10-Q

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                                                   FORM 10-Q

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

                                                   (MARK ONE)

                           [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                                 OF THE SECURITIES EXCHANGE ACT OF 1934

                               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

                                                       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 001-16517

                                          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
            incorporation or organization)                                   Identification No.)

                               One American Row, Hartford, Connecticut 06102-5056
                                                 (860) 403-5000
                            ________________________________________________________
                              (Address, including zip code, and telephone number,
                              including area code, of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes X.  No  

Indicated by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

Yes X.  No  

On October 31, 2004, the registrant had 94,808,425 shares of common stock outstanding.



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                                                       1



                                               TABLE OF CONTENTS


PART I.     FINANCIAL INFORMATION                                                                          Page

  Item 1.     Unaudited Interim Condensed Consolidated Financial Statements:
                Unaudited Interim Condensed Consolidated Balance Sheet as of September 30, 2004
                  and December 31, 2003...................................................................   3
                Unaudited Interim Condensed Consolidated Statement of Income and Comprehensive Income
                  for the three and nine months ended September 30, 2004 and 2003.........................   4
                Unaudited Interim Condensed Consolidated Statement of Cash Flows
                  for the nine months ended September 30, 2004 and 2003...................................   5
                Unaudited Interim Condensed Consolidated Statement of Changes in Stockholders' Equity
                  for the three and nine months ended September 30, 2004 and 2003.........................   6
                Notes to Unaudited Interim Condensed Consolidated Financial Statements for the
                  three and nine months ended September 30, 2004 and 2003.................................   7
  Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations.......  36
  Item 3.     Quantitative and Qualitative Disclosures About Market Risk..................................  78
  Item 4.     Controls and Procedures.....................................................................  83

PART II.    OTHER INFORMATION

  Item 1.     Legal Proceedings...........................................................................  84
  Item 2.     Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities............  85
  Item 3.     Defaults Upon Senior Securities.............................................................  86
  Item 4.     Submission of Matters to a Vote of Security Holders.........................................  86
  Item 5.     Other Information...........................................................................  86
  Item 6.     Exhibits and Reports on Form 8-K............................................................  86
Signature.................................................................................................  91

                                                       2

PART I.
                                             FINANCIAL INFORMATION

ITEM 1.  UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                          THE PHOENIX COMPANIES, INC.
                             Unaudited Interim Condensed Consolidated Balance Sheet
                                   ($ amounts in millions, except share data)
                              September 30, 2004 (unaudited) and December 31, 2003

                                                                                     2004            2003
                                                                                --------------- ---------------
ASSETS:
Available-for-sale debt securities, at fair value............................... $   13,338.5    $   13,273.0
Available-for-sale equity securities, at fair value.............................        309.2           312.0
Mortgage loans, at unpaid principal balances....................................        223.7           284.1
Venture capital partnerships, at equity in net assets...........................        244.1           234.9
Affiliate equity securities, at equity in net assets............................         53.3            47.5
Policy loans, at unpaid principal balances......................................      2,236.6         2,227.8
Other investments...............................................................        371.2           402.0
                                                                                --------------- ---------------
                                                                                     16,776.6        16,781.3
Available-for-sale debt and equity securities pledged as collateral,
  at fair value........                                                               1,289.4         1,350.0
                                                                                --------------- ---------------
Total investments...............................................................     18,066.0        18,131.3
Cash and cash equivalents.......................................................        451.0           447.9
Accrued investment income.......................................................        238.7           222.3
Receivables.....................................................................        178.7           224.9
Deferred policy acquisition costs...............................................      1,428.7         1,367.7
Deferred income taxes...........................................................         16.4            58.7
Intangible assets...............................................................        311.8           335.1
Goodwill........................................................................        420.8           419.9
Other assets....................................................................        245.7           268.2
Separate account assets.........................................................      6,440.2         6,083.2
                                                                                --------------- ---------------
Total assets.................................................................... $   27,798.0    $   27,559.2
                                                                                =============== ===============

LIABILITIES:
Policy liabilities and accruals................................................. $   13,163.3    $   13,088.6
Policyholder deposit funds......................................................      3,531.3         3,642.7
Stock purchase contracts........................................................        131.1           128.8
Indebtedness....................................................................        662.7           639.0
Other general account liabilities...............................................        450.6           525.7
Non-recourse collateralized obligations.........................................      1,360.5         1,472.0
Separate account liabilities....................................................      6,440.2         6,083.2
                                                                                --------------- ---------------
Total liabilities...............................................................     25,739.7        25,580.0
                                                                                --------------- ---------------

CONTINGENT LIABILITIES AND COMMITMENTS (NOTES 11 & 12)

MINORITY INTEREST IN NET ASSETS OF CONSOLIDATED SUBSIDIARIES....................         37.3            31.4
                                                                                --------------- ---------------

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: 106,376,417 and 106,376,363 shares issued.........          1.0             1.0
Additional paid-in capital......................................................      2,428.9         2,428.8
Deferred compensation on restricted stock units.................................         (2.7)           (3.6)
Accumulated deficit.............................................................       (329.8)         (352.7)
Accumulated other comprehensive income..........................................        107.6            63.7
Treasury stock, at cost: 11,600,943 and 11,930,647 shares.......................       (184.0)         (189.4)
                                                                                --------------- ---------------
Total stockholders' equity......................................................      2,021.0         1,947.8
                                                                                --------------- ---------------
Total liabilities, minority interest and stockholders' equity................... $   27,798.0    $   27,559.2
                                                                                =============== ===============

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

                                                       3


                                          THE PHOENIX COMPANIES, INC.
             Unaudited Interim Condensed Consolidated Statement of Income and Comprehensive Income
                            ($ amounts in millions, except share and per share data)
                            Three and Nine Months Ended September 30, 2004 and 2003

                                                                 Three Months                Nine Months
                                                          --------------------------  -------------------------
                                                                           2003                       2003
                                                               2004      Restated         2004      Restated
                                                          ------------  ------------  ------------ ------------
REVENUES:
Premiums................................................   $   268.8     $   286.9     $   739.7    $   781.5
Insurance and investment product fees...................       135.8         147.7         450.4        420.8
Investment income, net of expenses......................       265.4         267.4         802.5        836.2
Net realized investment gains (losses)..................        (9.1)         (3.4)          9.0       (122.2)
                                                          ------------  ------------  ------------ ------------
Total revenues..........................................       660.9         698.6       2,001.6      1,916.3
                                                          ------------  ------------  ------------ ------------
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends.......       373.3         389.0       1,060.2      1,088.2
Policyholder dividends..................................        98.6          99.5         309.8        310.2
Policy acquisition cost amortization....................        30.6          22.7          76.3         76.6
Intangible asset amortization...........................         8.5           8.3          25.1         24.9
Interest expense on indebtedness........................        10.1           9.8          29.8         29.5
Interest expense on non-recourse collateralized
  obligations...........................................         9.1          11.9          25.5         37.8
Other operating expenses................................       120.5         135.1         412.7        405.8
                                                          ------------  ------------  ------------ ------------
Total benefits and expenses.............................       650.7         676.3       1,939.4      1,973.0
                                                          ------------  ------------  ------------ ------------
Income (loss) from continuing operations before                 10.2          22.3          62.2        (56.7)
  income taxes and minority interest....................
Applicable income tax (benefit).........................        (0.3)          5.8          13.7        (30.8)
                                                          ------------  ------------  ------------ ------------
Income (loss) from continuing operations                        10.5          16.5          48.5        (25.9)
  before minority interest..............................
Minority interest in net income of
  consolidated subsidiaries.............................        (3.4)         (2.9)        (10.5)        (8.0)
                                                          ------------  ------------  ------------ ------------
Income (loss) from continuing operations................         7.1          13.6          38.0        (33.9)
Income (loss) from discontinued operations..............        --            (0.4)          0.1         (1.2)
                                                          ------------  ------------  ------------ ------------
Net income (loss).......................................   $     7.1     $    13.2     $    38.1    $   (35.1)
                                                          ============  ============  ============ ============
EARNINGS PER SHARE:
Income (loss) from continuing operations - basic........   $    0.07     $    0.14     $    0.40    $   (0.36)
Income (loss) from continuing operations - diluted......   $    0.07     $    0.14     $    0.38    $   (0.36)
                                                          ============  ============  ============ ============
Net income (loss) - basic...............................   $    0.07     $    0.14     $    0.40    $   (0.37)
Net income (loss) - diluted.............................   $    0.07     $    0.13     $    0.38    $   (0.37)
                                                          ============  ============  ============ ============
Weighted-average common shares outstanding
  (in thousands)........................................      94,733        94,276        94,624       94,158
Weighted-average common shares outstanding and
  dilutive potential common shares (in thousands).......      99,234        98,272       100,930       94,158
                                                          ============  ============  ============ ============
COMPREHENSIVE INCOME:
Net income (loss).......................................   $     7.1     $    13.2     $    38.1    $   (35.1)
                                                          ------------  ------------  ------------ ------------
Net unrealized investment gains (losses)................        73.5         (27.2)         10.2        141.9
Net unrealized foreign currency translation adjustment..        (0.4)         (1.0)         --            3.8
Net unrealized derivative instruments gains (losses)....        17.6          (1.1)         33.7          6.8
                                                          ------------  ------------  ------------ ------------
Other comprehensive income (loss).......................        90.7         (29.3)         43.9        152.5
                                                          ------------  ------------  ------------ ------------
Comprehensive income (loss).............................   $    97.8     $   (16.1)    $    82.0    $   117.4
                                                          ============  ============  ============ ============

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

                                                       4


                                                THE PHOENIX COMPANIES, INC.
                             Unaudited Interim Condensed Consolidated Statement of Cash Flows
                                                  ($ amounts in millions)
                                       Nine Months Ended September 30, 2004 and 2003

                                                                                      Nine Months
                                                                             -------------------------------
                                                                                                  2003
                                                                                  2004          Restated
                                                                             --------------- ---------------
OPERATING ACTIVITIES:
Premiums collected.........................................................   $      731.2    $      772.1
Insurance and investment product fees collected............................          455.3           413.2
Investment income collected................................................          740.8           750.5
Policy benefits paid, excluding policyholder dividends.....................       (1,001.9)         (794.1)
Policyholder dividends paid................................................         (291.4)         (292.0)
Policy acquisition costs paid..............................................         (123.4)         (150.0)
Interest expense on indebtedness paid......................................          (24.8)          (24.2)
Interest expense on collateralized obligations paid........................          (25.5)          (37.8)
Other operating expenses paid..............................................         (404.2)         (406.6)
Income taxes refunded......................................................            2.1             6.6
                                                                             --------------- ---------------
Cash from continuing operations............................................           58.2           237.7
Discontinued operations, net...............................................          (25.1)          (60.0)
                                                                             --------------- ---------------
Cash from operating activities.............................................           33.1           177.7
                                                                             --------------- ---------------
INVESTING ACTIVITIES:
Investment purchases.......................................................       (3,095.7)       (4,196.7)
Investment sales, repayments and maturities................................        3,181.9         3,314.4
Debt and equity securities pledged as collateral purchases.................          (16.2)          (31.6)
Debt and equity securities pledged as collateral sales.....................           76.2            86.9
Subsidiary purchases.......................................................          (36.7)          (23.5)
Subsidiary sales...........................................................           17.1            --
Premises and equipment additions...........................................           (5.8)          (11.7)
Premises and equipment disposals...........................................           26.4            --
Discontinued operations, net...............................................            6.3            (6.7)
                                                                             --------------- ---------------
Cash from (for) investing activities.......................................          153.5          (868.9)
                                                                             --------------- ---------------
FINANCING ACTIVITIES:
Policyholder deposit fund deposits.........................................          674.7         1,156.5
Policyholder deposit fund withdrawals......................................         (786.1)         (814.4)
Other indebtedness proceeds................................................           25.0            --
Collateralized obligations repayments......................................          (70.4)          (43.4)
Common stock dividends paid................................................          (15.1)          (15.1)
Minority interest distributions............................................          (11.6)          (10.7)
                                                                             --------------- ---------------
Cash from (for) financing activities.......................................         (183.5)          272.9
                                                                             --------------- ---------------
Change in cash and cash equivalents........................................            3.1          (418.3)
Cash and cash equivalents, beginning of period.............................          447.9         1,110.5
                                                                             --------------- ---------------
Cash and cash equivalents, end of period...................................   $      451.0    $      692.2
                                                                             =============== ===============

Included in cash and cash equivalents above is cash pledged as collateral of $61.6 million and $63.9 million at
September 30, 2004 and 2003, respectively.

Included in policy benefits paid for the 2004 period is a scheduled $177.0 million surrender of a large
corporate owned life insurance policy.

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


                                                       5


                                          THE PHOENIX COMPANIES, INC.
             Unaudited Interim Condensed Consolidated Statement of Changes in Stockholders' Equity
                            ($ amounts in millions, except share and per share data)
                            Three and Nine Months Ended September 30, 2004 and 2003

                                                                 Three Months                Nine Months
                                                          --------------------------  -------------------------
                                                                            2003                       2003
                                                              2004        Restated        2004       Restated
                                                          ------------  ------------  ------------ ------------
COMMON STOCK AND
ADDITIONAL PAID-IN CAPITAL:
Restricted stock units awarded as compensation
  (13,800; 5,537; 78,566; and 817,047 units).............  $     0.1     $     0.1     $     0.9    $     5.1
Restricted stock units awarded as payment of liabilities
  (0; 0; 0; and 161,769 units)...........................       --            --            --            1.5
Stock options awarded as compensation
  (284,570; 5,000; 494,570; and 481,089 options).........        0.1          --             0.7         --
Excess of cost over fair value of common shares
  contributed to employee savings plan...................       (0.7)         (0.7)         (1.5)        (2.0)

DEFERRED COMPENSATION ON
RESTRICTED STOCK UNITS:
Compensation expense deferred on
  restricted stock units awarded.........................       --            --            (0.5)        (5.0)
Compensation expense recognized on
  restricted stock units.................................        0.4           0.6           1.3          1.1

RETAINED EARNINGS
(ACCUMULATED DEFICIT):
Net income (loss)........................................        7.1          13.2          38.1        (35.1)
Common stock dividend paid ($0.16 per share).............       --            --           (15.1)       (15.1)

ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Other comprehensive income (loss)........................       90.7         (29.3)         43.9        152.5

TREASURY STOCK:
Common shares contributed to employee savings plan
  (97,404; 135,977; 338,262; and 293,414 shares).........        1.5           2.2           5.4          4.7
                                                          ------------  ------------  ------------ ------------
Change in stockholders' equity...........................       99.2         (13.9)         73.2        107.7
Stockholders' equity, beginning of period................    1,921.8       1,948.4       1,947.8      1,826.8
                                                          ------------  ------------  ------------ ------------
Stockholders' equity, end of period......................  $ 2,021.0     $ 1,934.5     $ 2,021.0    $ 1,934.5
                                                          ============  ============  ============ ============

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

                                                       6


                                          THE PHOENIX COMPANIES, INC.
                     Notes to Unaudited Interim Condensed Consolidated Financial Statements
                            Three and Nine Months Ended September 30, 2004 and 2003



1.   Organization and Operations

Our unaudited interim condensed consolidated financial statements include the accounts of The Phoenix
Companies, Inc., its subsidiaries and certain sponsored collateralized obligation trusts as described in Note
7. The Phoenix Companies, Inc. is a holding company whose operations are conducted through subsidiaries, the
principal ones of which are Phoenix Life Insurance Company, or Phoenix Life, and Phoenix Investment Partners,
Ltd., or PXP. We have eliminated significant intercompany accounts and transactions in consolidating these
financial statements. We have restated certain 2003 amounts on our Unaudited Interim Condensed Consolidated
Statement of Income and Comprehensive Income, our Unaudited Interim Condensed Consolidated Statement of Cash
Flows and our Unaudited Interim Condensed Consolidated Statement of Changes in Stockholders' Equity to correct
an accounting error related to the method of consolidation for several of our sponsored collateralized
obligation trusts, which is further described below. Also, we have reclassified certain amounts for 2003 to
conform with our 2004 presentation.

We have prepared these financial statements in accordance with accounting principles generally accepted in the
United States, 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; the valuation of
deferred tax assets; pension and other post-employment benefits liabilities; and accruals for contingent
liabilities. Our significant accounting policies are presented in the notes to our consolidated financial
statements in our 2003 Annual Report on Form 10-K.

Our unaudited interim condensed financial statements do not include all of the disclosures required by GAAP for
annual financial statements. In our opinion, we have included all adjustments, consisting of normal recurring
adjustments, considered necessary for a fair statement of the results for the interim periods. Financial
results for the three and nine month periods in 2004 are not necessarily indicative of the results that may be
expected for the year 2004. These unaudited condensed consolidated financial statements should be read in
conjunction with our consolidated financial statements in our 2003 Annual Report on Form 10-K.

Accounting changes and restatement of prior periods

Other-Than-Temporary Impairments: Portions of Emerging Issues Task Force Abstract EITF 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments, or EITF 03-1, are effective for
fiscal periods beginning after June 15, 2004. EITF 03-1 provides guidance as to the determination of
other-than-temporary impaired securities and requires additional disclosures with respect to unrealized losses.
These accounting and disclosure requirements largely codify our existing practices and thus, are not
anticipated to have a material effect on our consolidated financial statements. The effective date of certain
portions of EITF 03-1 has been delayed pending further interpretive guidance. Because significant uncertainty
remains surrounding what form the guidance will ultimately take, we cannot predict what effect, if any,
adoption of the pending portions will have on our financial results.

Post-retirement Benefits: On May 19, 2004, the Financial Accounting Standards Board, or the FASB, issued FASB
Staff Position No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003, or the FSP. For employers that sponsor post-

                                                       7


retirement benefit plans, or plan sponsors that provide prescription drug benefits to retirees, the FSP
requires any effects of the anticipated federal tax subsidy related to those drug benefits be treated as an
actuarial gain. The effect of the FSP is immaterial to our consolidated financial statements.

Nontraditional Long-Duration Contracts and Separate Accounts: Effective January 1, 2004, we adopted 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. Since this new accounting standard largely codifies certain accounting
and reserving practices related to applicable nontraditional long-duration contracts and separate accounts that
we already followed, our adoption did not have a material effect on our consolidated financial statements.

Variable Interest Entities: In January 2003, a new accounting standard was issued, FASB Interpretation No. 46,
or FIN 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, 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 obtained an interest after January 31, 2003. In
addition, as required by the revised standard, on December 31, 2003 we adopted FIN 46-R for Special Purpose
Entities, or SPEs, in which we hold a variable interest that we acquired prior to February 1, 2003. FIN 46-R
requires our application of its provisions to non-SPE variable interest entities for periods ending after March
15, 2004. The adoption of FIN 46-R for our non-SPE variable interest entities did not have a material effect on
our consolidated financial statements.

Stock-based Compensation: A new standard was issued by the FASB in 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. We adopted fair value accounting for stock-based
compensation in 2003 using the prospective method of transition provided by the new standard, which results in
expense recognition for stock options awarded after December 31, 2002.

