts at risk
in these two lines of business, as well as higher sales of universal life products, resulted in higher fees.

Net investment income for 2003, increased by $45.8 million, or 5%, compared to 2002, due to increased general
account spread-type funds, primarily annuities, partially offset by lower rates earned on invested assets.

Policy benefits, including policyholder dividends for 2003, were relatively flat compared to 2002. This was
primarily due to a decrease in reserves for the participating life insurance driven by lower inforce and an
$0.8

                                                      42



million decrease in our reserves for minimum death benefit guarantees due to favorable equity markets,
partially offset by higher interest credited on guaranteed interest accounts and fixed annuities driven by
higher average fund balances and higher mortality expense for universal life insurance.

Policy acquisition cost amortization for 2003 increased $9.6 million, or 11%, compared to 2002, primarily due
to a growing inforce, higher margins and slightly higher surrenders, partially offset by lower amortization
expense for annuities due to the charges incurred in the third quarter of 2002, which did not recur in 2003.

Other operating expenses decreased $6.9 million, or 2%, in 2003 compared to 2002 as a result of generally lower
non-deferrable operating expenses, partially offset by higher employee benefit costs.

Minority interest expense relates to our subsidiary, PFG. We acquired the 33% of the minority interest in PFG
we did not already own in May 2003.

Allocated income taxes for 2003 increased $3.1 million over 2002 as a result of higher segment income before
income taxes as well as a current year allocation of the tax effects of tax advantaged investments to the Life
and Annuity segment.

2002 vs. 2001

Premium revenue declined $30.7 million, or 3%, in 2002 compared to 2001, primarily as the result of a shift in
sales from traditional life products to variable universal life, universal life and annuity products. Insurance
and investment product fees increased $12.0 million, or 4%, in 2002 as compared to 2001. Variable universal
life and universal life fees increased $9.4 million and $8.6 million, respectively, due to higher funds under
management driven by strong sales of universal life and variable universal life products, particularly in 2001
and 2002. Annuity fees declined $4.8 million as the result of lower funds under management in variable
sub-accounts.

Net investment income increased $56.6 million, or 6%, in 2002 compared to 2001, primarily as the result of an
increase of invested assets related to the guaranteed interest account portion of our annuity business,
principally from the late 2001 and 2002 sales of the RPE variable annuity. Small increases in net investment
income for variable universal life were offset by a modest decrease in universal life net investment income
resulting from lower new money rates, reinvestment rates and asset defaults. The interest spread, or the excess
of interest earned on guaranteed interest accounts as compared to interest credited on guaranteed interest
accounts, increased by $8.8 million compared to 2001. The improved interest spread on annuity guaranteed
interest accounts is the result of a $1.2 billion increase in guaranteed interest account balances at December
31, 2002 compared to December 31, 2001, offset by lower new money rates and the investment of related assets in
short term, more liquid instruments. We experienced a decline in interest spread in the second half of 2002 as
further described in the General Account section of Management's Discussion and Analysis of Financial Condition
and Results of Operations in this Form 10-K.

The increase in policy benefits and dividends of $55.0 million, or 3%, in 2002 compared to 2001 is primarily
due to a $48.2 million increase in interest credited on the guaranteed interest accounts portion of our annuity
business, mostly from late 2001 and 2002 sales of RPE (see the General Account section of Management's
Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K). Our policyholder
dividend obligation decreased by $4.6 million as a result of realized losses partially offset by continuing
favorable mortality and persistency experience. In addition, expense related to minimum death benefit
guarantees on certain of our variable annuity products increased $8.7 million during 2002 as the result of an
increase in net minimum death benefit exposure from $5.8 million at December 31, 2001 to $234.9 million at
December 31, 2002. Of this increase, $176.6 million was the result of the acquisition of a block of annuity
business from Valley Forge Life Insurance Company in the third quarter of 2002, with the remaining increase in
exposure resulting from the impact of the overall decline in equity markets on fund balances.

                                                      43



The decrease in policy acquisition cost amortization of $33.9 million, or 28%, in 2002 compared to 2001 was
primarily due to favorable mortality and persistency experience on life products, offset by a $13.5 million
acceleration of policy acquisition cost amortization expense related to our annuity business in the third
quarter of 2002. This offset resulted from a revision of our long-term market return assumption for annuities
from 8% to 7% and an impairment charge related to the recoverability of our deferred acquisition cost asset
related to our variable annuities business. The Valley Forge block we acquired at the beginning of the third
quarter, which experienced significant declines in assets due to equity market declines, accounts for $4.5
million of this acceleration. DAC costs for individual participating life insurance policies are amortized in
proportion to estimated gross margins. The amortization process requires the use of various assumptions,
estimates and judgments about the future. The primary assumptions involve expenses, investment performance,
mortality and contract cancellations (i.e., lapses, withdrawals and surrenders). These assumptions are reviewed
on a regular basis and are generally based on our past experience, industry studies, regulatory requirements
and judgments about the future. In the first quarter of 2002, we revised the assumptions on traditional life
products used in the development of estimated gross margins to reflect favorable experience and, as a result,
the amortization cost expense decreased.

The increase in other operating expenses was primarily due to higher benefit costs, mainly pension-related
costs. The segment also experienced slightly higher compensation expense and corporate overhead absorption
costs.

Minority interest expense relates to our then 67% owned subsidiary, PFG.

Life and Annuity segment revenues by product for the years 2003, 2002 and 2001 are as follows ($ amounts in
millions):

                                                                                              Changes
                                                                                     ------------------------
                                                 2003         2002          2001       2003/02      2002/01
                                             -----------  -----------   -----------  -----------  -----------

Variable universal life insurance..........   $   114.8    $   109.2     $    97.3    $     5.6    $    11.9
Universal life insurance...................       196.9        195.8         190.8          1.1          5.0
Term life insurance........................        14.6         12.2           8.7          2.4          3.5
Other life insurance.......................       148.2        146.3         140.1          1.9          6.2
                                             -----------  -----------   -----------  -----------  -----------
Total, non-participating life insurance....       474.5        463.5         436.9         11.0         26.6
Participating life insurance...............     1,690.1      1,718.9       1,760.9        (28.8)       (42.0)
                                             -----------  -----------   -----------  -----------  -----------
Total, life insurance......................     2,164.6      2,182.4       2,197.8        (17.8)       (15.4)
Annuities..................................       203.8        162.1         108.8         41.7         53.3
                                             -----------  -----------   -----------  -----------  -----------
Segment revenues...........................   $ 2,368.4    $ 2,344.5     $ 2,306.6    $    23.9    $    37.9
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Variable universal life product revenues increased $5.6 million, or 5%, in 2003 compared to 2002, primarily due
to higher cost of insurance fees from a growing inforce, and higher surrender charges, partially offset by
slightly lower sales and lower interest earned.

Universal life product revenues increased $1.1 million, or less than 1%, in 2003 compared to 2002, primarily
due to higher cost of insurance and other fees from higher sales and a growing inforce, offset by lower
interest earned.

Term life revenues increased $2.4 million, or 20%, in 2003 compared to 2002, due to premium growth from higher
sales.

Other life insurance revenues increased $1.9 million, or 1%, in 2003 compared to 2002, primarily due to higher
revenue in an old block of corporate-owned life insurance business and from higher investment income, partially
offset by lower revenues in non-life insurance subsidiaries.

                                                      44



Participating life product revenues decreased $28.8 million, or 2%, in 2003 compared to 2002, primarily due to
a continued shift in sales from participating life to universal and variable universal life products as well as
a continued decline in participating life inforce business.

Annuity product revenues increased $41.7 million, or 26%, in 2003 compared to 2002, primarily due to higher
fees from improved equity market performance and to an increase in interest earned on higher spread based asset
products.

2002 vs. 2001

Variable universal life product revenues increased $11.9 million, or 12%, in 2002 compared to 2001, primarily
due to higher cost of insurance fees from a growing inforce, higher fees from higher sales, and higher interest
earned on the increase in funds under management.

Universal life product revenues increased $5.0 million, or 3%, in 2002 compared to 2001, primarily due to
higher cost of insurance and other fees from higher sales and a growing inforce, offset by lower interest
earned.

Term life revenues increased $3.5 million, 40%, in 2002 compared to 2001, due to premium growth from higher
sales, partially offset by lower investment income.

Other life insurance revenues increased $6.2 million, or 4%, in 2002 compared to 2001, primarily due to higher
revenues in an old block of corporate-owned life insurance business and from higher investment income, offset
by lower revenues in non-life insurance subsidiaries.

Participating life product revenues decreased $42.0 million, or 2%, in 2002 compared to 2001, primarily due to
a continued shift in sales from participating life to universal and variable universal life products, a
continued decline in participating life inforce business and slightly lower investment income.

Annuity product revenues increased $53.3 million, or 49%, in 2002 compared to 2001, primarily due to higher
interest earned on higher spread based asset funds, partially offset by slightly lower fees.

Life and Annuity segment income before income taxes by product for the years 2003, 2002 and 2001 is as follows
($ amounts in millions):

                                                                                             Changes
                                                                                     ------------------------
                                                 2003         2002          2001       2003/02      2002/01
                                             -----------  -----------   -----------  -----------  -----------

Variable universal life insurance..........   $    35.0    $    35.9     $    30.2    $    (0.9)   $     5.7
Universal life insurance...................        21.7         26.3          17.4         (4.6)         8.9
Term life insurance........................         3.8          4.7           1.3         (0.9)         3.4
Other life insurance.......................         6.9          0.8           1.7          6.1         (0.9)
                                             -----------  -----------   -----------  -----------  -----------
Total, non-participating life insurance....        67.4         67.7          50.6         (0.3)        17.1
Participating life insurance...............        36.1         33.3          21.4          2.8         11.9
                                             -----------  -----------   -----------  -----------  -----------
Total, life insurance......................       103.5        101.0          72.0          2.5         29.0
Annuities..................................        (4.1)       (20.7)         10.9         16.6        (31.6)
                                             -----------  -----------   -----------  -----------  -----------
Segment income before income taxes.........   $    99.4    $    80.3     $    82.9    $    19.1    $    (2.6)
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Variable universal life product pre-tax income decreased $0.9 million, or 3%, in 2003 compared to 2002. The
decrease can be attributed to lower sales, higher amortization of deferred acquisition costs and higher
non-deferrable expenses, partially offset by favorable insurance margins and higher surrender charges.

                                                      45



Universal life product pre-tax income decreased $4.6 million, or 17%, in 2003 compared to 2002, due to lower
insurance margins and surrender charges, partially offset by higher investment margins and lower expenses.

Term product pre-tax income decreased $0.9 million, or 19%, in 2003 compared to 2002, primarily due to slightly
higher expense levels partially offset by higher insurance margins.

Other life insurance pre-tax income increased $6.1 million in 2003 compared to 2002, due to favorable mortality
in an old block of corporate-owned life insurance business, the release of a reserve on a life contingent
annuity due to the death of the annuitant and higher income from certain non-life insurance subsidiaries.

Participating life product pre-tax income increased $2.8 million, or 8%, in 2003 compared to 2002, primarily
due to a one-time investment gain during the second quarter of 2003 and lower non-deferrable expenses,
partially offset by higher DAC amortization and the release of a policyholder tax contingency in 2002 that did
not recur in 2003.

Annuity product pre-tax loss was $16.6 million, or 80%, less in 2003 compared to 2002. This was primarily due
to lower amortization of DAC in 2003, a decrease in minimum guaranteed death benefits expense in 2003, and
higher investment margins from higher spread type funds under management. These were partially offset by higher
non-deferrable expenses and commissions as well as further spread compression in 2003. Amortization of DAC was
lower in 2003, due to acceleration of amortization from a revision of long-term market return assumptions and
an impairment charge in 2002, neither of which recurred in 2003.

2002 vs. 2001

Variable universal life product pre-tax income increased $5.7 million, or 19%, in 2002 compared to 2001,
primarily due to favorable investment margins, slightly higher surrender charges, and lower amortization of
DAC.

Universal life product pre-tax income increased $8.9, or 51%, in 2002 compared to 2001, due primarily to higher
insurance and investment margins, partially offset by higher incurred expenses.

Term product pre-tax income increased $3.4 million in 2002 compared to 2001, due primarily to higher sales.

Other life insurance pre-tax income decreased $0.9 million, or 53%, in 2002 compared to 2001, primarily due to
an old block of corporate-owned life insurance business which had higher benefit costs, partially offset by
higher investment income in 2002.

Participating life product pre-tax income increased $11.9 million, or 56%, in 2002 compared to 2001, primarily
due to lower benefit costs and lower incurred expenses from lower amortization of DAC, partially offset by
lower revenues.

Annuity product pre-tax loss was $20.7 million in 2002, compared with pre-tax income of $10.9 million in 2001.
This $31.6 million decrease was primarily due to higher non-deferrable expenses, amortization of DAC, and
benefit costs.

See Note 3 to our consolidated financial statements in this Form 10-K for more information.

                                                      46



Asset Management Segment

The following table and discussion presents summary financial data relating to Asset Management for the years
2003, 2002 and 2001 ($ amounts in millions).

                                                                                             Changes
                                                                                     ------------------------
                                                 2003         2002          2001        2003/02    2002/01
                                             -----------  -----------   -----------  -----------  -----------
Results of Operations
Investment product fees....................   $   243.2    $   258.1     $   258.1    $   (14.9)   $    --
Net investment income......................         0.7          1.0           1.6         (0.3)        (0.6)
                                             -----------  -----------   -----------  -----------  -----------
Total segment revenues.....................       243.9        259.1         259.7        (15.2)        (0.6)
                                             -----------  -----------   -----------  -----------  -----------
Intangible asset amortization..............        33.2         32.5          49.0          0.7        (16.5)
Intangible asset impairments...............        --           66.3          --          (66.3)        66.3
Other operating expenses...................       207.4        218.3         212.5        (10.9)         5.8
                                             -----------  -----------   -----------  -----------  -----------
Total segment expenses.....................       240.6        317.1         261.5        (76.5)        55.6
                                             -----------  -----------   -----------  -----------  -----------
Segment income (loss) before
  income taxes and minority interest.......         3.3        (58.0)         (1.8)        61.3        (56.2)
Allocated income taxes (benefit)...........        (3.3)        (6.0)          2.6          2.7         (8.6)
                                             -----------  -----------   -----------  -----------  -----------
Segment income (loss) before
  minority interest........................         6.6        (52.0)         (4.4)        58.6        (47.6)
Minority interest in net income
  of subsidiaries..........................        12.0         11.9           6.9          0.1          5.0
                                             -----------  -----------   -----------  -----------  -----------
Segment loss...............................        (5.4)       (63.9)        (11.3)        58.5        (52.6)
Net realized investment gains (losses).....        (0.3)        --             0.5         (0.3)        (0.5)
Restructuring and other costs, net of
  income taxes.............................        (4.0)        (8.4)        (50.4)         4.4         42.0
Cumulative effect of accounting change.....        --         (119.9)         --          119.9       (119.9)
                                             -----------  -----------   -----------  -----------  -----------
Segment net loss...........................   $    (9.7)   $  (192.2)    $   (61.2)   $   182.5    $  (131.0)
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Investment product fees decreased $14.9 million, or 6%, in 2003 compared to 2002. This decrease was primarily
due to the decrease in average assets under management compared to the prior year. Private client and
institutional investment product fees decreased $8.9 million and $6.5 million, respectively, as a result of the
decrease in average assets under management. Approximately 56% of our management fee revenues are based on
assets as of the beginning of a quarter, which causes fee revenues to lag behind changes in average assets
under management.

Assets under management were $59.2 billion and $54.0 billion, of which $15.5 billion and $14.5 billion as of
December 31, 2003 and 2002, respectively, were our Life Companies' assets, including the general and variable
separate accounts. The increase in assets under management during 2003 is due primarily to positive investment
performance of $5.8 billion for the year. Sales of private client products in 2003 were $4.1 billion, which is
a decrease of 29% from 2002. The majority of this decline is due to reduced sales of sponsored managed accounts
at Seneca and Kayne Anderson Rudnick. Redemptions of private client products in 2003 were $4.9 billion, which
is a decrease of 11% from 2002. This improvement was primarily a result of lower redemptions for mutual funds.
Sales of institutional accounts in 2003 were $3.0 billion, which is a 32% decrease from 2002. The decrease in
sales is due to the fact that 2002 included the issuance of a $1.0 billion CDO, which we consolidate in our
financial statements, that did not recur in 2003. Redemptions of institutional accounts in 2003 were $3.5
billion, which is a decrease of 22% from 2002. The majority of the improvement in redemptions was attributable
to Seneca.

There were no impairments of goodwill or other intangible assets in 2003. The $66.3 million charge in 2002 was
associated with the impairment of goodwill related to certain of our asset management partners.

                                                      47



Other operating expenses decreased $10.9 million, or 5%, in 2003 compared to 2002, of which $5.3 million
related to compensation expense and $5.5 million related to lower non-compensation related operating expenses.
The decrease in non-compensation related operating expenses was primarily the result of lower professional,
rent, depreciation, and travel related charges offset, in part, by increased computer services charges.

Allocated income tax benefits decreased $2.7 million, or 45%, from the comparable period in 2002 as a result of
lower segment losses offset by the impact of non-deductible asset impairments in the prior year.

2002 vs. 2001

Investment product fees remained relatively constant compared to 2001. The acquisition of a 60% interest in
Kayne Anderson Rudnick in 2002 increased investment product fees by $41.2 million. A corresponding decrease
resulted from reductions in other assets under management and changes to fee structures. Excluding Kayne
Anderson Rudnick, total average assets under management decreased by $4.6 billion. Average assets under
management for the private client line of business, excluding Kayne Anderson Rudnick, decreased $5.1 billion,
decreasing investment product fees by $34.1 million. Although assets under management for the institutional
line of business increased by $0.5 billion, a change in our Life Companies general account fee structure in
July 2001 was the principal cause of a $6.9 million decrease in institutional investment product fees. At
December 31, 2002, Asset Management had $54.0 billion in assets under management, an increase of $1.9 billion,
or 4%, from December 31, 2001. This increase consisted of $7.7 billion from the acquisition of Kayne Anderson
Rudnick, net asset inflows of $0.2 billion, including the issuance of a $1.0 billion collateralized obligation
in 2002 and $1.8 billion of increased annuity deposits in our Life Companies general accounts offset, in part,
by a decrease of $7.9 billion resulting from investment performance.

Sales of private client products in 2002 were $5.8 billion, including $3.1 billion from Kayne Anderson Rudnick,
an increase of 27% from the same period in 2001 and redemptions from existing accounts were $5.5 billion,
including $0.9 billion from Kayne Anderson Rudnick, an increase of 3% from the same period in 2001. Sales of
institutional accounts in 2002 were $4.4 billion, including $0.3 billion from Kayne Anderson Rudnick, a
decrease of 12% from the same period in 2001 and lost accounts and withdrawals from existing accounts were $4.5
billion, including $0.3 billion from Kayne Anderson Rudnick, an increase of 19% from the same period in 2001.

The decrease in intangible asset amortization of $16.5 million, or 34%, in 2002 compared to 2001 was primarily
due to the elimination of approximately $20.7 million of amortization on goodwill and indefinite-lived
intangible assets in accordance with SFAS No. 142. Additional intangible amortization of $4.2 million in 2002
compared to 2001 resulted from the acquisition of our interest in Kayne Anderson Rudnick.

Intangible asset impairments is the result of a $66.3 million impairment of goodwill taken in the third quarter
of 2002.

The increase in other operating expenses of $5.8 million, or 3%, in 2002 compared to 2001 was primarily due to
$24.6 million from Kayne Anderson Rudnick, for the eleven months of 2002. This increase was offset, in part, by
an $8.9 million decrease in compensation expense of which $7.6 million related to incentive compensation. Other
operating expense decreased $9.9 million, primarily related to reductions in consulting, professional and
travel charges.

The increase in minority interest in net income of subsidiaries in 2002 was due primarily to our purchase of
Kayne Anderson Rudnick.

See Note 4 to our consolidated financial statements in this Form 10-K for more information.

                                                      48



Venture Capital Segment

Our venture capital investments are limited partnership interests in venture capital funds, leveraged buyout
funds and other private equity partnerships sponsored and managed by third parties. We record our investments
in venture capital partnerships in accordance with the equity method of accounting. (See Venture Capital
Partnerships in the Critical Accounting Estimates section of Management's Discussion and Analysis of Financial
Condition and Results of Operations.) Venture capital investments are investments of the general account of
Phoenix Life.

In the first quarter of 2001, we recorded a charge of $48.8 million (net of income taxes of $26.3 million)
representing the cumulative effect of our venture capital partnership accounting change on the fourth quarter
of 2000. The cumulative effect was based on the actual fourth quarter 2000 financial results as reported by the
partnerships.

During the first quarter of 2003, we sold a 50% interest in certain of our venture capital partnerships to an
outside party and transferred the remaining 50% interest in those partnerships to our closed block. The
carrying value of the partnerships sold and transferred totaled $52.2 million after realizing a loss of $19.4
million ($5.1 million recorded in 2002 and $14.3 million recorded in 2003). The unfunded commitments of the
partnerships sold and transferred totaled $27.2 million; the outside party and the closed block will each fund
half of these commitments. At the time of transfer, the partnerships transferred constituted less than 0.5% of
the assets of the closed block.

The following table and discussion present summary financial data relating to our Venture Capital segment for
the years 2003, 2002 and 2001 ($ amounts in millions).

                                                                                             Changes
                                                                                     ------------------------
                                                 2003        2002          2001         2003/02    2002/01
                                             -----------  -----------   -----------  -----------  -----------
Results of Operations
Net realized gains (losses) on
  partnership cash and stock distributions.   $     4.9    $    (4.7)    $    17.8    $     9.6    $   (22.5)
Net unrealized gains (losses) on
  partnership investments..................        37.1        (47.2)        (95.9)        84.3         48.7
Partnership operating expenses.............        (5.8)        (7.4)         (6.4)         1.6         (1.0)
                                              -----------  -----------   -----------  -----------  -----------
Segment net investment income (loss).......        36.2        (59.3)        (84.5)        95.5         25.2
Applicable income taxes (benefit)..........        12.7        (20.7)        (29.6)        33.4          8.9
                                             -----------  -----------   -----------  -----------  -----------
Segment net income (loss)..................   $    23.5    $   (38.6)    $   (54.9)   $    62.1    $    16.3
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Net investment income increased $95.5 million in 2003 compared to 2002 due to overall improved equity market
conditions and the true-up to the partnerships' audited fourth quarter of 2002 financial statements from
estimated amounts as of December 31, 2002.

Our accounting methodology makes downward adjustments based on public market indices, but limits upward
adjustments to the amounts previously reported by the partnerships. Accordingly, we do not record gains until
they are reported by the partnerships. As a result, the effect of our adjusting estimated partnership results
to actual results increased investment income by $33.4 million and $12.8 million for 2003 and 2002,
respectively.

                                                      49



2002 vs. 2001

The reduction in net investment loss of $25.2 million in 2002 compared to 2001 was primarily due to a reduced
effect of industry sector indices when applied to lower partnership holdings balances during 2002 compared to
2001. The loss in 2002 was primarily driven by stock market performance, most notably in technology and related
sectors ($ amounts in millions).

                                                                                             Changes
                                                                                     ------------------------
                                                 2003         2002          2001       2003/02      2002/01
                                             -----------  -----------   -----------  -----------  -----------
Venture Capital Investments
Contributions (dollars invested)...........   $    31.0    $    42.2     $    47.0    $   (11.2)   $    (4.8)
Equity in earnings of partnerships.........        36.2        (59.3)       (159.6)        95.5        100.3
Distributions..............................       (32.2)       (41.7)        (63.0)         9.5         21.3
Proceeds from sale of partnership
  interests and transfer to closed block...       (52.2)        --            --          (52.2)        --
Realized loss on sale of partnership
  interests and transfer to closed block...       (14.3)        (5.1)         --           (9.2)        (5.1)
                                             -----------  -----------   -----------  -----------  -----------
Change in venture capital investments......       (31.5)       (63.9)       (175.6)        32.4        111.7
Venture capital segment investments,
  beginning of period......................       227.8        291.7         467.3        (63.9)      (175.6)
                                             -----------  -----------   -----------  -----------  -----------
Venture capital segment investments,
  end of period............................   $   196.3    $   227.8     $   291.7    $   (31.5)  $    (63.9)
                                             ===========  ===========   ===========  ===========  ===========

2003 vs. 2002

Venture capital investments for 2003 increased $32.4 million compared to the change for 2002, primarily due to
$36.2 million in equity in earnings in 2003 compared to equity in losses of $59.3 million in 2002. This $95.5
million improvement in equity in earnings in 2003 was partially offset by proceeds from, and realized losses
on, the sale of partnership interests and transfer to the closed block in 2003 which totaled $66.5 million.

2002 vs. 2001

Venture capital investments for 2002 increased $111.7 million compared to the change for 2001, primarily due to
lower losses from equity interests in partnerships ($59.3 million loss in 2002 compared to $159.6 million loss
in 2001) and lower distributions in 2002 compared to 2001. Losses from equity interests in partnerships were
higher in 2001 primarily due to the cumulative effect of an accounting change discussed above.

                                                      50



Our investments in venture capital partnerships as of December 31, 2003 and 2002 by type of investment follow
($ amounts in millions):

                                                                                 2003            2002
                                                                             --------------  --------------

Technology.................................................................    $    36.8       $    25.0
Telecommunications.........................................................         13.3            10.2
Biotechnology..............................................................         16.3            11.1
Health care................................................................          8.2             9.2
Consumer and business products and services................................         29.6            45.9
Financial services.........................................................         28.5            28.1
Other......................................................................         44.9            50.6
                                                                             --------------  --------------
Private holdings...........................................................        177.6           180.1
Public holdings............................................................         11.3            23.0
Cash and cash equivalents..................................................          5.5            21.6
Other......................................................................          1.9             3.1
                                                                             --------------  --------------
Venture capital partnerships...............................................    $   196.3       $   227.8
                                                                             ==============  ==============

Unfunded commitments.......................................................    $    76.7       $   131.3
                                                                             ==============  ==============

See Note 5 to our consolidated financial statements in this Form 10-K for more information regarding our
Venture Capital segment.

Corporate and Other Segment

The following table and discussion present summary financial data relating to Corporate and Other for the years
2003, 2002 and 2001 ($ amounts in millions):

                                                              2002          2001              Changes
                                                 2003       Restated      Restated      2003/02      2002/01
                                             -----------  -----------   ------------  -----------  -----------
Results of Operations
Corporate investment income................   $    4.3     $    1.5      $     7.2     $    2.8     $   (5.7)
Investment income from
  collateralized obligations...............       52.2         31.0           42.8         21.2        (11.8)
Interest expense on indebtedness...........      (39.6)       (31.4)         (27.3)        (8.2)        (4.1)
Interest expense on non-recourse
  collateralized obligations...............      (48.9)       (30.5)         (42.3)       (18.4)        11.8
Corporate expenses.........................      (11.0)       (10.4)         (19.9)        (0.6)         9.5
International..............................       (1.4)         4.2            7.7         (5.6)        (3.5)
Other......................................       (3.4)        (4.4)          (2.9)         1.0         (1.5)
                                             -----------  -----------   ------------  -----------  -----------
Segment loss, before income taxes..........      (47.8)       (40.0)         (34.7)        (7.8)        (5.3)
Allocated income tax (benefit).............      (18.8)       (29.8)         (20.9)        11.0         (8.9)
                                             -----------  -----------   ------------  -----------  -----------
Segment loss...............................   $  (29.0)    $  (10.2)     $   (13.8)    $  (18.8)    $    3.6
                                             ===========  ===========   ============  ===========  ===========

2003 vs. 2002

Investment income from debt and equity securities pledged as collateral related to our consolidated CDOs
increased $21.2 million, or 68%, in 2003 compared to 2002, primarily from earnings from the Mistic CDO which
closed in the third quarter of 2002.

Interest expense on indebtedness increased $8.2 million, or 26%, in 2003 compared to 2002, primarily due to a
restructuring of debt in late 2002 through the issuance of equity units to paydown shorter term, lower cost
borrowings under our bank credit facility.

                                                       51


Interest expense on non-recourse collateralized obligations increased $18.4 million, or 60%, in 2003 compared
to 2002, primarily due to interest expense from the Mistic CDO which closed in the third quarter of 2002.

Corporate expenses were relatively level for 2003 compared to 2002. Expenses increased $7.2 million for costs
related to the stock purchase contracts issued in 2002, but this was offset by lower unallocated corporate
expenses.

International results decreased $5.6 million in 2003 compared to 2002, due primarily to lower equity in
earnings from Aberdeen.

Other increased $1.0 million in 2003 compared to 2002, due primarily to lower losses from non-core operations
offset by slightly higher expenses related to debt and equity securities pledged as collateral related to our
consolidated CDOs of $2.8 million.

2002 vs. 2001

Investment income from debt and equity securities pledged as collateral related to our consolidated CDOs
decreased $11.8 million, or 28%, in 2002 compared to 2001, primarily due to a significant drop in interest
rates and higher credit defaults resulting in lower interest income received.

Interest expense on indebtedness increased due to higher levels of indebtedness in 2002 than in 2001.

Interest expense on non-recourse collateralized obligations decreased $11.8 million, or 28%, in 2002 compared
to 2001, primarily due to reduced interest income received (discussed above) resulting in lower distributions
to investment holders.

The decrease in net investment income in 2002 from 2001 is primarily due to a decrease in invested assets in
2002, including a reallocation of assets to the Life and Annuity segment, which was effective January 1, 2002.
The decrease was partially offset by our equity in increased earnings of unconsolidated affiliates, including
HRH, in 2002.

Corporate expenses decreased $9.5 million in 2002 from 2001, due primarily to lower unallocated expenses. Other
decreased $1.5 million in 2002 from 2001, due primarily to our exit from our physician practice management
business during 2001, offset by higher losses from non-core operations.

General Account

The invested assets in the Life Companies' general accounts are generally of high quality and broadly
diversified across asset classes, sectors and individual credits and issuers. Our asset management
professionals manage these general account assets in investment segments that support specific product
liabilities. These investment segments have distinct investment policies that are structured to support the
financial characteristics of the related liabilities within them. Segmentation of assets allows us to manage
the risks and measure returns on capital for our various businesses and products.

Separate Accounts

Separate account assets are managed in accordance with the specific investment contracts and guidelines
relating to our variable products. We generally do not bear any investment risk on assets held in separate
accounts. Rather, we receive investment management fees based on assets under management. Assets held in
separate accounts are not available to satisfy general account obligations.


                                                      52



Debt and Equity Securities Pledged as Collateral and Non-recourse Collateralized Obligations

Investments pledged as collateral trusts are assets held for the benefit of those institutional clients which
have investments in structured bond products offered and managed by our asset management subsidiary.

See Note 8 to our consolidated financial statements in this Form 10-K for more information.

Asset/Liability and Risk Management

Our primary investment objective is to maximize after-tax investment return within defined risk parameters. Our
primary sources of investment risk are:

    •    credit risk, which relates to the uncertainty associated with the ongoing ability of an obligor to
         make timely payments of principal and interest;
    •    interest rate risk, which relates to the market price and cash flow variability associated with
         changes in market interest rates; and
    •    equity risk, which relates to the volatility of prices for equity and equity-like investments, such as
         venture capital partnerships.

We manage credit risk through the fundamental analysis of the underlying obligors, issuers and transaction
structures. We employ a staff of experienced credit analysts who review obligors' management, competitive
position, cash flow, coverage ratios, liquidity and other key financial and non-financial information. These
analysts recommend the investments needed to fund our liabilities while adhering to diversification and credit
rating guidelines. In addition, when investing in private debt securities, we rely upon broad access to
management information, negotiated protective covenants, call protection features and collateral protection. We
review our debt security portfolio regularly to monitor the performance of obligors and assess the stability of
their current credit ratings.

We manage interest rate risk as part of our asset/liability management process and product design procedures.
Asset/liability management strategies include the segmentation of investments by product line, and the
construction of investment portfolios designed to satisfy the projected cash needs of the underlying
liabilities. We identify potential interest rate risk in portfolio segments by modeling asset and liability
durations and cash flows under current and projected interest rate scenarios. We use these projections to
assess and control interest rate risk.

We offer a variety of variable annuities to meet the accumulation and preservation needs of the affluent and
high-net-worth market. Our major sources of revenues from separate account variable annuities are mortality and
expense fees charged to the contractholder, generally determined as a percentage of the market value of the
underlying assets under management. Our major source of profit from fixed annuities and general account
variable annuities is from the interest rate spread, or the excess of investment income earned over interest
credited.

In 1999, we began selling RPE, a no-load variable annuity. Commissions on these sales were 1% to 1.25% per year
depending on the distribution outlet. RPE was designed to attract contributions into variable sub-accounts on
which we earn mortality and expense fees. In September 2002, we stopped accepting applications for RPE,
although existing policyholders have the right to make subsequent cumulative gross deposits up to $1 million
per contract.


                                                      53



Amounts held by our policyholders in RPE and other guaranteed interest accounts, or GIAs, and fixed annuities,
as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                                  2003             2002
                                                                             ---------------  ---------------
Policyholder Deposit Funds
Retirement Planners Edge GIAs..............................................   $    1,209.4     $    1,345.6
Other variable annuity GIAs................................................          858.0            813.7
                                                                             ---------------  ---------------
Variable annuity GIAs......................................................        2,067.4          2,159.3
Fixed annuities............................................................        1,056.9            737.2
                                                                             ---------------  ---------------
Total variable annuity GIAs and fixed annuities............................   $    3,124.3     $    2,896.5
                                                                             ===============  ===============

We also manage interest rate risk by emphasizing the purchase of securities that feature prepayment
restrictions and call protection. Our product design and pricing strategies include the use of surrender
charges or restrictions on withdrawals in some products. In addition, we selectively apply derivative
instruments, primarily interest rate swaps, to reduce the interest rate risk inherent in our portfolios. These
derivatives are transacted with highly rated counterparties and monitored for effectiveness on an ongoing
basis. We use derivatives exclusively for hedging purposes.

We manage credit risk through industry and issuer diversification and asset allocation. Maximum exposure to an
issuer is defined by quality ratings, with higher quality issuers having larger exposure limits. We have an
overall limit on below investment-grade rated issuer exposure.

For further information about our management of interest rate risk and equity risk, see Management's Discussion
and Analysis of Financial Condition and Results of Operations--Quantitative and Qualitative Information About
Market Risk.

Debt and Equity Securities Held in General Account

Our general account debt securities portfolio consists primarily of investment-grade publicly traded and
privately placed corporate bonds, residential mortgage-backed securities, commercial mortgage-backed securities
and asset-backed securities. As of December 31, 2003, our general account debt securities with a carrying value
of $13,273.0 million represented 79% of total general account investments. Public debt securities represented
78.9% of total debt securities, with the remaining 21.1% represented by private debt securities.

We consolidate debt and equity securities on our consolidated balance sheet that are pledged as collateral for
the settlement of collateralized obligation liabilities related to three collateralized obligation trusts we
sponsor. See Note 8 of our consolidated financial statements in this Form 10-K for additional information on
these debt and equity securities pledged as collateral.

Each year, the majority of our general account's net cash flows are invested in investment grade debt
securities. In addition, we maintain a portfolio allocation of between 6% and 10% of debt securities in below
investment grade rated bonds. Allocations are based on our assessment of relative value and the likelihood of
enhancing risk-adjusted portfolio returns. The size of our allocation to below investment grade bonds is also
constrained by the size of our net worth. We are subject to the risk that the issuers of the debt securities we
own may default on principal and interest payments, particularly in the event of a major economic downturn. Our
investment strategy has been to invest the majority of our below investment grade rated bond exposure in the BB
rating category, which is equivalent to a Securities Valuation Office, or SVO, securities rating of 3. The BB
rating category is the highest quality tier within the below investment grade universe, and BB rated securities
historically experienced lower defaults compared to B or CCC rated bonds. As of December 31, 2003, our total
below investment grade securities totaled $1,101.0 million, or 8.3%, of our total debt security portfolio. Of
that amount, $764.9 million, or 5.8%, of our debt security portfolio was invested in the BB category. Our debt
securities having an increased risk of default (those securities with an SVO rating of four or greater which is
equivalent to B or below) totaled $336.1 million, or 2.5%, of our total debt security portfolio.

                                                      54



Our general account debt and equity securities are classified as available-for-sale and are reported at fair
value with unrealized gains or losses included in equity. Accordingly, the carrying value of such securities
reflects their fair value at the balance sheet date. Fair value is based on quoted market price, where
available. When quoted market prices are not available, we estimate fair value for debt securities by
discounting projected cash flows based on market interest rates currently being offered on similar terms to
borrowers of similar credit quality, by quoted market prices of comparable instruments and by independent
pricing sources or internally developed pricing models. Investments whose value, in our judgment, is considered
to be other-than-temporarily impaired are written down to fair value as a charge to realized losses included in
our earnings. The cost basis of these written-down investments is adjusted to fair value at the date the
determination of impairment is made. The new cost basis is not changed for subsequent recoveries in value.

The following table presents our general account debt security portfolio at fair value as of December 31, 2003
and 2002 ($ amounts in millions), by SVO ratings, along with an equivalent Standard & Poor's, or S&P, rating
agency designation, and by public and private securities. The majority of our debt securities are investment
grade, with 91.7% invested in Categories 1 and 2 securities as of December 31, 2003.

                                   Total Debt Securities      Public Debt Securities   Private Debt Securities
                                        (Fair Value)              (Fair Value)               (Fair Value)
   SVO      S&P Equivalent        ------------------------   -----------------------   ------------------------
 Rating       Designation              2003         2002         2003         2002         2003         2002
- ---------  --------------------   -----------   ----------   ----------   ----------   ----------   ----------

    1      AAA/AA/A............   $  8,821.2    $  7,971.5   $  7,442.1   $  6,560.4   $  1,379.1   $  1,411.1
    2      BBB.................      3,350.8       2,849.0      2,160.6      1,767.1      1,190.2      1,081.9
                                  -----------   ----------   ----------   ----------   ----------   ----------
     Total investment grade         12,172.0      10,820.5      9,602.7      8,327.5      2,569.3      2,493.0
    3      BB..................        764.9         785.7        635.5        577.4        129.4        208.3
    4      B...................        218.9         105.4        157.8         82.2         61.1         23.2
    5      CCC and lower.......         94.6         118.5         53.7         53.3         40.9         65.2
    6      In or near default..         22.6          59.4         19.0         25.4          3.6         34.0
                                  -----------   ----------   ----------   ----------   ----------   ----------
     Total debt securities         $13,273.0    $11,889.5    $10,468.7    $  9,065.8   $  2,804.3   $  2,823.7
                                  ===========   ==========   ==========   ==========   ==========   ==========


                                                      55



The following tables present our general account debt security portfolio by investment type as of December 31,
2003 ($ amounts in millions), along with a breakout of credit quality based on equivalent S&P rating agency
designation.

                                                                           Unrealized Gains (Losses)
                                                                     ------------------------------------
                                            Fair                        Gross       Gross
                                            Value         Cost          Gains       Losses        Net
                                        ------------  ------------   ----------  -----------  -----------
Debt Securities by Type
U.S. government and agency...........    $   757.0     $   714.5     $   44.0     $   (1.5)    $   42.5
State and political subdivision......        510.3         468.4         43.5         (1.6)        41.9
Foreign government...................        260.4         239.0         23.2         (1.8)        21.4
Corporate............................      6,765.8       6,412.4        400.4        (47.0)       353.4
Mortgage-backed......................      3,097.5       2,963.4        143.4         (9.3)       134.1
Other asset-backed...................      1,882.0       1,863.6         55.6        (37.2)        18.4
                                        ------------  ------------   ----------  -----------  -----------
Total debt securities................    $13,273.0     $12,661.3     $  710.1     $  (98.4)    $  611.7
                                        ============  ============   ==========  ===========  ===========
Debt securities outside closed block:
    Unrealized gains.................    $ 5,169.1     $ 4,946.8     $  222.3     $   --       $  222.3
    Unrealized losses................      1,197.5       1,247.4         --          (49.9)       (49.9)
                                        ------------  ------------   ----------  -----------  -----------
    Total outside the closed block...      6,366.6       6,194.2        222.3        (49.9)       172.4
                                        ------------  ------------   ----------  -----------  -----------
Debt securities in closed block:
    Unrealized gains.................      5,807.5       5,319.7        487.8         --          487.8
    Unrealized losses................      1,098.9       1,147.4         --          (48.5)       (48.5)
                                        ------------  ------------   ----------  -----------  -----------
    Total in the closed block........      6,906.4       6,467.1        487.8        (48.5)       439.3
                                        ------------  ------------   ----------  -----------  -----------
Total debt securities................    $13,273.0     $12,661.3     $  710.1     $  (98.4)    $  611.7
                                        ============  ============   ==========  ===========  ===========

                                                           Investment Grade       Below Investment Grade
                                                      -------------------------  ------------------------
                                                       Fair Value       Cost      Fair Value     Cost
                                                      ------------   ----------  -----------  -----------
Debt Securities by Type and Credit Quality
U.S. government and agency..........................   $   757.0     $   714.5    $    --      $   --
State and political subdivision.....................       510.3         468.4         --          --
Foreign government..................................       126.8         117.7        133.6       121.3
Corporate...........................................     6,013.3       5,682.2        752.5       730.2
Mortgage-backed.....................................     3,035.2       2,907.8         62.3        55.6
Other asset-backed..................................     1,729.4       1,704.7        152.6       158.9
                                                      ------------   ----------  -----------  -----------
Total debt securities...............................   $12,172.0     $11,595.3    $ 1,101.0    $1,066.0
                                                      ============   ==========  ===========  ===========

Percentage of total debt securities.................       91.7%         91.6%         8.3%        8.4%
                                                      ============   ==========  ===========  ===========

                                                                        Total     AAA/AA/A        BBB
                                                                     ----------  -----------  -----------
Investment Grade Debt Securities (Fair Value)
U.S. government and agency........................................   $    757.0   $  757.0     $   --
State and political subdivision...................................        510.3      497.2         13.1
Foreign government................................................        126.8       24.5        102.3
Corporate.........................................................      6,013.3    3,237.2      2,776.1
Mortgage-backed...................................................      3,035.2    2,857.3        177.9
Other asset-backed................................................      1,729.4    1,448.0        281.4
                                                                     ----------- -----------  -----------
Total debt securities.............................................   $12,172.0    $8,821.2     $3,350.8
                                                                     ==========  ===========  ===========

Percentage of total debt securities...............................        91.7%      66.5%        25.2%
                                                                     ==========  ===========  ===========


                                                      56




                                                                                                 In or Near
                                           Total           BB            B        CC or Lower      Default
                                        ------------  -----------   -----------  -------------  ------------
Below Investment Grade
Debt Securities (Fair Value)
Foreign government...................    $   133.6     $  129.7      $    3.9     $    --       $    --
Corporate............................        752.5        526.8         167.1          55.0           3.6
Mortgage-backed......................         62.3         61.9          --             0.2           0.2
Other asset-backed...................        152.6         46.5          47.9          39.4          18.8
                                        ------------  -----------   -----------  ------------  ------------
Total debt securities................    $ 1,101.0     $  764.9      $  218.9     $    94.6     $    22.6
                                        ============  ===========   ===========  ============  ============

Percentage of total debt securities..         8.3%         5.8%          1.6%          0.7%          0.2%
                                        ============  ===========   ===========  ============  ============

We manage credit risk through industry and issuer diversification. Maximum exposure to an issuer is defined by
quality ratings, with higher quality issuers having larger exposure limits. Our investment approach has been to
create a high level of industry diversification. The top five industry holdings as of December 31, 2003 in our
debt securities portfolio are banking (4.0%), insurance (2.6%), diversified financial services (2.5%),
electrical utilities (2.3%) and broker-dealers (2.2%).

Our corporate debt security exposure to currently troubled industries, including telecommunication equipment,
telephone utilities, airlines, media, publishing and broadcasting, comprises 3.1% of our debt securities
portfolio at December 31, 2003. In addition, within the asset-backed securities sector, our exposure to
securitized aircraft receivable securities comprise approximately 1% of our debt securities portfolio, with
less than one-third of that exposure rated below investment grade at December 31, 2003.

The following table presents certain information with respect to realized investment gains and losses including
those on debt securities pledged as collateral, with losses from other-than-temporary impairment charges
reported separately in the table. These impairment charges were determined based on our assessment of factors
enumerated below, as they pertain to the individual securities determined to be other-than-temporarily
impaired. Sources and types of net realized investment gains (losses) in our general account for 2003, 2002 and
2001 follow ($ amounts in millions):

                                                                                           2002         2001
                                                                               2003      Restated     Restated
                                                                           -----------  -----------  ----------

Debt and equity security impairments....................................    $  (80.4)    $ (124.1)    $ (46.1)
Affiliate equity security impairments...................................       (96.9)        --          --
Debt securities pledged as collateral impairments.......................        (8.3)       (34.9)      (39.0)
Other investment impairments............................................       (25.2)       (27.7)       (9.8)
                                                                           -----------  -----------  ----------
Impairment losses.......................................................      (210.8)      (186.7)      (94.9)
                                                                           -----------  -----------  ----------
Debt and equity security transaction gains..............................       152.5        118.8        65.4
Debt and equity security transaction losses.............................       (40.6)       (68.3)      (52.5)
Other investments transaction gains (losses)............................        (1.6)         2.3        (2.9)
                                                                           -----------  -----------  ----------
Net transaction gains...................................................       110.3         52.8        10.0
                                                                           -----------  -----------  ----------
Net realized investment losses..........................................      (100.5)      (133.9)      (84.9)
                                                                           -----------  -----------  ----------
Applicable closed block policyholder dividend obligation (reduction)....        (5.9)       (40.3)      (15.4)
Applicable deferred acquisition costs (benefit).........................        (4.1)        (7.2)       10.5
Applicable deferred income tax benefit..................................       (36.3)       (20.8)      (24.5)
                                                                           -----------  -----------  ----------
Offsets to realized investment losses...................................       (46.3)       (68.3)      (29.4)
                                                                           -----------  -----------  ----------
Net realized investment losses included in net income...................    $  (54.2)    $  (65.6)    $ (55.5)
                                                                           ===========  ===========  ==========


                                                      57


Realized impairment losses on debt and equity securities pledged as collateral relating to our direct
investments in the consolidated collateralized obligation trusts are $5.9 million, $8.6 million and $26.5
million for 2003, 2002 and 2001, respectively.

Gross and net unrealized gains and losses from our general account debt and equity securities as of December
31, 2003 follow ($ amounts in millions):

                                                      Total         Outside Closed Block      Closed Block
                                             --------------------- --------------------- ----------------------
                                                Gains     Losses      Gains     Losses      Gains     Losses
                                             ---------- ---------- ---------- ---------- ---------- -----------
Debt Securities
Number of positions........................     1,938        447        785        264      1,153         183
                                             ---------- ---------- ---------- ---------- ---------- -----------
Unrealized gains (losses)..................   $ 710.1    $ (98.4)   $ 222.3    $ (49.9)   $ 487.8    $  (48.5)
                                             ---------- ---------- ---------- ---------- ---------- -----------
Applicable policyholder dividend
  obligation (reduction)...................     487.8      (48.5)      --         --        487.8       (48.5)
Applicable deferred policy acquisition
  costs (benefit)..........................     120.4      (22.8)     120.4      (22.8)      --          --
Applicable deferred income taxes (benefit).      35.7      (10.8)      35.7      (10.8)      --          --
                                             --------------------- ---------- ---------- ---------- -----------
Offsets to net unrealized gains (losses)...     643.9      (82.1)     156.1      (33.6)     487.8       (48.5)
                                             --------------------- ---------- ---------- ---------- -----------
Unrealized gains (losses) after offsets....   $  66.2   $  (16.3)   $  66.2    $ (16.3)   $  --      $   --
                                             ========== =========  ========== ========== ========== ===========
Net unrealized gains after offsets.........   $  49.9              $   49.9               $  --
                                             ==========            ==========            ==========

Equity Securities
Number of positions........................       320         55        164         24        156          31
                                             ---------- ---------- ---------- ---------- ---------- -----------
Unrealized gains (losses)..................   $  91.4   $   (1.8)   $  83.3   $   (1.4)   $   8.1    $   (0.4)
                                             ---------- ---------- ---------- ---------- ---------- -----------
Applicable policyholder dividend
  obligation (reduction)...................       8.1       (0.4)      --         --          8.1        (0.4)
Applicable deferred income taxes (benefit).      29.2       (0.5)      29.2       (0.5)      --          --
                                             ---------- ---------- ---------- ---------- ---------- -----------
Offsets to net unrealized gains (losses)...      37.3       (0.9)      29.2       (0.5)       8.1        (0.4)
                                             ---------- ---------- ---------- ---------- ---------- -----------
Unrealized gains (losses) after offsets....   $  54.1   $   (0.9)   $  54.1   $   (0.9)   $  --      $   --
                                             ========== ========== ========== ========== ========== ===========
Net unrealized gains after offsets.........   $  53.2               $  53.2               $  --
                                             ==========            ==========            ==========

Total net unrealized gains on debt and equity securities were $701.3 million (unrealized gains of $801.5 less
unrealized losses of $100.2). Of that net amount, $254.3 million was outside the closed block ($103.1 million
after applicable deferred policy acquisition costs and deferred income taxes) and $447.0 million was in the
closed block ($0.0 million after applicable policyholder dividend obligation).

At the end of each reporting period, we review all securities for potential recognition of an
other-than-temporary impairment. We maintain a watch list of securities in default, near default or otherwise
considered by our investment professionals as being distressed, potentially distressed or requiring a
heightened level of scrutiny. We also identify securities whose carrying value has been below amortized cost on
a continuous basis for zero to six months, greater than six months to 12 months, greater than 12 months to 24
months and greater than 24 months. This analysis is provided for investment grade and non-investment grade
securities and closed block and outside of closed block securities. Using this analysis, coupled with our watch
list, we review all securities whose fair value is less than 80% of amortized cost (significant unrealized
loss) with emphasis on below investment grade securities with a continuous significant unrealized loss in
excess of six months. In addition, we review securities that had experienced lesser percentage declines in
value on a more selective basis to determine if a security is other-than-temporarily impaired.


                                                      58



Our assessment of whether an investment by us in a debt or equity security is other-than-temporarily impaired
includes whether the issuer has:

    •    defaulted on payment obligations;
    •    declared that it will default at a future point outside the current reporting period;
    •    announced that a restructuring will occur outside the current reporting period;
    •    severe liquidity problems that cannot be resolved;
    •    filed for bankruptcy;
    •    a financial condition which suggests that future payments are highly unlikely;
    •    deteriorating financial condition and quality of assets;
    •    sustained significant losses during the current year;
    •    announced adverse changes or events such as changes or planned changes in senior management,
         restructurings, or a sale of assets; and/or
    •    been affected by any other factors that indicate that the fair value of the investment may have been
         negatively impacted.

The following tables present certain information with respect to our gross unrealized losses with respect to
our investments in general account debt securities, both outside and inside the closed block, as of December
31, 2003. In the tables, we separately present information that is applicable to unrealized losses both outside
and inside the closed block. We believe it is unlikely that there would be any effect on our net income related
to the realization of investment losses inside the closed block due to the current sufficiency of the
policyholder dividend obligation liability in the closed block. See Note 3 to our consolidated financial
statements in this Form 10-K for more information regarding the closed block. Applicable deferred policy
acquisition costs and income taxes further reduce the effect on our comprehensive income.


                                                      59



Gross unrealized losses on general account debt and equity securities outside of the closed block as of
December 31, 2003 by duration of unrealized loss and by debt securities credit quality follow ($ amounts in
millions):

                                                            0 - 6          6 - 12       12 - 24       Over 24
                                              Total         Months         Months       Months        Months
                                           ------------  ------------   -----------  ------------  ------------
Debt Securities Outside Closed Block
Number of positions.......................        264           205            14            21            24
                                           ------------  ------------   -----------  ------------  ------------
Total fair value..........................  $ 1,197.5     $   943.1      $   74.0     $    66.0     $   114.4
Total amortized cost......................    1,247.4         961.9          80.4          72.0         133.1
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (49.9)    $   (18.8)     $   (6.4)    $    (6.0)    $   (18.7)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $   (16.3)    $    (7.6)     $   (0.6)    $    (0.5)    $    (7.6)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $   (16.4)    $    (0.5)     $   (3.7)    $    (2.5)    $    (9.7)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    (7.0)    $    (0.2)     $   (0.6)    $    (2.2)    $    (4.0)
                                           ============  ============   ===========  ============  ============

Investment grade:
Number of positions.......................        230           193            11            13            13
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (38.7)    $   (16.4)     $   (5.8)    $    (3.7)    $   (12.8)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $   (12.4)    $    (6.4)     $   (0.5)    $    (0.4)    $    (5.1)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $   (11.1)    $    --        $   (3.7)    $    (2.5)    $    (4.9)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    (3.3)    $    --        $   (0.6)    $    (0.7)    $    (2.0)
                                           ============  ============   ===========  ============  ============

Below investment grade:
Number of positions.......................         34            12             3             8            11
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (11.2)    $    (2.4)     $   (0.6)    $    (2.3)    $    (5.9)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    (3.9)    $    (1.2)     $   (0.1)    $    (0.1)    $    (2.5)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $    (5.3)    $    (0.5)     $   --       $    --       $    (4.8)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    (3.7)    $    (0.2)     $   --       $    (1.5)    $    (2.0)
                                           ============  ============   ===========  ============  ============

Equity Securities Outside Closed Block
Number of positions.......................         24            16             3              2            3
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $    (1.4)    $    (0.6)     $   (0.2)    $     (0.5)   $    (0.1)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    (0.9)    $    (0.4)     $   (0.1)    $     (0.3)   $    (0.1)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $    (0.4)    $    (0.1)     $   (0.2)    $     --      $    (0.1)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    --       $    --        $   --       $     --      $    --
                                           ============  ============   ===========  ============  ============

For debt securities outside of the closed block with gross unrealized losses, 78% of the unrealized losses
after offsets pertain to investment grade securities and 22% of the unrealized losses after offsets pertain to
below investment grade securities.

Of the 230 investment grade debt securities held outside the closed block with unrealized losses, 204 have been
in an unrealized loss position for 12 months or less at December 31, 2003 (including 203 that have unrealized
losses less than 20% of cost). Of the remaining 26 security positions, 13 have been in an unrealized loss
position for 12 to 24 months (including 12 that have unrealized losses less than 20% of cost) and 13 have been
in an unrealized loss position for over 24 months (including 11 that have unrealized losses less than 20% of
cost).

Of the 34 below investment grade debt security positions held outside the closed block with unrealized losses,
15 have been in an unrealized loss position for 12 months or less at December 31, 2003 (including 13 that have


                                                      60


unrealized losses less than 20% of cost). Of the remaining 19 security positions, eight have been in an
unrealized loss position for 12 to 24 months (all that have unrealized losses less than 20% of cost) and 11
have been in an unrealized loss position for over 24 months (including seven that have unrealized losses less
than 20% of cost).

Of the six below investment grade debt security positions held outside the closed block with gross unrealized
losses greater than 20% of cost at December 31, 2003, four have been in an unrealized position of greater than
20% of cost for 12 months or less at December 31, 2003. Of the remaining two positions, one has been in an
unrealized loss position greater than 20% of cost for 12 to 24 months and one has been in an unrealized loss
position greater than 20% of cost for over 24 months with an unrealized loss of less than $(0.0) million.

Of the 24 equity securities held outside the closed block with unrealized losses, 19 have been in an unrealized
loss position for 12 months or less at December 31, 2003 (including 17 that have unrealized losses less than
20% of cost). Of the remaining five securities, two have been in an unrealized loss position for 12 to 24
months (both have unrealized losses less than 20% of cost) and three have been in an unrealized loss position
for over 24 months (including one that has unrealized losses less than 20% of cost).


                                                      61



Gross unrealized losses on general account debt and equity securities in the closed block as of December 31,
2003 by duration of unrealized loss and by debt securities credit quality follow ($ amounts in millions):

                                                            0 - 6          6 - 12       12 - 24       Over 24
                                              Total         Months         Months       Months        Months
                                           ------------  ------------   -----------  ------------  ------------
Debt Securities Inside Closed Block
Number of positions.......................        183           139            15            13            16
                                           ------------  ------------   -----------  ------------  ------------
Total fair  value.........................  $ 1,098.7     $   916.0      $   32.6     $    56.3     $    93.8
Total amortized cost......................    1,147.2         944.7          34.7          63.5         104.3
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (48.5)    $   (28.7)     $   (2.1)    $    (7.2)    $   (10.5)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $   (11.3)    $    (2.5)     $   (0.7)    $    (3.1)    $    (5.0)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============

Investment grade:
Number of positions.......................        155           129            12             5             9
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (30.4)    $   (24.2)     $   (0.8)    $    (1.7)    $    (3.7)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $    (1.1)    $    --        $   --       $    --       $    (1.1)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============

Below investment grade:
Number of positions.......................         28            10             3             8             7
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $   (18.1)    $    (4.5)     $   (1.3)    $    (5.5)    $    (6.8)
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $   (10.2)    $    (2.5)     $   (0.7)    $    (3.1)    $    (3.9)
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    --       $    --        $   --       $    --       $     -
                                           ============  ============   ===========  ============  ============

Equity Securities Inside Closed Block
Number of positions.......................         31            31             0             0             0
                                           ------------  ------------   -----------  ------------  ------------
Unrealized losses.........................  $    (0.4)    $    (0.4)     $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses after offsets...........  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost........  $    (0.1)    $    (0.1)     $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============
Unrealized losses over 20% of cost
  after offsets...........................  $    --       $    --        $   --       $    --       $    --
                                           ============  ============   ===========  ============  ============

For debt securities in the closed block with gross unrealized losses, 63% of the unrealized losses pertain to
investment grade securities and 37% of the unrealized losses pertain to below investment grade securities.

Of the 155 investment grade debt securities held in the closed block with unrealized losses, 141 have been in
an unrealized loss position for 12 months or less at December 31, 2003 (all of which have unrealized losses
less than 20% of cost). Of the remaining 14 security positions, nine have been in an unrealized loss position
for over 24 months (including eight that have unrealized losses less than 20% of cost).

Of the 28 below investment grade debt security positions held in the closed block with unrealized losses, 13
have been in an unrealized loss position for 12 months or less at December 31, 2003 (including 11 that have
unrealized losses less than 20% of cost). Of the remaining 15 positions, eight have been in an unrealized loss
position for 12


                                                      62


to 24 months (including seven that have unrealized losses less than 20% of cost) and seven have been in an
unrealized loss position for over 24 months (including five that have unrealized losses less than 20% of cost).

Of the five below investment grade debt security positions held in the closed block with gross unrealized
losses greater than 20% of cost at December 31, 2003, two have been in an unrealized loss position of greater
than 20% of cost for 12 months or less at December 31, 2003. Of the remaining three positions, two have been in
an unrealized position greater than 20% of cost for 12 to 24 months. None of these securities were considered
to be other-than-temporarily impaired at December 31, 2003. Each security has performed, and is expected to
continue to perform, in accordance with their original contractual terms. Two issues are collateralized
airplane lease related holdings that have declined in fair value due to airline bankruptcies, reduced travel
and higher risk premiums required for aircraft related investments. The unrealized loss on these securities at
December 31, 2003 was $(5.9) million. The other issue is an energy/power generation related holding that has
declined in fair value due to downgrades, bankruptcies and weakness in the energy market. The unrealized loss
on this security at December 31, 2003 was $(1.1) million, or 22%, of its amortized cost.

Of the 31 equity securities held inside the closed block with unrealized losses, all have been in an unrealized
loss position for 6 months or less as of December 31, 2003.

In determining that the securities giving rise to the previously mentioned unrealized losses were not
other-than-temporarily impaired, we evaluated the factors cited above, which we consider when assessing whether
a security is other-than-temporarily impaired. In making these evaluations, we must exercise considerable
judgment. Accordingly, there can be no assurance that actual results will not differ from our judgments and
that such differences may require the future recognition of other-than-temporary impairment charges that could
have a material affect on our financial position and results of operations. In addition, the value of, and the
realization of any loss on, a debt security or equity security is subject to numerous risks, including;
interest rate risk, market risk, credit risk and liquidity risk. The magnitude of any loss incurred by us may
be affected by the relative concentration of our investments in any one issuer or industry. We have established
specific policies limiting the concentration of our investments in any single issuer and industry and believe
our investment portfolio is prudently diversified.

Aberdeen Asset Management PLC

As of December 31, 2003, we owned $27.5 million of Aberdeen 7.5% convertible subordinated notes. The 7.5%
convertible subordinated notes were originally issued in 1996 at 7%, with a maturity of March 29, 2003, subject
to four six-month extensions at Aberdeen's option with increasing interest rates. In March 2003, these notes
were partially paid down by $5.0 million, with the remainder extended, subject to a rate increase to 7.5% and a
maturity of September 29, 2003. The maturity on these notes was extended again to March 29, 2004 with a partial
pay down of $5.0 million received in November 2003 at an interest rate of 7.5%. Prior to the fourth quarter of
2003, we owned $19.0 million of 5.875% convertible bonds which were issued in 2002 and mature in 2007. During
the fourth quarter of 2003, we sold the Aberdeen 5.875% bonds and realized a gain of $0.7 million.

Prior to October 24, 2003, our ownership of Aberdeen common stock included 22% of the company's outstanding
common shares that we purchased in between 1996 and 2001 for $109.1 million. As of June 30, 2003, we concluded
that our equity investment in Aberdeen, accounted for under the equity method of accounting, was
other-than-temporarily impaired resulting in an $89.1 million pre-tax, non-cash charge to earnings during the
three month period ended June 30, 2003. The carrying value of our equity investment in Aberdeen was $38.3
million and $119.3 million at December 31, 2003 and 2002, respectively. The fair value, based on quoted market
price of underlying shares, of our equity investment in Aberdeen was $65.2 million, $54.4 million and $43.6
million at March 11, 2004, December 31, 2003 and 2002, respectively.

During the second half of 2002, the value of Aberdeen's publicly traded shares experienced a significant
decline due to a general decline in valuations of U.K. asset managers as well as regulatory matters related to
the U.K. split-capital trust sector, including Aberdeen's managed funds. In late 2002, Aberdeen announced the
results of a


                                                      63


strategic review, which concluded with an announcement of a decision to divest itself of a business segment
that actively manages property investments and of a conditional agreement to dispose of its rights to manage
certain retail funds.

Since the third quarter of 2002, we have evaluated the carrying value of our equity method investment in
Aberdeen for other-than-temporary impairment. This evaluation considered quantitative and qualitative factors
including quoted market price for the underlying securities, the length of time that the carrying value has
been in excess of fair value, historical and projected earnings and cash flow capacity.

As of June 30, 2003, we concluded that our equity investment in Aberdeen, accounted for under the equity method
of accounting, was other-than-temporarily impaired after consideration of the following:

    •   restructuring activities announced to date had not materialized as originally contemplated;
    •   continuing inquiry by U.K. regulatory authorities related to "mis-selling" of certain split capital
        trusts funds managed by Aberdeen with no resolution anticipated in the near-term;
    •   disputes with clients related to certain closed-end funds managed by Aberdeen; and
    •   as at June 30, 2003, the carrying value of our equity method investment in Aberdeen had continuously
        exceeded the underlying fair value as represented by its publicly traded share price for a period of
        nine to 12 months.

The other-than-temporary impairment of our equity investment in Aberdeen resulted in an $89.1 million pre-tax
($55.0 million after income taxes), non-cash charge to earnings during the three-month period ended June 30,
2003.

On October 24, 2003, Aberdeen completed the acquisition of 100% of the outstanding common stock of Edinburgh
Fund Managers Group plc, an Edinburgh Scotland based asset manager, for £36 million through the issuance
of 58.9 million shares of Aberdeen common stock. Subsequent to this acquisition, and as of December 31, 2003
our percentage ownership in Aberdeen's common stock was diluted from approximately 22% to 16.2%, although our
representation on Aberdeen's Board of Directors remained at two seats out of 12 seats. Based on our continued
substantial ownership position and related board representation, we have the ability to significantly influence
the operations of Aberdeen and, therefore, we continue to account for our investment using the equity method of
accounting subsequent to October 24, 2003.

Hilb, Rogal & Hamilton Company

Our investment in HRH, a Virginia-based property and casualty insurance and employee benefit products
distributor, includes primarily common stock. See Notes 5 and 6 to our consolidated financial statements in
this Form 10-K for detailed information regarding our investment in HRH.

Liquidity and Capital Resources

In the normal course of business, we enter into transactions involving various types of financial instruments
such as debt and equity securities. These instruments have credit risk and also may be subject to risk of loss
due to interest rate and market fluctuations.

Liquidity refers to the ability of a company to generate sufficient cash flow to meet its cash requirements.
The following discussion combines liquidity and capital resources as these subjects are interrelated.


                                                      64



The Phoenix Companies, Inc. (consolidated)

The following table presents summary consolidated cash flow data for 2003, 2002 and 2001 ($ amounts in
millions):

                                                                                             Changes
                                                           2002           2001      --------------------------
                                             2003        Restated       Restated       2003/02      2002/01
                                         ------------  ------------   ------------  ------------- ------------

Cash from continuing operations.........  $   393.1     $   316.1      $   251.2     $    77.0     $    64.9
Cash for discontinued operations........      (36.5)        (59.1)         (76.8)         22.6          17.7
Cash for continuing operations
  investing activities..................   (1,134.7)     (2,498.7)      (1,891.0)      1,364.0        (607.7)
Cash from discontinued operations
  investing activities..................       (4.4)         37.3           79.4         (41.7)        (42.1)
Cash from financing activities..........      119.9       2,491.6        1,742.9      (2,371.7)        748.7

2003 vs. 2002

For 2003, cash from continuing operations increased $77.0 million compared to 2002, due primarily to higher
investment income collected and lower operating expenses paid, partially offset by lower premiums collected.

For 2003, cash for continuing operations investing activities decreased $1,364.0 million compared to 2002, due
primarily to lower cash from financing activities from lower policyholder deposit fund receipts and lower net
proceeds from collateralized obligations. Proceeds from collateralized obligations were higher in 2002 due to
proceeds from Mistic CDO which closed in 2002.

For 2003, cash from financing activities decreased $2,371.7 million compared to 2002, due primarily to lower
policyholder deposit fund receipts and lower net proceeds from collateralized obligations (discussed above),
partially offset by treasury stock purchases in 2002 that were not continued in 2003.

2002 vs. 2001

For 2002, cash from continuing operations increased $64.9 million compared to 2001, due primarily to lower
benefit payments and expenses paid, partially offset by lower premiums collected.

For 2002, cash for investing activities increased $607.7 million compared to 2001, due primarily to higher cash
from financing (discussed below), partially offset by higher acquisition costs of subsidiary purchases in 2001.

For 2002, cash from financing activities increased $748.7 million compared to 2001, due to proceeds from the
equity units and stock purchase contract transactions, increases in policyholder deposit fund receipts and
proceeds from the Mistic CDO, partially offset by the proceeds from our IPO and debt offering in 2001.

The Phoenix Companies, Inc. (parent company only)

The following table presents cash flow data for 2003, 2002 and 2001 ($ amounts in millions):

                                                                                              Changes
                                                                                    ---------------------------
                                             2003          2002           2001         2003/02       2002/01
                                         ------------  ------------   ------------  ------------  ------------

Cash from operating activities.........   $    33.2     $    61.3      $    90.3     $   (28.1)    $   (29.0)
Cash for investing activities..........       (25.7)       (372.0)        (900.4)        346.3         528.4
Cash (for) from financing activities...       (15.1)        136.1        1,015.1        (151.2)       (879.0)


                                                      65



2003 vs. 2002

Cash from operating activities decreased $28.1 million in 2003 compared to 2002, primarily due to a decrease of
$22.5 million in the dividend from Phoenix Life and slightly higher expense payments.

Cash for investing activities decreased $346.3 million in 2003 compared to 2002, due to reduced contributions
and advances to subsidiaries and lower equity security purchases. This resulted from reduced cash from
financing as discussed below.

Cash from financing activities decreased $151.2 million in 2003 compared to 2002, due to the proceeds from the
issuance of stock purchase contracts and equity units in 2002 for an aggregate of $ 283.0 million, partially
offset by common stock repurchases of $131.1 million. Those financing activities did not recur in 2003.

2002 vs. 2001

Cash from operating activities decreased $29.0 million in 2002 compared to 2001, primarily due to a decrease of
$65.3 million in the dividend from Phoenix Life, partially offset by lower expenses paid, primarily
demutualization related, and higher investment income, primarily related to interest received on borrowing by
Phoenix Investment Partners.

Cash for investing activities decreased 528.4 millions in 2002 compared to 2001, due to purchases of
subsidiaries from Phoenix Life in 2001 for $659.8 million that did not recur in 2002. These purchases were part
of the demutualization and reorganization discussed previously and in Note 1 to our consolidated financial
statements in this Form 10-K.

Cash from financing activities decreased $879.0 million in 2002 compared to 2001, primarily proceeds from our
public offering in 2001 of $831.0, which did not recur in 2002. See Note 1 to our consolidated financial
statements in this Form 10-K for additional information.

The holding company's primary uses of liquidity include dividend payments on its common stock, loans or
contributions to its subsidiaries, debt service and general corporate expenses.

The holding company's primary sources of liquidity have been dividends from Phoenix Life and interest income
received from Phoenix Investment Partners. Under New York Insurance Law, Phoenix Life can pay stockholder
dividends to the holding company in any calendar year without prior approval from the New York Superintendent
of Insurance in the amount of the lesser of 10% of Phoenix Life's surplus to policyholders as of the
immediately preceding calendar year or Phoenix Life's statutory net gain from operations for the immediately
preceding calendar year, not including realized capital gains. Phoenix Life paid a dividend of $44.5 million in
April 2003 and is able to pay a dividend of $69.7 million in 2004 under this provision. See Note 15 to our
consolidated financial statements in this Form 10-K for more information on Phoenix Life statutory financial
information and regulatory matters.

The holding company sponsors post-employment benefit plans through pension and savings plans and
post-retirement health care and life insurance for employees of Phoenix Life and Phoenix Investment Partners.
Funding of these obligations is provided by Phoenix Life and Phoenix Investment Partners on a 100% cost
reimbursement basis through administrative services agreements with the holding company. See Note 11 to our
consolidated financial statements in this Form 10-K for additional information.

Phoenix Investment Partners pays interest to the holding company on its debt from the holding company. The
holding company does not expect to receive dividends from Phoenix Investment Partners in the near term because
it will likely use a substantial portion of its cash flows from operations to pay contingent consideration for
prior acquisitions, to repay intercompany debt, including debt to the holding company and interest on debt.


                                                      66


On December 22, 2003, we closed on a new $150.0 million unfunded, unsecured senior revolving credit facility to
replace our $100 million credit facility, which expired on that date. This new facility consists of two
tranches: a $112.5 million, 364-day revolving credit facility and a $37.5 million, 3-year revolving credit
facility. Under the 364-day facility, we have the ability to extend the maturity date of any outstanding
borrowings for one year from the termination date. Potential borrowers on the new credit line are the holding
company, Phoenix Life and Phoenix Investment Partners. Financial covenants require the maintenance at all times
of: consolidated stockholders' equity of $1,775.0 million, stepping up by 50% of quarterly positive net income
and 100% of equity issuances; a maximum consolidated debt-to-capital ratio of 30%; a minimum consolidated fixed
charge coverage ratio (as defined in the credit agreement) of 1.25:1; and, for Phoenix Life, a minimum
risk-based capital ratio of 250% and a minimum A.M. Best Financial Strength Rating of A-.

See Note 18 to our consolidated financial statements in this Form 10-K for more information on the holding
company.

Life Companies

The Life Companies' liquidity requirements principally relate to: the liabilities associated with various life
insurance and annuity products; the payment of dividends by Phoenix Life to The Phoenix Companies, Inc.;
operating expenses; contributions to subsidiaries; and payment of principal and interest by Phoenix Life on its
outstanding debt obligations. Liabilities arising from life insurance and annuity products include the payment
of benefits, as well as cash payments in connection with policy surrenders, withdrawals and loans. The Life
Companies also have liabilities arising from the runoff of the remaining group accident and health reinsurance
discontinued operations.

Historically, our Life Companies have used cash flow from operations and investment activities to fund
liquidity requirements. Their principal cash inflows from life insurance and annuities activities come from
premiums, annuity deposits and charges on insurance policies and annuity contracts. In the case of Phoenix
Life, cash inflows also include dividends, distributions and other payments from subsidiaries. Principal cash
inflows from investment activities result from repayments of principal, proceeds from maturities, sales of
invested assets and investment income. The principal cash inflows from our discontinued group accident and
health reinsurance operations come from our finite reinsurance, recoveries from other retrocessionaires and
investment activities. See Note 17 to our consolidated financial statements in this Form 10-K for additional
information.

Additional liquidity to meet cash outflows is available from our Life Companies' portfolios of liquid assets.
These liquid assets include substantial holdings of U.S. government and agency bonds, short-term investments
and marketable debt and equity securities.

Phoenix Life's current sources of liquidity also include a revolving credit facility under which Phoenix Life
has direct borrowing rights, subject to our unconditional guarantee. Since the demutualization, Phoenix Life's
access to the cash flows generated by the closed block assets has been restricted to funding the closed block.

A primary liquidity concern with respect to life insurance and annuity products is the risk of early
policyholder and contractholder withdrawal. Our Life Companies closely monitor their liquidity requirements in
order to match cash inflows with expected cash outflows, and employ an asset/liability management approach
tailored to the specific requirements of each product line, based upon the return objectives, risk tolerance,
liquidity, tax and regulatory requirements of the underlying products. In particular, our Life Companies
maintain investment programs generally intended to provide adequate funds to pay benefits without forced sales
of investments. Products having liabilities with relatively long lives, such as life insurance, are matched
with assets having similar estimated lives, such as long-term bonds, private placement bonds and mortgage
loans. Shorter-term liabilities are matched with investments with short-term and medium-term fixed maturities.


                                                      67



The following table summarizes the withdrawal characteristics of our Life Companies' annuity contract reserves
and deposit fund liabilities as of December 31, 2003 and 2002 ($ amounts in millions):

                                                                        2003                    2002
                                                                ---------------------   ---------------------
                                                                 Amount(1)   Percent      Amount(1)   Percent
                                                                ----------- ---------   ----------- ---------

Not subject to discretionary withdrawal provision.............   $  220.8       3%       $  168.1       3%
Subject to discretionary withdrawal without adjustment........    1,967.2      28%        2,073.3      35%
Subject to discretionary withdrawal with market value
  adjustment..................................................      811.6      11%          649.7      11%
Subject to discretionary withdrawal at contract value less
  surrender charge............................................      869.8      12%          701.5      11%
Subject to discretionary withdrawal at market value...........    3,294.0      46%        2,386.5      40%
                                                                ----------- ---------   ----------- ---------
Total annuity contract reserves and deposit fund liability....   $7,163.4     100%       $5,979.1     100%
                                                                =========== =========   =========== =========
- -------
(1)  Contract reserves and deposit fund liability amounts are reported on a statutory basis, which more
     accurately reflects the potential cash outflows and include variable product liabilities. Annuity contract
     reserves and deposit fund liabilities are monetary amounts that an insurer must have available to provide
     for future obligations with respect to its annuities and deposit funds. These are liabilities on the
     balance sheet of financial statements prepared in conformity with statutory accounting practices. These
     amounts are at least equal to the values available to be withdrawn by policyholders.

Individual life insurance policies are less susceptible to withdrawals than annuity contracts because
policyholders may incur surrender charges and be required to undergo a new underwriting process in order to
obtain a new insurance policy. As indicated in the table above, most of our annuity contract reserves and
deposit fund liabilities are subject to withdrawals.

Individual life insurance policies, other than term life insurance policies, increase in cash values over their
lives. Policyholders have the right to borrow an amount generally up to the cash value of their policies at any
time. As of December 31, 2003, our Life Companies had approximately $11.5 billion in cash values with respect
to which policyholders had rights to take policy loans. The majority of cash values eligible for policy loans
are at variable interest rates that are reset annually on the policy anniversary. Policy loans at December 31,
2003 were $2.2 billion.

The primary liquidity risks regarding cash inflows from the investment activities of our Life Companies are the
risks of default by debtors, interest rate and other market volatility and potential illiquidity of
investments. We closely monitor and manage these risks.

We believe that the current and anticipated sources of liquidity for our Life Companies are adequate to meet
their present and anticipated needs.

Phoenix Investment Partners

Phoenix Investment Partners' liquidity requirements are primarily to fund operating expenses and pay its debt
and interest obligations. Phoenix Investment Partners also would require liquidity to fund the costs of any
contingent payments for previous acquisitions, as well as any potential acquisitions. Historically, Phoenix
Investment Partners' principal source of liquidity has been cash flows from operations. We expect that cash
flow from operations will continue to be Phoenix Investment Partners' principal source of working capital.
Phoenix Investment Partners' current sources of liquidity also include a revolving credit facility under which
Phoenix Investment Partners has direct borrowing rights subject to the unconditional guarantee of The Phoenix
Companies, Inc. We believe that Phoenix Investment Partners' current and anticipated sources of liquidity are
adequate to meet its present and anticipated needs. See Note 6 to our consolidated financial statements in this
Form 10-K for further details on our financing activities. It is anticipated that Phoenix Investment Partners
will draw $25.0 million against the credit facility during the first quarter of 2004 in order to fulfill an
obligation related to the Kayne Anderson Rudnick acquisition. See Commitments Related to Recent Business
Combinations


                                                      68


and Note 4 to our consolidated financial statements in this Form 10-K for additional information.


Consolidated Financial Condition

The following table presents the consolidated balance sheet as of December 31, 2003 and 2002 ($ amounts in
millions):

                                                                                       2002
                                                                         2003        Restated       Change
                                                                    ------------- ------------- --------------
ASSETS
Available-for-sale debt securities, at fair value................    $  13,273.0   $  11,889.5   $   1,383.5
Available-for-sale equity securities, at fair value..............          312.0         385.9         (73.9)
Mortgage loans, at unpaid principal balances.....................          284.1         468.8        (184.7)
Venture capital partnerships, at equity in net assets............          234.9         228.6           6.3
Affiliate equity securities, at equity in net assets.............           47.5         134.7         (87.2)
Policy loans, at unpaid principal balances.......................        2,227.8       2,195.9          31.9
Other investments................................................          402.0         398.9           3.1
                                                                    ------------- ------------- --------------
                                                                        16,781.3      15,702.3       1,079.0
Available-for-sale debt and equity
  securities pledged as collateral, at fair value................        1,350.0       1,358.7          (8.7)
                                                                    ------------- ------------- --------------
Total investments................................................       18,131.3      17,061.0       1,070.3
Cash and cash equivalents........................................          447.9       1,110.5        (662.6)
Accrued investment income and receivables........................          447.2         409.7          37.5
Deferred policy acquisition costs................................        1,367.7       1,234.1         133.6
Deferred income taxes............................................           58.7          41.4          17.3
Goodwill and other intangible assets.............................          755.0         747.7           7.3
Other general account assets.....................................          268.2         260.3           7.9
Separate account assets..........................................        6,083.2       4,371.2       1,712.0
                                                                    ------------- ------------- --------------
Total assets.....................................................    $  27,559.2   $  25,235.9   $   2,323.3
                                                                    ============= ============= ==============

LIABILITIES
Policy liabilities and accruals..................................    $  13,088.6   $  12,680.0   $     408.6
Policyholder deposit funds.......................................        3,642.7       3,395.7         247.0
Stock purchase contracts and indebtedness........................          767.8         781.9         (14.1)
Other general account liabilities................................          525.7         542.7         (17.0)
Non-recourse collateralized obligations..........................        1,472.0       1,609.5        (137.5)
Separate account liabilities.....................................        6,083.2       4,371.2       1,712.0
                                                                    -------------  ------------- --------------
Total liabilities................................................       25,580.0      23,381.0       2,199.0
                                                                    ------------- ------------- --------------

MINORITY INTEREST
Minority interest in net assets of consolidated subsidiaries......          31.4          28.1           3.3
                                                                    ------------- ------------- --------------

STOCKHOLDERS' EQUITY
Common stock and additional paid in capital......................        2,429.8       2,425.4           4.4
Deferred compensation on restricted stock units..................           (3.6)         --            (3.6)
Accumulated deficit..............................................         (352.7)       (331.4)        (21.3)
Accumulated other comprehensive income...........................           63.7         (71.5)        135.2
Treasury stock...................................................         (189.4)       (195.7)          6.3
                                                                    -------------  ------------- --------------
Total stockholders' equity.......................................        1,947.8       1,826.8         121.0
                                                                    -------------  ------------- --------------
Total liabilities, minority interest and stockholders' equity....    $  27,559.2   $  25,235.9   $   2,323.3
                                                                    ============= ============= ==============


                                                      69



2003 vs. 2002

Available-for-sale debt securities increased $1,383.5 million, or 12%, in 2003 compared to 2002, reflecting
significant appreciation of bond values due to lower interest rates, as well as the investment of December 31,
2002 cash in debt securities.

Equity securities decreased $73.9 million, or 19%, in 2003 compared to 2002, primarily due to the sale of
equity positions in two General Electric Company life insurance subsidiaries and PXRE Group, Ltd., and a
decrease in the fair value of HRH common stock, which we hold as collateral for our stock purchase contracts,
partially offset by appreciation in the value of other equity securities.

Affiliate equity securities decreased $87.2 million, or 65%, in 2003 compared to 2002, primarily due to an
$89.1 million pre-tax, non-cash charge related to the other-than-temporary impairment of our equity investment
in Aberdeen taken in the second quarter of 2003. See Note 5 to our consolidated financial statements in this
Form 10-K for additional information.

Mortgage loans decreased $184.7 million, or 39%, in 2003 compared to 2002, reflecting continued mortgage loan
paydowns, including several significant prepayments and the sale of a portfolio of loans in 2003.