                                                       8


Pro forma earnings and earnings per share, as if we had applied the fair value method of accounting for stock
options awarded prior to December 31, 2002, follow:

                                                             Three Months Ended          Nine Months Ended
                                                                September 30,              September 30,
                                                          --------------------------  -------------------------
Pro Forma Net Income and Earnings Per Share:                                2003                       2003
($ amounts in millions, except per share data)                2004        Restated        2004       Restated
                                                          ------------  ------------  ------------ ------------

Net income (loss), as reported...........................  $     7.1     $    13.2     $    38.1    $   (35.1)
Add:  Employee stock option compensation expense
  included in net income, net of applicable income taxes.        0.1           0.1           0.5          0.1
Deduct:  Employee stock option compensation expense
  determined under fair value accounting for all awards,
  net of applicable income taxes.........................        1.3           1.2           4.0          3.4
                                                          ------------  ------------  ------------ ------------
Pro forma net income.....................................  $     5.9     $    12.1     $    34.6    $   (38.4)
                                                          ============  ============  ============ ============
Basic earnings per share:
    As reported..........................................  $    0.07     $    0.14     $    0.40    $   (0.37)
    Pro forma............................................  $    0.06     $    0.13     $    0.37    $   (0.41)
Diluted earnings per share:
    As reported..........................................  $    0.07     $    0.13     $    0.38    $   (0.37)
    Pro forma............................................  $    0.06     $    0.12     $    0.34    $   (0.41)

See Note 9 for additional information related to stock-based compensation.

Consolidated Collateralized Obligation Trusts: We have restated certain 2003 amounts on our Consolidated
Statement of Income and Comprehensive Income, our Consolidated Statement of Cash Flows, and our Consolidated
Statement of Changes in Stockholders' Equity to correct an error related to our method of consolidation for
several of our sponsored collateralized obligation trusts, as further described in our 2003 Annual Report on
Form 10-K.

Originally reported and restated amounts for the three and nine months ended September 30, 2003 follow:

Revised and Originally Reported
Select Financial Components:                                   Three Months Ended          Nine Months Ended
($ amounts in millions, except per share data)                 September 30, 2003         September 30, 2003
                                                           --------------------------  -------------------------
                                                           As Restated   As Reported   As Restated  As Reported
                                                           ------------  ------------  ------------ ------------
Income statement data
Insurance and investment product fees...................    $   147.7     $   148.3     $   420.8    $   422.2
Investment income, net of expenses......................        267.4         254.1         836.2        794.5
Realized investment losses..............................         (3.4)         (2.6)       (122.2)      (119.5)
Interest expense on non-recourse
  collateralized obligations............................         11.9          --            37.8         --
Net income (loss) from continuing operations............         13.6          14.4         (33.9)       (31.1)
Net income (loss).......................................    $    13.2     $    14.0     $   (35.1)   $   (32.3)

Earnings per share data
Income (loss) from continuing operations - basic........    $    0.14     $    0.15     $   (0.36)   $   (0.33)
Income (loss) from continuing operations - diluted......         0.14          0.15         (0.36)       (0.33)
Net income (loss) - basic...............................         0.14          0.15         (0.37)       (0.34)
Net income (loss) - diluted.............................    $    0.13     $    0.14     $   (0.37)   $   (0.34)

Business combinations and divestitures

In 2002, we acquired a 60% interest in Kayne Anderson Rudnick Investment Management, LLC, or Kayne Anderson
Rudnick, for $102.4 million; management of the company retained the remaining ownership interest.

                                                       9


In addition to the initial cost of the purchase, we made a subsequent payment, during the three months ended
March 31, 2004, of $30.1 million, based upon growth in management fee revenue for the purchased business
through the end of 2003. This payment had been accrued for by PXP as goodwill as of December 31, 2003.

In January 2004, one member of Kayne Anderson Rudnick accelerated his put/call agreement, at which time we
acquired an additional 0.3% of Kayne Anderson Rudnick. We are also obligated to purchase an additional 14.7%
interest in the company by 2007.

We acquired the remaining minority interest in Walnut Asset Management LLC and Rutherford Brown & Catherwood,
LLC in March 2004 for $2.1 million as a result of the management members exercising their put/call agreements.
This additional purchase price was allocated by PXP to goodwill and definite-lived intangible assets.

The minority interests in each of our less than wholly-owned asset management subsidiaries are subject to
agreements which existed at the time of the acquisitions, pursuant to which either the minority interest
holders or PXP may exercise their respective rights to sell or buy the minority interests on specified future
dates or upon the occurrence of certain events. The contingent and incremental purchase prices are equal to (1)
investment advisory fees for the relevant year multiplied by an agreed upon multiple, multiplied by (2) the
amount of membership interest being purchased. The pricing for the above-described "put/call" is determined
within 60 days after year-end and the put/call may be exercised within 60 days of the finalization of the
price. There is no cap or floor on the put/call price for any of the agreements. Payments made to acquire
minority interest under the agreements are recorded as a step purchase. Accordingly, the purchase price is
allocated to the portion of the assets acquired and liabilities assumed based on their respective fair values.

On March 31, 2004, we completed the sale of 100% of the common stock held by us in Phoenix National Trust
Company. The effect of this transaction is immaterial to our consolidated financial statements. Phoenix
National Trust Company is presented as a discontinued operation in our consolidated financial statements for
all periods presented.

Effective May 31, 2004, we sold our retail broker-dealer operations to Linsco/Private Ledger Financial
Services, or LPL. As part of the transaction, advisors affiliated with WS Griffith Securities, Inc., or
Griffith, and Main Street Management Company, or Main Street, had the opportunity to move to LPL as independent
registered representatives. Revenues net of eliminations and direct expenses net of deferrals and certain
transaction related costs included in our consolidated financial statements related to our retail broker-dealer
operations sold during the second quarter are as follows:

Revenues and Direct Expenses:                                Three Months Ended          Nine Months Ended
($ amounts in millions)                                         September 30,              September 30,
                                                          -------------------------  --------------------------
                                                               2004        2003          2004          2003
                                                          ------------ ------------  ------------  ------------

Insurance and investment product fee revenues,
  net of eliminations...................................   $    --      $    15.5     $    32.0     $    43.9
Direct other operating expenses, net of deferrals.......         0.8         18.3          37.2          53.1

Actual net expense savings to be realized from the sale of our retail broker-dealer operations will depend on
the effect this transaction has on future sales and persistency of inforce life and annuity business and thus,
actual net expense savings realized from the sale may fall short or exceed our current expectations of an
annual pre-tax earnings benefit of $10.0 million or more.

During the nine months ended September 30, 2004, we incurred a $3.6 million net of tax charge for an impairment
of goodwill related to Main Street, offset by a $2.7 million net of tax gain on the sale of the retail
broker-dealer operations. Both the charge and the gain were recorded to realized investment gains and losses.
In addition, we incurred a $10.2 million net of tax charge ($1.8 million of which was incurred during the three
months ended September 30, 2004) related to severance and lease termination costs, offset by a $4.4 million
after-

                                                      10


tax gain related to curtailment accounting in connection with employee benefit plans, all of which was incurred
prior to the three months ended September 30, 2004.

On July 2, 2004, we sold the stock of Phoenix Global Solutions (India) Pvt. Ltd., our India-based information
technology subsidiary, and essentially all of the assets of its U.S. affiliate, Phoenix Global Solutions, Inc.,
to Tata Consultancy Services Limited, a division of Tata Sons Ltd. This transaction is not material to our
consolidated financial statements.

On October 25, 2004, we signed an agreement with Friends Provident plc, or Friends Provident, to sell our 12%
interest in Lombard International Assurance, S.A., or Lombard, and to relinquish our note receivable from
Lombard's affiliate, Insurance Development Holdings A.G., or IDH, in exchange for shares of Friends Provident's
stock. The sale is expected to close during the first quarter of 2005, the effect of which is not material to
our consolidated financial statements. Under the terms of the agreement, we are required to hold the shares of
Friends Provident until April 1, 2005, and we may be entitled to additional cash
consideration based upon Lombard's performance through 2006, payable through 2007.


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 independent 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 our remaining 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
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.
The other 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

                                                      11


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 2004 and 2003. 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.

Segment Information on Assets:                                                     Sept 30,        Dec 31,
($ amounts in millions)                                                              2004            2003
                                                                                --------------- ---------------
Segment assets
Life and annuity segment.....................................................    $   24,746.8    $   24,219.5
Asset management segment.....................................................           843.2           851.2
                                                                                --------------- ---------------
Operating segment assets.....................................................        25,590.0        25,070.7
Venture capital segment......................................................           197.9           196.3
Corporate and other segment..................................................         1,987.0         2,264.0
                                                                                --------------- ---------------
Total segment assets.........................................................        27,774.9        27,531.0
Net assets of discontinued operations........................................            23.1            28.2
                                                                                --------------- ---------------
Total assets.................................................................    $   27,798.0    $   27,559.2
                                                                                =============== ===============

                                                      12


                                                              Three Months Ended          Nine Months Ended
                                                                 September 30,              September 30,
                                                          --------------------------  -------------------------
Segment Information on Revenues and Income:                                 2003                       2003
($ amounts in millions)                                       2004        Restated        2004       Restated
                                                          ------------  ------------  ------------ ------------
Segment revenues
Life and annuity segment................................   $   594.8     $   614.5     $ 1,733.8    $ 1,765.9
Asset management segment................................        63.7          64.1         200.4        180.0
Elimination of inter-segment revenues...................         1.9          (1.5)          3.8         (3.9)
                                                          ------------  ------------  ------------ ------------
Operating segment revenues..............................       660.4         677.1       1,938.0      1,942.0
Venture capital segment.................................        (3.9)          5.1          12.1         34.8
Corporate and other segment.............................        13.5          19.8          42.5         62.1
                                                          ------------  ------------  ------------ ------------
Total segment revenues..................................       670.0         702.0       1,992.6      2,038.9
Net realized investment gains (losses)..................        (9.1)         (3.4)          9.0       (122.2)
Other...................................................        --            --            --           (0.4)
                                                          ------------  ------------  ------------ ------------
Total revenues..........................................   $   660.9     $   698.6     $ 2,001.6    $ 1,916.3
                                                          ============  ============  ============ ============
Segment income (loss)
Life and annuity segment................................   $    40.8     $    25.0     $   100.5    $    70.8
Asset management segment................................        --            (3.1)          0.2        (14.6)
                                                          ------------  ------------  ------------ ------------
Operating segment pre-tax income........................        40.8          21.9         100.7         56.2
Venture capital segment.................................        (3.9)          5.1          12.1         34.8
Corporate and other segment.............................       (15.9)        (10.5)        (44.7)       (34.4)
                                                          ------------  ------------  ------------ ------------
Total segment income before income taxes................        21.0          16.5          68.1         56.6
Applicable income taxes.................................         0.5           4.6          13.5         15.6
                                                          ------------  ------------  ------------ ------------
Total segment income....................................        20.5          11.9          54.6         41.0
Gain (loss) from discontinued operations,
  net of income taxes...................................        --            (0.4)          0.1         (1.2)
Net realized investment gains (losses),
  net of income taxes and other offsets.................        (8.5)          1.7          (2.7)       (71.8)
Restructuring costs, net of income taxes................        (4.9)         --           (13.9)        (4.3)
Other income, net of income taxes.......................        --            --            --            1.2
                                                          ------------  ------------  ------------ ------------
Net income (loss).......................................   $     7.1     $    13.2     $    38.1    $   (35.1)
                                                          ============  ============  ============ ============


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, segment income
and deferred policy acquisition costs follows:

Life and Annuity Segment Assets:                                                   Sept 30,         Dec 31,
($ amounts in millions)                                                              2004            2003
                                                                                --------------- ---------------
Segment assets
Investments..................................................................    $   16,324.9    $   16,203.3
Cash and cash equivalents....................................................           293.4           250.5
Receivables..................................................................           244.4           228.1
Deferred policy acquisition costs............................................         1,428.7         1,367.7
Deferred income taxes........................................................             4.3            40.2
Goodwill and other intangible assets.........................................            10.2            15.3
Other general account assets.................................................           144.0           204.1
Separate accounts............................................................         6,296.9         5,910.3
                                                                                --------------- ---------------
Total segment assets.........................................................    $   24,746.8    $   24,219.5
                                                                                =============== ===============

                                                      13


Life and Annuity Segment Income:                              Three Months Ended          Nine Months Ended
($ amounts in millions)                                          September 30,              September 30,
                                                          --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------
Segment income
Premiums.................................................  $   268.8     $   286.9     $   739.7    $   781.5
Insurance and investment product fees....................       73.4          84.4         249.4        241.8
Net investment income....................................      252.6         243.2         744.7        742.6
                                                          ------------  ------------  ------------ ------------
Total segment revenues...................................      594.8         614.5       1,733.8      1,765.9
                                                          ------------  ------------  ------------ ------------
Policy benefits, including policyholder dividends........      471.9         491.8       1,357.9      1,397.0
Policy acquisition cost amortization.....................       30.6          25.5          77.1         77.7
Other operating expenses.................................       51.5          72.2         198.3        220.0
                                                          ------------  ------------  ------------ ------------
Total segment benefits and expenses......................      554.0         589.5       1,633.3      1,694.7
                                                          ------------  ------------  ------------ ------------
Segment income before income taxes.......................       40.8          25.0         100.5         71.2
Allocated income taxes...................................        7.2          10.7          24.5         23.1
                                                          ------------  ------------  ------------ ------------
Segment income before minority interest..................       33.6          14.3          76.0         48.1
Minority interest in net income of
  consolidated subsidiaries..............................       --            --            --            0.4
                                                          ------------  ------------  ------------ ------------
Segment income...........................................       33.6          14.3          76.0         47.7
Net realized investment gains (losses),
  net of income taxes and other offsets..................       (3.1)         (1.7)         (5.1)         0.9
Restructuring charges, after income taxes................       (1.0)         --            (7.2)        --
                                                          ------------  ------------  ------------ ------------
Segment net income.......................................  $    29.5     $    12.6     $    63.7    $    48.6
                                                          ============  ============  ============ ============

Life and Annuity Segment Revenues by Product:                Three Months Ended          Nine Months Ended
($ amounts in millions)                                         September 30,              September 30,
                                                          --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------
Premiums
Term life insurance......................................  $     2.5     $     2.5     $     7.9    $     6.9
Other life insurance.....................................        2.6           5.2           9.1         10.4
                                                          ------------  ------------  ------------ ------------
Total, non-participating life insurance..................        5.1           7.7          17.0         17.3
Participating life insurance.............................      263.7         279.2         722.7        764.2
                                                          ------------  ------------  ------------ ------------
Total premiums...........................................      268.8         286.9         739.7        781.5
                                                          ------------  ------------  ------------ ------------
Insurance and investment product fees
Variable universal life insurance........................       27.3          27.4          82.3         81.3
Universal life insurance.................................       28.3          24.9          83.4         71.3
Other life insurance.....................................        --           16.0          32.1         44.0
                                                          ------------  ------------  ------------ ------------
Total, life insurance....................................       55.6          68.3         197.8        196.6
Annuities................................................       17.8          16.1          51.6         45.2
                                                          ------------  ------------  ------------ ------------
Total insurance and investment product fees..............       73.4          84.4         249.4        241.8
Net investment income....................................      252.6         243.2         744.7        742.6
                                                          ------------  ------------  ------------ ------------
Segment revenues.........................................  $   594.8     $   614.5     $ 1,733.8    $ 1,765.9
                                                          ============  ============  ============ ============

Other life insurance and investment product fees include broker-dealer commissions related to our retail
broker-dealer operations, which were sold May 31, 2004 as further described in Note 1.

                                                      14



                                                             Three Months Ended          Nine Months Ended
Deferred Policy Acquisition Costs:                              September 30,              September 30,
($ amounts in millions)                                   --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------

Policy acquisition costs deferred.......................   $    33.8     $    49.4     $   123.3    $   150.0
Acquisition costs recognized in
  PFG minority interest acquisition.....................        --             9.8          --            9.8
Costs amortized to expenses:
  Recurring costs related to segment income.............       (30.6)        (25.5)        (77.1)       (77.7)
  Decrease (increase) related to realized
    investment gains or losses..........................        --             2.8           0.8          1.1
Offsets to net unrealized investment gains or losses
  included in other comprehensive income................       (39.7)         51.1          14.0         18.3
                                                          ------------  ------------  ------------ ------------
Change in deferred policy acquisition costs.............       (36.5)         87.6          61.0        101.5
Deferred policy acquisition costs,
  beginning of period...................................     1,465.2       1,248.0       1,367.7      1,234.1
                                                          ------------  ------------  ------------ ------------
Deferred policy acquisition costs, end of period........   $ 1,428.7     $ 1,335.6     $ 1,428.7    $ 1,335.6
                                                          ============  ============  ============ ============

We have included in deferred policy acquisition costs the present value of future profits from two major
reinsurance assumed transactions and the purchase of the minority interest in a subsidiary. The amounts
included at September 30, 2004 and December 31, 2003 follow: Confederation Life ($39.1 million and $36.0
million, respectively), Valley Forge Life ($34.7 million and $37.4 million, respectively) and PFG Holdings
($9.6 million and $9.7, respectively).

Policy liabilities and accruals

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 4.00% to 6.00% at September 30, 2004 and 4.00% to 6.25% at December 31, 2003,
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 1.1% to 12.3% at September 30,
2004 and 1.0% to 12.3% at December 31, 2003, less administrative charges.

Participating life insurance

Participating life insurance inforce was 35.7% and 38.8% of the face value of total individual life insurance
inforce at September 30, 2004 and December 31, 2003, respectively.

Closed block

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 this mutual company were extinguished and eligible policyholders of the mutual company received
shares of common stock of The Phoenix Companies, Inc., together with cash and policy credits, as compensation.
To protect the future dividends of these policyholders, we established a closed block for their existing
policies. Summary financial data for the closed block follows:

                                                      15

                                                                                                    Inception
Closed Block Assets and Liabilities:                                      Sept 30,       Dec 31,     (Dec 31,
($ amounts in millions)                                                     2004          2003         1999)
                                                                        ------------  ------------ ------------

Debt securities................................................          $  6,912.7    $  6,906.4   $  4,773.1
Equity securities..............................................                84.2          82.9         --
Mortgage loans.................................................               194.8         228.5        399.0
Venture capital partnerships...................................                46.2          38.6         --
Policy loans...................................................             1,377.4       1,386.8      1,380.0
Other invested assets..........................................                55.1          46.7         --
                                                                        ------------  ------------ ------------
Total closed block investments.................................             8,670.4       8,689.9      6,552.1
Cash and cash equivalents......................................                89.8          40.5         --
Accrued investment income......................................               121.5         120.2        106.8
Receivables....................................................                65.3          43.0         35.2
Deferred income taxes..........................................               368.8         377.0        389.4
Other closed block assets......................................                18.8          62.3          6.2
                                                                        ------------  ------------ ------------
Total closed block assets......................................             9,334.6       9,332.9      7,089.7
                                                                        ------------  ------------ ------------
Policy liabilities and accruals................................             9,663.1       9,723.1      8,301.7
Policyholder dividends payable.................................               373.7         369.8        325.1
Policyholder dividend obligation...............................               546.0         519.2         --
Other closed block liabilities.................................                60.6          63.0         12.3
                                                                        ------------  ------------ ------------
Total closed block liabilities.................................            10,643.4      10,675.1      8,639.1
                                                                        ------------  ------------ ------------
Excess of closed block liabilities over closed block assets....          $  1,308.8    $  1,342.2   $  1,549.4
                                                                        ============  ============ ============



Closed Block Revenues and Expenses and Changes
in Policyholder Dividend Obligations:                                                     Nine Months Ended,
($ amounts in millions)                                                 Cumulative          September 30,
                                                                           from       -------------------------
                                                                         Inception        2004         2003
                                                                        ------------  ------------ ------------
Closed block revenues
Premiums..............................................................   $  4,938.4    $    700.4   $    754.4
Net investment income.................................................      2,629.6         418.4        425.4
Net realized investment gains (losses)................................        (90.2)         (1.1)        (5.5)
                                                                        ------------  ------------ ------------
Total revenues........................................................      7,477.8       1,117.7      1,174.3
                                                                        ------------  ------------ ------------
Policy benefits, excluding dividends..................................      5,110.1         749.6        798.2
Other operating expenses..............................................         56.2           7.2          8.2
                                                                        ------------  ------------ ------------
Total benefits and expenses, excluding policyholder dividends.........      5,166.3         756.8        806.4
                                                                        ------------  ------------ ------------
Closed block contribution to income before dividends and income taxes.      2,311.5         360.9        367.9
Policyholder dividends................................................      1,905.5         309.2        309.8
                                                                        ------------  ------------ ------------
Closed block contribution to income before income taxes...............        406.0          51.7         58.1
Applicable income taxes...............................................        142.7          18.2         20.5
                                                                        ------------  ------------ ------------
Closed block contribution to income...................................   $    263.3    $     33.5   $     37.6
                                                                        ============  ============ ============
Policyholder dividend obligation
Policyholder dividends provided through earnings......................   $  1,950.7    $    309.2   $    309.8
Policyholder dividends provided through other comprehensive income....        445.2          12.5        (46.0)
                                                                        ------------  ------------ ------------
Additions to policyholder dividend liabilities........................      2,395.9         321.7        263.8
Policyholder dividends paid...........................................     (1,801.3)       (291.0)      (291.9)
                                                                        ------------  ------------ ------------
Increase (decrease) in policyholder dividend liabilities..............        594.6          30.7        (28.1)
Policyholder dividend liabilities, beginning of period................        325.1         889.0        910.7
                                                                        ------------  ------------ ------------
Policyholder dividend liabilities, end of period......................        919.7         919.7        882.6
Less: policyholder dividends payable, end of period...................        373.7         373.7        375.9
                                                                        ------------  ------------ ------------
Policyholder dividend obligation, end of period.......................    $   546.0     $   546.0    $   506.7
                                                                         ============  ============ ============

                                                      16


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, closed-end 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 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 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. See Note 7 for
additional information.

We offer asset management services through our affiliated asset managers. We provide these 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.

Segment information on assets, segment income and intangible assets and goodwill follows:

Asset Management Segment Assets:                                                   Sept 30,         Dec 31,
($ amounts in millions)                                                              2004            2003
                                                                                --------------- ---------------

Segment assets
Investments..................................................................    $       15.4    $       11.8
Cash and cash equivalents....................................................            61.6            39.6
Receivables..................................................................            31.3            36.0
Intangible assets............................................................           311.8           335.1
Goodwill.....................................................................           410.6           408.1
Other assets.................................................................            12.5            20.6
                                                                                --------------- ---------------
Total segment assets.........................................................    $      843.2    $      851.2
                                                                                =============== ===============

                                                      17



                                                              Three Months Ended          Nine Months Ended
Asset Management Segment Income:                                 September 30,              September 30,
($ amounts in millions)                                   --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------
Segment income
Investment product fees.................................   $    63.5     $    64.0     $   199.9    $   179.7
Net investment income...................................         0.2           0.1           0.5          0.3
                                                          ------------  ------------  ------------ ------------
Total segment revenues..................................        63.7          64.1         200.4        180.0
                                                          ------------  ------------  ------------ ------------
Intangible asset amortization...........................         8.5           8.3          25.1         24.9
Other operating expenses................................        51.9          56.0         164.6        162.1
                                                          ------------  ------------  ------------ ------------
Total segment expenses..................................        60.4          64.3         189.7        187.0
                                                          ------------  ------------  ------------ ------------
Segment income (loss) before income taxes                        3.3          (0.2)         10.7         (7.0)
  and minority interest.................................
Allocated income taxes (benefit)........................        --            (1.2)          0.4         (5.6)
                                                          ------------  ------------  ------------ ------------
Segment income (loss) before minority interest..........         3.3           1.0          10.3         (1.4)
Minority interest in segment income of
  consolidated subsidiaries.............................         3.3           2.9          10.5          7.6
                                                          ------------  ------------  ------------ ------------
Segment income (loss)...................................        --            (1.9)         (0.2)        (9.0)
Restructuring charges, net of income taxes..............        --            --            (0.3)        (3.3)
Realized investment gains, net of income taxes..........         0.2          --             1.6         --
                                                          ------------  ------------  ------------ ------------
Segment net income (loss)...............................   $     0.2     $    (1.9)    $     1.1    $   (12.3)
                                                          ============  ============  ============ ============

Beginning in 2004, trailing commissions related to mutual funds are classified as operating expenses, whereas
in prior years, trailing commissions were presented as a deduction to investment product fees. The Asset
Management segment charges investment management fees, on a cost recovery basis, to the Life Companies for
managing their general account assets. These fees, as well as the associated expenses, have been eliminated.
This treatment has no effect on the segment's net income. Prior year amounts have been reclassified to conform
to current year presentation.

Asset management segment intangible assets and goodwill

Carrying Amounts of Intangible Assets and Goodwill:                                     Sept 30,     Dec 31,
($ amounts in millions)                                                                   2004        2003
                                                                                      ------------ ------------

Asset management contracts with definite lives...............................          $   396.2    $   396.1
Less: accumulated amortization...............................................              157.7        134.3
                                                                                      ------------ ------------
Intangible assets with definite lives........................................              238.5        261.8
Asset management contracts with indefinite lives.............................               73.3         73.3
                                                                                      ------------ ------------
Intangible assets............................................................          $   311.8    $   335.1
                                                                                      ============ ============

Goodwill.....................................................................          $   410.6    $   408.1
                                                                                      ============ ============

                                                      18

Activity in Intangible Assets and Goodwill:                   Three Months Ended          Nine Months Ended
($ amounts in millions)                                          September 30,              September 30,
                                                          --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------
Intangible assets
Asset purchases.........................................   $    --       $     2.6     $     1.8    $     3.4
Asset amortization......................................        (8.5)         (8.3)        (25.1)       (24.9)
                                                          ------------  ------------  ------------ ------------
Change in intangible assets.............................        (8.5)         (5.7)        (23.3)       (21.5)
Balance, beginning of period............................       320.3         349.2         335.1        365.0
                                                          ------------  ------------  ------------ ------------
Balance, end of period..................................   $   311.8     $   343.5     $   311.8    $   343.5
                                                          ============  ============  ============ ============

Goodwill
Goodwill acquired.......................................   $    --       $     1.8     $     2.5    $     3.0
                                                          ------------  ------------  ------------ ------------
Change in goodwill......................................        --             1.8           2.5          3.0
Balance, beginning of period............................       410.6         376.8         408.1        375.6
                                                          ------------  ------------  ------------ ------------
Balance, end of period..................................   $   410.6     $   378.6     $   410.6    $   378.6
                                                          ============  ============  ============ ============

Upon acquisition, we calculate and record the fair value of definite-lived intangible assets based on their
discounted cash flows. To conduct subsequent tests for impairments, we calculate the current fair value of the
asset, compare it to the recorded value, and record an impairment if warranted. For purposes of our testing for
goodwill and indefinite-lived intangible asset 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.

The estimated amortization expense on definite-lived intangible assets in future periods is: three months ended
December 31, 2004 - $8.3 million; 2005 - $32.4 million; 2006 - $27.4 million; 2007 - $26.3 million; 2008 -
$26.0 million; 2009 - $24.9 million; and thereafter - $93.2 million. At September 30, 2004, the remaining
weighted-average amortization period for definite-lived intangible assets is 8.5 years.


5.   Investing Activities

Debt and equity securities

Fair Value and Cost of Debt and Equity Securities:            September 30, 2004          December 31, 2003
($ amounts in millions)                                   --------------------------  -------------------------
                                                           Fair Value       Cost       Fair Value      Cost
                                                          ------------  ------------  ------------ ------------

U.S. government and agency..............................   $   669.8     $   609.5     $   757.0    $   714.5
State and political subdivision.........................       463.8         427.8         510.3        468.4
Foreign government......................................       308.2         284.0         260.4        239.0
Corporate...............................................     7,194.8       6,857.2       6,765.8      6,412.4
Mortgage-backed.........................................     3,114.3       2,974.2       3,097.5      2,963.4
Other asset-backed......................................     1,587.6       1,573.1       1,882.0      1,863.6
                                                          ------------  ------------  ------------ ------------
Debt securities.........................................   $13,338.5     $12,725.8     $13,273.0    $12,661.3
                                                          ============  ============  ============ ============

Amounts applicable to the closed block..................   $ 6,912.7     $ 6,462.9     $ 6,906.4    $ 6,471.1
                                                          ============  ============  ============ ============

Hilb, Rogal and Hobbs, or HRH, common stock.............   $   131.2     $    42.1     $   116.2    $    42.2
Lombard International Assurance, S.A....................        41.5          41.5          41.1         41.1
Other equity securities.................................       136.5         127.8         154.7        139.1
                                                          ------------  ------------  ------------ ------------
Equity securities.......................................   $   309.2     $   211.4     $   312.0    $   222.4
                                                          ============  ============  ============ ============

Amounts applicable to the closed block..................   $    84.2     $    78.5     $    82.9    $    75.0
                                                          ============  ============  ============ ============

Our holdings in HRH common stock as of September 30, 2004 are pledged for use in November 2005 to settle
certain stock purchase contracts issued by us. Upon settlement of such stock purchase contracts, we will

                                                      19


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.

On October 25, 2004, we signed an agreement with Friends Provident to sell our interest in Lombard as further
described in Note 1.

Gross and Net Unrealized Gains and Losses from
General Account Debt and Equity Securities:                   September 30, 2004          December 31, 2003
($ amounts in millions)                                   --------------------------  -------------------------
                                                             Gains         Losses        Gains        Losses
                                                          ------------  ------------  ------------ ------------

U.S. government and agency..............................   $    61.4     $    (1.1)    $    44.0    $    (1.5)
State and political subdivision.........................        37.6          (1.6)         43.5         (1.6)
Foreign government......................................        24.7          (0.5)         23.2         (1.8)
Corporate...............................................       381.8         (44.2)        400.4        (47.0)
Mortgage-backed.........................................       146.7          (6.6)        143.4         (9.3)
Other asset-backed......................................        41.8         (27.3)         55.6        (37.2)
                                                          ------------  ------------  ------------ ------------
Debt securities gains (losses)..........................   $   694.0     $   (81.3)    $   710.1    $   (98.4)
                                                          ============  ============  ============ ============
Debt securities net gains...............................   $   612.7                   $   611.7
                                                          ============                ============

Hilb, Rogal and Hobbs common stock......................   $    89.1     $    --       $    74.0    $    --
Other equity securities.................................        14.7          (6.0)         17.4         (1.8)
                                                          ------------  ------------  ------------ ------------
Equity securities gains (losses)........................   $   103.8     $    (6.0)    $    91.4    $    (1.8)
                                                          ============  ============  ============ ============
Equity securities net gains.............................   $    97.8                   $    89.6
                                                          ============                ============

Mortgage loans

Carrying Values of Investments in Mortgage Loans:             September 30, 2004          December 31, 2003
($ amounts in millions)                                   --------------------------  -------------------------
                                                            Carrying                    Carrying
                                                              Value      Fair Value       Value     Fair Value
                                                          ------------  ------------  ------------ ------------
Property type
Apartment buildings.....................................   $    82.8     $    86.7     $   105.1    $   106.7
Office buildings........................................        28.9          30.3          49.0         49.7
Retail stores...........................................        93.2          97.6         109.0        110.7
Industrial buildings....................................        28.7          30.1          33.7         34.2
Other...................................................         0.1           0.1           0.1          0.1
                                                          ------------  ------------  ------------ ------------
Subtotal................................................       233.7         244.8         296.9        301.4
Less: valuation allowances..............................        10.0          --            12.8         --
                                                          ------------  ------------  ------------ ------------
Mortgage loans..........................................   $   223.7     $   244.8     $   284.1    $   301.4
                                                          ============  ============  ============ ============

Amounts applicable to the closed block..................   $   194.8     $   203.9     $   228.5    $   242.4
                                                          ============  ============  ============ ============

                                                      20


                                                                     September 30, 2004
                                              -----------------------------------------------------------------
Aging of Temporarily Impaired General
Account Debt and Equity Securities:            Less than 12 months  Greater than 12 months        Total
($ amounts in millions)                       --------------------- ---------------------- --------------------
                                                 Fair    Unrealized   Fair     Unrealized   Fair     Unrealized
                                                 Value     Losses     Value      Losses     Value      Losses
                                              ---------- ---------- --------- ----------- ---------- ----------
Debt securities
U.S. government and agency................     $   83.8    $  (0.8)  $   4.9   $   (0.3)   $   88.7   $   (1.1)
State and political subdivision...........         39.1       (1.0)     14.8       (0.6)       53.9       (1.6)
Foreign government........................          7.8       (0.3)     10.6       (0.2)       18.4       (0.5)
Corporate.................................        935.5      (16.5)    480.9      (27.7)    1,416.4      (44.2)
Mortgage-backed...........................        452.7       (4.4)     94.0       (2.2)      546.7       (6.6)
Other asset-backed........................        297.9       (5.8)    116.4      (21.5)      414.3      (27.3)
                                              ---------- ---------- --------- ---------- ----------- ----------
Debt securities...........................     $1,816.8    $ (28.8)  $ 721.6   $  (52.5)   $2,538.4   $  (81.3)
Common stock..............................         30.1       (5.2)      5.7       (0.8)       35.8       (6.0)
                                              ---------- ---------- --------- ---------- ----------- ----------
Total temporarily impaired securities.....     $1,846.9    $ (34.0)  $ 727.3   $  (53.3)   $2,574.2   $  (87.3)
                                              ========== ========== ========= ========== =========== ==========

Amounts inside the closed block...........     $  662.8    $ (13.6)  $ 347.5   $  (20.7)   $1,010.3   $  (34.3)
                                              ========== ========== ========= ========== =========== ==========

Amounts outside the closed block..........     $1,184.1    $ (20.4)  $ 379.8   $  (32.6)   $1,563.9   $  (53.0)
                                              ========== ========== ========= ========== =========== ==========

Amounts outside the closed block
  that are below investment grade.........     $  100.1    $  (5.0)  $  73.9   $  (15.2)   $  174.0   $  (20.2)
                                              ========== ========== ========= ========== =========== ==========
After offsets for deferred acquisition
  cost adjustment and taxes...............                $   (2.1)            $   (5.8)              $   (7.8)
                                                         ==========           ==========             ==========

These securities are considered to be temporarily impaired at September 30, 2004 as each of these securities
has performed, and is expected to continue to perform, in accordance with their original contractual terms.

Venture capital partnerships

Components of Net Investment Income Related to Venture          Three Months Ended         Nine Months Ended
Capital Partnerships:                                              September 30,             September 30,
($ amounts in millions)                                      ------------------------  ------------------------
                                                                 2004        2003         2004         2003
                                                             -----------  -----------  -----------  -----------
Net realized gains on partnership cash
  and stock distributions................................     $    8.3     $   10.0     $    8.5     $   11.5
Net unrealized gains (losses) on partnership investments.        (11.7)         2.4         10.1         40.1
Partnership operating expenses...........................         (0.3)        (2.2)        (2.9)        (6.0)
                                                             -----------  -----------  -----------  -----------
Net investment income (loss).............................     $   (3.7)    $   10.2     $   15.7     $   45.6
                                                             ===========  ===========  ===========  ===========

Amounts applicable to the closed block...................     $    0.2    $     5.1     $    3.6     $   10.8
                                                             ===========  ===========  ===========  ===========
Amounts applicable to the venture capital segment........     $   (3.9)   $     5.1     $   12.1     $   34.8
                                                             ===========  ===========  ===========  ===========

                                                      21



The effect of adjusting estimated partnership results to actual results was to decrease investment income by
$2.6 million and $0.4 million for the three months ended September 30, 2004 and 2003, respectively, and to
increase investment income by $7.8 million and $33.4 million for the nine months ended September 30, 2004 and
2003, respectively.

                                                              Three Months Ended          Nine Months Ended
Investment Activity in Venture Capital Partnerships:             September 30,              September 30,
($ amounts in millions)                                   --------------------------  -------------------------
                                                              2004          2003          2004         2003
                                                          ------------  ------------  ------------ ------------

Contributions............................................  $    16.0     $     9.4     $    42.8    $    34.2
Equity in earnings of partnerships.......................       (3.7)         10.2          15.7         45.6
Distributions............................................      (17.5)        (16.4)        (49.3)       (27.7)
Proceeds from sale of partnership interests..............       --            --            --          (26.1)
Realized loss on sale of partnership interests...........       --            --            --          (14.3)
                                                          ------------  ------------  ------------ ------------
Change in venture capital partnerships...................       (5.2)          3.2           9.2         11.7
Venture capital partnership investments,
  beginning of period....................................      249.3         237.1         234.9        228.6
                                                          ------------  ------------  ------------ ------------
Venture capital partnership investments,                   $   244.1     $   240.3     $   244.1    $   240.3
  end of period.......................................... ============  ============  ============ ============

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 use 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 apply a public industry sector index to
estimate changes in valuations 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 write-downs by the general partners). Our methodology recognizes both downward and
upward adjustments in estimated values based on the indices, but when the general partner reduces the value of
a private investee company, we do not adjust the fair value upward (by applying the public sector index) in
excess of the most recent value reported by the general partner. Finally, 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.

Unfunded Commitments and Investments in Venture Capital Partnerships:                  Sept 30,      Dec 31,
($ amounts in millions)                                                                  2004          2003
                                                                                     ------------  ------------

Unfunded commitments
Closed block......................................................................    $    77.1     $    48.3
Venture capital segment...........................................................         52.0          76.7
                                                                                     ------------  ------------
Total unfunded commitments........................................................    $   129.1     $   125.0
                                                                                     ============  ============

Venture capital partnerships
Closed block......................................................................    $    46.2     $    38.6
Venture capital segment...........................................................        197.9         196.3
                                                                                     ------------  ------------
Total venture capital partnerships................................................    $   244.1     $   234.9
                                                                                     ============  ============

Affiliate equity securities

The fair value of our investment in Aberdeen Asset Management PLC, or Aberdeen, common stock, based on the
London Stock Exchange closing price at September 30, 2004 and December 31, 2003, was $58.3 million and $54.4
million, respectively. The carrying value of our investment in Aberdeen, using the equity method of accounting,
totaled $39.0 million and $38.3 million at September 30, 2004 and December 31, 2003, respectively.

                                                      22


On May 25, 2004, Aberdeen closed on the sale of its UK and Continental European property investment management
business to an unrelated party. We recognized a pre-tax, non-cash realized gain of $1.2 million during the
second quarter of 2004 as a realized investment gain related to our share of Aberdeen's realized gain.