Cash and cash equivalents decreased $662.6 million, or 60%, in 2003 compared to 2002, primarily due to cash
outflows for the purchase of debt securities, partially offset by policyholder deposit fund receipts, and cash
inflows from continuing operations.

Accrued investment income increased $37.5 million, or 9%, in 2003 compared to 2002, as a result of higher
invested asset balances.

Amortization of policy acquisition costs increased $133.6 million, or 11%, in 2003 compared to 2002, due
primarily to business growth and the acquisition of the minority interest PFG. See Note 3 to our consolidated
financial statements in this Form 10-K for additional information. The composition of deferred acquisition
costs by product at December 31, 2003 and 2002 follows ($ amounts in millions):

                                                                          2003          2002         Change
                                                                      ------------  ------------  ------------

Variable universal life...........................................     $    328.7    $    309.9    $     18.8
Universal life....................................................          169.3         105.2          64.1
Variable annuities................................................          260.3         240.0          20.3
Fixed annuities...................................................           45.2           7.7          37.5
Participating life................................................          536.7         551.0         (14.3)
Other.............................................................           27.5          20.3           7.2
                                                                      ------------  ------------  ------------
Total deferred acquisition costs..................................     $  1,367.7    $  1,234.1    $    133.6
                                                                      ============  ============  ============

Policy liabilities and accruals increased $408.6 million, or 3%, in 2003 compared to 2002, primarily due to
growth in policyholder inforce, partially offset by a decrease in the policyholder dividend obligation.

Policyholder deposit funds increased $247.0 million, or 7%, in 2003 compared to 2002, primarily due to growth
in fixed and market value adjusted annuity deposits, offset by net withdrawals from variable annuity guaranteed
interest account sub-accounts.

Stock purchase contracts and indebtedness decreased $14.1 million, or 2%, in 2003 compared to 2002, primarily
due to the increase in the fair value of the embedded derivative investment. We recorded a favorable change in
fair value of the embedded derivative investment of $8.8 with an offset to other comprehensive income. The
increased fair value of the embedded derivative investment was primarily due to a decrease in the quoted market
price of HRH common stock. Additionally, there was a $5.3 million decrease in the interest rate swap related to


                                                      70


our senior unsecured bonds. See Note 6 to our consolidated financial statements in this Form 10-K for
additional information.

Non-recourse collateralized obligations decreased $137.5 million, or 14%, in 2003 compared to 2002, due to
distributions to investors and decreases in the non-recourse derivative cash flow hedges.


Contractual Obligations and Commercial Commitments

As of December 31, 2003, we had $2,074.2 million of outstanding contractual obligations, excluding derivative
instruments, and $134.0 million in commercial commitments. The following table presents our contractual
obligations and commercial commitments, including the years in which such obligations will come due and such
commercial commitments expire ($ amounts in millions).

                                                Total        2004       2005 - 2006   2007 - 2008   Thereafter
                                             -----------  -----------  ------------  ------------  ------------
Contractual Obligations Due
Indebtedness(1) ............................   $   628.7    $    --      $    175.0    $    153.7    $    300.0
Capital lease obligations..................        --           --            --            --            --
Operating lease obligations................        41.5         11.4          16.7          10.2           3.2
Other purchase liabilities(2)(6) ............        59.7         45.5          11.8           2.4          --
                                             -----------  -----------  ------------  ------------  ------------
Subtotal...................................   $   729.9    $    56.9    $    203.5    $    166.3    $    303.2
Non-recourse collateralized obligations(3) .     1,344.3         --            --            --         1,344.3
                                             -----------  -----------  ------------  ------------  ------------
Total contractual obligations..............   $ 2,074.2    $    56.9    $    203.5    $    166.3    $  1,647.5
                                             ===========  ===========  ============  ============  ============

Commercial Commitments Expire
Standby letters of credit(4) ...............   $     9.0    $     9.0    $     --      $     --      $     --
Other commercial commitments(5)(6) ..........       125.0          3.4           4.6          25.1          91.9
                                             -----------  -----------  ------------  ------------  ------------
Total commercial commitments...............   $   134.0    $    12.4    $      4.6    $     25.1    $     91.9
                                             ===========  ===========  ============  ============  ============
- -------
(1)   Indebtedness amounts include principal only.
(2)   Other purchase liabilities includes $30.0 million due in the first quarter of 2004 related to a recent
     business combination. The remainder relates to open purchase orders and other contractual obligations.
(3)   Non-recourse obligations are not direct liabilities of ours as they will be repaid from investments
     pledged as collateral recorded on our consolidated balance sheet. See Note 8 to our consolidated financial
     statements in this Form 10-K for additional information.
(4)   Our standby letters of credit automatically renew on an annual basis.
(5)   Other commercial commitments relate to venture capital partnerships. These commitments can be drawn down
     by private equity funds as necessary to fund their portfolio investments through the end of the funding
     period as stated in each agreement. The amount collectively drawn down by the private equity funds in our
     portfolio during 2003 was $41.3 million.
(6)   Obligations and commitments related to post-employment benefit plans and commitments related to recent
     business combinations are not included in amounts presented within table. See the discussion on the
     following pages.


Commitments Related to Recent Business Combinations

Under the terms of purchase agreements related to certain recent business combinations, we are subject to
certain contractual obligations and commitments related to additional purchase consideration and put/call
arrangements summarized as follows:

Kayne Anderson Rudnick

We have an earn-out arrangement effective December 31, 2003 for non-Phoenix members of Kayne Anderson Rudnick
that is in the form of a put/call. Non-Phoenix members will be entitled to a payment in the first quarter

                                                      71


of 2004 equal to the excess (if any) of (a) the lesser of (i) $165 million or (ii) 2003 net investment advisory
fees times 4.5 times 60%, over (b) $100 million. The maximum payment is $65 million. As of December 31, 2003,
we have accrued approximately $30 million related to this payment.

Phoenix has an additional arrangement in which existing non-Phoenix members of Kayne Anderson Rudnick will sell
a portion of their membership interests in Kayne Anderson Rudnick, representing 15%, to Phoenix at a rate of 33
1/3% per year at December 31, 2004, 2005 and 2006. The total purchase price will equal net investment advisory
fees for each year times 4.5 times 4.9% (the proportionate interest purchased). Such amounts are paid during
the following quarter. Under certain circumstances, the purchases may be accelerated.

There is also a put/call arrangement with respect to the remaining 25% of the total membership interests. The
purchase price will be equal to investment advisory fees for the relevant contract year multiplied by 4.5
multiplied by the amount of membership interest purchased. The contract year is defined as the twelve months
ending December 31, 2006 and each calendar year thereafter. The pricing on the put/calls will be determined
within 60 days after each such year-end and can be exercised within 60 days of the finalization of the price.
All of these membership interests acquired will be reissued to members/employees of Kayne Anderson Rudnick. The
reissuance process involves Phoenix Investment Partners contributing the interests to Kayne Anderson Rudnick
and then Kayne Anderson Rudnick selling the interests to the members/employees. The members/employees will not
pay cash for these purchases but will enter into a note payable agreement with Kayne Anderson Rudnick. Phoenix
Investment Partners will have preferential distribution rights with respect to payments of principal and
interest on these notes. Under certain circumstances, these interests can be issued without a note payable or
other consideration. In addition, in certain circumstances, the purchases may be accelerated. Once these
interests are purchased and then reissued, the amount of cash that Phoenix Investment Partners will need to pay
to repurchase them in the future will be based on the growth in Kayne Anderson Rudnick's revenues since the
reissuance dates. There is no expiration date for the put/call agreements. There is no cap or floor on the
put/call price.

In August 2003, certain members of Kayne Anderson Rudnick accelerated their put/call arrangement. The purchase
price for their interests totaled $4.5 million, which was recorded as additional purchase price by Phoenix
Investment Partners and allocated to goodwill and definite-lived intangible assets.

PFG

In May 2003, we acquired the remaining interest in PFG not already owned by us for initial consideration of
$16.7 million. Under the terms of the purchase agreement, we may be obligated to pay additional consideration
of up to $89.0 million to the selling shareholders, including $13.0 million during the years 2004 through 2007,
based on certain financial performance targets being met, and the balance in 2008, based on the appraised value
of PFG as of December 31, 2007.

We have accounted for our acquisition of the remaining interest in PFG as a step-purchase acquisition.
Accordingly, we recorded a definite-lived intangible asset of $9.8 million related to the PVFP acquired and a
related deferred tax liability of $3.4 million. The PVFP intangible asset will be amortized over the remaining
estimated life of the underlying insurance inforce acquired, estimated to be 40 years. The remaining
acquisition price plus transaction costs of $7.6 million has been assigned to goodwill. We have not presented
pro forma information as if PFG had been acquired at the beginning of January 2003, as it is not material to
our financial statements. For additional information, see Note 3 to our consolidated financial statements in
this Form 10-K.

Seneca

We have a put/call arrangement with respect to the membership interests in Seneca not owned by Phoenix
Investment Partners. The purchase price is equal to Seneca's investment advisory fees for the relevant year
multiplied by 3.5 multiplied by the amount of the interest purchased. The pricing on the put/calls will be
determined within 60 days after each calendar year-end and can be exercised within 60 days of the finalization
of the price. All of these interests acquired will be reissued to members/employees of Seneca. The reissuance


                                                      72


process involves Phoenix Investment Partners contributing the interests to Seneca and then Seneca selling them
to the members/employees. The members/employees do not pay cash for these purchases, but enter into a note
payable agreement with Seneca. Phoenix Investment Partners has preferential distribution rights with respect to
payments of principal and interest on these notes. Since these interests have already been purchased by Phoenix
Investment Partners and reissued at least once, the amount of cash that Phoenix Investment Partners will need
to pay to repurchase them in the future will be the amount related to the growth in Seneca's revenues since the
various reissuance dates. There is no cap or floor on the put/call price. The put/call agreements will expire
after the year ended December 31, 2007.


Off-Balance Sheet Arrangements

As of December 31, 2003 we did not have any significant off-balance sheet arrangements as defined by Item
303(a)(4)(ii) of SEC Regulation S-K. See Note 8 to our consolidated financial statements in this Form 10-K for
information on variable interest entities.


Reinsurance

We maintain life reinsurance programs designed to protect against large or unusual losses in our life insurance
business. Based on our review of their financial statements and reputations in the reinsurance marketplace, we
believe that these third-party reinsurers are financially sound and, therefore, that we have no material
exposure to uncollectible life reinsurance.


Statutory Capital and Surplus and Risk Based Capital

Phoenix Life's consolidated statutory basis capital and surplus (including AVR) decreased from $1,009.2 million
at December 31, 2002 to $962.4 million at December 31, 2003. The principal factors resulting in this decrease
are a decrease in admitted deferred income tax assets of $44.8 million and a dividend of $44.5 million to the
parent, partially offset by increases in other admitted assets and unrealized investment gains.

Section 1322 of New York Insurance Law requires that New York life insurers report their RBC. RBC is based on a
formula calculated by applying factors to various asset, premium and statutory reserve items. The formula takes
into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk
and business risk. Section 1322 gives the New York Insurance Department explicit regulatory authority to
require various actions by, or take various actions against, insurers whose Total Adjusted Capital (capital and
surplus plus AVR plus one-half the policyholder dividend liability) does not exceed certain RBC levels. Each of
our other life insurance subsidiaries is also subject to these same RBC requirements.

The levels of regulatory action, the trigger point and the corrective actions are summarized below:

     Company Action Level - results when Total Adjusted Capital falls below 100% of Company Action Level at
     which point the company must file a comprehensive plan to the state insurance regulators;

     Regulatory Action Level - results when Total Adjusted Capital falls below 75% of Company Action Level
     where in addition to the above, insurance regulators are required to perform an examination or analysis
     deemed necessary and issue a corrective order specifying corrective actions;

     Authorized Control Level - results when Total Adjusted Capital falls below 50% of Company Action Level
     where in addition to the above, the insurance regulators are permitted but not required to place the
     company under regulatory control; and


                                                      73


     Mandatory Control Level - results when Total Adjusted Capital falls below 35% of Company Action Level
     where insurance regulators are required to place the company under regulatory control.

At December 31, 2003, Phoenix Life's and each of its insurance subsidiaries' RBC levels were in excess of 300%
of Company Action Level.

See Note 15 to our consolidated financial statements in this Form 10-K regarding the Life Companies' statutory
financial information and regulatory matters.


Net Capital Requirements

Our broker-dealer subsidiaries are each subject to the net capital requirements imposed on registered
broker-dealers by the Securities Exchange Act of 1934. Each is also required to maintain a ratio of aggregate
indebtedness to net capital that does not exceed 15:1. The largest of these subsidiaries had net capital of
approximately $6.6 million, which is $5.8 in excess of its required minimum net capital of $0.8 million. The
ratio of aggregate indebtedness to net capital for that subsidiary was 2:1. The ratios of aggregate
indebtedness to net capital for each of the other broker-dealer subsidiaries were also below the regulatory
ratio at December 31, 2003 and their respective net capital each exceeded the applicable regulatory minimum.


Obligations Related to Pension and Post-Retirement Employee Benefit Plans

We provide our employees with post-employment benefits that include retirement benefits, through pension and
savings plans, and other benefits, including health care and life insurance. Employee benefit expense related
to these plans totaled $33.1 million, $24.9 million and $25.1 million for 2003, 2002 and 2001, respectively.

We have two defined benefit pension plans covering our employees. The employee pension plan, covering
substantially all of our employees, provides benefits up to the amount allowed under the Internal Revenue Code.
The supplemental plan provides benefits in excess of the primary plan. Retirement benefits under both plans are
a function of years of service and compensation. The employee pension plan is funded with assets held in a
trust, while the supplemental plan is unfunded.

We expect to contribute $107.8 million to the employee pension plan through 2008, including $7.2 million during
2004.

The funded status of the qualified and non-qualified pension plans as of December 31, 2003 and 2002 follows
($ amounts in millions):

                                                       Employee Plan                Supplemental Plan
                                                -----------------------------  -----------------------------
                                                     2003           2002            2003           2002
                                                --------------  -------------  --------------  -------------

Plan assets, end of year......................   $    368.9      $    327.7     $     --        $     --
Projected benefit obligation, end of year.....       (460.6)         (410.1)        (124.8)         (126.9)
                                                --------------  -------------  --------------  -------------
Plan assets less than projected
  benefit obligations, end of year ...........   $    (91.7)     $    (82.4)    $   (124.8)     $   (126.9)
                                                ==============  =============  ==============  =============

The post-retirement plan is unfunded. The projected benefit obligation and, therefore, its funded status was
$(78.7) million and $(74.2) million as of December 31, 2003 and 2002, respectively.

See note 11 of the consolidated financial statements included in this Form 10-K for additional information.


                                                      74


Related Party Transactions

State Farm currently owns of record more than 5 percent of our outstanding common stock. In 2003 and 2002, our
subsidiaries incurred total compensation costs of $25.8 million and $10.7 million, respectively, related to
entities which were either subsidiaries of State Farm or owned by State Farm employees, for the sale of our
insurance and annuity products.


Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

Market Risk Exposures and Risk Management

We must effectively manage, measure and monitor the market risk generally associated with our insurance and
annuity business and, in particular, our commitment to fund insurance liabilities. We have developed an
integrated process for managing market risk, which we conduct through our Corporate Finance Department,
Corporate Portfolio Management Department, Life and Annuity Financial Department, and additional specialists at
the business segment level. These groups confer with each other regularly. We have implemented comprehensive
policies and procedures at both the corporate and business segment level to minimize the effects of potential
market volatility.

Market risk is the risk that we will incur losses due to adverse changes in market rates and prices. We have
exposure to market risk through both our insurance operations and our investment activities. Our primary market
risk exposure is to changes in interest rates, although we also have exposures to changes in equity prices and
foreign currency exchange rates. We also have credit risk in connection with our derivative contracts.


Interest Rate Risk

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Our
exposure to interest rate changes primarily results from our commitment to fund interest-sensitive insurance
liabilities, as well as from our significant holdings of fixed rate investments. Our insurance liabilities
largely comprise dividend-paying individual whole life and universal life policies and annuity contracts. Our
fixed maturity investments include U.S. and foreign government bonds, securities issued by government agencies,
corporate bonds, asset-backed securities, mortgage-backed securities and mortgage loans, most of which are
mainly exposed to changes in medium-term and long-term U.S. Treasury rates.

We manage interest rate risk as part of our asset/liability management process and product design procedures.
Asset/liability strategies include the segmentation of investments by product line and the construction of
investment portfolios designed to specifically satisfy the projected cash needs of the underlying product
liability. We manage the interest rate risk inherent in our assets relative to the interest rate risk inherent
in our insurance products. We identify potential interest rate risk in portfolio segments by modeling asset and
product liability durations and cash flows under current and projected interest rate scenarios.

One of the key measures we use to quantify this interest rate exposure is duration. Duration is one of the most
significant measurement tools in measuring the sensitivity of the fair value of assets and liabilities to
changes in interest rates. For example, if interest rates increase by 100 basis points, or 1%, the fair value
of an asset with a duration of five years is expected to decrease by 5%. We believe that as of December 31,
2003, our asset and liability portfolio durations were well matched, especially for the largest segments of our
balance sheet (i.e., participating and universal life). Since our insurance products have variable interest
rates (which expose us to the risk of interest rate fluctuations), we regularly undertake a sensitivity
analysis that calculates liability durations under various cash flow scenarios.


                                                      75



The selection of a 100 basis point immediate, parallel increase or decrease in interest rates is a hypothetical
rate scenario used to demonstrate potential risk. While a 100 basis point immediate, parallel increase or
decrease does not represent our view of future market changes, it is a reasonably possible hypothetical
near-term change that illustrates the potential impact of such events. Although these fair value measurements
provide a representation of interest rate sensitivity, they are based on our portfolio exposures at a point in
time and may not be representative of future market results. These exposures will change as a result of
on-going portfolio transactions in response to new business, management's assessment of changing market
conditions and available investment opportunities.

To calculate duration, we project asset and liability cash flows and discount them to a net present value using
a risk-free market rate adjusted for credit quality, sector attributes, liquidity and any other relevant
specific risks. Duration is calculated by revaluing these cash flows at an alternative level of interest rates
and by determining the percentage change in fair value from the base case.

We also employ product design and pricing strategies to manage interest rate risk. Product design and pricing
strategies include the use of surrender charges or restrictions on withdrawals in some products.

The tables below show the estimated interest rate sensitivity of our fixed income financial instruments
measured in terms of fair value as of December 31, 2003 ($ amounts in millions). Given that our asset and
liability portfolio durations were well matched for the periods indicated, we would expect market value gains
or losses in assets to be largely offset by corresponding changes in liabilities.

                                                                     -100 Basis                  +100 Basis
                                                       Carrying        Point                       Point
                                                        Value          Change      Fair Value      Change
                                                     ------------   ------------  ------------  ------------

Cash and cash equivalents...........................  $    447.9     $    448.2    $    447.9    $    447.6
Available-for-sale debt securities..................    13,273.0       13,878.5      13,273.0      12,668.0
Commercial mortgages................................       284.1          308.7         301.4         294.1
                                                     ------------   ------------  ------------  ------------
Subtotal............................................    14,005.0       14,635.4      14,022.3      13,409.7
Debt and equity securities pledged as collateral....     1,350.0        1,420.8       1,350.0       1,279.2
                                                     ------------   ------------  ------------  ------------
Totals..............................................  $ 15,355.0     $ 16,056.2    $ 15,372.3    $ 14,688.9
                                                     ============   ============  ============  ============

We use derivative financial instruments, primarily interest rate swaps, to manage our residual exposure to
fluctuations in interest rates. We enter into derivative contracts only with highly rated financial
institutions to reduce counterparty credit risks and diversify counterparty exposure.

We enter into interest rate swap agreements to reduce market risks from changes in interest rates. We do not
enter into interest rate swap agreements for trading purposes. Under interest rate swap agreements, we exchange
cash flows with another party at specified intervals for a set length of time based on a specified notional
principal amount. Typically, one of the cash flow streams is based on a fixed interest rate set at the
inception of the contract and the other is based on a variable rate that periodically resets. Generally, no
premium is paid to enter into the contract and neither party makes payment of principal. The amounts to be
received or paid on these swap agreements are accrued and recognized in net investment income.

                                                      76


The tables below show the interest rate sensitivity of our general account interest rate derivatives measured
in terms of fair value as of December 31, 2003 ($ amounts in millions). These exposures will change as our
insurance liabilities are created and discharged and as a result of ongoing portfolio and risk management
activities.

                                                        Weighted-        -100                        +100
                                                         Average        Basis                       Basis
                                           Notional       Term          Point                       Point
                                            Amount       (Years)        Change      Fair Value      Change
                                        ------------  ------------   ------------  ------------  ------------

Interest rate swaps..................    $    540.0          10.4     $     31.3    $     18.2    $      5.0
Other................................          90.0           2.5            0.5           0.4           0.8
                                        ------------                 ------------  ------------  ------------
Totals – general account.............    $    630.0                   $     31.8    $     18.6    $      5.8
                                        ============                 ============  ============  ============
Non-recourse interest rate swaps
  held in consolidated CDO trusts....    $  1,211.3           7.8     $    179.5    $    127.8    $     79.5
                                        ============  ============   ============  ============  ============

See Note 9 to our consolidated financial statements in this Form 10-K for more information on derivative
instruments.


Equity Risk

Equity risk is the risk that we will incur economic losses due to adverse changes in equity prices. Our
exposure to changes in equity prices primarily results from our commitment to fund our variable annuity and
variable life products, as well as from our holdings of common stocks, mutual funds and other equities. We
manage our insurance liability risks on an integrated basis with other risks through our liability and risk
management and capital and other asset allocation strategies. We also manage equity price risk through industry
and issuer diversification and asset allocation techniques. We held $312.0 million in equity securities on our
balance sheet as of December 31, 2003. A 10% decline or increase in the relevant equity price would have
decreased or increased, respectively, the value of these assets by approximately $31.2 million as of December
31, 2003.

Certain annuity products sold by our Life Companies contain guaranteed minimum death benefits. The guaranteed
minimum death benefit feature provides annuity contract holders with a guarantee that the benefit received at
death will be no less than a prescribed amount. This minimum amount is based on the net deposits paid into the
contract, the net deposits accumulated at a specified rate, the highest historical account value on a contract
anniversary, or more typically, the greatest of these values. To the extent that the guaranteed minimum death
benefit is higher than the current account value at the time of death, the company incurs a cost. This
typically results in an increase in annuity policy benefits in periods of declining financial markets and in
periods of stable financial markets following a decline. As of December 31, 2003 and 2002, the difference
between the guaranteed minimum death benefit and the current account value (net amount at risk) for all
existing contracts was $183.1 and $234.9 million, respectively. This is our exposure to loss should all of our
contractholders die on either December 31, 2003 or December 31, 2002 ($ amounts in millions).

                                                                               2003        2002        Change
                                                                            ----------  -----------  ----------

Net amount at risk on minimum guaranteed death benefits
   (before reinsurance)...................................................   $  616.9    $ 1,148.4    $ (531.5)
Net amount at risk reinsured..............................................     (433.8)      (913.5)      479.7
                                                                            ----------  -----------  ----------
Net amount at risk on minimum guaranteed death benefits
   (after reinsurance)....................................................   $  183.1    $   234.9    $  (51.8)
                                                                            ==========  ===========  ==========

Weighted-average age of contractholder....................................         59           60          (1)
                                                                            ==========  ===========  ==========

                                                      77


For the years 2003, 2002 and 2001, payments related to guaranteed minimum death benefits, net of reinsurance
recoveries, were as follows ($ amounts in millions):

                                                                               2003        2002         2001
                                                                            ----------  -----------  ----------

Death claims payments before reinsurance..................................   $    7.7    $    8.6     $    3.5

Reinsurance recoveries....................................................       (5.1)       (6.4)        (3.0)
                                                                            ----------  -----------  ----------
Net death claims payments.................................................   $    2.6    $    2.2     $    0.5
                                                                            ==========  ===========  ==========

We establish a reserve for guaranteed minimum death benefits using a methodology consistent with the AICPA SOP
No. 03-01, "Accounting and Reporting by Insurance Enterprises for Certain Non-traditional Long Duration
Contracts and for Separate Accounts." This reserve is determined using the net amount at risk taking into
account estimates for mortality, equity market returns, and voluntary terminations under a wide range of
scenarios at December 31, 2003 and 2002. Reserves related to guaranteed minimum death benefits, net of
reinsurance recoverables, were as follows ($ amounts in millions):

                                                                                           2003         2002
                                                                                        ----------  -----------

Statutory reserve (after reinsurance)................................................    $   17.3    $    15.8
GAAP reserve (after reinsurance).....................................................         7.6          8.7

We also provide reserves for guaranteed minimum income benefits and guaranteed payout annuity floor benefits.
The statutory reserves for these totaled $0.5 million and $0.1 million at December 31, 2003 and 2002,
respectively. No GAAP reserves were required at December 31, 2003 and 2002.

The following analysis represents an estimated sensitivity of our deferred acquisition cost asset and
guaranteed minimum death benefit liability to equity market changes, based on their December 31, 2003 carrying
values ($ amounts in millions):

                                                                                -10%                    + 10%
                                                                               Equity     Carrying     Equity
                                                                               Market       Value      Market
                                                                             ----------  -----------  ---------

Deferred policy acquisition costs (variable annuities).....................   $  278.3    $   280.1    $ 281.5
Deferred policy acquisition costs (variable universal life)................      318.9        319.8      320.3
Guaranteed minimum death benefit liability (variable annuities)............       11.0          7.8        5.6

See Note 3 to our consolidated financial statements in this Form 10-K for more information regarding deferred
policy acquisition costs.

We sponsor defined benefit pension plans for our employees. For GAAP accounting purposes, we assumed an 8.5%
long-term rate of return on plan assets in 2003 and 2002. To the extent there are deviations in actual returns,
there will be changes in our projected expense and funding requests. As of December 31, 2003, the projected
benefit obligation for our defined benefit plans were in excess of plan assets by $183.1 million. We expect to
contribute $107.8 million to the employee pension plan through 2008, including $7.2 million during 2004. See
Note 11 to our consolidated financial statements in this Form 10-K for more information on our employee benefit
plans.


Foreign Currency Exchange Risks

Foreign currency exchange risk is the risk that we will incur economic losses due to adverse changes in foreign
currency exchange rates. Our functional currency is the U.S. dollar. Our exposure to fluctuations in foreign
exchange rates against the U.S. dollar results from our holdings in non-U.S. dollar-denominated debt and equity

                                                      78


securities and through our investments in foreign subsidiaries and affiliates. The principal currencies that
create foreign currency exchange rate risk for us are the British pound sterling, due to our investments in
Aberdeen and Lombard International Assurance, S.A. and the Argentine peso, due to our investment in EMCO.
During the years 2003 and 2002, we recorded foreign currency translation adjustment gains (losses) of $10.1
million and $17.7 million, respectively, related to changes in valuation of the British pound sterling and $2.0
million and $(10.8) million, respectively, for the Argentine peso. The components of foreign currency exchange
gains (losses) in accumulated other comprehensive income by currency at December 31, 2003 and 2002 are as
follows ($ amounts in millions):

                                                                                2003        2002       Change
                                                                             ----------  ----------  ----------

British pound sterling....................................................    $   19.2    $     9.1    $  10.1
Argentine peso............................................................        (8.8)       (10.8)       2.0
Other.....................................................................        (0.1)         0.1       (0.2)
                                                                             ----------  ----------  ----------
Total gains (losses)......................................................    $   10.3    $    (1.6)   $  11.9
                                                                             ==========  ==========  ==========


Item 8.    Financial Statements and Supplementary Data
See Table of Contents.


Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.


                                                         PART III

Item 9A.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures.  We have developed controls and procedures to ensure that
information required to be disclosed by us in reports we file or submit pursuant to the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
SEC. Based on their review, our Chief Executive Officer and Chief Financial Officer each concluded that our
disclosure controls and procedures, as in effect on December 31, 2003, were effective, both in design and
operation, for achieving the foregoing purpose.

Changes in Internal Control over Financial Reporting.  During the calendar year ended on December 31, 2003,
there were no changes in our internal control over financial reporting that have materially affected, or are
reasonably like to materially affect, our internal control over financial reporting.


Item 10.   Directors and Executive Officers of the Registrant

The information required by Items 401 and 405 of Regulation S-K, except for Item 401 with respect to the
executive officers as disclosed below, is incorporated herein by reference to the information set forth under
Proposal 1 of our definitive proxy statement (which will be filed pursuant to Regulation 14A under the Exchange
Act within 120 days after the close of its fiscal year) under the following headings: "The Board of Directors,"
"Audit Committee Charter and Report," "Compensation of Executive Officers," "Compensation Committee Report,"
and "Performance Graph."

Set forth below is a description of the business positions held during at least the past five years by the
current executive officers of Phoenix:

                                                      79


DONA D. YOUNG, age 501, has been: Chief Executive Officer of PNX and Phoenix Life since January 2003; President
and a Director of PNX since 2000; a Director of Phoenix Life since 1998; and President of Phoenix Life since
2000. Before then, she was: Chief Operating Officer from 2001 until 2003; Executive Vice President, Individual
Insurance and General Counsel of Phoenix Life from 1994 until 2000; and Senior Vice President and General
Counsel of Phoenix Life from 1989 until 1994. Mrs. Young also serves as a director of Wachovia Corporation and
Foot Locker, Inc.

DANIEL T. GERACI, age 46, has been: Executive Vice President, Asset Management, of PNX and President and Chief
Executive Officer of Phoenix Investment Partners since May 2003. From 2001 until May 2003, he was President and
Chief Executive Officer of Pioneer Investment Management USA, Inc. From 1995 to 2001, he held several senior
executive positions with Fidelity Investments, including president of Fidelity's Wealth Management Group. From
1988 through 1995, he was with Midland Walwyn Capital, Inc. (later Merrill Lynch Canada), where he held
successive distribution and management positions, including founder and president of its asset management
subsidiary, Atlas Asset Management, Inc.

MICHAEL J. GILOTTI, age 56, has been: Executive Vice President of PNX and Phoenix Life since August 2002, with
responsibility for life, annuity and asset management distribution and marketing across all product lines. He
joined Phoenix Life in 1999 as a Vice President and became a Senior Vice President in 2000. From 1994 until
1999, he was the director of bank and broker/dealer operations at Aetna Financial Services. Mr. Gilotti also
serves as a director of Phoenix Edge Series Fund.

MICHAEL E. HAYLON, age 46, has been Executive Vice President and Chief Financial Officer of PNX and Phoenix
Life since January 1, 2004. Before then, he was Executive Vice President and Chief Investment Officer of PNX
and of Phoenix Life from 2002 through 2003. He joined Phoenix Life in 1990, as a Vice President, and became
Senior Vice President in 1993. Mr. Haylon also serves as a director of Aberdeen Asset Management PLC.

BONNIE J. MALLEY, age 42, has been Senior Vice President, Corporate Services, of PNX and of Phoenix Life since
2002. Before then, she was Senior Vice President and chief accounting officer from 2001 to 2002 and Vice
President, Corporate Finance 1998 until 2001. She joined Phoenix Life in 1985 as a corporate auditor.

PHILIP K. POLKINGHORN, age 46, became Executive Vice President, Life and Annuity Manufacturing in March 2004.
Before then he had served since 2001 as a Vice President of Sun Life Financial Company with responsibility for
overall management of its annuity business, which it acquired from Keyport Life Insurance Company in 2001. Mr.
Polkinghorn served as President of Keyport Life from 1999 until its acquisition by Sun Life. From 1996 to 1999,
he served as Chief Marketing Officer for American General.

TRACY L. RICH, age 52, has been: Executive Vice President, General Counsel and Assistant Secretary of PNX and
Phoenix Life since 2002. Before then, he was Senior Vice President and General Counsel of PNX and Phoenix Life
from 2000 to 2002 and Senior Vice President and Deputy General Counsel of Massachusetts Mutual Life Insurance
Company from 1996 until 2000.

JAMES D. WEHR, age 46, has been Senior Vice President and Chief Investment Officer of PNX and Phoenix Life
since January 1, 2004. Before then, he was Senior Managing Director and Portfolio manager of Phoenix Investment
Partners from 1995 through 2003. He joined Phoenix in 1981 and has held a series of increasingly senior
investment positions.

                                                      Code of Ethics

We have a code of ethics that is applicable to all of our company directors and employees, including our
principal executive officer, principal financial officer and principal accounting officer. A copy of this code
(our "Code of


__________________________________
1 All ages are as of March 1, 2004.
                                                      80


Conduct") may be reviewed on our web site at PhoenixWealthManagement.com, in the Investor Relations section.
(This URL and the one below are intended to be inactive textual references only. They are not intended to be
active hyperlinks to our website. The information on the website, which might be accessible through a hyperlink
resulting from those URLs, is not intended to be part of this report and is not incorporated herein by
reference). The latest amendments to the Code of Conduct will be reflected, together with a description of the
nature of any amendments, other than ones that are technical, administrative or non-substantive, on the above
website. In the event we ever waive compliance with the code by any of our executive officers, we will disclose
the waiver on that website. Copies of our code may also be obtained without charge by sending a request either
by mail to: Corporate Secretary, The Phoenix Companies, Inc., One American Row, P.O. Box 5056, Hartford,
Connecticut 06102-5056, or by e-mail to: corporate.secretary@phoenixwm.com.


Item 11.   Executive Compensation

The information required by Item 402 of Regulation S-K is incorporated herein by reference to the information
set forth under the sections entitled: "Compensation of Executive Officers," "Compensation of Directors,"
"Compensation Committee Report," and "Performance Graph" of our definitive proxy statement, which will be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934, or the Exchange Act, within 120 days
after the close of PNX's fiscal year.


Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 403 of Regulation S-K is incorporated herein by reference to the information
set forth under the section entitled "Ownership of Common Stock" of our definitive proxy statement, which will
be filed pursuant to Regulation 14A under the Exchange Act within 120 days after the close of PNX's fiscal
year.

The information required by Item 201(d) of Regulation S-K follows.

                                                      81


Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of the end of the Company's 2003 fiscal year with respect to
compensation plans under which equity securities of the Company are authorized for issuance.

                                ------------------------- -------------------------- -------------------------
                                            (A)                       (B)                       (C)
- ------------------------------- ------------------------- -------------------------- -------------------------
                                                                                     Number of securities
                                Number of securities to   Weighted-average exercise  remaining available for
                                be issued upon exercise   price of outstanding       future issuance under
Plan Category                   of outstanding options,   options, warrants and      equity compensation plans,
                                warrants and rights       rights                     excluding securities
                                                                                     reflected in column (A)
- ------------------------------- ------------------------- -------------------------- -------------------------
Equity compensation plans
approved by the Company's
shareholders
•  2003 Restricted Stock,
   Restricted Stock Unit and
   Long-Term Incentive Plan(1)         1,615,966(2)                 $ 7.99                   4,384,034
- ------------------------------- ------------------------- -------------------------- -------------------------
Equity compensation plans not
approved by the Company's
shareholders
•  Stock Incentive Plan(3)             4,422,356(4)                 $15.27                     850,922
•  Directors Stock Plan(5)               205,500(6)                 $16.20                     819,343
•  Retirement and Transition
   Agreement(7)                          573,477(8)                 $13.95                          --
•  Executive Employment
   Agreement(9)                          394,737(8)                  $7.60                          --
- ------------------------------- ------------------------- -------------------------- -------------------------
Total                                 7,212,036                    $13.14                   6,054,299
- ------------------------------- ------------------------- -------------------------- -------------------------

(1)   A copy of the 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan is filed as an
     exhibit to the 2003 Proxy Statement filed by the Company with the SEC on March 21, 2003. The following
     summary of the material features of the plan is qualified in its entirety by reference to the full text of
     the plan, which is hereby incorporated by reference.

     The Compensation Committee administers this plan and selects the participants to whom restricted stock,
     restricted stock units, or RSUs, and long-term performance units may be granted. The number of shares of
     common stock that may be issued under the plan may not exceed 6,000,000 shares. Appropriate adjustments
     will be made for certain capitalization events in the number of shares that may be issued. Where the
     shares underlying any grant are not issued, such shares will again be available for inclusion in future
     award grants. Each RSU represents a contractual right to receive one share of Common Stock after the
     satisfaction of certain vesting criteria. RSUs granted before June 25, 2006 are not convertible and
     deliverable in Common Stock until after that date. Generally, RSUs and shares of restricted stock may not
     be transferred, sold, assigned, pledged, hypothecated or otherwise encumbered by the participant during
     the restricted period. The committee may, however, permit limited exceptions.

     Holders of restricted stock will have all the rights of other shareholders including, but not limited to,
     the right to vote and the right to receive dividends. Holders of RSUs, however, will not have the right to
     vote or to dispose of the shares of the underlying Common Stock and thus, will not have beneficial
     ownership of Common Stock until the shares are issued. Generally, if a participant terminates employment
     by reason of death, disability or retirement, the restricted period will lapse and the number of shares to
     be issued will be prorated. Any awards as to which the restricted period has not lapsed at the date of a
     participant's termination of employment for the above reasons will automatically be cancelled. If
     employment is terminated for any other reason before the end of the restricted period, all restricted
     stock held by the participant will revert to the Company and all RSUs and any dividend equivalents
     credited to such participant will be forfeited. In the event of a change of control of the Company (as
     defined in the plan), the restricted period with respect to each award of restricted stock and RSUs will
     end on the date of such change of control.

     Long-Term Performance Units will relate to pre-established "performance goals" over a "performance cycle"
     (generally, three years and may consist of calendar year segments.) The committee will establish the
     performance goals applicable

                                                      82


     to the units that may be earned by a participant for each performance cycle and/or segment thereof.
     Following the end of each performance cycle, the committee will determine the number of units actually
     earned. In general, if a participant ceases employment by reason of death, disability or retirement during
     a performance cycle, the participant will earn that number of units determined by prorating the percentage
     of the target earned according to the number of months he or she was actively at work during the cycle. In
     general, if a participant ceases employment prior to the end of a cycle for any other reason, he or she
     will forfeit all units. In the event of a change of control, however, the participant will earn a prorated
     number of units in respect of each outstanding performance cycle.

     The Board of Directors may terminate the plan at any time and, from time to time, may amend or modify the
     plan (subject in certain cases to the approval of shareholders and, prior to June 26, 2006, to the prior
     written consent of the New York State Superintendent of Insurance). No amendment, modification, or
     termination of the plan may in any manner adversely affect any award previously granted under the plan,
     without the consent of the participant. The plan will continue in effect, unless terminated or until no
     more shares of Common Stock are available for issuance under the plan.

(2)   This figure consists of the shares underlying 255,004 RSUs that vest over time, 1,147,338 RSUs that are
     subject to performance contingencies, and 213,624 RSUs that are subject to no contingencies (but which are
     not currently convertible).

(3)   A copy of the Stock Incentive Plan is filed as an exhibit to the Form S-1 filed by the Company with the
     SEC on February 9, 2001. The following summary of the material features of the plan is qualified in its
     entirety by reference to the full text of the plan, which is hereby incorporated by reference.

     Under the Company's Stock Incentive Plan, the Compensation Committee (or if the committee delegates such
     authority to the CEO, the CEO) may grant stock options to officers, employees and insurance agents of the
     Company and its subsidiaries. The maximum number of shares issuable under the plan with respect to
     officers, employees and insurance agents of the Company (including those who are also employees, officers
     or directors of Phoenix Investment Partners and those individuals who were officers or employees of the
     Company on June 25, 2001) is the aggregate of 5% (approximately 5.2 million) of the shares outstanding on
     June 26, 2001 (approximately 105 million shares) reduced by the shares issuable pursuant to options
     granted under the Company's Directors Stock Plan and, with respect to officers and employees of Phoenix
     Investment Partners (other than those officers, employees or insurance agents described above) 1%
     (approximately 1.05 million) of the shares outstanding on June 26, 2001. The maximum number of shares
     which may be subject to award under the plan: prior to June 25, 2003, shall not exceed 75% of the shares
     available under the plan; prior to June 25, 2004, shall not equal 85% of the shares available under the
     plan; and prior to June 25, 2005, shall not exceed 100% of the shares available under the plan. During any
     five-year period, no participant may be granted options in respect of more than 5% of the shares available
     for issuance under the plan. The Board may terminate or amend (subject, in some cases, to the approval of
     its shareholders and, prior to June 25, 2006, to the approval of the New York Superintendent of Insurance)
     the plan, but such termination or amendment may not adversely affect any outstanding stock option without
     the consent of the participant. The plan will continue in effect until it is terminated by the Board or
     until no more shares are available for issuance.

     The exercise price per share subject to an option will be not less than the fair market value of such
     share on the option's grant date. Each option will generally become exercisable in equal installments on
     each of the first three anniversaries of the grant date, except that no option will become exercisable
     prior to June 25, 2003 nor may any option be exercised after the tenth anniversary of the grant date.
     Options may not be transferred by the grantee, except in the event of death or, if the committee permits,
     the transfer of non-qualified stock options by gift or domestic relations order to the grantee's immediate
     family members. Upon a grantee's death, any outstanding options previously granted to such grantee will be
     exercisable by the grantee's designated beneficiary until the earlier of the expiration of the option or
     five years following the grantee's death. If the grantee terminates employment by reason of disability or
     retirement, any outstanding option will continue to vest as if the grantee's service had not terminated
     and the grantee may exercise any vested option until the earlier of five years following termination of
     employment or the expiration of the option. If the grantee's employment is terminated for cause, the
     grantee will forfeit any outstanding options. If the grantee's employment terminates in connection with a
     divestiture of a business unit or subsidiary or similar transaction, the committee may provide that all or
     some outstanding options will continue to become exercisable and may be exercised at any time prior to the
     earlier of the expiration of the term of the options and the third anniversary of the grantee's
     termination of service. If the grantee terminates employment for any other reason, any vested options held
     by the grantee at the date of termination will remain exercisable for a period of 30 days and any then
     unvested options will be forfeited.

                                                      83


     Generally, upon a change of control (as defined in the plan), each outstanding option will become fully
     exercisable. Alternatively, the committee may: (i) require that each option be canceled in exchange for a
     payment in an amount equal to the excess, if any, of the price paid in connection with the change of
     control over the exercise price of the option; or (ii) if the committee determines in good faith that the
     option will be honored or assumed by, or an alternative award will be issued by, the acquirer in the
     change of control, require that each option remain outstanding without acceleration of vesting or
     exchanged for such alternative award.

(4)   This figure consists of the shares which underlie the options issued under the Stock Incentive Plan
     (1,827,664 of which are fully vested and 2,641,363 of which are subject to vesting with the passage of
     time).

(5)   A copy of the Directors Stock Plan is filed as an exhibit to the Form S-1 filed by the Company on February
     9, 2001. The following summary of the material features of the plan is qualified in its entirety by
     reference to the full text of the plan, which is hereby incorporated by reference.

     Under the Directors Stock Plan, the Board of Directors may grant options to outside directors, provided
     that prior to June 25, 2006: (a) such options will be in substitution for a portion of the cash fees that
     would otherwise have been payable to such directors; and (b) the aggregate number of shares issuable
     pursuant to options will not exceed 0.5% of the total shares outstanding on June 26, 2001, or 524,843
     shares. Each option entitles the holder to acquire one share of our Common Stock at the stated exercise
     price. The exercise price per share will not be less than the fair market value of a share on the day such
     option is granted and the option will be exercisable from the later of June 25, 2003 or the day the option
     is granted until the earlier of the tenth anniversary of such grant date or the third anniversary of the
     day the outside director ceases to provide services for the Company. Under the Directors Stock Plan, the
     Board of Directors may require the outside directors to receive up to one-half of their directors fees in
     shares instead of cash and the outside directors may elect to receive any portion of such fees in shares
     instead of cash. The aggregate number of shares that may also be issued in lieu of cash fees may not
     exceed 500,000 shares, bringing the total available under this plan to 1,024,843 shares.

(6)   This figure consists of the shares which underlie the options issued under the Directors Stock Plan.

(7)   A copy of the Retirement and Transition Agreement with Robert W. Fiondella, retired Chairman, is filed as
     an exhibit to the Form 8-K filed by the Company on October 9, 2002. The following summary of the material
     features of the RSUs subject to that agreement is qualified in its entirety by reference to the full text
     of the agreement, which is hereby incorporated by reference.

     The Company's Retirement and Transition Agreement with Mr. Fiondella provided for the issuance to him of
     $8,000,000 worth of RSUs upon his retirement in March 2003. This equated to 573,477 RSUs, based on the
     closing price of $13.95 on September 27, 2002, the date of measurement. Each unit represents the right to
     receive one share of Common Stock after June 25, 2006. The agreement expressly prohibits the actual
     issuance of stock to Mr. Fiondella prior to the fifth anniversary of the effective date of Phoenix Life's
     demutualization (i.e., prior to June 25, 2006). The agreement further provides that while Mr. Fiondella
     holds the RSUs, he will not have any right to vote or to direct the vote of the related shares of stock.
     Moreover, he is expressly prohibited from disposing of the underlying shares of stock, or of any economic
     interest related to the shares of stock, other than upon his death (in which case, the Company will
     distribute the shares of stock to his estate after June 25, 2006). The Company will credit each RSU with
     an amount equal to cash dividends on the shares of stock underlying the RSUs, or dividend equivalents, and
     interest thereon, both to be distributed promptly following June 25, 2006.

(8)   This figure consists of the shares which underlie the RSUs issued or issuable pursuant to the related
     agreement.

(9)   A copy of the Company's Executive Employment Agreement with Mrs. Young is filed as an exhibit to the Form
     8-K filed by the Company as of January 1, 2003. The following summary of the material features of the RSUs
     subject to that agreement is qualified in its entirety by reference to the full text of the agreement.

     The Company's Executive Employment Agreement with Mrs. Young provides for the issuance to her of that
     number of RSUs equal to the number resulting from dividing $3,000,000 by the closing price of our Common
     Stock on December 31, 2002 ($7.60) (i.e. 394,737 RSUs).

     The agreement expressly provides, assuming the RSUs have by then vested, for the issuance of stock to Mrs.
     Young on the later of: (a) June 26, 2006; or (b) the 15th day after termination of her employment with the
     Company (the period

                                                      84


     from the grant date of January 1, 2003 to that date being the "Restricted Period"). The agreement further
     provides that while Mrs. Young holds the RSUs, she will not have any right to vote or to direct the vote
     of the underlying shares of stock. Moreover, she is expressly prohibited from disposing of the underlying
     shares of stock, or of any economic interest related to the shares of stock, other than upon her death (in
     which case, the Company will distribute the shares of stock to her estate after June 25, 2006). The
     Company will credit each RSU with dividend equivalents and interest thereon, both to be distributed to
     Mrs. Young at the end of the Restricted Period.


Item 13.   Certain Relationships and Related Transactions

The information required by Item 404 of Regulation S-K is incorporated herein by reference to the information
set forth under the section entitled "The Board of Directors" (under the caption "Certain Relationships and
Related Transactions") of our definitive proxy statement, which will be filed pursuant to Regulation 14A under
the Exchange Act within 120 days after the close of our fiscal year.


Item 14.   Principal Accountant Fees and Services

The information required by Item 9(c) of Schedule 14A is incorporated herein by reference to the information
set forth in the section entitled Fees Incurred for Services Performed by PwC, under Proposal 2 of our
definitive proxy statement, which will be filed pursuant to Regulation 14A under the Securities Exchange Act of
1934 within 120 days after the close of our fiscal year.


                                                          PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)      Documents filed as part of this Form 10-K.

         1.   Financial Statements.  The financial statements listed in Part II of the Table of Contents to
              this Form 10-K are filed as part of this Form 10-K.
         2.   Financial Statement Schedules.  All financial statement schedules are omitted as they are not
              applicable or the information is shown in the consolidated financial statements or notes thereto.
         3.   Exhibits.  The exhibits filed as part of this Form 10-K are listed on the Exhibit Index
              immediately preceding such exhibits and incorporated herein by reference.

(b)      The following reports on Form 8-K were filed during the last quarter covered by this Form 10-K:

         •    dated October 17, 2003, containing a press release of that date concerning the resignation of Sue
              A. Collins as Executive Vice President;
         •    dated November 4, 2003, containing a press release of that date announcing third quarter
              financial results and the Company's financial supplement for quarter ended September 30, 2003
              (which was also made available on the Company's website);
         •    dated November 21, 2003, containing a press release dated November 20, 2003 announcing the
              appointment of Michael E. Haylon as Executive Vice President and Chief Financial Officer and the
              promotion of James D. Wehr to Senior Vice President and Chief Investment Officer; and
         •    dated December 23, 2003, concerning our closing of a new $150.0 million unfunded, unsecured
              senior revolving credit facility to replace the then existing unfunded $100 million credit
              facility.

We make our periodic and current reports available, free of charge, on our website, at
PhoenixWealthManagement.com, in the Investor Relations section, as soon as reasonably practicable after the
material is electronically filed with, or furnished to, the SEC. (This URL is intended to be an inactive
textual

                                                      85


reference only. It is not intended to be an active hyperlink to our website. The information on the website,
which might be accessible through a hyperlink resulting from this URL, is not intended to be part of this
report and is not incorporated herein by reference).

                                                      86



                                                  SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                          THE PHOENIX COMPANIES, INC.
                                                 (Registrant)

Dated:                March 15, 2004                           By: /s/Dona D. Young
                                                                   ----------------
                                                               Dona D. Young
                                                               President and Chief Executive Officer

Dated:                March 15, 2004                           By: /s/Michael E. Haylon
                                                                   --------------------
                                                               Michael E. Haylon
                                                               Executive Vice President
                                                                and Chief Financial Officer

Dated:                March 15, 2004                           By: /s/Scott R. Lindquist
                                                                   ---------------------
                                                               Scott R. Lindquist
                                                               Senior Vice President
                                                                and Chief Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, dated
March 15, 2004, by the following persons on behalf of the Registrant and in the capacities indicated.

/s/Sal H. Alfiero                                              /s/John E. Haire
- -----------------                                              ----------------
Sal H. Alfiero, Director                                       John E. Haire, Director

/s/Peter C. Browning                                           /s/Jerry J. Jasinowski
- --------------------                                           ----------------------
Peter C. Browning, Director                                    Jerry J. Jasinowski, Director

/s/Arthur P. Byrne                                             /s/Thomas S. Johnson
- ------------------                                            ---------------------
Arthur P. Byrne, Director                                      Thomas S. Johnson, Director

/s/Sanford Cloud, Jr.                                          /s/Marilyn E. LaMarche
- ---------------------                                          ----------------------
Sanford Cloud, Jr., Director                                   Marilyn E. LaMarche, Director

/s/Richard N. Cooper                                           /s/Robert G. Wilson
- --------------------                                           -------------------
Richard N. Cooper, Director                                    Robert G. Wilson, Director

/s/Gordon J. Davis                                             /s/Dona D. Young
- ------------------                                             ----------------
Gordon J. Davis, Director                                      Dona D. Young, Chairman

/s/Ann M. Gray
- --------------
Ann M. Gray, Director

                                                      87
















                                      THIS PAGE INTENTIONALLY LEFT BLANK





                                        REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholders of
 The Phoenix Companies, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income
and comprehensive income, cash flows and changes in stockholders' equity present fairly, in all material
respects, the financial position of The Phoenix Companies, Inc. and its subsidiaries (the Company) at December
31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2003, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting
for goodwill and other intangible assets in 2002 and for venture capital partnerships, securitized financial
instruments and derivative instruments in 2001. In addition, as discussed in Note 1, the Company has revised
its financial statements as of December 31, 2002 and for each of the two years in the period ended December
31, 2002.

/s/PricewaterhouseCoopers LLP

Hartford, Connecticut
March 9, 2004







                                                     F-1





                                          The Phoenix Companies, Inc.
                                          Consolidated Balance Sheet
                                ($ amounts in millions, except per share data)
                                          December 31, 2003 and 2002

                                                                                                        2002
                                                                                       2003           Restated
                                                                                  ---------------  ---------------
ASSETS:
Available-for-sale debt securities, at fair value...............................   $   13,273.0     $   11,889.5
Available-for-sale equity securities, at fair value.............................          312.0            385.9
Mortgage loans, at unpaid principal balances....................................          284.1            468.8
Venture capital partnerships, at equity in net assets...........................          234.9            228.6
Affiliate equity securities, at equity in net assets............................           47.5            134.7
Policy loans, at unpaid principal balances......................................        2,227.8          2,195.9
Other investments...............................................................          402.0            398.9
                                                                                  ---------------  ---------------
                                                                                       16,781.3         15,702.3
Available-for-sale debt and equity securities pledged as collateral,
 at fair value..................................................................        1,350.0          1,358.7
                                                                                  ---------------  ---------------
Total investments...............................................................       18,131.3         17,061.0
Cash and cash equivalents.......................................................          447.9          1,110.5
Accrued investment income.......................................................          222.3            192.3
Receivables.....................................................................          224.9            217.4
Deferred policy acquisition costs...............................................        1,367.7          1,234.1
Deferred income taxes...........................................................           58.7             41.4
Intangible assets with definite lives...........................................          261.8            291.7
Goodwill and other indefinite-lived intangible assets...........................          493.2            456.0
Other assets....................................................................          268.2            260.3
Separate account assets.........................................................        6,083.2          4,371.2
                                                                                  ---------------  ---------------
Total assets....................................................................   $   27,559.2     $   25,235.9
                                                                                  ===============  ===============

LIABILITIES:
Policy liabilities and accruals.................................................   $   13,088.6     $   12,680.0
Policyholder deposit funds......................................................        3,642.7          3,395.7
Stock purchase contracts........................................................          128.8            137.6
Indebtedness....................................................................          639.0            644.3
Other general account liabilities...............................................          525.7            542.7
Non-recourse collateralized obligations.........................................        1,472.0          1,609.5
Separate account liabilities....................................................        6,083.2          4,371.2
                                                                                  ---------------  ---------------
Total liabilities...............................................................       25,580.0         23,381.0
                                                                                  ---------------  ---------------

MINORITY INTEREST:
Minority interest in net assets of consolidated subsidiaries....................           31.4             28.1
                                                                                  ---------------  ---------------

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: 106,376,291 and 106,374,510 shares issued.........            1.0              1.0
Additional paid-in capital......................................................        2,428.8          2,424.4
Deferred compensation on restricted stock units.................................           (3.6)            --
Accumulated deficit.............................................................         (352.7)          (331.4)
Accumulated other comprehensive income..........................................           63.7            (71.5)
Treasury stock, at cost: 11,930,647 and 12,330,000 shares.......................         (189.4)          (195.7)
                                                                                  ---------------  ---------------
Total stockholders' equity......................................................        1,947.8          1,826.8
                                                                                  ---------------  ---------------
Total liabilities, minority interest and stockholders' equity...................   $   27,559.2     $   25,235.9
                                                                                  ===============  ===============

The accompanying notes are an integral part of these financial statements.

                                                     F-2



                                          The Phoenix Companies, Inc.
                             Consolidated Statement of Income and Comprehensive Income
                                ($ amounts in millions, except per share data)
                                 Years Ended December 31, 2003, 2002 and 2001

                                                                                          2002           2001
                                                                           2003         Restated       Restated
                                                                       -------------  ------------  --------------
 REVENUES:
 Premiums............................................................   $ 1,042.2     $ 1,082.0     $  1,112.7
 Insurance and investment product fees...............................       565.3         560.5          543.2
 Investment income, net of expenses..................................     1,107.4         947.7          892.8
 Net realized investment losses......................................      (100.5)       (133.9)         (84.9)
                                                                       ------------  ------------  --------------
 Total revenues......................................................     2,614.4       2,456.3        2,463.8
                                                                       ------------  ------------  --------------

 BENEFITS AND EXPENSES:
 Policy benefits, excluding policyholder dividends...................     1,454.0       1,436.1        1,406.7
 Policyholder dividends..............................................       418.8         401.8          400.1
 Policy acquisition cost amortization................................        94.1          59.2          133.0
 Intangible asset amortization.......................................        33.2          32.5           49.4
 Intangible asset impairments........................................        --            66.3           --
 Interest expense on indebtedness....................................        39.6          31.4           27.3
 Interest expense on non-recourse collateralized obligations.........        48.9          30.5           42.3
 Other operating expenses............................................       536.0         583.0          650.3
                                                                       ------------  ------------  --------------
 Total benefits and expenses.........................................     2,624.6       2,640.8        2,709.1
                                                                       ------------  ------------  --------------
 Loss from continuing operations before income taxes
   and minority interest.............................................       (10.2)       (184.5)        (245.3)
 Applicable income tax benefit.......................................       (18.5)        (56.2)        (105.2)
                                                                       ------------  ------------  --------------
 Income (loss) from continuing operations before minority interest...         8.3        (128.3)        (140.1)
 Minority interest in net income of consolidated subsidiaries........        12.4          12.4            7.2
                                                                       ------------  ------------  --------------
 Loss from continuing operations.....................................        (4.1)       (140.7)        (147.3)
 Loss from discontinued operations...................................        (2.1)         (1.3)          (2.5)
                                                                       ------------  ------------  --------------
 Loss before cumulative effect of accounting changes.................        (6.2)       (142.0)        (149.8)
 Cumulative effect of accounting changes.............................        --          (130.3)         (65.4)
                                                                       ------------  ------------  --------------
 Net loss............................................................   $    (6.2)    $  (272.3)    $   (215.2)
                                                                       ============  ============  ==============

 EARNINGS PER SHARE:
 Loss from continuing operations — basic.............................   $    (0.04)   $    (1.44)   $     (1.41)
 Loss from continuing operations — diluted...........................   $    (0.04)   $    (1.44)   $     (1.41)
                                                                       ============  ============  ==============
 Loss before cumulative effect of accounting change — basic..........   $    (0.07)   $    (1.45)   $     (1.43)
 Loss before cumulative effect of accounting change — diluted........   $    (0.07)   $    (1.45)   $     (1.43)
                                                                       ============  ============  ==============
 Net loss — basic....................................................   $    (0.07)   $    (2.78)   $     (2.06)
 Net loss — diluted..................................................   $    (0.07)   $    (2.78)   $     (2.06)
                                                                       ============  ============  ==============
 Basic weighted-average common shares outstanding (in thousands).....       94,218        97,854        104,578
 Diluted weighted-average common shares outstanding (in thousands)...       94,218        97,854        104,578
                                                                       ============  ============  ==============

 COMPREHENSIVE INCOME:
 Net loss............................................................   $    (6.2)    $  (272.3)    $   (215.2)
 Other comprehensive income (loss)...................................       135.2         (74.3)         (14.5)
                                                                       ------------  ------------  --------------
 Comprehensive income (loss).........................................   $   129.0     $  (346.6)    $   (229.7)
                                                                       ============  ============  ==============

The accompanying notes are an integral part of these financial statements.

                                                     F-3



                                          The Phoenix Companies, Inc.
                                     Consolidated Statement of Cash Flows
                                            ($ amounts in millions)
                                 Years Ended December 31, 2003, 2002 and 2001

                                                                                       2002             2001
                                                                       2003          Restated         Restated
                                                                   --------------  --------------   --------------

 OPERATING ACTIVITIES:
 Premiums collected..............................................   $  1,024.9      $  1,068.2       $  1,108.3
 Insurance and investment product fees collected.................        575.1           579.2            546.0
 Investment income collected.....................................      1,026.2           954.7            906.2
 Policy benefits paid, excluding policyholder dividends..........     (1,017.9)       (1,036.2)        (1,099.0)
 Policyholder dividends paid.....................................       (396.1)         (387.0)          (387.6)
 Policy acquisition costs paid...................................       (205.5)         (217.0)          (206.1)
 Interest expense on indebtedness paid...........................        (36.5)          (32.6)           (32.3)
 Interest expense on collateralized obligations paid.............        (48.9)          (30.5)           (42.3)
 Other operating expenses paid...................................       (534.8)         (595.0)          (614.0)
 Income taxes refunded...........................................          6.6            12.3             72.0
                                                                   --------------  --------------   --------------
 Cash from continuing operations.................................        393.1           316.1            251.2
 Discontinued operations, net....................................        (36.5)          (59.1)           (76.8)
                                                                   --------------  --------------   --------------
 Cash from operating activities..................................        356.6           257.0            174.4
                                                                   --------------  --------------   --------------

INVESTING ACTIVITIES:
Investment purchases (Note 5)....................................     (5,625.5)       (4,969.9)        (3,795.8)
Investment sales, repayments and maturities (Note 5).............      4,417.2         3,418.6          2,284.1
Debt and equity securities pledged as collateral purchases.......        (56.9)         (891.6)          (116.4)
Debt and equity securities pledged as collateral sales...........        171.5            96.0            127.4
Subsidiary purchases.............................................        (23.4)         (136.1)          (373.7)
Premises and equipment additions.................................        (17.6)          (15.7)           (16.6)
Discontinued operations, net.....................................         (4.4)           37.3             79.4
                                                                   --------------  --------------   --------------
Cash for investing activities...................................      (1,139.1)       (2,461.4)        (1,811.6)
                                                                   --------------  --------------   --------------

 FINANCING ACTIVITIES:
 Policyholder deposit fund receipts (repayments), net ...........        247.0         1,649.6            836.8
 Stock purchase contracts proceeds...............................         --             133.9             --
 Equity units proceeds...........................................         --             149.1             --
 Senior unsecured bond proceeds..................................         --              --              300.0
 Other indebtedness proceeds.....................................         --              --              179.5
 Indebtedness repayments.........................................         --            (125.1)          (305.3)
 Common stock issuance...........................................         --              --              831.0
 Common stock purchases..........................................         --            (131.1)           (64.6)
 Payment to policyholders in demutualization.....................         --              --              (28.7)
 Collateralized obligations proceeds (repayments), net...........        (99.6)          841.6             --
 Common stock dividends paid.....................................        (15.1)          (15.8)            --
 Minority interest distributions.................................        (12.4)          (10.6)            (5.8)
                                                                   --------------  --------------   --------------
 Cash from financing activities..................................        119.9         2,491.6          1,742.9
                                                                   --------------  --------------   --------------
 Change in cash and cash equivalents.............................       (662.6)          287.2            105.7
 Cash and cash equivalents, beginning of year....................      1,110.5           823.3            717.6
                                                                   --------------  --------------   --------------
 Cash and cash equivalents, end of year..........................   $    447.9      $  1,110.5       $    823.3
                                                                   ==============  ==============   ==============

Included in cash and cash equivalents above is cash pledged as collateral of $72.0 million, $57.0 million, and
$11.0 million at December 31, 2003, 2002 and 2001, respectively.

The accompanying notes are an integral part of these financial statements.

                                                      F-4



                                          The Phoenix Companies, Inc.
                             Consolidated Statement of Changes in Stockholders' Equity
                                ($ amounts in millions, except per share data)
                                 Years Ended December 31, 2003, 2002 and 2001


                                                                                            2002          2001
                                                                             2003         Restated      Restated
                                                                         ------------   ------------  -----------

COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL:
Additional common shares issued in demutualization
  (1,853; 4,237; and 56,174,373 shares)...............................   $     --       $     --       $  1,580.4
Restricted stock units awarded as compensation
  (701,598; 573,477 units)............................................          5.1            8.0           --
Restricted stock units awarded as payment of deferred compensation
  liabilities (161,768 units).........................................          1.5           --             --
Stock options awarded as compensation (572,504 options)...............          0.4           --             --
Excess of cost over fair value of common shares contributed to
  employee savings plan...............................................         (2.6)          --             --
Income tax benefit....................................................         --              5.9           --
Present value of future contract adjustment payments on equity units..         --             (2.8)          --
Common shares issued in initial public offering (50,195,900 shares)...         --             --            831.0

DEFERRED COMPENSATION ON RESTRICTED STOCK UNITS:
Compensation deferred on restricted stock units awarded...............         (5.0)          --             --
Compensation expense recognized — restricted stock units..............          1.4           --             --

RETAINED EARNINGS (ACCUMULATED DEFICIT):
Net loss..............................................................         (6.2)        (272.3)        (215.2)
Common stock dividends declared ($0.16 per share; $0.16 per share)....        (15.1)         (15.8)          --
Transfer to common stock and additional paid-in capital for
  common shares issued in demutualization.............................         --             --         (1,580.4)
Policyholder cash payments and policy credits.........................         --             --            (41.5)
Equity adjustment for policyholder dividend obligation, net...........         --             --            (30.3)
Other equity adjustments..............................................         --             --              3.4

ACCUMULATED OTHER COMPREHENSIVE INCOME:
Other comprehensive income (loss).....................................        135.2          (74.3)         (14.5)

TREASURY STOCK:
Common shares purchased (0; 7,871,500; and 4,458,500 shares)..........         --           (129.7)         (66.0)
Common shares contributed to employee savings plan
 (399,353 shares).....................................................          6.3           --             --
                                                                        -------------  -------------  -------------
Change in stockholders' equity.......................................         121.0         (481.0)         466.9
Stockholders' equity, beginning of year...............................      1,826.8        2,307.8        1,840.9
                                                                        -------------  -------------  -------------
Stockholders' equity, end of year.....................................  $   1,947.8    $   1,826.8    $   2,307.8
                                                                        =============  =============  =============


The accompanying notes are an integral part of these financial statements.

                                                      F-5



                                          The Phoenix Companies, Inc.
                                  Notes to Consolidated Financial Statements
                          ($ amounts in millions, except per share and per unit data)
                                 Years Ended December 31, 2003, 2002 and 2001


1.  Organization and Operations

Our consolidated financial statements include the accounts of The Phoenix Companies, Inc. and its
subsidiaries. The Phoenix Companies, Inc. is a holding company and our operations are conducted through
subsidiaries, the principal ones of which are Phoenix Life Insurance Company, or Phoenix Life, and Phoenix
Investment Partners, Ltd., or Phoenix Investment Partners. We have eliminated significant intercompany
accounts and transactions in consolidating these financial statements. We have restated certain amounts on our
Consolidated Statement of Income and Comprehensive Income and our Consolidated Balance Sheet which is further
described below. Also, we have reclassified certain amounts for 2002 and 2001 to conform with 2003
presentations.

We have prepared these financial statements in accordance with generally accepted accounting principles, or
GAAP. In preparing these financial statements in conformity with GAAP, we are required to make estimates and
assumptions that affect the reported amounts of assets and liabilities at reporting dates and the reported
amounts of revenues and expenses during the reporting periods. Actual results will differ from these estimates
and assumptions. We employ significant estimates and assumptions in the determination of deferred policy
acquisition costs; policyholder liabilities and accruals; the valuation of intangible assets; the valuation of
investments in debt and equity securities and venture capital partnerships; pension and other post-employment
benefits liabilities; and accruals for contingent liabilities. Significant accounting policies are presented
throughout the notes in italicized type.

In 1999, we began the process of reorganizing and demutualizing our then principal operating company, Phoenix
Home Life Mutual Insurance Company. We completed the process in June 2001, when all policyholder membership
interests in the mutual company were extinguished and eligible policyholders of the mutual company received
56,180,463 shares of common stock (56,164,244 shares in June 2001 and 16,219 shares subsequently), $28.8
million of cash and $12.7 million of policy credits as compensation. Our retained earnings immediately
following the demutualization (net of cash payments and policy credits that were charged directly to retained
earnings) were reclassified to common stock and additional paid-in capital in the amount of $1,580.4 million.
To protect the future dividends of these policyholders, we established a closed block for their existing
policies, which we describe in Note 3. Concurrent with the demutualization and conversion, we sold common
stock of The Phoenix Companies, Inc. to the public and received net proceeds of $831.0 million.

Accounting changes and restatement of prior periods

The cumulative effect of accounting changes for 2002 and 2001 follows ($ amounts in millions):

                                                                                  2002              2001
                                                                             ---------------   ---------------
 Goodwill and other intangible assets......................................   $   (130.3)       $     --
 Venture capital partnerships..............................................         --               (48.8)
 Securitized financial instruments.........................................         --               (20.5)
 Derivative instruments....................................................         --                 3.9
                                                                             ---------------   ---------------
 Cumulative effect of accounting changes income (loss).....................   $   (130.3)       $    (65.4)
                                                                             ===============   ===============

As of December 31, 2003, we adopted a new accounting standard for special purpose variable interest entities
which we describe further in Note 8. As of January 1, 2003, we prospectively adopted a new accounting standard
for stock-based compensation, which we describe further in Note 11. We recognized no cumulative effect of
accounting changes in 2003 as a result of our adoption of these new accounting standards.

                                                      F-6


As of January 1, 2002, we adopted a new accounting standard for goodwill and other intangible assets and
recorded the cumulative effect of the adoption as a charge to earnings. We describe the adoption of this
standard further in Note 4.

As of January 1, 2001, we adopted a new accounting standard for derivative instruments and recorded the
cumulative effect of the adoption as a credit to both earnings and other comprehensive income. We describe the
adoption further in Note 9. Also as of January 1, 2001, we changed our accounting for venture capital
partnerships to remove the lag in reporting their operating results and recorded the effect of this change as
a charge to earnings. Additionally, in the beginning of the second quarter of 2001, we adopted a new
accounting pronouncement for securitized financial instruments and recorded the cumulative effect of the
adoption as a charge to earnings. We describe both of these changes further in Note 5.

Pro forma information on income (loss) from continuing operations for 2001 assuming retroactive application of
the accounting change for goodwill and other intangibles assets follows ($ amounts in millions):

                                                                                                    2001
                                                                                   2001            Actual
                                                                                 Pro forma        Restated
                                                                              ---------------  ---------------

Income (loss) from continuing operations....................................   $     (128.1)    $     (147.3)
Income (loss) from continuing operations per share (basic and diluted)......   $      (1.23)    $      (1.41)

Effective January 1, 2004, we are required to adopt the AICPA's Statement of Position 03-1, Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate
Accounts, or SOP 03-1. SOP 03-1 provides guidance related to the accounting, reporting and disclosure of
certain insurance contracts and separate accounts, including guidance for computing reserves for products with
guaranteed benefits, such as guaranteed minimum death benefits, and for products with annuitization benefits
such as guaranteed minimum income benefits. In addition, SOP 03-1 addresses the presentation and reporting of
separate accounts, as well as rules concerning the capitalization and amortization of sales inducements. This
new accounting standard largely codifies our current accounting and reserving practices related to our
applicable non-traditional long-duration contracts and separate accounts and thus, our adoption is not
expected to have a material effect on our financial statements.

                                                      F-7



We have restated certain 2002 and 2001 amounts on our Consolidated Statement of Income and Comprehensive
Income and our Consolidated Balance Sheet with respect to our method of consolidation for several of our
sponsored collateralized obligation trusts which we further describe in Note 8. Revised and originally
reported amounts for select financial statement components for the years 2002 and 2001 and as of 2002 are as
follows ($ amounts in millions, except per share data):

                                                                     2002                          2001
                                                         -----------------------------  ----------------------------
                                                               As             As             As             As
                                                            Restated       Reported       Restated       Reported
                                                         --------------  -------------  -------------  -------------
Income statement data
Insurance and investment product fees.................    $    560.5      $    562.3     $   543.2      $   545.7
Investment income.....................................         947.7           916.7         892.8          847.5
Realized investment gains (losses)....................        (133.9)         (107.6)        (84.9)         (72.4)
Interest expense on non-recourse
  collateralized obligations..........................          30.5            --            42.3           --
Net loss from continuing operations...................        (140.7)         (114.4)       (147.3)        (134.8)
Net loss..............................................    $   (272.3)     $   (246.0)    $  (215.2)     $  (202.7)

Earnings per share data
Loss from continuing operations — basic and diluted...    $    (1.44)     $    (1.17)    $   (1.41)     $   (1.29)
Loss before cumulative effect of accounting change —
  basic and diluted...................................         (1.45)          (1.18)        (1.43)         (1.31)
Net loss — basic and diluted..........................    $    (2.78)     $    (2.51)    $   (2.06)     $   (1.94)

Balance sheet data
Available-for-sale equity securities..................    $    385.9      $    390.9
Available-for-sale debt and equity securities
  pledged as collateral...............................       1,358.7            --
Cash and cash equivalents.............................       1,110.5         1,053.5
Other assets..........................................         260.3           249.1
Separate account assets...............................       4,371.2            --
Separate account and investment trust assets..........          --           5,793.1
Non-recourse collateralized obligations...............       1,609.5            --
Separate account liabilities..........................       4,371.2            --
Separate account and investment trust liabilities.....          --           5,793.1
Minority interest in net assets of subsidiaries.......          28.1            10.8
Stockholders' equity..................................    $  1,826.8      $  2,031.7

As reported 2002 and 2001 amounts reflect reclassifications related to discontinued operations and other
reclassifications to conform to 2003 presentation. Reduction of December 2001 stockholders' equity due to the
change in method of consolidation of $87.9 million is reflected as a decrease to 2002 opening stockholders'
equity.

Business combinations

In 2003, we acquired the outstanding minority interests in PFG Holdings, Inc., or PFG, and Capital West Asset
Management, LLC, or Capital West. In 2002, we acquired a majority interest in Kayne Anderson Rudnick
Investment Management, LLC, or Kayne Anderson Rudnick; in 2001, we acquired the minority interest in Phoenix
Investment Partners and majority interests in two other asset management firms. Additional information on PFG
is included in Note 3 and on the other acquisitions in Note 4.

We have not presented pro forma information as if the minority and majority interests had been acquired at the
beginning of 2001, since such pro forma information does not differ materially from our financial statements.

                                                      F-8




2.  Business Segments

We are a manufacturer of insurance, annuity and asset management products for the accumulation, preservation
and transfer of wealth. We provide products and services to affluent and high-net-worth individuals through
their advisors and to institutions directly and through consultants. We offer a broad range of life insurance,
annuity and asset management products through a variety of distributors. These products are managed within two
operating segments -- Life and Annuity and Asset Management. We report our remaining activities in two
non-operating segments -- Venture Capital and Corporate and Other.

The Life and Annuity segment includes individual life insurance and annuity products including participating
whole life, universal life, variable life, term life and variable annuities. The Asset Management segment
includes private client and institutional investment management and distribution, including managed accounts,
open-end mutual funds and closed-end funds. We provide more information on the Life and Annuity and Asset
Management operating segments in Note 3 and Note 4, respectively.

The Venture Capital segment includes our equity share in the operating income and the realized and unrealized
investment gains of our venture capital partnership investments held in the general account of Phoenix Life,
but outside the closed block. We provide more information on this segment in Note 5. The Corporate and Other
segment includes all interest expense, as well as several smaller subsidiaries and investment activities which
do not meet the thresholds of reportable segments. These include international operations and the run-off of
our group pension and guaranteed investment contract businesses.

We evaluate segment performance on the basis of segment income. Realized investment gains and losses and some
non-recurring items are excluded because we do not consider them when evaluating the financial performance of
the segments. The size and timing of realized investment gains and losses are often subject to our discretion.
The non-recurring items are removed from segment after-tax operating income if, in our opinion, they are not
indicative of overall operating trends. While some of these items may be significant components of net income,
we believe that segment income is an appropriate measure that represents the earnings attributable to the
ongoing operations of the business.

The criteria used to identify an item that will be excluded from segment income include: whether the item is
infrequent and is material to the segment's income; or whether it results from a business restructuring, or a
change in regulatory requirements, or relates to other unusual circumstances (e.g., non-routine litigation).
We include information on other items allocated to our segments in their respective notes for information
only. Items excluded from segment income may vary from period to period. Because these items are excluded
based on our discretion, inconsistencies in the application of our selection criteria may exist. Segment
income is not a substitute for net income determined in accordance with GAAP and may be different from
similarly titled measures of other companies.

We allocate indebtedness and related interest expense to our Corporate and Other segment. We allocate capital
to our Life and Annuity segment based on risk-based capital, or RBC, for our insurance products. We used 300%
of RBC levels for 2003 and 2002 and 250% of RBC for 2001. Capital within our life insurance companies that is
unallocated is included in our Corporate and Other segment. We allocate capital to our Asset Management
segment on the basis of the historical capital within that segment. We allocate net investment income based on
the assets allocated to the segments. We allocate certain costs and expenses to the segments based on a review
of the nature of the costs, time studies and other methodologies. Investment income on debt and equity
securities pledged as collateral as well as interest expense on non-recourse collateralized obligations, both
related to three consolidated collateralized obligation trusts we sponsor, are included in the Corporate and
Other segment. Excess investment income on debt and equity securities pledged as collateral represent
investment advisory fees earned by our asset management subsidiary and are allocated to the Asset Management
segment as investment product fees for segment reporting purposes only.

                                                      F-9



Segment information on assets as of December 31, 2003 and 2002 and revenues and income for 2003, 2002 and 2001
follow ($ amounts in millions):

                                                                                     2003             2002
                                                                                ---------------  ---------------
Segment Assets
Life and annuity segment......................................................   $   24,219.5     $   21,263.0
Asset management segment......................................................          851.2            844.3
                                                                                ---------------  ---------------
Operating segment assets......................................................       25,070.7         22,107.3
Venture capital segment.......................................................          196.3            227.8
Corporate and other segment...................................................        2,264.0          2,870.4
                                                                                ---------------  ---------------
Total segment assets..........................................................       27,531.0         25,205.5
Net assets of discontinued operations (Note 14)...............................           28.2             30.4
                                                                                ---------------  ---------------
Total assets..................................................................   $   27,559.2     $   25,235.9
                                                                                ===============  ===============

                                                                                     2002             2001
                                                                    2003           Restated         Restated
                                                               ---------------  ---------------  ---------------
Segment Revenues
Life and annuity segment.....................................   $    2,368.4     $    2,344.5     $    2,306.6
Asset management segment.....................................          243.9            259.1            259.7
Elimination of inter-segment revenues........................          (14.0)           (15.8)           (19.3)
                                                               ---------------  ---------------  ---------------
Operating segment revenues..................................         2,598.3          2,587.8          2,547.0
Venture capital segment......................................           36.2            (59.3)           (84.5)
Corporate and other segment..................................           80.4             61.7             86.2
                                                               ---------------  ---------------  ---------------
Total segment revenues......................................         2,714.9          2,590.2          2,548.7
Net realized investment losses...............................         (100.5)          (133.9)           (84.9)
                                                               ---------------  ---------------  ---------------
Total revenues..............................................    $    2,614.4     $    2,456.3     $    2,463.8
                                                               ===============  ===============  ===============

Segment Income (Loss)
Life and annuity segment.....................................   $       99.4     $       80.3     $       82.9
Asset management segment.....................................           (8.7)           (69.9)            (8.7)
                                                               ---------------  ---------------  ---------------
Operating segment pre-tax income............................            90.7             10.4             74.2
Venture capital segment......................................           36.2            (59.3)           (84.5)
Corporate and other segment:
    Interest expense on indebtedness.........................          (39.6)           (31.4)           (27.3)
    Other....................................................           (8.2)            (8.6)            (7.4)
                                                               ---------------  ---------------  ---------------
Total segment income (loss) before income taxes..............           79.1            (88.9)           (45.0)
Applicable income taxes (benefit) ...........................           21.8            (28.5)           (19.1)
                                                               ---------------  ---------------  ---------------
Total segment income (loss).................................            57.3            (60.4)           (25.9)
Loss from discontinued operations...........................            (2.1)            (1.3)            (2.5)
Net realized investment losses, net of income taxes and
  other offsets.............................................           (54.2)           (65.6)           (55.5)
Restructuring and early retirement costs, net of
  income taxes..............................................            (8.5)           (28.5)           (15.5)
Other income, net of income taxes...........................             1.3             --                2.4
Deferred acquisition cost adjustment, net of income taxes...            --               15.1             --
Demutualization related items, net of income taxes..........            --               (1.3)           (23.9)
Expenses of purchase of Phoenix Investment Partners
  minority interest.........................................            --               --              (52.8)
Mutual life surplus tax.....................................            --               --               21.0
Pension adjustment, net of income taxes.....................            --               --                2.9
Cumulative effect of accounting changes, net of
  income taxes..............................................            --             (130.3)           (65.4)
                                                               ---------------  ---------------  ---------------
Net loss....................................................    $       (6.2)    $     (272.3)    $     (215.2)
                                                               ===============  ===============  ===============

While revenues derived from outside of the United States are not material to our financial statements, we have
international investments, the principal ones of which are located in the United Kingdom (Aberdeen Asset
Management PLC, or Aberdeen, 16.2% owned, Note 5) and Luxembourg (Lombard International Assurance, 12% owned,
Note 5) and Argentina. We have recorded pre-tax cumulative foreign currency translation gains of $10.3
million, related principally to the British pound and the Argentine peso, which are included as a component of
accumulated other comprehensive income at December 31, 2003 (Note 12).

                                                     F-10


The pre-tax components of foreign currency exchange gains (losses) in accumulated other comprehensive income
by currency as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                                     2003             2002
                                                                                ---------------  ---------------

British pound sterling........................................................   $       19.2     $        9.1
Argentine peso................................................................           (8.8)           (10.8)
Other.........................................................................           (0.1)             0.1
                                                                                ---------------  ---------------
Total accumulated unrealized foreign currency gain (loss).....................   $       10.3     $       (1.6)
                                                                                ===============  ===============


3.  Life and Annuity Segment

The Life and Annuity segment includes individual life insurance and annuity products of Phoenix Life and
certain of its subsidiaries and affiliates (together, our "Life Companies"), including universal life,
variable universal life, term life and fixed and variable annuities. It also includes the results of our
closed block, which consists primarily of participating whole life products.