Net investment income

                                                              Three Months Ended          Nine Months Ended
                                                                 September 30,              September 30,
                                                          --------------------------  -------------------------
Sources of Net Investment Income:                                           2003                       2003
($ amounts in millions)                                       2004        Restated        2004       Restated
                                                          ------------  ------------  ------------ ------------

Debt securities..........................................  $   192.4     $   184.5     $   575.9    $   571.4
Equity securities........................................        1.1           0.9           3.1          3.1
Mortgage loans...........................................        5.9           7.0          17.2         26.4
Venture capital partnerships.............................       (3.7)         10.2          15.7         45.6
Affiliate equity securities..............................        0.3          --             0.5          0.7
Policy loans.............................................       42.3          42.2         126.2        127.4
Other investments........................................       17.0          11.0          37.9         23.4
Cash and cash equivalents................................        1.4           1.4           3.1          5.9
                                                          ------------  ------------  ------------ ------------
Total investment income..................................      256.7         257.2         779.6        803.9
  Less: investment expenses..............................        2.4           2.5           7.1          8.0
                                                          ------------  ------------  ------------ ------------
Net investment income, general account investments.......      254.3         254.7         772.5        795.9
Debt and equity securities pledged as collateral (Note 7)       11.1          12.7          30.0         40.3
                                                          ------------  ------------  ------------ ------------
Net investment income....................................  $   265.4     $   267.4     $   802.5    $   836.2
                                                          ============  ============  ============ ============

Amounts applicable to the closed block...................  $   137.3     $   138.8     $   418.4    $   425.4
                                                          ============  ============  ============ ============

                                                      23



Net realized investment gains (losses)

                                                               Three Months Ended          Nine Months Ended
                                                                  September 30,              September 30,
                                                           --------------------------  -------------------------
Net Realized Investment Gains (Losses):                                      2003                       2003
($ amounts in millions)                                        2004        Restated        2004       Restated
                                                           ------------  ------------  ------------ ------------

Debt security impairments................................   $    (4.6)    $   (15.0)    $    (8.6)   $   (60.4)
Equity security impairments..............................        --            (3.2)         --           (4.3)
Mortgage loan impairments................................        --            (0.9)         --           (4.1)
Venture capital partnership impairments..................        --            --            --           (4.6)
Affiliate equity security impairments....................        --            --            --          (96.9)
Other invested asset impairments.........................        --            (0.4)         (3.3)       (10.3)
Debt and equity securities
  pledged as collateral impairments......................        (8.3)         (0.8)        (16.6)        (2.7)
                                                           ------------  ------------  ------------ ------------
Impairment losses........................................       (12.9)        (20.3)        (28.5)      (183.3)
                                                           ------------  ------------  ------------ ------------
Debt security transaction gains..........................         6.0          12.4          25.2         82.7
Debt security transaction losses.........................        (2.3)         (1.3)         (8.4)       (25.1)
Equity security transaction gains........................         0.2           5.5          14.0         21.1
Equity security transaction losses.......................        --            (0.6)         (0.9)       (11.0)
Mortgage loan transaction gains (losses).................        --            (0.6)          0.2         (1.4)
Venture capital partnership transaction losses...........        --            --            --           (9.7)
Other invested asset transaction gains (losses)..........        (0.1)          1.5           7.4          4.5
                                                           ------------  ------------  ------------ ------------
Net transaction gains....................................         3.8          16.9          37.5         61.1
                                                           ------------  ------------  ------------ ------------
Net realized investment gains (losses)...................   $    (9.1)    $    (3.4)    $     9.0    $  (122.2)
                                                           ------------  ------------  ------------ ------------

Net realized investment gains (losses)...................   $    (9.1)    $    (3.4)    $     9.0    $  (122.2)
                                                           ------------  ------------  ------------ ------------
Applicable closed block
  policyholder dividend obligation.......................        (2.5)         (3.5)          4.8         (4.5)
Applicable deferred policy acquisition costs.............        (0.1)         (2.8)         (0.9)        (1.1)
Applicable deferred income taxes (benefit)...............         2.0           1.2           7.8        (44.8)
                                                           ------------  ------------  ------------ ------------
Offsets to realized investment gains (losses)............        (0.6)         (5.1)         11.7        (50.4)
                                                           ------------  ------------  ------------ ------------
Net realized investment gains (losses)
  included in net income.................................   $    (8.5)    $     1.7     $    (2.7)   $   (71.8)
                                                           ============  ============  ============ ============

Unrealized investment gains (losses)

                                                               Three Months Ended          Nine Months Ended
                                                                  September 30,              September 30,
Sources of Changes in                                      --------------------------  -------------------------
Net Unrealized Investment Gains (Losses):                                    2003                       2003
($ amounts in millions)                                        2004        Restated        2004       Restated
                                                           ------------  ------------  ------------ ------------

Debt securities..........................................   $   273.7     $  (292.9)    $     1.0    $   (33.6)
Equity securities........................................        (1.7)        (27.6)          8.2        (23.3)
Debt and equity securities pledged as collateral.........        35.9           7.5           8.4        136.6
Other investments........................................        (4.8)          5.9          (7.3)         0.2
                                                           ------------  ------------  ------------ ------------
Net changes in unrealized investment gains (losses)......   $   303.1     $  (307.1)    $    10.3    $    79.9
                                                           ============  ============  ============ ============

Net unrealized investment gains (losses).................   $   303.1     $  (307.1)    $    10.3    $    79.9
                                                           ------------  ------------  ------------ ------------
Applicable closed block
  policyholder dividend obligation.......................       170.4        (209.8)         12.5        (46.0)
Applicable deferred policy acquisition costs (benefit)...        39.7         (51.1)        (14.0)       (18.3)
Applicable deferred income taxes (benefit)...............        19.5         (19.0)          1.6          2.3
                                                           ------------  ------------  ------------ ------------
Offsets to net unrealized investment gains (losses)......       229.6        (279.9)          0.1        (62.0)
                                                           ------------  ------------  ------------ ------------
Net changes in unrealized investment gains (losses)
  included in other comprehensive income.................   $    73.5     $   (27.2)    $    10.2    $   141.9
                                                           ============  ============  ============ ============

                                                      24

6.   Financing Activities

Stock purchase contracts and indebtedness

The carrying values and fair values of our stock purchase contracts as of September 30, 2004 and December 31,
2003 follow:

                                                    September 30, 2004                December 31, 2003
                                              --------------------------------  -------------------------------
Stock Purchase Contracts:                        Carrying           Fair           Carrying          Fair
($ amounts in millions)                           Value            Value            Value           Value
                                              ---------------  ---------------  --------------- ---------------

Stock purchase contracts stated amount......   $      141.9     $      131.1     $      144.2    $      128.8
Settlement amount adjustment................          (10.8)            --              (15.4)           --
                                              ---------------  ---------------  --------------- ---------------
Stock purchase contracts....................   $      131.1     $      131.1     $      128.8    $      128.8
                                              ===============  ===============  =============== ===============

In 2002, we issued stock purchase contracts in a public offering. The stock purchase contracts are prepaid
forward contracts issued by us that will be settled in shares of Hilb, Rogal and Hobbs Company, or HRH, common
stock. Upon issuance of the stock purchase contracts, we designated the embedded derivative instrument as a
hedge of the forecasted sale of our investment in HRH, whose shares underlie the stock purchase contracts. All
changes in the fair value of the embedded derivative instrument are recorded in other comprehensive income. For
the three months ended September 30, 2004 and 2003, we recognized an increase (decrease) in the fair value of
the embedded derivative instrument of $6.5 million ($4.2 million after income taxes) and $(0.9) million ($(0.6)
million after income taxes), respectively, in other comprehensive income. For the nine months ended September
30, 2004 and 2003, we recognized an increase (decrease) in the fair value of the embedded derivative instrument
of $(4.6) million ($(3.0) million after income taxes) and $11.3 million ($7.3 million after taxes),
respectively, in other comprehensive income. These changes in the fair value of the embedded derivative are
primarily due to fluctuations in the quoted market price of HRH common stock during the respective three and
nine months ended September 30, 2004 and 2003. The quoted market price of HRH common stock, which was $36.22 at
September 30, 2004, was less than the price that we received at issuance of the stock purchase contracts. For
more information, see Notes 5 and 6 to our consolidated financial statements in our 2003 Annual Report on Form
10-K.

                                                    September 30, 2004                December 31, 2003
                                              --------------------------------  -------------------------------
Indebtedness:                                    Carrying           Fair           Carrying          Fair
($ amounts in millions)                           Value            Value            Value           Value
                                              ---------------  ---------------  --------------- ---------------

Surplus notes...............................   $      175.0     $      187.4     $      175.0    $      188.8
Equity units................................          153.7            200.0            153.7           232.1
Senior unsecured bonds......................          300.0            305.9            300.0           311.2
Revolving credit facility...................           25.0             25.0             --              --
Interest rate swap..........................            9.0              9.0             10.3            10.3
                                              ---------------  ---------------  --------------- ---------------
Total indebtedness..........................   $      662.7     $      727.3     $      639.0    $      742.4
                                              ===============  ===============  =============== ===============

On December 22, 2003, we closed on a new $150.0 million unfunded, unsecured senior revolving credit facility to
replace our $100.0 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 PXP. Financial covenants require the maintenance at all times of: consolidated
stockholders' equity, excluding the accounting effects of FIN 46-R, 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-. On March 15, 2004, PXP borrowed $25.0 million from the $37.5 million three-year tranche of this credit
facility to fulfill an obligation

                                                      25


related to the Kayne Anderson Rudnick acquisition, as further described in Note 1 of these consolidated
financial statements. We were in compliance with all credit facility covenants at September 30, 2004. We are
currently renegotiating this revolving credit facility and expect to have a new facility in place prior to
December 20, 2004.

Interest Expense on Indebtedness,                          Three Months Ended            Nine Months Ended
including Amortization of Debt Issuance Costs:                September 30,                September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                           2004           2003           2004         2003
                                                      -------------  -------------  ------------- -------------

Stock purchase contract adjustment payments.........   $      2.0     $      2.0     $      6.1    $      6.1
                                                      =============  =============  ============= =============

Surplus notes.......................................   $      3.0     $      3.0     $      9.1    $      9.1
Equity units........................................          3.0            3.0            9.1           9.1
Senior unsecured bonds..............................          3.7            3.7           10.9          11.1
Bank credit facility and other......................          0.4            0.1            0.7           0.2
                                                      -------------  -------------  ------------- -------------
Total interest expense on indebtedness..............   $     10.1     $      9.8     $     29.8    $     29.5
                                                      =============  =============  ============= =============

Stock purchase contract adjustment payments are included in other operating expenses.

Common stock dividends

On April 29, 2004, we declared a cash dividend of $0.16 per share, which was paid July 12, 2004 to shareholders
of record on June 14, 2004. In the prior year, we declared a dividend of $0.16 per share on April 28, 2003 to
our shareholders of record on June 13, 2003; we paid that dividend on July 11, 2003.

7.   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 be deemed to hold interests in those entities. In particular, we
serve as the investment advisor to eight collateralized obligation trusts that were organized to take advantage
of bond market arbitrage opportunities, including the three in the table below. The eight collateralized
obligation trusts are investment trusts with aggregate assets of $2.9 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 equity securities to third parties, as well as to our
principal life insurance subsidiary's general account. Our asset management affiliates earned advisory fees
from these trusts of $2.6 million and $1.3 million for the three months ended September 30, 2004 and 2003,
respectively, and $6.1 million and $4.5 million for the nine months ended September 30, 2004 and 2003,
respectively. These advisory fees are either recorded as investment product fees for unconsolidated trusts or
reflected as investment income on debt and equity securities pledged as collateral, net of interest expense on
collateralized obligations and applicable minority interest related to third-party equity investments for
consolidated trusts on our consolidated statement of income. The collateralized obligation trusts reside in
bankruptcy remote SPEs for which we provide neither recourse nor guarantees. Accordingly, our sole financial
exposure to these collateralized obligation trusts stems from the life insurance subsidiary's general account
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 eight
collateralized obligation trusts is $78.2 million at September 30, 2004 ($28.5 million of which relate to
trusts that are consolidated). Of that exposure, $54.7 million ($20.0 million of which relate to trusts that
are consolidated) relates to investment grade debt securities and loss of management fees.

We consolidated three collateralized obligation trusts as of September 30, 2004 and 2003. As of September 30,
2004, our direct investment in the three consolidated collateralized obligation trusts is $28.5 million ($20.0
million of which is an investment grade debt security). Minority interest liability of $29.5 million relates to
third-party equity investments, specifically in Phoenix-Mistic 2002-1 CDO, where the carrying value of assets
pledged as collateral exceeds the carrying value of liabilities due to third parties by $58.0 million at
September 30, 2004. Minority interest liability related to the other two consolidated trusts, Phoenix CDO I and
Phoenix CDO II is zero

                                                      26


at September 30, 2004 as the carrying value of the liabilities due third parties exceeds the
carrying value of the assets pledged as collateral. We recognized investment income on debt and equity
securities pledged as collateral, net of interest expense on collateralized obligations and applicable minority
interest of $0.8 million and $0.5 million for the three months ended September 30, 2004 and 2003, respectively,
and $2.6 million and $1.6 million for the nine months ended September 30, 2004 and 2003, respectively, related
to these three consolidated collateralized obligation trusts.

Five variable interest entities not consolidated by us under FIN 46-R represent collateralized obligation
trusts with approximately $1.6 billion of investment assets pledged as collateral. Our general account direct
investment in these unconsolidated variable interest entities is $49.7 million ($34.7 million of which are
investment grade debt securities at September 30, 2004). We recognized investment advisory fee revenues related
to the five unconsolidated variable interest entities of $1.8 million and $0.8 million for the three months
ended September 30, 2004 and 2003, respectively, and $3.5 million and $2.9 million for the nine months ended
September 30, 2004 and 2003, respectively.

Consolidated Variable Interest Entities:                                           Sept 30,         Dec 31,
($ amounts in millions)                                                              2004            2003
                                                                                --------------- ---------------

Assets Pledged as Collateral, at Fair Value
Phoenix CDO I................................................................    $      119.4    $      148.8
Phoenix CDO II...............................................................           300.5           332.6
Phoenix-Mistic 2002-1 CDO, Ltd...............................................           954.1           963.4
                                                                                --------------- ---------------
Total........................................................................    $    1,374.0    $    1,444.8
                                                                                =============== ===============

Non-recourse Collateralized Obligations
Phoenix CDO I (March 2011 maturity)..........................................    $      125.5    $      183.2
Phoenix CDO II (December 2012 mandatorily redeemable)........................           338.8           375.6
Phoenix-Mistic 2002-1 CDO, Ltd. (September 2014 maturity)....................           896.2           913.2
                                                                                --------------- ---------------
Total........................................................................    $    1,360.5    $    1,472.0
                                                                                =============== ===============

Assets pledged as collateral consist of available-for-sale debt and equity securities at fair value of $1,289.4
million and $1,350.0 million at September 30, 2004 and December 31, 2003, respectively. In addition, cash and
accrued investment income of $84.6 million and $94.8 million are included in these amounts at September 30,
2004 and December 31, 2003, respectively.

Non-recourse collateralized obligations consist of callable collateralized obligations of $1,254.1 million and
$1,344.2 million at September 30, 2004 and December 31, 2003, respectively, and non-recourse derivative cash
flow hedge liabilities of $106.4 million (notional amount of $1,117.6 million with maturities of 2005-2013) and
$127.8 million (notional amount of $1,211.3 million with maturities of 2005-2013) at September 30, 2004 and
December 31, 2003, respectively. Minority interest liabilities related to third-party equity investments in the
consolidated variable interest entities are $29.5 million and $22.3 million at September 30, 2004 and December
31, 2003, respectively.

                                                      27


Fair Value and Cost of Debt and Equity Securities
Pledged as Collateral:                                     September 30, 2004           December 31, 2003
($ amounts in millions)                               ----------------------------  ---------------------------
                                                        Fair Value       Cost         Fair Value      Cost
                                                      -------------  -------------  ------------- -------------

Debt securities pledged as collateral...............   $  1,287.7     $  1,178.1     $  1,348.8    $  1,247.4
Equity securities pledged as collateral.............          1.7            1.1            1.2           0.7
                                                      -------------  -------------  ------------- -------------
Total debt and equity securities
  pledged as collateral.............................   $  1,289.4     $  1,179.2     $  1,350.0    $  1,248.1
                                                      =============  =============  ============= =============


Gross and Net Unrealized Gains and Losses from
Debt and Equity Securities Pledged as Collateral:          September 30, 2004           December 31, 2003
($ amounts in millions)                               ----------------------------  ---------------------------
                                                          Gains          Losses         Gains         Losses
                                                      -------------  -------------  ------------- -------------

Debt securities pledged as collateral...............   $    126.2     $    (16.6)    $    129.7    $    (28.3)
Equity securities pledged as collateral.............          1.1           (0.5)           0.7          (0.2)
                                                      -------------  -------------  ------------- -------------
Total...............................................   $    127.3     $    (17.1)    $    130.4    $    (28.5)
                                                      =============  =============  ============= =============
Net unrealized gains................................   $    110.2                    $    101.9
                                                      =============                 =============

The above non-cash charges to earnings and stockholders' equity primarily relate to realized and unrealized
investment losses within the collateralized obligation trusts. Upon maturity or other liquidation of the
trusts, the fair value of the investments pledged as collateral will be used to settle the non-recourse
collateralized obligations with any shortfall in such investments inuring to the third-party note and equity
holders. To the extent there remains a recorded liability for non-recourse obligations after all the assets
pledged as collateral are exhausted, such amount will be reduced to zero with a corresponding benefit to
earnings. Accordingly, these investment losses and any future investment losses under this method of
consolidation will ultimately reverse upon the maturity or other liquidation of the non-recourse collateralized
obligations. These non-recourse obligations mature between 2011 through 2014 but contain call provisions. The
call provisions may be triggered at the discretion of the equity investors based on market conditions and are
subject to certain contractual limitations.

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 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.

The amount of derivative cash flow hedge ineffectiveness recognized for the nine months ended September 30,
2004 and 2003 is $(0.2) million and $0.0 million, respectively. See Note 5 to our consolidated financial
statements in this Form 10-Q for information on realized investment losses related to these CDOs.


8.   Income Taxes

For the three months ended September 30, 2004 and 2003 and for the nine months ended September 30, 2004 and
2003, the effective income tax rates applicable to income from continuing operations differ from the 35.0% U.S.
federal statutory tax rate. Items giving rise to the differences and the effects are as follows:


                                                      28


                                                           Three Months Ended            Nine Months Ended
                                                              September 30,                September 30,
                                                      ----------------------------  ---------------------------
Analysis of Effective Income Tax Rates:                                   2003                         2003
($ amounts in millions)                                    2004         Restated         2004        Restated
                                                      -------------  -------------  ------------- -------------

Income taxes at statutory rate......................   $      3.6     $      7.8     $     21.8    $    (19.8)
Tax-advantaged investment income....................         (8.8)          (2.0)         (11.5)         (5.0)
Non-taxable minority interest income................         (1.2)          (1.0)          (3.7)         (2.7)
Realized losses on available-for-sale securities
  pledged as collateral.............................          2.9            0.3            4.5           1.0
Other, net..........................................          3.2            0.7            2.6          (4.3)
                                                      -------------  -------------  ------------- -------------
Income taxes (benefit) applicable to
  continuing operations.............................   $     (0.3)    $      5.8     $     13.7    $    (30.8)
                                                      =============  =============  ============= =============

Effective income tax (benefit) rates................        (3)%           26%            22%           54%
                                                      =============  =============  ============= =============

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.
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 on the balance sheet, are adequate 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. Tax-advantaged investment income for the 2004
three and nine month periods include a $5.7 million benefit related to changes in estimate of the anticipated
resolution of certain tax matters with the IRS.