Segment information on assets as of December 31, 2003 and 2002 and income for 2003, 2002 and 2001 follows
($ amounts in millions):

                                                                                     2003             2002
                                                                                ---------------  ---------------
Life and Annuity Segment Assets
Investments...................................................................   $   16,203.3     $   14,475.1
Cash and cash equivalents.....................................................          250.5            919.0
Receivables...................................................................          228.1            236.5
Deferred policy acquisition costs.............................................        1,367.7          1,234.1
Deferred income taxes.........................................................           40.2             97.2
Goodwill and other intangible assets..........................................           15.3              7.1
Other general account assets..................................................          204.1            162.3
Separate accounts.............................................................        5,910.3          4,131.7
                                                                                ---------------  ---------------
Total segment assets..........................................................   $   24,219.5     $   21,263.0
                                                                                ===============  ===============

                                                                    2003             2002             2001
                                                               ---------------  ---------------  ---------------
Life and Annuity Segment Income
Premiums.....................................................   $    1,042.2     $    1,082.0     $    1,112.7
Insurance and investment product fees........................          333.0            315.1            303.1
Net investment income........................................          993.2            947.4            890.8
                                                               ---------------  ---------------  ---------------
Total segment revenues......................................         2,368.4          2,344.5          2,306.6
                                                               ---------------  ---------------  ---------------
Policy benefits, including policyholder dividends............        1,869.9          1,867.6          1,812.6
Policy acquisition cost amortization.........................           98.2             88.6            122.5
Other operating expenses.....................................          300.5            307.4            288.3
                                                               ---------------  ---------------  ---------------
Total segment benefits and expenses.........................         2,268.6          2,263.6          2,223.4
                                                               ---------------  ---------------  ---------------
Segment income before income taxes and minority interest.....           99.8             80.9             83.2
Allocated income taxes.......................................           31.1             28.0             28.8
                                                               ---------------  ---------------  ---------------
Segment income before minority interest......................           68.7             52.9             54.4
Minority interest in segment income of consolidated
  subsidiaries...............................................            0.4              0.6              0.3
                                                               ---------------  ---------------  ---------------
Segment income..............................................            68.3             52.3             54.1
Net realized investment losses, net of income taxes and
  other offsets..............................................           (4.7)           (15.0)           (16.6)
Restructuring charges, net of income taxes...................           (1.3)            --               --
Deferred acquisition cost adjustment, net of income taxes....           --               15.1             --
                                                               ---------------  ---------------  ---------------
Segment net income..........................................    $       62.3     $       52.4     $       37.5
                                                               ===============  ===============  ===============

                                                     F-11



Premium and fee revenue and related expenses

We recognize life insurance premiums, other than premiums for universal life and certain annuity contracts,
as premium revenue pro rata over the related contract periods. We match benefits, losses and related expenses
with premiums over the related contract periods. Revenues for universal life products consist of net
investment income and mortality, administration and surrender charges assessed against the fund values during
the period. Related benefit expenses include universal life benefit claims in excess of fund values and net
investment income credited to universal life fund values.

Reinsurance

We use reinsurance agreements to provide for greater diversification of business, allow us to control exposure
to potential losses arising from large risks and provide additional capacity for growth.

We recognize assets and liabilities related to reinsurance ceded contracts on a gross basis. The cost of
reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured
policies using assumptions consistent with those used to account for the underlying policies.

We remain liable to the extent that reinsuring companies may not be able to meet their obligations under
reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses
to us; consequently, estimates are established for amounts deemed or estimated to be uncollectible. To
minimize our exposure to significant losses from reinsurance insolvencies, we evaluate the financial condition
of our reinsurers and monitor concentration of credit risk arising from similar geographic regions,
activities, or economic characteristics of the reinsurers.

Our reinsurance program varies based on the type of risk, for example:

   •    On direct policies, the maximum of individual life insurance retained by us on any one life is $10
        million for single life and joint first-to-die policies and $12 million for joint last-to-die
        policies, with excess amounts ceded to reinsurers.
   •    We reinsure 80% of the mortality risk on the inforce block of the Confederation Life business we
        acquired in December 1997.
   •    We entered into two separate reinsurance agreements in 1998 and 1999 to reinsure 80% and 60%,
        respectively, of the mortality risk on a substantial portion of our otherwise retained individual
        life insurance business.
   •    We reinsure 80% to 90% of the mortality risk on certain new issues of term.
   •    We reinsure 100% of guaranteed minimum death benefits on a block of variable deferred annuities
        issued between January 1, 1996 through December 31, 1999, including subsequent deposits. We retain
        the guaranteed minimum death benefits risks on the remaining variable deferred annuity inforce that
        is not covered by this reinsurance arrangement.
   •    We assume and cede business related to the group accident and health block in run-off. While we are
        not writing any new contracts, we are contractually obligated to assume and cede premiums related to
        existing contracts.

                                                     F-12



Additional information on direct business written and reinsurance assumed and ceded for continuing operations
for 2003, 2002 and 2001 follows ($ amounts in millions):

                                                                    2003             2002             2001
                                                               ---------------  ---------------  ---------------

Direct premiums..............................................   $    1,092.1     $    1,104.2     $    1,145.5
Premiums assumed from reinsureds.............................           15.5             16.9              0.6
Premiums ceded to reinsurers.................................          (65.4)           (39.1)           (33.4)
                                                               ---------------  ---------------  ---------------
Premiums....................................................    $    1,042.2     $    1,082.0     $    1,112.7
                                                               ===============  ===============  ===============
Percentage of amount assumed to net premiums.................          1.5%             1.6%             0.1%
                                                               ===============  ===============  ===============

Direct policy benefits incurred..............................   $      404.1     $      370.2     $      366.5
Policy benefits assumed from reinsureds......................           34.8             27.6             17.2
Policy benefits ceded to reinsurers..........................          (57.1)           (47.0)           (53.0)
                                                               ---------------  ---------------  ---------------
Policy benefits.............................................    $      381.8     $      350.8     $      330.7
                                                               ===============  ===============  ===============

Direct life insurance inforce................................   $  122,591.8     $  112,842.8     $  105,517.9
Life insurance inforce assumed from reinsureds...............          168.7            440.9             28.1
Life insurance inforce ceded to reinsurers...................      (77,214.9)       (74,265.8)       (69,127.0)
                                                               ---------------  ---------------  ---------------
Life insurance inforce......................................    $   45,545.6     $   39,017.9     $   36,419.0
                                                               ===============  ===============  ===============
Percentage of amount assumed to net insurance inforce........          0.4%             1.1%             0.1%
                                                               ===============  ===============  ===============

Irrevocable letters of credit aggregating $57.7 million at December 31, 2003 have been arranged with
commercial banks in favor of us to collateralize the ceded reserves.

Business combinations and major reinsurance assumed transaction

In May 2003, we acquired the remaining interest in PFG not already owned by us for initial consideration of
$16.7 million. Under the terms of the purchase agreement, we may be obligated to pay additional consideration
of up to $89.0 million to the selling shareholders, including $13.0 million during the years 2004 through 2007
based on certain financial performance targets being met, and the balance in 2008 based on the appraised value
of PFG as of December 31, 2007. We have accounted for our acquisition of the remaining interest in PFG as a
step-purchase. Accordingly, we recorded a definite-lived intangible asset of $9.8 million related to the
present value of future profits acquired and a related deferred income tax liability of $3.4 million. The
present value of future profits intangible asset will be amortized over the remaining estimated life of the
underlying insurance inforce acquired, estimated to be 40 years. The remaining acquisition price of $7.6
million has been assigned to goodwill.

In July 2002, we acquired the variable life and variable annuity business of Valley Forge Life Insurance
Company (a subsidiary of CNA Financial Corporation), effective July 1, 2002. The business acquired had a total
account value of $557.0 million at June 30, 2002. This transaction was effected through a combination of
coinsurance and modified coinsurance.

Deferred policy acquisition costs

The costs of acquiring new business, principally commissions, underwriting, distribution and policy issue
expenses, all of which vary with and are primarily related to production of new business, are deferred. In
connection with our acquisitions of the Confederation Life business (1997) and PFG (2003), we recognized an
asset for the present value of future profits, or PVFP, representing the present value of estimated net cash
flows embedded in the existing contracts acquired. This asset is included in deferred acquisition costs, or
DAC.

We amortize DAC and PVFP based on the related policy's classification. For individual participating life
insurance policies, DAC and PVFP are amortized in proportion to estimated gross margins. For universal life,
variable universal life and accumulation annuities, DAC and PVFP are amortized in proportion to estimated

                                                     F-13


gross profits. Policies may be surrendered for value or exchanged for a different one of our products
(internal replacement); the DAC balance associated with the replaced or surrendered policies is amortized to
reflect these surrenders.

The amortization process requires the use of various assumptions, estimates and judgments about the future.
The primary assumptions are expenses, investment performance, mortality and contract cancellations (i.e.,
lapses, withdrawals and surrenders). These assumptions are reviewed on a regular basis and are generally based
on our past experience, industry studies, regulatory requirements and judgments about the future. Changes in
estimated gross margins and gross profits based on actual experiences are reflected as an adjustment to total
amortization to date resulting in a charge or credit to earnings. Finally, analyses are performed periodically
to assess whether there are sufficient gross margins or gross profits to amortize the remaining DAC balances.

The activity in deferred policy acquisition costs for 2003, 2002 and 2001 follows ($ amounts in millions):

                                                                    2003             2002             2001
                                                               ---------------  ---------------  ---------------

Acquisition costs deferred...................................   $      205.5     $      217.1     $      206.1
Acquisition costs recognized in:
    PFG minority interest acquisition........................            9.8             --               --
    Valley Forge Life reinsurance assumed transaction........           --               48.5             --
Costs amortized to expenses:
    Recurring costs related to segment income................          (98.2)           (88.6)          (122.5)
    (Cost) credit related to realized investment gains or
      losses (Note 5)........................................            4.1              7.2            (10.5)
    Change in actuarial assumption...........................           --               22.1             --
Offsets to net unrealized investment gains or losses
  included in other comprehensive income (Note 12)...........           12.4            (95.9)            28.5
Equity adjustment for policyholder dividend obligation.......           --               --                3.1
                                                               ---------------  ---------------  ---------------
Change in deferred policy acquisition costs.................           133.6            110.4            104.7
Deferred policy acquisition costs, beginning of year.........        1,234.1          1,123.7          1,019.0
                                                               ---------------  ---------------  ---------------
Deferred policy acquisition costs, end of year..............    $    1,367.7     $    1,234.1     $    1,123.7
                                                               ===============  ===============  ===============

In 2002, we revised the mortality assumptions used in the development of estimated gross margins for the
traditional participating block of business to reflect favorable experience. This revision resulted in a
decrease in deferred policy acquisition cost amortization of $22.1 million ($14.4 million after income taxes).
Also in 2002, we revised the long-term market return assumption for the variable annuity block of business
from 8% to 7%. In addition, we recorded an impairment charge related to the recoverability of our deferred
acquisition cost asset related to the variable annuity business. The revision in long-term market return
assumption and the impairment charge resulted in a $13.5 million pre-tax ($8.8 million after income taxes)
increase in policy acquisition cost amortization expense in the third quarter of 2002.

We have included in deferred policy acquisition costs the PVFP from two major reinsurance assumed transactions
and the purchase of the minority interest in a subsidiary. The amounts included as of December 31, 2003 and
2002 follow: Confederation Life reinsurance assumed ($36.0 million and $45.7 million, respectively), Valley
Forge Life reinsurance assumed ($37.4 million and $43.5 million, respectively) and PFG minority interest
acquisition ($9.7 million and $0 million, respectively).

Policy liabilities and accruals

Future policy benefits are liabilities for life and annuity products. We establish liabilities in amounts
adequate to meet the estimated future obligations of policies inforce. Future policy benefits for traditional
life insurance are computed using the net level premium method on the basis of actuarial assumptions as to
contractual guaranteed rates of interest, mortality rates guaranteed in calculating the cash surrender values
described in such contracts and morbidity. Future policy benefits for variable universal life, universal life
and annuities in the accumulation phase are computed using the deposit-method which is the sum of the account
balance, unearned revenue liability

                                                     F-14


and liability for minimum policy benefits. Future policy benefits for term and annuities in the payout phase
that have significant mortality risk are computed using the net premium method on the basis of actuarial
assumptions at the issue date of these contracts for rates of interest, contract administrative expenses,
mortality and surrenders. We establish liabilities for outstanding claims, losses and loss adjustment expenses
based on individual case estimates for reported losses and estimates of unreported losses based on past
experience.

Policyholder liabilities are primarily for participating life insurance policies and universal life insurance
policies. For universal life, this includes deposits received from customers and investment earnings on their
fund balances, which range from 4.0% to 6.25% as of December 31, 2003 and 4.0% to 7.0% as of December 31,
2002, less administrative and mortality charges.

Policyholder deposit funds

Policyholder deposit funds primarily consist of annuity deposits received from customers, dividend
accumulations and investment earnings on their fund balances, which range from 1.0% to 12.3% as of December
31, 2003, less administrative charges.

Fair value of investment contracts

For purposes of fair value disclosures (Note 9), we determine the fair value of guaranteed interest contracts
by assuming a discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the
present value of projected contractual liability payments through final maturity. We valued the fair value of
deferred annuities and supplementary contracts without life contingencies with an interest guarantee of one
year or less at the amount of the policy reserve. In determining the fair value of deferred annuities and
supplementary contracts without life contingencies with interest guarantees greater than one year, we used a
discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the present value
of the projected account value of the policy at the end of the current guarantee period.

Deposit type funds, including pension deposit administration contracts, dividend accumulations, and other
funds left on deposit not involving life contingencies, have interest guarantees of less than one year for
which interest credited is closely tied to rates earned on owned assets. For these liabilities, we assume fair
value to be equal to the stated liability balances.

Participating life insurance

Participating life insurance inforce was 38.8% and 45.5% of the face value of total individual life insurance
inforce at December 31, 2003 and 2002, respectively. The premiums on participating life insurance policies
were 67.4%, 70.4% and 73.5% of total individual life insurance premiums in 2003, 2002, and 2001, respectively.

Funds under management

Activity in annuity funds under management for 2003, 2002 and 2001 ($ amounts in millions):

                                                                    2003             2002             2001
                                                               ---------------  ---------------  ---------------

Deposits.....................................................   $    1,428.1     $    2,258.5     $    1,492.9
Performance..................................................          865.2           (338.0)          (563.1)
Fees.........................................................          (57.7)           (58.8)           (67.3)
Benefits and surrenders......................................         (925.3)          (777.3)          (516.6)
                                                               ---------------  ---------------  ---------------
Change in funds under management.............................        1,310.3          1,084.4            345.9
Funds under management, beginning of year....................        5,833.5          4,749.1          4,403.2
                                                               ---------------  ---------------  ---------------
Annuity funds under management, end of year.................    $    7,143.8     $    5,833.5     $    4,749.1
                                                               ===============  ===============  ===============

                                                     F-15



Demutualization and Closed Block

Phoenix Home Life Mutual Insurance Company demutualized on June 25, 2001 by converting from a mutual life
insurance company to a stock life insurance company, became a wholly-owned subsidiary of The Phoenix
Companies, Inc. and changed its name to Phoenix Life Insurance Company.

Effective June 30, 2001, we adopted a new accounting pronouncement, which provided guidance on accounting by
insurance enterprises for demutualization, including the emergence of earnings from and the financial
presentation of the closed block established in connection with the demutualization. The pronouncement
specifies that closed block assets, liabilities, revenues and expenses should be displayed with all other
assets, liabilities, revenues and expenses of the insurance enterprise based on the nature of the particular
item, with appropriate disclosures relating to the closed block. We recorded a charge on adoption of $30.3
million to equity representing the establishment of the policyholder dividend obligation along with the
corresponding effect on deferred policy acquisition costs and deferred income taxes.

As specified in the plan of reorganization, Phoenix Life established a closed block as of December 31, 1999 to
preserve over time the reasonable dividend expectations of individual life and annuity policyholders for which
dividends were currently being paid or were expected to be paid under the then-current dividend scale. The
closed block comprises a defined limited group of policies and a defined set of assets, is governed by a set
of operating rules and will continue in effect as long as any policy in the closed block remains in effect.

Phoenix Life allocated assets to the closed block in an amount we believed sufficient to produce cash flows
which, together with anticipated premiums and other revenues from the policies included in the closed block,
we expect to support payment of obligations relating to these policies. These obligations include the payment
of claims, certain expenses, taxes and policyholder dividends, which we estimated to continue at rates in
effect for 2000.

We use the same accounting principles to account for the participating policies included in the closed block
as we used prior to the date of demutualization. The only accounting policy difference is the establishment of
the policyholder dividend obligation, described below.

The closed block assets, including future assets from cash flows generated by the assets and premiums and
other revenues from the policies in the closed block, will benefit only holders of the policies in the closed
block. The principal cash flow items that affect the amount of closed block assets and liabilities are
premiums, net investment income, investment purchases and sales, policyholder benefits, policyholder
dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed
block are management and maintenance expenses, commissions, investment income and realized investment gains
and losses on investments held outside the closed block that support the closed block business. All of these
excluded income and expense items enter into the determination of total gross margins of closed block policies
for the purpose of amortization of deferred policy acquisition costs.

In our financial statements, we present closed block assets, liabilities, revenues and expenses together with
all other assets, liabilities, revenues and expenses. Within closed block liabilities, we have established a
policyholder dividend obligation to record an additional liability to closed block policyholders for
cumulative closed block earnings in excess of expected amounts calculated at the date of demutualization.
These closed block earnings will not inure to stockholders, but will result in additional future dividends to
closed block policyholders unless otherwise offset by future performance of the closed block that is less
favorable than expected.

As closed block liabilities exceed closed block assets, we have a net closed block liability at each
period-end. This net liability represents the maximum future earning contribution to be recognized from the
closed block and the change in this net liability each period is in the earnings contribution recognized from
the closed block for the period. To the extent that actual cash flows differ from amounts anticipated, we may
adjust policyholder

                                                     F-16


dividends. If the closed block has excess funds, those funds will be available only to the closed block
policyholders. However, if the closed block has insufficient funds to make policy benefit payments that are
guaranteed, the payments will be made from assets outside of the closed block.

Summarized information on closed block assets and liabilities as of December 31, 2003 and 2002 and inception
(December 31, 1999) follows ($ amounts in millions):

                                                                    2003             2002           Inception
                                                               ---------------  ---------------  ----------------

Debt securities..............................................   $    6,906.4     $    6,431.1     $    4,773.1
Equity securities............................................           82.9             --               --
Mortgage loans...............................................          228.5            373.2            399.0
Venture capital partnerships.................................           38.6              0.8             --
Policy loans.................................................        1,386.8          1,399.0          1,380.0
Other invested assets........................................           46.7             --               --
                                                               ---------------  ---------------  ----------------
Total closed block investments...............................        8,689.9          8,204.1          6,552.1
Cash and cash equivalents....................................           40.5            187.1             --
Accrued investment income....................................          120.2            110.9            106.8
Receivables..................................................           43.0             42.1             35.2
Deferred income taxes........................................          377.0            402.7            389.4
Other closed block assets....................................           62.3             45.2              6.2
                                                               ---------------  ---------------  ----------------
Total closed block assets...................................         9,332.9          8,992.1          7,089.7
                                                               ---------------  ---------------  ----------------
Policy liabilities and accruals..............................        9,723.1          9,449.0          8,301.7
Policyholder dividends payable...............................          369.8            363.4            325.1
Policyholder dividend obligation.............................          519.2            547.3             --
Other closed block liabilities...............................           63.0             24.2             12.3
                                                               ---------------  ---------------  ----------------
Total closed block liabilities..............................        10,675.1         10,383.9          8,639.1
                                                               ---------------  ---------------  ----------------
Excess of closed block liabilities over closed block assets.    $    1,342.2     $    1,391.8     $    1,549.4
                                                               ===============  ===============  ================

Closed block revenues and expenses and changes in the policyholder dividend obligation, all for the cumulative
period from inception through December 31, 2003, the years 2003 and 2002 follow ($ amounts in millions):

                                                                 Cumulative
                                                                    from
                                                                 Inception           2003             2002
                                                               ---------------  ---------------  ---------------


Premiums.....................................................   $    4,238.1     $    1,000.1     $    1,043.2
Net investment income .......................................        2,211.2            573.1            562.0
Net realized investment losses...............................          (89.1)            (9.4)           (49.3)
                                                               ---------------  ---------------  ---------------
Total revenues..............................................         6,360.2          1,563.8          1,555.9
                                                               ---------------  ---------------  ---------------
Policy benefits, excluding dividends.........................        4,360.5          1,058.0          1,079.4
Other operating expenses.....................................           49.0             10.0             10.3
                                                               ---------------  ---------------  ---------------
Total benefits and expenses, excluding policyholder
  dividends..................................................        4,409.5          1,068.0          1,089.7
                                                               ---------------  ---------------  ---------------
Closed block contribution to income before dividends and
  income taxes...............................................        1,950.7            495.8            466.2
Policyholder dividends.......................................        1,596.3            419.4            400.7
                                                               ---------------  ---------------  ---------------
Closed block contribution to income before income taxes......          354.4             76.4             65.5
Applicable income taxes......................................          124.5             26.8             22.6
                                                               ---------------  ---------------  ---------------
Closed block contribution to income.........................    $      229.9     $       49.6     $       42.9
                                                               ===============  ===============  ===============

                                                     F-17





                                                                 Cumulative
                                                                    from
                                                                 Inception           2003             2002
                                                               ---------------  ---------------  ---------------

Policyholder dividends provided through earnings.............   $    1,641.5     $      419.4     $      400.7
Policyholder dividends provided through other
  comprehensive income.......................................          432.7            (45.5)           369.4
                                                               ---------------  ---------------  ---------------
Additions to policyholder dividend liabilities..............         2,074.2            373.9            770.1
Policyholder dividends paid.................................        (1,510.3)          (395.6)          (383.9)
                                                               ---------------  ---------------  ---------------
Change in policyholder dividend liabilities..................          563.9            (21.7)           386.2
Policyholder dividend liabilities, beginning of period.......          325.1            910.7            524.5
                                                               ---------------  ---------------  ---------------
Policyholder dividend liabilities, end of period.............          889.0            889.0            910.7
Less:  policyholder dividends payable, end of period.........          369.8            369.8            363.4
                                                               ---------------  ---------------  ---------------
Policyholder dividend obligation, end of period.............    $      519.2     $      519.2     $      547.3
                                                               ===============  ===============  ===============

In addition to the closed block assets, we hold assets outside the closed block in support of closed block
liabilities. We recognize investment earnings on these invested assets, less deferred policy acquisition cost
amortization and allocated expenses, as an additional source of earnings to our stockholders.


4.  Asset Management Segment

We conduct activities in Asset Management with a focus on two customer groups -- private client and
institutional. Through our private client group, we provide asset management services principally on a
discretionary basis, with products consisting of open-end mutual funds and managed accounts. Managed accounts
include intermediary programs sponsored and distributed by non-affiliated broker-dealers and direct managed
accounts which are sold and administered by us. Our private client business also provides transfer agency,
accounting and administrative services to most of our open-end mutual funds.

Through our institutional group, we provide discretionary and non-discretionary asset management services
primarily to corporations, multi-employer retirement funds and foundations, as well as to endowment and
special purpose funds. In addition, we manage closed-end funds and alternative financial products, including
structured finance products. Structured finance products include collateralized obligations backed by
portfolios of public high yield bonds, emerging markets bonds, commercial mortgage-backed and asset-backed
securities or bank loans (Note 8).

We offer asset management services through our affiliated asset managers. We provide our affiliated asset
managers with a consolidated platform of distribution and administrative support, thereby allowing each
manager to devote a high degree of focus to investment management activities. On an ongoing basis, we monitor
the quality of the affiliates' products by assessing their performance, style consistency and the discipline
with which they apply their investment process. Assets under management were $59,151 million, $53,956 million
and $52,090 million, of which $15,528 million, $14,497 million, and $13,823 million as of December 31, 2003,
2002 and 2001, respectively, were life company general account assets.

                                                     F-18




Segment information on assets as of December 31, 2003 and 2002 and on income for 2003, 2002 and 2001 follows
($ amounts in millions):

                                                                                       2003             2002
                                                                                ---------------  ---------------
Asset Management Segment Assets
Investments...................................................................   $       11.8     $        5.6
Cash and cash equivalents.....................................................           39.6             44.2
Receivables...................................................................           36.0             31.6
Intangible assets with definite lives.........................................          261.8            291.7
Goodwill and other indefinite-lived intangible assets.........................          481.4            448.9
Other assets..................................................................           20.6             22.3
                                                                                ---------------  ---------------
Total segment assets..........................................................   $      851.2     $      844.3
                                                                                ===============  ===============

                                                                      2003             2002             2001
                                                               ---------------  ---------------  ---------------
Asset Management Segment Income
Investment product fees......................................   $      243.2     $      258.1     $      258.1
Net investment income........................................            0.7              1.0              1.6
                                                               ---------------  ---------------  ---------------
Total segment revenues......................................           243.9            259.1            259.7
                                                               ---------------  ---------------  ---------------
Intangible asset amortization................................           33.2             32.5             49.0
Intangible asset impairments.................................           --               66.3             --
Other operating expenses.....................................          207.4            218.3            212.5
                                                               ---------------  ---------------  ---------------
Total segment expenses......................................           240.6            317.1            261.5
                                                               ---------------  ---------------  ---------------
Segment income (loss) before income taxes and minority
  interest...................................................            3.3            (58.0)            (1.8)
Allocated income taxes (benefit).............................           (3.3)            (6.0)             2.6
                                                               ---------------  ---------------  ---------------
Segment income (loss) before minority interest...............            6.6            (52.0)            (4.4)
Minority interest in segment income of consolidated
  subsidiaries...............................................           12.0             11.9              6.9
                                                               ---------------  ---------------  ---------------
Segment loss................................................            (5.4)           (63.9)           (11.3)
Net realized investment gains (losses).......................           (0.3)            --                0.5
Restructuring charges, net of income taxes...................           (4.0)            (8.4)           (50.4)
Cumulative effect of accounting change, net of income taxes..           --             (119.9)            --
                                                               ---------------  ---------------  ---------------
Segment net loss............................................    $       (9.7)    $     (192.2)    $      (61.2)
                                                               ===============  ===============  ===============

In 2003 and 2002, our Asset Management segment incurred restructuring charges primarily in connection with
organizational and employment-related costs of $6.2 million ($4.0 million after income taxes) and $12.9
million ($8.4 million after income taxes), respectively. In 2001, the segment recorded restructuring charges
of $86.1 million ($52.8 million after income taxes) related to our purchase of the Phoenix Investment Partners
minority interest, including Phoenix Investment Partners' accrual of non-recurring compensation expenses of
$57.0 million to cash out restricted stock, $5.5 million of related compensation costs, non-recurring
retention costs of $19.7 million and non-recurring transaction costs of $3.9 million. These expenses were
partially offset by non-recurring income from partnership gains of $2.4 million after income taxes.

Fee Revenues

Investment management fees and mutual fund ancillary fees included in investment product fees are recorded as
income during the period in which services are performed. Investment management fees are generally computed
and earned based upon a percentage of assets under management and are paid pursuant to the terms of the
respective investment management contracts, which generally require monthly or quarterly payment. Investment
management fees related to the Life Companies general account are earned on a cost-recovery basis, effective
July 1, 2001. Management fees contingent upon achieving certain levels of performance are recorded when
earned.

Mutual fund ancillary fees consist of distribution fees, net of trailing commissions, administrative fees,
shareholder service agent fees, fund accounting fees, dealer concessions and underwriter fees. Dealer
concessions and underwriting fees earned (net of related expenses) from the distribution and sale of
affiliated mutual fund shares and other securities are recorded on a trade date basis.

                                                     F-19


Business combinations

In 2001, we acquired a 65% interest in Capital West for $5.5 million. In June 2003, we acquired the remaining
interest in Capital West not already owned by us for $1.1 million. We have accounted for our acquisition of
the remaining interest as a step-purchase. We recorded $0.7 million for definite-lived investment management
contracts and assigned the remaining acquisition price of $1.0 million to goodwill.

In 2002, we acquired a 60% interest in Kayne Anderson Rudnick for $102.4 million; management of the company
retained the remaining ownership interest. In addition to the initial cost of the purchase, we will make a
payment of approximately $30.0 million in the first quarter of 2004 based upon growth in management fee
revenue for the purchased business through 2003. We have fully accrued for this estimated payment as of
December 31, 2003 and have allocated it entirely to goodwill. In addition, we are obligated to purchase an
additional 15% interest in the company by 2007. Related to the initial purchase in 2001, we allocated $0.3
million of the initial purchase price to tangible net assets acquired and $102.1 million to intangible assets
($58.3 million to investment management contracts and $43.8 million to goodwill). We will allocate all of the
additional purchase price to goodwill. Kayne Anderson Rudnick's results of operations for the period from
January 30, 2002 through December 31, 2002 are included in our results of operations for the year 2002.

In August 2003, certain members of Kayne Anderson Rudnick accelerated their put-call arrangement. The purchase
price for these units totaled $4.5 million, which was recorded as additional purchase price by Phoenix
Investment Partners and allocated to goodwill and definite-lived intangible assets.

In 2001, we acquired the 44.9% minority interest in Phoenix Investment Partners for $339.3 million. Prior to
this acquisition, Phoenix Investment Partners had been a publicly held company listed on the New York Stock
Exchange in which we held a 55.1% interest. In connection with this acquisition, Phoenix Investment Partners
redeemed all of its outstanding convertible subordinated debentures at a cost of $38.2 million and recorded
non-recurring costs of $86.1 million, consisting of $57.0 million to cash out employee stock options (Note
11), $5.5 million of related compensation costs (Note 11), $19.7 million for retention bonuses and $3.9
million in transaction costs. Our purchase price totaled $361.3 million, which consisted of the purchase of
the minority interest for $339.3 million, the premium paid by Phoenix Investment Partners to redeem its
debentures of $18.8 million and our transaction costs of $3.2 million. We allocated this price to the fair
value of the tangible net assets acquired ($137.2 million), investment management contracts ($179.1 million,
before applicable deferred income taxes of $73.4 million) and goodwill ($118.4 million). The weighted-average
useful life assigned to the investment management contracts was 13.4 years; the useful life assigned to the
goodwill was 40 years. In 2001, we also acquired a 75% interest in Walnut Asset Management, LLC for $7.5
million.

The minority interests in each of our less than wholly-owned asset management subsidiaries are subject to
put/call agreements pursuant to which either the minority interest holders or Phoenix Investment Partners may
exercise their respective rights to sell or buy the minority interests on specified future dates. Initial
payments made under these put/call agreements are recorded as additional purchase price. To the extent that
any additional payments are required, associated with the re-issuance and repurchase of the same interests,
the increase in the underlying value of the shares is recorded as compensation expense. We recorded $6.5
million and $34.8 million additional purchase price in 2003 and 2002, respectively, related to put/call
agreements that exist with certain of our majority-owned subsidiaries.

Goodwill and other intangible assets

Effective January 1, 2002, we adopted the new accounting standard for goodwill and other intangible assets,
including amounts reflected in our carrying value of equity method investments. Under this new standard, we
discontinued recording amortization expense on goodwill and other intangible assets with indefinite lives, but
we continue recording amortization expense for those intangible assets with definite estimated lives. For
goodwill and indefinite-lived intangible assets, we perform impairment tests at the reporting-unit level at
least annually.

                                                     F-20


To test for impairments, we calculate the fair value of each reporting unit based on the sum of a multiple of
revenue and the fair value of the unit's tangible net assets. We calculate the fair value of definite-lived
intangible assets based on their discounted cash flows. We compare the calculated fair value to the recorded
values and record an impairment, if warranted. Prior to 2002, we amortized goodwill principally over 40 years
and investment management contracts and employment contracts over five to 16 years and three to seven years,
respectively. All amortization expense has been and continues, for definite-lived intangible assets, to be
calculated on a straight-line basis.

Upon adoption of the new accounting standard, we recorded a before tax cumulative effect charge of $141.7
million to reduce the carrying value of goodwill and other intangible assets with indefinite lives to fair
value, of which $131.3 million pertained to our Asset Management segment and $10.4 million pertained to an
international equity investment in our Corporate and Other segment (Note 5). After applicable income tax
benefits, the charge reduced earnings by $130.3 million or $1.33 per share. In the third quarter of 2002, we
performed an impairment test at the Asset Management segment reporting-unit level and recorded a charge of
$66.3 million to further reduce the carrying value of goodwill and other intangible assets.

Details of gross and net carrying amounts for definite-lived intangible assets and goodwill and other
indefinite-lived intangible assets as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                                       2003             2002
                                                                                ---------------  ---------------

Asset management contracts with definite lives................................   $      396.1     $      392.8
Less: accumulated amortization................................................          134.3            101.1
                                                                                ---------------  ---------------
Intangible assets with definite lives.........................................   $      261.8     $      291.7
                                                                                ===============  ===============

Goodwill......................................................................   $      408.1     $      375.6
Asset management contracts with indefinite lives..............................           73.3             73.3
                                                                                ---------------  ---------------
Goodwill and other indefinite-lived intangible assets.........................   $      481.4     $      448.9
                                                                                ===============  ===============

The activity in intangible assets with definite lives and goodwill and other indefinite-lived intangible
assets for the years 2003 and 2002 follows ($ amounts in millions):

                                                                                       2003             2002
                                                                                ---------------  ---------------
Intangible assets with definite lives
Asset purchases...............................................................   $        3.3     $       78.3
Asset reclassification........................................................           --                2.4
Asset amortization............................................................          (33.2)           (32.5)
                                                                                ---------------  ---------------
Change in intangible assets with definite lives...............................          (29.9)            48.2
Balance, beginning of period..................................................          291.7            243.5
                                                                                ---------------  ---------------
Balance, end of period........................................................   $      261.8     $      291.7
                                                                                ===============  ===============

Goodwill and other indefinite-lived intangible assets
Asset purchases...............................................................   $       32.5     $       60.0
Asset reclassification........................................................           --               (2.4)
Asset impairments.............................................................           --             (197.6)
                                                                                ---------------  ---------------
Change in goodwill and other indefinite-lived intangible assets...............           32.5           (140.0)
Balance, beginning of period..................................................          448.9            588.9
                                                                                ---------------  ---------------
Balance, end of period........................................................   $      481.4     $      448.9
                                                                                ===============  ===============

The estimated aggregate intangible asset amortization expense in future periods follows: 2004 - $33.0 million,
2005 - $32.2 million, 2006 - $27.2 million, 2007 - $26.1 million, 2008 - $25.6 million and thereafter - $117.7
million. At December 31, 2003, the weighted-average amortization period for definite-lived intangible assets
is nine years.

                                                     F-21


5.  Investing Activities

Debt and equity securities

We classify our debt and equity securities as available-for-sale and report them in our balance sheet at
fair value. Fair value is based on quoted market price, where available. When quoted market prices are not
available, we estimate fair value by discounting debt security cash flows to reflect interest rates currently
being offered on similar terms to borrowers of similar credit quality (private placement debt securities), by
quoted market prices of comparable instruments (untraded public debt securities) and by independent pricing
sources or internally developed pricing models (equity securities).

See Note 8 for information on available-for-sale debt and equity securities pledged as collateral.

Fair value and cost of our general account debt securities as of December 31, 2003 and 2002 follow ($ amounts
in millions):

                                                          2003                               2002
                                             --------------------------------   --------------------------------
                                               Fair Value          Cost           Fair Value          Cost
                                             ---------------   --------------   ---------------  ---------------

U.S. government and agency.................   $      757.0      $      714.5     $      457.0     $      426.7
State and political subdivision............          510.3             468.4            534.7            481.9
Foreign government.........................          260.4             239.0            183.9            168.4
Corporate..................................        6,765.8           6,412.4          5,485.2          5,138.7
Mortgage-backed............................        3,097.5           2,963.4          3,099.9          2,901.9
Other asset-backed.........................        1,882.0           1,863.6          2,128.8          2,094.1
                                             ---------------   --------------   ---------------  ---------------
Debt securities............................   $   13,273.0      $   12,661.3     $   11,889.5     $   11,211.7
                                             ===============   ==============   ===============  ===============

Amounts applicable to the closed block.....   $    6,906.4      $    6,471.1     $    6,431.1     $    5,952.9
                                             ===============   ==============   ===============  ===============

For mortgage-backed and other asset-backed debt securities, we recognize income using a constant effective
yield based on anticipated prepayments and the estimated economic lives of the securities. When actual
prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect
actual payments to date and any resulting adjustment is included in net investment income. For certain
asset-backed securities, changes in estimated yield are recorded on a prospective basis and specific valuation
methods are applied to these securities to determine if there has been an other-than-temporary decline in
value.

For 2003 and 2002, net investment income was lower by $10.4 million and $6.2 million, respectively, due to
non-income producing debt securities. Of these amounts, $5.5 million and $5.2 million, respectively, related
to the closed block.

                                                     F-22



Fair value and cost of our general account equity securities as of December 31, 2003 and 2002 follow
($ amounts in millions):

                                                          2003                               2002
                                             --------------------------------   --------------------------------
                                               Fair Value          Cost           Fair Value          Cost
                                             ---------------   --------------   ---------------  ---------------

Hilb, Rogal and Hamilton (HRH) common
  stock....................................   $      116.2      $       42.2     $      159.3     $       44.7
GE Life and Annuity Assurance and
 GE Group Life Assurance common stock......           --                --               60.5             50.4
Lombard International Assurance, S.A.......           41.1              41.1             33.8             33.8
PXRE Group common stock....................           --                --               27.7              9.4
Other equity securities....................          154.7             139.1            104.6            118.6
                                             ---------------   ---------------  ---------------  ---------------
Equity securities..........................   $      312.0      $      222.4     $      385.9     $      256.9
                                             ===============   ===============  ===============  ===============

Amounts applicable to the closed block.....   $       82.9      $       75.0     $       --       $       --
                                             ===============   ===============  ===============  ===============

Our holdings in HRH common stock as of December 31, 2003 are available to be used in November 2005 to settle
stock purchase contracts issued by us. Upon settlement of such stock purchase contracts, we will recognize a
gross investment gain of $91.8 million ($32.4 million, net of offsets for applicable deferred acquisition
costs and deferred income taxes). See Note 6 for additional information.

In the fourth quarter of 2003, we sold our 3.0% and 3.1% equity interests in two life insurance subsidiaries
of General Electric Company for $72.0 million and realized a gain of $21.6 million ($14.0 million after income
taxes). Also in that quarter, we sold our 9.3% equity interest in PXRE Group Ltd., a property catastrophe
reinsurer, for $23.1 million and realized a gain of $13.7 million ($8.9 million after income taxes).

Lombard International Assurance, S.A., or Lombard, is a pan-European life insurance company, based in
Luxembourg, which writes unit-linked life assurance policies for high-net-worth private investors. We own 12%
of Lombard's ordinary shares and Aberdeen owns an additional 15% of Lombard's ordinary shares.

Gross and net unrealized gains and losses from our general account's debt and equity securities as of December
31, 2003 and 2002 follow ($ amounts in millions):

                                                           2003                              2002
                                             ---------------------------------  --------------------------------
                                                 Gains             Losses           Gains            Losses
                                             ---------------   ---------------  ---------------  ---------------

U.S. government and agency.................   $       44.0      $       (1.5)    $       30.5     $       (0.2)
State and political subdivision............           43.5              (1.6)            53.1             (0.3)
Foreign government.........................           23.2              (1.8)            20.2             (4.7)
Corporate..................................          400.4             (47.0)           442.8            (96.3)
Mortgage-backed............................          143.4              (9.3)           198.5             (0.5)
Other asset-backed.........................           55.6             (37.2)            85.0            (50.3)
                                             ---------------   ---------------  ---------------  ---------------
Debt securities gains and losses...........   $      710.1      $      (98.4)    $      830.1     $     (152.3)
                                             ===============   ===============  ===============  ===============
Debt securities net gains..................   $      611.7                       $      677.8
                                             ===============                    ===============

Hilb, Rogal and Hamilton common stock......   $       74.0      $       --       $      114.6     $       --
GE Life and Annuity Assurance and
  GE Group Life Assurance common stock.....           --                --               10.1             --
PXRE Group common stock....................           --                --               18.3             --
Other equity securities....................           17.4              (1.8)             1.4            (15.4)
                                             ---------------   ---------------  ---------------  ---------------
Equity securities gains and losses.........   $       91.4      $       (1.8)    $      144.4     $      (15.4)
                                             ===============   ===============  ===============  ===============
Equity securities net gains................   $       89.6                       $      129.0
                                             ===============                    ===============

                                                     F-23




The aging of temporarily impaired general account debt and equity securities as of December 31, 2003 is as
follows ($ amounts in millions):

                                              Less than 12 months  Greater than 12 months         Total
                                            ---------------------- ---------------------- --------------------------
                                               Fair     Unrealized   Fair     Unrealized    Fair      Unrealized
                                               Value      Losses     Value      Losses      Value       Losses
                                            ----------- ---------- ---------- ----------- ------------ ----------
Debt Securities
U.S. government and agency................   $   90.2    $  (1.5)   $  --      $   --      $    90.2    $  (1.5)
State and political subdivision...........       63.8       (1.6)      --          --           63.8       (1.6)
Foreign government........................       14.6       (1.8)      --          --           14.6       (1.8)
Corporate.................................      915.9      (31.5)     193.6       (15.5)     1,109.5      (47.0)
Mortgage-backed...........................      640.7       (9.3)       1.5        --          642.2       (9.3)
Other asset-backed........................      240.4      (10.6)     135.4       (26.6)       375.8      (37.2)
                                            ----------- ---------- ---------- ----------- ------------ ----------
Debt securities...........................   $1,965.6    $ (56.3)   $ 330.5    $  (42.1)   $ 2,296.1    $ (98.4)
Common stock..............................       21.1       (1.2)       3.7        (0.6)        24.8       (1.8)
                                            ----------- ---------- ---------- ----------- ------------ ----------
Total temporarily impaired securities.....   $1,986.7    $ (57.5)   $ 334.2    $  (42.7)   $ 2,320.9    $(100.2)
                                            =========== ========== ========== =========== ============ ==========

Amounts inside the closed block...........   $  957.0    $ (31.2)   $ 150.0    $  (17.7)   $ 1,107.0    $ (48.9)
                                            =========== ========== ========== =========== ============ ==========

Amounts outside the closed block..........   $1,029.7    $ (26.3)   $ 184.2    $  (25.0)   $ 1,213.9    $ (51.3)
                                            =========== ========== ========== =========== ============ ==========

Amounts outside the closed block
  that are below investment grade.........   $   39.8    $  (3.0)   $  53.3    $ (11.9)    $    93.1    $ (14.9)
                                            =========== ========== ========== =========== ============ ==========
After offsets for deferred acquisition
  cost adjustment and taxes...............               $  (1.3)              $  (4.9)                 $  (6.2)
                                                        ==========            ==========               ==========

Below investment grade debt securities outside the closed block with a fair value less than 80% of the
security's amortized cost totals $5.3 million at December 31, 2003, $4.8 million ($2.0 million after offsets
for taxes and deferred policy acquisition cost amortization) of which has been in an unrealized loss for
greater than 12 months.

Below investment grade debt securities held in the closed block with a fair value of less than 80% of the
securities' amortized cost totals $10.2 million at December 31, 2003, $7.0 million ($0 after offsets for
change in policy dividend obligation) of which has been in an unrealized loss for greater than 12 months.

These securities are considered to be temporarily impaired at December 31, 2003 as each of these securities
has performed, and is expected to continue to perform, in accordance with their original contractual terms.

Mortgage loans

We report mortgage loans at unpaid principal balances, net of valuation reserves on impaired mortgages. We
consider a mortgage loan to be impaired if we believe it is probable that we will be unable to collect all
amounts of contractual interest and principal as scheduled in the loan agreement. We do not accrue interest
income on impaired mortgage loans when the likelihood of collection is doubtful.

For purpose of fair value disclosures (Note 9), we estimated the fair value of mortgage loans by discounting
the present value of scheduled loan payments. We based the discount rate on the comparable U.S. Treasury rates
for loan durations plus spreads of 130 to 800 basis points, depending on our internal quality ratings of the
loans. For in-process-of-foreclosure or defaulted loans, we estimated fair value as the lower of the
underlying collateral value or the loan balance.

                                                     F-24




Our mortgage loans are diversified by property type, location and borrower. Mortgage loans are collateralized
by the related properties and are generally no greater than 75% of the properties' value at the time the loans
are originated. The carrying value of our investments in mortgage loans by property type and their fair value
at December 31, 2003 and 2002 follow ($ amounts in millions):

                                                           2003                              2002
                                             ---------------------------------  --------------------------------
                                                Carrying                           Carrying
                                                 Value           Fair Value         Value          Fair Value
                                             ---------------   ---------------  ---------------  ---------------
Property type
Apartment buildings........................   $      105.1      $      106.7     $      159.0     $      160.3
Office buildings...........................           49.0              49.7            131.5            132.6
Retail stores..............................          109.0             110.7            151.5            152.7
Industrial buildings.......................           33.7              34.2             42.2             42.5
Other......................................            0.1               0.1              0.1              0.1
                                             ---------------   ---------------  ---------------  ---------------
Subtotal...................................          296.9             301.4            484.3            488.2
Less: valuation allowances.................           12.8              --               15.5             --
                                             ---------------   ---------------  ---------------  ---------------
Mortgage loans.............................   $      284.1      $      301.4     $      468.8     $      488.2
                                             ===============   ===============  ===============  ===============

Amounts applicable to the closed block.....   $      228.5      $      242.4     $      373.2     $      388.6
                                             ===============   ===============  ===============  ===============

The carrying values of delinquent and in-process-of-foreclosure mortgage loans as of December 31, 2003 and
2002 were $0.0 million and $5.6 million, respectively. The carrying values of mortgage loans on which the
payment terms have been restructured or modified were $25.8 million and $29.5 million as of December 31, 2003
and 2002, respectively. We have provided valuation allowances for delinquent, in-process-of-foreclosure and
restructured or modified mortgage loans.

Activity in the valuation allowance, which has been deducted in arriving at mortgage loan carrying value, for
2003, 2002 and 2001 follows ($ amounts in millions):

                                                                      2003             2002             2001
                                                               ---------------  ---------------  ---------------

Valuation allowance, beginning of year......................    $       15.5     $       15.0     $        9.1
Additions charged to income.................................             0.8              0.6              6.1
Deductions for write-offs and disposals.....................            (3.5)            (0.1)            (0.2)
                                                               ---------------  ---------------  ---------------
Valuation allowance, end of year............................    $       12.8     $       15.5     $       15.0
                                                               ===============  ===============  ===============

Interest income on restructured mortgage loans that would have been recorded in accordance with the original
terms of such loans amounted to $3.0 million, $3.5 million and $3.6 million in 2003, 2002 and 2001,
respectively. Actual interest income on these loans included in net investment income was $2.3 million, $2.7
million and $2.4 million in 2003, 2002 and 2001, respectively. The amount of interest foregone by non-income
producing mortgage loans was $0.0 million for 2003 and $0.6 million for 2002. There were no non-income
producing mortgage loans during 2001.

Venture capital partnerships

We invest as a limited partner in venture capital limited partnerships. Generally, these partnerships focus on
early-stage ventures, primarily in the information technology and life science industries and leveraged buyout
funds. We also have direct equity investments in leveraged buyouts and corporate acquisitions.

We record our equity in the earnings of venture capital partnerships in net investment income using the most
recent financial information received from the partnerships and estimating the earnings for any lag in
reporting. Effective January 1, 2001, we changed our accounting for venture capital partnership earnings to
eliminate the quarterly lag in information provided to us. We did this by estimating the change in our share
of partnership 

                                                     F-25


earnings for the quarter. This change resulted in a $75.1 million charge ($48.8 million charge after income
taxes), representing the cumulative effect of this accounting change on the fourth quarter of 2000.

To estimate the net equity in earnings of the venture capital partnerships for each quarter, we developed a
methodology to estimate the change in value of the underlying investee companies in the venture capital
partnerships.  For public investee companies, we used quoted market prices at the end of each quarter, applying
liquidity discounts to these prices in instances where such discounts were applied in the underlying
partnerships' financial statements.  For private investee companies, we applied a public industry sector index
to roll the value forward each quarter.  We apply this methodology consistently each quarter with subsequent
adjustments to reflect market events reported by the partnerships (e.g., new rounds of financing, initial
public offerings and writedowns by the general partners).  Our methodology recognizes downward adjustments
based on the indices, but limits upward adjustments to the amounts previously reported by the partnerships.  In
addition, we annually revise the valuations we have assigned to the investee companies to reflect the
valuations in the audited financial statements received from the venture capital partnerships.

Our venture capital earnings are subject to variability.

The components of net investment income related to venture capital partnerships for 2003, 2002 and 2001 follow
($ amounts in millions):

                                                             2003             2002             2001
                                                      ---------------  ---------------  ---------------

Net realized gains (losses) on partnership
 cash and stock distributions......................    $       17.4     $       (4.7)    $       17.8
Net unrealized gains (losses) on partnership
 investments.......................................            38.2            (47.2)           (95.9)
Partnership operating expenses.....................            (6.6)            (7.4)            (6.4)
                                                      ---------------  ---------------  ---------------
Net investment income (loss).......................    $       49.0     $      (59.3)    $      (84.5)
                                                      ===============  ===============  ===============

Amounts applicable to the closed block.............    $       12.8     $       --       $       --
                                                      ===============  ===============  ===============
Amounts applicable to the Venture Capital segment..    $       36.2     $      (59.3)    $      (84.5)
                                                      ===============  ===============  ===============

As indicated above, we record our equity in earnings of venture capital partnerships based on the most recent
financial information and by estimating the earnings for any lag in partnership reporting.  As a result, the
effect of our adjusting our estimates to actual results reflected in partnership financial statements was to
increase net investment income as follows ($ amounts in millions):

                                                           2003             2002             2001
                                                      ---------------  ---------------  ---------------

Closed block.......................................    $       --       $       --       $       --
Venture Capital segment............................            33.4             12.8             --
                                                      ---------------  ---------------  ---------------
Total..............................................    $       33.4     $       12.8     $       --
                                                      ===============  ===============  ===============


                                                     F-26


Investment activity in venture capital partnerships for the years 2003, 2002 and 2001 and unfunded commitments
as of December 31, 2003, 2002 and 2001 follow ($ amounts in millions):

                                                             2003             2002             2001
                                                        ---------------  ---------------  ---------------

Contributions........................................    $       41.3     $       43.0     $       47.0
Equity in earnings (losses) of partnerships..........            49.0            (59.3)           (84.5)
Cumulative effect of accounting change...............            --               --              (75.1)
Distributions........................................           (43.6)           (41.7)           (63.0)
Proceeds from sale of partnership interests..........           (26.1)            --               --
Realized loss on sale of partnership interests.......           (14.3)            (5.1)            --
                                                        ---------------  ---------------  ---------------
Change in venture capital partnerships...............             6.3            (63.1)          (175.6)
Venture capital partnership investments,
 beginning of period.................................           228.6            291.7            467.3
                                                        ---------------  ---------------  ---------------
Venture capital partnership investments, end
 of period...........................................    $      234.9     $      228.6     $      291.7
                                                        ===============  ===============  ===============

Unfunded commitments, end of period..................    $      125.0     $      154.7     $      166.8
                                                        ===============  ===============  ===============

Amounts applicable to the closed block:
Venture capital partnerships.........................    $       38.6     $        0.8     $       --
                                                        ===============  ===============  ===============
Unfunded commitments.................................    $       48.3     $       23.4     $       --
                                                        ===============  ===============  ===============

Amounts applicable to Venture Capital segment:
Venture capital partnerships.........................    $      196.3     $      227.8     $      291.7
                                                        ===============  ===============  ===============
Unfunded commitments.................................    $       76.7     $      131.3     $      166.8
                                                        ===============  ===============  ===============

In February 2003, we sold a 50% interest in certain of our venture capital partnerships to an outside party and
transferred the remaining 50% interest to our closed block. The carrying value of the partnerships sold and
transferred totaled $52.2 million after realizing a loss of $5.1 million in 2002 and $14.3 million in 2003 to
reflect the proceeds received. The unfunded commitments of the partnerships sold and transferred totaled $27.2
million; the outside party and the closed block will each fund half of these commitments.

Affiliate equity securities

Our investments in affiliate equity securities represent investments in operating entities in which we own less
than a majority of the outstanding common stock and where we exercise significant influence over the operating
and financial policies of the companies. We use the equity method of accounting for our investments in common
stock of these affiliates. We evaluate our equity method investments for an other-than-temporary impairment at
each balance sheet date considering quantitative and qualitative factors including quoted market price of
underlying equity securities, the duration the carrying value is in excess of fair value and historical and
projected earnings and cash flow capacity.


                                                     F-27


Carrying value and cost of affiliate equity securities and affiliate debt securities (which are included in the
debt securities caption) as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                       2003                              2002
                                         ---------------------------------  --------------------------------
                                            Carrying                           Carrying
                                             Value              Cost            Value             Cost
                                         ---------------   ---------------  ---------------  ---------------

Aberdeen common stock.................    $       38.3      $       20.0     $      119.3     $      109.1
Other.................................             9.2              18.9             15.4             26.5
                                         ---------------   ---------------  ---------------  ---------------
Affiliate equity securities...........    $       47.5      $       38.9     $      134.7     $      135.6
                                         ===============   ===============  ===============  ===============

Aberdeen 7.5% convertible notes.......    $       27.5      $       27.5     $       37.5     $       37.5
Aberdeen 5.875% convertible notes.....            --                --               15.2             19.0
                                         ---------------   ---------------  ---------------  ---------------
Affiliate debt securities.............    $       27.5      $       27.5     $       52.7     $       56.5
                                         ===============   ===============  ===============  ===============

Sources of equity in earnings from affiliate equity securities and interest earned from affiliate debt
securities (included in the debt securities caption) for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                 2003             2002             2001
                                                          ---------------  ---------------  ---------------

Aberdeen common stock dividends........................    $        2.7     $        3.8     $        6.3
Equity in Aberdeen undistributed income (loss).........            --                2.3             (0.5)
HRH common stock dividends.............................            --                0.5              0.6
Equity in HRH undistributed income.....................            --                2.5              1.9
Other..................................................            (2.7)            (3.2)            (0.1)
                                                          ---------------  ---------------  ---------------
Affiliate equity securities investment income..........    $       --       $        5.9     $        8.2
                                                          ===============  ===============  ===============

Aberdeen convertible notes and bonds...................    $        2.5     $        3.8     $        2.6
Aberdeen 5.875% convertible notes......................             0.1              1.3              1.7
                                                          ---------------  ---------------  ---------------
Affiliate debt securities investment income............    $        2.6     $        5.1     $        4.3
                                                          ===============  ===============  ===============

Aberdeen.  We own 38,100,000 shares of Aberdeen common stock, which represent 16.2% of its outstanding shares
as of December 31, 2003 (22% at December 31, 2002). We purchased these shares between 1996 and 2001 (at a total
cost of $109.1 million). During the second quarter of 2003, we recorded a charge of $89.1 million ($55.0
million after income taxes) related to an other-than-temporary impairment of our equity investment in Aberdeen.
The fair value of our Aberdeen common stock, based on the London Stock Exchange closing market prices, was
$65.2 million, $54.4 million and $43.6 million as of March 11, 2004, December 31, 2003 and 2002, respectively.

We also own $27.5 million in 7.5% Aberdeen convertible subordinated notes issued in 1996. The notes mature on
March 29, 2004, subject to two six-month extensions at Aberdeen's option with an increase in the interest rate
to at least 8.0%. The conversion price for the notes is in excess of Aberdeen's common stock price as of
December 31, 2003. During 2003, we received principal payments of $10.0 million on the notes. Also, during the
fourth quarter of 2003, we sold £13.0 million ($19.0 million) in Aberdeen 5.875% convertible bonds and
realized a gain of $0.7 million.

HRH.  HRH is a Virginia-based property and casualty insurance and employee benefit products distributor traded
on the New York Stock Exchange. We owned 6.4% of its common shares, as well as convertible debt securities
which, if converted, would have represented 16.8% of HRH's common stock outstanding. Prior to November 2002, we
had a contractual right to designate two nominees for election to its board of directors.

In November 2002, we converted our HRH note into shares of HRH common stock, when our total HRH holdings had a
total fair value of $167.1 million. On the day following the conversion, we sold shares of HRH common stock in
a secondary public offering for $23.5 million and issued stock purchase contracts for $133.9 million, which
contracts require us to deliver shares of HRH common stock on November 13, 2005 (Note 6).

                                                     F-28


As a result of these transactions, we recorded a gross realized investment gain of $15.3 million in 2002 and a
gross deferred investment gain of $91.8 million. Net of offsets for applicable deferred policy acquisition
costs and deferred income taxes, our realized gain was $6.4 million and our deferred gain was $32.4 million. We
calculated our gains using the specific identification of the securities sold. The deferred gain will be
realized on settlement of the stock purchase contracts in the fourth quarter of 2005. In addition, in 2003 we
sold shares of HRH common stock in the open market for $9.4 million and recorded a gross realized investment
gain of $6.9 million ($4.5 million after income taxes). As a result of a transaction we completed in November
2002, it was no longer appropriate to consider HRH as an affiliate for accounting and reporting purposes.

Other. In connection with the 2002 adoption of a new accounting standard for goodwill and other intangible
assets (Note 1), we recorded a change of $10.4 million ($10.4 million after income taxes) as the cumulative
effect adjustment to reduce the carrying value of goodwill to its fair value for our investment in an Argentine
financial services company in which we have a 50% interest; that company is included in the other category
above.

Policy loans and other invested assets

Policy loans are carried at their unpaid principal balances and are collateralized by the cash values of the
related policies. For purposes of fair value disclosures (Note 9), we estimate the fair value of fixed rate
policy loans by discounting loan interest and loan repayments. We base the discount rate on the 10-year U.S.
Treasury rate. We assume that loan interest payments are made at the fixed rate less 17.5 basis points and that
loan repayments only occur as a result of anticipated policy lapses. For variable rate policy loans, we
consider the unpaid loan balance as fair value, as interest rates on these loans are reset annually based on
market rates.

Other investments primarily include leveraged lease investments and other partnership and joint venture
interests. Leveraged lease investments represent the net amount of the estimated residual value of the lease
assets, rental receivables and unearned and deferred income to be allocated over the lease term. Investment
income is calculated using the interest method and is recognized only in periods in which the net investment is
positive. Other partnership and joint venture interests in which we do not have control or a majority ownership
interest are recorded using the equity method of accounting. These investments include affordable housing,
mezzanine and other partnership interests.

Our derivative instruments primarily include interest rate swap agreements. We report these contracts at fair
values, which are based on current settlement values. These values are determined by brokerage quotes that
utilize pricing models or formulas based on current assumptions for the respective agreements.

Other invested assets as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                                   2003             2002
                                                                            ---------------  ---------------

Transportation and other equipment leases................................    $       68.7     $       66.0
Separate account equity investments......................................            49.2             36.0
Mezzanine partnerships...................................................            50.9             45.4
Affordable housing partnerships..........................................            24.8             25.7
Derivative instruments (Note 9)..........................................            40.3             52.7
Other affiliate investments..............................................            23.3             37.9
Real estate..............................................................            64.0             69.6
Other partnership interests..............................................            80.8             65.6
                                                                            ---------------  ---------------
Other invested assets....................................................    $      402.0     $      398.9
                                                                            ===============  ===============

Amounts applicable to the closed block...................................    $       46.7     $       --
                                                                            ===============  ===============


                                                     F-29

Net investment income and net realized investment gains (losses)

We recognize realized investment gains and losses on asset dispositions and when declines in fair value of debt
and equity securities are considered to be other-than-temporarily impaired. The cost basis of these written
down investments is adjusted to fair value at the date the determination of impairment is made and the new cost
basis is not changed for subsequent recoveries in value. The closed block policyholder dividend obligation,
applicable deferred policy acquisition costs and applicable income taxes, which offset realized investment
gains and losses, are each reported separately as components of net income.

Effective April 1, 2001, we adopted a new accounting pronouncement for securitized financial instruments. This
pronouncement requires investors in certain asset-backed securities to record changes in their estimated yield
on a prospective basis and to apply specific valuation methods to these securities to determine if there has
been an other-than-temporary decline in value. Upon adoption of this pronouncement, we recorded a $31.6 million
charge ($20.5 million charge after income taxes) as the cumulative effect of an accounting change.

Sources of net investment income for the years 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                  2003             2002             2001
                                                             ---------------  ---------------  --------------

Debt securities...........................................    $      765.3     $      732.1     $      677.0
Equity securities.........................................             4.6              4.2              5.2
Mortgage loans............................................            32.6             40.4             45.0
Venture capital partnerships..............................            49.0            (59.3)           (84.5)
Affiliate equity securities...............................            --                5.9              8.2
Policy loans..............................................           171.7            171.8            168.6
Other investments.........................................            35.0             18.9             25.7
Cash and cash equivalents.................................             7.0             11.9             15.2
                                                             ---------------  ---------------  ---------------
Total investment income...................................         1,065.2            925.9            860.4
Less: investment expenses.................................            10.0              9.2             10.4
                                                             ---------------  ---------------  ---------------
Net investment income, general account investments........         1,055.2            916.7            850.0
Debt and equity securities pledged as collateral (Note 8).            52.2             31.0             42.8
                                                             ---------------  ---------------  ---------------
Net investment income.....................................    $    1,107.4     $      947.7     $      892.8
                                                             ===============  ===============  ===============

Amounts applicable to the closed block....................    $      573.1     $      562.0     $      281.1
                                                             ===============  ===============  ===============


                                                     F-30

Sources of realized investment gains (losses) for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                  2003             2002             2001
                                                             ---------------  ---------------  ---------------

Debt security impairments...............................    $      (76.1)    $     (114.3)    $      (46.1)
Equity security impairments.............................            (4.3)            (9.8)            --
Mortgage loan impairments...............................            (4.1)            (0.6)            (6.1)
Venture capital partnership impairments.................            (4.6)            (5.1)            --
Affiliate equity security impairments...................           (96.9)            --               --
Other invested asset impairments........................           (16.5)           (22.0)            (3.7)
Debt and equity securities pledged as collateral
  impairments...........................................            (8.3)           (34.9)           (39.0)
                                                           ---------------  ---------------  ---------------
Impairment losses.......................................          (210.8)          (186.7)           (94.9)
                                                           ---------------  ---------------  ---------------
Debt security transaction gains.........................            93.7             94.3             53.2
Debt security transaction losses........................           (29.0)           (45.9)           (31.5)
Equity security transaction gains.......................            58.8             24.5             12.2
Equity security transaction losses......................           (11.6)           (22.4)           (21.0)
Mortgage loan transaction gains (losses)................            (1.3)             0.2              7.1
Venture capital partnership transaction losses..........            (9.7)            --               --
Other invested asset transaction gains (losses).........             9.4              2.1            (10.0)
                                                           ---------------  ---------------  ---------------
Net transaction gains...................................           110.3             52.8             10.0
                                                           ---------------  ---------------  ---------------
Net realized investment losses..........................    $     (100.5)    $     (133.9)    $      (84.9)
                                                           ---------------  ---------------  ---------------

Net realized investment losses..........................    $     (100.5)    $     (133.9)    $      (84.9)
                                                           ---------------  ---------------  ---------------
Applicable closed block policyholder
  dividend obligation (reduction).......................            (5.9)           (40.3)           (15.4)
Applicable deferred policy acquisition costs (benefit)..            (4.1)            (7.2)            10.5
Applicable deferred income tax benefit..................           (36.3)           (20.8)           (24.5)
                                                           ---------------  ---------------  ---------------
Offsets to realized investment losses...................           (46.3)           (68.3)           (29.4)
                                                           ---------------  ---------------  ---------------
Net realized investment losses included in net income...    $      (54.2)    $      (65.6)    $      (55.5)
                                                           ===============  ===============  ===============

Included in realized impairment losses on debt and equity securities pledged as collateral above, are
impairments relating to our direct investments in the consolidated collateralized obligation trusts of $5.9
million, $8.6 million and $26.5 million for 2003, 2002 and 2001, respectively.

In February 2004, we announced the execution of an agreement to sell our Enfield, Connecticut office facility
which sale is expected to close in the second quarter of 2004. We have recorded a $6.2 million ($4.0 million
after-tax) realized impairment loss in the fourth quarter of 2003.

Unrealized investment gains (losses)

We recognize unrealized investment gains and losses on investments in debt and equity securities that we
classify as available-for-sale. These gains and losses are reported as a component of other comprehensive
income, net of the closed block policyholder dividend obligation, applicable deferred policy acquisition costs
and applicable deferred income taxes.


                                                     F-31


Sources of net unrealized investment gains (losses) for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                 2003             2002             2001
                                                            ---------------  ---------------  ---------------

Debt securities..........................................    $      (66.1)    $      404.2     $      200.3
Equity securities........................................           (39.4)           108.5            (23.8)
Debt and equity securities pledged as collateral.........           116.4             42.6            (44.6)
Other investments........................................             7.0             (2.4)             3.6
                                                            ---------------  ---------------  ---------------
Net unrealized investment gains (losses).................    $       17.9     $      552.9     $      135.5
                                                            ===============  ===============  ===============

Net unrealized investment gains (losses).................    $       17.9     $      552.9     $      135.5
                                                            ---------------  ---------------  ---------------
Applicable policyholder dividend obligation..............           (45.5)           369.4            108.8
Applicable deferred policy acquisition costs.............           (12.4)            95.9            (28.5)
Applicable deferred income taxes (benefit)...............            (9.8)            15.8             33.9
                                                            ---------------  ---------------  ---------------
Offsets to net unrealized investment gains...............           (67.7)           481.1            114.2
                                                            ---------------  ---------------  ---------------
Net unrealized investment gains (losses)
 included in other comprehensive income (Note 12)........    $       85.6     $       71.8     $       21.3
                                                            ===============  ===============  ===============

Investing cash flows

Investment purchases, sales, repayments and maturities for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                  2003             2002             2001
                                                            ---------------  ---------------  ---------------

Debt security purchases..................................    $   (5,394.9)    $   (4,742.4)    $   (3,505.1)
Equity security purchases................................          (129.9)           (59.8)           (72.8)
Venture capital partnership investments..................           (41.6)           (43.0)           (47.0)
Affiliate equity and debt security purchases.............            --              (28.0)           (46.8)
Other invested asset purchases...........................           (27.2)           (73.0)           (57.1)
Policy loan advances, net................................           (31.9)           (23.7)           (67.0)
                                                            ---------------  ---------------  ---------------
Investment purchases.....................................    $   (5,625.5)    $   (4,969.9)    $   (3,795.8)
                                                            ===============  ===============  ===============

Debt securities sales....................................    $    2,124.7     $    1,807.6     $    1,218.7
Debt securities maturities and repayments................         1,792.0          1,305.6            824.6
Equity security sales....................................           235.7            139.3            114.6
Mortgage loan maturities and principal repayments........           180.3             67.7             58.7
Venture capital partnership capital distributions........            54.2             28.5             30.7
Real estate and other invested assets sales..............            30.3             69.9             36.8
                                                            ---------------  ---------------  ---------------
Investment sales, repayments and maturities..............    $    4,417.2     $    3,418.6     $    2,284.1
                                                            ===============  ===============  ===============

The maturities of general account debt securities and mortgage loans, by contractual sinking fund payment and
maturity, as of December 31, 2003 are summarized in the following table ($ amounts in millions). Actual
maturities will differ from contractual maturities as certain borrowers have the right to call or prepay
obligations with or without call or prepayment penalties, we have the right to put or sell certain obligations
back to the issuers and we may refinance mortgage loans. Refinancing of mortgage loans was not significant
during 2003 or 2002.

                                                                 Debt           Mortgage
                                                              Securities         Loans            Total
                                                            ---------------  ---------------  ---------------

  Due in one year or less................................    $      608.7     $       15.7     $      624.4
  Due after one year through five years..................         2,557.8            144.4          2,702.2
  Due after five years through ten years.................         3,104.1             89.1          3,193.2
  Due after ten years....................................         6,390.7             34.9          6,425.6
                                                            ---------------  ---------------  ---------------
  Total..................................................    $   12,661.3     $      284.1     $   12,945.4
                                                            ===============  ===============  ===============

                                                     F-32


6. Financing Activities

Stock purchase contracts and indebtedness

We have recorded our stock purchase contract obligation as a liability on our balance sheet at estimated
settlement amount. This liability includes a premium representing the fair value of a net purchased option
contained in the purchase contract. The premium is amortized over the life of the purchase contract. Contract
adjustment payments and premium amortization on the purchase contracts are recorded in other expenses in our
statement of income.

We have recorded indebtedness at unpaid principal balances of each instrument. In connection with our senior
unsecured bond offering, we entered into an interest rate swap agreement on half of the offering amount to
reduce market risks from changes in interest rates. We have recorded the interest rate swap at fair value based
on the settlement value of the swap. For purposes of fair value disclosures (Note 9), we have determined the
fair value of indebtedness based on contractual cash flows discounted at market rates for surplus notes and on
quoted market prices for bonds and equity units.

Carrying value and fair value of our stock purchase and indebtedness as of December 31, 2003 and 2002 follow
($ amounts in millions):

                                                        2003                              2002
                                          ---------------------------------  --------------------------------
                                               Carrying             Fair          Carrying            Fair
                                                Value              Value           Value             Value
                                          ---------------   ---------------  ---------------  ---------------

Stock purchase contracts stated amount.    $      144.2      $      128.8     $      147.2     $      137.6
Settlement amount adjustment...........           (15.4)             --               (9.6)            --
                                          ---------------   ---------------  ---------------  ---------------
Stock purchase contracts...............    $      128.8      $      128.8     $      137.6     $      137.6
                                          ===============   ===============  ===============  ===============

Surplus notes..........................    $      175.0      $      188.8     $      175.0     $      182.5
Equity units...........................           153.7             232.1            153.7            156.5
Senior unsecured bonds.................           300.0             311.2            300.0            259.8
Interest rate swap.....................            10.3              10.3             15.6             15.6
                                          ---------------   ---------------  ---------------  ---------------
Indebtedness...........................    $      639.0      $      742.4     $      644.3     $      614.4
                                          ===============   ===============  ===============  ===============

In November 2002, we issued 3,622,500 stock purchase contracts in a public offering at $38.10 per contract
($138.0 million aggregate) and raised net proceeds of $133.9 million. The stock purchase contracts are prepaid
forward contracts issued by us that will be settled in shares of HRH common stock. Under each purchase
contract, we will make quarterly contract adjustment payments at the annual rate of 7.00% of the stated
contract amount.

We are obligated to deliver shares of HRH common stock to holders of the stock purchase contracts in November
2005. The number of HRH common shares that we are obligated to deliver is based on the volume weighted-average
daily trading price of HRH common stock over the 20-trading day period ending on the third trading day prior to
November 13, 2005. The maximum number of HRH common shares that we are obligated to deliver, subject to
anti-dilution adjustments, is 3,622,500, or one share of HRH common stock per purchase contract. The minimum
number is 2,969,363 shares, or 0.8197 share of HRH common stock per purchase contract. We have pledged
3,622,500 shares of HRH common stock as collateral for our obligations under the purchase contracts (Note 5).

Our surplus notes are an obligation of Phoenix Life and are due December 1, 2006. Interest payments are at an
annual rate of 6.95%, require the prior approval of the Superintendent of Insurance of the State of New York
and may be made only out of surplus funds which the Superintendent determines to be available for such payments
under New York insurance law. The notes have no early redemption provisions. New York insurance law provides
that the notes are not part of the legal liabilities of Phoenix Life.


                                                     F-33


In December 2002, we issued 6,147,500 of 7.25% equity units in a public offering at $25 per unit for gross
proceeds of $153.7 million (net proceeds of $149.1 million). Each equity unit is composed of an unsecured,
subordinated note and a purchase contract (equity forward on our common stock collateralized by the note). The
notes bear interest at an annual rate of 6.6% and $25 principal amount per note is initially due in February
2008. On or after November 2005 the notes will be remarketed as senior unsecured obligations and the interest
rate will be reset at that time. The holders of the purchase contracts will be paid a contract adjustment
payment at a rate of 0.65% per year and have agreed to purchase a minimum 2.8343 shares (17,423,859 shares
aggregate) and a maximum of 3.4578 shares (21,256,826 shares aggregate) of our common stock, depending on its
quoted market price, in February 2006. The present value of the future contract adjustment payments of $2.8
million was recorded as a charge to paid-in capital at inception.

The senior unsecured bonds were issued in December 2001 for gross proceeds of $300.0 million (net proceeds of
$290.6 million) and mature in January 2032. We pay interest at an annual rate of 7.45%. We may redeem any or
all of the bonds from January 2007 at a redemption price equal to 100% of principal plus accrued and unpaid
interest to the redemption date. We also have the right to redeem the bonds in whole in certain circumstances
if we are unable to deduct interest paid on the bonds.

On December 22, 2003, we closed on a new $150.0 million unfunded, unsecured senior revolving credit facility to
replace our $100 million credit facility, which expired on that date. This new facility consists of two
tranches: a $112.5 million, 364-day revolving credit facility and a $37.5 million, three-year revolving credit
facility. Under the 364-day facility, we have the ability to extend the maturity date of any outstanding
borrowings for one year from the termination date. Potential borrowers on the new credit line are the holding
company, Phoenix Life and Phoenix Investment Partners. Financial covenants require the maintenance at all times
of: consolidated stockholders' equity of $1,775.0 million, stepping up by 50% of quarterly positive net income
and 100% of equity issuances; a maximum consolidated debt-to-capital ratio of 30%; a minimum consolidated fixed
charge coverage ratio (as defined in the credit agreement) of 1.25:1; and, for Phoenix Life, a minimum
risk-based capital ratio of 250% and a minimum A.M. Best Financial Strength Rating of A-. We were in compliance
with all credit facility covenants at December 31, 2003. There were no borrowings on any of the credit lines in
2003. We anticipate that we will draw $25.0 million against this facility to fulfill an obligation related to
the Kayne Anderson Rudnick acquisition (Note 4).

Future minimum annual principal payments on indebtedness as of December 31, 2003 follow: 2006, $175.0 million;
2008, $153.7 million; and 2032, $300.0 million.

As of December 31, 2003, we had $9.0 million of standby letters of credit primarily to cover any potential
losses on certain reinsurance.

Stock purchase contract adjustment payments (included in other operating expenses) and interest expense on our
indebtedness, including amortization of issuance costs, for the years 2003, 2002 and 2001 follow ($ amounts in
millions):

                                                                 2003             2002             2001
                                                            ---------------  ---------------  ---------------

Stock purchase contract adjustment payments..............    $        8.2     $        1.0     $       --
                                                            ===============  ===============  ===============

Surplus notes............................................    $       12.2     $       12.2     $       12.2
Equity units.............................................            12.1              0.3             --
Senior unsecured bonds...................................            14.9             15.5              0.3
Bank credit facility and other...........................             0.4              3.4             14.8
                                                            ---------------  ---------------  ---------------
Interest expense on indebtedness.........................    $       39.6     $       31.4     $       27.3
                                                            ===============  ===============  ===============


                                                     F-34

Common stock and stock repurchase program

We have authorization for the issuance of 1,000,000,000 shares of our common stock. In connection with our
demutualization and initial public offering, we issued 106,376,363 common shares (56,180,463 shares to our
policyholders in exchange for their interests in the mutual company and 50,195,900 shares in sales to the
public). As of December 31, 2003, we had 94,445,716 shares outstanding, net of 11,930,647 common shares of
treasury stock . We also had 28,993,669 common shares reserved for issuance at that date under the purchase
contracts included with our equity units (21,256,826 shares), our stock option plans (6,300,000 shares) and our
restricted stock units (1,436,843 shares).

We have authorization from our board of directors to repurchase an additional 670,000 shares of our common
stock. As of December 31, 2003, we had repurchased 12,330,000 shares of our common stock at an average price of
$15.87 per share, including zero, 7,871,500 and 4,458,500 shares in 2003, 2002 and 2001, respectively. During
2003, we contributed 399,353 treasury shares to fund the employer match for our saving and investment benefit
plans. These shares had a cost basis of $6.3 million (weighted-average cost of $15.87 per share) and an
aggregate market value of $3.8 million.

State Farm Mutual Automobile Insurance Company, or State Farm, currently owns of record more than five percent
of our outstanding common stock. In 2003 and 2002, our subsidiaries incurred $25.8 million and $10.7 million,
respectively, as compensation costs for the sale of our insurance and annuity products by entities that were
either subsidiaries of State Farm or owned by State Farm employees.


7. Separate Account Assets and Liabilities

Separate account products are those for which a separate investment and liability account is maintained on
behalf of the policyholder. Investment objectives for these separate accounts vary by fund account type, as
outlined in the applicable fund prospectus or separate account plan of operations. Our separate account
products include variable annuities and variable life insurance contracts.

Separate account assets and liabilities related to policyholder funds are carried at market value. Deposits,
net investment income and realized investment gains and losses for these accounts are excluded from revenues,
and the related liability increases are excluded from benefits and expenses. Fees assessed to the
contractholders for management services are included in revenues when services are rendered.

Separate account assets and liabilities by segment as of December 31, 2003 and 2002 follow ($ amounts in
millions).

                                                                            2003             2002
                                                                       ---------------  ---------------

Life and Annuity segment separate accounts...........................   $    5,910.3     $    4,131.7
Corporate and Other segment separate accounts........................          172.9            239.5
                                                                       ---------------  ---------------
Total separate account assets and liabilities........................   $    6,083.2     $    4,371.2
                                                                       ===============  ===============


8. Investments Pledged as Collateral and Non-recourse Collateralized Obligations

We are involved with various entities in the normal course of business that may be deemed to be variable
interest entities and, as a result, we may hold interests in those entities. We serve as the investment advisor
to nine collateralized obligation trusts that were organized to take advantage of bond market arbitrage
opportunities, including the three in the table below. The nine collateralized obligation trusts are investment
trusts with aggregate assets of $3.3 billion that are primarily invested in a variety of fixed income
securities acquired from third parties. The collateralized obligation trusts, in turn, issued tranched
collateralized obligations and residual

                                                     F-35


equity securities to third parties as well as to our life insurance subsidiary's general account. Our asset
management affiliates earned advisory fees of $10.3 million, $7.9 million and $7.6 million in 2003, 2002 and
2001, respectively, which are recorded as either investment product fees for unconsolidated trusts or are
reflected as investment income on debt and equity securities pledged as collateral, net of interest expense on
collateralized obligations and applicable minority interest for consolidated trusts on our consolidated
statement of income. The collateralized obligation trusts reside in bankruptcy remote, special purpose
entities, or SPEs, in which we neither provide recourse nor guarantees. Accordingly, our financial exposure to
these collateralized obligation trusts stems from our life insurance subsidiary general account's direct
investment in certain debt or equity securities issued by these collateralized obligation trusts. Our maximum
exposure to loss with respect to our life insurance subsidiary's direct investment in the nine collateralized
obligation trusts is $91.6 million at December 31, 2003, $54.1 million of which relate to investment grade debt
securities and loss of management fees.

In January 2003, a new accounting standard was issued, FIN 46, Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51, or FIN 46, that interprets the existing standards on consolidation. FIN 46 was
subsequently reissued as FIN 46-R in December 2003, with FIN 46-R providing additional interpretation as to
existing standards on consolidation. FIN 46-R clarifies the application of standards of consolidation to
certain entities in which equity investors do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties (variable interest entities). Variable interest entities are
required to be consolidated by their primary beneficiaries if they do not effectively disperse risks among all
parties involved. The primary beneficiary of a variable interest entity is the party that absorbs a majority of
the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of
holding variable interests. As required under the original standard, on February 1, 2003, we adopted the new
standard for variable interest entities created after January 31, 2003 and for variable interest entities in
which we obtain an interest after January 31, 2003. In addition, as required by the revised standard, on
December 31, 2003 we have adopted FIN 46-R for SPEs in which we hold a variable interest that we acquired prior
to February 1, 2003. We continue to consolidate three collateralized obligation trusts as of December 31, 2003
and 2002. Our direct investment in the three consolidated collateralized obligation trusts is $27.8 million,
$20.0 million of which is an investment grade debt security as of December 31, 2003. We recognized investment
income on debt and equity securities pledged as collateral, net of interest expense on collateralized
obligations and applicable minority interest of $2.9 million, $2.6 million and $2.5 million in 2003, 2002 and
2001, respectively, related to these three consolidated collateralized obligation trusts.

Six variable interest entities not consolidated by us under FIN 46-R represent collateralized obligation trusts
with approximately $2.1 billion of investment assets pledged as collateral. Our general account's direct
investment in these unconsolidated variable interest entities is $63.8 million, $34.1 million of which are
investment grade debt securities at December 31, 2003. We recognized investment advisory fee revenues related
to the six unconsolidated variable interest entities of $7.4 million, $5.3 million and $5.1 million in 2003,
2002 and 2001, respectively.



                                                     F-36


Variable interest entities consolidated as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                                     2003             2002
                                                                              ---------------  ---------------
Assets Pledged as Collateral, at Fair Value
Phoenix CDO I...............................................................   $      148.8     $      150.4
Phoenix CDO II..............................................................          332.6            377.2
Phoenix-Mistic 2002-1 CDO...................................................          963.4            899.3
                                                                              ---------------  ---------------
Total.......................................................................   $    1,444.8     $    1,426.9
                                                                              ===============  ===============

Non-recourse Collateralized Obligations
Phoenix CDO I (March 2011 maturity).........................................   $      183.2     $      214.6
Phoenix CDO II (December 2012 mandatorily redeemable).......................          375.6            438.9
Phoenix-Mistic 2002-1 CDO (September 2014 maturity).........................          913.2            956.0
                                                                              ---------------  ---------------
Total.......................................................................   $    1,472.0     $    1,609.5
                                                                              ===============  ===============

Assets pledged as collateral are comprised of available-for-sale debt and equity securities at fair value of
$1,350.0 million and $1,358.7 million at December 31, 2003 and 2002, respectively. In addition, cash and
accrued investment income of $94.8 million and $68.2 million are included in these amounts at December 31, 2003
and 2002, respectively.

Non-recourse collateralized obligations are comprised of callable collateralized obligations of $1,344.2
million and $1,443.8 million at December 31, 2003 and 2002, respectively, and non-recourse derivative cash flow
hedge liabilities of $127.8 million (notional amount of $1,211.3 million with maturities of 2005-2013) and
$165.7 million at December 31, 2003 and 2002, respectively. Minority interest liabilities related to
third-party equity investments in the consolidated variable interest entities is $22.3 million and $17.3
million at December 31, 2003 and 2002, respectively.

Collateralized obligations for which Phoenix Investment Partners is the sponsor and actively manages the
assets, where we are deemed to be a primary beneficiary as a result of our variable interests, and where there
is not a substantive amount of outside third-party equity investment in the trust, are consolidated in our
financial statements. Our financial exposure is limited to our share of equity and bond investments in these
vehicles held in our general account as available-for-sale debt and equity securities, as applicable, and there
are no financial guarantees from, or recourse, to us, for these collateralized obligation trusts.

Debt and equity securities pledged as collateral are recorded at fair value with any applicable unrealized
investment gains or losses reflected as a component of accumulated other comprehensive income, net of
applicable minority interest. We recognize realized investment losses on debt and equity securities in these
collateralized obligations when declines in fair values, in our judgment, are considered to be
other-than-temporarily impaired. Non-recourse obligations issued by the consolidated collateralized obligation
trusts are recorded at unpaid principal balance. Non-recourse derivative cash flow hedges are carried on our
consolidated balance sheet at fair value with an offsetting amount recorded in accumulated other comprehensive
income.

In 2003, we revised our method of consolidation of the collateralized obligation trusts for 2003, 2002 and
2001. Under the new method, the applicable assets, liabilities, revenues, expenses and minority interest are
presented on a disaggregated basis, and the non-recourse collateralized obligations are recorded at unpaid
principal balance. Prior to our revision of previously reported 2003, 2002 and 2001 amounts, investments
pledged as collateral were recorded at fair value with asset valuation changes directly offset by changes in
the corresponding liabilities in a manner similar to separate accounts.


                                                     F-37


The effect of our change in the method of consolidation for the three consolidated collateralized obligation
trusts was to increase our net loss and to reduce stockholders' equity for the years 2003, 2002 and 2001 as
follows
($ amounts in millions):

                                                                   2003             2002             2001
                                                              ---------------  ---------------  ---------------

Increase in net loss........................................   $       (2.4)    $      (26.3)    $      (12.5)
                                                              ===============  ===============  ===============
Reduction to stockholders' equity...........................   $      (77.3)    $     (204.9)    $      (87.9)
                                                              ===============  ===============  ===============

The above non-cash charges to earnings and stockholders' equity primarily relate to realized and unrealized
investment losses within the collateralized obligation trusts, that will ultimately be borne by third-party
investors in the non-recourse collateralized obligations. Accordingly, these losses and any future gains or
losses under this method of consolidation will ultimately reverse upon the maturity or other liquidation of the
non-recourse collateralized obligations.

GAAP requires us to consolidate all the assets and liabilities of these collateralized obligation trusts which
results in the recognition of realized and unrealized losses even though we have no legal obligation to fund
such losses in the settlement of the collateralized obligations. The Financial Accounting Standards Board, or
FASB, continues to evaluate, through the issuance of FASB staff positions, the various technical implementation
issues related to consolidation accounting. We will continue to assess the impact of any new implementation
guidance issued by the FASB as well as evolving interpretations among accounting professionals. Additional
guidance and interpretations may affect our application of consolidation accounting in future periods.

Fair value and cost of the debt and equity securities pledged as collateral as of December 31, 2003 and 2002
follow ($ amounts in millions):

                                                            2003                              2002
                                              --------------------------------  -------------------------------
                                                Fair Value          Cost          Fair Value         Cost
                                              ---------------  ---------------  ---------------  --------------
Debt Securities Pledged as Collateral by Type
Corporate...................................   $    1,006.7     $      909.4     $      959.9    $      942.9
Mortgage-backed.............................          193.2            185.0            231.0           218.6
Other asset-backed..........................          148.9            153.0            162.7           205.7
                                              ---------------  ---------------  ---------------  --------------
Subtotal....................................        1,348.8          1,247.4          1,353.6         1,367.2

Equity securities pledged as collateral.....            1.2              0.7              5.1             6.0
                                              ---------------  ---------------  ---------------  --------------
Total debt and equity securities
  pledged as collateral.....................   $    1,350.0     $    1,248.1     $    1,358.7    $    1,373.2
                                              ===============  ===============  ===============  ==============

Gross and net unrealized gains and losses from debt and equity securities pledged as collateral as of December
31, 2003 and 2002 follow ($ amounts in millions):

                                                            2003                              2002
                                              --------------------------------  -------------------------------
                                                  Gains            Losses           Gains           Losses
                                              ---------------  ---------------  --------------- ---------------
Debt Securities Pledged as Collateral by Type
Corporate...................................   $      104.1     $       (6.8)    $       49.2    $      (32.2)
Mortgage-backed.............................           21.8            (13.6)            25.9           (13.5)
Other asset-backed..........................            3.8             (7.9)             3.4           (46.4)
                                              ---------------  ---------------  --------------- ---------------
Subtotal....................................          129.7            (28.3)            78.5           (92.1)
Equity securities pledged as collateral.....            0.7             (0.2)             0.1            (1.0)
                                              ---------------  ---------------  --------------- ---------------
Total.......................................   $      130.4     $      (28.5)    $       78.6    $      (93.1)
                                              ===============  ===============  =============== ===============
Net unrealized gains........................   $      101.9                      $      (14.5)
                                              ===============                   ===============


                                                     F-38

The aging of temporarily impaired debt and equity securities pledged as collateral as of December 31, 2003
follows ($ amounts in millions):

                                     Less than 12 months   Greater than 12 months             Total
                                  -----------------------  ------------------------  -----------------------
                                      Fair     Unrealized      Fair     Unrealized      Fair     Unrealized
                                      Value      Losses       Value       Losses        Value      Losses
                                  ----------- -----------  ----------- ------------  ----------- -----------
Debt Securities Pledged as
 Collateral by Type
Corporate.......................   $    20.0  $    (0.9)    $    48.1   $    (5.9)    $    68.1   $   (6.8)
Mortgage-backed.................         6.2       (2.0)         25.2       (11.6)         31.4      (13.6)
Other asset-backed..............         8.7       (0.3)         37.8        (7.6)         46.5       (7.9)
                                  ----------- -----------  ----------- ------------  ----------- -----------
Debt securities.................   $    34.9  $    (3.2)    $   111.1   $   (25.1)    $   146.0   $  (28.3)
Equity securities pledged as
 collateral.....................         0.2       --            --          (0.2)          0.2       (0.2)
                                  ----------- -----------  ----------- ------------ ------------ -----------
Total temporarily impaired
 securities pledged as
 collateral.....................   $    35.1  $    (3.2)    $   111.1   $   (25.3)    $   146.2   $  (28.5)
                                  =========== ===========  =========== ============ ============ ===========

Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the
security's amortized cost totals $25.3 million at December 31, 2003. Debt securities with a fair value less
than 80% of the security's amortized totaled $17.9 million at December 31, 2003. The majority of these debt
securities are investment grade issues that continue to perform to their original contractual terms at December
31, 2003.

The maturity of the debt securities pledged as collateral as of December 31, 2003 follows ($ amounts in
millions):

                                                                                                  2003
                                                                                                  Cost
                                                                                             ---------------
Debt Securities
Due in one year or less....................................................................   $       13.1
Due after one year through five years......................................................          198.0
Due after five years through ten years.....................................................          827.2
Due after ten years........................................................................          209.1
                                                                                             ---------------
Total debt securities......................................................................   $    1,247.4
                                                                                             ===============

FIN 46-R requires our application of its provisions to non-SPE variable interest entities for periods ending
after March 15, 2004. We are currently evaluating non-SPE entities in which we may have a variable interest for
the applicability of FIN 46-R and, accordingly, have not determined the additional impact, if any, FIN 46-R may
have on our financial position or results of operations.


9. Derivative Instruments and Fair Value of Financial Instruments

Derivative instruments

We maintain an overall interest rate risk-management strategy that primarily incorporates the use of interest
rate swaps as hedges of our exposure to changes in interest rates. Our exposure to changes in interest rates
primarily results from our commitments to fund interest-sensitive insurance liabilities, as well as from our
significant holdings of fixed rate financial instruments.

All derivative instruments are recognized on the balance sheet at fair value. Generally, each derivative is
designated according to the associated exposure as either a fair value or cash flow hedge at its inception as
we do not enter into derivative contracts for trading or speculative purposes.

Except for the foreign currency swaps discussed below, all fair value hedges are accounted for with changes in
the fair value of related interest rate swaps recorded on the balance sheet with an offsetting amount recorded
to


                                                     F-39


the hedged item's balance sheet carrying amount. Changes in the fair value of foreign currency swaps used as
hedges of the fair value of foreign currency denominated assets are reported in current period earnings with
the change in value of the hedged asset attributable to the hedged risk.

Cash flow hedges are generally accounted for with changes in the fair value of related interest rate swaps
recorded on the balance sheet with an offsetting amount recorded in accumulated other comprehensive income. The
effective portion of changes in fair values of derivatives hedging the variability of cash flows related to
forecasted transactions are reported in accumulated other comprehensive income and reclassified into earnings
in the periods during which earnings are affected by the variability of the cash flows of the hedged item.

Changes in the fair value of derivative instruments not designated as hedging instruments and ineffective
portions of hedges are recognized in net investment income in the period incurred.

Our general account held the following positions in derivative instruments as of December 31, 2003 and 2002 at
fair value ($ amounts in millions):

                                                                           2003                 2002
                                                                  -------------------- --------------------
                                              Notional
                                               Amount    Maturity   Asset    Liability    Asset   Liability
                                             ---------- --------- ---------- --------- ---------- ---------
Interest rate swaps
   Fair value hedges.....................    $   150      2032     $   10.3   $   --    $   15.6   $   --
   Cash flow hedges......................         30      2007          4.5       --         5.6       --
   Non-hedging derivative instruments....        360      2007         25.1      21.7       30.7      26.5
Other....................................         90    2003-2008       0.4       --         0.8       --
                                             ----------           ---------- --------- ---------- ---------
Total general account
 derivative instrument positions.........    $   630               $   40.3   $  21.7   $   52.7   $  26.5
                                             ==========           ========== ========= ========== =========

Fair value hedges. We currently hold interest rate swaps that convert a portion of our fixed rate debt
portfolio to variable rate debt. These hedges are accounted for under the shortcut method and, therefore, no
hedge ineffectiveness is recorded in current period earnings associated with these interest rate swaps.

During a portion of 2002 and all of 2001, we held foreign currency swaps that hedged the fair value of foreign
currency denominated available-for-sale securities that backed U.S. dollar denominated liabilities. We
recognized ineffectiveness of $0.5 million ($0.3 million after income taxes) and $1.2 million ($0.8 million
after income taxes) for the years 2002 and 2001, respectively. There were no foreign currency swaps held during
2003.

Cash flow hedges. We currently hold interest rates swaps that effectively convert variable rate bond cash flows
to fixed cash flows in order to better match the cash flows of associated liabilities. These hedges are
accounted for under the shortcut method and, therefore, no hedge ineffectiveness was recorded in earnings for
2003, 2002 and 2001. We do not expect to reclassify any amounts reported in accumulated other comprehensive
income into earnings over the next twelve months with respect to these hedges.

We recognized an after-tax gain of $0.0 million, $1.8 million and $3.0 million for the years 2003, 2002 and
2001 in accumulated other comprehensive income related to changes in fair value of interest rate forward swaps
designated as cash flow hedges of the forecasted purchase of assets. At December 31, 2003 we expect to
reclassify into earnings over the next twelve months $1.0 million of the deferred after-tax gains on these
derivative instruments. For the years 2003, 2002 and 2001, we reclassified after-tax gains of $0.6 million,
$0.6 million and $0.3 million, respectively, into earnings related to these same derivatives.

Non-hedging derivative instruments. We also hold interest rate swaps that were initially entered into as hedges
of an anticipated purchase of assets associated with an acquisition of a block of insurance liabilities.
Subsequently, offsetting swap positions were taken to lock in a stream of income to supplement the income on
the assets purchased.


                                                     F-40


On January 1, 2001, we recorded a net-of-tax cumulative effect adjustment of $1.3 million (gain) in earnings to
recognize at fair value all derivative instruments that are designated as fair-value hedging instruments. We
recorded an offsetting net-of-tax cumulative effect adjustment of $1.3 million (loss) in earnings to recognize
the difference attributable to the hedged risks between the carrying values and fair values of the related
hedged assets and liabilities. We also recorded a net-of-tax cumulative effect adjustment of $1.1 million
(gain) in accumulated other comprehensive income to recognize, at fair value, all derivative instruments that
are designated as cash-flow hedging instruments. For derivative instruments that were not designated as hedges,
we also recorded a cumulative effect adjustment of $6.0 million in earnings, ($3.9 million after income taxes)
in earnings to recognize these instruments at fair value.

We are exposed to credit risk in the event of non-performance by counterparties to these derivative
instruments. We do not expect that counterparties will fail to meet their financial obligation as we only enter
into derivative contracts with a number of highly rated financial institutions. The credit exposure of these
instruments is the positive fair value at the reporting date, or $40.3 million as of December 31, 2003. We
consider the likelihood of any material loss on these instruments to be remote.

Fair value of financial instruments

The carrying amounts and estimated fair values of financial instruments as of December 31, 2003 and 2002 follow
($ amounts in millions):

                                                          2003                              2002
                                           ---------------------------------  --------------------------------
                                              Carrying            Fair           Carrying           Fair
                                               Value             Value            Value            Value
                                           ---------------   ---------------  ---------------  ---------------

Cash and cash equivalents................   $      447.9      $      447.9     $    1,110.5     $    1,110.5
Debt securities (Note 5).................       13,273.0          13,273.0         11,889.5         11,889.5
Equity securities (Note 5)...............          312.0             312.0            385.9            385.9
Mortgage loans (Note 5)..................          284.1             301.4            468.8            488.2
Debt and equity securities pledged
 as collateral (Note 8)..................        1,350.0           1,350.0          1,358.7          1,358.7
Derivative financial instruments.........           40.3              40.3             52.7             52.7
Policy loans (Note 5)....................        2,227.8           2,356.4          2,195.9          2,367.9
                                           ---------------   ---------------  ---------------  ---------------
Financial assets.........................   $   17,935.1      $   18,081.0     $   17,462.0     $   17,653.4
                                           ===============   ===============  ===============  ===============

Investment contracts (Note 3)............   $    3,642.7      $    3,680.8     $    3,395.7     $    3,481.9
Non-recourse collateralized
 obligations (Note 8)....................        1,472.0           1,444.8          1,609.5          1,426.9
Stock purchase contracts (Note 6)........          128.8             128.8            137.6            137.6
Indebtedness (Note 6)....................          639.0             742.4            644.3            614.4
Derivative financial instruments.........           21.7              21.7             26.5             26.5
                                           ---------------   ---------------  ---------------  ---------------
Financial liabilities....................   $    5,904.2      $    6,018.5     $    5,813.6     $    5,687.3
                                           ===============   ===============  ===============  ===============


10. Income Taxes

We recognize income tax expense or benefit based upon amounts reported in the financial statements and the
provisions of currently enacted tax laws. We allocate income taxes to income, other comprehensive income and
additional paid-in capital, as applicable.

We recognize current income tax assets and liabilities for estimated income taxes refundable or payable based
on the current year's income tax returns. We recognize deferred income tax assets and liabilities for the
estimated future income tax effects of temporary differences and carryforwards. Temporary differences are the
differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as
well as the timing of income or expense recognized for financial reporting and tax purposes of items not
related to assets or liabilities. If necessary, we establish valuation allowances to reduce the carrying amount
of deferred income tax

                                                     F-41


assets to amounts that are more likely than not to be realized. We periodically review the adequacy of these
valuation allowances and record any reduction in allowances through earnings.

The allocation of income taxes to elements of comprehensive income (loss) and between current and deferred for
2003, 2002 and 2001 follows ($ amounts in millions):

                                                                  2003             2002             2001
                                                             ---------------  ---------------  ---------------
Income taxes (benefit) applicable to
Continuing operations.....................................    $      (18.5)    $      (56.2)    $     (105.2)
Discontinued operations...................................            (1.2)            (0.6)            (0.9)
Cumulative effect of accounting changes...................            --              (11.4)           (35.2)
                                                             ---------------  ---------------  ---------------
Net loss..................................................    $      (19.7)    $      (68.2)    $     (141.3)
Other comprehensive income................................            (4.2)            14.2             31.2
                                                             ---------------  ---------------  ---------------
Comprehensive loss........................................    $      (23.9)    $      (54.0)    $     (110.1)
                                                             ===============  ===============  ===============

Current...................................................    $       (6.6)    $      (14.4)    $      (58.2)
Deferred..................................................           (17.3)           (39.6)           (51.9)
                                                             ---------------  ---------------  ---------------
Income tax benefit applicable to comprehensive income.....    $      (23.9)    $      (54.0)    $     (110.1)
                                                             ===============  ===============  ===============

For 2003, 2002 and 2001, the effective income tax rates applicable to income from continuing operations differ
from the 35% federal statutory income tax rate. Items giving rise to the differences and the effects are as
follow ($ amounts in millions):

                                                                  2003             2002             2001
                                                             ---------------  ---------------  ---------------

Income tax benefit at statutory rate.......................   $       (3.6)    $      (64.6)    $      (85.9)
Tax advantaged investment income...........................           (6.8)           (12.6)            (7.2)
Intangible asset amortization and impairments..............           --               19.5              3.2
Realized losses on available-for-sale securities pledged...            0.9              9.2              4.4
Non-taxable minority interest income.......................           (4.2)            (4.1)            (2.5)
Demutualization expenses...................................           --                0.2              7.1
Tax interest recoveries....................................           (1.1)            --               --
Other, net.................................................           (3.7)            (3.8)            (3.3)
Differential earnings (mutual life insurance company
 equity tax)...............................................           --               --              (21.0)
                                                             ---------------  ---------------  ---------------
Income tax benefit applicable to continuing
 operations................................................   $      (18.5)    $      (56.2)    $     (105.2)
                                                             ===============  ===============  ===============
Effective income tax benefit rates.........................        (181.4)%          (30.5)%          (42.9)%
                                                             ===============  ===============  ===============



                                                     F-42


Deferred income tax assets (liabilities) attributable to temporary differences as of December 31, 2003 and 2002
follow ($ amounts in millions):

                                                                                  2003             2002
                                                                             ---------------  ---------------
Deferred income tax assets
Future policyholder benefits...............................................   $      215.2     $      190.3
Unearned premiums / deferred revenues......................................          125.1            129.3
Policyholder dividend obligation...........................................          111.8            113.3
Employee benefits..........................................................           91.1            100.6
Intangible assets..........................................................            7.1             20.5
Investments................................................................          123.9             93.3
Net operating loss carryover benefits......................................           74.0             63.7
Foreign tax credits carryover benefits.....................................            0.1              7.0
Low income housing tax credits.............................................           12.3              8.2
Other......................................................................            9.1             32.4
Valuation allowance........................................................          (24.3)           (35.9)
                                                                             ---------------  ---------------
Gross deferred income tax assets...........................................          745.4            722.7
                                                                             ---------------  ---------------

Deferred tax liabilities
Deferred policy acquisition costs..........................................         (316.1)          (282.1)
Investments................................................................         (272.3)          (283.4)
Investment management contracts............................................          (93.1)          (100.0)
Other......................................................................           (5.2)           (15.8)
                                                                             ---------------  ---------------
Gross deferred income tax liabilities......................................         (686.7)          (681.3)
                                                                             ---------------  ---------------
Deferred income tax asset..................................................   $       58.7     $       41.4
                                                                             ===============  ===============

We have elected to file a consolidated federal income tax return for 2003 and prior years. Within the
consolidated tax return, we are required by Internal Revenue Service regulations to segregate the entities into
two groups: life insurance companies and non-life insurance companies. We are limited as to the amount of any
operating losses from one group that can be offset against taxable income of the other group. These limitations
affect the amount of any operating loss carryforwards that we have now or in the future.

As of December 31, 2003, we had deferred tax assets related to net operating losses of $49.7 million for
federal income tax purposes and $24.3 million for state income tax purposes. The deferred tax assets related to
the federal net operating losses are scheduled to expire as follows: $7.7 million in 2015, $5.4 million in
2016, $19.8 million in 2017, $1.1 million in 2018 and $15.7 in 2023. The deferred tax assets related to the
state net operating losses relate to the non-life subgroup and are scheduled to expire as follows: $12.7
million in 2020 and $11.6 million in 2021. Due to the inability to combine the life insurance and non-life
insurance subgroups for state income tax purposes, a $24.3 million and a $29.0 million valuation allowance has
been established at the end of 2003 and 2002, respectively, relative to the state net operating loss
carryforwards.

As of December 31, 2003, the deferred income tax asset of $0.1 million related to foreign tax credit carryovers
is expected to expire between the 2006 and 2008 tax years. As of December 31, 2002, $6.9 million of the $7.0
million deferred tax asset related to foreign tax credit was scheduled to expire in 2003. As a result, a
valuation allowance of $6.9 million was established to reduce the carrying amount of this deferred tax asset as
of December 31, 2002.

As of December 31, 2003, the deferred income tax assets of $12.3 million related to low income housing tax
credits are expected to expire as follows: $4.1 million in 2021, $4.1 million in 2022 and $4.1 million in 2023.

We have determined, based on our earnings and future income, that it is more likely than not that the deferred
income tax assets after valuation allowance already recorded as of December 31, 2003 and 2002 will be realized.
In determining the adequacy of future income, we have considered projected future income, reversal of existing
temporary differences and available tax planning strategies that could be implemented, if necessary.

                                                     F-43


Our federal income tax returns are routinely audited by the Internal Revenue Service, or the IRS, and estimated
provisions are routinely provided in the financial statements in anticipation of the results of these audits.
The IRS has examined our consolidated group's federal income tax returns through 1997. The IRS is currently
examining our federal income tax returns for 1998 through 2001. While it is often difficult to predict the
outcome of these audits, including the timing of any resolution of any particular tax matter, we believe that
our reserves, as recorded in other liabilities on the balance sheet, have been adequately provided for all open
tax years. Unfavorable resolution of any particular issue could result in additional use of cash to pay
liabilities that would be deemed owed to the IRS. Additionally, any unfavorable or favorable resolution of any
particular issue could result in an increase or decrease, respectively, to our effective income tax rate to the
extent that our estimates differ from the ultimate resolution.


11. Employee Benefit Plans and Employment Agreements

Stock options

We have stock option plans under which we grant options for a fixed number of common shares to employees,
non-employee directors and certain insurance agents. Our options have an exercise price equal to the market
value of the shares at the date of grant. A new standard was issued which amends an existing standard on
accounting for stock-based compensation. Our adoption of the new standard results in expense recognition for
stock options awarded after December 31, 2002 over the service period of the options equal to their fair value
at issuance. During 2002, a previous standard allowed for us to account for stock-based compensation using the
intrinsic value method which did not result in expense recognition because at issuance date, the market price
of our common stock was equal to the exercise price of the options. As required under the new standard, we have
included pro forma net income and earnings per share as if we had applied the fair value method for all periods
presented.

The new standard provides methods of transition for a voluntary change to fair value accounting for stock-based
compensation. It also requires annual and quarterly disclosures about the method of accounting for stock-based
compensation and tabular information about the effect of the method of accounting for stock-based compensation.
We adopted fair value accounting for stock-based compensation in 2003 using the prospective method of
transition provided by the new standard.

During 2003 and 2002, we granted options to employees and non-employee directors and agents. The employee and
agent options vest over a three-year period while the directors' options vested immediately. No options were
exercisable until June 25, 2003, the second anniversary of our initial public offering. All options terminate
ten years from date of grant. The Stock Incentive Plan authorized the issuance to officers, employees and
insurance agents of that number of options equal to 5% of the total number of common stock shares outstanding
immediately after the initial public offering in June 2001, or approximately 5,250,000 shares, plus an
additional 1%, or approximately 1,050,000 shares, for Phoenix Investment Partners officers and employees, less
the number of share options issuable under the Directors' Stock Plan. The Directors' Stock Plan authorized the
issuance to non-employee directors of that number of options equal to 0.5%, or approximately 525,000 shares, of
the total number of common stock shares outstanding immediately after the initial public offering in June 2001,
plus 500,000 shares, bringing the total to approximately 1,025,000 shares.



                                                     F-44


Stock option activity by number of common shares and weighted-average exercise price for the years 2003 and
2002 follows (amounts in millions, except per share price):

                                                       2003                              2002
                                         ---------------------------------  --------------------------------
                                             Number            Price            Number           Price
                                         ---------------   ---------------  ---------------  ---------------

Outstanding, beginning of year.........      4,409,558      $      16.20               --     $      --
Granted................................        572,504              9.00        4,456,906            16.20
Canceled...............................        (42,211)            15.63               --            --
Forfeited..............................       (311,995)            14.13          (47,348)           16.20
                                         ---------------                    ---------------
Outstanding, end of year...............      4,627,856      $      15.45        4,409,558     $      16.20
                                         ===============   ===============  ===============  ===============

Prior to 2001, Phoenix Investment Partners, whose shares were then publicly traded, granted options to its
employees and directors to purchase shares of its common stock at an option price of not less than 85% of the
fair value of that company's common stock at the time of grant. Options granted under the Phoenix Investment
Partners plan vested over a three-year period. In connection with our purchase of the minority interest in
Phoenix Investment Partners (Note 4), Phoenix Investment Partners recognized compensation expense of $57.0
million related to Phoenix Investment Partners' payment for the cancellation of all of its outstanding options
(7,007,444 total); holders of the options were paid an amount equal to the difference between the converted
value of the options ($111.9 million) and their exercise price ($54.9 million).

Pro forma earnings and earnings per share as if we and Phoenix Investment Partners had applied the fair value
method of accounting for stock-based compensation for 2003 and 2002 (Phoenix) and 2001 (Phoenix Investment
Partners) ($ amounts in millions, except per share amounts):

                                                                   2003            2002            2001
                                                             --------------  --------------  --------------

Net loss, as reported......................................   $      (6.2)    $    (272.3)    $    (215.2)
Add:  Employee stock option compensation expense
 included in net loss, net of applicable income taxes......           0.4            --              --
Deduct:  Employee stock option compensation expense
 determined under fair value accounting for all awards,
 net of applicable income taxes............................           5.0             6.5             2.6
                                                             --------------  --------------  --------------
Pro forma net loss.........................................   $     (10.8)    $    (278.8)    $    (217.8)
                                                             ==============  ==============  ==============

 Basic loss per share:
     As reported...........................................   $     (0.07)    $     (2.78)    $     (2.06)
     Pro forma.............................................   $     (0.11)    $     (2.85)    $     (2.08)
 Diluted loss per share:
     As reported...........................................   $     (0.07)    $     (2.78)    $     (2.06)
     Pro forma.............................................   $     (0.11)    $     (2.85)    $     (2.08)

The weighted-average fair values of options granted during 2003 and 2002 were $4.07 and $8.18 per share,
respectively, using the Black-Scholes option valuation model with the parameters stated below. Of the 2002 pro
forma expense, $4.2 million relates to options that were fully earned at December 31, 2002; there will be no
additional pro forma expense recognition for those options.



                                                     F-45



The pro forma adjustments relating to options granted are based on a fair value method using the Black-Scholes
option-pricing model. Valuation and related assumption information used for the options granted include these
key variables: weighted-average expected volatility, weighted-average risk-free interest rate and
weighted-average common share dividend yield. The key assumptions for years 2003 and 2002 follow:

                                                                                     2003             2002
                                                                               ---------------  ---------------

Weighted-average expected volatility.........................................        43.7%            34.9%
Weighted-average risk-free interest rate.....................................         3.5%             5.5%
Weighted-average common share dividend yield.................................         1.8%             0.9%

The Black-Scholes option valuation model was developed for use in estimating the fair value of options that
have no vesting restrictions and are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including the expected share price volatility. Because our share options have
characteristics significantly different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, especially in a security traded for only a
short time, in our opinion the existing models do not necessarily provide a reliable measure of the fair value
of our share options. Despite these concerns, the Black-Scholes model was used to develop the pro forma amounts
presented above.

Restricted stock units and restricted stock

We record deferred compensation for the fair value of restricted stock unit awards and present deferred
compensation as a separate, offsetting component of stockholders' equity. We recognized compensation expense
over the vesting period of the restricted stock units.

Generally, shares underlying those awards which are or become vested will be issued on the later of June 26,
2006 or each employee's and each director's respective termination or retirement.

RSU activity by number of units and weighted-average exercise price for the years 2003 and 2002 follow:

                                                                  2003                          2002
                                                      ---------------------------  ----------------------------
                                                                       Exercise                     Exercise
                                                           RSUs         Price           RSUs         Price
                                                      -------------  ------------  -------------  -------------

Outstanding, beginning of year......................      573,477     $    13.95             --     $    --
Awarded to officers and directors...................      701,598           7.95        573,477          13.95
Issued to officers in satisfaction of
  deferred compensation liabilities.................      161,768           9.07             --          --
                                                      -------------                 -------------
Outstanding, end of year............................    1,436,843     $    10.47        573,477     $    13.95
                                                      =============  =============  =============  ============

In addition to the RSU activity above, 1,147,338 RSUs are subject to future issuance based on the achievement
of performance criteria established under the 2003-2005 cycle of our 2003 Restricted Stock, Restricted Stock
Unit and Long-Term Incentive Plan.

See Securities Authorized for Issuance under Equity Compensation Plans in Item 12 in this Form 10-K for
further information about RSUs.

Pension and other post-employment benefits

We provide our employees with post-employment benefits that include retirement benefits, through pension and
savings plans, and other benefits, including health care and life insurance.

                                                     F-46


The cost of post-employment benefits recognized and the underlying principal rates and assumptions used for
2003, 2002 and 2001 follow ($ amounts in millions):

                                                                               2003       2002         2001
                                                                           ----------- ---------- -----------

Cost components
Recurring pension benefit cost (credit).................................    $   22.8    $   15.2     $   (2.1)
Recurring other post-retirement benefit costs...........................         3.6         4.2          3.9
Savings plans cost......................................................         5.4         4.9          3.5
Other post-employment benefit cost......................................        --          --            0.4
                                                                           ----------- ----------- -----------
Total continuing operations recurring cost..............................        31.8        24.3          5.7
Total non-recurring and discontinued operations cost....................         1.3         0.6         19.4
                                                                           ----------- ----------- -----------
Total pension and other post-employment benefit cost....................    $   33.1    $   24.9     $   25.1
                                                                           =========== =========== ===========

Principal Rates and Assumptions
Assumptions Used to Determine Benefit Obligations
Projected benefit obligation discount rate..............................      6.0%        6.5%           7.0%
Future compensation increase rate.......................................      3.5%        3.5%           4.0%
Pension plan assets long-term rate of return............................      8.5%        8.5%           9.0%
Deferred investment gain/loss amortization corridor.....................      5.0%        5.0%           5.0%
Future health care cost increase rate, age 64 and younger...............      9.25%      10.0%           5.5%
Future health care cost increase rate, age 65 and older.................     11.25%      12.0%           5.5%

Assumptions Used to Determine Benefit Costs
Projected benefit obligation discount rate..............................      6.5%        7.0%           7.5%
Future compensation increase rate.......................................      3.5%        4.0%           4.5%
Pension plan assets long-term rate of return............................      8.5%        9.0%           8.0%
Deferred investment gain/loss amortization corridor.....................      5.0%        5.0%          10.0%
Future health care cost increase rate, age 64 and younger...............     10.0%        5.5%           7.5%
Future health care cost increase rate, age 65 and older.................     12.0%        5.5%           7.5%

Our investment policy and strategy employs a total return approach combining equities, fixed income, real
estate and other assets to maximize the long-term return of the plan assets for a prudent level of risk. Risk
tolerance is determined based on consideration of plan liabilities and plan-funded status. The investment
portfolio contains a diversified blend of equity, fixed income, real estate and alternative investments. The
equity investments are diversified across domestic and foreign markets, across market capitalizations (large,
mid and small cap), as well as growth, value and blend. Derivative instruments are not typically used for
implementing asset allocation decision, and never used in conjunction with leverage. Investment performance is
measured and monitored on an on-going basis through quarterly investment portfolio reviews, annual liability
measurement, and periodic presentations by asset managers included in the plan.

We use a building block approach in estimating the long-term rate of return for plan assets. Historical returns
are determined by asset class. The historical relationships between equities, fixed income and other asset
classes are reviewed. We apply long-term asset return estimates to the plan's target asset allocation to
determine the weighted-average long-term return. Our long-term asset allocation was determined through modeling
long-term returns and asset return volatilities. The allocation reflects proper diversification and was
reviewed against other corporate pension plans for reasonability and appropriateness.

                                                     F-47


The employee pension plan asset allocation as of December 31, 2003 and 2002 follows:

                                                                                  2003             2002
                                                                             ---------------  ---------------
Asset Category
Equity securities..........................................................        63%              52%
Debt securities............................................................        28%              31%
Real estate................................................................         6%              14%
Other......................................................................         3%               3%
                                                                             ---------------  ---------------
Total......................................................................       100%             100%
                                                                             ===============  ===============

We recognize pension and other post-retirement benefit costs and obligations over the employees' expected
service periods by discounting an estimate of aggregate benefits. We estimate aggregate benefits by using
assumptions for employee turnover, future compensation increases, rates of return on pension plan assets and
future health care costs. We recognize an expense for differences between actual experience and estimates over
the average future service period of participants. We recognize an expense for our contributions to employee
and agent savings plans at the time employees and agents make contributions to the plans. We also recognize the
costs and obligations of severance, disability and related life insurance and health care benefits to be paid
to inactive or former employees after employment but before retirement.

We use a December 31 measurement date for our pension and post-employment benefits.

In 2003, as a result of staff reduction initiatives, there was a curtailment credit for the employee pension
plan and post-retirement plan in the aggregate amount of $0.8 million.

In 2002 and 2001, we offered special retirement programs under which qualified participants' benefits under the
employee pension plan were enhanced by adding five years to both the participants' age and years of service. As
a result of participants' acceptance of the offers, we recognized non-recurring pension and other
post-retirement benefit costs of $0.6 million and $23.2 million for the years 2002 and 2001, respectively ($0.4
million and $15.1 million, respectively, after income taxes). In connection with the relocation of our annuity
servicing operations in 2001, we recognized a non-recurring pension cost of $0.6 million ($0.4 million after
income taxes). In 2001, we changed the corridor used to amortize deferred actuarial gains and losses and
recognized a non-recurring pension benefit credit for the year 2001 of $4.4 million ($2.9 million after income
taxes).

Pension plans.  We have two defined benefit pension plans covering our employees.  The employee pension
plan, covering substantially all of our employees, provides benefits up to the amount allowed under the
Internal Revenue Code. The supplemental plan provides benefits in excess of the primary plan. Retirement
benefits under both plans are a function of years of service and compensation.

Components of pension benefit cost for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                             2003         2002         2001
                                                                         -----------  -----------  -----------

Service cost..........................................................    $   12.4     $   14.0     $   12.1
Interest cost.........................................................        33.0         34.5         32.4
Plan assets expected return...........................................       (27.4)       (34.5)       (39.2)
Net (gain) loss amortization..........................................         6.2          1.7         (7.5)
Prior service cost amortization.......................................         1.1          2.0          2.6
Net transition asset amortization.....................................        (2.5)        (2.5)        (2.5)
                                                                         -----------  -----------  -----------
Recurring pension benefit cost (credit)...............................        22.8         15.2         (2.1)
                                                                         -----------  -----------  -----------
Special retirement programs cost......................................         3.3          0.6         16.5
Facility closing cost.................................................        --           --            0.6
Corridor gain.........................................................        --           --           (4.4)
                                                                         -----------  -----------  -----------
Non-recurring and discontinued operations cost........................         3.3          0.6         12.7
                                                                         -----------  -----------  -----------
Pension benefit cost..................................................    $   26.1     $   15.8     $   10.6
                                                                         ===========  ===========  ===========

                                                     F-48


The employee pension plan is funded with assets held in a trust. The assets within the plan include corporate
and government debt securities, equity securities, real estate and venture capital partnerships. The
supplemental plan is unfunded.

Changes in the plans' assets and projected benefit obligations and the accumulated benefit obligation for 2003
and 2002 follow ($ amounts in millions):

                                                              Employee Plan             Supplemental Plan
                                                         -------------------------  -------------------------
                                                            2003         2002           2003         2002
                                                         ------------ ------------  ------------ ------------
Plans' Assets
Plan assets' actual gain (loss)........................   $    66.4    $   (43.2)    $     --     $     --
Employer contributions.................................        --           --              5.1          4.2
Participant benefit payments...........................       (25.2)       (24.2)          (5.1)        (4.2)
                                                         ------------ ------------  ------------ ------------
Change in plan assets..................................        41.2        (67.4)          --           --
Plan assets, beginning of year.........................       327.7        395.1           --           --
                                                         ------------ ------------  ------------ ------------
Plans' assets, end of year.............................   $   368.9    $   327.7     $     --     $     --
                                                         ============ ============  ============ ============

Plans' Projected Benefit Obligation
Service and interest cost accrual......................   $   (37.1)   $   (36.5)    $     (8.4)  $    (12.0)
Actuarial gain (loss)..................................       (39.9)       (23.2)           7.6        (17.8)
Plan amendment gain (loss).............................        --          (11.8)          --           19.1
Curtailment gain (loss)................................         1.3         --             (2.2)        (0.6)
Participant benefit payments...........................        25.2         24.2            5.1          4.2
                                                         ------------ ------------  ------------ ------------
Change in projected benefit obligation.................       (50.5)       (47.3)           2.1         (7.1)
Projected benefit obligation, beginning of year........      (410.1)      (362.8)        (126.9)      (119.8)
                                                         ------------ ------------  ------------ ------------
Projected benefit obligation, end of year..............   $  (460.6)   $  (410.1)    $   (124.8)  $   (126.9)
                                                         ============ ============  ============ ============

Accumulated benefit obligation.........................   $   434.6    $   378.7     $     79.5   $     95.5
                                                         ============ ============  ============ ============

In addition to the liability for the excess of accrued pension cost of each plan over the amount
contributed to the plan, we also recognize an additional liability for any excess of the accumulated benefit
obligation of each plan over the fair value of plan assets. The offset to this additional liability is first
recognized as an intangible asset, which is limited to unrecognized prior service, including any unrecognized
net transition obligation. Any additional offsets are then recognized as an adjustment to accumulated other
comprehensive income.

The funded status of the plans as of December 31, 2003 and 2002 follows ($ amounts in millions):

                                                                        Employee Plan      Supplemental Plan
                                                                   --------------------  ---------------------
                                                                      2003      2002        2003       2002
                                                                   --------- ----------  ---------- ----------

Excess of accrued pension benefit cost
  over amount contributed to plan................................. $  (38.3)  $  (25.7)   $  (82.0)  $  (73.6)
Excess of accumulated benefit  obligation over plan assets........    (27.4)     (25.3)      (30.9)     (37.9)
                                                                   ---------- ----------  ---------- ---------
Accrued benefit obligation in other liabilities...................    (65.7)     (51.0)     (112.9)    (111.5)
Intangible asset..................................................     11.0       14.2        --         --
Minimum pension liability adjustment in
  accumulated other comprehensive income..........................     16.4       11.1        30.9       37.9
                                                                   ---------- ----------  ---------- ---------
Funding status recognized in balance sheet........................    (38.3)     (25.7)      (82.0)     (73.6)
                                                                   ---------- ----------  ---------- ---------
Net unamortized loss..............................................    (44.8)     (47.4)      (47.6)     (54.4)
Unamortized prior service (cost) credit...........................    (11.0)     (14.2)        4.8        1.1
Net unamortized transition asset..................................      2.4        4.9        --         --
                                                                   ---------- ----------  ---------- ---------
Funding status unrecognized in balance sheet......................    (53.4)     (56.7)      (42.8)     (53.3)
                                                                   ---------- ----------  ---------- ---------
Plan assets less than projected benefit obligations, end of year.. $  (91.7)  $  (82.4)   $ (124.8)  $ (126.9)
                                                                   ========== ==========  ========== =========

                                                     F-49


We expect to contribute $107.8 million to the employee pension plan through 2008, including $7.2 million during
2004.

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act, or the Act, of 2003 was
signed into law by President Bush. The Act introduces a prescription drug benefit under Medicare and, under
certain circumstances, provides a non-taxable federal subsidy to be paid to sponsors of post-retirement benefit
plans that provide retirees with a drug benefit. On January 12, 2004, the FASB issued FASB Staff Position No.
FAS 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, or the FSP. The FSP permits employers that sponsor post-retirement benefit
plans, or plan sponsors, that provide prescription drug benefits to retirees to make a one-time election to
defer accounting for any effects of the Act. Without the FSP, plan sponsors would be required under Statement
of Financial Accounting Standards No. 106, Employers' Accounting for Post-Retirement Benefits Other Than
Pensions, to account for the effects of the Act as of December 31, 2003. If deferral is elected, the
deferral must remain in effect until the earlier of: (a) the issuance of guidance by the FASB on how to account
for the federal subsidy to be provided to plan sponsors under the Act or (b) the remeasurement of plan assets
and obligations subsequent to January 31, 2004.

We are currently evaluating the Act and its effect on post-retirement benefits provided by us to our retirees.
Accordingly, accumulated post-retirement benefit obligation and net periodic post-retirement benefit cost
reflected in our financial statements and accompanying notes do not reflect the effects of the Act on our
post-retirement benefit plan as we have elected to defer accounting for the effects of the Act until the
earlier of: (a) issuance of guidance by the FASB on how to account for the federal subsidy to be provided to us
under the Act or (b) a remeasurement of plan obligations subsequent to January 31, 2004. Specific authoritative
guidance on the accounting for the federal subsidy is pending and that guidance, when issued, could require us
to change amounts reported herein as of December 31, 2003 and for the periods then ended.

Other post-employment benefits.  The components of post-retirement health care benefit cost for 2003, 2002
and 2001 follow ($ amounts in millions):

                                                                2003             2002             2001
                                                           ---------------  ---------------  ---------------

Service cost............................................    $        1.7     $        2.0     $        1.9
Interest cost...........................................             4.8              4.9              4.5
Net gain amortization...................................            (0.1)            (2.5)            (2.7)
Prior service cost amortization.........................            (2.8)            (0.2)             0.2
                                                           ---------------  ---------------  ---------------
Recurring other post-retirement benefit cost............             3.6              4.2              3.9
Curtailments............................................            (2.0)            --               --
Special retirement program cost.........................            --               --                6.7
                                                           ---------------  ---------------  ---------------
Other post-retirement benefit cost......................    $        1.6     $        4.2     $       10.6
                                                           ===============  ===============  ===============

                                                     F-50


Our other post-retirement plans are unfunded and participant benefit payments are represented by employer
contributions. Changes in the plans' projected benefit obligation for 2003 and 2002 follow ($ amounts in
millions):

                                                                                2003             2002
                                                                           ---------------  ---------------

Service and interest cost accrued........................................   $       (6.5)    $       (6.9)
Actuarial gain (loss)....................................................           (5.9)           (21.3)
Plan amendments..........................................................           --               16.2
Curtailments.............................................................            0.5             --
Participant benefit payments.............................................            7.4              6.6
                                                                           ---------------  ---------------
Change in projected benefit obligation...................................           (4.5)            (5.4)
Projected benefit obligations, beginning of year.........................          (74.2)           (68.8)
                                                                           ---------------  ---------------
Projected benefit obligations, end of year...............................   $      (78.7)    $      (74.2)
                                                                           ===============  ===============

The funded status of the other post-retirement plans as of December 31, 2003 and 2002 follows ($ amounts
in millions):

                                                                                2003             2002
                                                                           ---------------  ---------------

Accrued benefit obligation included in other liabilities.................   $     (100.5)    $     (106.4)
                                                                           ---------------  ---------------
Net unamortized gain.....................................................            6.3             18.3
Unamortized prior service (costs) credits................................           15.5             13.9
                                                                           ---------------  ---------------
Funding status unrecognized in balance sheet.............................           21.8             32.2
                                                                           ---------------  ---------------
Plan assets less than projected benefit obligations, end of year.........   $      (78.7)    $      (74.2)
                                                                           ===============  ===============

The health care cost trend rate has a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point in each year would increase the accumulated
post-retirement benefit obligation by $0.8 million and the annual service and interest cost by $0.1 million.
Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the
accumulated post-retirement benefit obligation by $0.8 million and the annual service and interest cost by $0.1
million.

Savings plans. We also sponsor savings plans for our qualified employees and agents. Employees and
agents may contribute a portion of their compensation, subject to certain limitations, to the plans. We
contribute an additional amount, subject to limitation, based on the employee or agent contribution. Our
contributions may be in the form of either our common stock or cash.

Management restructuring expense and employment agreements

We have entered into agreements with certain key executives of the Company that will, in certain circumstances,
provide separation benefits upon the termination of the executive's employment by the company for reasons other
than death, disability, cause or retirement, or by the executive for "good reason," as defined in the
agreements. For most of these executives, the agreements provide this protection only if the termination occurs
following (or is effectively connected with) the occurrence of a change of control, as defined in the
agreements.

We recorded a non-recurring expense of $11.4 million ($7.2 million after income taxes) and $43.4 million ($28.5
million after income taxes) in 2003 and 2002, respectively, primarily in connection with organizational and
employment-related costs. Of these amounts, $6.2 million ($4.0 million after income taxes) and $12.9 million
($8.4 million after income taxes) related to our Asset Management segment for 2003 and 2002, respectively.

                                                     F-51


12. Other Comprehensive Income

We record unrealized gains and losses on available-for-sale securities, minimum pension liability
adjustments in excess of unrecognized prior service cost, foreign currency translation gains and losses and
effective portions of the gains or losses on derivative instruments designated as cash flow hedges in
accumulated other comprehensive income. Unrealized gains and losses on available-for-sale securities are
recorded in other comprehensive income until the related securities are sold, reclassified or deemed to be
impaired. Minimum pension liability adjustments in excess of unrecognized prior service cost are adjusted or
eliminated in subsequent periods to the extent that plan assets exceed accumulated benefits. Foreign currency
translation gains and losses are recorded in accumulated other comprehensive income until the foreign entity is
sold or liquidated or the functional currency of that entity is deemed to be highly inflationary. The effective
portions of the gains or losses on derivative instruments designated as cash flow hedges are reclassified into
earnings in the same period in which the hedged transaction affects earnings. If it is probable that a hedged
forecasted transaction will no longer occur, the effective portions of the gains or losses on derivative
instruments designated as cash flow hedges are reclassified into earnings immediately.

Sources of other comprehensive income for 2003, 2002 and 2001 follow ($ amounts in millions):

                                                                             2002                2001
                                                     2003                  Restated            Restated
                                            --------------------- ---------------------- ----------------------
                                              Gross       Net       Gross         Net       Gross        Net
                                            ---------- ---------- ----------- ---------- ---------- -----------

Unrealized gains (losses) on  investments..  $  129.8   $  158.3    $  603.4   $  104.6   $  152.5    $   34.2

Net realized investment losses on
  available-for-sale securities
  included in net income...................    (111.9)     (72.7)      (50.5)     (32.8)     (17.0)      (12.9)
                                            ---------- ---------- ----------- ---------- ---------- -----------
Net unrealized investment gains............      17.9       85.6       552.9       71.8      135.5        21.3

Minimum pension liability adjustment.......       1.7        1.1       (26.8)     (17.4)     (12.8)       (8.3)
Net unrealized foreign currency
  translation adjustment ..................      11.9        8.2         7.1        1.2       (2.6)       (1.7)
Net unrealized derivative instruments
  gains (losses)...........................      41.6       40.3      (128.0)    (129.9)     (23.1)      (25.8)
                                            ---------- ---------- ----------- ---------- ---------- -----------
Other comprehensive income (loss)..........      73.1   $  135.2       405.2   $  (74.3)      97.0    $  (14.5)
                                            ---------- ========== ----------- ========== ---------- ===========
Applicable policyholder
  dividend obligation......................     (45.5)                 369.4                 108.8
Applicable deferred policy acquisition
  cost amortization........................     (12.4)                  95.9                 (28.5)
Applicable deferred income taxes (benefit)       (4.2)                  14.2                  31.2
                                            -----------            ----------            ----------
Offsets to other comprehensive income......     (62.1)                 479.5                 111.5
                                            -----------            ----------            ----------
Other comprehensive income (loss)..........  $  135.2               $  (74.3)             $  (14.5)
                                            ===========            ==========            ==========

                                                     F-52


Components of accumulated other comprehensive income as of December 31, 2003 and 2002 follows ($ amounts
in millions):

                                                                                              2002
                                                                    2003                    Restated
                                                          -------------------------- -------------------------
                                                             Gross         Net         Gross         Net
                                                          ------------ ------------- ----------- -------------

Unrealized gains on investments.........................   $    793.4   $    207.3   $    775.5   $    122.0
Minimum pension liability adjustment (Note 11)..........        (47.3)       (30.7)       (49.0)       (31.8)
Unrealized foreign currency translation adjustment......         10.3          4.1         (1.6)        (4.4)
Unrealized losses on derivative instruments.............       (111.1)      (117.0)      (152.7)      (157.3)
                                                          ------------ ------------- ----------- -------------
Accumulated other comprehensive income..................        645.3   $     63.7        572.2   $    (71.5)
                                                          ------------ ============= ----------- =============
Applicable policyholder dividend obligation.............        432.7                     478.2
Applicable deferred policy acquisition costs............         94.1                     106.5
Applicable deferred income taxes........................         54.8                      59.0
                                                          -------------             -------------
Offsets to accumulated other comprehensive income.......        581.6                     643.7
                                                          -------------             -------------
Accumulated other comprehensive income..................   $     63.7                $    (71.5)
                                                          =============             =============


13. Earnings Per Share

We calculate earnings per share, EPS, on two bases: basic and diluted.  We calculate basic EPS by dividing
earnings available to common stockholders by the weighted-average number of common shares outstanding during
the period. We calculate diluted EPS similarly except that, if applicable, we adjust earnings to reflect
earnings had the dilutive potential common shares been issued during the period, and we increase the
weighted-average number of shares to include the issuance of the dilutive potential common shares.

The following table presents the shares used in the calculation of basic and diluted earnings per share for the
years 2003, 2002, and 2001 (shares in thousands):

                                                                            2003         2002         2001
                                                                         -----------  -----------  -----------

Weighted-average common shares outstanding............................      94,218       97,854      104,578
                                                                         -----------  -----------  -----------
Weighted-average effect of dilutive potential common shares:
    Restricted stock units (1,437 and 573)............................       1,236          143           --
    Employee stock options assumed issued (476).......................          12           --           --
    Equity units assumed issued (17,424)..............................       1,096           --           --
                                                                         -----------  -----------  -----------
Potential common shares...............................................       2,344          143           --
Less:  Potential common shares excluded from calculation
  due to operating losses.............................................       2,344          143           --
                                                                         -----------  -----------  -----------
Dilutive potential common shares......................................          --           --           --
                                                                         -----------  -----------  -----------
Weighted-average common shares outstanding, including
  dilutive potential common shares....................................      94,218       97,854      104,578
                                                                         ===========  ===========  ===========

Employee stock options and equity units excluded from calculation
  due to anti-dilutive exercise prices (i.e., in excess of average
  common share market prices)
    Stock options.....................................................       4,187        4,410           --
    Equity units......................................................          --       17,424           --

The 2001 weighted-average shares outstanding is pro forma and is based on the weighted-average shares
outstanding for the period from the initial public offering to December 31, 2001.

There are no adjustments to net income (loss) for the years 2003, 2002 and 2001 for purposes of calculating
earnings per share.

                                                     F-53


14. Discontinued Operations

During the fourth quarter of 2003, we entered into a purchase and sale agreement to sell 100% of common stock
held by us in Phoenix National Trust Company. This sale is expected to close in the first quarter of 2004. The
financial statement effect of this transaction is immaterial to our consolidated financial statements. The net
after-tax loss included in discontinued operations for the years ended 2003, 2002 and 2001 was $2.1 million,
$1.3 million and $2.5 million, respectively.

During 1999, we discontinued the operations of three of our business segments which in prior years had been
reflected as reportable business segments: reinsurance operations, group life and health operations and real
estate management operations. We sold several operations, had a signed agreement to sell one of the operations
and we implemented plans to withdraw from the remaining businesses.

Total reserves related to our discontinued reinsurance operations, including coverage available from our finite
reinsurance and reserves for amounts recoverable from retrocessionaires, were $185.0 million and $155.0 million
as of December 31, 2003 and 2002, respectively. Our total amounts recoverable from retrocessionaires related to
paid losses were $165.0 million and $65.0 million as of December 31, 2003 and 2002, respectively. We did not
recognize any gains or losses during the years 2003, 2002 and 2001. See Note 17 for additional information on
the discontinued reinsurance business.

We have excluded assets and liabilities of the discontinued operations from the assets and liabilities of
continuing operations and on a net basis included them in other general account assets on our balance sheet.


15. Phoenix Life Statutory Financial Information and Regulatory Matters

Our insurance subsidiaries are required to file annual statements with state regulatory authorities prepared on
an accounting basis prescribed or permitted by such authorities.

As of January 1, 2001 the New York Insurance Department adopted the National Association of Insurance
Commissioners, or the NAIC, Codification of Statutory Accounting Principles guidance, with the exception for
accounting for deferred income taxes. Codification guidance replaced the accounting practices and procedures
manual as the NAIC's primary guidance on statutory accounting; it also provides guidance for areas where
statutory accounting has been silent and changed current statutory accounting in other areas. The effect of
adoption decreased the statutory surplus of our insurance subsidiaries by $66.4 million, primarily as a result
of non-admitting certain assets and recording increased investment reserves. As of December 31, 2002, the New
York Insurance Department adopted the NAIC codification guidance for accounting for deferred income taxes.

As of December 31, 2003, statutory surplus differs from equity reported in accordance with GAAP for life
insurance companies primarily as follows:

    •    policy acquisition costs are expensed when incurred;
    •    investment reserves are based on different assumptions;
    •    surplus notes are included in surplus rather than debt;
    •    post-retirement benefit expense allocated to Phoenix Life relate only to vested participants and
         expense is based on different assumptions and reflect a different method of adoption;
    •    life insurance reserves are based on different assumptions; and
    •    net deferred income tax assets in excess of 10% of previously filed statutory capital and surplus
         are not recorded.

                                                     F-54


Statutory financial data for Phoenix Life as of December 31, 2003, 2002 and 2001 and for the years 2003, 2002
and 2001 are as follows ($ amounts in millions):

                                                                              2003        2002         2001
                                                                           ----------  ----------   ----------

Statutory capital, surplus, surplus notes and asset valuation reserve...   $   961.5   $ 1,008.0    $ 1,371.3
Statutory gain from operations..........................................   $    69.7   $    44.5    $   119.9
Statutory net income (loss).............................................   $    21.5   $     7.5    $   (13.4)

New York Insurance Law requires that New York life insurers report their RBC. RBC is based on a formula
calculated by applying factors to various assets, premium and statutory reserve items. The formula takes into
account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and
business risk. New York insurance law gives the New York Superintendent of Insurance explicit regulatory
authority to require various actions by, or take various actions against, insurers whose total adjusted capital
does not exceed certain RBC levels. Each of the U.S. insurance subsidiaries of Phoenix Life is also subject to
these same RBC requirements. Phoenix Life and each of its insurance subsidiaries' RBC was in excess of 300% of
Company Action Level (the level where a life insurance enterprise must submit a comprehensive plan to state
insurance regulators) as of December 31, 2003 and 2002.

Under New York Insurance Law, Phoenix Life can pay stockholder dividends to us in any calendar year without
prior approval from the New York Insurance Department in the amount of the lesser of 10% of Phoenix Life's
surplus to policyholders as of the immediately preceding calendar year or Phoenix Life's statutory net gain
from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life
paid dividends of $44.5 million in 2003 and is able to pay $69.7 million in dividends in 2004 without prior
approval from the New York Insurance Department. Any additional dividend payments, in excess of $69.7 million
in 2004, would be subject to the discretion of the New York Superintendent of Insurance.


16. Premises and Equipment

Premises and equipment, consisting primarily of office buildings occupied by us, are stated at cost less
accumulated depreciation and amortization. We depreciate buildings on the straight-line method over 10 to 45
years and equipment primarily on a modified accelerated method over 3 to 10 years. We amortize leasehold
improvements over the terms of the related leases.

Premises and equipment are included in other general account assets in our balance sheet. Cost and carrying
value as of December 31, 2003 and 2002 follow ($ amounts in millions):

                                                                     2003                       2002
                                                           -------------------------  ------------------------
                                                                           Carrying                  Carrying
                                                              Cost           Value         Cost        Value
                                                           -----------   -----------  -----------  -----------

Real estate.............................................    $  148.8      $   63.5     $  155.5     $   72.1
Equipment...............................................       188.3          31.8        171.7         30.6
Leasehold improvements..................................        10.5           6.8         10.5          7.3
                                                           -----------   -----------  -----------
                                                                                                   -----------
Premises and equipment cost and carrying value..........       347.6      $  102.1        337.7     $  110.0
                                                                         ===========               ===========
Accumulated depreciation and amortization...............      (245.5)                    (227.7)
                                                           -----------                -----------
Premises and equipment..................................    $  102.1                   $  110.0
                                                           ===========                ===========

Depreciation and amortization expense for premises and equipment for 2003, 2002 and 2001 totaled $19.3 million,
$21.4 million and $20.7 million, respectively.

In February 2004, we announced the execution of an agreement to sell our Enfield, Connecticut office facility,
which sale is expected to close in the second quarter of 2004.

                                                     F-55


Rental expenses for operating leases for continuing operations, principally with respect to buildings, amounted
to $11.4 million, $12.1 million and $13.4 million in 2003, 2002 and 2001, respectively. Future minimum rental
payments under non-cancelable operating leases for continuing operations were $41.5 million as of December 31,
2003, payable as follows: 2004, $11.4 million; 2005, $9.1 million; 2006, $7.6 million; 2007, $6.0 million;
2008, $4.2 million; and $3.2 million thereafter.


17. Contingent Liabilities

In 1999, we discontinued our reinsurance operations through a combination of sale, reinsurance and placement of
certain retained group accident and health reinsurance business into run-off. We adopted a formal plan to stop
writing new contracts covering these risks and to end the existing contracts as soon as those contracts would
permit. However, we remain liable for claims under those contracts. We also purchased finite aggregate
excess-of-loss reinsurance, or finite reinsurance, to further protect us from unfavorable results from this
discontinued business.

We have established reserves for claims and related expenses that we expect to pay on our discontinued group
accident and health reinsurance business. These reserves are a net present value amount that is based on
currently known facts and estimates about, among other things, the amount of insured losses and expenses that
we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will
collect under our finite reinsurance, the amounts we believe we will collect from our retrocessionaires and the
likely legal and administrative costs of winding down the business.

Our total reserves, including coverage available from our finite reinsurance and reserves for amounts
recoverable from retrocessionaires, were $185.0 million and $155.0 million as of December 31, 2003 and 2002
respectively. Our total amounts recoverable from retrocessionaires related to paid losses were $165.0 million
and $65.0 million as of December 31, 2003 and 2002, respectively. We did not recognize any gains or losses
during the years 2003, 2002 and 2001.

We expect our reserves and reinsurance to cover the run-off of the business; however, the nature of the
underlying risks is such that the claims may take years to reach the reinsurers involved. Therefore, we expect
to pay claims out of existing estimated reserves for up to ten years as the level of business diminishes. In
addition, unfavorable claims experience is possible and could result in additional future losses. Given the
uncertainty associated with litigation and other dispute resolution proceedings, as described below, our
estimated amount of the loss on disposal of reinsurance discontinued operations may differ from actual results.
However, it is our opinion, based on current information and after consideration of the provisions made in
these financial statements, as described above, that future developments will not have a material effect on our
financial position.

Unicover Managers, Inc.

A significant portion of the claims arising from our discontinued group accident and health reinsurance
business arises from the activities of Unicover Managers, Inc., or Unicover. Unicover organized and managed a
group, or pool, of insurance companies, or Unicover pool, and two other facilities, or Unicover facilities,
which reinsured the life and health insurance components of workers' compensation insurance policies issued by
various property and casualty insurance companies. We were a member of the Unicover pool but terminated our
participation in the pool effective March 1, 1999.

We are involved in disputes relating to the activities of Unicover. Under Unicover's underwriting authority,
the Unicover pool and Unicover facilities wrote a dollar amount of reinsurance coverage that was many times
greater than originally estimated. As a member of the Unicover pool, we were involved in several proceedings in
which the pool members asserted that they could deny coverage to certain insurers that claimed that they
purchased reinsurance coverage from the pool. Those matters were settled. Also, the pool members are currently
involved

                                                     F-56


in proceedings arising from business ceded to the London market. Those proceedings are in the preliminary
stages.

Further, we were, along with Sun Life Assurance of Canada ("Sun Life") and Cologne Life Reinsurance Company
("Cologne Life"), a retrocessionaire (meaning a reinsurer of other reinsurers) of the Unicover pool and two
other Unicover facilities, providing the pool and facility members with reinsurance of the risks that the pool
and facility members had assumed. In September 1999, we joined an arbitration proceeding that Sun Life had
begun against the members of the Unicover pool and the Unicover facilities. In this arbitration, we and Sun
Life sought to cancel our retrocession agreements on the grounds that material misstatements and nondisclosures
were made to us about, among other things, the amount of risks we would be reinsuring. The arbitration
proceeded only with respect to the Unicover pool because we, Sun Life and Cologne Life reached settlement with
the two Unicover facilities in the first quarter of 2000. In October 2002, the arbitration panel issued its
decision that the agreement by which we provided retrocessional reinsurance to the pool was valid only to the
extent of business bound or renewed to that agreement on or before August 31, 1998. This decision had the
effect of granting us a substantial discount on our potential liabilities, because most of the business was
bound or renewed to the agreement after August 31, 1998. In a clarification dated January 4, 2003, the
arbitration panel confirmed its decision. A significant portion of our remaining potential liabilities as a
retrocessionaire of the pool may be recovered from our retrocessionaires.

In one of the Unicover facilities' settlements, the Reliance facility settlement of January 2000, we paid a
settlement amount of $97.9 million and were released from all of our obligations as a retrocessionaire of the
facility. Subsequently, we were reimbursed by one of our retrocessionaires for $38.8 million of the amount we
paid under the settlement. A significant portion of the remainder of the settlement payment may be recovered
from certain of our other retrocessionaires.

In the other Unicover facilities' settlement, the Lincoln facility settlement of March 2000, we paid a
settlement amount of $11.6 million and were released from all of our obligations as a retrocessionaire of the
facility. A significant portion of the settlement payment may be recovered from certain of our
retrocessionaires.

The likelihood of obtaining the additional recoveries from our retrocessionaires cannot be estimated with a
reliable degree of certainty at this stage of our recovery efforts. This is due in part to the lack of
sufficient claims information (which has resulted from disputes among ceding reinsurers leading to delayed
processing, reporting blockages and standstill agreements among reinsurers) and in part to the matters
discussed below under "Related Proceedings."

The amounts paid and the results achieved in the above settlements and arbitration decision are reflected in
our consolidated financial statements. As the amounts previously reserved for these matters were sufficient, we
established no additional reserves with respect to these settlements and arbitration decision.

Related Proceedings

In our capacity as a retrocessionaire of the Unicover business, we had an extensive program of our own
reinsurance in place to protect us from financial exposure to the risks we had assumed. Currently, we are
involved in separate arbitration proceedings with three of our own retrocessionaires, which are seeking on
various grounds to avoid paying any amounts to us or have reserved rights. Because the same retrocession
program that covers our Unicover business covers a significant portion of our other remaining group accident
and health reinsurance business, we could have additional material losses if one or more of our
retrocessionaires successfully avoids its obligations.

With one of those retrocessionaires, we have three disputes. One concerns an agreement under which the
retrocessionaire reinsures us for up to $45 thousand per loss in excess of a $5 thousand retention. In June
2003, the arbitration panel issued its decision, which upheld in all material respects the retrocessional
obligations to us. The decision is the subject of a pending appeal only with respect to the Unicover business.
The other two

                                                     F-57


disputes will not have a material effect on our reinsurance recoverable balances. As of December 31, 2003, the
reinsurance recoverable balance from this retrocessionaire related to paid losses was $57.0 million, subject to
further development.

The dispute with another retrocessionaire, which sought to avoid an excess-of-loss retrocession agreement, a
surplus share retrocession agreement and a quota share retrocession agreement, was the subject of an
arbitration in November, 2003. In December 2003, the arbitration panel issued its interim decision which is
confidential. The financial implications of the interim decision are consistent with our current financial
provisions. As of December 31, 2003, the reinsurance recoverable balance from this retrocessionaire related to
paid losses was $7.0 million, subject to further development.

The dispute with the third retrocessionaire is the subject of arbitration proceedings that we initiated in
December 2003. The purpose of the arbitration proceedings is to confirm the validity and enforce the terms of
the retrocessional contracts. We had previously entered into a standstill agreement with this retrocessionaire
under which both parties had agreed not to commence any proceedings against the other without providing written
notice within a specified period. The purpose of the agreement was to allow the parties to investigate the
existence and extent of their contractual obligations to each other. As of December 31, 2003, the reinsurance
recoverable balance from this retrocessionaire related to paid losses was $86.0 million, subject to further
development.

At this stage, we cannot predict the outcome of the above matters, nor can we estimate the amount at risk with
a reliable degree of certainty. This is due in part to our lack of sufficient claims information (which has
resulted from disputes among ceding reinsurers that have led to delayed processing, reporting blockages, and
standstill agreements among reinsurers). This applies with regard both to business related to Unicover and not
related to Unicover.

Other Proceedings

Another set of disputes involves personal accident business that was reinsured in the mid-1990s in the London
reinsurance market in which we participated. These disputes involve multiple layers of reinsurance and
allegations that the reinsurance program created by the brokers involved in placing those layers was
interrelated and devised to disproportionately pass losses to a top layer of reinsurers. Many companies who
participated in this business are involved in litigation or arbitration in attempts to avoid their obligations
on the basis of misrepresentation. Because of the complexity of the disputes and the reinsurance arrangements,
many of these companies are currently participating in negotiations of the disputes for certain contract years,
and we believe that similar discussions will follow for the remaining years. Although we are vigorously
defending our contractual rights, we are actively involved in the attempt to reach negotiated business
solutions. At this stage, we cannot predict the outcome, nor can we estimate the amount at risk with a reliable
degree of certainty. This is due in part to our lack of sufficient claims information (which has resulted from
disputes among ceding reinsurers that have led to delayed processing, reporting blockages, and standstill
agreements among reinsurers).

                                                     F-58


18. Condensed Financial Information of The Phoenix Companies, Inc.

A summary of The Phoenix Companies, Inc. (parent company only) financial information as of December 31, 2003
and 2002 and for the years 2003, 2002 and the period from inception (June 25, 2001) through December 31, 2001
follows ($ amounts in millions):

                                                                                                 2002
                                                                                2003           Restated
                                                                           ---------------  ---------------
Parent Company Financial Position
Investment in Phoenix Life...............................................   $    1,637.6     $    1,511.7
Investment in Phoenix Investment Partners................................          231.0            239.5
Investments in other subsidiaries........................................          123.5            107.2
Loans to Phoenix Investment Partners.....................................          377.0            385.0
Advances to subsidiaries.................................................          230.8            217.0
Hilb, Rogal and Hamilton common stock, at fair value (Note 5)............          116.2            148.2
Cash and cash equivalents................................................           22.8             30.4
Intangible assets (Note 11)..............................................           11.0             14.2
Other assets.............................................................          106.6             78.0
                                                                           ---------------  ---------------
Total assets.............................................................   $    2,856.5     $    2,731.2
                                                                           ===============  ===============

Stock purchase contracts (Note 6)........................................   $      128.8     $      137.6
Indebtedness (Note 6)....................................................          464.0            469.3
Accrued pension and post-employment benefits (Note 11)...................          281.1            270.9
Other liabilities........................................................           34.8             26.6
                                                                           ---------------  ---------------
Total liabilities........................................................          908.7            904.4
Total stockholders' equity...............................................        1,947.8          1,826.8
                                                                           ---------------  ---------------
Total liabilities and stockholders' equity...............................   $    2,856.5     $    2,731.2
                                                                           ===============  ===============


                                                                                    2002          2001
                                                                      2003        Restated      Restated
                                                                   -----------  -----------   -----------
 Parent Company Results of Operations
 Dividends received from subsidiary, Phoenix Life...............    $  44.5      $ 113.8          $ 132.3
 Investment income, principally from subsidiary,
   Phoenix Investment Partners..................................       23.0         15.2              1.8
 Net realized investment gains..................................       (0.1)         1.7             --
                                                                  -----------  -----------     -----------
 Total revenues.................................................       67.4        130.7            134.1
                                                                  -----------  -----------     -----------
 Interest expense...............................................       26.9         15.8              0.3
 Demutualization expense........................................       --            1.8             42.6
 Other operating expenses.......................................       18.8          7.2              2.0
                                                                  -----------  -----------     -----------
 Total expenses.................................................       45.7         24.8             44.9
                                                                  -----------  -----------     -----------
 Income before income taxes and equity in undistributed
   losses of subsidiaries.......................................       21.7        105.9             89.2
 Income tax benefit.............................................       (8.5)        (2.2)            (8.0)
                                                                  -----------  -----------     -----------
 Income before equity in undistributed earnings of subsidiaries.       30.2        108.1             97.2
 Equity in undistributed losses of subsidiaries.................      (36.4)      (380.4)          (138.4)
                                                                  -----------  -----------     -----------
 Net loss.......................................................    $  (6.2)     $(272.3)        $  (41.2)
                                                                  ===========  ===========     ===========

                                                     F-59


                                                                                        2002         2001
                                                                            2003      Restated     Restated
                                                                        -----------  -----------  -----------
Parent Company Cash Flows
Cash dividends received from subsidiary...............................   $   44.5     $   67.0     $  132.3
Investment income received............................................        9.7         11.7          0.1
Interest, income taxes and other expenses paid, net...................      (21.0)       (17.4)       (42.1)
                                                                        -----------  -----------  -----------
Cash from operating activities........................................       33.2         61.3         90.3
                                                                        -----------  -----------  -----------
Advances to subsidiaries and capital contributed to subsidiaries......       (7.8)      (287.4)      (240.6)
Purchase of subsidiaries..............................................      (17.9)        --         (659.8)
Equity security purchases.............................................       --         (157.4)        --
Debt and equity security sales........................................       --           72.8         --
                                                                        -----------  -----------  -----------
Cash for investing activities.........................................      (25.7)      (372.0)      (900.4)
                                                                        -----------  -----------  -----------
Stock purchase contract and indebtedness proceeds.....................       --          283.0        290.1
Common stock issuance.................................................       --           --          831.0
Common stock repurchase...............................................       --         (131.1)       (64.6)
Common stock dividend paid............................................      (15.1)       (15.8)        --
Payments to subsidiary to reimburse policyholder
  credits and payments in lieu of stock...............................       --           --          (41.4)
                                                                        -----------  -----------  -----------
Cash (for) from financing activities..................................      (15.1)       136.1      1,015.1
                                                                        -----------  -----------  -----------
Change in cash and cash equivalents...................................       (7.6)      (174.6)       205.0
Cash and cash equivalents, beginning of year..........................       30.4        205.0         --
                                                                        -----------  -----------  -----------
Cash and cash equivalents, end of year................................   $   22.8     $   30.4     $  205.0
                                                                        ===========  ===========  ===========


19. Additional Operating Cash Flow Information

Operating activities are presented in the Consolidated Statement of Cash Flows on a direct basis.  The
indirect basis reconciles net income (loss) to cash from (for) operating activities.  This reconciliation
follows ($ amounts in millions):

                                                                                         2002         2001
                                                                            2003       Restated     Restated
                                                                        -----------  -----------  -----------

 OPERATING ACTIVITIES
 Loss from continuing operations.......................................  $   (4.1)    $ (140.7)    $ (147.3)
 Net realized investment losses........................................     100.5        133.9         84.9
 Amortization and depreciation.........................................      52.5        122.4         70.2
 Investment loss.......................................................      78.5         67.2         97.4
 Securitized financial instruments and derivatives.....................      --           --           16.6
 Deferred income tax benefit...........................................     (11.9)       (42.4)       (39.3)
 Increase in receivables...............................................      (7.7)        (8.3)        (5.3)
 Deferred policy acquisition costs increase............................    (111.4)      (206.4)       (76.2)
 Decrease in policy liabilities and accruals...........................     454.1        473.4        322.1
 Other assets and other liabilities net change.........................    (157.4)       (83.0)       (71.9)
                                                                        -----------  -----------  -----------
 Cash from continuing operations.......................................     393.1        316.1        251.2
 Discontinued operations, net..........................................     (36.5)       (59.1)       (76.8)
                                                                        -----------  -----------  -----------
 Cash from operating activities........................................  $  356.6     $  257.0     $  174.4
                                                                        ===========  ===========  ===========

                                                     F-60


20. Supplemental Unaudited Financial Information

We have restated certain 2002 and 2001 amounts on our Consolidated Statement of Income and Comprehensive Income
and our Consolidated Balance Sheet with respect to our method of consolidation for several of our sponsored
collateralized obligation trusts which we further describe in Note 8. Summarized selected, revised and
originally reported quarterly financial data for 2003 and 2002 follows ($ amounts in millions, except per share
amounts):

                                                         For the Quarter Ended
                             -------------------------------------------------------------------------------
                                                                  2003
                             -------------------------------------------------------------------------------
                             Mar 31,   Mar 31,   June 30,  June 30,  Sept 30,  Sept 30,  Dec 31,    Dec 31,
                                As        As        As        As        As        As        As        As
                             Restated  Reported  Restated  Reported  Restated  Reported  Restated  Reported
                             --------- --------- --------- --------- --------- --------- --------- ---------

Revenues.................... $ 655.4   $  643.1  $  554.6  $  541.2  $  693.7  $  681.8  $  710.7  $  698.5

Income (loss) from
  continuing operations..... $   1.7   $    3.5  $  (49.2) $  (49.1) $   13.6  $   14.4  $   29.8  $   29.5

Income (loss) before
  cumulative effect of
  accounting changes........ $   1.3   $    3.1  $  (49.6) $  (49.5) $   13.2  $   14.0  $   28.9  $   28.6

Net income (loss)........... $   1.3   $    3.1  $  (49.6) $  (49.5) $   13.2  $   14.0  $   28.9  $   (3.0)

Earnings (loss) per share:
  Basic..................... $  0.01   $   0.03   $ (0.53)    (0.53) $   0.14  $   0.15  $   0.31  $  (0.03)
  Diluted................... $  0.01   $   0.03   $ (0.53)    (0.53) $   0.13  $   0.14  $   0.29  $  (0.03)


                                                         For the Quarter Ended
                             -------------------------------------------------------------------------------
                                                                  2002
                             -------------------------------------------------------------------------------
                             Mar 31,   Mar 31,   June 30,  June 30,  Sept 30,  Sept 30,   Dec 31,   Dec 31,
                                As        As        As        As        As        As        As        As
                             Restated  Reported  Restated  Reported  Restated  Reported  Restated  Reported
                             --------- --------- --------- --------- --------- --------- --------- ---------

Revenues.................... $  599.6  $  593.6  $  596.8  $  592.1  $  661.5  $  654.5  $  598.4  $  611.4

Income (loss) from
  continuing operations..... $   26.3  $   29.2  $  (40.7) $  (36.8) $  (92.6) $  (92.6) $  (33.7) $  (14.2)

Income (loss) before
  cumulative effect of
  accounting changes........ $   26.0  $   28.9  $  (41.1) $  (37.2) $  (93.0) $  (93.0) $  (33.9) $  (14.4)

Net income (loss)........... $ (104.3) $ (101.4) $  (41.1) $  (37.2) $  (93.0) $  (93.0) $  (33.9) $  (14.4)

Earnings (loss) per share:
  Basic..................... $  (1.03) $  (1.00) $  (0.41) $  (0.37) $  (0.96) $  (0.96) $  (0.36) $  (0.15)
  Diluted................... $  (1.03) $  (1.00) $  (0.41) $  (0.37) $  (0.96) $  (0.96) $  (0.36) $  (0.15)

                                                     F-61






















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                                                 EXHIBIT INDEX

    Exhibit
- ----------------

         2.1     Plan of Reorganization

         3.1     Form of Amended and Restated Certificate of Incorporation of The Phoenix Companies, Inc.
                 (incorporated herein by reference to Exhibit 3.1 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-l (Registration No. 333-73896), filed on November 21, 2001, as amended)

         3.2     Form of By-Laws of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibit
                 3.1 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No.
                 333-73896), filed on November 21, 2001, as amended)

         4.1     Indenture dated as of December 27, 2001, between The Phoenix Companies, Inc. and SunTrust
                 Bank, as Trustee (incorporated herein by reference to Exhibit 4.1 to The Phoenix Companies,
                 Inc. annual report on Form 10-K filed March 27, 2001

         4.2     Specimen of global bond dated as of December 27, 2001, issued by The Phoenix Companies, Inc.
                 (incorporated herein by reference to Exhibit 4.2 to The Phoenix Companies, Inc. annual report
                 on Form 10-K filed March 27, 2001

         4.3     Fiscal Agency Agreement dated as of November 25, 1996, between Phoenix Home Life Mutual
                 Insurance Company, as Issuer and The Bank of New York as Fiscal Agent (incorporated herein by
                 reference to Exhibit 10.24 to The Phoenix Companies, Inc. Registration Statement on Form S-1
                 (Registration No. 333-55268), filed on February 9, 2001, as amended)

         4.4     Global Note dated as of November 25, 1996, between Phoenix Home Life Mutual Insurance Company,
                 Bear, Stearns & Co, Inc., Chase Securities Inc., Merrill Lynch & Co. and The Bank of New York
                 (incorporated herein by reference to Exhibit 10.25 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-1 (Registration No. 333-55268), filed on February 9, 2001, as amended)

         4.5     Underwriting Agreement General Terms and Conditions dated December 16, 2002, including the
                 Pricing Agreement, dated December 16, 2002 (Equity Units of the Company (incorporated herein
                 by reference to Exhibit 1.1 to The Phoenix Companies, Inc. current report on Form 8-K dated
                 December 16, 2002)

         4.6     Subordinated Indenture dated as of December 20, 2002 between the Company and SunTrust Bank as
                 Trustee (incorporated herein by reference to Exhibit 4.1 to The Phoenix Companies, Inc.
                 current report on Form 8-K dated December 16, 2002)

         4.7     Supplemental Indenture No. 1 dated as of December 20, 2002, to the Subordinated Indenture
                 incorporated by reference as Exhibit 4.6 hereto, between the Company and SunTrust Bank as
                 Trustee (incorporated herein by reference to Exhibit 4.2 to The Phoenix Companies, Inc.
                 current report on Form 8-K dated December 16, 2002)

         4.8     Purchase Contract Agreement dated as of December 20, 2002, between the Company and SunTrust
                 Bank as Purchase Contract Agent (incorporated herein by reference to Exhibit 4.3 to The
                 Phoenix Companies, Inc. current report on Form 8-K dated December 16, 2002)

         4.9     Pledge Agreement dated as of December 20, 2002, between the Company and SunTrust Bank as
                 Collateral Agent, Custodial Agent, Securities Intermediary and Purchase Contract Agent
                 (incorporated herein by reference to Exhibit 4.4 to The Phoenix Companies, Inc. current report
                 on Form 8-K dated December 16, 2002)

         4.10    Remarketing Agreement dated December 20, 2002, by and among the Company, Morgan Stanley & Co.
                 Incorporated as Remarketing Agent, and SunTrust Bank as Purchase Contract Agent (incorporated
                 herein by reference to Exhibit 4.5 to The Phoenix Companies, Inc. current report on Form 8-K
                 dated December 16, 2002)

        10.1     Phoenix Home Life Mutual Insurance Company Long-term Incentive Plan (incorporated herein by
                 reference to Exhibit 10.1 to The Phoenix Companies, Inc. Registration Statement on Form S-l
                 (Registration No. 333- 55268), filed on February 9, 2001, as amended)

                                                      E-1


        10.2     The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit
                 10.2 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No.
                 333-55268), filed on February 9, 2001, as amended)

        10.3     Phoenix Home Life Mutual Insurance Company Mutual Incentive Plan (incorporated herein by
                 reference to Exhibit 10.3 to The Phoenix Companies, Inc. Registration Statement on Form S-1
                 (Registration No. 333- 55268), filed on February 9, 2001, as amended)

        10.4     The Phoenix Companies, Inc. Directors Stock Plan (incorporated herein by reference to Exhibit
                 10.4 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No.
                 333-55268), filed on February 9, 2001, as amended)

        10.5     Phoenix Home Life Mutual Insurance Company Excess Benefit Plan (incorporated herein by
                 reference to Exhibit 10.5 to The Phoenix Companies, Inc. Registration Statement on Form S-l
                 (Registration No. 333- 55268), filed on February 9, 2001, as amended)

        10.6     Amendment to Phoenix Home Life Mutual Insurance Company Excess Benefit Plan (incorporated
                 herein by reference to Exhibit 10.6 to The Phoenix Companies, Inc. Registration Statement on
                 Form 8-1 (Registration No. 333-55268), filed on February 9, 2001, as amended)

        10.7     Second Amendment to Phoenix Home Life Mutual Insurance Company Excess Benefit Plan
                 (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-l (Registration No. 333-55268), filed on February 9, 2001, as amended)

        10.8     Third Amendment to The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated
                 effective January 1, 1988 (incorporated herein by reference to Exhibit 10.8 to The Phoenix
                 Companies, Inc. annual report of Form 10-K filed March 27, 2001)

        10.9     Fourth Amendment to The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated
                 effective January 1994 (incorporated herein by reference to Exhibit 10.9 to The Phoenix
                 Companies, Inc. annual report of Form 10-K filed March 27, 2001)

       10.10     Phoenix Home Life Mutual Insurance Company Excess Investment Plan (incorporated herein by
                 reference to Exhibit 10.8 to The Phoenix Companies, Inc. Registration Statement on Form S-1
                 (Registration No. 333- 55268), filed on February 9, 2001, as amended)

       10.11     Amendment to Phoenix Home Life Mutual Insurance Company Excess Investment Plan (incorporated
                 herein by reference to Exhibit 10.9 to The Phoenix Companies, Inc. Registration Statement on
                 Form S-1 (Registration No. 333-55268), filed on February 9, 2001, as amended)

       10.12     Second Amendment to Phoenix Home Life Mutual Insurance Company Excess Investment Plan
                 (incorporated herein by reference to Exhibit 10.10 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-l (Registration No. 333-55268), filed on February 9, 2001, as amended)

       10.13     Third Amendment to Phoenix Home Life Mutual Insurance Company Excess Investment Plan
                 (incorporated herein by reference to Exhibit 10.11 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-1 (Registration No. 333-55268), filed on February 9, 2001, as amended)

       10.14     The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended
                 and restated effective January 1, 2003 (incorporated herein by reference to Exhibit 10.14 to
                 The Phoenix Companies, Inc. annual report in Form 10-K filed March 21, 2003)

       10.15     Phoenix Investment Partners 2001 Phantom Option Plan (incorporated herein by reference to
                 Exhibit 10.15 to The Phoenix Companies, Inc. annual report in Form 10-K filed March 21, 2003)

       10.16     Phoenix Investment Partners 2002 Phantom Option Plan (incorporated herein by reference to
                 Exhibit 10.16 to The Phoenix Companies, Inc. annual report in Form 10-K filed March 21, 2003)

       10.17     Phoenix Investment Partners, Ltd 2002 Management Incentive Plan - Corporate (incorporated
                 herein by reference to Exhibit 10.17 to The Phoenix Companies, Inc. annual report in Form 10-K
                 filed March 21, 2003)

       10.18     Phoenix Investment Partners, Ltd 2002 - Associate Incentive Plan (incorporated herein by
                 reference to Exhibit 10.18 to The Phoenix Companies, Inc. annual report in Form 10-K filed
                 March 21, 2003)

                                                      E-2


       10.19     Phoenix Investment Partners, Ltd 2002 Investment Incentive Plan - DPIM Fixed Income
                 (incorporated herein by reference to Exhibit 10.19 to The Phoenix Companies, Inc. annual
                 report in Form 10-K filed March 21, 2003)

       10.20     The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term
                 Incentive Plan (incorporated herein by reference to Exhibit B to The Phoenix Companies, Inc.
                 2003 Proxy Statement, filed on March 21, 2003)

       10.21     Stockholder Rights Agreement dated as of June 19, 2001 (incorporated herein by reference to
                 Exhibit 10.24 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration
                 No. 333 73896), filed on November 21, 2001, as amended)

       10.22     Binder of Reinsurance dated as of September 30, 1999, between Phoenix Home Life Mutual
                 Insurance Company, American Phoenix Life & Reassurance Company and European Reinsurance
                 Company of Zurich (Bermuda Branch)(+) (incorporated herein by reference to Exhibit 10.36 to
                 The Phoenix Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-55268),
                 filed on February 9, 2001, as amended)

       10.23     Amendment No. 1 dated as of February 1, 2000, to the Binder of Reinsurance, dated as of
                 September 30, 1999, between Phoenix Home Life Mutual Insurance Company, American Phoenix Life
                 & Reassurance Company and European Reinsurance Company of Zurich (Bermuda Branch)( +)
                 (incorporated herein by reference to Exhibit 10.37 to The Phoenix Companies, Inc. Registration
                 Statement on Form S-l (Registration No. 333-55268), filed on February 9, 2001, as amended)

       10.24     Stock Purchase Agreement dated as of June 23, 1999, between Banco Suquia S.A. and PM Holdings,
                 Inc. (incorporated herein by reference to Exhibit 10.41 to The Phoenix Companies, Inc.
                 Registration Statement on Form S-l (Registration No. 333-55268), filed on February 9, 2001, as
                 amended)

       10.25     Acquisition Agreement dated as November 10, 1999, between Selling Management Shareholders,
                 Aberdeen Asset Management PLC, The Standard Life Assurance Co., The Non-Selling Management
                 Shareholders, Lombard International Assurance SA and PM Holdings, Inc. (incorporated herein by
                 reference to Exhibit 10.43 to The Phoenix Companies, Inc. Registration Statement on Form S-l
                 (Registration No. 333-55268), filed on February 9, 2001, as amended)

       10.26     Stock Purchase Agreement dated as of November 12, 1999, by and between TCW/EMCO Holding LLC
                 and PM Holdings, Inc. (incorporated herein by reference to Exhibit 10.44 to The Phoenix
                 Companies, Inc. Registration Statement on Form S-l (Registration No. 333-55268), filed on
                 February 9, 2001, as amended)

       10.27     Subordination Agreement dated as of June 11, 2001 between Phoenix Home Life Mutual Insurance
                 Company and Phoenix Investment Partners, Ltd. (incorporated herein by reference to Exhibit
                 10.64 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No.
                 333-55268), filed on February 9, 2001, as amended)

       10.28     Standstill Agreement dated May 18, 2001, between The Phoenix Companies, Inc. and State Farm
                 Mutual Insurance Company (incorporated herein by reference to Exhibit 4.2 to The Phoenix
                 Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-55268), filed on
                 February 9, 2001, as amended)

       10.29     Shareholder's Agreement dated as of June 19, 2001, between The Phoenix Companies, Inc. and
                 State Farm Mutual Insurance Company (incorporated herein by reference to Exhibit 10.56 to The
                 Phoenix Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-73896), filed
                 on November 21, 2001, as amended)

       10.30     Acquisition Agreement, dated as of November 12, 2001, by and among Kayne Anderson Rudnick
                 Investment Management, LLC, the equity holders named therein and Phoenix Investment Partners,
                 Ltd. (incorporated herein by reference to Exhibit 10.57 to The Phoenix Companies, Inc.
                 Registration Statement on Form S-1 (Registration No. 333-73896), filed on November 21, 2001,
                 as amended)

       10.31     Subordination Agreement dated as of December 27, 2001 between The Phoenix Companies, Inc. and
                 Phoenix Investment Partners, Ltd. (incorporated herein by reference to Exhibit 10.64 to The
                 Phoenix Companies, Inc. annual report on Form 10-K filed March 27, 2001)

                                                      E-3


       10.32     Subordination Agreement dated as of January 29, 2002 between The Phoenix Companies, Inc. and
                 Phoenix Investment Partners, Ltd. (incorporated herein by reference to Exhibit 10.65 to The
                 Phoenix Companies, Inc. annual report on Form 10-K filed March 27, 2001)

       10.33     Credit Agreement dated as of December 22, 2003 between The Phoenix Companies, Inc., Phoenix
                 Life Insurance Company, Phoenix Investment Partners, Ltd. and various financial institutions *

       10.34     Executive Employment Agreement dated as of January 1, 2003, between The Phoenix Companies,
                 Inc. and Dona D. Young (incorporated herein by reference to Exhibit 99.1 to The Phoenix
                 Companies, Inc. current report on Form 8-K dated January 1, 2003)

       10.35     Employment Continuation Agreement dated January 1, 2003, between The Phoenix Companies, Inc.
                 and Dona D. Young (incorporated herein by reference to Exhibit 99.2 to The Phoenix Companies,
                 Inc. current report on Form 8-K dated January 1, 2003)

       10.36     Restructured Stock Units Agreement dated as of January 25, 2003, between The Phoenix
                 Companies, Inc. and Dona D. Young (incorporated herein by reference to Exhibit 10.1 to The
                 Phoenix companies, Inc. quarterly report on Form 10-Q filed August 14, 2003)

       10.37     Retirement and Transition Agreement dated September 27, 2002, between Robert W. Fiondella and
                 The Phoenix Companies, Inc. (incorporated herein by reference to Exhibit 99.2 to The Phoenix
                 Companies, Inc. current report on Form 8-K dated September 30, 2002)

       10.38     Amendment dated February 10, 2003 to Retirement and Transition Agreement between The Phoenix
                 Companies, Inc. and Robert W. Fiondella (incorporated herein by reference to Exhibit 10.49 to
                 The Phoenix Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.39     Change in Control Agreement dated as of November 6, 2000, between Phoenix Home Life Mutual
                 Insurance Company and Michael J. Gilotti (incorporated herein by reference to Exhibit 10.50 to
                 The Phoenix Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.40     Severance Agreement dated December 20, 2000, between Phoenix Home Life Mutual Insurance
                 Company and Michael J. Gilotti (incorporated herein by reference to Exhibit 10.51 to The
                 Phoenix Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.41     Change in Control Agreement dated as of January 1, 2003, between The Phoenix Companies, Inc.
                 and Michael J. Gilotti (incorporated herein by reference to Exhibit 10.52 to The Phoenix
                 Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.42     2002 Incentive Plan for Michael J. Gilotti (incorporated herein by reference to Exhibit 10.53
                 to The Phoenix Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.43     Change in Control Agreement dated as of February 1, 2001, between Phoenix Investment Partners,
                 Ltd. and Michael E. Haylon (incorporated herein by reference to Exhibit 10.54 to The Phoenix
                 Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.44     Severance Agreement dated as of February 1, 2001, between Phoenix Investment Partners, Ltd.
                 and Michael E. Haylon (incorporated herein by reference to Exhibit 10.55 to The Phoenix
                 Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.45     Change in Control Agreement dated as of January 1, 2003, between The Phoenix Companies, Inc.
                 and Michael E. Haylon (incorporated herein by reference to Exhibit 10.56 to The Phoenix
                 Companies, Inc. annual report on Form 10-K filed March 21, 2003)

       10.46     Offer Letter dated April 14, 2003 by The Phoenix Companies, Inc. to Daniel T. Geraci
                 (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. quarterly
                 report on Form 10-Q filed August 14, 2003)

       10.47     Change in Control Agreement dated as of May 12, 2003, between The Phoenix Companies, Inc. and
                 Daniel T. Geraci (incorporated herein by reference to Exhibit 10.3 to The Phoenix Companies,
                 Inc. quarterly report on Form 10-Q filed August 14, 2003)

       10.48     Restricted Stock Units Agreement dated as of May 12, 2003 between The Phoenix Companies, Inc.
                 and Daniel T. Geraci (incorporated herein by reference to Exhibit 10.4 to The Phoenix
                 Companies, Inc. quarterly report on Form 10-Q filed August 14, 2003)

                                                      E-4


       10.49     Change in Control Agreement dated as of January 1, 2003, between The Phoenix Companies, Inc.
                 and Coleman D. Ross *

       10.50     Offer Letter dated February 9, 2004, by The Phoenix Companies, Inc. to Philip K. Polkinghorn *

          12     Ratio of Earnings to Fixed Charges*

          21     Subsidiaries of the Registrant *

          23     Consent of PricewaterhouseCoopers LLP*

        31.1     Certification of Dona D. Young, Chief Executive Officer, pursuant to Section 302 of the
                 Sarbanes-Oxley Act of 2002 *

        31.2     Certification of Michael E. Haylon, Chief Financial Officer, pursuant to Section 302 of the
                 Sarbanes-Oxley Act of 2002 *

          32     Certification by Dona D. Young, Chief Executive Officer and Michael E. Haylon, Chief Financial
                 Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

- --------------------------

           *     Filed herewith

         (+)     Portions subject to confidential treatment request

Phoenix will furnish any exhibit upon the payment of a reasonable fee, which fee shall be limited to Phoenix's
reasonable expenses in furnishing such exhibit.