9.   Employee Benefits

Pension and other post-retirement 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. The components of pension and
post-retirement benefit costs follow:

                                                    Three Months Ended                Nine Months Ended
Components of Pension Benefit Costs:                   September 30,                    September 30,
($ amounts in millions)                       --------------------------------  -------------------------------
                                                    2004             2003             2004            2003
                                              ---------------  ---------------  --------------- ---------------

Service cost................................   $        2.2     $        3.4     $        8.2    $       10.2
Interest cost...............................            8.4              8.1             24.6            24.1
Expected return on plan assets..............           (7.7)            (6.7)           (22.9)          (20.1)
Net (gain) loss amortization................            1.6              1.2              3.8             3.6
Prior service cost amortization.............            0.2              0.4              0.7             1.4
Net transition asset information............           (0.7)            (0.7)            (1.9)           (1.9)
Loss on curtailment.........................            0.7             --                1.3            --
                                              ---------------  ---------------  --------------- ---------------
Pension benefit cost........................   $        4.7     $        5.7     $       13.8    $       17.3
                                              ===============  ===============  =============== ===============

                                                      29


                                                           Three Months Ended             Nine Months Ended
Components of Other Post-retirement Benefit Costs:            September 30,                 September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                           2004           2003           2004          2003
                                                      -------------  -------------  ------------- -------------

Service cost........................................   $      0.7     $      0.8     $      1.5    $      2.0
Interest cost.......................................          1.0            1.5            3.2           4.5
Net gain amortization...............................         (0.2)          (0.4)          (0.2)         (0.8)
Prior service cost amortization.....................         (0.6)          --             (1.7)         (0.2)
Gain on curtailment.................................         (2.3)          --             (9.7)         --
                                                      -------------  -------------  ------------- -------------
Other post-retirement benefit cost (benefit)........   $     (1.4)    $      1.9     $     (6.9)   $      5.5
                                                      =============  =============  ============= =============

As of May 31, 2004 we revalued our employee benefit assets and liabilities in connection with the sale of our
retail broker-dealer operations. As a result of the revaluation, we recognized a net curtailment gain during
the nine months ended September 30, 2004 of $6.8 million ($4.4 million after tax) related to the pension and
other post-retirement benefit plans. In addition, as of September 30, 2004 we revalued our employee benefit
assets and liabilities in connection with employee terminations associated with the information technology
services agreement with Electronic Data Systems, or EDS. As a result of this revaluation, we recognized a net
curtailment gain of $1.6 million for the three and nine months ended September 30, 2004.

As previously disclosed in our consolidated financial statements for the year ended December 31, 2003, we
expect to contribute $107.8 million to the employee pension plan through 2008, including $7.2 million during
2004. For the estimated 2004 contribution, quarterly payments of $2.5 million each were made to the pension
plan in April, July and October 2004. In September 2004, we made a payment of $1.6 million, related to the 2003
minimum contribution.

Savings plans

During the three months ended September 30, 2004 and 2003, we incurred costs of $1.0 million and $1.4 million,
respectively, for contributions to our employer-sponsored savings plans. During the nine months ended September
30, 2004 and 2003, we incurred costs of $4.3 million and $4.3 million, respectively, for contributions to our
employer-sponsored savings plans.

Our contributions to sponsored savings plans may be in the form of common stock or cash. During the three
months ended September 30, 2004 and 2003, we contributed 97,404 and 135,977 treasury shares, respectively, to
fund the employer match for our saving and investment benefit plans. These shares had a cost basis of $1.5
million and $2.2 million (weighted-average cost of $15.87 per share for both periods) and an aggregate market
value of $1.0 million and $1.4 million for the three months ended September 30, 2004 and 2003, respectively.
During the nine months ended September 30, 2004 and 2003, we contributed 338,262 and 293,414 treasury shares,
respectively, to fund the employer match for our saving and investment benefit plans. These shares had a cost
basis of $5.4 million and $4.7 million (weighted-average cost of $15.87 per share for both periods) and an
aggregate market value of $4.1 million and $2.6 million for the nine months ended September 30, 2004 and 2003,
respectively.

                                                      30


Stock-based compensation

                               Three Months Ended September 30,           Nine Months Ended September 30,
                         ------------------------------------------ -------------------------------------------
                                  2004                 2003                  2004                 2003
                         --------------------- -------------------- --------------------- ---------------------
Stock Option                Number   Weighted-   Number   Weighted-    Number   Weighted-   Number    Weighted-
Activity:                     of      Average     of       Average       of      Average      of       Average
                            Common   Exercise    Common   Exercise     Common   Exercise    Common    Exercise
                            Shares     Price     Shares     Price      Shares     Price     Shares      Price
                          ---------- --------- ---------- ---------  ---------- --------- ----------  ---------
Outstanding,              4,393,175  $  15.37  4,801,154  $  15.48   4,627,856  $  15.45  4,409,558   $  16.20
  beginning of period..
Granted................     284,570     10.40      5,000     10.49     494,570     11.13    481,089       8.95
Exercised..............      (4,177)     9.07         --     --         (6,035)     9.07         --      --
Canceled...............    (172,247)    15.17    (40,411)    15.67    (615,070)    14.84   (124,904)     16.20
                          ----------           ----------            ----------           ----------
Outstanding,
  end of period........   4,501,321  $  15.05  4,765,743  $  15.47   4,501,321  $  15.05  4,765,743   $  15.47
                          ========== ========= ========== =========  ========== ========= ==========  =========

During the three months ended September 30, 2004, we granted 284,570 stock options which vest over three years.
The options have a weighted-average fair value of $3.91 per option ($1.1 million aggregate) which will be
expensed over the three-year vesting period.

During the six months ended June 30, 2004, we granted 210,000 stock options which vest over three years. The
options had a weighted-average fair value of $4.46 per option ($0.9 million aggregate) which we are expensing
over their three-year vesting period.

At September 30, 2004, 2,946,420 of outstanding stock options were exercisable, with a weighted-average
exercise price of $15.81. At September 30, 2004, the weighted-average remaining contractual life for all
options outstanding was 8.0 years.

Restricted stock units (RSUs)

                                                                 Nine Months Ended September 30,
                                                  -------------------------------------------------------------
                                                              2004                             2003
                                                  ------------------------------  -----------------------------
RSU Activity at Weighted-Average Issue Price:
($ amounts in millions, except issue price)            RSUs           Price            RSUs          Price
                                                  --------------  --------------  -------------- --------------

Outstanding, beginning of year...................    1,436,843     $     10.47         573,477    $     13.95
Awarded, six months ended June 30,...............       64,766           13.51         811,510           7.97
                                                  --------------  --------------  -------------- --------------
Outstanding, June 30, 2004 and 2003                  1,501,609           10.60       1,384,987          10.48
Awarded, three months ended September 30,........       13,800           10.42           5,537           9.03
                                                  --------------  --------------  -------------- --------------
Outstanding, end of period.......................    1,515,409     $     10.60       1,390,524    $     10.44
                                                  ==============  ==============  ============== ==============

Generally, the shares underlying these 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.

                                                      31


10.  Earnings Per Share

Shares Used in Calculation of                                   Three Months Ended         Nine Months Ended
Basic and Diluted Earnings Per Share:                                September 30,             September 30,
(in thousands)                                                ------------------------  -----------------------
                                                                  2004         2003         2004        2003
                                                              -----------  -----------  ----------- -----------
Weighted-average common shares outstanding..................     94,733       94,276       94,624      94,158
                                                              -----------  -----------  ----------- -----------
Effect of potential common shares:
  Equity units..............................................      2,935        2,531        4,722          --
  Restricted stock units....................................      1,502        1,390        1,476       1,181
  Director and employee stock options.......................         64           75          108           5
                                                              -----------  -----------  ----------- -----------
Potential common shares.....................................      4,501        3,996        6,306       1,186
Less: anti-dilutive potential common shares.................         --           --           --       1,186
                                                              -----------  -----------  ----------- -----------
Dilutive potential common shares............................      4,501        3,996        6,306          --
                                                              -----------  -----------  ----------- -----------
Weighted-average common shares outstanding
  and dilutive potential common shares......................     99,234       98,272      100,930      94,158
                                                              ===========  ===========  =========== ===========


Employee Stock Options and Equity Units excluded
from Calculation Due to Anti-Dilutive Exercise Prices:          Three Months Ended         Nine Months Ended
(i.e., in excess of average common share market prices)           September 30,             September 30,
                                                              ------------------------  -----------------------
                                                                  2004         2003         2004        2003
                                                              -----------  -----------  ----------- -----------

  Stock options.............................................      3,815        4,289        3,771       5,638
  Equity units..............................................         --           --           --      17,424

Treasury stock

During the nine months ended September 30, 2004 and 2003, we made no purchases of our common stock in the
market.

11.  Contingent Liabilities

In addition to the matters discussed below, we are, in the normal cause of business, 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. In addition, various 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. 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. 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 in certain matters
could, from time to time, have a material adverse effect on our results of operations or cash flows.

Discontinued Reinsurance Operations

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.

                                                      32


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 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 $155.0 million as of September 30, 2004. Our total amounts recoverable
from retrocessionaires related to paid losses were $145.0 million as of September 30, 2004. We did not
recognize any gains or losses related to our discontinued group accident and health reinsurance business during
the three and nine months ended September 30, 2004 and 2003, respectively.

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 or favorable claims and/or reinsurance recovery experience is reasonably possible and
could result in our recognition of additional losses or gains, respectively, in future years. Given the
uncertainty associated with litigation and other dispute resolution proceedings, as described below, as well as
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), the range of any
reasonably possible additional future losses or gains is not currently estimable. However, it is our opinion,
based on current information and after consideration of the provisions made in these financial statements, as
described above, that any future adverse or favorable development of recorded reserves and/or reinsurance
recoverables will not have a material effect on our financial position.

Additional information with respect to our group accident and health reinsurance run-off exposures follows:

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 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, or Sun Life, and Cologne Life Reinsurance Company,
or 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

                                                      33


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 Unicover 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 two of our own retrocessionaires, which have sought on
various grounds to avoid paying any amounts to us. 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 had 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 disputes were settled in March 2004 and did not have a material effect on our reinsurance
recoverable balances. As of September 30, 2004, the reinsurance recoverable balance from this retrocessionaire
related to paid losses was $45.0 million, subject to further development.

The dispute with the other 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. The arbitration proceedings are in the

                                                      34


preliminary stages. As of September 30, 2004, the reinsurance recoverable balance from this retrocessionaire
related to paid losses was $87.0 million, subject to further development.

The dispute with a third 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. Since then, this retrocessionaire has paid $8.0 million to bring the account current. As of
September 30, 2004, the reinsurance recoverable balance from this retrocessionaire related to paid losses was
$0.0 million, subject to further development. In June 2004 the arbitration panel relinquished its jurisdiction.

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
business not related to Unicover.

Other Proceedings

Another set of disputes involves personal accident business that was reinsured in the London reinsurance market
in which we participated from 1994 to 1997. These disputes involve multiple layers of reinsurance and
allegations that the reinsurance programs created by the brokers involved in placing those layers were
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,
we and many of these companies have participated in negotiations that have resulted in settlements of disputes
relating to the 1994 and 1995 contract years. The amounts paid and the results achieved in the settlements have
been 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. Although we are
vigorously defending our contractual rights in respect of the remaining disputes, we remain actively involved
in attempts to reach negotiated business solutions. At this stage, we cannot predict the outcome, nor can we
estimate the remaining 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). As a result, as of
September 30, 2004 the reinsurance recoverable balances from our retrocessionaires related to paid losses on
this business were immaterial, subject to further development.


12.  Commitments

During the second quarter of 2004, we entered into a $122.0 million seven-year information technology
infrastructure services agreement with EDS.

During the normal course of business, the Company enters into agreements to fund venture capital partnerships
and to purchase private placement investments. As of September 30, 2004, the Company had committed $183.6
million under such deals, of which $57.3 million is expected to be disbursed by December 31, 2004.

                                                      35


ITEM 2.  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 developments that may affect the company or the cost of, or demand for, its products or
services; (v) downgrades in the financial strength ratings of the company's subsidiaries or in the company's
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 continued success in achieving planned expense reductions; (ix) the
effects of closing the company's retail brokerage operations; and (x) 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.


                                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations reviews our consolidated
financial condition as of September 30, 2004 as compared to December 31, 2003; our consolidated results of
operations for the three and nine months ended September 30, 2004 and 2003; and, where appropriate, factors
that may affect our future financial performance. This discussion should be read in conjunction with the
unaudited interim financial statements and notes contained in this filing as well as in conjunction with our
consolidated financial statements for the year ended December 31, 2003 in our 2003 Annual Report on Form 10-K.

                                                      36


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 independent 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, a range of variable annuity offerings and other products and services, including executive benefits
and private placement life and annuity products. 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. 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 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.

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 account of Phoenix Life and certain of its subsidiaries and affiliates (together, our Life Companies).
Corporate and Other includes: indebtedness; unallocated assets, liabilities and expenses; and certain
businesses not of sufficient scale to report independently. 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.

                                                      37


Our expenses consist principally of:

    •   insurance policy benefits provided to policyholders, including interest credited on policies;
    •   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 and $401.8 million during 2002.

Our sales and financial results over the last several years have been affected by demographic, industry and
market trends. The baby boom generation has entered 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 shift 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

On March 31, 2004, we completed the sale of 100% of the common stock held by us in Phoenix National Trust
Company. The effect of this transaction is immaterial to our consolidated financial statements. Phoenix
National Trust Company is presented as a discontinued operation in our consolidated financial statements for
all periods presented.

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 11 to our
consolidated financial statements in this Form 10-Q for detailed information regarding contingent liabilities
related to our remaining discontinued operations.

                                                      38


Other Recent Acquisitions and Divestitures

Life and Annuity

On October 25, 2004, we signed an agreement with Friends Provident plc, or Friends Provident, to sell our 12%
interest in Lombard International Assurance, S.A., or Lombard, and to relinquish our note receivable from
Lombard's affiliate, Insurance Development Holdings A.G., or IDH, in exchange for shares of Friends Provident's
stock. The sale is expected to close during the first quarter of 2005, the effect of which is not material to
our consolidated financial statements. Under the terms of the agreement, we are required to hold the shares of
Friends Provident until April 1, 2005, and we may be entitled to additional cash consideration based upon
Lombard's performance through 2006, payable through 2007.

Effective as of May 31, 2004, we sold our retail broker-dealer operations to Linsco/Private Ledger Financial
Services, or LPL. As part of the transaction, advisors affiliated with WS Griffith Securities, Inc., or
Griffith, and Main Street Management Company, or Main Street, had the opportunity to move to LPL as independent
registered representatives. As of September 30, 2004, LPL successfully recruited about 45% of Griffith's total
representatives, representing about 55% of Griffith's total gross dealer concessions. As of September 30, 2004,
we have not determined the ultimate persistency of the business written by the advisors, but our
experience-to-date shows no material decrease, reflecting the quality of our inforce products and the
professionalism of the advisors. We expect an annual pre-tax earnings benefit of $10.0 million or more, which
consists of expense savings, net of reduced broker-dealer revenues and increased policy acquisition cost
amortization expense. As part of this transaction, we are expanding our distribution relationship with LPL,
adding life and annuity products to our existing asset management offerings, and we have recently commenced a
marketing plan to position these products within LPL and its more than 5,500 producers.

Revenues net of eliminations and direct expenses net of deferrals and certain transaction related costs
included in our consolidated financial statements related to our retail affiliate operations sold during the
second quarter are as follows:

Revenues and Direct Expenses:                                 Three Months Ended          Nine Months Ended
($ amounts in millions)                                          September 30,              September 30,
                                                           -------------------------  -------------------------
                                                               2004         2003          2004          2003
                                                           ------------ ------------  ------------  -----------

Insurance and investment product fees revenues,
  net of eliminations...................................    $    --      $    15.5     $    32.0     $    43.9
Direct other operating expenses, net of deferrals.......          0.8         18.3          37.2          53.1

Actual net expense savings to be realized from the sale of our retail broker-dealer operations will be
dependent on the effect this transaction has on future sales and persistency of inforce life and annuity
business and thus, actual net expense savings realized from the sale may fall short of or exceed our current
expectations of an annual pre-tax earnings benefit of $10.0 million or more.

During the nine months ended September 30, 2004, we incurred a $3.6 million net of tax charge for an impairment
of goodwill related to Main Street, offset by a $2.7 million net of tax gain on the sale of the broker-dealer
operations. Both the charge and the gain were recorded to realized investment gains and losses. In addition, we
incurred a $10.2 million net of tax charge ($1.8 million of which was incurred during the three months ended
September 30, 2004) related to lease termination costs, offset by a $4.4 million after-tax gain related to
curtailment account in connection with employee benefit plans.

On July 2, 2004, we sold the stock of Phoenix Global Solutions (India) Pvt. Ltd., our India-based information
technology subsidiary, and essentially all of the assets of its U.S. affiliate, Phoenix Global Solutions, Inc.,
to Tata Consultancy Services Limited, a division of Tata Sons Ltd. This transaction is not material to our
consolidated financial statements.

                                                      39


In 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 $10.0 million during the remainder of 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. During the nine months ended September 30, 2004, we paid $3.0 million under this obligation.

Asset Management

In 2002, we acquired a 60% interest in Kayne Anderson Rudnick Investment Management, LLC, or 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 made a subsequent payment, during the three months ended March 31,
2004, of $30.1 million, based upon growth in management fee revenue for the purchased business through the end
of 2003. This payment had been accrued for as goodwill as of December 31, 2003. In January 2004, one member of
Kayne Anderson Rudnick accelerated his put/call agreement, at which time we acquired an additional 0.3% of
Kayne Anderson Rudnick. We are also obligated to purchase an additional 14.7% interest in the company by 2007.

We acquired the remaining minority interest in Walnut Asset Management LLC and Rutherford Brown & Catherwood,
LLC in March 2004 for $2.1 million as a result of the management members exercising their put/call agreements.
This additional purchase price was allocated by PXP to goodwill and definite-lived intangible assets.

On October 22, 2004, we purchased the FMI Sasco Contrarian Value Fund.  This transaction is not material to our
consolidated financial statements.

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 The Phoenix Companies, Inc. and changed its name to
Phoenix Life Insurance Company, or Phoenix Life. See Note 3 to our consolidated financial statements in this
Form 10-Q for detailed information regarding the demutualization and the closed block.

Recently Issued Accounting Standards

Other-Than-Temporary Impairments: Portions of Emerging Issues Task Force Abstract EITF 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments, or EITF 03-1, are effective for
fiscal periods beginning after June 15, 2004. EITF 03-1 provides guidance as to the determination of
other-than-temporarily impaired securities and requires additional financial disclosures with respect to
unrealized losses. These accounting and disclosure requirements largely codify our existing practices and thus,
are not anticipated to have a material effect on our consolidated financial statements. The effective date of
certain portions of EITF 03-1 has been delayed pending further interpretive guidance. Because significant
uncertainty remains surrounding what form the guidance will ultimately take, we cannot predict what effect, if
any, adoption of the pending portions will have on our financial results.

Post-retirement Benefits: On May 19, 2004, the Financial Accounting Standards Board, or the FASB, issued FASB
Staff Position No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003, or the FSP. For employers that sponsor post-retirement benefit
plans, or plan sponsors that provide prescription drug benefits to retirees, the FSP requires any effects of
the anticipated federal tax subsidy related to those drug benefits be treated as an actuarial gain. The effect
of the FSP is not material to our consolidated financial statements.

                                                      40


Accounting Changes and Restatement of Prior Period

Nontraditional Long-Duration Contracts and Separate Accounts: Effective January 1, 2004, we adopted 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. Since this new accounting standard largely codifies certain accounting
and reserving practices related to applicable nontraditional long-duration contracts and separate accounts that
we already followed, our adoption did not have a material effect on our consolidated financial statements.