                                                      E-5





























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EX-99

                                                                                                  Exhibit 10.33

                                                                                                 EXECUTION COPY




===============================================================================================================

                                               U.S. $150,000,000

                                                CREDIT AGREEMENT

                                         Dated as of December 22, 2003

                                                    Between

                                          THE PHOENIX COMPANIES, INC.

                                         PHOENIX LIFE INSURANCE COMPANY

                                       PHOENIX INVESTMENT PARTNERS, LTD.

                                    THE FINANCIAL INSTITUTIONS PARTY HERETO,

                          WACHOVIA BANK, NATIONAL ASSOCIATION, as ADMINISTRATIVE AGENT

                                   FLEET NATIONAL BANK, as SYNDICATION AGENT

                              FLEET SECURITIES, INC. AND WACHOVIA SECURITIES, LLC

                                            AS JOINT LEAD ARRANGERS

                            The BANK OF NEW YORK AND PNC BANK, NATIONAL ASSOCIATION,
                                            AS DOCUMENTATION AGENTS


===============================================================================================================








                                               TABLE OF CONTENTS

SECTION                                             HEADING                                                PAGE



ARTICLE I  DEFINITIONS........................................................................................1

     Section 1.1.     Certain Defined Terms...................................................................1
     Section 1.2.     Other Interpretive Provisions..........................................................17
     Section 1.3.     Accounting Principles..................................................................18



ARTICLE II  THE CREDITS......................................................................................18

     Section 2.1.     Amounts and Terms of Commitments.......................................................18
     Section 2.2.     Loan Accounts..........................................................................19
     Section 2.3.     Procedure for Borrowing................................................................20
     Section 2.4.     Conversion and Continuation Elections..................................................21
     Section 2.5.     Voluntary Termination or Reduction of Commitments......................................22
     Section 2.6.     Optional Prepayments...................................................................23
     Section 2.7.     Repayment..............................................................................26
     Section 2.8.     Interest...............................................................................26
     Section 2.9.     Fees...................................................................................27
     Section 2.10.    Computation of Fees and Interest.......................................................29
     Section 2.11.    Payments...............................................................................29
     Section 2.12.    Payments by the Banks to the Administrative Agent......................................30
     Section 2.13.    Sharing of Payments, Etc...............................................................31



ARTICLE III  TAXES, YIELD PROTECTION AND ILLEGALITY..........................................................33


     Section 3.1.     Taxes..................................................................................33
     Section 3.2.     Illegality.............................................................................34
     Section 3.3.     Increased Costs and Reduction of Return................................................35
     Section 3.4.     Funding Losses.........................................................................35
     Section 3.5.     Inability to Determine Rates...........................................................36
     Section 3.6.     Certificates of Banks..................................................................36
     Section 3.7.     Survival...............................................................................36



ARTICLE IV  CONDITIONS PRECEDENT.............................................................................36


     Section 4.1.     Conditions of Initial Loans............................................................36
     Section 4.2.     Conditions to All Borrowings...........................................................38



ARTICLE V  REPRESENTATIONS AND WARRANTIES....................................................................39


     Section 5.1.     Corporate Existence and Power..........................................................39
     Section 5.2.     Corporate Authorization; No Contravention..............................................40




     Section 5.3.     Governmental Authorization.............................................................40
     Section 5.4.     Binding Effect.........................................................................40
     Section 5.5.     Litigation.............................................................................40
     Section 5.6.     Contractual Obligation.................................................................41
     Section 5.7.     ERISA Compliance.......................................................................41
     Section 5.8.     Use of Proceeds; Margin Regulations....................................................41
     Section 5.9.     Title to Properties....................................................................41
     Section 5.10.    Taxes..................................................................................42
     Section 5.11.    Financial Condition....................................................................42
     Section 5.12.    Environmental Matters..................................................................43
     Section 5.13.    Regulated Entities.....................................................................43
     Section 5.14.    No Burdensome Restrictions.............................................................43
     Section 5.15.    Copyrights, Patents, Trademarks and Licenses, Etc......................................43
     Section 5.16.    Subsidiaries...........................................................................43
     Section 5.17.    Insurance..............................................................................43
     Section 5.18.    Full Disclosure........................................................................43
     Section 5.19.    Compliance.............................................................................44



ARTICLE VI  AFFIRMATIVE COVENANTS............................................................................44


     Section 6.1.     Financial Statements...................................................................44
     Section 6.2.     Certificates; Other Information........................................................45
     Section 6.3.     Notices................................................................................46
     Section 6.4.     Preservation of Corporate Existence, Etc...............................................47
     Section 6.5.     Maintenance of Property................................................................47
     Section 6.6.     Insurance..............................................................................47
     Section 6.7.     Payment of Obligations.................................................................47
     Section 6.8.     Compliance with Laws...................................................................48
     Section 6.9.     Compliance with ERISA..................................................................48
     Section 6.10.    Inspection of Property and Books and Records...........................................48
     Section 6.11.    Environmental Laws.....................................................................48
     Section 6.12.    Use of Proceeds........................................................................48



ARTICLE VII  NEGATIVE COVENANTS..............................................................................49


     Section 7.1.     Limitation on Liens....................................................................49
     Section 7.2.     Mergers, Consolidations and Sales of Assets............................................50
     Section 7.3.     Loans and Investments..................................................................51
     Section 7.4.     Limitation on Indebtedness.............................................................52
     Section 7.5.     Transactions with Affiliates...........................................................52
     Section 7.6.     Use of Proceeds........................................................................52
     Section 7.7.     Contingent Obligations.................................................................52
     Section 7.8.     Joint Ventures.........................................................................53
     Section 7.9.     Restricted Payments....................................................................53
     Section 7.10.    ERISA..................................................................................53
     Section 7.11.    Change in Business.....................................................................53

                                                      ii


     Section 7.12.    Accounting Changes.....................................................................53
     Section 7.13.    Pari Passu.............................................................................53
     Section 7.14.    Phoenix................................................................................53



ARTICLE VIII  PARENT'S FINANCIAL COVENANTS...................................................................54


     Section 8.1.     Parent Total Debt to Capitalization Ratio..............................................54
     Section 8.2.     Shareholders' Equity...................................................................54
     Section 8.3.     Parent Consolidated Fixed Charge Coverage Ratio........................................54



ARTICLE IX  PLIC FINANCIAL COVENANTS.........................................................................54


     Section 9.1.     Risk Based Capital.....................................................................54
     Section 9.2.     A.M. Best Rating.......................................................................54



ARTICLE X  GUARANTIES 55

     Section 10.1.    Guaranty...............................................................................55
     Section 10.2.    Guaranty Unconditional.................................................................55
     Section 10.3.    Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances............56
     Section 10.4.    Waiver by the Parent...................................................................56
     Section 10.5.    Subrogation............................................................................56
     Section 10.6.    Stay of Acceleration...................................................................56



ARTICLE XI  EVENTS OF DEFAULT................................................................................56


     Section 11.1.    Event of Default.......................................................................56
     Section 11.2.    Remedies...............................................................................58
     Section 11.3.    Rights Not Exclusive...................................................................59



ARTICLE XII  THE ADMINISTRATIVE AGENT........................................................................59


     Section 12.1.    Appointment............................................................................59
     Section 12.2.    Delegation of Duties...................................................................59
     Section 12.3.    Exculpatory Provisions.................................................................59
     Section 12.4.    Reliance by Administrative Agent.......................................................60
     Section 12.5.    Notice of Default......................................................................61
     Section 12.6.    Non-Reliance on Administrative Agent and Other Banks...................................61
     Section 12.7.    Indemnification........................................................................61
     Section 12.8.    Administrative Agent in Its Individual Capacity........................................62
     Section 12.9.    Successor Administrative Agent.........................................................62
     Section 12.10.   Syndication Agent and Documentation Agent..............................................63

                                                      iii


ARTICLE XIII  MISCELLANEOUS..................................................................................63


     Section 13.1.    Amendments and Waivers.................................................................63
     Section 13.2.    Notices................................................................................64
     Section 13.3.    No Waiver; Cumulative Remedies.........................................................65
     Section 13.4.    Costs and Expenses.....................................................................65
     Section 13.5.    Indemnity..............................................................................65
     Section 13.6.    Payments Set Aside.....................................................................66
     Section 13.7.    Successors and Assigns.................................................................66
     Section 13.8.    Assignments, Participations, etc.......................................................66
     Section 13.9.    Confidentiality........................................................................69
     Section 13.10.   Set-off................................................................................69
     Section 13.11.   Automatic Debits of Fees...............................................................70
     Section 13.12.   Notification of Addresses, Lending Offices, Etc........................................70
     Section 13.13.   Counterparts...........................................................................70
     Section 13.14.   Severability...........................................................................71
     Section 13.15.   No Third Parties Benefits..............................................................71
     Section 13.16.   Governing Law and Jurisdiction.........................................................71
     Section 13.17.   Waiver of Jury Trial...................................................................71
     Section 13.18.   Entire Agreement.......................................................................72

                                                      iv



SCHEDULES
Schedule 2.1(a)   Tranche A Commitments
Schedule 2.1(b)   Tranche B Commitments
Schedule 5.7(c)   Unfunded Pension Liability
Schedule 7.1      Permitted Liens
Schedule 7.7      Contingent Obligations

EXHIBITS

Exhibit A-1       Form of Notice of Tranche A Borrowing
Exhibit A-2       Form of Notice of Tranche B Borrowing
Exhibit B-1       Form of Notice of Conversion/Continuation for Tranche A Loans
Exhibit B-2       Form of Notice of Conversion/Continuation for Tranche B Loans
Exhibit B-3       Form of Notice of Conversion/Continuation for Converted Tranche A Loan
Exhibit C         Form of Compliance Certificate
Exhibit D-1       Form of Legal Opinion of PXP's, PLIC's and Parent's Independent Counsel
Exhibit D-2       Form of Legal Opinion of PXP's In-House Counsel
Exhibit D-3       Form of Legal Opinion of PLIC's In-House Counsel
Exhibit D-4       Form of Legal Opinion of Parent's In-House Counsel
Exhibit E-1       Form of Assignment and Acceptance for Tranche A Loans
Exhibit E-2       Form of Assignment and Acceptance for Tranche B Loans
Exhibit E-3       Form of Assignment and Acceptance for Converted Tranche A Loan
Exhibit F         Form of Tranche A Note
Exhibit G         Form of Tranche B Note
Exhibit H         Form of Converted Tranche A Note
Exhibit I         Primary Subsidiaries
Exhibit J         Certain Undertakings



                                                       v


                                                CREDIT AGREEMENT

To the Agents and each of the Financial
  Institutions which are or become parties hereto:

         The undersigned The Phoenix Companies, Inc., a Delaware Corporation (the "Parent"), Phoenix Life
Insurance Company, a New York stock insurance company ("PLIC") and Phoenix Investment Partners, Ltd., a
Delaware corporation ("PXP"), apply to you for your several commitments to extend credit to them on and subject
to the terms and conditions hereinafter set forth.

                                                   ARTICLE I

                                                  DEFINITIONS

         Section 1.1.      Certain Defined Terms. The following terms have the following meanings:

         "Acquisition" means any transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership
interests or equity of any Person, or otherwise causing any Person to become a Subsidiary of the Parent, or (c)
a merger or consolidation or any other combination with another Person (other than a Person that is a
Subsidiary of the survivor) provided that the Parent or a Subsidiary thereof is the surviving entity.

         "Administrative Agent" means Wachovia, in its capacity as administrative agent for the Banks
hereunder, and any successor administrative agent arising under Section 12.9.

         "Administrative Agent's Payment Office" means the address for payments set forth on the signature page
hereto in relation to the Administrative Agent, or such other address as the Administrative Agent may from time
to time specify.

         "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of the other Person, whether through the ownership of voting securities, by
contract, or otherwise.

         "Agent-Related Persons" means Fleet, Wachovia, and any successor Administrative Agent arising under
Section 12.9, together with their respective Affiliates (including, in the case of Wachovia and Fleet the
Arrangers), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

         "Agents" means the Administrative Agent, Fleet as Syndication Agent and The Bank of New York and PNC
Bank, National Association, as Documentation Agents.

         "Agreement" means this Credit Agreement.



         "A.M. Best" means A.M. Best Co.

         "Annual Statement" means the annual financial statement of any insurance company as required to be
filed with the Department, together with all exhibits or schedules filed therewith, prepared in conformity with
SAP. References to amounts on particular exhibits, schedules, lines, pages and columns on such Annual
Statements are based on the formats promulgated by the NAIC for 2002 Annual Statements for the applicable type
of insurance company. If such format is changed in future years so that different information is contained in
such items or they no longer exist, it is understood that the reference is to information consistent with that
recorded in the referenced item in the 2002 Annual Statement of the applicable insurance company.

         "Applicable Margin" means, at any time, the rate per annum determined in accordance with the
following:

- ------------ --------------- ------------------ --------------------- ------------------- -------------------
   LEVEL         PARENT                              APPLICABLE           APPLICABLE
                   SP          PARENT MOODY'S        MARGIN FOR           MARGIN FOR       APPLICABLE MARGIN
                 RATING           RATING             TRANCHE A            TRANCHE B          FOR CONVERTED
                                                       LOANS                LOANS           TRANCHE A LOAN
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
      I           >A-              >A3                  1.125%              1.075%               1.375%
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
      II       >BBB+ but        >Baal but               1.250%              1.200%               1.500%
                  <A-              <A3
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
      III      >BBB but         >Baa2 but               1.375%              1.325%               1.625%
                 <BBB+            <Baa1
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
      IV       >BBB-but           >Baa3                 1.500%              1.450%               1.750%
                 <BBB            but<Baa2
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
      V          <BBB-            <Baa3                 1.625%              1.575%               1.875%
- ------------ --------------- ------------------ --------------------- ------------------- -------------------
         Provided, however, that the forgoing shall be subject to the following:

         (a)      The terms "Parent S&P Rating" and "Parent Moody's Rating" shall for all purposes of this
Agreement mean the ratings solicited by the Parent from and issued by S&P or Moody's, respectively, for the
long term unsecured debt of the Parent. The term "Rating" shall refer to any of the forgoing ratings.

         (b)      If only an S&P Rating or a Moody's Rating is available then the Applicable Margins shall be
determined on the basis of the Rating which is available but if both such Ratings are available and the Ratings
are split (i.e., the Ratings are not at the same level as contemplated by the foregoing grid) then (i) the
Applicable Margins shall be determined based upon the higher level Rating if the two ratings differ by only one
level and (ii) the Applicable Margin shall be determined based on the level which is one level above the level
of the lower of the two ratings if the two ratings differ by more than one level. If neither an S&P Rating nor
a Moody's Rating is available then in that event the Applicable Margin shall be determined by the
Administrative Agent, after consultation with the Parent, so as to approximate the Administrative Agent's
estimate of what the ratings of long term unsecured indebtedness of the Parent would

                                                       2


have been had such ratings been available, the determination of the Administrative Agent to be final and
conclusive provided it was acting in good faith.

         (c)      Changes in the Applicable Margin resulting from Rating changes or from Ratings becoming, or
ceasing to be, available shall become effective upon the date of the occurrence in question.

         (d)      References to rating categories hereinabove are references to such categories as presently
determined by S&P and Moody's and in the event a ratings system referred to hereinabove is changed by any such
rating agency, each reference to a particular rating set forth in this Agreement shall be deemed to be a
reference to the rating under such changed rating system which, in the reasonable judgment of the
Administrative Agent, after consultation with the rating service involved, most closely approximates the level
of financial condition associated with the particular rating as currently defined.

         (e)      The Applicable Margin shall initially be 1.375% per annum with respect to Tranche A Loans and
1.325% per annum with respect to Tranche B Loans and shall not be subject to downward adjustment prior to March
22, 2004.

         "Arrangers" means Fleet Securities, Inc. and Wachovia Securities, LLC in their capacities as such.

         "Assignee" has the meaning specified in subsection 13.8(a).

         "Assignment and Acceptance" has the meaning specified in subsection 13.8(a).

         "Attorney Costs" means and includes all fees and disbursements of any law firm or other external
counsel, the non-duplicative allocated cost of internal legal services and all disbursements of internal
counsel.

         "Available Dividend Amount" means with respect to PLIC for any period, the aggregate maximum amount of
dividends automatically permitted by the Department under applicable Requirements of Law to be paid by PLIC,
excluding the amount of dividends that are paid by PLIC during such period.

         "Banks" means the financial institutions from time to time parties hereto other than the Borrowers.

         "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as
amended from time to time.

         "Base Rate" means, for any day, a rate per annum equal to the higher of: (a) 0.50% per annum above the
Federal Funds Rate in effect for such date; and (b) the rate of interest announced by Wachovia from time to
time as its prime commercial rate for Dollar loans made in the United States (it being understood that such
rate may not be Wachovia's best or lowest rate), as in effect on such day. Any change in the Base Rate
resulting from a change in such prime commercial rate shall take effect at the opening of business on the day
specified in the announcement of such change.

                                                       3


         "Base Rate Loan" means any Tranche A Loan, any Tranche B Loan and/or the Converted Tranche A Loan, or
any portion or portions thereof, that bears interest based on the Base Rate.

         "Borrowing Date" means a Tranche A Borrowing Date or a Tranche B Borrowing Date, as the context
requires.

         "Borrowers" means the Parent, PLIC and PXP and each of them and "Borrower" means any of the Borrowers.
It is understood that no Borrower is liable for the Loans of the others or costs and expenses related thereto
except to the extent it has guaranteed same pursuant to Article X hereof.

         "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in
New York City or Charlotte, North Carolina are authorized or required by law to close and, if the applicable
Business Day relates to any Eurodollar Rate Loan, means any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such other eurodollar interbank
market as may be selected by the Administrative Agent in its sole discretion and acting in good faith.

         "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other
Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation controlling a bank.

         "Change of Control" means

         (a)      the acquisition by any Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 30% or more of the voting power of the Parent; or

         (b)      the failure of the Parent to own, either directly or indirectly, free and clear of all Liens
or other encumbrances, all of the outstanding shares of the voting stock of the other Borrowers.

         "Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder, all as amended
from time to time.

         "Commitment" means a Tranche A Commitment or a Tranche B Commitment, as applicable.

         "Company Action Level" means 200% of the Authorized Control Level Risk-Based Capital of PLIC. The
Authorized Control Level Risk-Based Capital of PLIC shall be computed in the manner from time to time
prescribed by the Insurance Department of the State of New York for inclusion in the Annual Statement of PLIC
to such Department. Such Authorized Control Level Risk-Based Capital currently appears on page 27 of such
statement in column 1, line 31.

         "Compliance Certificate" means a certificate substantially in the form of Exhibit C.

                                                       4


         "Consolidated EBITDA" means with respect to any Person for any period, (a) the Consolidated Net Income
of such Person and its Subsidiaries for such period plus (b) the sum of each of the following expenses that
have been deducted in the determination of the Consolidated Net Income of such Person and its Subsidiaries for
such period: (i) all interest expense of such Person and its Subsidiaries, (ii) all income and franchise tax
expense (whether federal, state, local, foreign or otherwise and, in any event, including foreign withholding
taxes and any state single business unitary or similar tax) of such Person and its Subsidiaries for such
period, (iii) all depreciation expense of such Person and its Subsidiaries for such period, (iv) all
amortization expense of such Person and its Subsidiaries for such period and (v) all extraordinary, unusual or
nonrecurring noncash losses and other noncash charges otherwise deducted in the determination of the
Consolidated Net Income of such Person and its Subsidiaries for such period less (c) all cash payments made
during such period on account of reserves, restructuring charges and other noncash losses, charges or expenses
added to Consolidated Net Income pursuant to clause (b)(v) of this definition, less (d) all extraordinary,
unusual or nonrecurring gains and other credits otherwise added in the determination of the Consolidated Net
Income of such Person and its Subsidiaries for such period, in each case determined on a Consolidated basis and
in accordance with GAAP for such period.

         "Consolidated Interest Expense" means with respect to any Person for any period, the interest expense
paid or payable on all Indebtedness of such Person and its Subsidiaries for such period, determined on a
consolidated basis and in accordance with GAAP, including, without limitation, (a) in the case of the
Borrowers, (i) interest expense paid or payable in respect of Indebtedness resulting from Loans and (ii) all
fees paid or payable pursuant to Section 2.9 other than arrangement fees and agency fees payable pursuant to
Section 2.9(a) and other than any upfront fees payable pursuant to Section 2.9(h), (b) the interest component
of all obligations in respect of capitalized leases, and (c) the net payment, if any, paid or payable in
connection with Swap Contracts less the net credit, if any, received in connection with Swap Contracts.

         "Consolidated Net Income" means, with respect to any Person for any period, the net income of such
Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP,
but excluding for each such period (without duplication):

         (a) the income (or loss) of any other Person accrued prior to the date on which it became a Subsidiary
of such Person or was merged into or consolidated with such Person or any of its Subsidiaries or all or
substantially all of the property and assets of such other Person were acquired by such Person or any of its
Subsidiaries;

         (b) the income (or loss) of any other Person (other than a Subsidiary of such Person) in which a
Person other than such Person or any of its Subsidiaries owns or otherwise holds an Equity Interest, except to
the extent such income (or loss) shall have been received in the form of cash dividends or other distributions
actually paid to such Person or any of its Subsidiaries by such other Person during such period; and

         (c) the income of any Subsidiary of such Person to the extent that the declaration or payment of any
dividends or other distributions of such income by such Subsidiary is not permitted to be made or paid (whether
by contract, judgment, Requirement of Law or otherwise) on the last day of such period.

                                                       5


         "Contingent Obligation" means, as to any Person, any direct or indirect liability of that Person,
whether or not contingent, with or without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the
primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss
in respect thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument issued for the
account of that Person or as to which that person is otherwise liable for reimbursement of drawings or payments
if the obligation supported by such Surety Instrument constitutes Indebtedness; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if the relevant contract or other
related document or obligation requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials, supplies or other property is
ever made or tendered, or such services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed equal to the
stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made
or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, and in
the case of other Contingent Obligations, shall be equal to the maximum reasonably anticipated liability in
respect thereof.

         "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person
or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its property is bound.

         "Conversion/Continuation Date" means any date on which, under Section 2.4, a Borrower (a) converts
Loans of one Type to another Type, or (b) continues as Eurodollar Rate Loans, but with a new Interest Period,
Eurodollar Rate Loans having Interest Periods expiring on such date.

         "Converted Tranche A Loan" means the Converted Tranche A Loan as defined in subsection 2.1(c) of this
Agreement which Converted Tranche A Loan, or any portion or portions thereof, may bear interest with reference
to the Base Rate or the Eurodollar Rate in accordance with the terms of this Agreement (each a "Type of
Converted Tranche A Loan").

         "Converted Tranche A Note" means the promissory note to be executed by the Borrowers in favor of a
Bank upon conversion of the Tranche A Loans to a term loan on the Tranche A Conversion Date pursuant to
subsection 2.2(b) in substantially the form of Exhibit H.


                                                       6


         "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or
both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.

         "Department" means the applicable Governmental Authority of the state of domicile of an insurance
company responsible for the regulation of said insurance company.

         "Dollars," "dollar" and "$" each mean lawful money of the United States.

         "Effective Date" means the date as of which the conditions precedent to the initial Loans as specified
in Section 4.1 hereof are satisfied.

         "Eligible Assignee" means (i) a commercial bank organized under the laws of the United States, or any
state thereof, and having a combined capital and surplus of at least $100,000,000 (or its equivalent in foreign
currency); (ii) a commercial bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000 (or its equivalent in foreign currency),
provided that such bank is acting through a branch or agency located in the United States; (iii) a Person that
is primarily engaged in the business of commercial banking and that is (A) a Subsidiary of a Bank, (B) a
Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary; and
(iv) any other Person agreed to by the Borrowers and the Administrative Agent.

         "Environmental Claims" means all claims, however asserted, by any Governmental Authority or other
Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or
injury' to the environment.

         "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.

         "ERISA" means the Employee Retirement Income Security Act of 1974, and regulations promulgated
thereunder, all as from time to time amended.

         "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with
the Parent, PLIC or PXP within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the Code).

         "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the
Parent, PLIC, PXP or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Parent, PLIC, PXP or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a
Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of

                                                       7


proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Parent, PLIC, PXP or any ERISA Affiliate.

         "Eurodollar Rate" means, with respect to the Interest Period applicable to any Eurodollar Rate Loan, a
rate of interest per annum, determined pursuant to the following formula:

                           Eurodollar Rate  =                    LIBOR Rate
                                                     ------------------------------------
                                                     100% - Eurodollar Reserve Percentage

         "Eurodollar Rate Loan" means any Tranche A Loan, any Tranche B Loan and/or the Converted Tranche A
Loan, or any portion or portions thereof, that bears interest based on the Eurodollar Rate.

         "Eurodollar Reserve Percentage" means, for any day during an Interest Period for a Borrowing of
Eurodollar Rate Loans, the maximum rate at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed on such day by the Board of Governors of the Federal Reserve
System (or any successor) on "Eurocurrency liabilities", as defined in such Board's Regulation D (or in respect
of any other category of liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined on any category of extension of credit or other assets that include loans
by non-United States offices of any Bank to United States residents) subject to any amendments of such reserve
requirement by such Board or its successor, taking into account any transitional adjustments thereto. The
Eurodollar Rate shall automatically be adjusted as of the date of any change in the Eurodollar Reserve
Percentage.

         "Event of Default" means any of the events or circumstances specified in Section 11.1.

         "Exchange Act" means the Securities and Exchange Act of 1934, and regulations promulgated thereunder.

         "Existing Credit Agreement" means the Credit Agreement dated as of December 23, 2002 among the
Borrowers, Bank of Montreal as Administrative Agent, Fleet as Syndication Agent and the other agents and
financial institutions party thereto, as the same may have been heretofore amended.

         "FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to
any of its principal functions.

         "Federal Funds Rate" means, for any day, a rate per annum (expressed as a decimal, rounded upwards, if
necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that
(i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such
day shall be

                                                       8


such rate on such transactions on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall
be the average of the quotations for such day on such transactions received by Wachovia as determined by
Wachovia and reported to the Administrative Agent.

         "Fleet" means Fleet National Bank, a national banking association.

         "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority
succeeding to any of its principal functions.

         "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date hereof.

         "Governmental Authority" means any nation or government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and
any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.

         "Guaranty Obligation" has the meaning specified in the definition of "Contingent Obligation."

         "Highest Lawful Rate" means as to any Bank, the maximum rate of interest, if any, that at any time or
from time to time may be contracted for, taken, charged or received by such Bank on the obligations owed to it
under the laws applicable to such Bank and this transaction.

         "Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b)
all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other
than trade payables entered into in the ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments to the extent such Surety Instruments
support payment of Indebtedness; (d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the event of default are limited
to repossession or sale of such property); (f) all obligations with respect to capital leases; (g) all monetary
obligations of such Person under a so-called synthetic or tax retention lease, or any other agreement for the
use or possession of property creating obligations which do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be characterized as Indebtedness of such Person
(without regard to accounting treatment); (h) all net obligations with respect to Swap Contracts; (i) all
indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any

                                                       9


Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness; and (j) all Guaranty Obligations
in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above.

         "Indemnified Liabilities" has the meaning specified in Section 13.5.

         "Indemnified Person" has the meaning specified in Section 13.5.

         "Independent Auditor" has the meaning specified in subsection 6.1(a).

         "Insolvency Proceeding" means (a) any case, action or proceeding before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.

         "Insurance Code" means with respect to any insurance company, the insurance code of the state of
domicile and any successor statute of similar import together with the regulations thereunder as amended or
otherwise modified and in effect from time to time. References to sections of the Insurance Code shall be
construed to also refer to successor Sections.

         "Interest Payment Date" means, as to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter and each
date such Loan is converted into another Type of Loan, provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the date that falls every successive three months after the
beginning of such Interest Period and the last day thereof is also an Interest Payment Date.

         "Interest Period" means: (a) as to any Tranche A Loan or Tranche B Loan that is a Eurodollar Rate
Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/Continuation Date on which
the Loan is converted into or continued as an Eurodollar Rate Loan, and ending on the date one, two, three or
six months thereafter as selected by the applicable Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; and (b) as to the Converted Tranche A Loan at such time as all or any portion thereof
is a Eurodollar Rate Loan, the period commencing on the Tranche A Conversion Date or on the
Conversion/Continuation Date on which the Converted Tranche A Loan is converted into or continued as an
Eurodollar Rate Loan, and ending on the date one, two, three or six months thereafter as selected by the
applicable Borrower on the Tranche A Conversion Date or in its Notice of Conversion/Continuation,

provided that:

                  (i) if any Interest Period would otherwise end on a day that is not a Business Day, that
Interest Period shall be extended to the following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such Interest Period shall end on the
preceding Business Day;

                                                      10


                  (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

                  (iii) no Interest Period with respect to any Loan shall extend beyond the Termination Date or
the Maturity Date of said Loan.

         "IRS" means the Internal Revenue Service, and any Governmental Authority succeeding to any of its
principal functions under the Code.

         "Joint Venture" means a single-purpose corporation, partnership, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate legal entity) now or hereafter formed
by the Parent, PLIC, PXP or any of their Subsidiaries with another Person in order to conduct a common venture
or enterprise with such Person.

         "Lending Office" means, as to any Bank, the office or offices of such Bank specified as its "Lending
Office" or "Domestic Lending Office" or "Eurodollar Lending Office," as the case may be, on such Bank's
signature page hereto, or such other office or offices as such Bank may from time to time notify the Borrowers
and the Administrative Agent.

         "LIBOR Rate" means, for any Interest Period applicable to a Borrowing of Eurodollar Rate Loans, (a)
the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards or downwards,
if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. dollars in immediately available funds are
offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) Business Days before the
beginning of such Interest Period by three (3) or more major lenders in the interbank eurodollar market
selected by the Administrative Agent for a period equal to such Interest Period and in an amount equal or
comparable to the principal amount of the Eurodollar Rate Loan scheduled to be made by the Administrative Agent
during such Interest Period. "LIBOR Index Rate" means for any Interest Period applicable to a Eurodollar Rate
Loan, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the date two Business Days before the
commencement of such Interest Period.

         "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge
or deposit arrangement, encumbrance, lien (statutory or other) preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien relates as debtor under the Uniform
Commercial Code or any comparable law (other than a filing made in connection with a true sale of accounts
receivable or a precautionary filing made in connection with a true lease) and any contingent or

                                                      11


other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating
lease.

         "Loan" means a Tranche A Loan, a Tranche B Loan or the Converted Tranche A Loan, as the context
requires, and "Loans" means, collectively, all Tranche A Loans, Tranche B Loans and the Converted Tranche A
Loan.

         "Loan Documents" means this Agreement, any Notes and all other certificates and documents required to
be delivered to the Administrative Agent or any Bank in connection herewith.

         "Majority Banks" means, at any time, Banks having Loans outstanding and unused Commitments
representing at least 51% of the sum of all Loans outstanding and unused Commitments at such time.

         "Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the FRB.

         "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon,
the operations, management, business, properties, condition (financial or otherwise) or prospects of the Parent
and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any of the Parent, PLIC or
PXP to perform under any Loan Document or to avoid any Event of Default; or (c) an adverse effect upon the
legality, validity, binding effect or enforceability against any of the Parent, PLIC or PXP of any Loan
Document.

         "Maturity Date" means, with respect to the Converted Tranche A Loan, that date which is one year after
the Tranche A Conversion Date.

         "Measurement Period" means, at any date of determination the most recently completed four consecutive
fiscal quarters of the Parent on or immediately prior to such date.

         "Moody's" means Moody's Investors Services, Inc.

         "Multiemployer Plan" means a "Multi employer plan," within the meaning of Section 400 1(a)(3) of
ERISA, to which the Parent, PLIC or PXP or any ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made, or been obligated to make,
contributions.

         "Notes" means, the Tranche A Note, the Tranche B Note and the Converted Tranche A Note.

         "Notice of Borrowing" means a Tranche A Notice of Borrowing and/or a Tranche B Notice of Borrowing, as
the context requires.

         "Notice of Tranche A Borrowing" means a notice in substantially the form of Exhibit A-1.


                                                    12


         "Notice of Tranche B Borrowing" means a notice in substantially the form of Exhibit A-2.

         "Notice of Conversion/Continuation" means: (a) with respect to a Tranche A Loan, a notice in
substantially the form of Exhibit B-1; (b) with respect to a Tranche B Loan, a notice in substantially in the
form of Exhibit B-2; and (c) with respect to the Converted Tranche A Loan, a notice in substantially in the
form of Exhibit B-3.

         "Obligations" means the principal of and interest on the Loans and all other fees, advances, debts,
liabilities, obligations, covenants and duties arising under any Loan Document owing by the Parent, PLIC, PXP
or any of them to any Bank, any Agent, or any other Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

         "Organization Documents" means, for any corporation, the certificate or articles of incorporation, the
bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.

         "Parent" is defined in the introductory paragraph hereof.

         "Parent Consolidated Fixed Charge Coverage Ratio" means, as to any period of determination, the ratio
for the Parent and its Subsidiaries, computed on a consolidated basis in accordance with GAAP of: (a) the sum
of (without duplication) (i) the Available Dividend Amount for PLIC, plus (ii) Consolidated EBITDA of the
Parent and its Subsidiaries excluding PLIC and its Subsidiaries to (b) Consolidated Interest Expense of the
Parent and its Subsidiaries.

         "Parent Total Debt to Capitalization Ratio" means the ratio for the Parent and its Subsidiaries,
computed on a consolidated basis in accordance with GAAP, of its Indebtedness (exclusive of Indebtedness in
connection with the Parent's 7.25% equity units through February 16, 2006 and exclusive of Indebtedness which
is mandatorily convertible into equity securities within three years of issuance and obligations on Swap
Contracts entered into in the ordinary course of business and not for speculation), to the sum of its
Indebtedness (exclusive of obligations on Swap Contracts entered into in the ordinary course of business and
not for speculation) plus its Shareholders' Equity.

         "Participant" has the meaning specified in subsection 13.8(d).

         "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any
of its principal functions under ERISA.

         "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA
which any of the Parent, PLIC or PXP sponsors, maintains, or to which it makes, is making, or is obligated to
make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan years.

         "Permitted Liens" has the meaning specified in Section 7.1.

                                                       13


         "Person" means an individual, partnership, limited liability company, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture, Governmental Authority, or other entity
of any nature whatsoever.

         "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which any of the Parent,
PLIC or PXP sponsors or maintains or to which any of them makes, is making, or is obligated to make
contributions and includes any Pension Plan.

         "PLIC" is defined in the introductory paragraph hereof.

         "Post Termination Facility Fee" means the fee payable pursuant to subsection 2.9(d) hereof with
respect to the Converted Tranche A Loan.

         "Primary Insurance Subsidiaries" means PLIC and those other Primary Subsidiaries principally engaged
in the business of insurance.

         "Primary Subsidiaries" means PXP, PLIC and any other Subsidiary of the Parent or PLIC which at the
time of determination has capital or a net worth in excess of $25,000,000.

         "Pro Rata Share" means: (a) as to any Tranche A Bank at any time with respect to Tranche A Loans, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Tranche
A Bank's Tranche A Commitments divided by the combined Tranche A Commitments of all Tranche A Banks; (b) as to
any Tranche B Bank at any time with respect to Tranche B Loans, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of such Tranche B Bank's Tranche B Commitments
divided by the combined Tranche B Commitments of all Tranche B Banks; and (c) as to any Tranche A Bank at any
time with respect to the Converted Tranche A Loan, the percentage equivalent (expressed as a decimal, rounded
to the ninth decimal place) at such time of the outstanding principal balance of the Converted Tranche A Loan
due to such Tranche A Bank divided by the total outstanding principal balance under the Converted Tranche A
Loan due to all Tranche A Banks.

         "PXP" is defined in the introductory paragraph.

         "Reportable Event" means, any of the events set forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.

         "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of its property is subject.

         "Responsible Officer" means, with respect to any Person, any one of the chief executive officer, the
president, any executive vice president, or the treasurer of such Person, or any other officer having
substantially the same authority and responsibility.

                                                      14


         "Risk Based Capital Ratio" means, as of any time the same is to be determined, the ratio of adjusted
capital of PLIC to the Company Action Level of PLIC. Adjusted capital, for the purpose of this definition,
shall be computed in the manner from time to time prescribed by the Insurance Department of the State of New
York as total adjusted capital for inclusion in the Annual Statement of PLIC to such department (currently
appearing on page 27 of such annual statement in column 1, line 30 and currently consisting of capital and
surplus, the asset valuation reserve of PLIC and 50% of PLIC's dividend liability).

         "S&P" means Standard & Poor's Ratings Services, a division of McGraw Hill, Inc.

         "SAP" means, as to PLIC, the statutory accounting principles prescribed or permitted by the
Department, or in the event that the Department fails to prescribe or address such practices, the NAIC
guidelines.

         "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of
its principal functions.

         "Shareholders' Equity" means the shareholders' equity of the applicable Person and its Subsidiaries
determined on a consolidated basis in accordance with GAAP;

         "Subsidiary" of a Person means any corporation, limited liability company, association, partnership,
joint venture or other business entity of which more than 50% of the voting stock or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof. The foregoing to the contrary
notwithstanding, a partnership or joint venture formed for the purpose of making or managing investments in the
ordinary course of business shall not be a Subsidiary if the Person in question directly or indirectly owns
less than 50% of the equity in the entity in question, provided that any Indebtedness, of such entity for which
the Person in question is liable (whether by contract, operation of law or otherwise) shall constitute
Indebtedness of the Person in question. Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Parent.

         "Surety Instruments" means all letters of credit (including standby and commercial), banker's
acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments.

         "Swap Contract" means any agreement (including any master agreement and any agreement, whether or not
in writing, relating to any single transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index swap or option, bond option, interest
rate option, forward foreign exchange agreement, rate cap, collar or floor agreement, currency swap agreement,
cross currency rate swap agreement, swaption, currency option or any other, similar agreement (including any
option to enter into any of the foregoing).

         "Termination Date" means:

         (a)      with respect to the Tranche A Commitments and the Tranche A Loans, the earlier to occur of:
(i) December 20, 2004; and (ii) the date on which the Tranche A Commitments terminate in accordance with the
provisions of this Agreement; and

                                                      15


         (b)      with respect to the Tranche B Commitments and the Tranche B Loans, the earlier to occur of:
(i) December 21, 2006; and (ii) the date on which the Tranche B Commitments terminate in accordance with the
provisions of this Agreement.

         "Tranche A Banks" means, those Banks identified from time to time as Tranche A Banks on the signature
page to this Agreement.

         "Tranche B Banks" means, those Banks identified from time to time as Tranche B Banks on the signature
page to this Agreement.

         "Tranche A Borrowing" means a borrowing hereunder consisting of Tranche A Loans of the same type made
to the same Borrower on the same day by the Tranche A Banks under Article II, and, other than in the case of
Base Rate Loans, having the same Interest Period.

         "Tranche B Borrowing" means a borrowing hereunder consisting of Tranche B Loans of the same type made
to the same Borrower on the same day by the Tranche B Banks under Article II, and, other than in the case of
Base Rate Loans, having the same Interest Period.

         "Tranche A Borrowing Date" means any date on which a Tranche A Borrowing occurs under subsection
2.3(a).

         "Tranche B Borrowing Date" means any date on which a Tranche B Borrowing occurs under subsection
2.3(b).

         "Tranche A Commitment," as to each Tranche A Bank, has the meaning specified in subsection 2.1(a). As
of the date of this Agreement, the amount of the combined Tranche A Commitments of all Tranche A Banks is
$112,500,000.

         "Tranche B Commitment," as to each Tranche B Bank, has the meaning specified in subsection 2.1(b). As
of the date of this Agreement, the amount of the combined Tranche B Commitments of all Tranche B Banks is
$37,500,000.

         "Tranche A Conversion" has the meaning set forth in subsection 2.1(c).

         "Tranche A Conversion Date" has the meaning set forth in subsection 2.1(c).

         "Tranche A Facility Fee" means the fee payable pursuant to subsection 2.9(b) hereof with respect to
the Tranche A Commitment.

         "Tranche B Facility Fee" means the fee payable pursuant to subsection 2.9(c) hereof with respect to
the Tranche B Commitment.

         "Tranche A Loan" means an extension of credit by a Tranche A Bank to a Borrower under subsection
2.1(a), and may be a Base Rate Loan or a Eurodollar Rate Loan (each a "Type of Tranche A Loan").

                                                      16


         "Tranche B Loan" means an extension of credit by a Tranche B Bank to a Borrower under subsection
2.1(b), and may be a Base Rate Loan or a Eurodollar Rate Loan (each a "Type of Tranche B Loan").

         "Tranche A Note" means a promissory note executed by a Borrower in favor of a Bank pursuant to
subsection 2.2(b) in substantially the form of Exhibit F.

         "Tranche B Note" means a promissory note executed by a Borrower in favor of a Bank pursuant to
subsection 2.2(b) in substantially the form of Exhibit G.

         "Type" means a Type of Tranche A Loan, a Type of Tranche B Loan and/or a Type of Converted Tranche A
Loan, as the context requires.

         "Type of Converted Tranche A Loan" has the meaning specified in the definition of "Converted Tranche A
Loan".

         "Type of Tranche A Loan" has the meaning specified in the definition of "Tranche A Loan".

         "Type of Tranche B Loan" has the meaning specified in the definition of "Tranche B Loan".

         "Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section
400l(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of the Code, for the applicable plan
year.

         "United States" and "U.S." each means the United States of America.

         "Wachovia" means Wachovia Bank, National Association, a national banking association.

         "Wholly-Owned Subsidiary" means any corporation in which (other than directors' qualifying shares
required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital
stock of every other class, in each case, at the time as of which any determination is being made, is owned,
beneficially and of record, by the parent entity in question or by one or more of the other Wholly-Owned
Subsidiaries thereof, or both.

         Section 1.2. Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.

         (b)      The words "hereof," "herein," "hereunder" and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.

         (c)      (i) The term "documents" includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.


                                                      17



                  (ii) The term "including" is not limiting and means "including without limitation."

                  (iii) In the computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding," and the
word "through" means "to and including."

         (d)      Except as otherwise stated, the terms "determine" or "determination" mean to reasonably
determine or reasonable determination, respectively.

         (e)      Unless otherwise expressly provided herein, (i) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.

         (f)      The captions and headings of this Agreement are for convenience of reference only and shall
not affect the interpretation of this Agreement.

         (g)      This Agreement and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.

         (h)      This Agreement and the other Loan Documents are the result of negotiations among and have
been reviewed by counsel to the Agents, the Borrowers and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Banks or the Agents merely because of the Agents'
or Banks' involvement in their preparation.

         Section 1.3. Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently applied.

         (b)      References herein to "fiscal year" and "fiscal quarter" refer to calendar years and calendar
quarters, respectively.

         (c)      All financial covenants will be calculated based upon relevant accounting principles and risk
based capital rules in effect as of the date hereof.

                                                   ARTICLE II

                                                  THE CREDITS

         Section 2.1.      Amounts and Terms of Commitments.

                                                      18


         (a)      Tranche A Commitments. Each Tranche A Bank severally agrees, on the terms and conditions set
forth herein, to make loans to the Borrowers (each such loan, a "Tranche A Loan") from time to time on any
Business Day during the period from the Effective Date to the Termination Date of the Tranche A Commitment, in
an aggregate amount not to exceed at any time outstanding, together with the principal amount of Tranche A
Loans outstanding in favor of such Tranche A Bank at such time, the amount set forth next to such Tranche A
Bank's name on Schedule 2.1(a) (such amount as the same may be reduced under Section 2.5 or as a result of one
or more assignments under Section 13.8, the Tranche A Bank's "Tranche A Commitment"); provided, however, that,
after giving effect to any Tranche A Borrowing, the aggregate principal amount of all outstanding Tranche A
Loans shall not at any time exceed the combined Tranche A Commitments. Within the limits of each Tranche A
Bank's Tranche A Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow
under this subsection 2.1(a), prepay under Section 2.6 and reborrow under this subsection 2.1(a).

         (b)      Tranche B Commitments. Each Tranche B Bank severally agrees, on the terms and conditions set
forth herein, to make loans to the Borrowers (each such loan, a "Tranche B Loan") from time to time on any
Business Day during the period from the Effective Date to the Termination Date of the Tranche B Commitment, in
an aggregate amount not to exceed at any time outstanding, together with the principal amount of Tranche B
Loans outstanding in favor of such Tranche B Bank at such time, the amount set forth next to such Tranche B
Bank's name on Schedule 2.1(b) (such amount as the same may be reduced under Section 2.5 or as a result of one
or more assignments under Section 13.8, the Tranche B Bank's "Tranche B Commitment"); provided, however, that,
after giving effect to any Tranche B Borrowing, the aggregate principal amount of all outstanding Tranche B
Loans shall not at any time exceed the combined Tranche B Commitments. Within the limits of each Tranche B
Bank's Tranche B Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow
under this subsection 2.1(b), prepay under Section 2.6 and reborrow under this subsection 2.1(b).

         (c)      Converted Tranche A Loan. At the election of the Borrowers and so long as Borrowers are in
compliance with all of the terms of the Loan Documents and no Default or Event of Default has occurred and is
continuing, the aggregate principal amount of part or all of the Tranche A Loans outstanding on the Termination
Date of the Tranche A Commitment (the "Tranche A Conversion Date") shall convert into term indebtedness (the
"Converted Tranche A Loan") with a final maturity on the Maturity Date (the "Tranche A Conversion"). All
outstanding principal under the Converted Tranche A Loan shall be due and payable in full in one installment on
the Maturity Date. All accrued and unpaid interest and all other amounts due under the Converted Tranche A Loan
shall also be due and payable in full on the Maturity Date. On and after the Termination Date of the Tranche A
Commitment, no Borrower shall have the ability to request, and no Tranche A Bank shall have any obligation to
make, any further Tranche A Loans or Converted Tranche A Loans. As a condition to the conversion of any or all
of the Tranche A Loans to Converted Tranche A Loans, Borrowers shall execute and deliver to each Tranche A Bank
a Converted Tranche A Note.

         Section 2.2. Loan Accounts. (a) The Loans made by each Bank to each Borrower shall be evidenced by one
or more loan accounts or records maintained by such Bank in the ordinary course of business. The loan accounts
or records maintained by the Administrative Agent shall be conclusive absent manifest error of the amount of
the Loans made by the Banks to

                                                      19


each Borrower and the interest and payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Loans.

         (b)      Upon the request of any Bank made through the Administrative Agent, the Loans made by such
Bank to each Borrower may be evidenced by one or more Notes, instead of loan accounts. Each such Bank shall
endorse on the reverse of or on schedules annexed to its Note(s) the date, amount and maturity of each Loan
made by it to the applicable Borrower and the amount of each payment of principal made by each Borrower with
respect thereto. Each such Bank is irrevocably authorized by each Borrower to endorse its Note(s); provided,
however, that the failure of a Bank to make, or an error in making, a notation thereon with respect to any Loan
shall not limit or otherwise affect the obligations of the Borrowers hereunder or under any such Note to such
Bank

         Section 2.3.      Procedure for Borrowing.

         (a)      Tranche A Loans. Each Tranche A Borrowing shall be made upon the applicable Borrower's
irrevocable written notice delivered to the Administrative Agent in the form of a Notice of Tranche A Borrowing
(which notice must be received by the Administrative Agent prior to 11:00 a.m. (New York City time) (i) three
Business Days prior to the requested Tranche A Borrowing Date, in the case of Eurodollar Rate Loans; and (ii)
on the date of the Tranche A Borrowing, in the case of Base Rate Loans, specifying:

                  (A) the amount of the Tranche A Borrowing, which shall be in an aggregate minimum amount of
         $5,000,000 or any multiple of $1,000,000 in excess thereof;

                  (B) the requested Tranche A Borrowing Date, which shall be a Business Day;

                  (C) the Type of Tranche A Loans comprising the Tranche A Borrowing; and

                  (D) in the case of Eurodollar Rate Loans, the duration of the Interest Period applicable to
         such Tranche A Loans included in such notice. If the Notice of Tranche A Borrowing fails to specify
         the duration of the Interest Period for any Tranche A Borrowing comprised of Eurodollar Rate Loans,
         such Interest Period shall be three months.

         (b)      Tranche B Loans. Each Tranche B Borrowing shall be made upon the applicable Borrower's
irrevocable written notice delivered to the Administrative Agent in the form of a Notice of Tranche B Borrowing
(which notice must be received by the Administrative Agent prior to 11:00 a.m. (New York City time) (i) three
Business Days prior to the requested Tranche B Borrowing Date, in the case of Eurodollar Rate Loans; and (ii)
on the date of the Tranche B Borrowing, in the case of Base Rate Loans, specifying:

                  (A) the amount of the Tranche B Borrowing, which shall be in an aggregate minimum amount of
         $5,000,000 or any multiple of $1,000,000 in excess thereof;

                  (B) the requested Tranche B Borrowing Date, which shall be a Business Day;

                                                      20


                  (C) the Type of Tranche B Loans comprising the Tranche B Borrowing; and

                  (D) in the case of Eurodollar Rate Loans, the duration of the Interest Period applicable to
         such Tranche B Loans included in such notice. If the Notice of Tranche B Borrowing fails to specify
         the duration of the Interest Period for any Tranche B Borrowing comprised of Eurodollar Rate Loans,
         such Interest Period shall be three months.

         (c)      After giving effect to any Tranche A Borrowing, there may be no more than 5 different
Interest Periods in effect with respect to the Tranche A Loans and after giving effect to any Tranche B
Borrowing, there may be no more than 3 different Interest Periods in effect with respect to the Tranche B
Loans.

         (d)      Each Tranche A Borrowing shall be made from the Tranche A Banks in accordance with their Pro
Rata Shares of the Tranche A Loans and each Tranche B Borrowing shall be made from the Tranche B Banks in
accordance with their Pro Rata Shares of the Tranche B Loans.

         (e)      The Borrowers shall notify the Administrative Agent in writing of its intent to convert the
Tranche A Loans to the Converted Tranche A Loan not less than ten (10) Business Days prior to the Tranche A
Conversion Date. Such notice shall specify the amount of the Converted Tranche A Loan, be irrevocable and, from
and after the Tranche A Conversion Date (provided that no Default or Event of Default shall exist on such
date), the Tranche A Banks shall be deemed to have made the Converted Tranche A Loan in accordance with their
Pro Rata Shares of the Tranche A Loans. There may be no more than 5 different Interest Periods in effect with
respect to the Converted Tranche A Loan at any time.

         Section 2.4. Conversion and Continuation Elections. (a) Each Borrower may, upon irrevocable written
notice to the Administrative Agent in accordance with subsection 2.4(b):

                  (i) elect, as of any Business Day, in the case of its Base Rate Loans, or as of the last day
         of the applicable Interest Period, in the case of its Eurodollar Rate Loans, to convert any such Loans
         (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of
         $1,000,000 in excess thereof) into Loans of any other Type; or

                  (ii) elect, as of the last day of the applicable Interest Period, to continue any Loans
         having Interest Periods expiring on such day (or any part thereof in an amount not less than
         $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof);

provided, that if at any time the aggregate amount of a Eurodollar Rate Loan is reduced, by payment,
prepayment, or conversion of part thereof to be less than $5,000,000, such Eurodollar Rate Loan shall
automatically convert into Base Rate Loans; provided further however, that if at any time the aggregate
principal amount of the Converted Tranche A Loan then outstanding as Eurodollar Rate Loans is less than
$5,000,000, such Eurodollar Rate Loans shall automatically convert into Base Rate Loans.

                                                      21


         (b)      The applicable Borrower shall deliver a Notice of Conversion/Continuation to be received by
the Administrative Agent not later than 11:00 a.m. (New York City time) at least (i) three Business Days in
advance of the Conversion/Continuation Date, if the Loans are to be converted into or continued as Eurodollar
Rate Loans; and (ii) on the Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:

                  (A) the proposed Conversion/Continuation Date;

                  (B) whether the Loans to be converted or continued are Tranche A Loans, Tranche B Loans
         and/or the Converted Tranche A Loan (or any portion thereof) and the aggregate amount of such
         identified Loans to be converted or continued;

                  (C) the Type of Loans resulting from the proposed conversion or continuation; and

                  (D) in the case of continuations of or conversions into Eurodollar Rate Loans, the duration
         of the requested Interest Period.

         (c)      If upon the expiration of any Interest Period applicable to Eurodollar Rate Loans, the
applicable Borrower has failed to select timely a new Interest Period to be applicable to such Eurodollar Rate
Loans, or if any Default or Event of Default then exists, such Borrower shall be deemed to have elected to
convert such Eurodollar Rate Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.

         (d)      The Administrative Agent will promptly notify each Bank of its receipt of a Notice of
Conversion/Continuation, or, if no timely notice is provided by the applicable Borrower, the Administrative
Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.

         (e)      Unless the Majority Banks otherwise agree, with respect to all Loans during the existence of
a Default or Event of Default, the Borrowers may not elect to have a Loan converted into or continued as an
Eurodollar Rate Loan.

         Section 2.5.      Voluntary Termination or Reduction of Commitments.

         (a)      Termination or Reduction of Tranche A Commitments. The Borrowers may, upon not less than
three Business Days' prior notice to the Administrative Agent, terminate the Tranche A Commitments, or
permanently reduce the Tranche A Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; provided, however, that after giving effect thereto and to any prepayments of
Tranche A Loans made on the effective date thereof, the then outstanding principal amount of the Tranche A
Loans may not exceed the amount of the combined Tranche A Commitments then in effect. Once reduced in
accordance with this Section, the Tranche A Commitments may not be increased. Any reduction of the Tranche A
Commitments shall be applied to each Tranche A Bank according to its Pro Rata Share. All accrued facility fees
to, but not including the effective date of any reduction or

                                                      22


termination of Tranche A Commitments, shall be paid on the effective date of such reduction or termination.

         (b)      Termination or Reduction of Tranche B Commitments. The Borrowers may, upon not less than
three Business Days' prior notice to the Administrative Agent, terminate the Tranche B Commitments, or
permanently reduce the Tranche B Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; provided, however, that after giving effect thereto and to any prepayments of
Tranche B Loans made on the effective date thereof, the then outstanding principal amount of the Tranche B
Loans may not exceed the amount of the combined Tranche B Commitments then in effect. Once reduced in
accordance with this Section, the Tranche B Commitments may not be increased. Any reduction of the Tranche B
Commitments shall be applied to each Tranche B Bank according to its Pro Rata Share. All accrued facility fees
to, but not including the effective date of any reduction or termination of Tranche B Commitments, shall be
paid on the effective date of such reduction or termination.

Section 2.6       Optional Prepayments.

         (a)      Voluntary Prepayments. Subject to Section 3.4, any Borrower may, at any time or from time to
time, upon not less than three Business Days' (or one Business Day's, in the case of Base Rate Loans)
irrevocable notice to the Administrative Agent, ratably prepay any of its Loans in whole or in part, in minimum
amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of prepayment shall specify
the date and amount of such prepayment; whether the Loans being prepaid are Tranche A Loans, Tranche B Loans or
the Converted Tranche A Loan; and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify each affected Bank of its receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by a Borrower, such Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified therein, together with accrued
interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.4.

         (b)      Mandatory Prepayments.

                  (i) Equity Issuances. Promptly upon receipt thereof by the Parent or a Subsidiary, the Parent
shall pay over to the Administrative Agent as and for a mandatory prepayment on the Loans an amount equal to
100% of all net cash proceeds (i.e., gross proceeds less out of pocket costs at issuance including underwriters
discounts, investment banking, legal and advisory fees) received by the Parent or any Subsidiary from a public
offering, private placement or other issuance or sale of the capital stock or other equity interests (or of
warrants, options or other rights therefor) of the Parent or any of its Subsidiaries, provided however that no
such prepayment need be made out of the proceeds of the issuance or sale of equity interests in a Subsidiary to
the Parent or to another Subsidiary.

                  (ii) Debt Issuances. Promptly upon receipt by the Parent or any Subsidiary of any amounts
from or out of the issuance of any Indebtedness, the Parent shall or shall cause any borrowing Subsidiary which
has Loans outstanding to, pay over to the Administrative Agent as and for a mandatory prepayment on the Loans
an amount equal to the net cash proceeds (i.e.,

                                                      23


gross proceeds less out of pocket costs at issuance including underwriters discounts, investment banking,
advisory and legal fees) received by the Parent or its Subsidiaries therefrom except that no such prepayment
shall be required to be made out of (i) the issuance of Indebtedness by any Subsidiary to the Parent or any
other Subsidiary, (ii) payments received under Swap Contracts, (iii) Indebtedness consisting of capitalized
leases, conditional sales or other retention devices incurred for the purpose of financing the purchase of
fixed or capital assets, (iv) the proceeds of Indebtedness incurred by Subsidiaries engaged in the business of
insurance to the extent such Indebtedness was incurred for the purpose of satisfying a regulatory requirement
or supporting the conduct by such Subsidiary of its business of insurance, in each case under circumstances
under which the proceeds of such Indebtedness are retained by such insurance Subsidiary and not used to pay a
dividend or retire Indebtedness owing the Parent or another Subsidiary, (v) Indebtedness outstanding under this
Agreement, and (vi) other Indebtedness not otherwise excepted by the foregoing and aggregating not more than
$25,000,000 at any one time outstanding.

                  (iii) Fixed Asset Proceeds. An amount equal to any and all net cash proceeds (i.e., gross
cash proceeds net of out of pocket expenses and property and transfer taxes incurred in effecting the sale or
other disposition in question and net of proceeds applied to repayment of liens on the assets sold or disposed
of) received by the Parent or any of its Subsidiaries from the sale or other disposition (whether voluntary or
involuntary) of fixed or capital assets (including the proceeds of a sale as part of sale/leaseback transaction
and proceeds (including insurance proceeds) received as a result of damage to or destruction of fixed or
capital assets and the proceeds of any taking, whether by eminent domain or otherwise, of any such assets)
shall be promptly paid over to the Administrative Agent as and for a mandatory prepayment on the Loans provided
however that (aa) the foregoing provision shall be inapplicable to funds received as a result of casualty
losses or condemnations in the event that either the amount received in respect of any particular occurrence is
less than $2,500,000 or the Parent notifies the Administrative Agent that the Parent or the applicable
Subsidiary intends to utilize the proceeds in question to repair or replace the asset damaged or destroyed and
such proceeds are in fact so utilized within 180 days of their receipt by the Parent or the applicable
Subsidiary, (ab) no prepayment shall be required with respect to net cash proceeds received from the ordinary
course of business, sale or other disposition of fixed or capital assets which are obsolete or worn out; (ac)
no prepayment shall be required with respect to net cash proceeds received from the sale of the Borrower's
Enfield, Connecticut facility, and (ad) no prepayment shall be required out of the first $2,500,000 of such net
cash proceeds received by the Parent and its Subsidiaries in any fiscal year which are not otherwise excepted
from prepayment hereunder.

                  (iv) Securitization Transactions. An amount equal to any and all net cash proceeds (i.e.,
gross cash proceeds, net of out of pocket expenses including investment banking, advisory and legal fees)
received by the Parent or its Subsidiaries from the sale of accounts receivable, notes receivable or other
financial assets shall be paid over to the Administrative Agent as and for a mandatory prepayment on the Loans,
provided, however that (aa) there shall be exempted from the foregoing any amount of the proceeds of such a
transaction which is required by the parties to the transaction which are not Affiliates of the Parent to be
retained to assure performance of the transaction (including retentions of amounts in the nature of a debt
service reserve fund), (ab) no prepayment need be made out of the sale or liquidation of investments made in
the ordinary course of business of the Parent and its Subsidiaries

                                                      24


substantially as now conducted, and (ac) any transaction of the forgoing types by a Subsidiary engaged in the
business of insurance shall not require prepayment hereunder if and to the extent that the proceeds of the
transaction are required to be retained by the Subsidiary in question in order to satisfy a regulatory
requirement to which it is subject or to the extent that such retention is in the opinion of any applicable
commissioner of insurance or other regulatory body necessary or appropriate to maintain the soundness of such
insurance Subsidiary whether or not the opinion of such commissioner of insurance or regulatory body has the
force of law. Notwithstanding the forgoing, in no event shall the Parent or any of its Subsidiaries, including,
without limitation, PLIC, be permitted to enter into any transaction relating to the sale, transfer or other
disposition of the closed block of business of PLIC except as otherwise specifically permitted pursuant to
Section 7.2(c) hereof. If any transaction described in this clause (iv) could also be characterized as the
incurrence of Indebtedness the provisions of this clause (iv) shall control over the provisions of clause (ii)
hereof.

                  (v) Sale of Other Assets. An amount equal to any and all net cash proceeds (i.e., gross cash
proceeds net of out of pocket expenses and property and transfer taxes incurred in effecting the sale or other
disposition in question and net of proceeds applied to repayment of liens on the assets sold or disposed of)
received by the Parent or any of its Subsidiaries from the sale or other disposition (whether voluntary or
involuntary) of any other assets of the Parent or any of its Subsidiaries not described in clause (iii) above
including, without limitation, the sale of any line of business of the Parent or any of its Subsidiaries and
the sale of any interest of the Parent or any of its Subsidiaries in any joint venture, shall be promptly paid
over to the Administrative Agent as and for a mandatory prepayment on the Loans provided however that the
foregoing provision shall be inapplicable (aa) to the sale of any such assets in the ordinary course of
business; or (bb) to the extent that the net cash proceeds from such sale are re-invested in the Parent or its
Subsidiaries and not used for the payment of dividends.

                  (vi) Breakage. If a mandatory prepayment could not be made without prepaying Eurodollar Rate
Loans and such a prepayment would result in a reimbursement obligation arising under Section 3.4 hereof, the
Parent or other depositor may, so long as no Default or Event of Default has occurred and is continuing, elect
to deposit the amount of the prepayment with the Administrative Agent to be held by the Administrative Agent
until such prepayment can be effected without triggering a reimbursement liability under Section 3.4 hereof.
The amounts so held by the Administrative Agent, may at the option of Parent or other depositor be invested in
an interest bearing account maintained with the Administrative Agent, or other high grade investments mutually
acceptable to the depositor and the Administrative Agent pending application of the proceeds thereof to
Eurodollar Rate Loans, all such investments to constitute collateral security for the Obligations to be prepaid
and with the earnings on such investments to be remitted to the depositor.

                  (vii) General Principles and Applications. If and to the extent that any transaction giving
rise to a requirement of prepayment under this subsection 2.6(b) results in the receipt of funds by a
Subsidiary which is not a Borrower or receipt of funds by a Borrower in excess of the amount of its Loans
hereunder, the Parent shall nonetheless cause an amount equal to the amount required to be prepaid hereunder to
be paid over to the Administrative Agent as aforesaid and, without limiting the foregoing principles in any
respect, nothing herein contained shall be deemed to require any party to directly prepay Loans for which it is
not the obligor or a

                                                      25


guarantor. All required prepayments under this subsection 2.6(b) shall be applied to reduce the outstanding
balance of the Loans on a pro rata basis but such prepayment shall not reduce any of the Commitments.

         Section 2.7.      Repayment.

         (a)      Tranche A Loans. Each Borrower shall repay to the Tranche A Banks on the Termination Date of
the Tranche A Loans the aggregate principal amount of the Tranche A Loans to it which are outstanding on such
date.

         (b)      Tranche B Loans. Each Borrower shall repay to the Tranche B Banks on the Termination Date of
the Tranche B Loans the aggregate principal amount of the Tranche B Loans to it which are outstanding on such
date.

         (c)      Converted Tranche A Loan. Each Borrower shall repay the Converted Tranche A Loan in
accordance with the terms of this Agreement and the Converted Tranche A Note with a final payment of all
outstanding principal, accrued and unpaid interest to be due and payable on the Maturity Date.

         Section 2.8.      Interest.

         (a)      (i) Each Tranche A Loan shall bear interest on the outstanding principal amount thereof from
the applicable Tranche A Borrowing Date at a rate per annum equal to the Eurodollar Rate or the Base Rate, as
the case may be (and subject to the applicable Borrower's right to convert to other Types of Tranche A Loans
under Section 2.4), plus the Applicable Margin for Tranche A Loans, in the case of Eurodollar Rate Loans; (ii)
each Tranche B Loan shall bear interest on the outstanding principal amount thereof from the applicable Tranche
B Borrowing Date at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the case may be (and
subject to the applicable Borrower's right to convert to other Types of Tranche B Loans under Section 2.4),
plus the Applicable Margin for Tranche B Loans, in the case of Eurodollar Rate Loans; and (iii) the Converted
Tranche A Loan shall bear interest on the outstanding principal amount thereof from the Tranche A Conversion
Date at a rate per annum equal to the Eurodollar Rate or the Base Rate, as the case may be (and subject to the
applicable Borrower's right to convert to other Types of Converted Tranche A Loans under Section 2.4), plus the
Applicable Margin for the Converted Tranche A Loan, in the case of all or any portion thereof bearing interest
with reference to the Eurodollar Rate.

         (b)      Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest shall
also be paid on the date of any prepayment of Loans under Section 2.6 for the portion of any such Loans so
prepaid and upon payment (including prepayment) in full thereof and, with respect to any Loan during the
existence of any Event of Default, interest shall be paid on demand of the Administrative Agent at the request
or with the consent of the Majority Banks.

         (c)      Notwithstanding subsection (a) of this Section with respect to any Loan, while any Event of
Default exists or after acceleration, the applicable Borrower shall pay interest (after as well as before entry
of judgment thereon to the extent permitted by law) on the principal amount of all outstanding Loans, at a rate
per annum which is determined by adding 2% per annum to the Applicable Margin then in effect for such Loans
and, in the case of Base Rate

                                                      26


Loans, at a rate per annum equal to the Base Rate plus 2%; provided, however, that, on and after the expiration
of any Interest Period applicable to any Eurodollar Rate Loan outstanding on the date of occurrence of such
Event of Default or acceleration, the principal amount of such Loan shall, during the continuation of such
Event of Default or after acceleration, bear interest at a rate per annum equal to the Base Rate plus 2%.

         (d)      Highest Lawful Rate. At no time shall the interest rate payable on the Loans of any Bank,
together with the fees and all other amounts payable under the Loan Documents to such Bank, to the extent the
same are construed to constitute interest, exceed the Highest Lawful Rate applicable to such Bank. If with
respect to any Bank for any period during the terms of this Agreement, any amount paid to such Bank under the
Loan Documents, to the extent the same shall (but for the provisions of this Section) constitute or be deemed
to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate
applicable to such Bank during such period (such amount being hereinafter referred to as an "Unqualified
Amount"), then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a
prepayment of the Loans of such Bank, and (ii) if in any subsequent period during the term of this Agreement,
all amounts payable under the Loan Documents to such Bank in respect of such period which constitute or shall
be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest
Lawful Rate applicable to such Bank during such period, then the Borrowers shall pay to such Bank in respect of
such period an amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a sum which, when
added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate
applicable to such Bank during such period, and (y) an amount equal to the Unqualified Amount less all other
Compensatory Interest Payments made in respect thereof.

         Section 2.9. Fees. (a) Arrangement, Agency Fee. The Parent shall pay such fees to the Arrangers and
the Agents for their own accounts as may be agreed to between the Parent and the Arrangers and the Agents from
time to time.

         (b)      Tranche A Facility Fee. The Parent shall pay to the Administrative Agent for the account of
each Tranche A Bank a facility fee (the "Tranche A Facility Fee") on such Tranche A Bank's Tranche A
Commitment, whether or not in use, computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter as calculated by the Administrative Agent, at the rate per annum equal at all times to .25%
per annum. Such Tranche A Facility Fee shall accrue from the Effective Date to the Termination Date of the
Tranche A Commitment and shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter (commencing on March 31, 2004) through the Termination Date of the Tranche A Commitment, with
the final payment to be made on the Termination Date of the Tranche A Commitment; provided that, in connection
with any reduction or termination of the Tranche A Commitments, the accrued Tranche A Facility Fee calculated
for the period ending on such date shall also be paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of the period from such reduction or termination date
to such quarterly payment date. The Tranche A Facility Fees provided in this subsection shall accrue at all
times after the above-mentioned commencement date, including at any time during which one or more conditions in
Section 4.2 are not met.

                                                      27


         (c)      Tranche B Facility Fee. The Parent shall pay to the Administrative Agent for the account of
each Tranche B Bank a facility fee (the "Tranche B Facility Fee") on such Tranche B Bank's Tranche B
Commitment, whether or not in use, computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter as calculated by the Administrative Agent, at the rate per annum equal at all times to .30%
per annum. Such Tranche B Facility Fee shall accrue from the Effective Date to the Termination Date of the
Tranche B Commitment and shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter (commencing on March 31, 2004) through the Termination Date of the Tranche B Commitment, with
the final payment to be made on the Termination Date of the Tranche B Commitment; provided that, in connection
with any reduction or termination of the Tranche B Commitments, the accrued Tranche B Facility Fee calculated
for the period ending on such date shall also be paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of the period from such reduction or termination date
to such quarterly payment date. The Tranche B Facility Fees provided in this subsection shall accrue at all
times after the above-mentioned commencement date, including at any time during which one or more conditions in
Section 4.2 are not met.

         (d)      Facility Fees After Termination of Commitment. The Parent shall pay to the Administrative
Agent for the account of each Bank having Loans outstanding after the Termination Date of any Commitment
(including Tranche A Loans that have been converted to the Converted Tranche A Loan), a facility fee (the "Post
Termination Facility Fee") on such Bank's Pro Rata Share of the Loans outstanding after such Termination Date
computed on a quarterly basis in arrears on the last Business Day of each calendar quarter as calculated by the
Administrative Agent, at the rate per annum equal at all times to .30% per annum. Such Post Termination
Facility Fee shall accrue from and including the Termination Date of the applicable Commitment to but excluding
the date such Loans shall be repaid in full, on the daily average aggregate outstanding principal amount of
such Loans.

         (e)      Tranche A Usage Fee. The Parent shall pay to the Administrative Agent for the account of each
Tranche A Bank a usage fee at the rate of .125% per annum on the full aggregate outstanding principal amount of
such Tranche A Bank's Tranche A Loans for each day when the aggregate outstanding principal balance of all
Loans exceeds 33% of the aggregate amount of all Commitments, such fee to be computed for each day on which
such an excess exists but to be payable quarterly in arrears on the last Business Day of each calendar quarter
through the Termination Date of the Tranche A Commitment, with the final payment to be made on the Termination
Date of the Tranche A Commitment, provided that if the Tranche A Commitments are terminated in whole, the
accrued usage fee calculated for the period ending on the date of such termination in whole shall be paid on
that date.

         (f)      Tranche B Usage Fee. The Parent shall pay to the Administrative Agent for the account of each
Tranche B Bank a usage fee at the rate of .125% per annum on the full aggregate outstanding principal amount of
such Tranche B Bank's Tranche B Loans for each day when such aggregate outstanding principal balance of all
Loans exceeds 33% of the aggregate amount of all Commitments, such fee to be computed for each day on which
such an excess exists but to be payable quarterly in arrears on the last Business Day of each calendar quarter
through the Termination Date of the Tranche B Commitment, with the final payment to be made on the Termination
Date of the Tranche B Commitment, provided that if the Tranche B Commitments

                                                      28


are terminated in whole, the accrued usage fee calculated for the period ending on the date of such
termination in whole shall be paid on that date.

         (g)      Usage Fee After Termination of Tranche A Commitment. In the event that the Tranche A
Commitment has terminated but the Borrowers have exercised their option to convert the Tranche A Loans to the
Converted Tranche A Loan as provided herein, the Parent shall pay to the Administrative Agent for the account
of each Tranche A Bank, a usage fee at the rate of .125% per annum on the aggregate outstanding principal
balance of such Tranche A Bank's share of the Converted Tranche A Loan, such fee to be computed daily but to be
payable quarterly in arrears on the last Business Day of each calendar quarter through the Maturity Date of the
Converted Tranche A Loan, with the final payment to be made on the Maturity Date of the Converted Tranche A
Loan, provided that if the Converted Tranche A Loan is prepaid in full, the accrued usage fee calculated for
the period ending on the date of such prepayment in whole shall be paid on that date.

         (h)      Upfront Fee. On the date hereof the Parent shall pay to each Bank a fee in the amount which
has been agreed upon between them.

         Section 2.10. Computation of Fees and Interest. (a) All computations of interest for Base Rate Loans
when the Base Rate is determined by the prime commercial rate of Wachovia and all computations of the Tranche A
Facility Fees, the Tranche B Facility Fees and usage fees shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. All other computations of interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on
the basis of a 365-day year). Interest and fees shall accrue during each Interest Period or other period during
which interest or such fees are computed from the first day thereof to but excluding the last day thereof.

         (b)      Each determination of an interest rate by the Administrative Agent shall be conclusive and
binding on the Borrowers and the Banks in the absence of manifest error.

         Section 2.11. Payments. (a) All payments to be made by the Borrowers or any of them shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all such payments
shall be made to the Administrative Agent for the account of the Banks at the Administrative Agent's Payment
Office, and shall be made in Dollars and in immediately available funds, no later than 12:00 p.m. (New York
City time) on the date specified herein. With respect to each Loan for which a payment has been received, the
Administrative Agent will promptly distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any payment received by the
Administrative Agent later than 12:00 p.m. (New York City time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to accrue.

         (b)      Subject to the provisions set forth in the definition of "Interest Period" herein, whenever
any payment is due on a day other than a Business Day, such payment shall be made the following Business Day,
and such extension of time shall in such case be included in the computation of interest or fees, as the case
may be.

                                                      29


         (c)      Unless the Administrative Agent receives notice from a Borrower prior to the date on which
any payment is due to any of the Banks that such Borrower will not make such payment in full as and when
required, the Administrative Agent may assume that such Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each such Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent each Borrower has not made such payment in full to
the Administrative Agent, such Bank shall repay to the Administrative Agent on demand such amount distributed
to such Bank, together with interest thereon at the Federal Funds Rate for each day from the date such amount
is distributed to such Bank until the date repaid.

         Section 2.12. Payments by the Banks to the Administrative Agent. (a) Tranche A Payments. Unless the
Administrative Agent receives notice from a Tranche A Bank on or prior to the Effective Date or, with respect
to any Tranche A Borrowing after the Effective Date, at least one Business Day prior to the date of such
Tranche A Borrowing, that such Tranche A Bank will not make available as and when required hereunder to the
Administrative Agent for the account of a Borrower the amount of that Tranche A Bank's Pro Rata Share of the
Tranche A Borrowing, the Administrative Agent may assume that each Tranche A Bank has made such amount
available to the Administrative Agent in immediately available funds on the Tranche A Borrowing Date and the
Administrative Agent may (but shall not be so required) in reliance upon such assumption, make available to the
applicable Borrower on such date a corresponding amount. If and to the extent any Tranche A Bank shall not have
made its full amount available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to a Borrower such amount, that Tranche A Bank
shall on the Business Day following such Tranche A Borrowing Date make such amount available to the
Administrative Agent, together with interest at the Federal Funds Rate for each day during such period. A
notice of the Administrative Agent submitted to any Tranche A Bank with respect to amounts owing under this
subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to
the Administrative Agent shall constitute such Tranche A Bank's Tranche A Loan on the date of the Tranche A
Borrowing for all purposes of this Agreement. If such amount is not made available to the Administrative Agent
on the Business Day following the Tranche A Borrowing Date, the Administrative Agent will notify the applicable
Borrower of such failure to fund and, upon demand by the Administrative Agent, such Borrower shall pay such
amount to the Administrative Agent for the Administrative Agent's account, together with interest thereon for
each day elapsed since the date of such Tranche A Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Tranche A Loans comprising such Tranche A Borrowing.

         (b) Tranche B Payments. Unless the Administrative Agent receives notice from a Tranche B Bank on or
prior to the Effective Date or, with respect to any Tranche B Borrowing after the Effective Date, at least one
Business Day prior to the date of such Tranche B Borrowing, that such Tranche B Bank will not make available as
and when required hereunder to the Administrative Agent for the account of a Borrower the amount of that
Tranche B Bank's Pro Rata Share of the Tranche B Borrowing, the Administrative Agent may assume that each
Tranche B Bank has made such amount available to the Administrative Agent in immediately available funds on the
Tranche B Borrowing Date and the Administrative Agent may (but shall not be so required) in reliance upon such
assumption, make available to the applicable Borrower

                                                      30


on such date a corresponding amount. If and to the extent any Tranche B Bank shall not have made its full
amount available to the Administrative Agent in immediately available funds and the Administrative Agent in
such circumstances has made available to a Borrower such amount, that Tranche B Bank shall on the Business Day
following such Tranche B Borrowing Date make such amount available to the Administrative Agent, together with
interest at the Federal Funds Rate for each day during such period. A notice of the Administrative Agent
submitted to any Tranche B Bank with respect to amounts owing under this subsection (a) shall be conclusive,
absent manifest error. If such amount is so made available, such payment to the Administrative Agent shall
constitute such Tranche B Bank's Tranche B Loan on the date of the Tranche B Borrowing for all purposes of this
Agreement. If such amount is not made available to the Administrative Agent on the Business Day following the
Tranche B Borrowing Date, the Administrative Agent will notify the applicable Borrower of such failure to fund
and, upon demand by the Administrative Agent, such Borrower shall pay such amount to the Administrative Agent
for the Administrative Agent's account, together with interest thereon for each day elapsed since the date of
such Tranche B Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Tranche
B Loans comprising such Tranche B Borrowing.

         (c)      General Principles Regarding Loans By Tranche A Banks. The failure of any Tranche A Bank to
make any Tranche A Loan on any Tranche A Borrowing Date shall not relieve any other Tranche A Bank of any
obligation hereunder to make a Tranche A Loan on such Tranche A Borrowing Date, but no Tranche A Bank shall be
responsible for the failure of any other Tranche A Bank to make the Tranche A Loan to be made by such other
Tranche A Bank on any Tranche A Borrowing Date.

         (d)      General Principles Regarding Loans By Tranche B Banks. The failure of any Tranche B Bank to
make any Tranche B Loan on any Tranche B Borrowing Date shall not relieve any other Tranche B Bank of any
obligation hereunder to make a Tranche B Loan on such Tranche B Borrowing Date, but no Tranche B Bank shall be
responsible for the failure of any other Tranche B Bank to make the Tranche B Loan to be made by such other
Tranche B Bank on any Tranche B Borrowing Date.

         Section 2.13. Sharing of Payments, Etc. (a) Tranche A Loan Payments  If, other than as expressly
provided elsewhere herein, any Tranche A Bank shall obtain on account of the Tranche A Loans made by it any
payment (other than through the exercise of any right of set-off which shall be governed by Section 13.10
hereof) in excess of its Pro Rata Share with respect to such Tranche A Loans, such Tranche A Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Tranche A Banks
such participations in the Tranche A Loans made by them as shall be necessary to cause such purchasing Tranche
A Bank to share the excess payment pro rata with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Tranche A Bank, such purchase shall to that
extent be rescinded and each other Tranche A Bank shall repay to the purchasing Tranche A Bank the purchase
price paid therefor, together with an amount equal to such paying Tranche A Bank's ratable share (according to
the proportion of (i) the amount of such paying Tranche A Bank's required repayment to (ii) the total amount so
recovered from the purchasing Tranche A Bank) of any interest or other amount paid or payable by the purchasing
Tranche A Bank in respect of the total amount so recovered. The Borrowers agree that any

                                                      31


Tranche A Bank so purchasing a participation from another Tranche A Bank may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but subject to Section 13.10) with
respect to such participation as fully as if such Tranche A Bank were the direct creditor of the applicable
Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations purchased under this Section and
will in each case notify the Tranche A Banks following any such purchases or repayments.

         (b) Tranche B Loan Payments  If, other than as expressly provided elsewhere herein, any Tranche B Bank
shall obtain on account of the Tranche B Loans made by it any payment (other than through the exercise of any
right of set-off which shall be governed by Section 13.10 hereof) in excess of its Pro Rata Share with respect
to such Tranche B Loans, such Tranche B Bank shall immediately (a) notify the Administrative Agent of such
fact, and (b) purchase from the other Tranche B Banks such participations in the Tranche B Loans made by them
as shall be necessary to cause such purchasing Tranche B Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the
purchasing Tranche B Bank, such purchase shall to that extent be rescinded and each other Tranche B Bank shall
repay to the purchasing Tranche A Bank the purchase price paid therefor, together with an amount equal to such
paying Tranche B Bank's ratable share (according to the proportion of (i) the amount of such paying Tranche B
Bank's required repayment to (ii) the total amount so recovered from the purchasing Tranche B Bank) of any
interest or other amount paid or payable by the purchasing Tranche B Bank in respect of the total amount so
recovered. The Borrowers agree that any Tranche B Bank so purchasing a participation from another Tranche B
Bank may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 13.10) with respect to such participation as fully as if such Tranche B Bank
were the direct creditor of the applicable Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the Tranche B Banks following any such
purchases or repayments.

         (c) Converted Tranche A Loan Payments  If, other than as expressly provided elsewhere herein, any
Tranche A Bank shall obtain on account of the Converted Tranche A Loan any payment (other than through the
exercise of any right of set-off which shall be governed by Section 13.10 hereof) in excess of its Pro Rata
Share with respect to such Converted Tranche A Loan, such Tranche A Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Tranche A Banks such participations in the
Converted Tranche A Loan as shall be necessary to cause such purchasing Tranche A Bank to share the excess
payment pro rata with each of them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Tranche A Bank, such purchase shall to that extent be rescinded and
each other Tranche A Bank shall repay to the purchasing Tranche A Bank the purchase price paid therefor,
together with an amount equal to such paying Tranche A Bank's ratable share (according to the proportion of (i)
the amount of such paying Tranche A Bank's required repayment to (ii) the total amount so recovered from the
purchasing Tranche A Bank) of any interest or other amount paid or payable by the purchasing Tranche A Bank in
respect of the total amount so recovered. The Borrowers agree that any Tranche A Bank so purchasing a
participation from another Tranche A Bank may, to the fullest extent permitted by

                                                      32


law, exercise all its rights of payment (including the right of set-off, but subject to Section 13.10) with
respect to such participation as fully as if such Tranche A Bank were the direct creditor of the applicable
Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations purchased under this Section and
will in each case notify the Tranche A Banks following any such purchases or repayments.

                                                  ARTICLE III

                                     TAXES, YIELD PROTECTION AND ILLEGALITY

         Section 3.1. Taxes. (a) Payments to be Free and Clear. All payments by each Borrower or any other
Person under the Loan Documents to or for the account of the Administrative Agent, or any Bank (each, an
"Indemnified Tax Person") shall be made free and clear of, and without any deduction or withholding for or on
account of, any and all current or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (including interest, additions to tax, and penalties thereon) imposed, levied,
collected, withheld or assessed by the United States or any political subdivision or taxing authority thereof
(collectively, "Taxes"), excluding as to any Indemnified Tax Person, (i) a Tax on the Income imposed on such
Indemnified Tax Person and (ii) any interest, fees, additions to tax or penalties for late payment thereof
(each such nonexcluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the Income" shall mean, as to
any Person, a Tax imposed by one of the following jurisdictions or by any political subdivision or taxing
authority thereof: (i) the United States, (ii) the jurisdiction in which such Person is organized, (iii) the
jurisdiction in which such Person's principal office is located, or (iv) in the case of each Bank, any
jurisdiction in which such Bank's applicable Lending Office is located; which Tax is an income tax or franchise
tax imposed on all or part of the net income or net profits of such Person or which Tax represents interest,
fees, or penalties for late payment of such an income tax or franchise tax.

         (b)      Grossing Up of Payments. If a Borrower or any other Person is required by law, rule,
regulation, order, directive, treaty or guideline to make any deduction or withholding (which deduction or
withholding would constitute an Indemnified Tax) from any amount required to be paid by it to or on behalf of
an Indemnified Tax Person under any Loan Document (i) it shall pay such Indemnified Tax before the date on
which penalties attach thereto, such payment to be made for its own account (if the liability to pay is imposed
on it) or on behalf of and in the name of such Indemnified Tax Person (if the liability is imposed on such
Indemnified Tax Person), and (ii) the sum payable to such Indemnified Tax Person shall be increased as may be
necessary so that after making all required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Indemnified Tax Person receives an amount equal
to the sum it would have received had no such deductions or withholdings been made.

         (c)      Other Taxes. Each Borrower or other Person agrees to pay any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment
made by it hereunder or from the execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect

                                                      33


of, the Loan Documents or otherwise with respect to, the Loan Documents (collectively, the "Other Taxes").

         (d)      Evidence of Payment. Within 30 days after the reasonable request therefor by the
Administrative Agent in connection with any payment of Indemnified Taxes or Other Taxes, the applicable
Borrower or other Person will furnish to the Administrative Agent the original or a certified copy of an
official receipt from the jurisdiction to which payment is made evidencing payment thereof or, if unavailable,
a certificate from a Responsible Officer that states that such payment has been made and that sets forth the
date and amount of such payment.

         (e)      U.S. Tax Certificates. Each Indemnified Tax Person that is organized under the laws of any
jurisdiction other than the United States or any political subdivision thereof that is exempt from United
States federal withholding tax, or that is subject to such tax at a reduced rate under an applicable treaty,
with respect to payments under the Loan Documents shall deliver to the Borrowers, on or prior to the Effective
Date (in the case of each Indemnified Tax Person listed on the signature pages hereof) or on the effective date
of the Assignment and Acceptance Agreement or other document pursuant to which it becomes an Indemnified Tax
Person (in the case of each other Indemnified Tax Person), and at such other times as the Borrowers or the
Administrative Agent may reasonably request, Internal Revenue Form W-8 ECI or Form W-8 BEN or other certificate
or document required under United States law to establish entitlement to such exemption or reduced rate. No
Borrower shall be required to pay any additional amount to any such Indemnified Tax Person under subsection (b)
above if such Indemnified Tax Person shall have failed to satisfy the requirements of the immediately preceding
sentence with respect to such Borrower; provided that if such Indemnified Tax Person shall have satisfied such
requirements on the Effective Date (in the case of each Indemnified Tax Person listed on the signature pages
hereof) or on the effective date of the Assignment and Acceptance Agreement or other document pursuant to which
it became an Indemnified Tax Person (in the case of each other Indemnified Tax Person), nothing in this
subsection shall relieve the Borrowers of their obligation to pay any additional amounts pursuant to subsection
(b) in the event that, as a result of any change in applicable law or treaty, such Indemnified Tax Person is no
longer properly entitled to deliver certificates, documents or other evidence at a subsequent date establishing
the fact that such Indemnified Tax Person is no longer entitled to such exemption or reduced rate.

         Section 3.2. Illegality. (a) If any Bank determines that the introduction of any Requirement of Law,
or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law,
has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Bank or its applicable Lending Office to make Eurodollar Rate Loans, then, on notice thereof
by the Bank to the Borrowers through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the Administrative Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.

         (b)      If a Bank determines that it is unlawful to maintain any Eurodollar Rate Loan, the Borrowers
shall, upon receipt of notice of such fact and demand from such Bank (with a copy to the Administrative Agent),
prepay in full such Eurodollar Rate Loans of that Bank then outstanding, together with interest accrued thereon
and amounts required under Section 3.4, either on the last day of the Interest Period thereof, if the Bank may
lawfully continue to

                                                      34


maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Eurodollar Rate Loan. If a Borrower is required to so prepay any Eurodollar Rate Loan, then
concurrently with such prepayment, such Borrower shall borrow from the affected Bank, in the amount of such
repayment, a Base Rate Loan.

         Section 3.3. Increased Costs and Reduction of Return. (a) If any Bank determines that, due to either
(i) the introduction of or any change (other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the Eurodollar Rate or in respect of the assessment rate payable by
any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation of any law or regulation or (ii)
the compliance by that Bank with any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to
make or making, funding or maintaining any Eurodollar Rate Loans, then the Borrowers shall be liable for, and
shall from time to time, upon demand (with a copy of such demand to be sent to the Administrative Agent), pay
to the Administrative Agent for the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.

         (b)      If any Bank shall have determined that (i) the introduction of any Capital Adequacy
Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged
with the interpretation or administration thereof, or (iv) compliance by the Bank (or its Lending Office) or
any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and
(taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such
Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of
its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Bank to the
Parent through the Administrative Agent, the Parent shall pay to the Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank for such increase.

         Section 3.4. Funding Losses. Each Borrower shall reimburse each Bank and hold each Bank harmless from
any loss or expense which the Bank may sustain or incur as a consequence of:

                  (a) the failure of such Borrower to make on a timely basis any payment of principal of any
         Eurodollar Rate Loan;

                  (b) the failure of such Borrower to borrow, continue or convert a Loan after such Borrower
         has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation;

                  (c) the failure of such Borrower to make any prepayment in accordance with any notice
         delivered under Section 2.6;

                  (d) the prepayment or other payment (including after acceleration thereof) of an Eurodollar
         Rate Loan on a day that is not the last day of the relevant Interest Period; or

                                                      35


                  (e) the automatic conversion under Section 2.4 of any Eurodollar Rate Loan to a Base Rate
         Loan on a day that is not the last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to
maintain its Eurodollar Rate Loans or from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Borrowers to the Banks under this Section and
under subsection 3.3(a), each Eurodollar Rate Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at the LIBOR Rate used in determining the
Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan
is in fact so funded.

         Section 3.5. Inability to Determine Rates. If the Majority Banks determine that for any reason
adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate applicable pursuant to
subsection 2.8(a) for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to the Banks of funding such Eurodollar Rate Loan, the Administrative
Agent will promptly so notify the Borrowers and each Bank. Thereafter, the obligation of the Banks to make or
maintain Eurodollar Rate Loans, as the case may be, hereunder shall be suspended until the Administrative Agent
upon the instruction of the Majority Banks revokes such notice in writing. Upon receipt of such notice, each
Borrower may revoke any Notice of Borrowing or Notice of Conversion/Continuation with respect to any Loans then
submitted by it. If the applicable Borrower does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by such Borrower, in the amount specified in the applicable notice submitted by
the applicable Borrower, but such Loans shall be made, converted or continued as Base Rate Loans instead of
Eurodollar Rate Loans.

         Section 3.6. Certificates of Banks. Any Bank or Agent claiming reimbursement or compensation under
this Article III shall deliver to the applicable Borrower (with a copy to the Administrative Agent) a
certificate setting forth in reasonable detail the amount payable to the Bank or Agent hereunder and such
certificate shall be conclusive and binding on such Borrower in the absence of manifest error.

         Section 3.7. Survival. The agreements and obligations of the Borrowers in this Article III shall
survive the payment of all other Obligations.

                                                   ARTICLE IV

                                              CONDITIONS PRECEDENT

         Section 4.1.  Conditions of Initial Loans. The obligation of each Bank to make its initial Loan
hereunder is subject to the following conditions:

         (a)      The Administrative Agent shall have received on or before the initial Tranche A Borrowing
Date and the initial Tranche B Borrowing Date all of the following, in form and

                                                      36


substance satisfactory to the Administrative Agent and each Bank, and in sufficient copies for each Bank
(except for the Notes (of which only the originals shall be signed)):

                  (i) Credit Agreement. This Agreement executed by each party hereto;

                  (ii) Notes. The Notes (if any);

                  (iii) Resolutions; Incumbency. (A) Copies of the resolutions of the board of directors of
         each of the Parent, PLIC and PXP authorizing the transactions contemplated hereby, certified as of the
         Effective Date by the Secretary or an Assistant Secretary of each of them;

                  (B) A certificate of the Secretary or Assistant Secretary of each of the Parent, PLIC and PXP
         certifying the names and true signatures of those of their officers authorized to execute, deliver and
         perform, as applicable, this Agreement, and all other Loan Documents to be delivered by them
         hereunder;

                  (iv) Organization Documents; Good Standing. Each of the following documents:

                           (A) the articles or certificate of incorporation and the bylaws of each of the
         Parent, PLIC and PXP as in effect on the Effective Date, certified by the Secretary or Assistant
         Secretary of each of them as of the Effective Date;

                           (B) a good standing certificate for each of the Parent, PLIC and PXP from the
         Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation and a
         good standing certificate for PLIC from the Insurance Department of the State of New York;

                  (v)      Legal Opinions.

                           (A) An opinion of independent outside counsel to PXP, PLIC and the Parent and
         addressed to the Agents and the Banks, substantially in the form of Exhibit D-1; and

                           (B) An opinion of Tracy L. Rich, counsel to PXP and addressed to the Agents and the
         Banks, substantially in the form of Exhibit D-2; and

                           (C) An opinion of Tracy L. Rich, counsel to PLIC and addressed to the Agents and the
         Banks, substantially in the form of Exhibit D-3;

                           (D) An opinion of Tracy L. Rich, counsel to the Parent, and addressed to the Agents
         and the Banks, substantially in the form of Exhibit D-4.

                  (vi) Certificate. A certificate signed by a Responsible Officer of each of the Parent, PLIC
and PXP, dated as of the Effective Date, stating that:

                           (A) the representations and warranties contained in Article V are true and correct
         on and as of such date, as though made on and as of such date;

                                                      37


                           (B) no Default or Event of Default exists or would result from the initial Tranche A
         Borrowing and/or the initial Tranche B Borrowing;

                           (C) there has occurred since September 30, 2003, no event or circumstance that has
         resulted or could reasonably be expected to result in a Material Adverse Effect; and

                           (D) all material third party approvals and consents necessary in connection with the
         execution and delivery by each of the Parent, PLIC and PXP of the Loan Documents to which it is a
         party, and the performance by each of the Parent, PLIC and PXP of its obligations under the Loan
         Documents shall have been obtained and remain in effect and any applicable waiting periods shall have
         expired.

                  (vii) Payment of Fees. Evidence that all arrangement fees, agency fees and other fees due to
the Agents, the Arrangers and the Banks by the Parent, PLIC and/or PXP on or before the date hereof have been
paid.

                  (viii) Other Documents. Such other approvals, opinions, documents or materials as the
Administrative Agent or any Bank may request.

         (b)      The commitments to extend credit under the Existing Credit Agreement shall have been
terminated and the principal of and interest on all loans outstanding thereunder, together with all accrued and
unpaid commitment and/or facility fees, shall have been paid in full (it being acknowledged that such a
repayment may be out of the proceeds of the initial Borrowing hereunder). Each Bank party hereto which is also
a party to the Existing Credit Agreement hereby waives any requirements set forth in the Existing Credit
Agreement to which it is a party for prior notice of the termination of the commitments thereunder and/or the
repayment of the loans and/or fees due thereunder to the extent, but only to the extent, that the termination
of such commitments and/or the repayment of such loans is occurring substantially concurrently with this
Agreement becoming effective. The foregoing waivers shall not (i) constitute a waiver of any condition or
requirement of any Existing Credit Agreement that payments of principal or interest be received by a certain
time on the date of payment in order to avoid the imposition of additional interest for the payment date and
for any non-business days immediately following the payment date and (ii) the foregoing waiver shall not
preclude the right of the banks party to the Existing Credit Agreement to be compensated, in accordance with
the terms of the Existing Credit Agreement, for any loss, cost or expense (including loss of profit) incident
to the prepayment of the loans outstanding thereunder which bears interest at a fixed rate and which is being
prepaid on a day other than a date which, pursuant to the terms of the applicable Existing Credit Agreement,
would avoid the requirement that the applicable Borrower reimburse such banks for such losses, costs or
expenses.

         Section 4.2.      Conditions to All Borrowings.

         (a)      Tranche A Borrowings. The obligation of each Tranche A Bank to make any Tranche A Loan to be
made by it (including its initial Tranche A Loan) is subject to the satisfaction of the following conditions
precedent on the relevant Tranche A Borrowing Date:

                                                      38


                  (i) Notice of Tranche A Borrowing. The Administrative Agent shall have received a Notice of
Tranche A Borrowing;

                  (ii) Continuation of Representations and Warranties. The representations and warranties in
Article V shall be true and correct on and as of such Tranche A Borrowing Date with the same effect as if made
on and as of such Tranche A Borrowing Date (except to the extent such representations and warranties expressly
refer to an earlier date); and

                  (iii) No Existing Default. No Event of Default or Default shall exist or shall result from
such Tranche A Borrowing.

Each Notice of Tranche A Borrowing submitted hereunder shall constitute a representation and warranty by the
applicable Borrower hereunder, as of the date of each such notice and as of each Tranche A Borrowing Date, that
the conditions in subsection 4.2(a) are satisfied.

         (b)      Tranche B Borrowings. The obligation of each Tranche B Bank to make any Tranche B Loan to be
made by it (including its initial Tranche B Loan) is subject to the satisfaction of the following conditions
precedent on the relevant Tranche B Borrowing Date:

                  (i) Notice of Tranche B Borrowing. The Administrative Agent shall have received a Notice of
Tranche B Borrowing;

                  (ii) Continuation of Representations and Warranties. The representations and warranties in
Article V shall be true and correct on and as of such Tranche B Borrowing Date with the same effect as if made
on and as of such Tranche B Borrowing Date (except to the extent such representations and warranties expressly
refer to an earlier date); and

                  (iii) No Existing Default. No Event of Default or Default shall exist or shall result from
such Tranche B Borrowing.

Each Notice of Tranche B Borrowing submitted hereunder shall constitute a representation and warranty by the
applicable Borrower hereunder, as of the date of each such notice and as of each Tranche B Borrowing Date, that
the conditions in Section 4.2(b) are satisfied.

                                                   ARTICLE V

                                         REPRESENTATIONS AND WARRANTIES

         The Parent, PLIC and PXP represent and warrant to each Agent and each Bank that as of the Effective
Date and at all times thereafter except to the extent that any representation or warranty herein expressly
refers only to a certain date:

         Section 5.1. Corporate Existence and Power. The Parent, PLIC, PXP and each of their Subsidiaries:

         (a)      is a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation;

                                                      39


         (b)      has the power and authority and all governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under
the Loan Documents;

         (c)      is duly qualified as a foreign corporation and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and

         (d)      is in compliance with all Requirements of Law; except, in each case referred to in clause (c)
or clause (d), to the extent that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

         Section 5.2. Corporate Authorization; No Contravention. The execution, delivery and performance by the
Parent, PLIC, PXP and their Subsidiaries of this Agreement and each other Loan Document to which such Person is
party, and each Borrowing hereunder, have been duly authorized by all necessary corporate action, and do not
and will not:

                  (a) contravene the terms of any of that Person's Organization Documents;

                  (b) conflict with or result in any breach or contravention of, or the creation of any Lien
         under, any document evidencing any Contractual Obligation to which such Person is a party or any
         order, injunction, writ or decree of any Governmental Authority to which such Person or its property
         is subject; or

                  (c) violate any Requirement of Law.

         Section 5.3. Governmental Authorization. No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with
the execution, delivery or performance by, or enforcement against, the Parent, PLIC, PXP or any of their
Subsidiaries of this Agreement or any other Loan Document, except filings made prior to the date hereof and
other filings which will be made as required by law.

         Section 5.4. Binding Effect. This Agreement and each other Loan Document to which any of the Parent,
PLIC or PXP is a party constitutes the legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.

         Section 5.5. Litigation. There are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of any of the Parent, PLIC or PXP threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Parent, PLIC or PXP or any of their Subsidiaries
or any of their respective properties which:

                  (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the
         transactions contemplated hereby or thereby; or

                                                      40


                  (b) as to which there exists a reasonable possibility of an adverse determination, which
         determination would reasonably be expected to have a Material Adverse Effect. No injunction, writ,
         temporary restraining order or any order of any nature has been issued by any court or other
         Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this
         Agreement or any other Loan Document, or directing that the transactions provided for herein or
         therein not be consummated as herein or therein provided.

         Section 5.6. Contractual Obligation. As of the Effective Date neither the Parent, PLIC, PXP nor any
Subsidiary of any of them is or will be in default under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults, could reasonably be expected to have a Material
Adverse Effect.

         Section 5.7. ERISA Compliance. (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. The Parent, PLIC, PXP and each ERISA
Affiliate has made all required contributions to any Pension Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Pension Plan.

                  (b) There are no pending or, to the best knowledge of the Parent, PLIC or PXP, threatened
         claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which
         has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no
         prohibited transaction or violation of the fiduciary responsibility rules with respect to any Pension
         Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.

                  (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) except as
         disclosed on Schedule 5.7(c) hereto, no Pension Plan has any Unfunded Pension Liability; (iii) neither
         the Parent, PLIC, PXP nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
         liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not
         delinquent under Section 4007 of ERISA); (iv) neither the Parent, PLIC, PXP nor any ERISA Affiliate
         has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the
         giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or
         4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Parent, PLIC, PXP nor any
         ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of
         ERISA.

         Section 5.8. Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used solely for
the purposes set forth in and permitted by Section 6.12 and Section 7.6. Neither the Parent, PLIC, PXP nor any
Subsidiary of any of them is generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.

         Section 5.9. Title to Properties. The Parent, PLIC, PXP and their Subsidiaries have good record and
marketable title in fee simple to, or valid leasehold interests in, all real property

                                                      41


necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as
could not, individually or in the aggregate, have a Material Adverse Effect. As of the Effective Date, the
property of the Parent, PLIC, PXP and their Subsidiaries is and will be subject to no Liens, other than
Permitted Liens.

         Section 5.10. Taxes. The Parent, PLIC, PXP and their Subsidiaries have filed all Federal and other
material tax returns and reports required to be filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed
tax assessment against the Parent, PLIC, PXP or any of their Subsidiaries that would, if made, have a Material
Adverse Effect. In addition, the Borrowers have no present intention to treat any Loan, or any transactions
related to the Loans, as part of a transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1.

         Section 5.11. Financial Condition. (a) The statutory financial statements of PLIC and its Primary
Insurance Subsidiaries dated December 31, 2002 and the related statements of income or operations, surplus or
capital and surplus and cash flows for the fiscal periods ended on those dates:

                           (i) were prepared in accordance with SAP consistently applied throughout the period
         covered thereby, except as otherwise expressly noted therein;

                           (ii) fairly present the financial condition of PLIC and its Primary Insurance
         Subsidiaries as of the date thereof and results of operations for the period covered thereby; and

                           (iii) show all material indebtedness and other liabilities, direct or contingent, of
         PLIC and its Primary Insurance Subsidiaries as of the date thereof, including liabilities for taxes,
         material commitments and Contingent Obligations.

         (b)      The audited consolidated financial statements of the Parent and its Subsidiaries dated
December 31, 2002 and the unaudited, interim consolidated financial statements of the Parent and its
Subsidiaries dated September 30, 2003, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal periods ended on those dates:

                           (i) were prepared in accordance with GAAP consistently applied throughout the period
         covered thereby, except as otherwise expressly noted therein;

                           (ii) fairly present the financial condition of the Parent and its Subsidiaries as of
         the date thereof and results of operations for the period covered thereby; and

                           (iii) show all material indebtedness and other liabilities, direct or contingent, of
         the Parent and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes,
         material commitments and Contingent Obligations.

                                                      42


         (c)      Since September 30, 2003, there has been no Material Adverse Effect.

         Section 5.12. Environmental Matters. The Parent, PLIC, PXP and their Subsidiaries (i) are in
compliance with any and all applicable Environmental Laws, (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a Material Adverse Effect.

         Section 5.13. Regulated Entities. The Parent, PLIC and PXP are not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other Federal or state statute or regulation limiting their ability to incur
Indebtedness. No filings, approvals or consents are required under the Investment Company Act of 1940 for the
enforceability of this Agreement or any other Loan Document.

         Section 5.14. No Burdensome Restrictions. Neither the Parent, PLIC, PXP nor any Subsidiary of any of
them is a party to or bound by any Contractual Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect.

         Section 5.15. Copyrights, Patents, Trademarks and Licenses, Etc. The Parent, PLIC, PXP and their
Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of the Parent, PLIC and PXP, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now contemplated to be employed, by the
Parent, PLIC and PXP or any Subsidiary thereof infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge
of the Parent, PLIC and PXP, proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.

         Section 5.16. Subsidiaries. PLIC and PXP are Wholly Owned Subsidiaries of the Parent. As of the date
hereof the Primary Subsidiaries are as identified on Exhibit I.

         Section 5.17. Insurance. The properties of the Parent, PLIC, PXP and their Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the Parent, PLIC or PXP, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the Parent, PLIC, PXP or any such
Subsidiary operates.

         Section 5.18. Full Disclosure. None of the representations or warranties made by the Parent, PLIC or
PXP in the Loan Documents as of the date such representations and warranties

                                                      43


are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Parent, PLIC or PXP in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Parent, PLIC or PXP to the Banks prior to
the Effective Date), contains any untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.

         Section 5.19. Compliance. The Parent, PLIC, PXP and each of their Subsidiaries is in compliance with
all applicable laws and regulations, all applicable ordinances, decrees, requirements, orders and judgments of,
and all of the terms of any applicable licenses and permits issued by, any governmental body, agency or
official, and all agreements and instruments to which it may be subject or any of its properties may be bound,
in each case where the violation thereof may have a Material Adverse Effect.

                                                   ARTICLE VI

                                             AFFIRMATIVE COVENANTS

         From and after the Effective Date and so long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in
writing:

         Section 6.1. Financial Statements. The Parent or PLIC shall deliver to the Administrative Agent, in
form and detail satisfactory to the Administrative Agent and the Majority Banks, with sufficient copies for
each Bank:

                  (a) as soon as available, but not later than 120 days after the end of each fiscal year, a
         copy of the audited consolidated balance sheets of the Parent and its Subsidiaries as at the end of
         such year and the related consolidated statements of income or operations, shareholders' equity and
         cash flows for such year, setting forth in each case in comparative form the figures for the previous
         fiscal year, and accompanied by the opinion of PricewaterhouseCoopers or another nationally-recognized
         independent public accounting firm ("Independent Auditor") which report shall state that such
         consolidated financial statements present fairly the financial position for the periods indicated in
         conformity with GAAP applied on a basis consistent with prior years. Such opinion shall not be
         qualified or limited because of a restricted or limited examination by the Independent Auditor of any
         material portion of the Parent's or any Subsidiary's records;

                  (b) as soon as available, but not later than 60 days after the end of each of the first three
         fiscal quarters of each fiscal year, a copy of the unaudited interim consolidated balance sheets of
         the Parent and its Subsidiaries and of PXP and its Subsidiaries as of the end of such quarter and the
         related interim consolidated statements of income, shareholders' equity and cash flows for the period
         commencing on the first day and ending on the last day of such quarter, and certified by a Responsible
         Officer of the Parent and PXP (as applicable) as fairly presenting, in accordance with GAAP (subject
         to

                                                      44


         ordinary, good faith year-end audit adjustments), the financial positions and the results of
         operations of the Parent and its Subsidiaries, and of PXP and its Subsidiaries;

                  (c) as soon as available, but not later than 120 days after the end of each fiscal year, (i)
         a copy of the Annual Statement of PLIC for such fiscal year prepared in accordance with SAP and
         accompanied by the certification of a Responsible Officer of PLIC that such Annual Statement presents
         fairly in accordance with SAP the financial position of PLIC for the period then ended and (ii) a copy
         of the unaudited consolidated balance sheet of PXP and its Subsidiaries as of the end of such year and
         the related consolidated statements of income, shareholders' equity and cashflows for the period
         commencing on the first day of such fiscal year and ending on the last day thereof and certified by a
         Responsible Officer of PXP as fairly presenting, in accordance with GAAP, the financial positions and
         results of operations of PXP and its Subsidiaries;

                  (d) as soon as possible, but no later than 60 days after the end of each of the first three
         fiscal quarters of each fiscal year, a copy of the quarterly statement of PLIC for each such fiscal
         quarter, all prepared in accordance with SAP and accompanied by the certification of a Responsible
         Officer of PLIC that all such quarterly statements present fairly in accordance with SAP the financial
         position of PLIC for the period then ended;

                  (e) as soon as available, a copy of PLIC's "Statement of Actuarial Opinion" which is provided
         to the Department (or equivalent information should the Department no longer require such a statement)
         as to the adequacy of policyholder reserves of PLIC, which opinion shall be in the format prescribed
         by the Insurance Code; and

                  (f) as soon as available, a copy of the "Management Discussion and Analysis" filed with the
         Department with respect to any of the foregoing financial statements and such other information.

         Section 6.2. Certificates; Other Information. The Parent or PLIC shall furnish to the Administrative
Agent, with sufficient copies for each Bank:

                  (a) concurrently with the delivery of the financial statements referred to in subsections
         6.1(a) and (b), a Compliance Certificate executed by a Responsible Officer of the Parent;

                  (b) promptly, copies of all financial statements and reports that the Parent or PLIC sends to
         its policyholders or shareholders, and copies of all financial statements and regular, periodical or
         special reports that the Parent or any Subsidiary may make to, or file with, the SEC other than
         filings made on behalf of Persons which are not Subsidiaries of the Parent, PLIC or PXP and filings
         made in connection with investment advisory, mutual fund and/or asset management activities;

                  (c) promptly, upon a change in any rating referred to in the definition of the term
         "Applicable Margin", written notice of such change by a Responsible Officer; and

                  (d) promptly, such additional information regarding the business, financial or corporate
         affairs of the Parent, PLIC, PXP or any Subsidiary of any of them as the


                                                    45


         Administrative Agent, at the request of any Bank, may from time to time reasonably request.

         Section 6.3.   Notices.  The Borrowers shall promptly notify the Administrative Agent and each Bank:

                  (a) of the occurrence of any Default or Event of Default and of the occurrence or existence
         of any event or circumstance that foreseeably will become a Default or Event of Default;

                  (b) of any matter that has resulted or may result in a Material Adverse Effect, including (i)
         breach or non-performance of, or any default under, a Contractual Obligation of the Parent, PLIC, PXP
         or any Subsidiary of any of them; (ii) any dispute, litigation, investigation, proceeding or
         suspension between the Parent, PLIC or PXP or any Subsidiary thereof and any Governmental Authority;
         or (iii) the commencement of, or any material development in, any litigation or proceeding affecting
         the Parent, PLIC, PXP or any Subsidiary thereof; including pursuant to any applicable Environmental
         Laws;

                  (c) of the occurrence of any of the following events affecting the Parent, PLIC or PXP or any
         ERISA Affiliate (but in no event more than 10 days after such event), and deliver to the
         Administrative Agent and each Bank a copy of any notice with respect to such event that is filed with
         a Governmental Authority and any notice delivered by a Governmental Authority to the Parent or any
         ERISA Affiliate with respect to such event:

                           (i) an ERISA Event;

                           (ii) a material increase in the Unfunded Pension Liability of any Pension Plan;

                           (iii) the adoption of, or the commencement of contributions to, any Pension Plan
                  subject to Section 412 of the Code by the Parent or any ERISA Affiliate; or

                           (iv) the adoption of any amendment to a Pension Plan subject to Section 412 of the
                  Code, if such amendment results; in a material increase in contributions or Unfunded Pension
                  Liability;

                  (d) of any material change in accounting policies or financial reporting practices by the
         Parent, PLIC, PXP or any of their Primary Subsidiaries;

                  (e) of the intention of any Borrower to take any action that is inconsistent with the
         representations contained in the last sentence of Section 5.10 hereof; and

                  (f) of any Acquisition by the Parent, PLIC, PXP or any of their Subsidiaries, the total
         consideration for which shall exceed $25,000,000 (or its equivalent in any other currency), together
         with pro forma financial statements giving effect to such Acquisition but subject to the requirements
         of any applicable confidentiality agreement.

                                                      46


         Each notice under this Section shall be accompanied by a written statement by a Responsible Officer of
the Parent, PLIC or PXP setting forth details of the occurrence referred to therein, and stating what action
the Parent, PLIC, PXP or any affected Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.3(a) or (b) shall describe with particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been (or foreseeably will be) breached or violated.

         Section 6.4. Preservation of Corporate Existence, Etc. The Parent, PLIC and PXP each shall, and shall
cause each of their respective Subsidiaries to:

                  (a) preserve and maintain in full force and effect its corporate existence and good standing
         under the laws of its state or jurisdiction of incorporation;

                  (b) preserve and maintain in full force and effect all governmental rights, privileges,
         qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its
         business;

                  (c) use reasonable efforts, in the ordinary course of business, to preserve its business
         organization and goodwill; and

                  (d) preserve or renew all of its registered patents, trademarks, trade names and service
         marks, the nonpreservation of which could reasonably be expected to have a Material Adverse Effect.

         The foregoing provisions of this Section 6.4 shall not restrict or prohibit the liquidation or
dissolution of any Subsidiary (other than a Borrower) which is inactive or whose continued existence is not
necessary to the continued operation of the businesses of the Parent, PLIC, PXP and their Subsidiaries taken as
a whole.

         Section 6.5. Maintenance of Property. The Parent, PLIC and PXP each shall maintain, and shall cause
each of their respective Subsidiaries to maintain, and preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted.

         Section 6.6. Insurance. The Parent, PLIC and PXP each shall maintain, and shall cause each of their
respective Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with
respect to its properties and business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried
under similar circumstances by such other Persons.

         Section 6.7. Payment of Obligations. The Parent, PLIC and PXP each shall, and shall cause each of
their respective Subsidiaries to, pay and discharge as the same shall become due and payable, all their
respective obligations and liabilities, including:

                  (a) all tax liabilities, assessments and governmental charges or levies upon it or its
         properties or assets, unless the same are being contested in good faith by

                                                      47


         appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the
         applicable Person;

                  (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and

                  (c) all indebtedness, as and when due and payable, but subject to any subordination
         provisions contained in any instrument or agreement evidencing such Indebtedness.

         Section 6.8. Compliance with Laws. The Parent, PLIC and PXP shall each comply, and shall cause each of
their respective Subsidiaries to comply, in all material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide dispute may exist.

         Section 6.9. Compliance with ERISA. The Parent, PLIC and PXP each shall, and shall cause each of its
ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any
Pension Plan subject to Section 412 of the Code.

         Section 6.10. Inspection of Property and Books and Records. The Parent, PLIC and PXP shall each
maintain, and shall cause each of their respective Subsidiaries to maintain, proper books of record and
account, in which full, true and correct entries in conformity with GAAP or SAP, as applicable, consistently
applied shall be made of all financial transactions and matters involving the assets and business of the
Parent, PLIC and PXP and each such Subsidiary. The Parent, PLIC, PXP shall each permit, and shall cause each of
their respective Subsidiaries to permit, representatives and independent contractors of the Administrative
Agent or any Bank to visit and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the applicable Person if a Default or Event of Default has occurred
and is continuing and at such reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the applicable Person; provided, however, when an Event of Default
or Default exists the Administrative Agent or any Bank may do any of the foregoing during normal business hours
and without advance notice.

         Section 6.11. Environmental Laws. The Parent, PLIC and PXP shall each, and shall cause each of their
respective Subsidiaries to, conduct its operations and keep and maintain its property in compliance with all
Environmental Laws.

         Section 6.12. Use of Proceeds. The Borrowers shall use the proceeds of the Loans for working capital
and other general corporate purposes, including the repayment of Indebtedness and the payment of contingency
payments due to Kayne Anderson Rudnick Investment

                                                      48


Management, LLC; provided, however, that such proceeds shall not be used for any Acquisition if the board of
directors of the entity to be acquired shall not have approved such Acquisition.

                                                  ARTICLE VII

                                               NEGATIVE COVENANTS

         From and after the Effective Date and so long as any Bank shall have any Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in
writing:

         Section 7.1. Limitation on Liens. The Parent, PLIC and PXP shall not, and shall not suffer or permit
any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property, whether now owned or hereafter acquired or lease any property previously
owned by any of them other than the following ("Permitted Liens"):

                  (a) any Lien existing on property of the Parent, PLIC, PXP or any Subsidiary on the Effective
         Date and set forth in Schedule 7.1 securing Indebtedness outstanding on such date;

                  (b) any Lien created under any Loan Document;

                  (c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent
         or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section
         6.7, provided that no notice of lien has been filed or recorded under the Code;

                  (d) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other
         similar Liens arising in the ordinary course of business which are not delinquent or remain payable
         without penalty;

                  (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required
         in the ordinary course of business in connection with workers' compensation, unemployment insurance
         and other social security legislation;

                  (f) Liens consisting of judgment or judicial attachment liens, provided that the enforcement
         of such Liens is effectively stayed and all such liens in the aggregate at any time outstanding for
         the Parent, PLIC, PXP and their Subsidiaries do not exceed $50,000,000 (or its equivalent in any other
         currency);

                  (g) easements, rights-of-way, restrictions and other similar encumbrances incurred in the
         ordinary course of business which, in the aggregate, are not substantial in amount, and which do not
         in any case materially detract from the value of the property subject thereto or interfere with the
         ordinary conduct of the businesses of the Parent, PLIC, PXP and their Subsidiaries;

                                                      49


                  (h) Liens arising solely by virtue of any statutory or common law provision relating to
         banker's liens, securities intermediary's liens, rights of set-off or similar rights and remedies as
         to deposit accounts, securities accounts or other funds maintained with a creditor depository
         institution; provided that (i) such deposit account is not a dedicated cash collateral account and is
         not subject to restrictions against access by the Parent, PLIC, PXP or the applicable Subsidiary in
         excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account or
         securities account is not intended by the Parent, PLIC, PXP or any Subsidiary to provide collateral to
         the depository institution providing such account;

                  (i) Liens securing obligations under Swap Contracts of the Parent and/or its Subsidiaries
         entered into in the ordinary course of business and not for speculation; and

                  (j) additional Liens securing: (A) Indebtedness and sale/leaseback transactions (other than
         the sale and leaseback transactions referred to in clause (B) below) not in excess of $25,000,000 (or
         its equivalent in any other currency) in the aggregate for all such Indebtedness and sale/leaseback
         transactions at any time outstanding; and (B) sale/leaseback transactions not in excess of $35,000,000
         (or its equivalent in any other currency) in the aggregate for all such sale/leaseback transactions at
         any time outstanding relating to the real property located at One American Row, Hartford, Connecticut
         and 56 Prospect Street, Hartford, Connecticut.

         For purposes of this Agreement, Liens on property held in a segregated separate account established
pursuant to the New York Insurance Code for the benefit of specified classes of policyholders, annuitants or
other third parties and securing Indebtedness for which the Parent, PLIC, PXP and their Subsidiaries have no
personal liability shall not be treated as a Lien upon the property of the Parent, PLIC, PXP or their
Subsidiaries nor shall such indebtedness be treated as Indebtedness thereof. In no event shall any Borrower
permit any Liens to exist on the assets of the closed block of business of PLIC for securitization purposes or
otherwise.

         Section 7.2. Mergers, Consolidations and Sales of Assets. The Parent, PLIC and PXP will not, and will
not permit any Primary Subsidiary to:

                  (a) consolidate with or be a party to a merger with any other Person or

                  (b) sell, lease or otherwise dispose of any substantial part of its assets provided that the
         foregoing shall not apply to or operate to prevent (i) either (A) reinsurance and similar risk sharing
         arrangements entered into in the ordinary course of business, or (B) reinsurance arrangements with
         respect to a whole block of business, (ii) sales or other dispositions of assets acquired in
         satisfaction of obligations owing the Parent, PLIC, PXP or a Primary Subsidiary, (iii) mergers of a
         Subsidiary with and into a Borrower and other mergers of a Subsidiary not involving the Parent, PLIC
         or PXP, (iv) mergers constituting Acquisitions which are permitted by subsection 7.3(d) hereof, (v)
         the sale of all or any substantial part of the assets of, or of the equity interests held by any of
         the Parent, PLIC or PXP in, any Subsidiary which is not a Borrower, (vi) the sale of any partnership
         or similar interest by PXP, or (vii) the sale and leaseback of the real property located at One
         American Row, Hartford, Connecticut or the sale and leaseback

                                                      50

         of the real property located at 56 Prospect Street, Hartford, Connecticut, so long as in the case of
         each of the matters described in clauses (i) through (vi) above, no Default or Event of Default shall
         have occurred and be continuing or would occur as a result thereof. Nothing herein contained shall be
         deemed to permit any transaction which constitutes a Change of Control. PXP will not be or become a
         direct or indirect Subsidiary of PLIC or of any other person, firm or corporation primarily engaged in
         the business of insurance or banking. All net proceeds from dispositions permitted in clauses (i)(B),
         (v) and (vi) above shall be applied in accordance with the provisions of subsection 2.6(b)(v) hereof.
         All net proceeds from the dispositions permitted in clause (vii) above shall be applied in accordance
         with the provisions of subsection 2.6(b)(iii) hereof.

                  (c) sell, transfer or otherwise dispose of the closed block of business of PLIC, provided
         that the foregoing shall not apply to or operate to prevent (i) inter-company transactions among the
         Parent, PLIC and PXP relating to the closed block of business of PLIC but only to the extent that such
         transactions would also be permitted under Section 7.5 hereof, or (ii) PLIC from entering into
         co-insurance, modified co-insurance or yearly renewable term re-insurance agreements with regard to
         the closed block of business of PLIC provided such agreements are not for financing or securitization
         purposes.

         Section 7.3. Loans and Investments. The Parent, PLIC and PXP shall not purchase or acquire, or suffer
or permit any Subsidiary to purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any Person or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of the Parent, PLIC or PXP, except for:

                  (a) investments in cash equivalents;

                  (b) investments by PLIC and other Subsidiaries primarily engaged in the business of insurance
         in compliance with all applicable regulatory requirements;

                  (c) investments by PXP in the ordinary course of business consistent with past practices; and

                  (d) Acquisitions, so long as after giving effect thereto (i) the general nature of the
         business which would then be engaged in by the Parent, PLIC, PXP and their Subsidiaries would not be
         substantially changed from the general nature of the business engaged in by PLIC, PXP and their
         Subsidiaries on the date of this Agreement, (ii) (A) no Default or Event of Default shall have
         occurred and be continuing and (B) the Parent, PLIC and PXP would have been in compliance with all
         financial covenants hereof, calculated on a pro forma basis at the time of the Acquisition as if the
         Acquisition had taken place at the beginning of the four fiscal quarter period ending as of the last
         fiscal quarter end and as though this Agreement had been in effect throughout such period, with the
         Parent providing a certificate with respect thereto and (iii) after giving effect to each expenditure
         for Acquisitions the aggregate unused amount of the Commitments shall be not less than $75,000,000;
         and

                                                      51


                  (e) Investments in Subsidiaries provided that (i) each such investment shall be made in
         compliance with all applicable regulatory requirements, (ii) each such investment which constitutes an
         Acquisition shall comply with the requirements of clause (d) hereof and (iii) after giving effect to
         each investment the Borrowers shall be in compliance with all the requirements of this Agreement and
         no Default or Event of Default shall have occurred or be continuing.

         Section 7.4. Limitation on Indebtedness. The Parent, PLIC and PXP shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness if after giving effect thereto and to the application of
the proceeds thereof (i) a breach would have occurred under any provision of Article VIII or IX hereof had the
Indebtedness in question been incurred, and the proceeds thereof applied, as of the last day of the fiscal
quarter most recently concluded prior to the incurrence of the Indebtedness in question or (ii) the aggregate
amount of Indebtedness of the Parent and its Subsidiaries (exclusive of Indebtedness owed by the Parent or a
Subsidiary to a Subsidiary or the Parent, Swap Contracts entered into in the ordinary course of business and
not for speculation and Indebtedness which is mandatorily convertible into equity within three years of
issuance) would exceed $750,000,000.

         Section 7.5. Transactions with Affiliates. The Parent, PLIC and PXP shall not, and shall not suffer or
permit any Subsidiary to, enter into any transaction with any Affiliate of the Parent, except upon fair and
reasonable terms no less favorable to the Parent, PLIC, PXP or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the Parent, PLIC, PXP or such Subsidiary.

         Section 7.6. Use of Proceeds. The Borrowers shall not, and shall not suffer or permit any Subsidiary
to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii)
to repay or otherwise refinance indebtedness of the Borrowers or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire
any security in any transaction that is subject to Section 13 or 14 of the Exchange Act.

         Section 7.7. Contingent Obligations. The Parent, PLIC and PXP shall not, and shall not suffer or
permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligations except:

                  (a) endorsements for collection or deposit in the ordinary course of business;

                  (b) Contingent Obligations of the Parent, PLIC, PXP and their Subsidiaries existing as of the
         Effective Date and listed in Schedule 7.7;

                  (c) Contingent Obligations included in the definition of the term "Indebtedness";

                  (d) the undertakings by PLIC in existence on the date hereof and identified on Exhibit J
         hereto pursuant to which PLIC provides rating agencies with undertakings to maintain the net worth or
         capital of the Subsidiaries in question and/or to assure that such Subsidiaries are able to meet their
         obligations on a timely basis, provided that (i) such

                                                      52


         undertakings may be renewed or extended and may be modified if the modifications in question will not
         increase the liability of PLIC thereunder in any material respect and (ii) PLIC shall cause the
         undertakings as to any Subsidiary to be terminated if and when it ceases to be a Subsidiary of PLIC
         (the undertakings above described shall not constitute "Indebtedness" of PLIC); and

                  (e) other Contingent Obligations in aggregate amounts not to exceed $50,000,000.

         Section 7.8. Joint Ventures. The Parent, PLIC and PXP shall not enter into or permit any Subsidiary to
enter into, any Joint Venture if after giving effect thereto the aggregate amount of investments by the Parent,
PLIC, PXP and their Subsidiaries (exclusive of investments in joint ventures between any of them or any of them
and their Subsidiaries or among such Subsidiaries) would exceed 10% of the Parent's Shareholders Equity.

         Section 7.9. Restricted Payments. The Parent shall not, declare or pay any dividend or other
distribution on account of its equity securities or directly or indirectly, through a subsidiary or otherwise,
purchase, redeem or otherwise acquire or retire any such equity securities if after giving effect thereto a
Default or Event of Default shall have occurred and be continuing. The Parent will not permit any Subsidiary to
enter into, or permit to remain outstanding, any agreement prohibiting or limiting the amount of dividends or
other distributions which it may make to the holders of its equity securities.

         Section 7.10. ERISA. The Parent, PLIC or PXP shall not, and shall not suffer or permit any of its
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Pension Plan which has resulted or could reasonably be expected to result in liability of
the Parent, PLIC or PXP in an aggregate amount in excess of $5,000,000 or (b) engage in a transaction that
could be subject to Section 4069 or 42 12(c) of ERISA.

         Section 7.11. Change in Business. The Parent, PLIC and PXP shall not, and shall not suffer or permit
any Subsidiary to, engage in any material line of business substantially different from those lines of business
carried on by PLIC, PXP and their Subsidiaries on the date hereof.

         Section 7.12. Accounting Changes. The Parent, PLIC and PXP shall not, and shall not suffer or permit
any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as
required by GAAP or SAP, or change the fiscal year of the Parent or of any Subsidiary.

         Section 7.13. Pari Passu. Each Borrower shall cause the Obligations to rank at least pari passu with
all other senior unsecured Indebtedness of such Borrower.

         Section 7.14. Phoenix.  The Parent and PLIC shall retain the word "Phoenix" in their names.

                                                      53


                                                  ARTICLE VIII

                                          PARENT'S FINANCIAL COVENANTS

         So long as any Bank shall have any Commitments hereunder, or any Loan or other Obligations shall
remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing:

         Section 8.1. Parent Total Debt to Capitalization Ratio. The Parent shall at all times maintain the
Parent Total Debt to Capitalization Ratio at not more than 30%.

         Section 8.2. Shareholders' Equity. At all times from the date hereof through and including December
31, 2003, the Parent shall maintain its Shareholder's Equity at not less than $1,775,000,000. For the fiscal
quarter ending on March 31, 2004, the Parent shall have a Shareholder's Equity of not less than: (a)
$1,775,000,000; plus (b) fifty percent (50%) of the Consolidated Net Income of the Parent for the fiscal
quarter of the Parent ending on March 31, 2004 as to which Consolidated Net Income is a positive amount; plus
(c) one hundred percent (100%) of the proceeds received in connection with the issuance of equity securities by
the Parent and its Subsidiaries during the fiscal quarter of the Parent ending on March 31, 2004. For each
fiscal quarter of the Parent ending after March 31, 2004, the Parent shall have a Shareholder's Equity of not
less than: (a) the minimum Shareholder's Equity requirement for the immediately preceding fiscal quarter of the
Parent; plus (b) fifty percent (50%) of the Consolidated Net Income of the Parent for the then ended fiscal
quarter of the Parent as to which Consolidated Net Income is a positive amount; plus (c) one hundred percent
(100%) of the proceeds received in connection with the issuance of equity securities by the Parent and its
Subsidiaries during the then ended fiscal quarter of the Parent.

         Section 8.3. Parent Consolidated Fixed Charge Coverage Ratio. The Parent shall maintain the Parent
Consolidated Fixed Charge Coverage Ratio at not less than 1.25 to 1.0 as of the end of each fiscal quarter of
the Parent for the then ended Measurement Period.

                                                   ARTICLE IX

                                            PLIC FINANCIAL COVENANTS

         From and after the Effective Date and so long as any Bank shall have any Commitments hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in
writing:

         Section 9.1. Risk Based Capital. PLIC shall as of the last day of each calendar quarter have a Risk
Based Capital Ratio of not less than 2.50 to 1.

         Section 9.2. A.M.  Best  Rating.  PLIC  shall at all times  have an A.M.  Best  Financial  Strength
rating of not less than "A-".

                                                      54


                                                   ARTICLE X

                                                   GUARANTIES

         Section 10.1. Guaranty. The Parent hereby unconditionally and irrevocably guarantees the full and
punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest
on each Note issued by PLIC or PXP pursuant to this Agreement, and the full and punctual payment of all
Obligations of PLIC or PXP under this Agreement. Upon failure by PLIC or PXP to pay punctually any such amount,
the Parent shall forthwith on demand pay the amount not so paid at the place and in the manner specified in
this Agreement.

         Section 10.2. Guaranty Unconditional. The obligations of the Parent under this Article X shall be
unconditional and absolute and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:

                  (a) any extension, renewal, settlement, compromise, waiver or release in respect of any
         obligation of PLIC or PXP under this Agreement or any Note, by operation of law or otherwise;

                  (b) any modification or amendment of or supplement to this Agreement or any Note;

                  (c) any release, impairment, non-perfection or invalidity of any direct or indirect security
         for any obligation of PLIC or PXP under this Agreement or any Note;

                  (d) any change in the corporate existence, structure or ownership of PLIC or PXP or any
         insolvency, bankruptcy, reorganization or other similar proceeding affecting PLIC or PXP or their
         assets or any resulting release or discharge of any obligation of PLIC or PXP contained in this
         Agreement or any Note;

                  (e) the existence of any claim, set-off or other right which the Parent may have at any time
         against PLIC or PXP, the Administrative Agent, any Bank or any other Person, whether in connection
         herewith or any unrelated transaction, provided that nothing herein shall prevent the assertion of any
         such claim by separate suit or compulsory counterclaim;

                  (f) any invalidity or unenforceability relating to or against PLIC or PXP for any reason of
         this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit
         the payment by PLIC or PXP of the principal of or interest on any Note or any other amount payable by
         PLIC or PXP under this Agreement; or

                  (g) any other act or omission to act or delay of any kind by PLIC or PXP, the Administrative
         Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the
         provisions of this paragraph, constitute a legal or equitable discharge of PLIC or PXP or of the
         Parent's obligations as guarantor hereunder.

                                                      55


         Section 10.3. Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances. The
Parent's obligations as guarantor hereunder shall remain in full force and effect until all of the Commitments
shall have terminated and all Obligations shall have been indefeasibly paid in full in money. If at any time
any payment of principal, interest or any other amount payable by PLIC or PXP under this Agreement or any Note
is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of
PLIC or PXP or otherwise, the Parent's obligations hereunder with respect to such payment shall be reinstated
as though such payment had been due but not made at such time.

         Section 10.4. Waiver by the Parent. The Parent irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any requirement that at any time any action
be taken by any Person against PLIC or PXP or any other Person.

         Section 10.5. Subrogation. Notwithstanding any payment made by or for the account of the Parent
pursuant to this Article X, the Parent shall not be subrogated to any right of the Administrative Agent or any
Bank until such time as the Administrative Agent and the Banks shall have received final payment in cash of the
full amount of all Obligations.

         Section 10.6. Stay of Acceleration. If acceleration of the time for payment of any amount payable by
PLIC or PXP under this Agreement or any Note is stayed upon the insolvency, bankruptcy or reorganization of
PLIC or PXP, all such amounts otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Parent hereunder forthwith on demand by the Administrative Agent made at the
request of the Majority Banks.

                                                   ARTICLE XI

                                               EVENTS OF DEFAULT

         Section 11.1. Event of Default.  Any of the following shall constitute an "Event of

Default":

                  (a) Non-Payment. Any of the Parent, PLIC or PXP fails to pay, (i) when and as required to be
         paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due,
         any interest, fee or any other amount payable hereunder or under any other Loan Document; or

                  (b) Representation or Warranty. Any representation or warranty by any of the Parent, PLIC or
         PXP or any other Subsidiary made or deemed made herein, in any other Loan Document, or which is
         contained in any certificate, document or financial or other statement by the Parent, PLIC or PXP, any
         other Subsidiary, or any Responsible Officer of the Parent, PLIC, PXP or any other Subsidiary,
         furnished at any time under this Agreement, or in or under any other Loan Document, is incorrect in
         any material respect on or as of the date made or deemed made; or

                                                      56


                  (c) Specific Defaults. Any of the Parent, PLIC or PXP fails to perform or observe any term,
         covenant or agreement contained in any of Section 6.1 or 6.3 or in Article VII, VIII or IX hereof; or

                  (d) Other Defaults. Any of the Parent, PLIC or PXP fails to perform or observe any other term
         or covenant contained in this Agreement or any other Loan Document, and such default shall continue
         unremedied for a period of 20 days after the date upon which written notice thereof is given to the
         Parent, PLIC or PXP (as applicable) by the Administrative Agent or any Bank; or

                  (e) Cross-Default. The Parent, PLIC, PXP or any other Subsidiary thereof (i) fails to make
         any payment in respect of any Indebtedness or Contingent Obligation having an aggregate principal
         amount (including undrawn committed or available amounts and including amounts owing to all creditors
         under any combined or syndicated credit arrangement) of more than $10,000,000 (or its equivalent in
         any other currency) with respect to the Parent or PLIC, or $5,000,000 (or its equivalent in any other
         currency) with respect to PXP or any other Subsidiary of the Parent (other than PLIC) or of PLIC, when
         due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (ii)
         fails to perform or observe any other condition or covenant, or any other event shall occur or
         condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent
         Obligation, if the effect of such failure, event or condition is to cause, or to permit the holder or
         holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or
         agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness
         to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to
         become payable or cash collateral in respect thereof to be demanded; provided that paying an amount on
         a Swap Contract entered into in the ordinary course of business and not for speculation when due shall
         not be treated as subject to this clause (ii); or

                  (f) Insolvency, Voluntary Proceedings. The Parent, PLIC, PXP or any other Subsidiary (i)
         ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay,
         its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity
         or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course other than, in
         the case of a Subsidiary other than PLIC or PXP, as a result of a decision of the Parent that the
         continued operation of the Subsidiary in question is no longer necessary to the conduct of the
         business of the Parent and its Subsidiaries taken as a whole; (iii) commences any Insolvency
         Proceeding with respect to itself or its property; or (iv) takes any action to effectuate or authorize
         any of the foregoing; or

                  (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed
         against the Parent, PLIC or PXP or any other Subsidiary or its property, or any writ, judgment,
         warrant of attachment, execution or similar process, is issued or levied against a substantial part of
         the properties of any of them, and any such proceeding or petition shall not be dismissed, or such
         writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or
         fully bonded within 60 days after commencement, filing or levy; (ii) the Parent, PLIC or PXP or any

                                                      57


         other Subsidiary admits the material allegations of a petition against it in any Insolvency
         Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency
         Proceeding; or (iii) the Parent, PLIC or PXP or any other Subsidiary acquiesces in the appointment of
         a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
         or other similar Person for itself or a substantial portion of its property or business; or

                  (h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer
         Plan which has resulted or could reasonably be expected to result in liability of the Parent under
         Title IV of ERISA to the Pension Plan, Multi-employer Plan or the PBGC; (ii) there exists an Unfunded
         Pension Liability (other than as disclosed on Schedule 5.7(c) hereto); or (iii) the Parent, PLIC or
         PXP or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace
         period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA
         under a Multiemployer Plan; or

                  (i) Monetary Judgments. One or more non-interlocutory judgments, non-interlocutory orders,
         decrees or arbitration awards is entered against the Parent, PLIC, PXP or any other Subsidiary
         involving in the aggregate a liability (to the extent not covered by independent third-party insurance
         as to which the insurer does not dispute coverage) as to any single or related series of transactions,
         incidents or conditions, of $25,000,000 (or its equivalent in any other currency) or more, and the
         same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after the
         entry thereof; or

                  (j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is entered against the
         Parent, PLIC, PXP or any other Subsidiary which does or would reasonably be expected to have a
         Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of
         enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in
         effect; or

                  (k) Change of Control. Any Change of Control occurs; or

                  (l) Loss of Licenses. Any Governmental Authority revokes or fails to renew any license,
         permit or franchise of the Parent, PLIC, PXP or any other Subsidiary, or the Parent, PLIC, PXP or any
         other Subsidiary for any reason loses any license, permit or franchise, or the Parent or any
         Subsidiary suffers the imposition of any restraining order, escrow, suspension or impound of funds in
         connection with any proceeding (judicial or administrative) with respect to any license, permit or
         franchise, if the effect of any thereof involves a reasonable possibility of a Material Adverse Effect
         or any Governmental Authority intervenes in the management of any Subsidiary engaged in the business
         of insurance.

         Section 11.2. Remedies. If any Event of Default occurs, the Administrative Agent shall, at the request
of, or may, with the consent of, the Majority Banks,

                                                      58


         (a)      declare  the  commitments  of  each  Bank  to  make  Loans  to be  terminated,  whereupon  such
commitments shall be terminated;

         (b)      declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately
due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Borrowers; and

         (c)      exercise on behalf of itself and the Banks all rights and remedies available to it and the
Banks under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in subsection (f) or (g) of Section 11.1 (in
the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein) with
respect to the Parent, PLIC, PXP or any other Primary Subsidiary, the obligation of each Bank to make Loans or
to convert the Tranche A Loans to the Converted Tranche A Loan shall automatically terminate and the unpaid
principal amount of all outstanding Loans, and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Administrative Agent or any Bank.

         Section 11.3. Rights Not Exclusive. The rights provided for in this Agreement and the other Loan
Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by
law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

                                                  ARTICLE XII

                                            THE ADMINISTRATIVE AGENT

         Section 12.1. Appointment. Subject to Section 12.9 hereof, each Bank hereby irrevocably designates and
appoints Wachovia as the Administrative Agent of such Bank under the Loan Documents and each Bank hereby
irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of the
Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of the Loan Documents, together with such powers as are reasonably incidental
thereto. The duties of the Administrative Agent shall be mechanical and administrative in nature, and,
notwithstanding any provision to the contrary elsewhere in any Loan Document, the Administrative Agent shall
not have any duties or responsibilities other than those expressly set forth therein, or any fiduciary
relationship with, or fiduciary duty to, any Bank, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Loan Documents or otherwise exist against the
Administrative Agent.

         Section 12.2. Delegation of Duties. The Administrative Agent may execute any of its duties under the
Loan Documents by or through agents or attorneys in fact and shall be entitled to rely upon, and shall be fully
protected in, and shall not be under any liability for, relying upon, the advice of counsel concerning all
matters pertaining to such duties.

         Section 12.3. Exculpatory Provisions. Neither the Administrative Agent nor any of its officers,
directors, employees, agents attorneys-in-fact, or affiliates shall be (i) liable for any

                                                      59


action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan
Documents (except the Administrative Agent for its own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made
by the Parent, PLIC or PXP or any officer thereof contained in the Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or received by the Administrative Agent
under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness,
perfection, enforceability or sufficiency of any of the Loan Documents or for any failure of the Parent, PLIC,
PXP or any other Person to perform its obligations thereunder. The Administrative Agent shall not be under any
obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Loan Documents, or to inspect the property, books or records of the Parent,
PLIC or PXP. The Banks acknowledge that the Administrative Agent shall not be under any duty to take any
discretionary action permitted under the Loan Documents unless the Administrative Agent shall be instructed in
writing to do so by the Majority Banks, and such instructions shall be binding on the Banks and all holders of
any Obligations; provided, however, that the Administrative Agent shall not be required to take any action
which exposes the Administrative Agent to personal liability or is contrary to law or any provision of the Loan
Documents. The Administrative Agent shall not be under any liability or responsibility whatsoever, as
Administrative Agent, to the Parent, PLIC, PXP or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Bank of any of its obligations under any of the Loan Documents.

         Section 12.4. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit,
opinion, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document
or conversation in good faith believed by it to be genuine and correct and to have been signed, sent or made by
a proper Person or Persons and upon advice and statements of legal counsel (including, without limitation,
counsel to Parent, PLIC or PXP), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may treat each Bank, or the Person designated in the last notice filed with it
under this Section, as the holder of all of the interests of such Bank, in its Loans and Notes, until written
notice of transfer, signed by such Bank (or the Person designated in the last notice filed with the
Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance
satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. The
Administrative Agent shall not be under any duty to examine or pass upon the validity, effectiveness,
enforceability or genuineness of the Loan Documents or any instrument, document or communication furnished
pursuant thereto or in connection therewith, and the Administrative Agent shall be entitled to assume that the
same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport
to be. The Administrative Agent shall be fully justified in failing or refusing to take any action under the
Loan Documents unless it shall first receive such advice or concurrence of the Majority Banks as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents in accordance with a request or direction of the Majority Banks, and such
request or direction and any action taken or failure to act pursuant thereto shall be binding upon all the
Banks and all future holders of the Notes.

                                                      60


         Section 12.5. Notice of Default. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received
written notice thereof from a Bank or a Borrower. In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall promptly give notice thereof to the Banks and the Parent, PLIC and PXP.
The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be
directed by the Majority Banks; provided, however, that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem to be in the
best interests of the Banks.

         Section 12.6. Non-Reliance on Administrative Agent and Other Banks. Each Bank expressly acknowledges
that neither the Administrative Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the
Administrative Agent hereinafter, including any review of the affairs of the Parent, PLIC and PXP, shall be
deemed to constitute any representation or warranty by the Administrative Agent to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without reliance upon the Administrative
Agent or any Bank, and based on such documents and information as it has deemed appropriate, made its own
evaluation of and investigation into the business, operations, property, financial and other condition and
creditworthiness of the Parent, PLIC and PXP and made its own decision to enter into this Agreement. Each Bank
also represents that it will, independently and without reliance upon the Administrative Agent or any Bank, and
based on such documents and information as it shall deem appropriate at the time, continue to make its own
credit analysis, evaluations and decisions in taking or not taking action under any Loan Document, and to make
such investigation as it deems necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Parent, PLIC and PXP. Except for notices, reports and other
documents expressly required to be furnished to the Banks by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide the Bank with any credit or other
information concerning the business, operations, property, financial and other condition or creditworthiness of
the Parent, PLIC or PXP which at any time may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates.

         Section 12.7. Indemnification. Each Bank agrees to indemnify and hold harmless the Administrative
Agent in its capacity as such (to the extent not promptly reimbursed by the Parent, PLIC and PXP and without
limiting the obligation of the Parent, PLIC and PXP to do so), pro rata according to its Pro Rata Share, from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever, including, without limitation, any amounts paid to the Banks
(through the Administrative Agent) by any of the Parent, PLIC or PXP pursuant to the terms of the Loan
Documents, that are subsequently rescinded or avoided, or must otherwise be restored or returned) which may at
any time (including, without limitation, at any time following the payment of the Loans or the Notes) be
imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of
the Loan Documents or any other documents contemplated by or referred to therein or the transactions
contemplated thereby or any action taken or omitted to be taken by the Administrative Agent under or in
connection with

                                                      61


any of the foregoing; provided, however, that no Bank shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting solely from the finally adjudicated gross negligence or willful
misconduct of the Administrative Agent. Without limitation of the foregoing, each Bank agrees to reimburse the
Administrative Agent promptly upon demand for its pro rata share of any unpaid fees owing to the Administrative
Agent, and any costs and expenses (including, without limitation, reasonable fees and expenses of counsel)
payable by the Parent, PLIC or PXP under Section 13.4, to the extent that the Administrative Agent has not been
paid such fees or has not been reimbursed for such costs and expenses by the Parent, PLIC or PXP. The failure
of any Bank to reimburse the Administrative Agent promptly upon demand for its pro rata share of any amount
required to be paid by the Banks to the Administrative Agent as provided in this Section shall not relieve any
other Bank of its obligation hereunder to reimburse the Administrative Agent for its pro rata share of such
amount, but no Bank shall be responsible for the failure of any other Bank to reimburse the Administrative
Agent for such other Bank's pro rata share of such amount. If, after having been indemnified or reimbursed by
the Banks as provided by this Section, the Administrative Agent shall have received payment from the obligor in
respect of the obligation or liability for which it received such indemnification or reimbursement from the
Banks, the Administrative Agent shall disburse to the Banks an amount equal to the amount of the payment so
received on a pro rata basis. The agreements in this Section shall survive the termination of the Commitments
of all of the Banks, and the payment of all amounts payable under the Loan Documents.

         Section 12.8. Administrative Agent in Its Individual Capacity. Wachovia and its affiliates may make
secured or unsecured loans to, accept deposits from, issue letters of credit for the account of, act as trustee
under indentures of, and generally engage in any kind of business with, the Parent, PLIC, PLP or their
Subsidiaries as though Wachovia were not an Agent hereunder. With respect to any Commitment made or renewed by
Wachovia and the Obligations owing it, Wachovia shall have the same rights and powers under the Loan Documents
as any Bank and may exercise the same as though it were not the Administrative Agent, and the terms "Bank" and
"Banks" shall in each case include Wachovia.

         Section 12.9. Successor Administrative Agent. If at any time the Administrative Agent deems it
advisable, in its discretion, it may submit to the Banks a written notice of its resignation as Administrative
Agent under the Loan Documents, such resignation to be effective upon the earlier of (i) the written acceptance
of the duties of the Administrative Agent under the Loan Documents by a successor Administrative Agent and (ii)
on the 30th day after the date of such notice. Upon any such resignation, the Majority Banks shall have the
right to appoint from among the Banks a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed by the Majority Banks and accepted such appointment in writing within 30 days
after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative
Agent may, on behalf of the Bank, appoint a successor Administrative Agent, which successor Administrative
Agent shall be a commercial bank organized or licensed under the laws of the United States or any State thereof
and having a combined capital, surplus, and undivided profits of at least $500,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative

                                                      62


Agent's rights, powers, privileges and duties as Administrative Agent under the Loan Documents shall be
terminated. The Parent, PLIC, PXP and the Banks shall execute such documents as shall be necessary to effect
such appointment. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions
of the Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it, and any
amounts owing to it, while it was Administrative Agent under the Loan Documents. If at any time there shall not
be a duly appointed and acting Administrative Agent, the Parent, PLIC and PXP agree to make each payment due
under the Loan Documents directly to the Banks entitled thereto during such time.

         Section 12.10. Syndication Agent and Documentation Agent. The Banks identified on the facing page or
signature pages of this Agreement as a "syndication agent" or "documentation agent" shall have no right, power,
obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as
such. Without limiting the foregoing, none of the Banks so identified as a "co-agent" or "lead manager" shall
have or be deemed to have any fiduciary relationship with any Bank or the Parent, PLIC or PXP. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so identified in deciding to enter
into this Agreement or in taking or not taking action hereunder. The parties identified on the facing pages
hereof as having arranged this transaction are not parties to this Agreement and have no liabilities hereunder.

                                                  ARTICLE XIII

                                                 MISCELLANEOUS

         Section 13.1. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by the Parent, PLIC or PXP therefrom, shall
be effective unless the same shall be in writing and signed by the Majority Banks (or by the Administrative
Agent at the written request of the Majority Banks) and the Parent, PLIC and PXP and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks, the Parent, PLIC and PXP and acknowledged by the Administrative
Agent, do any of the following:

         (a)      increase, decrease or extend the Commitment of any Bank (or reinstate any Commitment
terminated pursuant to Section 11.2); provided, however, that a decrease of any Commitment by the Borrowers
pursuant to Section 2.5 hereof shall not require the written consent of the Administrative Agent or any Bank;

         (b)      postpone or delay any date fixed by this Agreement or any other Loan Document for any payment
of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any other
Loan Document;

         (c)      reduce the principal of, or the rate of interest specified herein on any Loan, or any fees or
other amounts payable hereunder or under any other Loan Document;

                                                      63


         (d)      change the percentage of any of the Commitments or of the aggregate unpaid principal amount
of any of the Loans which is required for the Banks or any of them to take any action hereunder;

         (e)      amend this Section, or Section 2.13 or any provision herein providing for consent or other
action by all Banks; or

         (f)      amend or terminate any guaranty, including the guaranties pursuant to Article X;

and, provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent, in addition to the Majority Banks or all the Banks, as the case may be, affect the rights
or duties of the Administrative Agent under this Agreement or any other Loan Document.

         Section 13.2. Notices. (a) All notices, requests and other communications under the Loan Documents
shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by the Parent, PLIC or PXP by facsimile (i) shall be immediately confirmed
by a telephone call to the recipient at the number specified on the signature pages hereof or on an Assignment
and Acceptance to which it is a party, and (ii) shall be followed promptly by delivery of a hard-copy original
thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on the
signature pages hereof or on an Assignment and Acceptance to which it is a party; or, as directed to the
Parent, PLIC, PXP or the Administrative Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the other parties.

         (b)      All such notices, requests and communications shall, when transmitted by overnight delivery,
or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by
facsimile machine, respectively, or, if mailed, upon the third Business Day after the date deposited into the
U.S. mail, or, if delivered, upon delivery; except that notices pursuant to Article II or XII shall not be
effective until actually received by the Administrative Agent.

         (c)      Any agreement of the Administrative Agent and the Banks herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the Parent, PLIC and/or PXP. The
Administrative Agent and the Banks shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Parent, PLIC and/or PXP to give such notice and the Administrative Agent and the Banks
shall not have any liability to the Parent, PLIC, PXP or other Persons on account of any action taken or not
taken by the Administrative Agent or the Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Borrowers to repay the Loans shall not be affected in any way or to any extent by any failure
by the Administrative Agent and the Banks to receive written confirmation of any telephonic or facsimile notice
or the receipt by the Administrative Agent and the Banks of a confirmation which is at variance with the terms
understood by the Administrative Agent and the Banks to be contained in the telephonic or facsimile notice.

                                                      64


         Section 13.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on
the part of the Administrative Agent or any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege.

         Section 13.4. Costs and Expenses. The Borrowers shall:

         (a)      whether or not the transactions contemplated hereby are consummated, pay or reimburse
Wachovia and Fleet for all reasonable costs and expenses incurred by Wachovia and Fleet in connection with the
development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by Wachovia and Fleet with respect thereto;
and

         (b)      pay or reimburse each Agent, the Arrangers and each Bank for all costs and expenses
(including reasonable Attorney Costs) incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate
proceeding).

         Section 13.5. Indemnity. Whether or not the transactions contemplated hereby are consummated, the
Parent, PLIC and PXP shall indemnify and hold the Agent-Related Persons, and each Bank and each of its
respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following repayment of the Loans and the termination,
resignation or replacement of the Administrative Agent or replacement of any Bank) be imposed on, incurred by
or asserted against any such Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all .the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Parent, PLIC and PXP shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or willful misconduct of such
Indemnified Person; and provided, further, that the Indemnified Persons shall, at the request of the Parent,
PLIC and PXP only use one counsel among them unless any such Indemnified Person determines in its sole
discretion that its interests may differ from any other Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.

                                                      65


         Section 13.6. Payments Set Aside. To the extent that any of the Parent, PLIC or PXP makes a payment to
the Administrative Agent or the Banks, or the Administrative Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by the Administrative Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such set-off had not occurred, and (b) each Bank severally
agrees to pay to the Administrative Agent upon demand its pro rata share of any amount so recovered from or
repaid by the Administrative Agent.

         Section 13.7. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns, except that the Parent, PLIC
and PXP may not assign or transfer any of their rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and each Bank.