Variable Interest Entities: In January 2003, a new accounting standard was issued, FASB Interpretation No. 46,
or FIN 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, 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 adopted FIN 46-R for Special Purpose Entities, or
SPEs, in which we hold a variable interest that we acquired prior to February 1, 2003. FIN 46-R requires our
application of its provisions to non-SPE variable interest entities for periods ending after March 15, 2004.
The adoption of FIN 46-R for our non-SPE variable interest entities was immaterial to our consolidated
financial statements at September 30, 2004.

Stock-based Compensation: A new standard was issued by the FASB 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. We adopted fair value accounting for
stock-based compensation in 2003 using the prospective method of transition provided by the new standard, which
results in expense recognition for stock options awarded after December 31, 2002. See Note 9 to our
consolidated financial statements in this Form 10-Q for additional disclosure on the requirements of the new
standard as it relates to our business.

Collateralized Obligation Trusts: In 2003, we revised certain 2002 and 2001 amounts to correct an error in our
method of consolidation for the years 2003, 2002 and 2001 for three collateralized obligation trusts for which
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 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.

The effect of our change in method of consolidation for these three collateralized obligation trusts was to
decrease our net income $12.9 million and $2.7 million for the nine months ended September 30, 2004 and 2003,
respectively, and to decrease our stockholders' equity by $39.5 million and $77.3 million as of September 30,

                                                      41


2004 and December 31, 2003, respectively. For the three months ended September 30, 2004 and 2003, the effect of
consolidation was to decrease our net income $8.3 million and $0.8 million, respectively.

The above non-cash charges to earnings and stockholders' equity primarily relate to realized and unrealized
investment losses within the collateralized obligation trusts. Upon maturity or other liquidation of the
trusts, the fair value of the investments pledged as collateral will be used to settle the non-recourse
collateralized obligations with any shortfall in such investments inuring to the third-party note and equity
holders. To the extent there remains a recorded liability for non-recourse obligations after all the assets
pledged as collateral are exhausted, such amount will be reduced to zero with a corresponding benefit to
earnings. Accordingly, these investment losses and any future investment losses under this method of
consolidation will ultimately reverse upon the maturity or other liquidation of the non-recourse collateralized
obligations. These non-recourse obligations mature between 2011 through 2014, but contain call provisions. The
call provisions may be triggered at the discretion of the equity investors based on market conditions and are
subject to certain contractual limitations.

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 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 7 to our consolidated financial statements in this Form 10-Q for additional information on
these revisions to our 2003 first quarter financial statements and see our 2003 Annual Report on Form 10-K for
additional information on these revisions to our 2002 and 2001 financial statements and on our consolidated
collateralized obligation trusts and other variable interest entities.

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.

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. 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 use 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 apply a public industry sector index to
estimate changes in valuations 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 write-downs by the general partners). Our methodology recognizes both downward and
upward adjustments in estimated values based on the indices, but when the general partner reduces the value of
a private investee company, we do not adjust the fair value upward (by applying the public sector index) in
excess of the most recent value reported by the general partner. Finally, we revise the valuations we have
assigned to the investee companies annually to reflect the valuations in the audited financial statements
received from the venture capital partnerships.

                                                      42


The estimation process for valuing the private investee companies is inherently less precise than the
estimation process for valuing public company investees. For private investee companies, we employ a sector
index based on biotechnology, telecom, computer and healthcare indices as a proxy for estimating changes in
fair value of individual private investee companies that will not necessarily match the underlying changes in
fair value of an individual private investee company. Based on our experience, we have found that such indices
represent a reasonable basis for estimating the fair value of an investee company during a period of
deteriorating public equity markets such as that experienced in 2001 and 2002. However, we believe this method
is less reliable in rising markets such as that experienced in 2003 relative to general partner valuations.
Specifically, our experience indicates that upward revisions of valuations by the general partners for private
company investees tend to lag increases in public equity markets as general partner valuations typically will
be revised upward based on company specific liquidity events including new rounds of financing, mergers and
acquisitions and initial public offerings.

We did not need to limit upward adjustments of private investee companies given overall declines in the select
public sector indices used to estimate the change in valuation for the three and nine months ended September
30, 2004.

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. See our 2003 Annual Report on Form 10-K
for a further description of our critical accounting estimates.

Consolidated Results of Operations

Summary Consolidated                               Three Months Ended                 Nine Months Ended
Financial Data:                                       September 30,                     September 30,
($ amounts in millions)                     --------------------------------- ---------------------------------
                                                          2003                              2003
                                                2004    Restated     Change      2004     Restated     Change
                                            ---------- ---------- ----------- ---------- ---------- -----------
REVENUES:
Premiums..................................   $  268.8   $  286.9   $  (18.1)   $  739.7   $  781.5   $   (41.8)
Insurance and investment product fees.....      135.8      147.7      (11.9)      450.4      420.8        29.6
Investment income, net of expenses........      265.4      267.4       (2.0)      802.5      836.2       (33.7)
Net realized investment gains (losses)....       (9.1)      (3.4)      (5.7)        9.0     (122.2)      131.2
                                            ---------- ---------- ----------- ---------- ---------- -----------
Total revenues............................      660.9      698.6      (37.7)    2,001.6    1,916.3        85.3
                                            ---------- ---------- ----------- ---------- ---------- -----------

BENEFITS AND EXPENSES:
Policy benefits,
  excluding policyholder dividends........      373.3      389.0      (15.7)    1,060.2    1,088.2       (28.0)
Policyholder dividends....................       98.6       99.5       (0.9)      309.8      310.2        (0.4)
Policy acquisition cost amortization......       30.6       22.7        7.9        76.3       76.6        (0.3)
Intangible asset amortization.............        8.5        8.3        0.2        25.1       24.9         0.2
Interest expense on indebtedness..........       10.1        9.8        0.3        29.8       29.5         0.3
Interest expense on non-recourse
  collateralized obligations..............        9.1       11.9       (2.8)       25.5       37.8       (12.3)
Other operating expenses..................      120.5      135.1      (14.6)      412.7      405.8         6.9
                                            ---------- ---------- ----------- ---------- ---------- -----------
Total benefits and expenses...............      650.7      676.3      (25.6)    1,939.4    1,973.0       (33.6)
                                            ---------- ---------- ----------- ---------- ---------- -----------
Income (loss) before income taxes                10.2       22.3      (12.1)       62.2      (56.7)      118.9
  and minority interest...................
Applicable income taxes (benefit).........       (0.3)       5.8       (6.1)       13.7      (30.8)       44.5
                                            ---------- ---------- ----------- ---------- ---------- -----------
Income (loss) before minority interest....       10.5       16.5       (6.0)       48.5      (25.9)       74.4
Minority interest in net income
  of subsidiaries.........................       (3.4)      (2.9)      (0.5)      (10.5)      (8.0)       (2.5)
                                            ---------- ---------- ----------- ---------- ---------- -----------
Income (loss) from
  continuing operations...................        7.1       13.6       (6.5)       38.0      (33.9)       71.9
Income (loss) from
  discontinued operations.................       --         (0.4)       0.4         0.1       (1.2)        1.3
                                            ---------- ---------- ----------- ---------- ---------- -----------
Net income (loss).........................   $    7.1   $   13.2   $   (6.1)   $   38.1   $  (35.1)  $    73.2
                                            ========== ========== =========== ========== ========== ===========

                                                      43


Executive Overview

Third quarter 2004 net income of $7.1 million, or $0.07 per diluted share, is lower than the third quarter 2003
net income of $13.2 million, or $0.13 per diluted share, primarily as a result of lower earnings from venture
capital, and higher realized investment losses related to collateralized debt obligation pools consolidated
under FIN 46, which will reverse upon the maturity or other liquidation of the related non-recourse
collateralized obligations, both of which were somewhat offset by substantially improved operating results from
our Life and Annuity and Asset Management segments and by a $5.7 million tax benefit related to the favorable
resolution of certain tax matters with the IRS. In the 2004 quarter, total segment income was $20.5 million, or
$0.21 per diluted share, a 72% increase from the $11.9 million, or $0.12 per diluted share, reported in the
2003 third quarter (a reconciliation of segment income to net income follows in the Results of Operations by
Segment section contained in this analysis), reflecting substantially improved operating results from our Life
and Annuity and Asset Management segments as well as the previously mentioned $5.7 million tax benefit. Third
quarter year-to-date 2004 net income of $38.1 million, or $0.38 per share, is substantially improved from the
third quarter year-to-date 2003 net loss of $35.1 million, or $0.37 loss per share as a result of improved
operating results from Life and Annuity and Asset Management, lower investment losses and a lower effective tax
rate. The 2003 year-to-date results included a $60.4 million non-cash charge relating to the impairment of
three international equity investments including Aberdeen Asset Management. Third quarter year-to-date 2004
total segment income of $54.6 million, or $0.54 per share, rose 33% from $41.0 million, or $0.43 per share in
the 2003 period as a result of substantially improved operating results from our Life and Annuity and Asset
Management segments, somewhat offset by lower venture capital earnings and higher corporate expenses. In
addition, Phoenix Life's statutory capital, surplus and surplus notes remained strong at $937.5 million even
after payment of a $69.7 million dividend to our holding company during the second quarter of 2004. Our
risk-based capital ratio remains well above our threshold of 300%.

Overall, we are encouraged by the earnings trends in the Life and Annuity segment, which have resulted from
significant expense reductions and maintenance of strong pricing discipline, and now position us to focus on
new products and organic growth. This business remains strong with excellent persistency, favorable mortality
and strong investment income. Since the end of 2002, we have taken a series of steps to sharpen our strategic
focus and reduce expenses, and the benefits are clearly emerging. Third quarter and year-to-date life insurance
results include investment gains of $7.3 million and $8.2 million, respectively, in the participating line from
several equity investments as compared to $2.0 million and $9.1 million in the 2003 third quarter and
year-to-date periods. Our equity portfolio, which is part of the open block of our participating line has
contributed net investment income ranging between $1.7 million and $7.3 million per quarter for the last six
quarters. Third quarter and year-to-date 2004 annuity earnings continue to benefit from higher equity markets
and improved investment margins as a result of the second quarter of 2004 extension of the Retirement Planners
Edge annuity, or RPE, portfolio asset duration. The three month rolling average yield on the portfolio
increased by 23 basis points, bringing the total increase in the last two quarters to 37 basis points. Given
the continuing low level of interest rates, it is not surprising that net redemptions for RPE were only $34
million in the quarter. The loss for the third quarter of 2004 in RPE was $600,000 and we are maintaining our
guidance of a pre-tax loss of $500,000 to $1 million per quarter.

Life and annuity sales declined as a result of our pricing and risk management discipline, particularly with
respect to universal life no-lapse guarantees. Although adherence to this discipline has hindered sales, it
reflects our emphasis on profitability and long-term value creation. In addition, as anticipated, sales
decreased as a result of the sale of Phoenix's affiliated retail distribution to LPL during the second quarter
of 2004, as well as to the company's strategic decisions in late 2003 to discontinue sales of deferred fixed
annuities and less profitable products, and to focus annuity wholesaling on more profitable distribution
relationships. Given the market conditions and decline in sales year-to-date, we do not expect to achieve our
targeted growth in life and annuity sales in 2004. We expect life sales to decline by 15% to 20% from their
2003 level. We expect variable annuity sales excluding discontinued products to decline by approximately 10%
this year. We are responding to the competitive landscape by investing in product development and distribution
to spur growth in Life and Annuity.

                                                      44


The third quarter and year-to-date 2004 Asset Management earnings and net flows were unsatisfactory, reflecting
both market conditions and below average equity investment performance. Our Asset Management segment
essentially broke even during the third quarter and year-to-date periods as compared to a $3.1 million pre-tax
loss and a $14.6 million pre-tax loss in the 2003 third quarter and year-to-date periods, respectively.
Revenues dropped 1% in the quarter due to lower assets under management while expenses dropped 5% reflecting
the results of our expense reduction initiatives. Sales for the nine month period were slightly higher than a
year ago, but so were redemptions. Relative investment performance continues to be the main reason for the
outflows. In general, good performance in our fixed income and specialty areas such as Real Estate Investment
Trusts is contributing to inflows, while under-performance in our equity strategies causes the outflows. We are
intensely focused on improving both relative performance and the profitability of this business. The most
visible actions so far involve expense reductions, which contributed to improved margins year over year. Moving
forward, we have identified an additional $30 million in corporate-wide expense savings, more than half of
which are in Asset Management, which we expect will have a meaningful impact on our profitability starting in
the first quarter of 2005.

Venture Capital produced a modest loss in the third quarter of 2004 as a result of lower equity markets during
this same time period, while the Corporate and Other segment recorded lower investment income and higher
corporate compliance and regulatory costs in both the 2004 third quarter and year-to-date periods.
Additionally, favorable credit markets contributed to substantially lower general account net bond impairments
of $4.6 million in the third quarter of 2004, compared to $13.5 million in net impairments in the 2003 third
quarter. For the nine months ended September 30, 2004, general account net bond impairments were $8.6 million
compared to $55.8 million for the same period in 2003.

Our capital and liquidity positions are strong at September 30, 2004. Stockholders' equity, excluding
accumulated other comprehensive income, rose to almost $2 billion, leverage is a relatively modest 24.8%, and
holding company liquidity is adequate. Finally, Phoenix Life's statutory capital, surplus and surplus notes
grew to $938 million with a commensurate increase in risk-based capital, and third quarter 2004 statutory gain
from operations was $22 million, driven in part by expense savings from the sale of affiliated distribution. As
of September 30, Phoenix Life had a year-to-date statutory gain from operations of $7.1 million, which is net
of a $16.0 million tax payment related to the forgiveness of debt on a restructured investment and $10.2
million in after-tax restructuring charges primarily associated with the sale of our retail broker-dealer
operations.

Three and nine months ended September 30, 2004 vs. September 30, 2003

Premium revenue for the three and nine months ended September 2004 decreased $18.1 million, or 6%, and $41.8
million, or 5%, respectively, from the comparable periods in 2003. Since our demutualization in 2001, we no
longer sell participating life policies, resulting in a decline in renewal participating life premiums and
related inforce. This will also result in a reduction of reserves, thereby lowering benefit costs. Premium
revenue for participating life policies decreased by $15.5 million and $41.4 million, respectively, for the
three and nine months ended September 30, 2004 from the comparable periods in 2003. In addition, premiums
decreased $2.6 million and $1.5 million for the three and nine months ended September 30, 2004 from the
comparable periods in 2003, respectively, on an old block of corporate owned life insurance.

Insurance and investment product fees for the three and nine months ended September 30, 2004 decreased $11.9
million, or 8%, and increased $29.6 million, or 7%, respectively, over the comparable periods in 2003. The
decrease for the 2004 quarter is primarily due to lower Life and Annuity revenues, from the sale of our retail
broker-dealer operations in May of 2004, partially offset by higher universal life and annuity fees. Asset
Management fee revenues decreased modestly for the 2004 quarter. The increase for the nine month period in 2004
primarily relates to a $20.2 million increase in Asset Management revenues and a $7.6 million increase for Life
and Annuity. Asset Management private client and institutional investment product fees increased $9.1 million
and $9.7 million, respectively as a result of increased billable assets under management. Approximately 58% of
our management fee revenues are based on assets as of the beginning of a quarter, which causes the trend
                                                      45



in fees to lag behind changes in assets under management. The increase in Life and Annuity revenues for the
nine month period in 2004 is due to higher universal life insurance and annuity fees, discussed above, offset
by lower broker-dealer commission revenues from the sale of our retail broker-dealer operations.

Net investment income for the three and nine months ended September 30, 2004 decreased by $2.0 million and
$33.7 million, respectively, from the comparable periods in 2003. This was due primarily to equity in earnings
on venture capital investments which decreased $13.9 million and $29.9 million, respectively, for the same
periods. This was partially offset by an increase in earnings from general account debt securities as a result
of higher invested balances, offset by lower new money rates. In addition, the 2004 quarter benefited from
higher investment income related to two equity investments which are reflected in the other investments
category. Investment income from our debt securities pledged as collateral related to our consolidated CDO
trusts also decreased by $2.1 million and $11.5 million, respectively, for the comparative three and nine month
periods, primarily due to decreased asset levels from pay downs and defaults. Investment income from mortgage
loans also decreased by $1.1 million and $9.2 million, respectively, for the three and nine months ended
September 30, 2004, from the comparable 2003 periods, reflecting the continued decline in mortgage loan assets
as mortgages pay down and no new investments are made in this asset class.

Net realized investment losses for the three months ended September 30, 2004 increased $5.7 million over the
comparable period in 2003. For the nine months ended September 30, 2004 net realized investment gains were $9.0
million, a $131.2 million improvement from a $122.2 million loss for the comparable period in 2003. The
increase in investment losses for the 2004 quarter is due to higher losses on debt securities pledged as
collateral related to our consolidated CDOs and lower transaction related gains, partially offset by lower
impairments in general account debt and equity securities from the improved credit environment in 2004. The
improvement for the nine month period in 2004 is due to significantly lower impairments in the 2004 period,
offset by lower transaction related gains, and higher losses related to our consolidated CDOs. For the nine
months ended September 30, 2004, realized losses from impairments on general account debt securities improved
from $60.4 million in 2003 to $8.6 million in 2004 as a result of a significantly improved credit environment.
The 2003 period also included $96.9 million pre-tax charge for the impairment of three international
investments, $89.1 million of which related to the impairment of our equity investment in Aberdeen.

Policy benefits and dividends for the three and nine months ended September 30, 2004 decreased $16.6 million,
or 3%, and $28.4 million, or 2%, respectively, over the comparable periods in 2003. This is primarily due to
decreases in Life and Annuity benefits and dividends of $19.9 million and $39.1 million for the three and nine
month periods, respectively. These decreases were offset by modestly higher benefits for Corporate and Other in
the 2004 periods and higher increases in the policyholder dividend obligation, particularly for the nine month
period in 2004. The Life and Annuity decrease for the three month period in 2004 is primarily due to lower
death benefits, dividends and a favorable change in reserves from a declining inforce for participating life
insurance and on an old block of corporate owned life insurance. In addition, annuity benefits were down
modestly from lower interest credited due to lower crediting rates, partially offset by a $2.6 million GMDB
reserve increase for the quarter. The decrease for the nine month period in 2004 is primarily due to lower
death benefits and policyholder dividends, a favorable change in reserves, from a declining inforce for
participating life insurance, and lower interest credited from lower crediting rates, partially offset by higher
GMDB reserves for annuities and higher benefits for universal life and variable universal life insurance. The
increase in universal life and variable universal life benefits is due to very favorable mortality in 2003;
plus for universal life, a large death claim in the first quarter of 2004.

Policy acquisition cost amortization for the three and nine months ended September 30, 2004 increased $7.9
million, or 35%, and decreased $0.3 million, respectively, from the comparable periods in 2003. The increase
for the 2004 quarter is primarily due to higher amortization of deferred acquisition costs, or DAC, for:
universal life from growth of inforce; annuities from growth and lower relative fund performance, and
participating life from higher investment gains. The effect of realized gains (losses) on the amortization
contributed $2.8 million to the increase for the quarter. The nine month decrease in policy acquisition cost
amortization reflects an increase in amortization for universal life and term life from growth of inforce,
offset by lower amortization variable
                                                      46


universal life, and annuities. There was a modest effect on amortization related to realized gains (losses) for
the nine month period.