         Section 13.8. Assignments, Participations, etc. (a) Any Bank may, subject to the written consent of
the Borrowers at all times other than during the existence of an Event of Default, and the Administrative
Agent, which consents shall not be unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Borrowers or the Administrative Agent shall be
required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank and the assignee need not be an Eligible Assignee if an Event of Default has occurred
and is continuing) (each an "Assignee") all, or any ratable part of all, of any Loan, all, or any ratable part
of all, of any Commitment and the other rights and obligations of such Bank hereunder, in a minimum amount such
that the Assignee after giving effect to such assignment shall hold at least: (a) $5,000,000 of the Tranche A
Commitments (or if less the aggregate amount of the Tranche A Commitments of the Bank so assigning), (b)
$5,000,000 of the Tranche B Commitments (or if less the aggregate amount of the Tranche B Commitments of the
Bank so assigning), and/or (b) $5,000,000 of the outstanding principal balance of the Converted Tranche A Loan
on the date of assignment (or if less the aggregate amount of the assigning Bank's interest in the outstanding
Converted Tranche A Loan on the date of assignment); provided, however, that the Borrowers and the
Administrative Agent may continue to deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been given to the Borrowers and the
Administrative Agent by such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Borrowers and the Administrative Agent an Assignment and Acceptance in the form of: (A) Exhibit E-1 with
respect to assignments of Tranche A Loans, (B) Exhibit E-2 with respect to assignments of Tranche B Loans, and
(C) Exhibit E-3 with respect to assignments of all or any portion of the Converted Tranche A Loan, or in such
other form as shall be acceptable to them (each an "Assignment and Acceptance") and (iii) the assignor Bank or
Assignee has paid to the Administrative Agent a processing fee in the amount of $3,500 (such processing fee to
be payable, without limitation, in connection with assignments from a Bank to another Bank).

                                                      66


         (b)      From and after the date that the Administrative Agent notifies the assignor Bank that it has
received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall
have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the
extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under
the Loan Documents.

         (c)      Within five Business Days after its receipt of notice by the Administrative Agent that it has
received an executed Assignment and Acceptance and payment of the processing fee, (and provided that it
consents to such assignment in accordance with subsection 13.8(a)), the Borrowers shall at the request of the
Assignee execute and deliver to the Administrative Agent, a new Note evidencing such Assignee's assigned Loans
and applicable Commitments. Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment of the applicable Commitment
and/or the interests in the Converted Tranche A Loan arising therefrom. The Commitments and/or the interest in
the Converted Tranche A Loan allocated to each Assignee shall reduce the applicable Commitments and/or interest
in the Converted Tranche A Loan of the assigning Bank pro tanto.

         (d)      Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates
of the Borrowers (a "Participant") participating interests in any of the Loans of that Bank, any of the
Commitments of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the
other Loan Documents; provided, however, that (i) the originating Bank's obligations under this Agreement shall
remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Borrowers and the Administrative Agent shall continue to deal solely and directly with
the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Bank shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment, consent or waiver would require, unanimous
consent of the Banks as described in the first proviso to Section 13.1. In the case of any such participation,
the Participant shall be entitled to the benefit of Sections 3.1, 3.3 and 13.5 as though it were also a Bank
hereunder, and not have any other rights under this Agreement, or any of the other Loan Documents, and all
amounts payable by the Borrowers hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed
to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing directly to it as a Bank under this
Agreement.

                                                      67


         (e)      Notwithstanding any other provision in this Agreement, any Bank may at any time create a
security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and the
Note(s) held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

         (f)      (i) Notwithstanding anything to the contrary contained herein, any Bank, (a "Granting
Lender") may grant to a special purpose funding vehicle (an "SPV"), identified as such in writing from time to
time by such Granting Lender to the Administrative Agent and the Borrowers, the option to fund all or any part
of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Credit Agreement;
provided that (aa) nothing herein shall constitute a commitment by any SPV to fund any Loan, (ab) if an SPV
elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender
shall be obligated to fund such Loan pursuant to the terms hereof, (ac) no SPV shall have any voting rights
pursuant to Section 13.1 and (ad) with respect to notices, payments and other matters hereunder, the Borrowers,
the Administrative Agent and the Banks shall not be obligated to deal with an SPV, but may limit their
communications and other dealings relevant to such SPV to the applicable Granting Lender. The funding of a Loan
by an SPV hereunder shall utilize the applicable Commitment of the Granting Lender to the same extent that, and
as if, such Loan were funded by such Granting Lender.

                  (ii) As to any Loans or portion thereof made by it, each SPV shall have all the rights that
its applicable Granting Lender making such Loans or portion thereof would have had under this Credit Agreement;
provided, however, that each SPV shall have granted to its Granting Lender an irrevocable power of attorney, to
deliver and receive all communications and notices under this Agreement (and any related documents) and to
exercise on such SPV's behalf, all of such SPV's voting rights under this Credit Agreement. No additional
Note(s) shall be required to evidence the Loans or portion thereof made by an SPV; and the related Granting
Lender shall be deemed to hold its Note(s) as agent for such SPV to the extent of the Loans or portion thereof
funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Granting Lender
as agent for such SPV.

                  (iii) Each party hereto hereby agrees that no SPV shall be liable for any indemnity or
payment under this Agreement for which a Lender would otherwise be liable for so long as, and to the extent,
the Granting Lender provides such indemnity or makes such payment. In furtherance of the foregoing, each party
hereto hereby agrees (which agreements shall survive the termination of this Credit Agreement) that, prior to
the date that is one year and one day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against,
such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under the laws of
the United States or any State thereof.

                  (iv) In addition, notwithstanding anything to the contrary contained in this Agreement, but
subject to the other provisions of Section 13.8(f), any SPV may (i) at any time and without paying any
processing fee therefor, assign or participate all or a portion of its Loans to the Granting Lender or to any
financial institutions providing liquidity and/or credit support to

                                                      68


or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any rating agency, commercial paper
dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. This Section
13.8(f) may not be amended without the written consent of any Granting Lender affected thereby if the existence
of such Granting Lender has been identified to the Borrowers and Administrative Agent pursuant to Section
13.8(f)(i).

         Section 13.9. Confidentiality. Each Bank agrees to take and to cause its Affiliates to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of all information identified as
"confidential" or "secret" by the Parent, PLIC or PXP and provided to it by the Parent, PLIC or PXP or any
other Subsidiary, or by any Agent or the Arrangers on their behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such information other than in connection with
the enforcement of this Agreement and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Parent, PLIC, PXP or any Subsidiary thereof; except to the extent
such information (i) was or becomes generally available to the public other than as a result of disclosure by
the Bank, or (ii) was or becomes available on a nonconfidential basis from a source other than the Parent, PLIC
or PXP, provided that such source is not bound by a confidentiality agreement with the Parent, PLIC or PXP
known to the Bank; provided, however, that any Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which the Administrative Agent, any Bank
or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (F) to such Bank's independent auditors and
other professional advisors; (G) to any Participant or Assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the same extent required of the Banks hereunder; (H)
as to any Bank or its Affiliate, as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Parent or any Subsidiary is party or is deemed party with such Bank or
such Affiliate; and (I) to its Affiliates. Notwithstanding anything to the contrary contained in this Section
or otherwise in the Loan Documents, the information subject to any confidentiality requirement shall not
include, and each Agent and each Bank may disclose without limitation of any kind, any information with respect
to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinion or other tax
analyses) that are provided to either of the Agents or such Bank relating to such tax treatment and tax
structure; provided that with respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions as well as other information, this sentence
shall only apply to such portions of the document or similar item that relate to the tax treatment or tax
structure of the Loans and other transactions contemplated hereby.

         Section 13.10. Set-off. In addition to any rights and remedies of the Banks provided by law, if an
Event of Default exists or the Loans have been accelerated, each Bank is authorized at any time and from time
to time, without prior notice to the Parent, PLIC or PXP, any such notice

                                                      69


being waived by the Parent, PLIC and PXP to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account of any of the Parent, PLIC or
PXP against any and all obligations owing to such Bank by the depositor, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the applicable party and the Administrative Agent after any such set-off and application
made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of
such set-off and application. In addition, each Bank agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and
interest due with respect to any Loans made by it which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest due with respect to any Loans made by it, the
Bank receiving such proportionately greater payment shall purchase such participations in the Loans, and such
other adjustments shall be made, as may be required so that all such payments of principal and interest with
respect to the Loans made by such other Banks shall be shared by the Banks pro rata based on the ratio of the
outstanding principal balance of all Loans made by each Bank to the aggregate outstanding principal balance of
all Loans made by all Banks; provided, however that nothing in this Section shall impair the right of any Bank
to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise
to the payment of Indebtedness of the Parent, PLIC or PXP other than Indebtedness of the Parent, PLIC or PXP
under the Loans. Each of the Parent, PLIC and PXP agrees, to the fullest extent that it may effectively do so
under applicable law, that any holder of a participation in any Loan, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct creditor of the Parent, PLIC and/or
PXP, as the case may be, in the amount of such participation.

         Section 13.11. Automatic Debits of Fees. With respect to any fee, or any other cost or expense
(including Attorney Costs) due and payable to the Agents or the Arrangers under the Loan Documents, the Parent,
PLIC and PXP hereby irrevocably authorize them to debit any deposit account of an obligor in an amount such
that the aggregate amount debited from all such deposit accounts does not exceed such fee, or other cost or
expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost
or expense then due, such debits will be reversed (in whole or in part, in the debtor's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a
set-off.

         Section 13.12. Notification of Addresses, Lending Offices, Etc. Each Bank shall notify the
Administrative Agent in writing of any changes in the address to which notices to the Bank should be directed,
of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative Agent shall reasonably request.

         Section 13.13. Counterparts. This Agreement may be executed in any number of separate, counterparts,
each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall
be deemed to constitute but one and the same instrument.

                                                      70


         Section 13.14. Severability. The illegality or unenforceability of any provision of this Agreement or
any instrument or agreement required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

         Section 13.15. No Third Parties Benefits. This Agreement is made and entered into for the sole
protection and legal benefit of the Parent, PLIC, PXP, the Banks, the Agents and the Agent- Related Persons,
and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the
other Loan Documents.

         Section 13.16. Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENTS AND THE BANKS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         (b)      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARENT, PLIC, PXP, THE AGENTS AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
THE PARENT, PLIC, PXP, THE AGENTS AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. THE PARENT, PLIC, PXP, THE AGENTS AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

         Section 13.17. Waiver of Jury Trial; Consequential Damages. THE PARENT, PLIC, PXP, THE BANKS AND THE
AGENTS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. IN ADDITION, EXCEPT AS PROHIBITED BY LAW, THE PARENT, PLIC, PXP AND THE BANKS EACH HEREBY
WAIVE ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE PARENT, PLIC, PXP, THE
BANKS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT
A JURY. WITHOUT

                                                      71


LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH OF THE PARENT, PLIC AND PXP CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR ANY AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
LENDERS AND/OR THE AGENTS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH OF
THE PARENT, PLIC AND PXP ACKNOWLEDGES AND STIPULATES THAT THE WAIVERS GRANTED ABOVE ARE MADE KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY AND AFTER FULL CONSULTATION WITH COUNSEL AND CONSTITUTE A MATERIAL INDUCEMENT FOR
THE LENDERS TO MAKE THE LOANS.

         Section 13.18. Entire Agreement. This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Borrowers, the Banks and the Agents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.



                                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                                       THE NEXT PAGE IS A SIGNATURE PAGE


                                                      72



         In Witness Whereof, the parties hereto have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above written.

                                                     THE PHOENIX COMPANIES, INC.



                                                     By: /s/ Katherine P. Cody
                                                         Its: Second Vice President and Treasurer



                                                     PHOENIX LIFE INSURANCE COMPANY



                                                     By:  /s/ Katherine P. Cody
                                                         Its: Second Vice President and Treasurer



                                                     PHOENIX INVESTMENT PARTNERS, LTD



                                                     By:  /s/ Glenn H. Pease
                                                         Its:  Vice President, Finance

                                                     Address for Notices to the Above Parties:

                                                     One American Row
                                                     Hartford, Connecticut 06115
                                                     Attention:  Katherine Cody
                                                     Phone:  860-403-6763
                                                     Fax:  860-403-5009

                                                     With copies also marked "Attention:  General
                                                         Counsel:


                                                 73



                                                     FLEET NATIONAL BANK, as Syndication Agent
                                                     and as a Tranche A Bank and a Tranche B Bank



                                                     By: /s/ Carla L. Balesano
                                                         Its: Director

                                                     Lending Office:

                                                     100 Federal Street
                                                     Boston, MA 02110

                                                     Address for Notices:

                                                     777 Main Street
                                                     Hartford, Connecticut 06115
                                                     Attn:  Carla L. Balesano
                                                     Phone:  (860) 952-7337
                                                     Fax:  (860) 952-7604


                                                      74



                                                     WACHOVIA BANK, NATIONAL ASSOCIATION,
                                                     as the Administrative Agent
                                                        and as a Tranche A Bank and a Tranche B Bank


                                                     By: /s/ William R. Goley
                                                         Its: Director

                                                     Lending Office

                                                     Wachovia Bank, National Association
                                                     201 South College Street
                                                     Charlotte, North Carolina 28288
                                                     Attn:  Mindy Yost
                                                     Phone:  (704) 383-6882
                                                     Fax:  (704) 383-0288

                                                     Address for Notices as a Lender

                                                     Same as above

                                                     Address for Notices as Administrative Agent

                                                     Same as above


                                                      75



                                                     PNC BANK, NATIONAL ASSOCIATION, as a
                                                     Documentation Agent and as a Tranche A Bank and
                                                     a Tranche B Bank


                                                     By: /s/ Marc Accamando Kirk Seagers
                                                         Its: Director and Vice President


                                                     Lending Office

                                                     500 First Avenue
                                                     Pittsburgh, Pennsylvania 15219
                                                     Attn: Marc Accamando
                                                     Phone: (412) 768-7647
                                                     Fax: (412) 768-4586

                                                     Address for Notices

                                                     Same as Above


                                                      76



                                                     THE BANK OF NEW YORK, as a Documentation Agent and as
                                                              a Tranche A Bank and a Tranche B Bank



                                                     By: /s/ Jeffrey D. Heiss
                                                         Its: Vice President

                                                     Lending Office

                                                     101 Barclay Street
                                                     New York, New York 10286

                                                     Address for Notices

                                                     One Wall Street
                                                     New York, New York 10286
                                                     Attn: Tonny G. Pinilla
                                                     Phone: (212) 635-7912
                                                     Fax: (212) 809-9520


                                                      77





                                                     BMO NESBITT BURNS FINANCING, INC., as a
                                                     Tranche A Bank and a Tranche B Bank



                                                     By: /s/ Joseph W. Linder
                                                         Its: Vice President

                                                     Lending Office:

                                                     115 S. LaSalle Street
                                                     Chicago, Illinois 60603
                                                     Attn: Ellen Dancer
                                                     Phone: (312) 750-3453
                                                     Fax: (312) 750-6061

                                                     Address For Notices

                                                     Same as above


                                                      78




                                                     JPMORGAN CHASE BANK, as a Tranche A Bank
                                                                  and a Tranche B Bank



                                                     By: /s/ Lawrence Palumbo, Jr.
                                                         Its: Vice President

                                                     Lending Office

                                                     270 Park Avenue, 4th Floor
                                                     New York, New York 10017
                                                     Attn:  Lawrence Palumbo
                                                     Phone:  (212) 270-7525
                                                     Fax:  (212) 270-1511

                                                     Address for Notices

                                                     Same as Above


                                                      79



                                                     STATE STREET BANK AND TRUST COMPANY,
                                                     as a Tranche A Bank and a Tranche B
                                                      Bank


                                                     By: /s/ Edward W. Anderson
                                                         Its: Vice President

                                                     Lending Office

                                                     225 Franklin Avenue MAO 11
                                                     Boston, Massachusetts 02110
                                                     Boston, MA  02110
                                                     Attn:  Teresa A. Brennan
                                                     Phone:  (617) 664-6434
                                                     Fax:  (617) 664-3941

                                                     Address for Notices

                                                     Same as above


                                                      80



                                                     WEBSTER BANK, as a Tranche A Bank and a
                                                           Tranche B Bank



                                                     By: /s/Peter F. Samson
                                                         Its: Vice President

                                                     Lending Office

                                                     145 Bank Street
                                                     Waterbury, Connecticut 06720

                                                     Address for Notices

                                                     CityPlace II, 5th Floor
                                                     185 Asylum Street
                                                     Hartford, Connecticut 06103
                                                     Attn:  Shannon Christensen
                                                     Phone:  (860) 692-1333
                                                     Fax:  (860) 692-1600


                                                      81



                                                  EXHIBIT A-1

                                         NOTICE OF TRANCHE A BORROWING

                                            Date: ____________, ___



To:       Wachovia Bank, National Association, as Administrative Agent for the Banks parties to the Credit
          Agreement dated as of December 22, 2003 (as extended, renewed, amended or restated from time to time,
          the "Credit Agreement") among The Phoenix Companies, Inc., Phoenix Life Insurance Company, Phoenix
          Investment Partners, Ltd., certain Banks which are signatories thereto, Fleet National Bank, as
          Syndication Agent, and Wachovia Bank, National Association, as Administrative Agent.

Ladies and Gentlemen:

         The undersigned, [Insert Name of Applicable Borrower] (the "Borrower"), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.3(a) of the Credit Agreement, of the Borrowing of Tranche A Loans specified
below:

                  1. The Business Day of the proposed Tranche A Borrowing is __________, 20_.

                  2. The aggregate amount of the proposed Tranche A Borrowing is $____________

                  3. The Tranche A Borrowing is to be comprised of $____________ of [Base Rate] [Eurodollar
         Rate] Loans.

                  [4. The duration of the Interest Period for the Eurodollar Rate Loans included in the Tranche
         A Borrowing shall be ______ months.]

         The undersigned hereby certifies that the following statements are true on the date hereof, and will
be true on the date of the proposed Tranche A Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:

                  (a) the representations and warranties of the Borrowers contained in Article V of the Credit
         Agreement are true and correct as though made on and as of such date (except to the extent such
         representations and warranties relate to an earlier date, in which case they are true and correct as
         of such date);

                  (b) no Default or Event of Default has occurred and is continuing or would result from such
         proposed Tranche A Borrowing; and




                  (c) The proposed Tranche A Borrowing will not cause the aggregate principal amount of all
         outstanding Tranche A Loans to exceed the combined Tranche A Commitments of the Tranche A Banks.

                                                              [NAME OF APPLICABLE BORROWER]



                                                              By:______________________________________________

                                                                 Title:________________________________________





















                                                     - 2 -



                                                  EXHIBIT A-2

                                         NOTICE OF TRANCHE B BORROWING

                                            Date: ____________, ___



To:       Wachovia Bank, National Association, as Administrative Agent for the Banks parties to the Credit
          Agreement dated as of December 22, 2003 (as extended, renewed, amended or restated from time to time,
          the "Credit Agreement") among The Phoenix Companies, Inc., Phoenix Life Insurance Company, Phoenix
          Investment Partners, Ltd., certain Banks which are signatories thereto, Fleet National Bank, as
          Syndication Agent, and Wachovia Bank, National Association as Administrative Agent.

Ladies and Gentlemen:

         The undersigned, [Insert Name of Applicable Borrower] (the "Borrower"), refers to the Credit
Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.3(b) of the Credit Agreement, of the Borrowing of Tranche B Loans specified
below:

                  1. The Business Day of the proposed Tranche B Borrowing is __________, 20_.

                  2. The aggregate amount of the proposed Tranche B Borrowing is $____________

                  3. The Tranche B Borrowing is to be comprised of $____________ of [Base Rate] [Eurodollar
         Rate] Loans.

                  [4. The duration of the Interest Period for the Eurodollar Rate Loans included in the Tranche
         B Borrowing shall be ______ months.]

         The undersigned hereby certifies that the following statements are true on the date hereof, and will
be true on the date of the proposed Tranche B Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:

                  (a) the representations and warranties of the Borrowers contained in Article V of the Credit
         Agreement are true and correct as though made on and as of such date (except to the extent such
         representations and warranties relate to an earlier date, in which case they are true and correct as
         of such date);

                  (b) no Default or Event of Default has occurred and is continuing or would result from such
         proposed Tranche B Borrowing; and




                  (c) The proposed Tranche B Borrowing will not cause the aggregate principal amount of all
         outstanding Tranche B Loans to exceed the combined Tranche B Commitments of the Tranche B Banks.

                                                              [NAME OF APPLICABLE BORROWER]




                                                              By:______________________________________________

                                                                 Title:________________________________________






















                                                     - 2 -



                                                  EXHIBIT B-1

                             NOTICE OF CONVERSION/CONTINUATION FOR TRANCHE A LOANS

                                             Date: ___________, ___



To:       Wachovia Bank, National Association, as Administrative Agent for the Banks parties to the Credit
          Agreement dated as of December 22, 2003 (as extended, renewed, amended or restated from time to time,
          the "Credit Agreement") among The Phoenix Companies, Inc., Phoenix Life Insurance Company, Phoenix
          Investment Partners. Ltd., certain Banks which are signatories thereto; Wachovia Bank, National
          Association, as Administrative Agent, and Fleet National Bank as Syndication Agent.

Ladies and Gentlemen:

         The undersigned, [name of Applicable Borrower] (the "Borrower"), refers to the Credit Agreement, the
terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.4 of the Credit Agreement, of the [conversion] [continuation] of the Tranche A Loans specified
herein, that:

                  1. The Conversion/Continuation Date is __________, 20__.

                  2. The aggregate amount of the Tranche A Loans to be [converted] [continued] is
          $_____________.

                  3. The Tranche A Loans are to be [converted into] [continued as] [Eurodollar Rate] [Base
          Rate] Loans.

                  4. [If applicable:] The duration of the Interest Period for the Tranche A Loans included in
          the [conversion] [continuation] shall be ____ months.

                                                              [NAME OF APPLICABLE BORROWER]



                                                              By:______________________________________________

                                                                 Title:________________________________________





                                                  EXHIBIT B-2

                             NOTICE OF CONVERSION/CONTINUATION FOR TRANCHE B LOANS

                                             Date: ___________, ___



To:       Wachovia Bank, National Association, as Administrative Agent for the Banks parties to the Credit
          Agreement dated as of December 22, 2003 (as extended, renewed, amended or restated from time to time,
          the "Credit Agreement") among The Phoenix Companies, Inc., Phoenix Life Insurance Company, Phoenix
          Investment Partners. Ltd., certain Banks which are signatories thereto; Wachovia Bank, National
          Association, as Administrative Agent, and Fleet National Bank as Syndication Agent.

Ladies and Gentlemen:

         The undersigned, [name of Applicable Borrower] (the "Borrower"), refers to the Credit Agreement, the
terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.4 of the Credit Agreement, of the [conversion] [continuation] of the Tranche B Loans specified
herein, that:

                  1. The Conversion/Continuation Date is __________, 20__.

                  2. The aggregate amount of the Tranche B Loans to be [converted] [continued] is
          $_____________.

                  3. The Tranche B Loans are to be [converted into] [continued as] [Eurodollar Rate] [Base
          Rate] Loans.

                  4. [If applicable:] The duration of the Interest Period for the Tranche B Loans included in
          the [conversion] [continuation] shall be ____ months.

                                                              [NAME OF APPLICABLE BORROWER]



                                                              By:______________________________________________

                                                                 Title:________________________________________






                                                  EXHIBIT B-3

                              NOTICE OF CONVERSION/CONTINUATION FOR THE CONVERTED

                                                 TRANCHE A LOAN

                                             Date: ___________, ___



To:       Wachovia Bank, National Association, as Administrative Agent for the Banks parties to the Credit
          Agreement dated as of December 22, 2003 (as extended, renewed, amended or restated from time to time,
          the "Credit Agreement") among The Phoenix Companies, Inc., Phoenix Life Insurance Company, Phoenix
          Investment Partners. Ltd., certain Banks which are signatories thereto; Wachovia Bank, National
          Association, as Administrative Agent, and Fleet National Bank as Syndication Agent.

Ladies and Gentlemen:

         The undersigned, [name of Applicable Borrower] (the "Borrower"), refers to the Credit Agreement, the
terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant
to Section 2.4 of the Credit Agreement, of the [conversion] [continuation] of [all] [a portion] of the
Converted Tranche A Loan specified herein, that:

                  1. The Conversion/Continuation Date is __________, 20__.

                  2. The aggregate amount of the Converted Tranche A Loan to be [converted] [continued] is
          $_____________.

                  3. The aggregate amount of the Converted Tranche A Loan being [converted] [continued]
          pursuant hereto is to be [converted into] [continued as] [Eurodollar Rate] [Base Rate] Loans.

                  4. [If applicable:] The duration of the Interest Period for that portion of the Converted
          Tranche A Loan included in the [conversion] [continuation] shall be ____ months.

                                                              [NAME OF APPLICABLE BORROWER]



                                                              By:______________________________________________

                                                                 Title:________________________________________





                                                   EXHIBIT C

                                             COMPLIANCE CERTIFICATE

                                    Financial Statement Date: ________, 200_


         Reference is made to that certain Credit Agreement dated as of December 22, 2003 (as extended,
renewed, amended or restated from time to time, the "Credit Agreement") among The Phoenix Companies, Inc.,
Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the several financial institutions from time
to time parties to the Credit Agreement (the "Banks"), Wachovia Bank, National Association, as Administrative
Agent, and Fleet National Bank as Syndication Agent. Unless otherwise defined herein, capitalized terms used
herein have the respective meanings assigned to them in the Credit Agreement.

         The undersigned Responsible Officer of the Parent, hereby certifies as of the date hereof that he/she
is the _________________ of the Parent, and that, as such, he/she is authorized to execute and deliver this
Certificate to the Banks and the Administrative Agent on behalf of the Parent and its Subsidiaries, and that:

                  1. Enclosed herewith is a copy of the [ audit/quarterly] report of the Parent as at
         ___________ (the "Computation Date") which report fairly presents the financial condition and results
         of operation of the Parent and its Subsidiaries, as of the Computation Date.

                  2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and
         has made, or has caused to be made under his/her supervision a detailed review of the transactions and
         conditions (financial or otherwise) of the Parent during the accounting period covered by the attached
         financial statements.

                  3. To the best of the undersigned's knowledge, the Parent, PLIC and PXP, during such period,
         have observed, performed or satisfied all of their covenants and other agreements, and satisfied every
         condition in the Credit Agreement to be observed, performed or satisfied by the Parent, PLIC and PXP,
         and the undersigned has no knowledge of any Default of Event of Default.

                  4. The following financial covenant analyses and information set forth on Schedule I attached
         hereto are true and accurate on and as of the date of this Certificate.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ___________ 200_.

                                                              THE PHOENIX COMPANIES, INC.



                                                              By:______________________________________________

                                                                 Title:________________________________________





                                                   SCHEDULE 1

                                           TO COMPLIANCE CERTIFICATE
                                        FINANCIAL COVENANT CALCULATIONS







                                                  EXHIBIT D-1

                        FORM OF OPINION OF PXP'S, PLIC"S AND PARENT'S INDEPENDENT COUNSEL


                                                                                             December __, 2003


To the Persons listed on
  Annex A

Ladies and Gentlemen:


         This opinion is furnished to you pursuant to Section 4.1(a)(v)(A) of the Credit Agreement, dated as of
December __, 2003 (the "Credit Agreement") among The Phoenix Companies, Inc., a Delaware corporation
("Parent"), Phoenix Life Insurance Company, a New York stock insurance company ("PLIC"), Phoenix Investment
Partners, Ltd., a Delaware corporation ("PXP", and together with Parent and PLIC, each a "Borrower" and,
collectively, the "Borrowers"), Wachovia Bank, National Association, as Administrative Agent, Fleet National
Bank, as Syndication Agent, Fleet Securities Inc. and Wachovia Securities, LLC, as Joint Lead Arrangers, PNC
Bank, National Association and The Bank of New York, as Documentation Agents, and the financial institutions
(collectively, the "Banks") acting as lenders thereunder.

         We have acted as special New York counsel to the Borrowers in connection with the execution and
delivery by the Borrowers of the Credit Agreement.

         Unless otherwise defined herein, terms defined in or defined by reference in the Credit Agreement and
used herein shall have the meanings assigned thereto in the Credit Agreement. As used herein, the following
terms have the following meanings: The term "Material Adverse Effect" means a material adverse effect on (i)
the business, assets, property or condition (financial or otherwise) of the Borrowers or (ii) the rights and
remedies of the Banks under the Credit Agreement, in each case, taken as a whole.

         In arriving at the opinions expressed below,

                  (a) we have examined and relied on the original, or a copy certified or otherwise identified
to our satisfaction, of the Credit Agreement,

                  (b) we have examined and relied on such documents and records of the Borrowers and such other
instruments and certificates and other information of public officials, officers and representatives of the
Borrowers and other Persons as we have deemed necessary or appropriate for the purposes of this opinion,

                  (c) we have examined and relied upon the representations and warranties as to factual matters
contained in or made pursuant to the Credit Agreement, and

                  (d) we have made such investigations of law as we have deemed appropriate as a basis for this
opinion.




         In rendering the opinions expressed below, we have assumed, with your permission, without independent
investigation or inquiry, (a) the authenticity of all documents submitted to us as originals, (b) the
genuineness of all signatures on all documents that we examined, (c) the conformity to authentic originals of
documents submitted to us as certified, conformed, telefaxed, electronic or photostatic copies, (d) the due
organization, valid existence and good standing of each party to the Credit Agreement, (e) the due
authorization and execution of the Credit Agreement by all parties thereto and (f) the due delivery of the
Credit Agreement by all parties thereto. In addition, we have assumed that the Credit Agreement constitutes the
legal, valid and binding obligations of each party to the Credit Agreement (other than the Borrowers)
enforceable against such party in accordance with their respective terms.

         Based upon and subject to the foregoing and the assumptions, qualifications and limitations
hereinafter set forth, we are of the opinion that:

         1. The execution, delivery and performance by the Borrowers of the Credit Agreement will not: (a)
violate any existing federal or New York law, rule or regulation known by us to be applicable to the Borrowers
except for such violations that to our knowledge would not have a Material Adverse Effect; or (b) result in the
creation or imposition of any lien, security interest, charge or encumbrance of any nature whatsoever upon or
in any of the Borrowers' assets under any such law, rule or regulation. Except for those consents,
authorizations, filings and other acts which, individually or in the aggregate, if not made, obtained or done
would not, to our knowledge, have a Material Adverse Effect, no consent or authorization of, approval by,
notice to, or filing with, any federal or New York governmental authority is required to be obtained or made on
or prior to the date hereof by any Borrower in connection with its execution, delivery or performance of the
Credit Agreement.

         2. The Credit Agreement constitutes the legal, valid and binding obligation of each Borrower,
enforceable against it in accordance with its terms.

         *        *        *

         Our opinions set forth above are subject to the effects of (i) bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization and moratorium laws and other similar laws and judicial
decisions relating to or affecting creditors' rights or remedies generally and, in the case of PLIC, rights of
creditors of insurance companies, (ii) general equitable principles (whether considered in a proceeding in
equity or at law), including without limitation the possible unavailability of specific performance or
injunctive relief and the exercise of discretionary powers by any court before which specific performance,
injunctive relief or other equitable remedies may be sought, (iii) an implied covenant of good faith,
reasonableness and fair dealing, and concepts of materiality and (iv) limitations on the enforceability of
rights to indemnification, contribution or exculpation under federal or state securities laws or regulations or
to the extent such indemnification, contribution or exculpation would violate public policy.

         Without limiting the foregoing, we express no opinion as to the validity, binding effect or
enforceability of (a) any provision of the Credit Agreement that purports to (i) waive, release or vary any
defense, right or privilege of, or any duties owing to, any Borrower to the extent that such waiver, release or
variation may be limited by provisions of applicable law, (ii) grant a right


                                                     - 2 -



to collect any amount that a court determines to constitute post-judgment interest, or a penalty or forfeiture,
(iii) grant any right of set-off with respect to any contingent or unmatured obligation, or to permit any
Person purchasing a participation from a Bank to exercise set-off rights with respect to such participation, or
to permit any affiliate of any Bank to exercise set-off rights against any Borrower pursuant to Section 2.13 or
13.8(d) of the Credit Agreement or otherwise, (iv) constitute a waiver of inconvenient forum or improper venue,
(v) relate to the subject matter jurisdiction of a court to adjudicate any controversy, (vi) allow for service
of process by mail or through compliance with the notice provisions of such Credit Agreement, (vii) provide for
liquidated damages or otherwise specify or limit damages, liabilities or remedies, or provide for cumulative
remedies, (viii) grant a right of specific performance or waive any defenses thereto, or (ix) provide that the
parties to the Credit Agreement shall engage in negotiations to replace any illegal, prohibited or
unenforceable provision or to waive defenses with respect to illegality and impossibility, and (b) the
provisions of Section 1.2(h) of the Credit Agreement. In addition, the enforceability of the provisions in the
Credit Agreement to the effect that (i) the terms thereof may not be waived or modified except in writing, (ii)
the express terms thereof supersede any inconsistent course of performance or usage of trade or (iii) certain
determinations made by one party shall have conclusive effect, may be limited under certain circumstances.

         We express no opinion as to the effect of, or compliance with, any federal or state laws regarding
fraudulent transfers or fraudulent conveyances or laws governing preferential transfers, or provisions of state
law restricting dividends, loans or other distributions by a corporation to or for the benefit of its
stockholders, or any federal or state securities laws, rules or regulations, including without limitation as to
the effect thereof on the validity, binding effect or enforceability of the Credit Agreement.

         We express no opinion as to the laws of any jurisdiction other than the laws of the State of New York
and the federal laws of the United States of America, in each case that in our experience are generally
applicable to transactions of this type. In giving the foregoing opinions, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in which any Bank is located that
limits the rate of interest that such Bank may charge or collect.

         The opinions expressed herein are solely for your benefit and, without our prior consent, neither our
opinion nor this opinion letter may be disclosed publicly to or relied upon by any other person; provided,
however, that copies of this opinion may be furnished to regulatory authorities and assignees or participants
(actual or potential) in the Loans.

         This opinion letter is limited to the matters stated and no opinion is implied or may be inferred
beyond the matters expressly stated herein. The opinions expressed herein are rendered only as of the date
hereof, and we assume no responsibility to advise you of facts, circumstances, events or developments which
hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein.



                                                              Very truly yours,


                                                     - 3 -



         Each of the persons listed below in its respective capacities under the Credit Agreement:

Wachovia Bank, National Association,
         as Administrative Agent and a Bank

Fleet National Bank,
         as Syndication Agent and a Bank

Fleet Securities, Inc.,
         as Joint Lead Arranger

Wachovia Securities, LLC,
         as Joint Lead Arranger

PNC Bank, National Association
         as Documentation Agent and a Bank

The Bank of New York,
         as Documentation Agent and a Bank

BMO Nesbitt Burns Financing, Inc.,
         as a Bank

JP Morgan Chase Bank,
         as a Bank

Webster Bank,
         as a Bank

State Street Bank and Trust Company,
         as a Bank










                                                     - 4 -



                                                  EXHIBIT D-2

                                   FORM OF OPINION OF PXP'S IN-HOUSE COUNSEL



                                               December 22, 2003



To:       Fleet National Bank as Syndication Agent, Wachovia Bank, National Association, as Administrative
          Agent, and the other Bank parties from time to time to the Credit Agreement hereinafter referred to

           Re: Credit Agreement, dated as of December 22, 2003, among The Phoenix Companies, Inc., Phoenix Life
            Insurance Company, Phoenix Investment Partners, Ltd., and the Financial Institutions Party Thereto,
             Fleet National Bank, as Syndication Agent, and Wachovia Bank, National Association, as
                                 Administrative Agent (the "Credit Agreement")

Ladies and Gentlemen:

         The undersigned has acted as counsel to Phoenix Investment Partners, Ltd. ("PXP") in connection with
the negotiation, execution and delivery of the Credit Agreement and the other Loan Documents. This opinion
letter is delivered pursuant to Section 4.1(a)(v) of the Credit Agreement. Unless otherwise defined herein or
the context otherwise requires, all capitalized terms used in this opinion letter shall have the respective
meanings assigned to them in the Credit Agreement.

         I have reviewed the corporate proceedings taken by PXP in connection with the Credit Agreement and the
other Loan Documents. In addition, I have examined and relied upon copies of such Credit Agreement, the
Certificate of Incorporation and the Bylaws of PXP as in effect on the date hereof, copies of supporting
resolutions adopted by the Board of Directors of PXP in connection with the Credit Agreement and the
transactions contemplated thereby and certificates executed by officers of PXP addressing facts material to my
opinions as I consider necessary or appropriate for the basis of the opinions expressed.

         In making the examination of such agreements and instruments in connection with the opinions expressed
herein, I have assumed the genuineness of all signatures (other than those on behalf of PXP) and the
authenticity of all documents submitted to me as originals and the conformity with the originals of all
documents submitted to me as copies and have further assumed that each of the Banks has the corporate power to
enter into a perform its obligations under the Credit Agreement and have assumed with respect to each of them
due authorization by all requisite corporate action, due execution and delivery and the valid and binding
effect of such documents and agreements and compliance by the Banks with applicable law.

         Based upon and subject to the foregoing, I am of the opinion that:




                  (1) PXP is a corporation, duly organized, validly existing and in good standing under the
          laws of the State of Delaware, and has full corporate power and authority to own and hold under lease
          its property and to conduct its business substantially as currently conducted by it. PXP has full
          corporate power and authority to enter into and perform its obligations under each Loan Document to
          which it is a party.

                  (2) PXP' s execution, delivery and performance of the Loan Documents to which it is a party
          are within PXP's corporate powers, have been duly authorized by all necessary corporate action, and
          do not:

                           a. contravene PXP's Certificate of Incorporation or Bylaws;

                           b. to the best of my knowledge, contravene any relevant order;

                           c. to the best of my knowledge, conflict with or result in any breach or
                  contravention of, or the creation of any Lien under, any document evidencing any Contractual
                  Obligation to which PXP is a party; or

                           d. result in, or require the creation or imposition of, any Lien on PXP's property
                  under any relevant law or relevant order.

         With respect to matters of fact on which my opinion is based, I have relied on appropriate
certificates of public officials and officers of PXP and I have no reason to believe such certificates are
inaccurate. My opinion is limited to the laws of the United States of America, the State of New York and the
general corporate law of the States of Delaware.

         This opinion letter is rendered solely for the Agents' and the Banks' benefit in connection with the
above transaction. Without my prior written consent, this opinion letter may not be: (i) relied upon by any
other party or for any other purpose; (ii) quoted in whole or in part or otherwise referred to in any report or
document; or (iii) furnished (the original or copies thereof) to any party except in connection with the
enforcement of the Loan Documents by the Agents or the Banks; provided, however, that copies of this opinion
letter may be furnished to regulatory authorities, assignees and participants (actual or potential) in the
Loans and pursuant to the requirements of process.

                                                              Very truly yours,





                                                              Tracy L. Rich
                                                              Executive Vice President and
                                                              General Counsel





                                                     - 2 -



                                                  EXHIBIT D-3

                                   FORM OF OPINION OF PLIC'S IN-HOUSE COUNSEL

                                               December 22, 2003



To:       Fleet National Bank as Syndication Agent, Wachovia Bank, National Association, as Administrative
          Agent and the other Bank parties from time to time to the Credit Agreement hereinafter referred to

          Re:     Credit Agreement, dated as of December 22, 2003, among The Phoenix Companies, Inc., Phoenix
                  Life Mutual Insurance Company, Phoenix Investment Partners, Ltd., and the Financial
                  Institutions Party Thereto, Fleet National Bank, as Syndication Agent and Wachovia Bank, as
                  Administrative Agent (the "Credit Agreement").

Ladies and Gentlemen:

         The undersigned has acted as counsel to Phoenix Life Insurance Company ("PLI") in connection with the
negotiation, execution and delivery of the Credit Agreement and the other Loan Documents. This opinion letter
is delivered pursuant to Section 4.l(a)(v) of the Credit Agreement. Unless otherwise defined herein or the
context otherwise requires, all capitalized terms used in this opinion letter shall have the respective
meanings assigned to them in the Credit Agreement.

         I have reviewed the corporate proceedings taken by PLI in connection with the Credit Agreement and the
other Loan Documents. In addition, I have examined and relied upon copies of such Credit Agreement, the Charter
and the Bylaws of PLI as in effect on the date hereof, copies of supporting resolutions adopted by the. Board
of Directors of PLI in connection with the Credit Agreement and the transactions contemplated thereby and
certificates executed by officers of PLI addressing facts material to my opinions as I consider necessary or
appropriate for the basis of the opinions expressed.

         In making the examination of such agreements and instruments in connection with the opinions expressed
herein, I have assumed the genuineness of all signatures (other than those on behalf of PLI) and the
authenticity of all documents submitted to me as originals and the conformity with the originals of all
documents submitted to me as copies and have further assumed that each of the Banks has the corporate power to
enter into and perform its obligations under the Credit Agreement and have assumed with respect to each of them
due authorization by all requisite corporate action, due execution and delivery and the valid and binding
effect of such documents and agreements and compliance by the Banks with applicable law.

         Based upon and subject to the foregoing, I am of the opinion that:

                  (1) PLI is a corporation, duly organized, validly existing and in good standing under the
          laws of the State of New York, and has full corporate power and authority to




          own and hold under lease its property and to conduct its business substantially as currently
          conducted by it. PLI has full corporate power and authority to enter into and perform its obligations
          under each Loan Document to which it is a party.

                  (2) PLI's execution, delivery and performance of the Loan Documents to which it is a party
          are within PLI's corporate powers, have been duly authorized by all necessary corporate action, and
          do not:

                           a. contravene PLI' s Charter or Bylaws;

                           b. to the best of my knowledge, contravene any relevant order;

                           c. to the best of my knowledge, conflict with or result in any breach or
                  contravention of, or the creation of any Lien under, any document evidencing any Contractual
                  Obligation to which PLI is a party; or

                           d. result in, or require the creation or imposition of, any Lien on PLI's property
                  under any relevant law or relevant order,

         With respect to matters of fact on which my opinion is based, I have relied on appropriate
certificates of public officials and officers of PLI and I have no reason to believe such certificates are
inaccurate. My opinion is limited to the laws of the United States of America and the State of New York.

This opinion letter is rendered solely for the Agents' and the Banks' benefit in connection with the above
transaction. Without my prior written consent, this opinion letter may not be: (i) relied upon by any other
party or for any other purpose; (ii) quoted in whole or in part or otherwise referred to in any report or
document, or (iii) furnished (the original or copies thereof) to any party except in connection with the
enforcement of the Loan Documents by the Agents or the Banks; provided, however, that copies of this opinion
letter may be furnished to regulatory authorities, assignees and participants (actual or potential) in the
Loans and pursuant to the requirements of process.

                                                              Very truly yours,



                                                              Tracy L. Rich
                                                              Executive Vice President and
                                                              General Counsel











                                                     - 2 -



                                                  EXHIBIT D-4

                                  FORM OF OPINION OF PARENT'S IN-HOUSE COUNSEL

                                               December 22, 2003



To:       Fleet National Bank as Syndication Agent, Wachovia Bank, National Association, as Administrative
          Agent and the other Bank parties from time to time to the Credit Agreement hereinafter referred to

          Re:     Credit Agreement, dated as of December 22, 2003, among The Phoenix Companies, Inc., Phoenix
                  Life Insurance Company, Phoenix Investment Partners, Ltd., and the Financial Institutions
                  Party Thereto, Fleet National Bank, as Syndication Agent and Wachovia Bank, National
                  Association, as Administrative Agent (the "Credit Agreement").

Ladies and Gentlemen:

         The undersigned has acted as Executive Vice President and General Counsel to The Phoenix Companies,
Inc. ("PCI") and Phoenix Life Insurance Company ("PLI"), which is the parent of Phoenix Investment Partners,
Ltd. ("PXP"), in connection with the negotiation, execution and delivery of the Credit Agreement and the other
Loan Documents. This opinion letter is delivered pursuant to Section 4.1(a)(v) of the Credit Agreement. Unless
otherwise defined herein or the context otherwise requires, all capitalized terms used in this opinion letter
shall have the respective meanings assigned to them in the Credit Agreement.

         I have reviewed the corporate proceedings taken by PCI in connection with the Credit Agreement and the
other Loan Documents. In addition, I have examined and relied upon copies of such Credit Agreement, the
Certificate of Incorporation and the Bylaws of PCI as in effect on the date hereof, copies of supporting
resolutions adopted by the Board of Directors of PCI in connection with the Credit Agreement and the
transactions contemplated thereby and certificates executed by officers of PCI addressing facts material to my
opinions as I consider necessary or appropriate for the basis of the opinions expressed.

         In making the examination of such agreements and instruments in connection with the opinions expressed
herein, I have assumed the genuineness of all signatures (other than those on behalf of PCI) and the
authenticity of all documents submitted to me as originals and the conformity with the originals of all
documents submitted to me as copies and have further assumed that each of the Banks has the corporate power to
enter into and perform its obligations under the Credit Agreement and have assumed with respect to each of them
due authorization by all requisite corporate action, due execution and delivery and the valid and binding
effect of such documents and agreements and compliance by the Banks with applicable law.

         Based upon and subject to the foregoing, I am of the opinion that:




                  (1) PCI is a corporation, duly organized, validly existing and in good standing under the
          laws of the State of Delaware, and has full corporate power and authority to own and hold under lease
          its property and to conduct its business substantially as currently conducted by it. PCI has full
          corporate power and authority to enter into and perform its obligations under each Loan Document to
          which it is a party.

                  (2) PCI's execution, delivery and performance of the Loan Documents to which it is a party
          are within PCI's corporate powers, have been duly authorized by all necessary corporate action, and
          do not:

                           a. contravene PCI's Certificate of Incorporation or Bylaws;

                           b. to the best of my knowledge, contravene any relevant order;

                           c. to the best of my knowledge, conflict with or result in any breach or
                  contravention of, or the creation of any Lien under, any document evidencing any Contractual
                  Obligation to which PCI is a party; or

                           d. result in, or require the creation or imposition of, any Lien on PCI's property
                  under any relevant law or relevant order.

         With respect to matters of fact on which my opinion is based, I have relied on appropriate
certificates of public officials and officers of PCI and I have no reason to believe such certificates are
inaccurate. My opinion is limited to the laws of the United States of America, the State of New York and the
general corporate law of the State of Delaware.

         This opinion letter is rendered solely for the Agents' and the Banks' benefit in connection with the
above transaction. Without my prior written consent, this opinion letter may not be: (i) relied upon by any
other party or for any other purpose; (ii) quoted in whole or in part or otherwise referred to in any report or
document; or (iii) furnished (the original or copies thereof) to any party except in connection with the
enforcement of the Loan Documents by the Agents or the Banks; provided, however, that copies of this opinion
letter may be furnished to regulatory authorities, assignees and participants (actual or potential) in the
Loans and pursuant to the requirements of process.

                                                              Very truly yours,



                                                              Tracy L. Rich
                                                              Executive Vice President and
                                                              General Counsel




                                                     - 2 -



                                                  EXHIBIT E-1

                                 [FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                              FOR TRANCHE A LOANS

          This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") dated as of
___________________, ____ is made between ___________________________ (the "Assignor") and
_____________________________ (the "Assignee").

                                                    RECITALS

         WHEREAS, the Assignor is party to that certain Credit Agreement dated as of December 22, 2003 (as
amended, amended and restated, modified, supplemented or renewed, the "Credit Agreement") among The Phoenix
Companies, Inc., Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the several financial
institutions from time to time party thereto (including the Assignor, the "Banks"), Wachovia Bank, National
Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Any terms defined in the
Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit
Agreement;

         WHEREAS, as provided under the Credit Agreement, the Assignor has committed to making Tranche A Loans
(the "Tranche A Loans") to the Borrowers in an aggregate amount not to exceed $______________ (its "Tranche A
Commitment");

         WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of
the Assignor under the Credit Agreement in respect of its Tranche A Commitments, together with a corresponding
portion of each of its outstanding Tranche A Loans, in an amount equal to $________________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the Assignee wishes to accept
assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such
conditions;

         NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the
parties hereto agree as follows:

SECTION 1.        ASSIGNMENT AND ACCEPTANCE.

         (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby
sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) _______% (the "Assignee's Percentage Share") of (A) the Tranche A Commitment and the
Tranche A Loans of the Assignor and (B) all related rights, benefits, obligations, liabilities and indemnities
of the Assignor under and in connection with the Credit Agreement and the Loan Documents.




         (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with a Tranche A Commitment in an amount equal to the Assigned Amount. The Assignee
agrees that it will perform in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent of the parties hereto that the
Tranche A Commitments of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the
Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the
Credit Agreement to the extent such obligations have been assumed by the Assignee; provided, however, the
Assignor shall not relinquish its rights under Sections 13.4 and 13.5 of the Credit Agreement to the extent
such rights relate to the time prior to the Effective Date.

         (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignee's Tranche A Commitment will be $______________.

         (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignor's Tranche A Commitment will be $_______________.

SECTION 2.        PAYMENTS.

         (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the
Assignee shall pay to the Assignor on the Effective Date in immediately available funds $_____________.*

         (b) The [Assignor] further agrees to pay to the Administrative Agent a processing fee in the amount
specified in Section 13.8 of the Credit Agreement.

SECTION 3.        REALLOCATION OF PAYMENTS.

         Any interest, fees and other payments accrued to the Effective Date with respect to the Tranche A
Commitment and assigned Tranche A Loans shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the Assigned Amounts shall be for the account
of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party
any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

SECTION 4.        INDEPENDENT CREDIT DECISION.

         The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules
and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 6.1
of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it
will, independently and without reliance upon
- --------------------
*  $ blank may be deleted and the phrase "the amount separately agreed to by Assignor and Assignee" substituted


                                                     - 2 -



the Assignor, any Agent or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action
under the Credit Agreement.

SECTION 5.        EFFECTIVE DATE; NOTICES.

         (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance
shall be _______________, 20__ (the "Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:

                  (i)   this Assignment and Acceptance shall be executed and delivered by the Assignor and the
          Assignee;

                  (ii)  the consent of the Borrowers and the Administrative Agent required for an effective
          assignment of the Assigned Amounts by the Assignor to the Assignee, under Section 13.8 of the Credit
          Agreement shall have been duly obtained and shall be in full force and effect as of the Effective
          Date;

                  (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this
          Assignment and Acceptance;

                  (iv)  the processing fee referred to in Section 2(b) hereof and in Section 13.8 of the Credit
          Agreement shall have been paid to the Administrative Agent; and

                  (v)   the Assignor shall have assigned and the Assignee shall have assumed a percentage equal
          to the Assignee's Percentage Share of the rights and obligations of the Assignor with respect to the
          Tranche A Loans under the Credit Agreement (if such agreements exists).

         (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to
the Borrowers and the Administrative Agent for acknowledgment by the Administrative Agent, a Notice of
Assignment substantially in the form attached hereto as Schedule 1.

[SECTION 6.       ADMINISTRATIVE AGENT [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE AGENT]

         (a) The Assignee hereby appoints and authorizes the Assignor to take such action as administrative
agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the Banks pursuant to the terms of the Credit Agreement.

         (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as
Administrative Agent under the Credit Agreement.


                                                     - 3 -



SECTION 7.        WITHHOLDING TAX.

         The Assignee (a) represents and warrants to the Banks, the Administrative Agent, the Parent, PLIC and
PXP that under applicable law and treaties no tax will be required to be withheld by the Bank with respect to
any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Administrative Agent and the Parent,
PLIC and PXP prior to the time that the Administrative Agent or the Parent, PLIC or PXP are required to make
any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal
Revenue Service Form W-8 ECI or U.S. Internal Revenue Service Form W-8 BEN (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms W-8 ECI or W-8 BEN upon the
expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and
regulations and amendments thereto, duly execute and completed by the Assignee, and (c) agrees to comply with
all applicable U.S. laws and regulations with regard to such withholding tax exemption.

SECTION 8.        REPRESENTATIONS AND WARRANTIES.

         (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting creditors' rights and to general
equitable principles.

         (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other
instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements
of the Borrowers, or the performance or observance by the Borrowers, of any of its respective obligations under
the Credit Agreement or any other instrument or document furnished in connection therewith.

         (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full
power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed


                                                     - 4 -



or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any
already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance;
and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action
by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance;
(iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms
hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of
general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it
is an Eligible Assignee.

SECTION 9.        FURTHER ASSURANCES.

         The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and
take such other action, as either party may reasonably request in connection with the transactions contemplated
by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to
the Borrowers or the Administrative Agent, which may be required in connection with the assignment and
assumption contemplated hereby.

SECTION 10.       MISCELLANEOUS.

         (a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and
signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this
Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach
thereof.

         (b) All payments made hereunder shall be made without any set-off or counterclaim.

         (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment arid Acceptance.

         (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

         (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction
of any State or Federal court sitting in New York over any suit, action or proceeding arising out of or
relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court. Each party to this Assignment
and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.


                                                     - 5 -



         (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

         [Other provisions to be added as may be negotiated between the Assignor and the Assignee, provided
that such provisions are not inconsistent with the Credit Agreement.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first above written.

                                                              [Assignor]


                                                              By:______________________________________________

                                                                 Title:________________________________________

                                                              Address:

                                                              [ASSIGNEE]


                                                              By:______________________________________________

                                                                 Title:________________________________________

                                                              Address:










                                                     - 6 -



                                                   SCHEDULE A

                                      NOTICE OF ASSIGNMENT AND ACCEPTANCE

                                              FOR TRANCHE A LOANS



                                                                                   ______________ 200_

To:       The Administrative Agent
          and the Borrowers under
          the Credit Agreement
          Referenced to below

Ladies and Gentlemen:

         We refer to the Credit Agreement dated as of December 22, 2003 (as amended, amended and restated,
modified, supplemented or renewed from time to time the "Credit Agreement") among The Phoenix Companies, Inc.,
Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the Banks referred to therein, Wachovia
Bank, National Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Terms
defined in the Credit Agreement are used herein as therein defined.

         1. We hereby give you notice of, and request your consent to, the assignment by
_________________________________ (the "Assignor") to ____________________________ (the "Assignee ") of
________% of the right, title and interest of the Assignor in and to the Credit Agreement to the extent related
to the Tranche A Loans (including, without limitation, the extension, administration and enforcement of the
Tranche A Loans and further including, without limitation, the right, title and interest of the Assignor in and
to the Tranche A Commitments of the Assignor and all outstanding Tranche A Loans made by the Assignor) pursuant
to the Assignment and Acceptance Agreement attached hereto (the "Assignment and Acceptance").

         2. The Assignee agrees that, upon receiving the consent of the Administrative Agent and, if
applicable, the Borrowers to such assignment, the Assignee will be bound by the terms of the Credit Agreement
as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Credit
Agreement.

         3. The following administrative details apply to the Assignee:

                  (A)      Notice Address:

                           Assignee Name:_______________________________________________

                           Address:_____________________________________________________

                                   _____________________________________________________

                                   _____________________________________________________

                           Attention:___________________________________________________


                           Telephone:  (___)____________________________________________

                           Telecopier: (___)____________________________________________


                  (B)      Payment Instructions:

                           Account No.:_________________________________________________

                                       At:______________________________________________

                                          ______________________________________________

                                          ______________________________________________

                           Reference:     ______________________________________________

                           Attention:     ______________________________________________

         4. You are entitled to rely upon the representations, warranties and covenants of each of the Assignor
and Assignee contained in the Assignment and Acceptance.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance
to be executed by their respective duly authorized officials, officers or agents as of the date first above
mentioned.

                                                              Very truly yours,

                                                              [NAME OF ASSIGNOR]


                                                              By:______________________________________________

                                                                  Title:_______________________________________


                                                              [NAME OF ASSIGNEE]


                                                              By:______________________________________________

                                                                  Title:_______________________________________











                                                     - 2 -




ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

THE PHOENIX COMPANIES, INC.


By:__________________________________________________

    Its:_____________________________________________



PHOENIX LIFE INSURANCE COMPANY


By:__________________________________________________

    Its:_____________________________________________



PHOENIX INVESTMENT PARTNERS, LTD.


By:__________________________________________________

    Its:_____________________________________________



WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent


By:__________________________________________________

    Its:_____________________________________________












                                                     - 3 -



                                                  EXHIBIT E-2



                                 [FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                              FOR TRANCHE B LOANS

         This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") dated as of
___________________, ____ is made between ___________________________ (the "Assignor") and
_____________________________ (the "Assignee").

                                                    Recitals

         WHEREAS, the Assignor is party to that certain Credit Agreement dated as of December 22, 2003 (as
amended, amended and restated, modified, supplemented or renewed, the "Credit Agreement") among The Phoenix
Companies, Inc., Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the several financial
institutions from time to time party thereto (including the Assignor, the "Banks"), Wachovia Bank, National
Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Any terms defined in the
Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit
Agreement;

         WHEREAS, as provided under the Credit Agreement, the Assignor has committed to making Tranche B Loans
(the "Tranche B Loans") to the Borrowers in an aggregate amount not to exceed $______________ (its "Tranche B
Commitment");

         WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of
the Assignor under the Credit Agreement in respect of its Tranche B Commitments, together with a corresponding
portion of each of its outstanding Tranche B Loans, in an amount equal to $________________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the Assignee wishes to accept
assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such
conditions;

         NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the
parties hereto agree as follows:

SECTION 1.        ASSIGNMENT AND ACCEPTANCE.

         (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby
sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) _______% (the "Assignee's Percentage Share") of (A) the Tranche B Commitment and the
Tranche B Loans of the Assignor and (B) all related rights, benefits, obligations, liabilities and indemnities
of the Assignor under and in connection with the Credit Agreement and the Loan Documents.




         (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with a Tranche B Commitment in an amount equal to the Assigned Amount. The Assignee
agrees that it will perform in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent of the parties hereto that the
Tranche B Commitments of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the
Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the
Credit Agreement to the extent such obligations have been assumed by the Assignee; provided, however, the
Assignor shall not relinquish its rights under Sections 13.4 and 13.5 of the Credit Agreement to the extent
such rights relate to the time prior to the Effective Date.

         (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignee's Tranche B Commitment will be $______________.

         (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignor's Tranche B Commitment will be $_______________.

SECTION 2.        PAYMENTS.

         (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the
Assignee shall pay to the Assignor on the Effective Date in immediately available funds $_____________.*

         (b) The [Assignor] further agrees to pay to the Administrative Agent a processing fee in the amount
specified in Section 13.8 of the Credit Agreement.

SECTION 3.        REALLOCATION OF PAYMENTS.

         Any interest, fees and other payments accrued to the Effective Date with respect to the Tranche B
Commitment and assigned Tranche B Loans shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the Assigned Amounts shall be for the account
of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party
any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

SECTION 4.        INDEPENDENT CREDIT DECISION.

         The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules
and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 6.1
of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it
will, independently and without reliance upon

- --------------------
*  $ blank may be deleted and the phrase "the amount separately agreed to by Assignor and Assignee" substituted

                                                     - 2 -


the Assignor, any Agent or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action
under the Credit Agreement.

SECTION 5.        EFFECTIVE DATE; NOTICES.

         (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance
shall be _______________, 20__ (the "Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:

                  (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and the
          Assignee;

                  (ii) the consent of the Borrowers and the Administrative Agent required for an effective
          assignment of the Assigned Amounts by the Assignor to the Assignee, under Section 13.8 of the Credit
          Agreement shall have been duly obtained and shall be in full force and effect as of the Effective
          Date;

                  (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this
          Assignment and Acceptance;

                  (iv) the processing fee referred to in Section 2(b) hereof and in Section 13.8 of the Credit
          Agreement shall have been paid to the Administrative Agent; and

                  (v) the Assignor shall have assigned and the Assignee shall have assumed a percentage equal
          to the Assignee's Percentage Share of the rights and obligations of the Assignor with respect to the
          Tranche B Loans under the Credit Agreement (if such agreements exists).

         (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to
the Borrowers and the Administrative Agent for acknowledgment by the Administrative Agent, a Notice of
Assignment substantially in the form attached hereto as Schedule 1.

[SECTION 6.       ADMINISTRATIVE AGENT [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE AGENT]

         (a) The Assignee hereby appoints and authorizes the Assignor to take such action as administrative
agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the Banks pursuant to the terms of the Credit Agreement.

         (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as
Administrative Agent under the Credit Agreement.


                                                     - 3 -



SECTION 7.        WITHHOLDING TAX.

         The Assignee (a) represents and warrants to the Banks, the Administrative Agent, the Parent, PLIC and
PXP that under applicable law and treaties no tax will be required to be withheld by the Bank with respect to
any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Administrative Agent and the Parent,
PLIC and PXP prior to the time that the Administrative Agent or the Parent, PLIC or PXP are required to make
any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal
Revenue Service Form W-8 ECI or U.S. Internal Revenue Service Form W-8 BEN (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms W-8 ECI or W-8 BEN upon the
expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and
regulations and amendments thereto, duly execute and completed by the Assignee, and (c) agrees to comply with
all applicable U.S. laws and regulations with regard to such withholding tax exemption.

SECTION 8.        REPRESENTATIONS AND WARRANTIES.

         (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting creditors' rights and to general
equitable principles.

         (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other
instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements
of the Borrowers, or the performance or observance by the Borrowers, of any of its respective obligations under
the Credit Agreement or any other instrument or document furnished in connection therewith.

         (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full
power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed


                                                     - 4 -



or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any
already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance;
and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action
by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance;
(iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms
hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of
general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it
is an Eligible Assignee.

SECTION 9.        FURTHER ASSURANCES.

         The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and
take such other action, as either party may reasonably request in connection with the transactions contemplated
by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to
the Borrowers or the Administrative Agent, which may be required in connection with the assignment and
assumption contemplated hereby.

SECTION 10.       MISCELLANEOUS.

         (a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and
signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this
Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach
thereof.

         (b) All payments made hereunder shall be made without any set-off or counterclaim.

         (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment arid Acceptance.

         (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

         (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction
of any State or Federal court sitting in New York over any suit, action or proceeding arising out of or
relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court. Each party to this Assignment
and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.


                                                     - 5 -



         (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

         [Other provisions to be added as may be negotiated between the Assignor and the Assignee, provided
that such provisions are not inconsistent with the Credit Agreement.]

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first above written.

                                                              [ASSIGNOR]


                                                              By:______________________________________________

                                                                   Title:______________________________________

                                                              Address:

                                                              [ASSIGNEE]


                                                              By:______________________________________________

                                                                   Title:______________________________________

                                                              Address:










                                                     - 6 -



                                                   SCHEDULE A

                                      NOTICE OF ASSIGNMENT AND ACCEPTANCE

                                              FOR TRANCHE B LOANS

                                                                                   ______________ 200_

To:       The Administrative Agent
          and the Borrowers under
          the Credit Agreement
          Referenced to below

Ladies and Gentlemen:

         We refer to the Credit Agreement dated as of December 22, 2003 (as amended, amended and restated,
modified, supplemented or renewed from time to time the "Credit Agreement") among The Phoenix Companies, Inc.,
Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the Banks referred to therein, Wachovia
Bank, National Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Terms
defined in the Credit Agreement are used herein as therein defined.

         1. We hereby give you notice of, and request your consent to, the assignment by
_________________________________ (the "Assignor") to ____________________________ (the "Assignee ") of
________% of the right, title and interest of the Assignor in and to the Credit Agreement to the extent related
to the Tranche B Loans (including, without limitation, the extension, administration and enforcement of the
Tranche B Loans and further including, without limitation, the right, title and interest of the Assignor in and
to the Tranche B Commitments of the Assignor and all outstanding Tranche B Loans made by the Assignor) pursuant
to the Assignment and Acceptance Agreement attached hereto (the "Assignment and Acceptance").

         2. The Assignee agrees that, upon receiving the consent of the Administrative Agent and, if
applicable, the Borrowers to such assignment, the Assignee will be bound by the terms of the Credit Agreement
as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Credit
Agreement.

         3. The following administrative details apply to the Assignee:

                  (A)      Notice Address:

                           Assignee Name:_______________________________________________

                           Address:_____________________________________________________

                                   _____________________________________________________

                                   _____________________________________________________

                           Attention:___________________________________________________

                           Telephone:  (___)____________________________________________

                           Telecopier: (___)____________________________________________



                  (B)      Payment Instructions:

                           Account No.:_________________________________________________

                                       At:______________________________________________

                                          ______________________________________________

                                          ______________________________________________

                           Reference:     ______________________________________________

                           Attention:     ______________________________________________


         4. You are entitled to rely upon the representations, warranties and covenants of each of the Assignor
and Assignee contained in the Assignment and Acceptance.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance
to be executed by their respective duly authorized officials, officers or agents as of the date first above
mentioned.

                                                              Very truly yours,

                                                              [NAME OF ASSIGNOR]


                                                              By:______________________________________________

                                                                   Title:______________________________________


                                                              [NAME OF ASSIGNEE]


                                                              By:______________________________________________

                                                                   Title:______________________________________












                                                     - 2 -



ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

THE PHOENIX COMPANIES, INC.


By:__________________________________________________

    Its:_____________________________________________



PHOENIX LIFE INSURANCE COMPANY


By:__________________________________________________

    Its:_____________________________________________


PHOENIX INVESTMENT PARTNERS, LTD.


By:__________________________________________________

    Its:_____________________________________________


WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent


By:__________________________________________________

    Its:_____________________________________________














                                                     - 3 -



                                                  EXHIBIT E-3



                                 [FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT

                                          FOR CONVERTED TRANCHE A LOAN

          This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") dated as of
___________________, ____ is made between ___________________________ (the "Assignor") and
_____________________________ (the "Assignee").

                                                    RECITALS

         WHEREAS, the Assignor is party to that certain Credit Agreement dated as of December 22, 2003 (as
amended, amended and restated, modified, supplemented or renewed, the "Credit Agreement") among The Phoenix
Companies, Inc., Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the several financial
institutions from time to time party thereto (including the Assignor, the "Banks"), Wachovia Bank, National
Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Any terms defined in the
Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit
Agreement;

         WHEREAS, pursuant to the Credit Agreement, the Assignor has extended a portion of the Converted
Tranche A Loan to the Borrowers;

         WHEREAS,  the outstanding  principal  balance of the Assignor's share of the Converted Tranche A Loan as
of the date hereof is $______________ (its "Converted Tranche A Loan Amount");

         WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of
the Assignor under the Credit Agreement in respect of its Converted Tranche A Loan Amount in an amount equal to
$________________ (the "Assigned Amount") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such
terms and subject to such conditions;

         NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the
parties hereto agree as follows:

SECTION 1.        ASSIGNMENT AND ACCEPTANCE.

         (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby
sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) _______% (the "Assignee's Percentage Share") of (A) the Converted Tranche A Loan
Amount of the




Assignor and (B) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under
and in connection with the Credit Agreement and the Loan Documents.

         (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with a share of the outstanding Converted Tranche A Loan in an amount equal to the
Assigned Amount. The Assignee agrees that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by it as a Bank. It is the intent of
the parties hereto that the interest of the Assignor in the Converted Tranche A Loan shall, as of the Effective
Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its rights and be
released from its obligations under the Credit Agreement to the extent such obligations have been assumed by
the Assignee; provided, however, the Assignor shall not relinquish its rights under Sections 13.4 and 13.5 of
the Credit Agreement to the extent such rights relate to the time prior to the Effective Date.

         (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignee's interest in the outstanding principal amount of the Converted Tranche A Loan will be
$______________.

         (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the
Assignor's interest in the outstanding principal amount of the Converted Tranche A Loan will be
$_______________.

SECTION 2.        PAYMENTS.

         (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the
Assignee shall pay to the Assignor on the Effective Date in immediately available funds $_____________.*

         (b) The [Assignor] further agrees to pay to the Administrative Agent a processing fee in the amount
specified in Section 13.8 of the Credit Agreement.

SECTION 3.        REALLOCATION OF PAYMENTS.

         Any interest, fees and other payments accrued to the Effective Date with respect to the Assignor's
interest in the Converted Tranche A Loan shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the Assigned Amounts shall be for the account
of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party
any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.



- --------------------
*  $ blank may be deleted and the phrase "the amount separately agreed to by Assignor and Assignee" substituted


                                                     - 2 -



SECTION 4.        INDEPENDENT CREDIT DECISION.

         The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules
and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 6.1
of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it
will, independently and without reliance upon the Assignor, any Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.

SECTION 5.        EFFECTIVE DATE; NOTICES.

         (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance
shall be _______________, 20__ (the "Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:

                  (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and the
          Assignee;

                  (ii) the consent of the Borrowers and the Administrative Agent required for an effective
          assignment of the Assigned Amounts by the Assignor to the Assignee, under Section 13.8 of the Credit
          Agreement shall have been duly obtained and shall be in full force and effect as of the Effective
          Date;

                  (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this
          Assignment and Acceptance;

                  (iv) the processing fee referred to in Section 2(b) hereof and in Section 13.8 of the Credit
          Agreement shall have been paid to the Administrative Agent; and

                  (v) the Assignor shall have assigned and the Assignee shall have assumed a percentage equal
          to the Assignee's Percentage Share of the rights and obligations of the Assignor with respect to the
          Converted Tranche A Loan under the Credit Agreement (if such agreements exists).

         (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to
the Borrowers and the Administrative Agent for acknowledgment by the Administrative Agent, a Notice of
Assignment substantially in the form attached hereto as Schedule 1.

[SECTION 6.       ADMINISTRATIVE AGENT [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE AGENT]

         (a) The Assignee hereby appoints and authorizes the Assignor to take such action as administrative
agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the Banks pursuant to the terms of the Credit Agreement.


                                                     - 3 -



         (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as
Administrative Agent under the Credit Agreement.]

SECTION 7.        WITHHOLDING TAX.

         The Assignee (a) represents and warrants to the Banks, the Administrative Agent, the Parent, PLIC and
PXP that under applicable law and treaties no tax will be required to be withheld by the Bank with respect to
any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of
any jurisdiction other than the United States or any State thereof) to the Administrative Agent and the Parent,
PLIC and PXP prior to the time that the Administrative Agent or the Parent, PLIC or PXP are required to make
any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal
Revenue Service Form W-8 ECI or U.S. Internal Revenue Service Form W-8 BEN (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms W-8 ECI or W-8 BEN upon the
expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and
regulations and amendments thereto, duly execute and completed by the Assignee, and (c) agrees to comply with
all applicable U.S. laws and regulations with regard to such withholding tax exemption.

SECTION 8.        REPRESENTATIONS AND WARRANTIES.

         (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting creditors' rights and to general
equitable principles.

         (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other
instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements
of the Borrowers, or the performance or observance by the Borrowers, of any of its respective obligations under
the Credit Agreement or any other instrument or document furnished in connection therewith.


                                                     - 4 -



         (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full
power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or delivered by it in connection with
this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or
undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with,
any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance
has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to
bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee.

SECTION 9.        FURTHER ASSURANCES.

         The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and
take such other action, as either party may reasonably request in connection with the transactions contemplated
by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to
the Borrowers or the Administrative Agent, which may be required in connection with the assignment and
assumption contemplated hereby.

SECTION 10.       MISCELLANEOUS.

         (a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and
signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this
Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach
thereof.

         (b) All payments made hereunder shall be made without any set-off or counterclaim.

         (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment arid Acceptance.

         (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

         (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction
of any State or Federal court sitting in New York over any suit, action or proceeding arising out of or
relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court. Each party to this Assignment
and Acceptance hereby irrevocably waives, to the fullest


                                                     - 5 -



extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.

         (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

         [Other provisions to be added as may be negotiated between the Assignor and the Assignee, provided
that such provisions are not inconsistent with the Credit Agreement.]

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first above written.

                                                              [ASSIGNOR]


                                                               By:______________________________________________

                                                                   Title:______________________________________

                                                              Address:

                                                              [ASSIGNEE]


                                                               By:______________________________________________

                                                                   Title:______________________________________

                                                              Address:
















                                                     - 6 -



                                                   SCHEDULE A

                                      NOTICE OF ASSIGNMENT AND ACCEPTANCE

                                          FOR CONVERTED TRANCHE A LOAN

                                                                                   ______________ 200_

To:       The Administrative Agent
          and the Borrowers under
          the Credit Agreement
          Referenced to below

Ladies and Gentlemen:

         We refer to the Credit Agreement dated as of December 22, 2003 (as amended, amended and restated,
modified, supplemented or renewed from time to time the "Credit Agreement") among The Phoenix Companies, Inc.,
Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd., the Banks referred to therein, Wachovia
Bank, National Association, as Administrative Agent, and Fleet National Bank as Syndication Agent. Terms
defined in the Credit Agreement are used herein as therein defined.

         1. We hereby give you notice of, and request your consent to, the assignment by
_________________________________ (the "Assignor") to ____________________________ (the "Assignee ") of
________% of the right, title and interest of the Assignor in and to the Credit Agreement to the extent related
to the Converted Tranche A Loan (including, without limitation, the extension, administration and enforcement
of the Converted Tranche A Loan and further including, without limitation, the right, title and interest of the
Assignor in and to all outstanding amounts under the Converted Tranche A Loan) pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance").

         2. The Assignee agrees that, upon receiving the consent of the Administrative Agent and, if
applicable, the Borrowers to such assignment, the Assignee will be bound by the terms of the Credit Agreement
as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Credit
Agreement.

         3. The following administrative details apply to the Assignee:

                  (A)      Notice Address:

                           Assignee Name:_______________________________________________

                           Address:_____________________________________________________

                                   _____________________________________________________

                                   _____________________________________________________

                           Attention:___________________________________________________

                           Telephone:  (___)____________________________________________

                           Telecopier: (___)____________________________________________





                  (B)      Payment Instructions:

                           Account No.:_________________________________________________

                                       At:______________________________________________

                                          ______________________________________________

                                          ______________________________________________

                           Reference:     ______________________________________________

                           Attention:     ______________________________________________

         4. You are entitled to rely upon the representations, warranties and covenants of each of the Assignor
and Assignee contained in the Assignment and Acceptance.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance
to be executed by their respective duly authorized officials, officers or agents as of the date first above
mentioned.

                                                              Very truly yours,

                                                              [NAME OF ASSIGNOR]


                                                              By:______________________________________________

                                                                   Title:______________________________________


                                                              [NAME OF ASSIGNEE]


                                                              By:______________________________________________

                                                                   Title:______________________________________
















                                                     - 2 -



ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

THE PHOENIX COMPANIES, INC.


By:__________________________________________________

    Its:_____________________________________________


PHOENIX LIFE INSURANCE COMPANY


By:__________________________________________________

    Its:_____________________________________________


PHOENIX INVESTMENT PARTNERS, LTD.


By:__________________________________________________

    Its:_____________________________________________


WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent


By:__________________________________________________

    Its:_____________________________________________















                                                     - 3 -



                                                   EXHIBIT F

                                      [FORM OF] TRANCHE A PROMISSORY NOTE


                                                                                               __________, 2003

For Value Received, the undersigned, [Insert Name of Applicable Borrower] (the "Borrower"), hereby promises to
pay to the order of _________________ (the "Bank"), the aggregate unpaid principal amount of all Tranche A
Loans made by the Bank to the Borrower pursuant to the Credit Agreement, dated as of December 22, 2003 (such
Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time: to time, being
hereinafter called the "Credit Agreement"), among The Phoenix Companies, Inc., Phoenix Life Insurance Company
and Phoenix Investment Partners, Ltd., the Bank, the other banks parties thereto, Wachovia Bank, National
Association, as Administrative Agent, and Fleet National Bank as Syndication Agent, on the dates and in the
amounts provided in the Credit Agreement. The Borrower further promises to pay interest on the unpaid principal
amount of the Tranche A Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as
provided in the Credit Agreement.

         The Bank is authorized to endorse or record the amount and the date on which each Tranche A Loan is
made, the maturity date therefor and each payment of principal with respect thereto on a schedule annexed
hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part
hereof or on its books and records; provided, that any failure to so endorse or record such information shall
not in any manner affect any obligation of the Borrower under the Credit Agreement and this Promissory Note
(the "Note").

         This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit
Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

         Terms defined in the Credit Agreement are used herein with their defined meanings therein unless
otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the
laws of the State of New York applicable to contracts made and to be performed entirely within such State.

                                                              [NAME OF APPLICABLE BORROWER].


                                                              By:______________________________________________

                                                                  Title:_______________________________________






                                                   EXHIBIT G

                                      [FORM OF] TRANCHE B PROMISSORY NOTE


                                                                                                 ________, 2003

         For Value Received, the undersigned, [Insert Name of Applicable Borrower] (the "Borrower"), hereby
promises to pay to the order of _________________ (the "Bank"), the aggregate unpaid principal amount of all
Tranche B Loans made by the Bank to the Borrower pursuant to the Credit Agreement, dated as of December 22,
2003 (such Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time: to
time, being hereinafter called the "Credit Agreement"), among The Phoenix Companies, Inc., Phoenix Life
Insurance Company and Phoenix Investment Partners, Ltd., the Bank, the other banks parties thereto, Wachovia
Bank, National Association, as Administrative Agent, and Fleet National Bank as Syndication Agent, on the dates
and in the amounts provided in the Credit Agreement. The Borrower further promises to pay interest on the
unpaid principal amount of the Tranche B Loans evidenced hereby from time to time at the rates, on the dates,
and otherwise as provided in the Credit Agreement.

         The Bank is authorized to endorse or record the amount and the date on which each Tranche B Loan is
made, the maturity date therefor and each payment of principal with respect thereto on a schedule annexed
hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part
hereof or on its books and records; provided, that any failure to so endorse or record such information shall
not in any manner affect any obligation of the Borrower under the Credit Agreement and this Promissory Note
(the "Note").

         This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit
Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

         Terms defined in the Credit Agreement are used herein with their defined meanings therein unless
otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the
laws of the State of New York applicable to contracts made and to be performed entirely within such State.

                                                              [NAME OF APPLICABLE BORROWER].


                                                              By:______________________________________________

                                                                  Title:_______________________________________






                                                   EXHIBIT H

                                 [FORM OF] CONVERTED TRANCHE A PROMISSORY NOTE


                                                                                               __________, 2003

         For Value Received, the undersigned, [Insert Name of Applicable Borrower] (the "Borrower"), hereby
promises to pay to the order of _________________ (the "Bank"), the aggregate unpaid principal amount of all
Tranche A Loans made by the Bank to the Borrower which have been converted to a Converted Tranche A Loan
pursuant to the Credit Agreement, dated as of December 22, 2003 (such Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified from time: to time, being hereinafter called the "Credit
Agreement"), among The Phoenix Companies, Inc., Phoenix Life Insurance Company and Phoenix Investment Partners,
Ltd., the Bank, the other banks parties thereto, Wachovia Bank, National Association, as Administrative Agent,
and Fleet National Bank as Syndication Agent, on the dates and in the amounts provided in the Credit Agreement.
The Borrower further promises to pay interest on the unpaid principal amount of the Converted Tranche A Loans
evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Credit
Agreement.

         The Bank is authorized to endorse or record the amount and the date on which the Converted Tranche A
Loan was made, the maturity date therefor and each payment of principal with respect thereto on a schedule
annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a
part hereof or on its books and records; provided, that any failure to so endorse or record such information
shall not in any manner affect any obligation of the Borrower under the Credit Agreement and this Promissory
Note (the "Note").

         This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit
Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

         Terms defined in the Credit Agreement are used herein with their defined meanings therein unless
otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the
laws of the State of New York applicable to contracts made and to be performed entirely within such State.

                                                              [NAME OF APPLICABLE BORROWER].


                                                              By:______________________________________________

                                                                  Title:_______________________________________



                                                SCHEDULE 2.1(A)

                                           THE TRANCHE A COMMITMENTS


                                                              TRANCHE A
                         BANK                             COMMITMENT AMOUNT                      PRO RATA SHARE

Fleet National Bank                                         $16,875,000.00                          15.0000%

Wachovia Bank, National Association                         $16,875,000.00                          15.0000%

The Bank of New York                                        $16,875,000.00                          15.0000%

PNC Bank, National Association                              $16,875,000.00                          15.0000%

BMO Nesbitt Burns Financing, Inc.                           $15,000,000.00                          13.3334%

JPMorgan Chase Bank                                         $11,250,000.00                          10.0000%

State Street Bank and Trust Company                         $11,250,000.00                          10.0000%

Webster Bank                                                $7,500,000.00                            6.6666%
                                                            -------------                         ----------

                                                            $112,500,000                                100%




                                                SCHEDULE 2.1(B)

                                           THE TRANCHE B COMMITMENTS

                                                              TRANCHE B
                         BANK                             COMMITMENT AMOUNT                      PRO RATA SHARE

Fleet National Bank                                         $5,625,000.00                           15.0000%

Wachovia Bank, National Association                         $5,625,000.00                           15.0000%

The Bank of New York                                        $5,625,000.00                           15.0000%

PNC Bank, National Association                              $5,625,000.00                           15.0000%

BMO Nesbitt Burns Financing, Inc.                           $5,000,000.00                           13.3334%

JPMorgan Chase Bank                                         $3,750,000.00                           10.0000%

State Street Bank and Trust Company                         $3,750,000.00                           10.0000%

Webster Bank                                                $2,500,000.00                            6.6666%
                                                            -------------                          ---------

                                                            $37,500,000                                 100%




                                                SCHEDULE 5.7(c)

                                           UNFUNDED PENSION LIABILITY

The Unfunded Pension Liability of The Phoenix Companies, Inc. Employee Pension Plan as set forth in Footnote 10
(page F-39) of the 2002 year end financial statements included in the Parent's annual report.







                                                  SCHEDULE 7.1

                                           SCHEDULED PERMITTED LIENS

                                                      None





                                                  SCHEDULE 7.7

                                        SCHEDULED CONTINGENT OBLIGATIONS




Contractual Obligations and Commercial Commitments

As of September 30, 2003, The Phoenix Companies, Inc, and its subsidiaries (PNX) had $205.2 million outstanding
related to contractual obligations, excluding derivative instruments, and $18.3 million in commercial
commitments through December 31, 2006. The following table presents PNX's contractual obligations and
commercial commitments through December 31, 2006, including the years in which such obligations will come due
and such commercial commitments expire ($ amounts in millions).