Other operating expenses, which include non-deferrable policy acquisition costs, commissions due to
broker-dealer registered agents, finders fees, formulaic compensation related to asset management revenue
growth and other segment and administrative expenses, decreased $14.6 million, or 11%, and increased $6.9
million, or 2%, respectively, for the three and nine months ended September 30, 2004 from the comparable
periods in 2003. The three month decrease is principally due to decreases of $20.7 million and $4.1 million for
Life and Annuity and Asset Management expenses, respectively, partially offset by a $7.6 million increase in
restructuring costs. The Life and Annuity expense decrease is primarily due to reductions resulting from the
sale of our retail broker-dealer operations in May of 2004 and lower non-deferred expenses from expense reduction
initiatives. The expense decrease for Asset Management relates to compensation expense, primarily as a result
of decreased incentive compensation and other employee related charges, and $1.8 million relates to other
non-compensation related operating expenses, primarily due to decreased trailing commissions, and computer
charges. The nine month increase is due to severance and lease termination costs of $21.5 million mostly
related to the sale of our retail broker-dealer operations, slightly higher Asset Management expenses, and higher
Corporate and Other expenses, partially offset by a $21.5 million decrease in Life and Annuity expenses. The
increase for Asset Management relates to a $2.8 million increase in compensation expense from higher formulaic
compensation, which resulted primarily from higher formula driven bonuses at certain affiliated companies. The
increase in compensation expense was offset, in part, by a decrease of $0.2 million in non-compensation related
operating expenses, which resulted primarily from a decrease in computer services charges.

Income taxes for the three and nine months ended September 30, 2004 decreased by $6.1 million and increased by
$44.5 million, respectively, from the comparable periods in 2003. The 2004 three and nine month periods reflect
a $5.7 million benefit related to the anticipated resolution of certain tax matters with the IRS.

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.

                                                      47


Amounts included in Income from
Continuing Operations excluded                      Three Months Ended                Nine Months Ended
from Operating Segment Results:                        September 30,                     September 30,
($ amounts in millions)                      --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------

Net realized investment gains (losses),
  after offsets...........................    $  (8.5)   $    1.7   $  (10.2)   $   (2.7)  $  (71.8)  $   69.1
Restructuring charges, after income taxes.       (4.9)       --         (4.9)      (13.9)      (4.3)      (9.6)
Other income, after income taxes..........       --          --         --          --          1.2       (1.2)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total.....................................    $ (13.4)   $    1.7   $  (15.1)   $  (16.6)  $  (74.9)  $   58.3
                                             ========== ========== ==========  ========== ========== ==========

Net realized investment gains (losses) of $(8.5) million and $1.7 million for the three months ended September
30, 2004 and 2003, respectively, and $(2.7) million and $(71.8) million for the nine months ended September 30,
2004 and 2003, respectively, are net of offsets for policy dividend obligation, deferred policy acquisition
costs and taxes as further detailed in Note 5 of our consolidated financial statements contained in this Form
10-Q. See discussion of realized investment gains (losses) in the Consolidated Results of Operations discussion
contained herein.

Restructuring charges for 2004 relate primarily to employee severance and lease termination costs associated
with the sale of our retail broker-dealer operations, partially offset by a $4.4 million after-tax benefit
related to the curtailment of employee benefit plans related to the sale of our retail broker-dealer
operations. The 2004 restructuring charges also include other severance costs and a $1.1 million after-tax
charge related to the impairment of certain data processing equipment to be sold in connection with the
information technology services agreement with EDS. The 2003 restructuring charges relate to severance costs
associated with the restructuring of certain PXP operations.

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 2004 and 2003. Capital within our 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.


                                                      48


Life and Annuity Segment

Summary Life and Annuity
Financial Data:                                     Three Months Ended,               Nine Months Ended,
($ amounts in millions)                                September 30,                    September 30,
                                             --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------
Results of operations
Premiums..................................    $  268.8   $  286.9   $  (18.1)   $  739.7   $  781.5   $  (41.8)
Insurance and investment product fees.....        73.4       84.4      (11.0)      249.4      241.8        7.6
Net investment income.....................       252.6      243.2        9.4       744.7      742.6        2.1
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total segment revenues....................       594.8      614.5      (19.7)    1,733.8    1,765.9      (32.1)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Policy benefits,
  including policyholder dividends........       471.9      491.8      (19.9)    1,357.9    1,397.0      (39.1)
Policy acquisition cost amortization......        30.6       25.5        5.1        77.1       77.7       (0.6)
Other operating expenses..................        51.5       72.2      (20.7)      198.3      220.0      (21.7)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total segment benefits and expenses.......       554.0      589.5      (35.5)    1,633.3    1,694.7      (61.4)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income............................        40.8       25.0       15.8       100.5       71.2       29.3
Allocated income taxes....................         7.2       10.7       (3.5)       24.5       23.1        1.4
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income before minority interest...        33.6       14.3       19.3        76.0       48.1       27.9
Minority interest in net income
  of consolidated subsidiaries............        --         --         --          --          0.4       (0.4)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income............................        33.6       14.3       19.3        76.0       47.7       28.3
Net realized investment gains (losses),
  net of  income taxes and other offsets..        (3.1)      (1.7)      (1.4)       (5.1)       0.9       (6.0)
Restructuring charges,
  after income taxes......................        (1.0)      --         (1.0)       (7.2)      --         (7.2)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment net income........................    $   29.5   $   12.6   $   16.9    $   63.7   $   48.6   $   15.1
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

Premium revenue for the three and nine months ended September 2004 decreased $18.1 million, or 6%, and $41.8
million, or 5%, respectively, from the comparable periods in 2003. Since our demutualization in 2001, we no
longer sell participating life policies, resulting in a decline in renewal participating life premiums and
related inforce. This will result in a reduction of reserves, thereby lowering related policyholder benefit
costs. Premium revenue for participating life policies decreased by $15.5 million and $41.4 million,
respectively, for the three and nine months ended September 30, 2004 from the comparable periods in 2003. In
addition, premiums declined on an old block of corporate owned life insurance by $2.6 million and $1.5 million
for the three and nine months ended September 30, 2004, respectively, from the comparable periods in 2003.

Insurance and investment product fees for the three and nine months ended September 30, 2004 decreased $11.0
million, or 13%, and increased $7.6 million, or 3%, respectively, from the comparable periods in 2003. The
decrease for the 2004 quarter primarily relates to lower broker-dealer commission revenues resulting from the
sale of our retail broker-dealer operations in May of 2004, which lowered broker-dealer commission revenues by
$15.5 million for the quarter. This reduction in revenue was partially offset by higher universal life
insurance fees, from a growing inforce and higher fee based funds and higher annuities fees from a higher funds
under management. The increase for the nine month period in 2004 is due to higher universal life insurance and
annuity fees, discussed above, offset by lower broker-dealer commission revenues from the sale of our retail
broker-dealer operations.

Policy benefits and dividends for the three and nine months ended September 30, 2004 decreased $19.9 million,
or 4%, and $39.1 million, or 3%, from the comparable periods in 2003. The decrease for the three months is
primarily due to lower death benefits and dividends and a favorable change in reserves from a declining inforce
for participating life insurance and on an old block of corporate owned life insurance. In addition annuity
benefits were down modestly due to lower interest credited from lower crediting rates, partially offset by a
$2.6 million GMDB reserve increase for the quarter. The decrease for the nine months is primarily due to lower
death benefits


                                                      49


and policyholder dividends, a favorable change in reserves, a declining inforce for participating life
insurance and lower interest credited from lower crediting rates, partially offset by higher GMDB reserves for
annuities and higher benefits for universal life and variable universal life insurance. The increase in
universal life and variable universal life benefits is due to very favorable mortality in 2003; plus for
universal life, a large death claim in the first quarter of 2004.

Policy acquisition cost amortization for the three and nine months ended September 30, 2004 increased $5.1
million, or 20%, and decreased $0.6 million, or 1%, respectively, from the comparable periods in 2003. The
increase for the 2004 quarter is primarily due to higher amortization for; universal life from growth of
inforce, annuities from growth and lower relative performance, and participating life from higher investment
gains. The nine month decrease reflects lower amortization for variable universal life and annuities, partially
offset by the higher amortization for universal life and term life.

Other operating expenses, which include non-deferrable policy acquisition costs, broker-dealer commissions due
to Griffith and Main Street registered agents and general and administrative costs, decreased for the three and
nine months ended September 30, 2004 by $20.7 million, or 29%, and $21.7 million, or 10% from the comparable
periods in 2003. These decreases are primarily due to lower broker-dealer commissions for Griffith and Main
Street registered agents, lower operating expenses as a result of the sale of our retail broker-dealer
operations in May of 2004 and lower general and administrative non-deferred expenses as a result of recent
expense reduction initiatives.

Allocated income taxes for the three and nine months ended September 30, 2004 decreased by $3.5 million and
increased by $1.4 million, respectively. The 2004 three and nine month periods reflect a $5.7 million benefit
related to the anticipated resolution of certain tax matters with the IRS.

The changes in annuity funds under management during the three and nine month periods were as follows:

                                                            Three Months Ended           Nine Months Ended
Annuity Funds Under Management:                                September 30,               September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                          2004           2003           2004          2003
                                                      -------------  -------------  ------------- -------------

Deposits.............................................. $    140.8     $    452.1     $    564.7    $  1,255.2
Performance and interest credited.....................        5.0          140.1          234.2         511.7
Fees..................................................      (15.1)         (14.4)         (44.4)        (41.3)
Benefits and surrenders...............................     (229.1)        (231.3)        (640.8)       (693.6)
                                                      -------------  -------------  ------------- -------------
Change in funds under management......................      (98.4)         346.5          113.7       1,032.0
Funds under management, beginning of period...........    7,355.9        6,518.9        7,143.8       5,833.4
                                                      -------------  -------------  ------------- -------------
Annuity funds under management, end of period......... $  7,257.5     $  6,865.4     $  7,257.5    $  6,865.4
                                                      =============  =============  ============= =============

Three and nine months ended September 30, 2004 vs. September 30, 2003

Annuity funds under management increased, $113.7 million from $7,143.8 million at December 31, 2003. While
benefits and surrenders were consistent with prior periods and management expectation, lower deposits reflected
our late 2003 decision to exit certain distribution relationships and to stop sales of fixed annuities, as well
as lower private placement sales. Deposits also decreased in the three month period ended September 30, 2004 as
a result of the sale of our retail broker-dealer operations. Lower performance and interest credited reflects
the sustained low interest rate and equity market environment experienced through 2004.


                                                      50


The changes in universal life funds under management during the three and nine month periods were as follows:

                                                           Three Months Ended           Nine Months Ended
Variable Universal Life Funds Under Management:               September 30,               September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                          2004           2003            2004         2003
                                                      -------------  -------------  ------------- -------------

Deposits.............................................. $      45.1    $     137.3    $     172.1   $     271.2
Performance and interest credited.....................        (2.0)          52.0           64.5         153.9
Fees and cost of insurance............................       (25.0)         (27.2)         (76.5)        (78.2)
Benefits and surrenders...............................       (16.7)         (25.9)         (48.1)        (51.4)
                                                      -------------  -------------  ------------- -------------
Change in funds under management......................         1.4          136.2          112.0         295.5
Funds under management, beginning of period...........     1,809.5        1,429.6        1,698.9       1,270.3
                                                      -------------  -------------  ------------- -------------
Variable universal life funds under management,
  end of period....................................... $   1,810.9    $   1,565.8    $   1,810.9   $   1,565.8
                                                      =============  =============  ============= =============

Universal Life Funds Under Management:                     Three Months Ended              Nine Months Ended
($ amounts in millions)                                       September 30,                  September 30,
                                                      ----------------------------  ---------------------------
                                                          2004           2003            2004         2003
                                                      -------------  -------------  ------------- -------------

Deposits.............................................. $      56.2    $      56.3    $     166.6   $     143.1
Interest credited.....................................        18.1           18.4           56.2          58.9
Fees and cost of insurance............................       (28.1)         (25.9)         (83.4)        (73.7)
Benefits and surrenders...............................       (35.2)         (33.2)        (111.1)       (100.4)
                                                      -------------  -------------  ------------- -------------
Change in funds under management......................        11.0           15.6           28.3          27.9
Funds under management, beginning of period...........     1,581.3        1,522.3        1,564.0       1,510.0
                                                      -------------  -------------  ------------- -------------
Universal life funds under management,
  end of period....................................... $   1,592.3    $   1,537.9    $   1,592.3   $   1,537.9
                                                      =============  =============  ============= =============

Three and nine months ended September 30, 2004 vs. September 30, 2003

Total universal life and variable universal life funds under management increased $140.3 million from $3,262.9
million at December 31, 2003. Our decision to maintain our pricing discipline by not competing actively in the
secondary guarantee markets at currently prevailing rates contributed to a lack of sales growth, particularly
for universal life. That, in combination with flat equity markets and consistently low interest rates,
resulted in deposits and performance that only slightly offset fee deductions, benefits and surrenders.


                                                      51


Composition of Life and Annuity
Segment Revenues by Product:                        Three Months Ended                Nine Months Ended
($ amounts in millions)                                September 30,                     September 30,
                                             --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------
Life and annuity segment revenues
by product
Variable universal life insurance.........    $   28.5   $   28.7   $   (0.2)   $   86.5   $   85.7   $    0.8
Universal life insurance..................        52.7       49.5        3.2       157.8      145.1       12.7
Term life insurance.......................         3.0        2.9        0.1         9.5        8.3        1.2
Other life insurance......................        22.1       38.6      (16.5)       97.7      106.9       (9.2)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total non-participating life insurance....       106.3      119.7      (13.4)      351.5      346.0        5.5
Participating Life insurance..............       433.0      442.1       (9.1)    1,222.5    1,269.8      (47.3)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total life insurance......................       539.3      561.8      (22.5)    1,574.0    1,615.8      (41.8)
Annuities.................................        55.5       52.7        2.8       159.8      150.1        9.7
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment revenues..........................    $  594.8   $  614.5   $  (19.7)   $1,733.8   $1,765.9   $  (32.1)
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

Variable Universal life insurance revenue for the three months ended September 30, 2004 was relatively flat
with the comparable period in 2003. Fees were lower due to lower premium deposits for the 2004 quarter, offset
by higher cost of insurance, or COI, charges due to growth of inforce. Variable Universal life insurance
revenue for the nine months ended September 30, 2004 increased $0.8 million, or 1%, from the comparable period
in 2003, due primarily to higher COI fees from a growing inforce, partially offset by lower fees due to lower
premium deposits, particularly in the third quarter of 2004.

Universal life insurance revenue for the three and nine months ended September 30, 2004 increased $3.2 million,
or 6%, and $12.7 million, or 9%, respectively, over the comparable periods in 2003, primarily due to higher
fees from higher premium deposits and higher COI charges from a growing inforce.

Term life insurance revenue for the three and nine months ended September 30, 2004 increased $0.1 million, or
3%, and $1.2 million, or 14%, respectively, over the comparable periods in 2003. The increase for the nine
month period is primarily due to higher premiums from the growth of inforce and modestly higher investment
earnings.

Other life insurance revenue for the three and nine months ended September 30, 2004 decreased $16.5 million, or
43%, and $9.2 million, or 9%, respectively, over the comparable periods in 2003, due primarily to lower
broker-dealer commission revenues resulting from the sale of our retail broker-dealer operations in May of
2004, offset by an increase from an old block of corporate owned life insurance, primarily from higher
investment earnings.

Annuity revenue for the three and nine months ended September 30, 2004 increased $2.8 million, or 5%, and $9.7
million, or 6%, respectively, over the comparable periods in 2003, primarily due to higher fees from increased
funds under management and higher investment earnings in the RPE annuity block.


                                                      52





Composition of Life and Annuity
Segment Income before
Income Taxes by Product:                            Three Months Ended                Nine Months Ended
($ amounts in millions)                                September 30,                     September 30,
                                             --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------
Life and annuity segment income
by product
Variable universal life insurance.........    $    9.7   $   10.4   $   (0.7)   $   26.3   $   26.0   $    0.3
Universal life insurance..................         8.7        5.5        3.2        21.5       15.8        5.7
Term life insurance.......................         0.9        0.9       --           0.1        0.5       (0.4)
Other life insurance......................         2.6        0.9        1.7         9.9        5.6        4.3
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total non-participating life insurance....        21.9       17.7        4.2        57.8       47.9        9.9
Participating Life insurance..............        15.9        6.9        9.0        33.0       29.6        3.4
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total life insurance......................        37.8       24.6       13.2        90.8       77.5       13.3
Annuities.................................         3.0        0.4        2.6         9.7       (6.3)      16.0
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income before income taxes
  and minority interest...................    $   40.8   $   25.0   $   15.8    $  100.5   $   71.2   $   29.3
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

Variable Universal Life pre-tax income for the three months ended September 30, 2004 decreased $0.7 million, or
7%, from the comparable period in 2003, primarily due to higher benefit costs, from very favorable mortality in
the 2003 quarter and a growing inforce, plus a higher amortization of DAC, partially offset by lower general
and administrative expenses. Variable Universal Life pre-tax income for the nine months ended September 30,
2004 increased $0.3 million, or 1%, from the comparable period in 2003, primarily due to higher revenues, as
discussed above, and lower amortization of DAC from favorable persistency and higher mortality, offset by
higher benefit costs due to very favorable experience in 2003 which did not recur in 2004.

Universal Life pre-tax income for the three and nine months ended September 30, 2004 increased $3.2 million, or
58%, and $5.7 million, or 36%, over the comparable periods in 2003, primarily due to higher revenues, as
discussed above, lower interest credited from lower crediting rates and lower general and administrative
expenses, particularly for the nine month period. These were partially offset by higher benefit costs caused by
very favorable mortality in 2003, which did not recur in 2004. Additionally, there was a large death claim in
the first quarter of 2004 that lowered earnings for the nine month period.

Annuity pre-tax income for the three months ended September 30, 2004 increased by $2.6 million over the
comparable period in 2003. This improvement was due to higher revenues, as discussed above, partially offset by
higher benefit costs due to an increase in guaranteed minimum death benefit liabilities in the 2004 quarter.
Annuity pre-tax income for the nine months ended September 30 2004 increased to $9.7 million from a loss of
$6.3 million for the comparable period in 2003 due primarily to higher revenues, as discussed above and lower
interest credited from lower crediting rates, partially offset by slightly higher benefit costs.

Participating Life pre-tax income for the three and nine months ended September 30, 2004 increased $9.0
million, or 130%, and $3.4 million, or 11%, over the comparable periods in 2003. The increase in pre-tax income
for the 2004 quarter is primarily due to higher investment gains. The increase for the nine month period is
primarily due to higher investment earnings and lower general and administrative expenses.