                                               Total           2003          2004         2005          2006
                                          --------------- ------------  ------------ ------------  ------------
Contractual Obligations Due
Indebtedness (1) ..........................  $   175.0       $    --       $    --      $    --       $   175.0

Future Minimum Lease Payments.............       30.2             3.9          11.0          9.0           6.3
Other(2)  .................................       --              --            --           --            --
                                          --------------- ------------  ------------ ------------  ------------
Total Contractual Obligations               $   205.2       $     3.9     $    11.0    $     9.0     $   181.3
                                          =============== ============  ============ ============  ============

                                              Total           2003          2004         2005          2006
                                          --------------- ------------  ------------ ------------  ------------
Commercial Commitments Expire
Standby Letters of Credit (3) .............  $    10.3       $    10.3     $    --      $    --       $    --
Venture Capital Commitments (2) (4)  .......        8.0             1.4           2.0          2.5           2.1
                                          --------------- ------------  ------------ ------------  ------------
Total Commercial Commitments..............  $    18.3       $    11.7     $     2.0    $     2.5     $     2.1
                                          =============== ============  ============ ============  ============

(1)  Indebtedness amounts include principal only.
(2)  There are no minimum contractual obligations in this category; however, see discussion below with respect
     to Commitments Related to Recent Business Combinations.
(3)  Phoenix Life Insurance Company's (PLIC) standby letters of credit automatically renew on an annual basis.
(4)  Other commercial commitments relate to venture capital partnerships. These commitments can be drawn down
     by private equity funds as necessary to fund their portfolio investments through the end of the funding
     period as stated in each agreement. The amount collectively drawn down by the private equity funds in
     PLIC's portfolio in the quarter ended September 30, 2003 was $9.4 million.




Commitments Related to Recent Business Combinations

Under the terms of purchase agreements related to certain recent business combinations, PNX is subject to
certain contractual obligations and commitments related to additional purchase consideration and put/call
arrangements summarized as follows:

Kayne Anderson Rudnick

Phoenix Investment Partners (PXP) has an earn-out arrangement effective December 31, 2003 for non-Phoenix
members of Kayne Anderson Rudnick (KAR) that is in the form of a put/call. Non-Phoenix shareholders will be
entitled to a payment in the first quarter of 2004 equal to the excess (if any) of (a) the lesser of (i) $165
million or (ii) 2003 net investment advisory fees times 4.5 times 60%, over (b) $100 million. The maximum
earnout payment is $65 million. In certain instances the earn-out date will be accelerated, in which case the
net investment advisory fees used in the calculation will be the trailing twelve months. PXP currently
estimates this payment to be approximately $30 million.

PXP has an additional purchase arrangement in which existing minority shareholders of KAR will sell 15% of KAR
to Phoenix at 5% per year at each year-end 2004 through 2006. The purchase price will be net investment
advisory fees for each year times 4.5 times 5% (the proportionate interest purchased). Such amounts are paid
during the following quarter. Under certain circumstances, the purchases may be accelerated.

There is also a put/call arrangement with respect to the remaining 25% of the total membership interests. The
purchase price will be equal to investment advisory fees for the relevant contract year multiplied by 4.5
multiplied by the amount of membership interest purchased. The contract year is defined as the twelve months
ending December 31, 2006 and each calendar year thereafter. The pricing on the put/calls will be determined
within 60 days after each such year-end and can be exercised within 60 days of the finalization of the price.
All of these membership interests acquired will be reissued to members/employees of KAR. The reissuance process
involves PXP contributing the units to KAR and then KAR selling the units to the members/employees. The
members/employees will not pay cash for these purchases, but will enter into a note payable agreement with KAR.
PXP will have preferential distribution rights with respect to payments of principal and interest on these
notes. Under certain circumstances, these shares can be issued without a note payable or other consideration.
In addition, in certain circumstances, the purchases may be accelerated. Once these units are purchased and
then reissued the amount of cash that PXP will need to pay to repurchase these units in the future will be
based on the growth in revenues since the reissuance dates. There is no expiration date for the put/call
agreements. There is no cap or floor on the put/call price.

In August 2003, certain members of KAR accelerated their put/call arrangement. The purchase price for these
units totaled $4.4 million, which was recorded as additional purchase price by PXP and allocated to goodwill
and definite-lived intangible assets.


                                                     - 2 -



PFG Holdings, Inc.

On May 1, 2003, PNX acquired the remaining interest in PFG Holdings, Inc. not already owned by PNX for initial
consideration of $16.7 million. Under the terms of the purchase agreement, PNX may be obligated to pay
additional consideration of up to $89.0 million to the selling shareholders, including $13.0 million during the
years 2004 through 2007, based on certain financial performance targets being met, and the balance in 2008,
based on the appraised value of PFG Holdings as of December 31, 2007.

Seneca

PXP has a put/call arrangement with respect to the 31.6% membership interests in Seneca not owned by PXP. The
purchase price is equal to investment advisory fees for the relevant year multiplied by 3.5 multiplied by the
amount of membership interest purchased. The pricing on the put/calls will be determined within 60 days after
each calendar year-end and can be exercised within 60 days of the finalization of the price. All of these
membership interests acquired will be reissued to members/employees of Seneca. The reissuance process involves
PXP contributing the units to Seneca and then Seneca selling the units to the members/employees. The
members/employees do not pay cash for these purchases, but enter into a note payable agreement with Seneca. PXP
has preferential distribution rights with respect to payments of principal and interest on these notes. Since
these units have already been purchased by PXP and reissued at least once, the amount of cash that PXP will
need to pay to repurchase these units in the future will be the amount related to the growth in revenues since
the various reissuance dates. There is no cap or floor on the put/call price. The put/call agreements will
expire after the year ended December 31, 2007.




















                                                     - 3 -




                                                   EXHIBIT I

                                              PRIMARY SUBSIDIARIES



Name                                                         State of Domicile

PM Holdings, Inc.                                            Connecticut

American Phoenix Life and Reassurance Company                Connecticut

PHL Variable Insurance Company                               Connecticut

Phoenix Investment Partners, Ltd.                            Delaware

Phoenix Life Insurance Company                               New York

Phoenix Investment Management Company                        Connecticut






                                                   EXHIBIT J

                                              CERTAIN UNDERTAKINGS

                                         PHOENIX LIFE INSURANCE COMPANY
                                         CAPITAL AND SURPLUS GUARANTEES


                                         Phoenix Life Insurance Company
                                         Capital and Surplus Guarantees


- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
AGL Life Assurance Company   December  Standard & Poor's  The Board of Directors commit that for long as AGL
                               1999                       remains a majority-owned subsidiary or until such
                                                          earlier times as: (1) AGL requests a separate
                                                          rating from S&P; or (2) S&P on its own initiative
                                                          determines that AGL requires a separate rating:
                                                          (a) PLIC shall maintain a net worth of AGL in
                                                          accordance with the following standard: As of the
                                                          last day of each calendar quarter, the S&P capital
                                                          adequacy ratio for AGL will be at least 125%. In
                                                          the event that this standard is not met, then PLIC
                                                          shall promptly contribute capital in an amount
                                                          sufficient to satisfy the standard; and (b) PLIC
                                                          shall ensure that AGL will have sufficient funds
                                                          to meet all of its current obligations on a timely
                                                          basis, including, but not limited to, obligations
                                                          to pay policy benefits and to provide policyholder
                                                          services.

                                                          Until such time as AGL requests a separate rating
                                                          from S&P or S&P on its own initiative determines
                                                          that AGL requires a separate rating: (a) in the
                                                          event that PLIC decides to cause PM Holdings, Inc.
                                                          to sell AGL, PLIC's officers shall give S&P
                                                          advance notice of any pending sale; and (b) PLIC
                                                          shall cause PM Holdings to sell shares of AGL only
                                                          (i) to another entity(ies) having a rating from
                                                          S&P equal to or higher than PLIC's; (ii) to the
                                                          public in a public offering; (iii) to any person,
                                                          provided that if such person has an S&P rating
                                                          lower than PLIC's, PLIC agrees to assumptively
                                                          reinsure all then outstanding policies of AGL to
                                                          the extent permitted by then applicable laws and
                                                          regulations; or (iv) under circumstances where
                                                          PLIC remains the majority shareholder of AGL.

                                                          PLIC officers shall promptly notify the Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of this vote.
- ---------------------------------------------------------------------------------------------------------------



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
                             December    Other Rating     The Board of Directors commit PLIC to maintaining the
                               1999        Agencies       net worth of AGL in accordance with the following
                                                          standards so long as it remains a majority-owned
                                                          subsidiary or until such earlier time as: (1) AGL
                                                          requests a separate rating from such rating
                                                          agencies; or (2) any such agencies on their own
                                                          initiative determine that AGL requires a separate
                                                          rating: As of the last day of each calendar
                                                          quarter, AGL's "total adjusted capital", as then
                                                          defined by the NAIC, shall equal at least 200% of
                                                          the "authorized control level risk-based capital"
                                                          (as then defined by the NAIC). In the event that
                                                          this standard is not met, PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard.

                                                          At least sixty (60) days prior to the effective
                                                          date of a sale by PLIC of its interest in AGL, the
                                                          officers shall notify each rating agency relying
                                                          on this vote about such sale.

                                                          The officers shall promptly notify the Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of the vote.
- ---------------------------------------------------------------------------------------------------------------
AGL Life Assurance Company   February      A.M. Best      The Board of Directors commit PLIC to maintaining
                               2000                       the net worth of AGL in accordance with the
                                                          following standards so long as AGL remains a
                                                          majority-owned subsidiary of Phoenix or until such
                                                          earlier time as: (1) AGL requests a separate
                                                          rating from A.M. Best; or (2) A.M. Best on its own
                                                          initiative determines that AGL requires a separate
                                                          rating: As of the last day of each calendar
                                                          quarter, AGL's "total adjusted capital" shall
                                                          equal or exceed the minimum level required for an
                                                          "A" (excellent) rating by A.M. Best.

                                                          If at any time AGL fails to meet this standard,
                                                          PLIC shall promptly contribute capital to AGL to
                                                          an amount sufficient to enable it to do so.

                                                          The officers shall promptly inform A.M. Best of
                                                          any definitive agreement to reduce its ownership
                                                          in AGL.

                                                          The officers must notify the board of each capital
                                                          contribution, if any, that becomes required as a
                                                          result of such votes.
                            ---------- -----------------  -----------------------------------------------------
                               June          Maine        That PLIC, as the parent of AGL, will guarantee
                               2001                       paid up capital in the amount of $2,500,000 and
                                                          surplus at $2,500,000 in accordance with
                                                          Attachment 1 (the Unconditional Guaranty
                                                          Agreement).

                                                          PLIC will make any needed contributions from the
                                                          date of admission of AGL to do business in Maine,
                                                          in accordance with Attachment 1, should AGL fall
                                                          below its commitment.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 2 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
                               May         New Jersey     That PLIC, so long as it continues to be the
                               2002                       parent of AGL, will maintain for a minimum of ten
                                                          years commencing on the effective date of the
                                                          extension, capital and surplus within AGL that
                                                          meet or exceed the requirements of the State of
                                                          New Jersey, as amended at any time during the
                                                          ten-year period.

                                                          The obligation imposed by this resolutions shall
                                                          be made binding upon any succeeding parent of AGL
                                                          as a condition of sale and shall not be modified,
                                                          revoked or rescinded without the prior approval by
                                                          the New Jersey Department of Banking and
                                                          Insurance.

                                                          AGL was admitted to New Jersey on June 22, 1994.
- ---------------------------------------------------------------------------------------------------------------
American Phoenix Life and    October       New Jersey     That PLIC, as long as it continue to be the parent
Reassurance Company           1991                        of APLAR, will maintain for a minimum
                                                          of ten years, commencing on the date of admission
                                                          in New Jersey, capital and surplus within APLAR
                                                          that meet or exceed the requirements of the State
                                                          of New Jersey, as amended at any time during the
                                                          ten-year period.

                                                          The obligation imposed by this resolution shall be
                                                          made binding upon any succeeding parent of APLAR
                                                          and shall not be modified, revoked or rescinded
                                                          without prior approval by the New Jersey Insurance
                                                          Department.

                                                          APLAR was admitted into New Jersey in April of
                                                          1997.
- ---------------------------------------------------------------------------------------------------------------
American Phoenix Life and    December        Maine        That PLIC, so long as it continues to be the parent
Reassurance Company            1991       (Inactive)      of APLAR, will maintain at all times, commencing on
                                                          the date of admission to the State of Maine,
                                                          capital and surplus that meet or exceed the
                                                          requirements of the State of Maine as amended at
                                                          any time.

                                                          The obligations imposed by this resolution shall
                                                          be made binding upon any succeeding parent of
                                                          APLAR and shall not be modified, revoked or
                                                          rescinded without prior approval by the Maine
                                                          Insurance Department.

                                                          It does not appear that APLAR was ever actually
                                                          qualified in Maine.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 3 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
                             December       Tennessee     That PLIC, so long as it continues to be parent of
                               1991         (Expired)     APLAR, will maintain for a minimum of three years,
                                                          commencing on the date of admission in Tennessee,
                                                          capital and surplus that meet or exceed the
                                                          requirements of the State of Tennessee as amended
                                                          at any time during the three year period.

                                                          The obligation imposed by this resolution shall be
                                                          made binding upon any succeeding parent of APLAR
                                                          and shall not be modified, revoked or rescinded
                                                          without prior approval by the Tennessee Insurance
                                                          Department.

                                                          APLAR was admitted into Tennessee in December of
                                                          1992.
                            ---------- -----------------  -----------------------------------------------------
                             December       New York      That PLIC, so long as it continues to be parent
                               1991        (Inactive)     of APLAR, will maintain for a minimum of ten
                                                          years, commencing on the date of admission in New
                                                          York, capital and surplus within APLAR that meet
                                                          or exceed the requirements of New York as amended
                                                          at any time during the ten year period.

                                                          The obligation imposed by this resolution shall be
                                                          made binding upon any succeeding parent of APLAR
                                                          and shall not be modified, revoked or rescinded
                                                          without prior approval of the New York Insurance
                                                          Department.

                                                          APLAR was never admitted in New York.
                            ---------- -----------------  -----------------------------------------------------
                             December    North Carolina   That PLIC, so long as it continues to be parent of
                               1991         (Expired)     APLAR, will maintain for a minimum of three years,
                                                          commencing on the date of admission in North
                                                          Carolina, capital and surplus that meet or exceed
                                                          the requirements of the State of North Carolina as
                                                          amended at any time during the three year period.

                                                          The obligation imposed by this resolution shall be
                                                          made binding upon any succeeding parent of APLAR
                                                          and shall not be modified, revoked or rescinded
                                                          without prior approval by the North Carolina
                                                          Insurance Department.

                                                          APLAR was admitted into North Carolina on July 1,
                                                          1995.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 4 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
American Phoenix Life and    February       Arizona       That PLIC, so long as it continues to be parent of
Reassurance Company            1992        (Expired)      APLAR, will maintain for a minimum of three years,
                                                          commencing on the date of admission in Arizona,
                                                          capital and surplus within APLAR that meet or
                                                          exceed the requirements of the State of Arizona as
                                                          amended at any time during the three year period.

                                                          The obligation imposed by this resolutions shall
                                                          be made binding upon any succeeding parent of
                                                          APLAR, and shall not be modified, revoked or
                                                          rescinded without prior approval by the Arizona
                                                          Department of Insurance.

                                                          APLAR was admitted into Arizona in May of 1995
                            ---------- -----------------  -----------------------------------------------------
                               June         Alaska        That PLIC, so long as it continues to be parent of
                               1993                       APLAR, will maintain at all times, commencing on
                                                          the date of admission in Alaska, capital and
                                                          surplus within APLAR that meet or exceed the
                                                          requirements of the State of Alaska.

                                                          The obligation imposed by this resolutions shall
                                                          be made binding upon any succeeding parent of
                                                          APLAR and shall not be modified, revoked or
                                                          rescinded without prior approval by the Alaska
                                                          Insurance Department.

                                                          APLAR was admitted into Alaska in September of
                                                          1993.
                            ---------- -----------------  -----------------------------------------------------
                             February    North Carolina   That PLIC, the parent affiliate of APLAR, will
                               1995         (Expired)     guarantee that APLAR will maintain capital and
                                                          surplus amounts at the statutory admission levels
                                                          for a minimum of three consecutive years'
                                                          successful operation following the date of
                                                          admission, or upon receipt of a certified Report
                                                          on Examination by the domiciliary state, based on
                                                          three consecutive years' successful operations,
                                                          whichever shall last occur, and the President is
                                                          authorized to execute an Unconditional Guaranty
                                                          Agreements in such amounts in the form provided by
                                                          the State of North Carolina.

                                                          PLIC will made any needed contributions prior to
                                                          December 31 of each year should APLAR fall below
                                                          its commitment in order to appear on the
                                                          appropriate Annual Statement.

                                                          These votes will not be amended or rescinded.

                                                          APLAR was admitted into North Carolina in May of
                                                          1995.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 5 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
                             October         Iowa         That PLIC, so long as it continues to own a majority
                              1995         (Expired)      of the issued and outstanding shares of capital
                                                          stock of APLAR, will maintain for a minimum of
                                                          three years, commencing on the date of APLAR's
                                                          admission to the State of Iowa, capital and
                                                          surplus within APLAR which each meet or exceed the
                                                          requirements of the State of Iowa as amended at
                                                          any time during such three-year period.

                                                          That the obligation imposed by this vote shall be
                                                          binding upon any succeeding parent of APLAR and
                                                          shall not be modified, revoked or rescinded
                                                          without the prior approval of the Iowa Insurance
                                                          Department.

                                                          APLAR was admitted in Iowa in June of 1996.
- ---------------------------------------------------------------------------------------------------------------
American Phoenix Life and      April   Standard & Poors   That in order to assure that Standard & Poor's
Reassurance Company            1996                       Corporation ("S&P") provides a rating for APLAR
                                                          equal to the rating it gives for PLIC, this Board
                                                          of Directors hereby commits that for so long as
                                                          APLAR remains a wholly-owned subsidiary or until
                                                          such earlier time as: (1) such company requests a
                                                          separate rating from S&P; or (2) S&P on its own
                                                          initiative determines that such company requires a
                                                          separate rating: (a) PLIC shall maintain the net
                                                          worth of APLAR in accordance with the following
                                                          standard: As of the last day of each calendar
                                                          quarter, the S&P capital adequacy ratio for APLAR
                                                          will be at least 150%. In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard; and (b) PLIC shall ensure
                                                          that APLAR will have sufficient funds to meet all
                                                          of its current obligations on a timely basis,
                                                          including, but not limited to, obligations to pay
                                                          policy benefits and to provide policyholder
                                                          services.

                                                          That the Board of Directors hereby agrees that it
                                                          has no present intentions to cause PM Holdings,
                                                          Inc., a wholly-owned subsidiary, to sell APLAR and
                                                          that, until such time as APLAR requests a separate
                                                          rating from S&P or S&P on its own initiative
                                                          determines that such company requires a separate
                                                          rating: (a) in the event that PLIC at any time
                                                          decides to cause PM Holdings, Inc. to sell APLAR,
                                                          PLIC's officers shall give S&P advance notice of
                                                          any pending sale; and (b) PLIC shall cause PM
                                                          Holdings to sell shares of APLAR only: (i) to
                                                          another entity or entities having a rating from
                                                          S&P equal to or higher than PLIC's; (ii) to the
                                                          public in a public offering; (iii) to any person,
                                                          provided that if such person has an S&P rating
                                                          lower than PLIC's, PLIC agrees to assumptively
                                                          reinsure all then outstanding policies of APLAR to
                                                          the extent permitted by then applicable laws and
                                                          regulations; or (iv) under circumstances where the
                                                          Company remains the majority shareholder of APLAR.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 6 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
                              April      Other Rating     That, in order to assure that various rating
                              1996         Agencies       agencies provide a rating for APLAR equal to the
                                                          rating they give for PLIC, the PLIC Board of
                                                          Directors hereby commits PLIC to maintaining the
                                                          net worth of APLAR in accordance with the
                                                          following standards so long as it remains a
                                                          wholly-owned subsidiary or until such earlier time
                                                          as: (1) such company requests a separate rating
                                                          from such agencies; or (2) any such agencies on
                                                          their own initiative determine that APLAR requires
                                                          a separate rating.

                                                          As of the last day of each calendar quarter,
                                                          APLAR's "total adjusted capital", as then defined
                                                          by the NAIC, shall equal at least 300% of the
                                                          "authorized control level risk-based capital" (as
                                                          then defined by the NAIC). In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------
American Phoenix Life and     October     New Jersey      That PLIC, so long as it continues to be the parent
Reassurance Company            1996                       of APLAR, will maintain for a minimum of ten
                                                          years, commencing on the date of admission in New
                                                          Jersey, capital and surplus within APLAR that meet
                                                          or exceed the requirements of the State of New
                                                          Jersey, as amended at any time during the ten-year
                                                          period.

                                                          That the obligation imposed by this resolution
                                                          shall be made binding upon any succeeding parent
                                                          of APLAR and shall not be modified, revoked or
                                                          rescinded without prior approval by the New Jersey
                                                          Insurance Department.

                                                          APLAR was admitted into New Jersey in May of 1997.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 7 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
PHL Variable Insurance        August   Standard & Poor's  That, in order to assure that Standard & Poor's
Company                        1994                       Corporation ("S&P") provides a rating for PHLVIC, a
                                                          wholly-owned subsidiary of this Company, equal to the
                                                          rating it gives for PLIC, the PLIC board of directors
                                                          hereby commits that for so long as PHLVIC remains a
                                                          wholly-owned subsidiary or until such earlier time
                                                          as: (1) APLAR requests a separate rating from S&P; or
                                                          (2) S&P on its own initiative determines that such
                                                          company requires a separate rating: (a) PLIC shall
                                                          maintain the net worth of PHLVIC in accordance with
                                                          the following standard: As of the last day of each
                                                          calendar quarter, the sum of PHLVIC's statutory
                                                          surplus and its Asset Valuation Reserve (AVR) shall
                                                          be such that the resulting adjusted surplus,
                                                          calculated in accordance with the methodology
                                                          employed by S&P, shall be at least 50% greater than
                                                          S&P's calculated risk-adjusted capital for said
                                                          subsidiary. In the event that upon completion of the
                                                          preparation of any quarter's financial statements,
                                                          PHLVIC determines that as of the last day of such
                                                          quarter the preceding standard was not met, then PLIC
                                                          shall promptly cause a capital contribution to be
                                                          made to PHLVIC in an amount sufficient to cause
                                                          PHLVIC to again comply with the standard; and (b)
                                                          PLIC shall ensure that PHLVIC has sufficient funds to
                                                          meet all of its current obligations on a timely
                                                          basis, including, but not limited to, obligations to
                                                          pay policy benefits and to provide policyholder
                                                          services.

                                                          That the PLIC board of directors hereby agrees
                                                          that it has no present intentions to cause PM
                                                          Holdings, Inc., a wholly-owned subsidiary, to sell
                                                          PHVLIC and that, until such time as PHLVIC
                                                          requests a separate rating from S&P or S&P on its
                                                          own initiative determines that PHLVIC requires a
                                                          separate rating: (a) in the event that PLIC at any
                                                          time decides to cause PM Holdings to sell PHLVIC,
                                                          PLIC's officers shall give S&P advance notice of
                                                          any pending sale; and (b) PLIC shall cause PM
                                                          Holdings to sell shares of PHLVIC only: (i) to
                                                          another entity or entities having a rating from
                                                          S&P equal to or higher than the Company's; (ii) to
                                                          the public in a public offering; (iii) to any
                                                          person, provided that if such person has an S&P
                                                          rating lower than the Company's, the Company
                                                          agrees to assumptively reinsure all then
                                                          outstanding policies of PHLVIC to the extent
                                                          permitted by then applicable laws and regulations;
                                                          or (iv) under circumstances where PLIC remains the
                                                          majority shareholder of PHLVIC.

                                                          PLIC officers shall promptly notify the PLIC board
                                                          of each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 8 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
PHL Variable Insurance        August       A.M. Best      That, in order to ensure that the rating agencies
Company                        1994                       each provide a rating for PHLVIC, a wholly-owned
                                                          subsidiary of PLIC, equal to the rating they give
                                                          for PLIC, the PLIC board of directors hereby
                                                          commits PLIC to maintaining the net worth of
                                                          PHLVIC in accordance with the following standard
                                                          so long as it remains a wholly-owned subsidiary or
                                                          until such earlier time as: (1) PHLVIC requests a
                                                          separate rating from such agencies; or (2) any of
                                                          such agencies on their own initiative determine
                                                          that PHLVIC requires a separate rating.

                                                          As of the last day of the calendar quarter, the
                                                          officers shall calculate PHLVIC's risk-based
                                                          capital level, as then defined by the NAIC. In the
                                                          event that PHLVIC's "total adjusted capital", as
                                                          then defined by the NAIC, is not, as of any such
                                                          date, at least 200% greater than PHLVIC's
                                                          "authorized control level risk-based capital" (as
                                                          defined by the NAIC), then this Company shall
                                                          cause a capital contribution to be made to PHLVIC
                                                          in an amount sufficient to cause PHLVIC to comply
                                                          with such standard.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolution.

                                                          These resolutions shall supersede in all respects
                                                          the resolutions passed on June 20, 1994 concerning
                                                          an A.M. Best rating for PHLVIC.
                            ---------- -----------------  -----------------------------------------------------
                             February    North Carolina   That PLIC, as the parent affiliate of PHLVIC, will
                               1997        (Expired)      guarantee that the applicant will maintain capital
                                                          and surplus in amounts at the statutory admission
                                                          levels for a minimum of three consecutive years
                                                          successful operation following the date of
                                                          admission, or upon receipt of a certified Report
                                                          on Examination by the domiciliary state, based on
                                                          three consecutive years successful operation,
                                                          whichever shall last occur, and the President is
                                                          authorized to execute an Unconditional Guaranty
                                                          Agreement in such amounts.

                                                          That PLIC will make any needed contributions prior
                                                          to December 31 of each year, should PHLVIC fall
                                                          below its commitment, in order for such to be
                                                          reflected on the appropriate Annual Statement.

                                                          These votes will not be amended or rescinded.

                                                          PHLVIC was admitted in North Carolina on
                                                          9/23/1998.
- ---------------------------------------------------------------------------------------------------------------


                                                     - 9 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
PHL Variable Insurance        August      California      That, in order to enable PHLVIC to obtain a
Company                        2002                       certificate of authority to market variable life
                                                          insurance products in California, PLIC's board of
                                                          directors hereby commits that for so long as
                                                          PHLVIC remains a wholly-owned subsidiary of PLIC,
                                                          it shall maintain PHLVIC according to the
                                                          following standards: (1) At all times, PHLVIC
                                                          shall maintain a combined capital and surplus of
                                                          at least $10,000,000 as required by California
                                                          Insurance Code Section 10506; and/or (2) At all
                                                          times, PHLVIC's adjusted capital, as defined by
                                                          California Insurance Code Section 739, shall be at
                                                          least 250% of the authorized control level RBC, as
                                                          defined in California Insurance Code Section 739.
                                                          If at any time PHLVIC determines that the
                                                          preceding standard was not met, then this Company
                                                          shall promptly cause a capital contribution to be
                                                          made to PHLVIC in an amount sufficient to cause
                                                          PHLVIC to again comply with the standards.

                                                          That the officers shall promptly notify PLIC's
                                                          board of each capital contribution, if any, that
                                                          becomes required as a result of such resolution.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 10 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
Phoenix Life and Annuity      April    Standard & Poors   That in order to assure that Standard & Poor's
Company                       1996                        Corporation ("S&P") provides a rating for APLAR
                                                          equal to the rating it gives for PLIC, this Board
                                                          of Directors hereby commits that for so long as
                                                          APLAR remains a wholly-owned subsidiary or until
                                                          such earlier time as: (1) such company requests a
                                                          separate rating from S&P; or (2) S&P on its own
                                                          initiative determines that such company requires a
                                                          separate rating: (a) PLIC shall maintain the net
                                                          worth of APLAR in accordance with the following
                                                          standard: As of the last day of each calendar
                                                          quarter, the S&P capital adequacy ratio for APLAR
                                                          will be at least 150%. In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard; and (b) PLIC shall ensure
                                                          that APLAR will have sufficient funds to meet all
                                                          of its current obligations on a timely basis,
                                                          including, but not limited to, obligations to pay
                                                          policy benefits and to provide policyholder
                                                          services.

                                                          That the Board of Directors hereby agrees that it
                                                          has no present intentions to cause PM Holdings,
                                                          Inc., a wholly-owned subsidiary, to sell APLAR and
                                                          that, until such time as APLAR requests a separate
                                                          rating from S&P or S&P on its own initiative
                                                          determines that such company requires a separate
                                                          rating: (a) in the event that PLIC at any time
                                                          decides to cause PM Holdings, Inc. to sell APLAR,
                                                          PLIC's officers shall give S&P advance notice of
                                                          any pending sale; and (b) PLIC shall cause PM
                                                          Holdings to sell shares of APLAR only: (i) to
                                                          another entity or entities having a rating from
                                                          S&P equal to or higher than PLIC's; (ii) to the
                                                          public in a public offering; (iii) to any person,
                                                          provided that if such person has an S&P rating
                                                          lower than PLIC's, PLIC agrees to assumptively
                                                          reinsure all then outstanding policies of APLAR to
                                                          the extent permitted by then applicable laws and
                                                          regulations; or (iv) under circumstances where the
                                                          Company remains the majority shareholder of APLAR.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 11 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
Phoenix Life and Annuity      April      Other Rating     That, in order to assure that various rating
Company                       1996         Agencies       agencies provide a rating for PLAC equal to the
                                                          rating they give for PLIC, the PLIC Board of
                                                          Directors hereby commits PLIC to maintaining the
                                                          net worth of PLAC in accordance with the following
                                                          standards so long as it remains a wholly-owned
                                                          subsidiary or until such earlier time as: (1) such
                                                          company requests a separate rating from such
                                                          agencies; or (2) any such agencies on their own
                                                          initiative determine that PLAC requires a separate
                                                          rating.

                                                          As of the last day of each calendar quarter,
                                                          PLAC's "total adjusted capital", as then defined
                                                          by the NAIC, shall equal at least 300% of the
                                                          "authorized control level risk-based capital" (as
                                                          then defined by the NAIC). In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
                            ---------- -----------------  -----------------------------------------------------
                             February       Virginia      That PLIC, so long as it continues to have
                               1997                       management control over PLAC and until PLAC has
                                                          achieved three (3) consecutive years of profitable
                                                          operations as a direct writer, will maintain,
                                                          commencing on the date of admission in Virginia,
                                                          capital and surplus within PLAC that meets or
                                                          exceeds the requirements of the State of Virginia,
                                                          as amended at any time during that period.

                                                          That the obligation imposed by this resolution
                                                          shall be made binding upon any succeeding entity
                                                          having management control over PLAC and shall not
                                                          be modified, revoked or rescinded without prior
                                                          approval by the Virginia Bureau of Insurance.

                                                          PLAC was admitted to do business in Virginia in
                                                          September of 1997.
                            ---------- -----------------  -----------------------------------------------------
                              August      New Jersey      That PLIC, so long as it continues to be the
                               1999                       parent of PLAC, will maintain for a minimum of ten
                                                          years, commencing on the date of admission in New
                                                          Jersey, capital and surplus within PLAC that meets
                                                          or exceeds the requirements of the State of New
                                                          Jersey, as amended at any time during the ten-year
                                                          period.

                                                          That the obligation imposed by this resolution
                                                          shall be made binding upon any succeeding parent
                                                          of PLAC and shall not be modified, revoked or
                                                          rescinded without prior approval by the New Jersey
                                                          Department of Banking and Insurance.

                                                          PLAC was admitted to New Jersey on July 30, 2001.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 12 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
Phoenix Life and Annuity     February    North Carolina   That PLIC, as the parent affiliate of PLAC, will
Company                        2000                       guarantee that the applicant will maintain capital
                                                          and surplus in amounts at the statutory admission
                                                          levels for a minimum of three consecutive years
                                                          successful operation following the date of admission,
                                                          or upon receipt of a Certified Report on Examination
                                                          by the domiciliary state, based on three consecutive
                                                          years successful operations, whichever shall last
                                                          occur, and the President is authorized to execute an
                                                          Unconditional Guaranty Agreement in such amounts.

                                                          That PLIC will make any needed contributions prior
                                                          to December 31 of each year, should the Company
                                                          fall below its commitment, in order for such to be
                                                          reflected on the appropriate Annual Statement.

                                                          That these votes will not be amended or rescinded.

                                                          PLAC was admitted to do business in North Carolina
                                                          in November of 2000.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 13 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
Phoenix Life and              April    Standard & Poors   That in order to assure that Standard & Poor's
Reassurance Company of        1996                        Corporation ("S&P") provides a rating for PLARNY
New York                                                  equal to the rating it gives for PLIC, this Board
                                                          of Directors hereby commits that for so long as
                                                          PLARNY remains a wholly-owned subsidiary or until
                                                          such earlier time as: (1) such company requests a
                                                          separate rating from S&P; or (2) S&P on its own
                                                          initiative determines that such company requires a
                                                          separate rating: (a) PLIC shall maintain the net
                                                          worth of PLARNY in accordance with the following
                                                          standard: As of the last day of each calendar
                                                          quarter, the S&P capital adequacy ratio for PLARNY
                                                          will be at least 150%. In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard; and (b) PLIC shall ensure
                                                          that PLARNY will have sufficient funds to meet all
                                                          of its current obligations on a timely basis,
                                                          including, but not limited to, obligations to pay
                                                          policy benefits and to provide policyholder
                                                          services.

                                                          That the Board of Directors hereby agrees that it
                                                          has no present intentions to cause PM Holdings,
                                                          Inc., a wholly-owned subsidiary, to sell PLARNY
                                                          and that, until such time as PLARNY requests a
                                                          separate rating from S&P or S&P on its own
                                                          initiative determines that such company requires a
                                                          separate rating: (a) in the event that PLIC at any
                                                          time decides to cause PM Holdings, Inc. to sell
                                                          PLARNY, PLIC's officers shall give S&P advance
                                                          notice of any pending sale; and (b) PLIC shall
                                                          cause PM Holdings to sell shares of PLARNY only:
                                                          (i) to another entity or entities having a rating
                                                          from S&P equal to or higher than PLIC's; (ii) to
                                                          the public in a public offering; (iii) to any
                                                          person, provided that if such person has an S&P
                                                          rating lower than PLIC's, PLIC agrees to
                                                          assumptively reinsure all then outstanding
                                                          policies of PLARNY\ to the extent permitted by
                                                          then applicable laws and regulations; or (iv)
                                                          under circumstances where the Company remains the
                                                          majority shareholder of PLARNY.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 14 -



- ---------------------------------------------------------------------------------------------------------------
     Company Name           Board Vote Guaranteed To                        Details of Guarantee
                               Date
- --------------------------  ---------- -----------------  -----------------------------------------------------
Phoenix Life and              April      Other Rating     That, in order to assure that various rating
Reassurance Company of        1996         Agencies       agencies provide a rating for PLARNY equal to the
New York                                                  rating they give for PLIC, the PLIC Board of
                                                          Directors hereby commits PLIC to maintaining the
                                                          net worth of PLARNY in accordance with the
                                                          following standards so long as it remains a
                                                          wholly-owned subsidiary or until such earlier time
                                                          as: (1) such company requests a separate rating
                                                          from such agencies; or (2) any such agencies on
                                                          their own initiative determine that PLARNY
                                                          requires a separate rating.

                                                          As of the last day of each calendar quarter,
                                                          PLARNY's "total adjusted capital", as then defined
                                                          by the NAIC, shall equal at least 300% of the
                                                          "authorized control level risk-based capital" (as
                                                          then defined by the NAIC). In the event that this
                                                          standard is not met, then PLIC shall promptly
                                                          contribute capital in an amount sufficient to
                                                          satisfy this standard.

                                                          Officers shall promptly notify the PLIC Board of
                                                          each capital contribution, if any, that becomes
                                                          required as a result of such resolutions.
- ---------------------------------------------------------------------------------------------------------------
Phoenix National              August      New Jersey      That PLIC, so long as it continues to be the
Insurance Company              1998                       parent of PNIC, will maintain for a minimum of ten
                                                          years, commencing on the date of admission in New
                                                          Jersey, capital and surplus within PNIC that meet
                                                          or exceed the requirements of the State of New
                                                          Jersey, as amended at any time during the ten year
                                                          period.

                                                          That the obligation imposed by this resolution
                                                          shall be made binding upon any succeeding parent
                                                          of PNIC and shall not be modified, revoked or
                                                          rescinded without prior approval by the New Jersey
                                                          Department of Banking and Insurance.

                                                          PNIC was admitted to New Jersey on July 1, 1999.
- ---------------------------------------------------------------------------------------------------------------


                                                    - 15 -

EX-99.10.49

                                                                                                 Exhibit 10.49


                                          CHANGE IN CONTROL AGREEMENT


         This Change in Control Agreement (this "Agreement") is effective as of  January 1, 2003, and is
between The Phoenix Companies, Inc., a Delaware corporation (the "Company"), and  Coleman D. Ross (the
"Executive").

         The Company or one of its Affiliates (as defined below) has employed the Executive in an officer
position and has determined that the Executive holds a critical position with the Company and/or such
Affiliate.

         The Company believes that, in the event it is confronted with a situation that could result in a
change in ownership or control of the Company, continuity of management will be essential to its ability to
evaluate and respond to such situation in the best interests of its shareholders.

         The Company understands that any such situation will present significant concerns for the Executive
with respect to the Executive's financial and job security. The Company desires to assure the Company and its
Affiliates of the Executive's services during the period in which it is confronting such a situation, and to
provide the Executive certain financial assurances to enable the Executive to perform the responsibilities of
the Executive's position without undue distraction and to exercise the Executive's judgment without bias due to
the Executive's personal circumstances. To achieve these objectives, the Company and the Executive desire to
enter into an agreement providing the Company and its Affiliates and the Executive with certain rights and
obligations upon the occurrence of a Change of Control (as defined below).

         The Company and the Executive therefore agree as follows:

         1. Operation of Agreement. (a) Term. The initial term of this Agreement shall commence on the date of
this Agreement and continue until the third anniversary of the date of this Agreement. Thereafter, the term of
this Agreement will automatically renew for up to two successive and consecutive additional one-year periods
following the end of its initial term and any extended term, unless the Company or the Executive gives the
other party written notice at least 12 months prior to the date the term would otherwise renew that it or the
Executive does not want the term to be so extended; provided that the Company may not deliver a notice of
nonrenewal after a Change of Control. At the option of the Company, which shall be exercised by the affirmative
action of its Board of Directors (the "Board") or a duly authorized committee thereof, the term of this
Agreement may also be extended after such two renewal periods for such period or periods as the Board or such
committee shall specify. Notwithstanding anything to the contrary in this Agreement, the term of this Agreement
shall in all events expire (regardless of when the term would otherwise have expired) on the second anniversary
of a Change of Control; provided that any payment obligations hereunder resulting from the Executive's
termination of employment prior to the expiration of the term or from an event covered under Section 7(e) shall
continue in full force and effect following the expiration of the term.




         (b) Effective Date. If a Change of Control occurs during the term of this Agreement, this Agreement
shall govern the terms and conditions of the Executive's employment and the benefits and compensation to be
provided to the Executive commencing on the date on which a Change of Control occurs (the "Effective Date") and
ending on the second anniversary of the Effective Date; provided that if the Executive is not employed by the
Company or one of its Affiliates on the Effective Date, this Agreement shall be void and without effect, shall
not constitute a contract of employment or a guarantee of employment for any period of time, and shall not
limit in any way the right of the Company or its Affiliates to change the terms and conditions of the
Executive's employment or to terminate the Executive's employment. Notwithstanding the preceding sentence, in
the event that the Executive's employment with the Company and its Affiliates is terminated in connection with
a Change of Control (which shall in all events be deemed the case if such termination is within 90 days prior
to the Effective Date and deemed not to be the case if such termination is more than 180 days before the
Effective Date) without Cause or for Good Reason (as such terms are defined in Sections 6(c) and 6(d) below,
but without regard to the requirement under Section 6(d) that such termination occur after the Effective Date),
the Executive shall be entitled to receive the benefits provided under Section 7(c), but only to the extent
that such benefits are in excess of those previously received by the Executive as a result of the Executive's
prior termination, and amounts due under Section 7(e).

         2. Definitions.

         (a) Affiliate. An "Affiliate" shall mean any corporation, partnership, limited liability company,
trust or other entity which directly, or indirectly through one or more intermediaries, controls, is under
common control with, or is controlled by, the Company.

         (b) Change of Control. For the purposes of this Agreement, a "Change of Control" shall mean the first
occurrence of:

                  (i) any Person acquires "beneficial ownership" (within the meaning of Rule 13d-3 under the
         Securities Exchange Act of 1934, as amended (the "Exchange Act")), directly or indirectly, of
         securities of the Company representing 25% or more of the combined Voting Power of the Company's
         securities;

                  (ii) within any 24-month period, the persons who were directors of the Company at the
         beginning of such period (the "Incumbent Directors") shall cease to constitute at least a majority of
         the Board or the board of directors of any successor to the Company; provided that any director
         elected or nominated for election to the Board by a majority of the Incumbent Directors then still in
         office shall be deemed to be an Incumbent Director for purposes of this subclause 2(b)(ii);

                  (iii) the effective date of any merger, consolidation, share exchange, division, sale or
         other disposition of all or substantially all of the assets of the Company which is consummated (a
         "Corporate Event"), if immediately

                                                       2


         following the consummation of such Corporate Event the stockholders of the Company immediately prior
         to such Corporate Event do not hold, directly or indirectly, a majority of the Voting Power, in
         substantially the same proportion as prior to such Corporate Event, of (x) in the case of a merger or
         consolidation, the surviving or resulting corporation or (y) in the case of a division or a sale or
         other disposition of assets, each surviving, resulting or acquiring corporation which, immediately
         following the relevant Corporate Event, holds more than 25% of the consolidated assets of the Company
         immediately prior to such Corporate Event;

                  (iv) the approval by stockholders of the Company of a plan of liquidation with respect to the
         Company; or

                  (v) any other event occurs which the Board declares to be a Change of Control.

         (c) Person. For purposes of the definition of Change of Control, "Person" shall have the same meaning
ascribed to such term in Section 3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3) of the
Exchange Act, and shall include any group (within the meaning of Rule 13d-5(b) under the Exchange Act);
provided that "Person" shall not include (i) the Company or any of its Affiliates, or (ii) any employee benefit
plan (including an employee stock ownership plan) sponsored by the Company or any of its Affiliates.

         (d) Voting Power. "Voting Power" shall mean such number of Voting Securities as shall enable the
holders thereof to cast all the votes which could be cast in an annual election of directors of a company, and
"Voting Securities" shall mean all securities entitling the holders thereof to vote in an annual election of
directors of a company.

         3. Employment Period. The period during which the Executive remains employed with the Company or any
Affiliate following the Effective Date through the expiration of the term of this Agreement shall be referred
to herein as the "Employment Period."

         4. Business Time. During the Employment Period, the Executive shall devote substantially Executive's
full business time and efforts to the performance of Executive's duties on behalf of the Company, except for
(i) time spent in managing the Executive's personal, financial and legal affairs and serving on civic or
charitable boards or committees, in each case only if and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of vacation and sick leave to which the Executive is
entitled. It is expressly understood and agreed that the Executive's continuing to serve on any boards and
committees on which the Executive is serving or with which the Executive is otherwise associated immediately
preceding the Effective Date shall not be deemed to interfere with the performance of the Executive's services
to the Company and its Affiliates. Moreover, so long as the following activities do not (individually or in the
aggregate) materially interfere with the performance of the Executive's duties with the Company and are
conducted in compliance with the

                                                       3


Company's Code of Conduct (as in effect from time to time), the Executive may (i) participate in charitable,
civic, educational, professional, community or industry affairs or serve on the boards of directors or advisory
boards of other not for profit companies, and (ii) manage his/her and his/her family's personal investments.
Executive may serve on the boards of directors or similar governing bodies of any for profit entity with the
prior written consent of the Company's Chief Executive Officer as long as such service is not in violation of
the Company's Code of Conduct.

         5. Compensation. (a) Base Salary. During the Employment Period, the Executive shall receive a base
salary at a monthly rate at least equal to the monthly salary paid to the Executive immediately prior to the
Effective Date. The base salary may be increased (but not decreased) at any time and from time to time by
action of the Board or any committee thereof, the board of directors of any Affiliate or any committee thereof
in the event the Executive is employed by an Affiliate, and any individual having authority to take such action
in accordance with the Company's or any Affiliate's regular practices. The Executive's base salary, as it may
be increased from time to time, shall hereafter be referred to as the "Base Salary".

         (b) Total Compensation. During the Employment Period, the total compensation opportunities made
available to the Executive in such year in the form of short-term incentive compensation and long-term
incentive compensation ("Total Compensation") shall not be less than the Total Compensation made available to
the Executive immediately prior to the Effective Date. For purposes of this Section 5(b), the amount of Total
Compensation made available to the Executive, whether prior to or after a Change of Control, shall be
conclusively determined by an independent compensation consultant selected by the Company prior to the
occurrence of a Change of Control (or, if that entity is no longer able to serve or declines to serve in such
capacity, such other independent compensation consultant that has no existing client relationship with the
Company and its Affiliates as shall be selected by the designated consultant and reasonably acceptable to the
Board (either such consultant hereinafter referred to as the "Compensation Consultant")), using methods of
valuation and comparison commonly used in competitive compensation practices, which shall be consistently
applied. The Company shall provide the Compensation Consultant with any and all data that the consultant shall
reasonably request in order to make its evaluations hereunder.

         6. Termination. (a) Death, Disability or Retirement. This Agreement shall terminate automatically upon
the Executive's death, termination due to "Disability" (as defined below), or voluntary retirement (other than
for Good Reason, as defined below) under any of the retirement plans of the Company or its Affiliates
applicable to the Executive as in effect from time to time. For purposes of this Agreement, "Disability" shall
mean the Executive's inability to perform his or her material duties for six consecutive months due to a
physical or mental incapacity.

         (b) Voluntary Termination. Notwithstanding anything in this Agreement to the contrary, the Executive
may voluntarily terminate employment for any reason (including early retirement pursuant to any retirement plan
of the Company or any of its Affiliates as in effect from time to time and applicable to the Executive), upon
not less

                                                       4


than 60 days' written notice (or such lesser period of notice as the Company shall specify) to the Company or
the entity employing the Executive, as applicable; provided that any termination by the Executive pursuant to
Section 6(d) hereof on account of Good Reason (as defined below) shall not be treated as a voluntary
termination under this Section 6(b).

         (c) Cause. The Company and each of its Affiliates that employs the Executive may terminate the
Executive's employment for Cause. For purposes of this Agreement, "Cause" means (i) the Executive's conviction
or plea of nolo contendere to a felony (other than with respect to a traffic violation or an incident of
vicarious liability); (ii) an act of willful misconduct (including, without limitation, a willful material
violation of the Company's Code of Conduct) on Executive's part with regard to the Company or its Affiliates
having a material adverse impact on the Company or its Affiliates, and (iii) the Executive's failure in good
faith to attempt or refusal to perform legal directives of the Board or executive officers of the Company, as
applicable, which directives are consistent with the scope and nature of the Executive's employment duties and
responsibilities and which failure or refusal is not remedied by the Executive within thirty (30) days after
notice of such non-performance is given to the Executive. The Executive shall be provided an opportunity,
together with his or her counsel, to be heard before the Board prior to termination and after such notice. If
the majority of the members of the Board do not confirm, through a duly-adopted resolution following such
opportunity, that the Company had grounds for a "Cause" termination, the Executive shall have the option to
treat his or her employment as not having terminated or as having been terminated pursuant to a termination
without Cause. No event shall constitute grounds for a "Cause" termination in the event that the Company fails
to take action within 90 days after the Company's Chairman or the Chairman of the Company's Audit Committee
obtains knowledge of the occurrence of such event. Additionally, for purposes of clause (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act,
or failure to act, was in the best interest of the Company and its subsidiaries.

         (d) Good Reason. After the Effective Date, the Executive may resign from employment at any time for
Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence after the Effective Date of any
of the following, without the express written consent of the Executive:

                  (i) the assignment to the Executive of duties inconsistent with the Executive's position or
         any reduction in the Executive's title or any material reduction in the Executive's position, duties
         or responsibilities from the title, position, duties or responsibilities held or exercised by the
         Executive prior to the Effective Date;

                  (ii) any requirement that the Executive change the location where the Executive regularly
         provides services to the Company outside of the Hartford, Connecticut metropolitan area (i.e., the
         area within a thirty five (35) mile radius of downtown Hartford);

                                                       5


                  (iii) a reduction by the Company of the Executive's Base Salary or Total Compensation
         opportunity or a reduction in the employee benefits provided to the Executive under the Company's
         employee benefit plans (unless the Executive is provided with substantially equivalent replacement
         benefits); or

                  (iv) any failure to obtain the assumption and agreement to perform this Agreement by a
         successor as contemplated by Section 12(b).

         (e) Notice of Termination. Any termination by the Company and/or its Affiliates for Cause or by the
Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 13(e). For purposes of this Agreement, a "Notice of Termination" means a written notice
given, (i) in the case of a termination for Cause, within 10 business days of the Company and any Affiliate
that employs the Executive having actual knowledge of the events giving rise to such termination, or (ii) in
the case of a termination for Good Reason, within 10 business days of the Executive's having actual knowledge
of the events giving rise to such termination. Any such Notice of Termination shall (x) indicate the specific
termination provision in this Agreement relied upon, (y) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's employment under the provision so
indicated, and (z) if the termination date is other than the date of receipt of such notice, specify the
termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice).

         (f) Date of Termination. For the purpose of this Agreement, the term "Date of Termination" means (i)
in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice
of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the
actual date on which the Executive's employment terminates during the Employment Period.

         7. Obligations of the Company or an Affiliate upon Termination. (a) Death or Disability. If the
Executive's employment is terminated during the Employment Period by reason of the Executive's death or
Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's
legal representatives under this Agreement other than those obligations accrued hereunder at the Date of
Termination, and the Company or the Affiliate that employs the Executive shall pay to the Executive (or the
Executive's beneficiary or estate), at the times determined below (i) the Executive's full Base Salary through
the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under
or in accordance with the terms and conditions of any otherwise applicable employee benefit plans, agreements
and programs and any accrued vacation pay not yet paid (the "Accrued Obligations"), and (iii) any other
benefits payable in such situation under the plans, agreements, policies or programs of the Company and its
Affiliates (the "Additional Benefits").

         Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event
more than 30 days (or at such earlier date required by law),

                                                       6


following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with
the terms of the applicable plan, program or arrangement.

          (b) Cause and Voluntary Termination. If, during the Employment Period, the Executive's employment
shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good
Reason), the Company or the Affiliate that employs the Executive shall pay the Executive (i) the Earned Salary
in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier date
required by law), following the Date of Termination, and (ii) the Accrued Obligations and Additional Benefits
in accordance with the terms of the applicable plan, program or arrangement.

         (c) Termination by the Company or the Affiliate that employs the Executive other than for Cause and
Termination by the Executive for Good Reason. If, during the Employment Period, the Company or the Affiliate
that employs the Executive terminates the Executive's employment other than for Cause or the Executive
terminates his or her employment for Good Reason:

                  (i)      Pension Service Credit and Payment. The Executive's accrued benefit under any
             qualified or nonqualified defined benefit type pension plan or arrangement of the Company,
             including, without limitation, the Employee Pension Plan or any successor plan and/or the
             Supplemental Executive Retirement Plan or any successor plan (all such plans, the "Pension Plans")
             shall, to the extent not previously vested, be deemed vested as of the Date of Termination. In
             addition, the Company shall pay to the Executive an amount equal to the lump sum value (based on
             the actuarial assumptions used under the respective plan) of two and one half years of additional
             service and age credit for pension purposes under the Pension Plans (with the Base Salary used for
             the last two and one half years of the salary component of "final average earnings" for purposes
             of this calculation), which payments shall be made within thirty (30) days after termination of
             employment.

                  (ii)     Additional Lump Sum Payments. In lieu of (and not in addition to) any severance
             benefits payable to the Executive under any other plan, policy or program of the Company or any
             Affiliate (each, a "Severance Policy") or under any written agreement, between the Executive and
             the Company (each, a "Prior Agreement"), the Company shall pay to the Executive (or cause the
             Executive to be paid), at the times determined below, the following amounts:

                  (A)      the Executive's Earned Salary;

                  (B)      a cash amount (the "Severance Amount") equal to two and one half times the sum of (x)
                           the Executive's annual rate of Base Salary as then in effect and (y) the greater of
                           (1) an amount equal to the average of the Executive's annual incentive compensation
                           earned under the Company's Mutual Incentive Plan (or any successor plan) or similar
                           annual incentive plan applicable to the

                                                       7


                           Executive (collectively, the "MIP") in respect of the Executive's services performed
                           in the last three full fiscal years completed prior to the Change of Control, and (2)
                           the MIP target applicable to the Executive for the year in which the Executive's
                           employment terminates; and

                  (C)      the Accrued Obligations and Additional Benefits.

         The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as
         practicable, but in no event more than 30 days (or at such earlier date required by law), following
         the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the
         applicable plan, program or arrangement. Notwithstanding the foregoing, the Executive may elect in
         writing to receive the benefits payable under any Severance Policy that would otherwise be available
         to him or her, or the termination benefits under any Prior Agreement to which he or she is a party, in
         each case in lieu of receiving the benefits payable hereunder.

                  (iii) Continuation of Benefits. The Executive (and, to the extent applicable, the Executive's
         dependents) shall be entitled, after the Date of Termination until two and one half years from the
         Date of Termination (the "End Date"), to continue participation in all of the employee and executive
         plans providing medical, dental and long-term disability benefits that the Executive participated in
         prior to the Date of Termination (collectively, the "Continuing Benefit Plans"); provided that the
         participation by the Executive (and, to the extent applicable, the Executive's dependents) in any
         Continuing Benefit Plan shall cease on the date, if any, prior to the End Date on which the Executive
         becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent
         employer ("Prior Date"). The Executive's participation in the Continuing Benefit Plans will be on the
         same terms and conditions that would have applied had the Executive continued to be employed by the
         Company or the Affiliate that employs the Executive through the End Date or the Prior Date. To the
         extent any such benefits cannot be provided under the terms of the applicable plan, policy or program,
         the Company shall provide (or shall cause to be provided) a comparable benefit under another plan or
         from its general assets; provided that the Company shall pay the Executive additional cash payments to
         the extent necessary for the Executive to receive the same net after-tax benefits that the Executive
         would have received under such plans if the Executive had continued to receive such plan benefits
         while employed with the Company.

                  (iv) Deemed Vesting for Certain Benefits. The Executive shall be deemed to have met all
         service and other requirements for full vesting of benefits under all stock option or other stock or
         equity compensation plans of the Company in which the Executive participates and the stock options
         held by the Executive shall remain exercisable for the lesser of two years or the duration of their
         normal terms.

                                                       8


                  (v) Pro-Rata Payment of MIP and Long-Term Incentive Plan. The Company shall pay to the
         Executive a cash amount equal to a pro rata portion of (i) the higher of the Executive's target or
         actually earned annual incentive award under the MIP for the fiscal year in which the Executive's Date
         of Termination occurs and (ii) any awards made to the Executive under the Company's long-term
         incentive plan (or any successor plan) determined as if the targets applicable to such awards were
         achieved. The pro-rata portion of each award shall be determined by multiplying the value of the award
         (i.e., in the case of the MIP, the amount actually earned, and in the case of the long term incentive
         awards, the target amounts) times a fraction, the numerator of which is the number of days during the
         performance period applicable to each such award prior to the Date of Termination and the denominator
         of which is the number of days in the performance period applicable to each such award.
         Notwithstanding the foregoing, any amount payable under this subparagraph in respect of the annual
         incentive award or in respect of any long-term incentive plan shall be inclusive of the amounts, if
         any, otherwise payable to the Executive under the MIP and long-term incentive plans for the year in
         which the Date of Termination occurs.

                  (vi) Savings and Investment Plans. If and to the extent the Executive is a participant in the
         Savings and Investment Plans or any successor plan thereto ("SIP") and/or the Excess Investment Plan
         or any successor plan thereto ("EIP"), the Company shall pay the Executive a lump sum amount equal to
         the amount that the Company would have contributed to the SIP or credited to the EIP, over the two and
         one half years following the Executive's Date of Termination assuming that the Executive were
         contributing to each such plan during such period at the rate in effect immediately prior to the Date
         of Termination (or, if greater, at the rate in effect immediately prior to the Change of Control).

                  (vii) Outplacement. The Company shall provide the Executive with outplacement services at a
         level commensurate with the Executive's position.

         (d) Discharge of the Company's and its Affiliates' Obligations. Except as expressly provided in the
last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or
not reduced pursuant to Section 7(e)) following termination of the Executive's employment shall be in full and
complete satisfaction of the Executive's rights under this Agreement and any other claims the Executive may
have in respect of the Executive's employment by the Company and its Affiliates. Such amounts shall constitute
liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such
amounts, the Company and its Affiliates shall be released and discharged from any and all liability to the
Executive in connection with this Agreement or otherwise in connection with the Executive's employment by the
Company and its Affiliates. Notwithstanding the foregoing, (i) the Executive shall retain all rights with
respect to the Company's continuing obligations to indemnify the Executive as a former officer or director of
the Company or its Affiliates, and to provide directors and officers liability insurance, to the fullest extent
permitted under the Company's certificate of incorporation and by-laws or any other arrangement and (ii) to the
extent the Executive is entitled to greater rights with


                                                       9


respect to any category of severance payments or benefits in any similar situation under any other arrangement
with the Company, the Executive shall be entitled to such greater rights.

         (e) Modification of Payments by the Company and its Affiliates.

                  (i) Application of Section 7(e). In the event that any amount or benefit paid or distributed
         to, or on behalf of, the Executive pursuant to this Agreement, taken together with any amounts or
         benefits otherwise paid or distributed to, or on behalf of, the Executive by the Company, its
         Affiliates and their successors, including any acquiror of the Company or its Affiliates (or any
         person or entity required to be aggregated with the Company or its Affiliates for purposes of Section
         280G of the Internal Revenue Code of 1986, as amended (the "Code")) under any other plan, agreement,
         or arrangement (collectively, the "Covered Payments"), would be an "excess parachute payment" as
         defined in Section 280G of the Code, and would thereby subject the Executive to the tax (the "Excise
         Tax") imposed under Section 4999 of the Code (or any similar tax that may hereafter be imposed), the
         Company shall pay (or cause to be paid) to the Executive at the time specified in Section 7(e)(iv)
         below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the
         Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered
         Payments and any Federal, state and local (including foreign) income tax, payroll tax and Excise Tax
         on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any
         Federal, state or local (including foreign) income or employment tax withholding on such Covered
         Payments, shall be equal to the amount of the Covered Payments; provided that if the aggregate value
         of all Covered Payments exceeds the maximum amount which can be paid to the Executive without the
         Executive incurring an Excise Tax (the "Cap Amount") by less than 10% (ten per cent) of the Cap
         Amount, the amounts payable to the Executive under this Section 7 shall be reduced (but not below
         zero) to the maximum amount which may be paid hereunder without the Executive becoming subject to such
         an Excise Tax as a result of all Covered Payments (such reduced payments to be referred to as the
         "Payment Cap"). In the event that Executive receives reduced payments and benefits hereunder,
         Executive shall have the right to designate which of the payments and benefits otherwise provided for
         in this Agreement that the Executive will receive in connection with the application of the Payment
         Cap.

                  (ii) Application of Section 280G. For purposes of determining whether any of the Covered
         Payments will be subject to the Excise Tax and the amount of such Excise Tax,

                  (A)  such Covered Payments will be treated as "parachute payments" within the meaning of
                       Section 280G of the Code, and all "parachute payments" in excess of the "base amount"
                       (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the
                       Excise Tax, unless, and except to the extent that, in the good


                                                      10


                       faith judgment of the Company's independent certified public accountants appointed
                       prior to the Effective Date or tax counsel selected by such accountants (the
                       "Accountants"), it is more likely than not that such Covered Payments (in whole or in
                       part) either do not constitute "parachute payments" or represent reasonable
                       compensation for personal services actually rendered (within the meaning of Section
                       280G(b)(4)(B) of the Code) in excess of the portion of the "base amount allocable to
                       such Covered Payments," or such "parachute payments" are otherwise not subject to such
                       Excise Tax, and

                  (B)  the value of any non-cash benefits or any deferred payment or benefit shall be determined
                       by the Accountants in accordance with the principles of Section 280G of the Code.

                  (iii) Adjustments in Respect of the Payment Cap. If the Executive receives reduced payments
         and benefits under this Section 7(e) (or this Section 7(e) is determined not to be applicable to the
         Executive because the Accountants conclude that Executive is not subject to any Excise Tax) and it is
         established pursuant to a final determination of a court or an Internal Revenue Service proceeding (a
         "Final Determination") that, notwithstanding the good faith of the Executive and the Company in
         applying the terms of this Agreement, the aggregate "parachute payments" within the meaning of Section
         280G of the Code paid to the Executive or for the Executive's benefit are in an amount that would
         result in the Executive being subject to an Excise Tax, then the Accountants shall determine whether
         the Executive should have received the Tax Reimbursement Payment described in Section 7(e)(i), or
         whether the amounts payable to the Executive hereunder would still have been reduced pursuant to
         Section 7(e)(i). If the Tax Reimbursement Payment would have been due, the Accountants shall determine
         the amount of any interest and penalties that may be imposed on the Executive by reason of having
         failed to have timely paid any Excise Tax (the "Penalty Amount"), and the amount of the Tax
         Reimbursement Payment due, treating the Penalty Amount as a Covered Payment. In the event a Tax
         Reimbursement Payment is due, the Company shall promptly (but in no event later than 10 business days
         after the Accountants have determined and informed the Company) pay the Executive such Tax
         Reimbursement Payment (as calculated in accordance with the immediately preceding sentence) and the
         Penalty Amount. If the Executive would still be subject to a reduction in the Covered Payments due
         hereunder, the Accountants shall determine the amount by which the Covered Payments exceeded the Cap
         Amount and the Executive shall have an obligation (to the extent permitted under applicable law) to
         repay such excess to the Company on demand, together with interest on such amount at the applicable
         Federal rate (as defined in Section 1274(d) of the Code) from the date of the payment hereunder to the
         date of repayment by the Executive. It is expressly understood that such excess is not in the nature
         of a personal loan to the Executive, but rather a payment made to the Executive as a "mistake in
         fact." If the Executive receives reduced payments and benefits by reason of this Section

                                                      11


          7(e) and it is established pursuant to a Final Determination that the Executive could have received a
          greater amount without exceeding the Cap Amount, then the Company shall promptly thereafter pay the
          Executive the aggregate additional amount which could have been paid without exceeding the Cap
          Amount, together with interest on such amount at the applicable Federal rate (as defined in Section
          1274(d) of the Code) from the original payment due date to the date of actual payment by the Company.
          For greater clarity, if the Executive receives a Tax Reimbursement Payment under Section 7(e)(i),
          then this Section 7(e)(iii) shall not apply.

                  (iv) Timing. The Tax Reimbursement Payment (or portion thereof) provided for in Section
         7(e)(i) above shall be paid to the Executive not later than ten (10) business days following the
         payment of the Covered Payments; provided that if the amount of such Tax Reimbursement Payment (or
         portion thereof) cannot be finally determined on or before the date on which payment is due, the
         Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants
         to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax
         Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the
         Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days
         after payment of the related Covered Payment. In the event that the amount of the estimated Tax
         Reimbursement Payment exceeds the amount subsequently determined to have been due, the Executive shall
         repay such excess to the Company (to the extent permitted under applicable law), payable as of the
         fifth business day after written demand by the Company for payment (together with interest at the rate
         provided in Section 1274(b)(2)(B) of the Code). It is expressly understood that such excess is not in
         the nature of a personal loan to the Executive.

                  (v) Survival. The provisions of this Section 7(e) of the Agreement shall survive the
         termination of the Executive's employment hereunder and the termination of this Agreement with regard
         to any event that occurred prior thereto.

         8.       Non-exclusivity of Rights. Except as expressly provided herein, nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its Affiliates and for which the Executive may qualify, nor
shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other
agreements with the Company or any of its Affiliates, including employment agreements, stock option agreements,
and other stock or equity compensation agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any Affiliate at or subsequent to the
Date of Termination shall be payable in accordance with such plan or program.

         9.       No Offset. The obligation of the Company or any of its Affiliates to make the payments provided for
in this Agreement and otherwise to perform the obligations


                                                      12


hereunder shall not be diminished or otherwise affected by any circumstances, including, but not limited to,
any set-off, counterclaim, recoupment, defense or other right which the Company or any of its Affiliates may
have against the Executive or others, whether by reason of the subsequent employment of the Executive or
otherwise.

         10. Legal Fees and Expenses. If the Executive asserts any claim in any contest (whether initiated by
the Executive or by the Company or any of its Affiliates) as to the validity, enforceability or interpretation
of any provision of this Agreement or to enforce and/or collect any payment or benefit payable hereunder, the
Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, but not limited
to, the Executive's reasonable attorney's fees, on a monthly basis, upon presentation of proof of such expenses
in a form acceptable to the Company; provided that the Executive shall reimburse the Company for such amounts
(to the extent permitted under applicable law), plus simple interest thereon at the 90-day United States
Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the
Executive's claims were substantially frivolous or brought in bad faith.

         11. Surviving Agreements. This Agreement provides for certain payments and benefits to the Executive
to be determined by the employee benefit plans and programs, incentive plans, stock option, and other stock or
equity compensation plans of the Company and its Affiliates. To the extent so provided, such programs and plans
constitute part of the agreement and understanding between the Executive and the Company and are incorporated
herein and made a part hereof. The Executive and the Company hereby reaffirm their respective commitments under
such programs and plans, and again agree to be bound by each of the covenants contained therein for the benefit
of the Company in consideration of the benefits made available to the Executive hereby.

         12. Successors. (a) This Agreement is personal to the Executive and, without the prior written consent
of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal
representatives and his or her estate.

         (b) This Agreement shall inure to the benefit of and be binding upon the Company and shall be
assignable, in writing, by the Company only to the acquiror of all or substantially all, of the assets of the
Company. The Company shall require any successor to all or substantially all of the business and/or assets of
the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.

         13. Miscellaneous. (a) Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut, applied without reference to principles of conflict of laws.


                                                      13


         (b) Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall
be resolved by binding arbitration. The arbitration shall be held in Hartford, Connecticut and except to the
extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment
Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration (or
such other rules as the parties may agree to in writing), and otherwise in accordance with principles which
would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the
Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.
The costs and expenses of the arbitration shall be paid by the Company.

         (c) Amendments. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.

         (d) Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with
             respect to the matters referred to herein, and completely supersedes and replaces any prior
             agreement between the Executive and the Company concerning the subject matter herein. No other
             agreement relating to the terms of the Executive's employment by the Company or any of its
             Affiliates, oral or otherwise, shall be binding between the parties unless it is in writing and
             signed by the party against whom enforcement is sought. Except as expressly provided herein,
             nothing in this Agreement shall be construed or interpreted to enhance, increase, reduce or
             diminish any rights, duties or obligations of the Executive under any individual agreement
             between the Executive and the Company or any of its affiliates, or under any employee benefit
             plan program or procedure established by the Company or any of its affiliates. There are no
             promises, representations, inducements or statements between the parties other than those that
             are expressly contained herein. The Executive acknowledges that the Executive is entering into
             this Agreement of the Executive's own free will and accord, and with no duress, that the
             Executive has read this Agreement and that the Executive understands it and its legal
             consequences.

         (e) Notices. All notices and other communications hereunder shall be in writing and shall be
             given by hand-delivery to the other party or by registered or certified mail, return receipt
             requested, postage prepaid, addressed as follows:

If to the Executive:                        at the home address of the Executive noted on the
                                            records of the Company


                                                      14


If to the Company:                          The Phoenix Companies, Inc.
                                            One American Row
                                            PO Box 5056
                                            Hartford, CT 06120-5056
                                     Attn.: Tracy L. Rich, General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually received by the addressee.

         (f) Tax Withholding. The Company shall withhold (or cause such withholding) from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

         (g) Severability; Reformation. In the event that one or more of the provisions of this Agreement shall
become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

         (h) Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms
of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different
from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any
course of dealing between the parties hereto or from any failure by either party hereto to assert its or the
Executive's rights hereunder on any occasion or series of occasions.

         (i) Confidentiality. The Executive, after termination of the Executive's employment, shall retain in
confidence any confidential or proprietary information known to the Executive concerning the Company and its
Affiliates and their business so long as such information is not publicly disclosed and shall not use such
information in any way injurious to the Company or its Affiliates except for any disclosure to which an
authorized officer of the Company or such Affiliate has consented or any disclosure or use required by any
order of any governmental body or court (including legal process). If requested, the Executive shall return to
the Company and its Affiliates any memoranda, documents or other materials possessed by the Executive and
containing confidential or proprietary information of the Company and its Affiliates. Notwithstanding the
preceding sentence, the Executive shall not be required to return to the Company or its Affiliates, any
memoranda, documents or other materials containing confidential or proprietary information of the Company or
its Affiliates, if such materials were provided to the Executive in his or her capacity as a director of the
Company or its Affiliates.

         (j) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

         (k) Captions. The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect.


                                                      15



                  IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the Company has
caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed
and attested by its Secretary, all as of the day and year first above written.

                                    PHOENIX COMPANIES, INC.

                                    /s/ Bonnie J. Malley
                                    By: Bonnie J. Malley
                                    Title: SVP Corp Admin



WITNESSED:

/s/ Debra Brown




                                    PHOENIX LIFE INSURANCE COMPANY

                                    /s/ Bonnie J. Malley
                                    By: Bonnie J. Malley
                                    Title: SVP Corp Admin



WITNESSED:

/s/ Debra Brown



                                    EXECUTIVE:                         DATE:


                                    /s/ Coleman D. Ross                1/22/03

WITNESSED:

/s/ Greta Dixon


                                                      16

EX-99.10.50

                                                                                                  Exhibit 10.50






February 9, 2004




Mr. Philip K. Polkinghorn
73 Forest Street
Wellesley, MA 02481

Dear Phil:

I am pleased to extend our offer of employment for the position of Executive Vice President, Life and Annuity
Manufacturing for The Phoenix Companies, Inc. (PNX). This position will report to the Chairman and Chief
Executive Officer of PNX and will be based in Hartford. The structure of our offer is as follows:


Base Salary:                   $450,000, payable twice per month in the amount $18,750.

Annual Incentive:              You will participate in PNX's Corporate Performance Incentive Plan. Your target
                               will be 65% of your base salary or $292,500. Your maximum annual incentive
                               potential will be $585,000. If the threshold performance target is met you
                               will receive $146,250.

Guarantee:                     You will be guaranteed your annual incentive plan target payment of $292,500.
                               The actual award may exceed $292,500 if the performance results in a higher
                               payment as determined as in accordance with the terms of the Performance
                               Incentive Plan. This amount will be payable at the same time as other awards
                               payable under the plan. You are not eligible to receive this guaranteed
                               payment if you voluntarily terminate your employment for any reason prior to
                               one year from the date you commence employment with PNX.

Long Term Incentive:           You will participate in PNX's Long Term Incentive Plan beginning with the
                               2004-2006 performance cycle. This plan is a performance share plan that pays out
                               in restricted stock units (RSUs) if PNX meets its ROE target for the three-year
                               cycle. Your target will be 60% of base salary or $270,000 of performance
                               shares. The maximum performance shares available under this plan are
                               $540,000. If the threshold performance target is met, you will receive
                               $135,000 of performance shares. The target number of performance shares
                               available is determined based upon the stock price at the beginning of the
                               cycle ($12.24).




Signing Bonus:                 You will receive a one-time cash-signing bonus of $375,000 payable in two
                               installments. The first installment of $250,000 will be paid with your first
                               PNX paycheck. You will be required to repay this amount if you voluntarily
                               terminate your employment within one year of your start date. The second
                               installment of $125,000 will be paid one year from your start date. You will
                               be required to repay this amount if you voluntarily terminate your employment
                               within one year after the payment of the second installment. PNX reserves the
                               right to offset this obligation against any amounts which may be due to you
                               from PNX or its affiliates at the time of your termination.

Option Grant:                  We will grant you 50,000 of PNX options valued at the closing price on your
                               start date. These options vest over three years with a ten-year duration. These
                               options are governed by the terms of PNX's Stock Option Plan.

Restricted Stock Units:        You will receive RSUs representing $500,000 of PNX's common stock valued using
                               the average closing price over the 10 trading days prior to your start date.
                               These restricted stock units will vest at the end of three years from your
                               start date. You will be required to retain these shares in accordance with
                               PNX's share ownership and retention guidelines. You will receive a PNX change
                               in control agreement, substantially the same as those provided to other
                               executive vice presidents, which will be amended to add a special provision
                               regarding vesting of restricted stock units in the event of a "change of
                               control". Pursuant to this provision, your $500,000 award of RSUs will vest
                               immediately in the event of a "change in control" and a termination by you for
                               "good reason" or a termination of you by PNX or its successor "other than for
                               cause". These terms are defined in the change of control agreement.

Performance Based Restricted Stock Units:
                               You will also be eligible to receive an additional $750,000 of restricted stock
                               units based upon achieving certain performance criteria, established by PNX for
                               the life and annuity manufacturing business measured at the end of a three year
                               period. Your ability to sell the performance RSUs and holding period will be the
                               same as the RSUs described above. The initial pricing on the performance RSUs
                               will be the same as the RSUs described above.

Vacation:                      You will receive 21 vacation days annually and you will also be eligible for 5
                               floating holidays, three of which are company-mandated holidays.


You are also eligible to participate in a wide variety of benefits including The Phoenix Companies, Inc.
Savings and Investment Plan, the Employee Pension Plan and Supplemental Retirement Plan, and certain welfare
benefit plans immediately following employment. The welfare benefits include health, life, accidental death and
long term disability coverage. Details and information regarding these benefits will be forwarded under
separate cover.




You are also eligible to participate in the company's relocation program and we will express mail details on
this program as well.

This offer is contingent upon the results of a background investigation that is satisfactory to Phoenix.

Phil, we hope you will join our management team. If you accept the terms outlined in this letter, please sign
the acknowledgement below and return this letter to me and keep a copy for your records. If you have any
questions, please feel free to contact me at (860) 403-5941 at work or my cell phone (860) 559-3086.

Sincerely

/s/ Bonnie J. Malley
Bonnie J. Malley


Acknowledged:


/s/ Philip J. Polkinghorn    
Philip J. Polkinghorn

EX-99.12

                                                                                              Exhibit 12

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ amounts in millions)
Years Ended December 31, 2003, 2002, 2001, 2000 and 1999

                                                                2003      2002      2001     2000      1999
                                                             --------- --------- --------- --------- ---------

Income (loss) from continuing operations before income
  taxes and minority interest                                 $ (10.2)  $(184.5)  $(245.3)  $ 172.5   $ 279.9

Less:  Equity in earnings (losses) of affiliates                 (0.1)      5.9       8.2       7.4       4.7
       Equity in earnings (losses) of venture capital
         partnership investments                                 36.2     (59.3)    (84.5)    277.3     139.9

Add:   Distributed earnings of affiliates                         1.2       4.6       6.9       5.6       4.5
       Distributed earnings of venture capital partnership
         investments                                             31.8      14.2      30.5     222.4      84.0
                                                             --------- --------- --------- --------- ---------


Income (loss) from continuing operations before income
  taxes, minority interest and equity in undistributed
  earnings of affiliates and venture capital partnership
  investments                                                 $ (13.3)  $(112.3)  $(131.6)  $ 115.8   $ 223.8
                                                             ========= ========= ========= ========= =========

Fixed Charges:
  Interest expense on indebtedness (1)                         $  39.6   $  31.4   $  27.3   $  32.7   $  34.0
  Stock purchase contract adjustment payments                     8.2       1.0       0.0       0.0       0.0
  Rental expense                                                  2.6       2.7       2.7       2.7       3.1
                                                             --------- --------- --------- --------- ---------
Total fixed charges                                           $  50.4   $  35.1   $  30.0   $  35.4   $  37.1
                                                             ========= ========= ========= ========= =========

Income (loss) from continuing operations before income
  taxes, minority interest, equity in undistributed
  earnings of affiliates and venture capital partnership
  investments and fixed charges                               $  37.1   $ (77.2)  $(101.6)  $ 151.2   $ 260.9
                                                             ========= ========= ========= ========= =========

Ratio of earnings to fixed charges                                0.7       -         -         4.3       7.0
                                                             ========= ========= ========= ========= =========

Additional earnings required to achieve 1:1 ratio
  coverage                                                    $  13.3   $ 112.3   $ 131.6       -         -
                                                             ========= ========= ========= ========= =========


SUPPLEMENTAL RATIO - ratio of earnings to fixed
charges inclusive of interest credited on
policyholder contract balances:

Income (loss) from continuing operations before
  income taxes, minority interest and equity in
  undistributed earnings of affiliates and venture
  capital partnership investments                             $ (13.3)  $(112.3)  $(131.6)  $ 115.8   $ 223.8
                                                             ========= ========= ========= ========= =========

Fixed Charges:
  Total fixed charges, as above                               $  50.4   $  35.1   $  30.0   $  35.4   $  37.1
  Interest credited on policyholder contract balances           207.9     181.4     133.2     109.5     105.6
                                                             --------- --------- --------- --------- ---------
Total fixed charges, inclusive of interest credited
  on policyholder contract balances                           $ 258.3   $ 216.5   $ 163.2   $ 144.9   $ 142.7
                                                             ========= ========= ========= ========= =========

Adjusted income from continuing operations before
  income taxes, minority interest and equity in
  undistributed earnings of affiliates and venture
  capital partnership investments plus fixed charges,
  inclusive of interest credited on policyholder
  contract balances                                           $ 245.0   $ 104.2    $ 31.6   $ 260.7   $ 366.5
                                                             ========= ========= ========= ========= =========

Ratio of earnings to fixed charges including interest
credited on policyholder contract balances                        0.9       0.5       0.2       1.8       2.6
                                                             ========= ========= ========= ========= =========

Additional earnings required to achieve 1:1 ratio
coverage                                                      $  13.3   $ 112.3   $ 131.6       -         -
                                                             ========= ========= ========= ========= =========



(1) Interest expense on collateralized obligations is not included as these are non-recourse liabilities to
Phoenix and the interest expense is solely funded by assets pledged as collateral consolidated on our balance
sheet.

EX-99.21

                                                                                             Exhibit 21

                                                  SUBSIDIARIES


As of December 31, 2003, the subsidiaries of The Phoenix Companies, Inc. were as follows:

- ----------------------------------------- ------------------------------------ ------------------------------
 Name                                      Business Name                        State of Incorporation
- ----------------------------------------- ------------------------------------ ------------------------------
 Phoenix Life Insurance Company            Phoenix Life Insurance Company       New York
- ----------------------------------------- ------------------------------------ ------------------------------
 PM Holdings, Inc.                         (1)                                  Connecticut
- ----------------------------------------- ------------------------------------ ------------------------------
 PHL Variable Insurance Company            PHL Variable Insurance Company       Connecticut
- ----------------------------------------- ------------------------------------ ------------------------------
 Phoenix Investment Management Company     (1)                                  Connecticut
- ----------------------------------------- ------------------------------------ ------------------------------
 Phoenix Investment Partners, Ltd.         Phoenix Investment Partners, Ltd.    Delaware
- ----------------------------------------- ------------------------------------ ------------------------------



(1) Holding company which does not conduct business.

EX-99.23

                                                                                               Exhibit 23


                                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Registration
No. 333-101629) and Form S-8 (Registration No. 333-75346) of The Phoenix Companies, Inc. of our report dated
March 9, 2004 relating to the consolidated financial statements, which appears in this Form 10-K.

/s/ Pricewaterhouse Coopers LLP

Hartford, Connecticut
March 15, 2004

EX-99.31.2

                                                                                                   Exhibit 31.1

                                                 CERTIFICATION


         I, the Chief Executive Officer of The Phoenix Companies, Inc. (the "issuer"), certify that:

         1. I have reviewed this report on Form 10-K of the issuer;

         2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

         3. Based on my knowledge, the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations and cash
flows of the issuer as of, and for, the periods presented in this report;

         4. The issuer's other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer
and we have:

         a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;

         b) evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

         c) disclosed in this report any change in the issuer's internal control over financial reporting that
occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting; and

         5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's
board of directors (or persons performing the equivalent functions):

         a) all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the issuer's ability to record,
process, summarize and report financial information; and

         b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the issuer's internal control over financial reporting.

Date:        March 15, 2004                                                 /s/ Dona D. Young
                                                         --------------------------------------------------------
                                                         Dona D. Young
                                                         Chairman, President and
                                                         Chief Executive Officer

EX-99.31.2

                                                                                                   Exhibit 31.2

                                                   CERTIFICATION


         I, the Chief Financial Officer of The Phoenix Companies, Inc. (the "issuer"), certify that:

         1. I have reviewed this report on Form 10-K of the issuer;

         2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;

         3. Based on my knowledge, the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations and cash
flows of the issuer as of, and for, the periods presented in this report;

         4. The issuer's other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer
and we have:

         a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;

         b) evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and

         c) disclosed in this report any change in the issuer's internal control over financial reporting that
occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting; and

         5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's
board of directors (or persons performing the equivalent functions):

         a) all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the issuer's ability to record,
process, summarize and report financial information; and

         b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the issuer's internal control over financial reporting.

Date:        March 15, 2004                                               /s/ Michael E. Haylon
                                                         --------------------------------------------------------
                                                         Michael E. Haylon
                                                         Chief Financial Officer

EX-99.32

                                                                                                     Exhibit 32


                                                 CERTIFICATION
                                   Pursuant to 18 United States Code § 1350


         The undersigned hereby certify that the Annual Report on Form 10-K for the fiscal year ended December
31, 2003 of The Phoenix Companies, Inc. (the "Company") filed with the Securities and Exchange Commission on
the date hereof fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and that the information contained in such report fairly presents, in all material respects, the
financial condition and results of operations of the Company.



                  /s/ Dona D. Young                                       /s/ Michael E. Haylon
- ------------------------------------------------------      ---------------------------------------------------
Name:    Dona D. Young                                      Name:    Michael E. Haylon
Title:   Chairman, President &                              Title:   Chief Financial Officer
         Chief Executive Officer
Date:    March 15, 2004                                     Date:    March 15, 2004