                                                      53


Asset Management Segment

Summary Asset Management
Financial Data:                                     Three Months Ended                Nine Months Ended
($ amounts in millions)                                September 30,                     September 30,
                                             --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------
Results of operations
Investment product fees...................    $   63.5   $   64.0   $   (0.5)   $  199.9   $  179.7   $   20.2
Net investment income.....................         0.2        0.1        0.1         0.5        0.3        0.2
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total segment revenues....................        63.7       64.1       (0.4)      200.4      180.0       20.4
                                             ---------- ---------- ----------  ---------- ---------- ----------
Intangible asset amortization.............         8.5        8.3        0.2        25.1       24.9        0.2
Other operating expenses..................        51.9       56.0       (4.1)      164.6      162.1        2.5
                                             ---------- ---------- ----------  ---------- ---------- ----------
Total segment expenses....................        60.4       64.3       (3.9)      189.7      187.0        2.7
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income (loss) before
  income taxes and minority interest......         3.3       (0.2)       3.5        10.7       (7.0)      17.7
Allocated income taxes (benefit)..........        --         (1.2)       1.2         0.4       (5.6)       6.0
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income (loss)
  before minority interest................         3.3        1.0        2.3        10.3       (1.4)      11.7
Minority interest in segment income.......         3.3        2.9        0.4        10.5        7.6        2.9
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment income (loss).....................        --         (1.9)       1.9        (0.2)      (9.0)       8.8
Restructuring charges,
  net of income taxes.....................        --         --         --          (0.3)      (3.3)       3.0
Realized investment gains,
  net of income taxes.....................         0.2       --          0.2         1.6       --          1.6
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment net income (loss).................    $    0.2   $   (1.9)  $    2.1    $    1.1   $  (12.3)  $   13.4
                                             ========== ========== ==========  ========== ========== ==========


Asset Management Net Flows and                            Three Months Ended            Nine Months Ended
Assets Under Management:                                     September 30,                September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                          2004           2003           2004          2003
                                                      -------------  -------------  ------------- -------------

Inflows............................................... $   1,809.3    $   1,642.3    $   5,426.5   $   5,246.8
Outflows..............................................    (2,573.3)      (1,845.3)      (9,421.5)     (5,772.1)
                                                      -------------  -------------  ------------- -------------
Net flows.............................................      (764.0)        (203.0)      (3,995.0)       (525.3)
Performance...........................................      (573.0)         945.1           19.3       3,322.0
Other.................................................        15.7          (13.1)          36.3        (156.8)
                                                      -------------  -------------  ------------- -------------
Change in assets under management.....................    (1,321.3)         729.0       (3,939.4)      2,639.9
Assets under management, beginning of period..........    43,642.4       43,746.2       46,260.5      41,835.3
                                                      -------------  -------------  ------------- -------------
Assets under management, end of period................ $  42,321.1    $  44,475.2    $  42,321.1   $  44,475.2
                                                      =============  =============  ============= =============

Three and nine months ended September 30, 2004 vs. September 30, 2003

Investment product fees decreased 1%, for the three month period and increased 11%, for the nine month period
ended September 30, 2004, respectively, from the comparable periods in 2003. Institutional investment
management fees increased $1.6 million for the comparative three months as a result of increased assets under
management. This increase was offset by a decrease of $0.5 million in private client investment management
fees, as a result of decreased assets under management, and a $1.5 million decrease in other investment product
fees, of which $0.8 million related to commissions earned on certain equity trades and $0.4 million related to
mutual fund ancillary fees. For the comparative nine month periods, private client and institutional investment
management fees increased $9.1 million and $9.7 million, respectively, as a result of increased assets under
management. Approximately 58% of our management fee revenues are based on assets as of the beginning of a
quarter, which causes the trend in fees to lag behind changes in assets under management.

Assets under management, excluding the general account of our affiliated life companies, were $42.3 billion,
$44.5 billion, and $46.3 billion, at September 30, 2004 and 2003, and at December 31, 2003, respectively. The


                                                      54


decrease in assets under management since September 30, 2003 and December 31, 2003 is primarily due to net
outflows of $4.6 billion and $4.0 billion, respectively. The outflows from September 2003 were offset, in part,
by positive investment performance of $2.4 billion. Sales of private client products for the three and nine
month periods in 2004 were $1.0 billion and $3.1 billion, respectively, a decrease of 7% and an increase of 4%,
respectively, from the same periods in 2003. Redemptions from existing accounts for the three and nine month
periods in 2004 were $1.6 billion and $5.0 billion, respectively, an increase of 46% and 48%, respectively,
from the same period in 2003. Sales of institutional accounts for the three and nine month periods in 2004 were
$0.8 billion and $2.3 billion, respectively, an increase of 42% and of 3%, respectively, from the same periods
in 2003. Lost accounts and withdrawals from existing accounts for the three and nine month periods in 2004 were
$0.9 billion and $4.5 billion, respectively, an increase of 29% and 83%, respectively, from the same periods in
2003. The nine month increase includes $0.5 billion as a result of liquidating one CDO and a structured product
deal during the period.

Redemptions in the period included two unusual items in the second quarter of 2004. One was a $1.2 billion
non-discretionary institutional account that earned only a nominal advisory fee. The other was the redemption
of a $240.0 million sub-advised structured product. In addition, a $0.3 billion CDO was liquidated during the
first quarter of 2004. In managed accounts, 2004 sales were lower due to the closing of a small cap strategy to
new deposits and weak performance at our major managers. In addition to the unusual institutional redemptions
previously noted, 2004 year-to-date sales and outflows of institutional products were influenced by performance
related issues in some of our equity strategies.

Other operating expenses decreased 7% and increased 2%, for the three and nine month periods ended September
30, 2004, respectively, from the comparable period in 2003. For the three month period $2.1 million of the
decrease related to compensation expense, primarily as a result of decreased incentive compensation and other
employee related charges, and $1.8 million related to other non-compensation related operating expenses,
primarily due to decreased trailing commissions and computer charges. An increase in compensation expense of
$2.8 million for the nine month period was primarily the result of higher formulaic compensation, which
resulted primarily from higher formula driven bonuses at certain affiliated companies. The increase in
compensation expense was offset, in part, by a decrease of $0.2 million in non-compensation related operating
expenses, which resulted primarily from a decrease in computer services charges.

Allocated income taxes increased for the three and nine month periods ended September 30, 2004 from the
comparable periods in 2003 primarily as a result of segment income in 2004 compared to segment losses in 2003.

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.

During the first quarter of 2003, we sold 50% of our interest in certain 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 are each
funding half of these commitments. At the time of transfer, the partnerships transferred to the closed block
constituted less than 0.5% of the assets of the closed block.


                                                      55


Summary Venture Capital Segment                     Three Months Ended                Nine Months Ended
Financial Data:                                        September 30,                    September 30,
($ amounts in millions)                      --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------

Net realized gains (losses) on partnership
  cash and stock distributions............    $    5.4   $    6.2   $   (0.8)   $    4.4   $    1.1   $    3.3
Net unrealized gains (losses) on
  partnership investments.................        (9.5)       0.7      (10.2)        9.6       39.1      (29.5)
Partnership operating (expenses) credits..         0.2       (1.8)       2.0        (1.9)      (5.4)       3.5
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment net investment income (loss)......        (3.9)       5.1       (9.0)       12.1       34.8      (22.7)
Applicable income taxes...................        (1.4)       1.8       (3.2)        4.2       12.2       (8.0)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment net income (loss).................    $   (2.5)  $    3.3   $   (5.8)   $    7.9   $   22.6   $  (14.7)
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

For the three months ended September 30, 2004, net investment income decreased $9.0 million over the three
months ended September 30, 2003, reflecting the effect of a decline in select market indices used to estimate
the change in valuation of private investee companies and overall equity market conditions when compared to the
comparable period in 2003. For the nine months ended September 30, 2004, net investment income decreased $22.7
million over the same period in 2003, due primarily to the amount of the true-up to the partnerships' audited
financial statements from estimated amounts as of December 31, 2003. The true-ups to the partnerships' audited
financial statements reflected in the three and nine months ended September 30, 2004 were $2.2 million and
$26.6 million lower, respectively, than the true-ups recognized in the comparable periods in 2003. This
decrease for the nine months ended 2004 was partially offset by higher gains realized on cash and stock
distributions.

The effect of adjusting estimated partnership results to actual results was to decrease investment income by
$2.6 million and $0.4 million for the three months ended September 30, 2004 and 2003, respectively, and to
increase investment income by $6.8 million and $33.4 million for the nine months ended September 30, 2004 and
2003, respectively.

Activity in Venture Capital Segment                 Three Months Ended                Nine Months Ended
Investments:                                           September 30,                    September 30,
($ amounts in millions)                      --------------------------------  --------------------------------
                                                2004       2003      Change       2004       2003      Change
                                             ---------- ---------- ----------  ---------- ---------- ----------

Contributions (dollars invested)..........    $    8.5   $    6.0   $    2.5    $   29.0   $   27.5   $    1.5
Equity in earnings of partnerships........        (3.9)       5.1       (9.0)       12.1       34.8      (22.7)
Distributions.............................       (12.9)     (12.4)      (0.5)      (39.5)     (21.2)     (18.3)
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..        --         --         --          --        (14.2)      14.2
                                             ---------- ---------- ----------  ---------- ---------- ----------
Change in venture capital investments.....        (8.3)      (1.3)      (7.0)        1.6      (25.3)      26.9
Venture capital segment investments,
  beginning of period.....................       206.2      203.8        2.4       196.3      227.8      (31.5)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Venture capital segment investments,
  end of period...........................    $  197.9   $  202.5   $   (4.6)   $  197.9   $  202.5   $   (4.6)
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

For the three months ended September 30, 2004, venture capital investments decreased $7.0 million compared to
the change for the comparable period in 2003, primarily due to a decrease in equity in earnings of
partnerships, partially offset by higher contributions for the quarter. For the nine months ended September 30,
2004, venture capital investments increased $26.9 million compared to the change for 2003, primarily due to
proceeds from, and realized losses on, the sale of partnership interests and transfer to the closed block in
2003, which reduced the

                                                      56


venture capital balance by $66.4 million. This change was partially offset by a decrease in equity in earnings
of $22.7 million and venture capital distributions, which increased $18.3 million over the first nine months of
2003.

Segment Investments in Segment Venture Capital Partnerships by Type:               Sept 30,         Dec 31,
($ amounts in millions)                                                              2004            2003
                                                                                --------------- ---------------

Technology..................................................................     $        24.6   $        36.8
Telecommunications..........................................................               6.8            13.3
Biotechnology...............................................................               7.9            16.3
Health care.................................................................               6.3             8.2
Consumer and business products and services.................................              32.1            29.6
Financial services..........................................................              20.9            28.5
Other.......................................................................              59.1            44.9
                                                                                --------------- ---------------
Private holdings............................................................             157.7           177.6
Public holdings.............................................................              14.8            11.3
Cash and cash equivalents...................................................               8.6             5.5
Other.......................................................................              16.8             1.9
                                                                                --------------- ---------------
Venture capital partnerships................................................     $       197.9   $       196.3
                                                                                =============== ===============

Unfunded commitments........................................................     $        52.0   $        76.7
                                                                                =============== ===============

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

Corporate and Other Segment

                                                    Three Months Ended                Nine Months Ended
Summary Corporate and Other                            September 30,                    September 30,
Financial Data:                              --------------------------------  --------------------------------
($ amounts in millions)                                    2003                              2003
                                                2004     Restated    Change       2004     Restated    Change
                                             ---------- ---------- ----------  ---------- ---------- ----------

Corporate investment income...............     $  --     $    1.5   $   (1.5)   $    0.4   $    2.9   $   (2.5)
Investment income from
  collateralized obligations..............        11.1       12.7       (1.6)       30.0       40.3      (10.3)
Interest expense on indebtedness..........       (10.1)      (9.8)      (0.3)      (29.8)     (29.5)      (0.3)
Interest expense on non-recourse
  collateralized obligations..............        (9.1)     (11.9)       2.8       (25.5)     (37.8)      12.3
Corporate expenses........................        (5.1)      (4.8)      (0.3)      (13.3)      (7.8)      (5.5)
International.............................        --          1.0       (1.0)       (0.1)      (0.3)       0.2
Other.....................................        (2.7)       0.8       (3.5)       (6.4)      (2.2)      (4.2)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment loss, before income taxes.........       (15.9)     (10.5)      (5.4)      (44.7)     (34.4)     (10.3)
Allocated income tax (benefit)............        (5.2)      (6.7)       1.5       (15.6)     (14.1)      (1.5)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment loss..............................       (10.7)      (3.8)      (6.9)      (29.1)     (20.3)      (8.8)
Net realized investment gains (losses),
  net of income taxes and other offsets...        (5.6)       4.2       (9.8)        0.8      (70.0)      70.8
Restructuring charges,
  after income taxes......................        (4.0)      --         (4.0)       (6.4)       0.1       (6.5)
                                             ---------- ---------- ----------  ---------- ---------- ----------
Segment net income (loss).................    $  (20.3)  $    0.4   $  (20.7)   $  (34.7)  $  (90.2)  $   55.5
                                             ========== ========== ==========  ========== ========== ==========

Three and nine months ended September 30, 2004 vs. September 30, 2003

For the three and nine months ended September 30, 2004, investment income from debt and equity securities
pledged as collateral related to our CDOs decreased $1.6 million and $10.3 million, respectively, over the same
periods in the prior year, due primarily to decreased asset levels from pay downs and defaults. Consequently,
lower distributions were made to investment holders resulting in $2.8 million and $12.3 million decreases in
interest expense on non-recourse collateralized obligations during the same periods.


                                                      57


Corporate expenses increased $0.3 million and $5.5 million for the three and nine months ended September 30,
2004, over the comparable periods in 2003, due to a return to more normalized incentive compensation accruals,
as well as increases in liability insurance and incremental regulatory compliance and audit costs associated
with The Sarbanes-Oxley Act of 2002.

The decrease in other primarily relates to a loss in a small group pension runoff block as a result of lower
investment earnings and slightly higher benefit costs combined with higher administrative expenses related to
the CDO trusts.

For the three months ended September 30, 2004 realized losses were $5.6 million compared to gains of $4.2
million for the same period in 2003. This decrease was primarily due to $8.3 million in realized losses from
the CDO trusts. For the nine months ended September 30, 2004, realized gains were $0.8 million compared to
losses of $70.0 million for the same period in 2003. The $70.8 million improvement is primarily due to lower
impairments in the 2004 period, partially offset by higher losses from the CDO trusts. Impairment losses were
lower in 2004 due to improved credit markets and higher losses in 2003 from a $60.4 million non-cash after tax
charge related to three international equity investments, including Aberdeen.

For the three and nine months ended September 30, 2004, restructuring charges increased $4.0 million and $6.5
million, respectively, over the comparable periods in 2003. These increases are primarily related to costs
incurred in connection with the information technology services agreement with EDS, including severance costs,
transition costs, and the impairment of certain information technology assets.

Income tax changes for the three and nine months ended September 30, 2004 compared to the same periods in 2003
are primarily due to changes in pre-tax income for the respective periods, plus the allocation of
tax-advantaged investments in the 2003 period.

General Account

The invested assets in the Life Companies' general account 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.

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

Investments pledged as collateral 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 7 to our consolidated financial statements in this Form 10-Q and our 2003 Annual Report on Form 10-K
for more information.


                                                      58


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.

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.

Annuity Deposit Fund Balances                                                       Sept 30,        Dec 31,
($ amounts in millions)                                                               2004           2003
                                                                                --------------- ---------------

Policyholder deposit funds
Retirement Planners Edge GIAs...............................................     $     1,130.7   $     1,209.4
Other variable annuity GIAs.................................................             829.8           858.0
                                                                                --------------- ---------------
Variable annuity GIAs.......................................................           1,960.5         2,067.4
Fixed annuities.............................................................           1,048.0         1,056.9
                                                                                --------------- ---------------
Total variable annuity GIAs and fixed annuities.............................     $     3,008.5   $     3,124.3
                                                                                =============== ===============

                                                      59


The funds in the RPE guaranteed interest account decreased by $17.6 million in the third quarter. Given its 3%
guaranteed interest rate, we believe most contract holders currently view RPE as an attractive alternative to
money market investments. As a result, to experience a material increase in surrenders, money market rates
would likely need to increase to 3.5% to 4.0%, or at least 250 basis points above current rates. Until
short-term rates hit that point, this business may continue to run off slowly.

Because experience has shown that the duration of the RPE liabilities is longer than we had previously assumed,
beginning in the second quarter of 2004 we extended the duration of the assets. Coincidentally, we were able to
take advantage of the sharp increase in rates and steeper yield curve during the second quarter to produce an
even more favorable outcome. As a result, the three-month rolling average yield on the portfolio has increased
by 37 basis points and the asset and liability durations are better aligned.

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 Our General Account

Our general account debt securities portfolios consist 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 September 30, 2004, our general account held debt securities with a carrying
value of $13,338.5 million, representing 79.5% of total general account investments. Public debt securities
represented 77.8% of total debt securities, with the remaining 22.2% represented by private debt securities.

On our consolidated balance sheet we consolidate debt and equity securities that are pledged as collateral for
the settlement of non-recourse collateralized obligation liabilities related to three collateralized obligation
trusts we sponsor. See Note 7 of our interim condensed consolidated financial statements in this Form 10-Q for
additional information on these debt and equity securities pledged as collateral.

Each year, the majority of our general account 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 September 30, 2004, our total
below investment grade securities totaled $1,098.5 million, or 8.2%, of our total debt security portfolio. Of
that amount, $844.9 million, or 6.3%, 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 $253.6 million, or 1.9%, of our total debt security portfolio.

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


                                                      60


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 and is
not written-up as a result of recoveries in fair value.

General Account Debt Security Portfolios at Fair Value by Rating:
($ amounts in millions)

  SVO         S&P Equivalent        Total Debt Securities    Public Debt Securities    Private Debt Securities
                                  ------------------------- ------------------------- -------------------------
                                    Sept 30,      Dec 31,     Sept 30,      Dec 31,     Sept 30,      Dec 31,
 Rating        Designation            2004         2003         2004         2003         2004         2003
- --------  ----------------------  ------------ ------------ ------------ ------------ ------------ ------------

   1       AAA/AA/A............    $  8,524.9   $  8,821.2   $  7,067.7   $  7,442.1   $  1,457.2   $  1,379.1
   2       BBB.................       3,715.1      3,350.8      2,384.8      2,160.6      1,330.3      1,190.2
                                  ------------ ------------ ------------ ------------ ------------ ------------
     Total investment grade          12,240.0     12,172.0      9,452.5      9,602.7      2,787.5      2,569.3
   3       BB..................         844.9        764.9        738.7        635.5        106.2        129.4
   4       B...................         158.4        218.9        124.0        157.8         34.4         61.1
   5       CCC and lower.......          82.6         94.6         54.8         53.7         27.8         40.9
   6       In or near default..          12.6         22.6          9.0         19.0          3.6          3.6
                                  ------------ ------------ ------------ ------------ ------------ ------------
     Total debt securities         $ 13,338.5   $ 13,273.0   $ 10,379.0   $ 10,468.7   $  2,959.5   $  2,804.3
                                  ============ ============ ============ ============ ============ ============

The following tables present our general account debt security portfolios by investment type, along with a
breakout of credit quality based on equivalent S&P rating agency designation.

                                                                 As of September 30, 2004
                                          ---------------------------------------------------------------------
                                                                              Unrealized Gains (Losses)
Debt Securities by Type:                                            -------------------------------------------
($ amounts in millions)                Fair Value        Cost        Gross Gains   Gross Losses        Net
                                      -------------  -------------  -------------  -------------  -------------

U.S. government and agency...........  $     669.8    $     609.5    $      61.4    $      (1.1)   $      60.3
State and political subdivision......        463.8          427.8           37.6           (1.6)          36.0
Foreign government...................        308.2          284.0           24.7           (0.5)          24.2
Corporate............................      7,194.8        6,857.2          381.8          (44.2)         337.6
Mortgage-backed......................      3,114.3        2,974.2          146.7           (6.6)         140.1
Other asset-backed...................      1,587.6        1,573.1           41.8          (27.3)          14.5
                                      -------------  -------------  -------------  -------------  -------------
Total debt securities................  $  13,338.5    $  12,725.8    $     694.0    $     (81.3)   $     612.7
                                      =============  =============  =============  =============  =============
Debt securities outside closed block:
    Unrealized gains.................  $   4,873.5    $   4,661.1    $     212.4    $      --      $     212.4
    Unrealized losses................      1,552.3        1,601.8           --            (49.5)         (49.5)
                                      -------------  -------------  -------------  -------------  -------------
    Total outside the closed block...      6,425.8        6,262.9          212.4          (49.5)         162.9
                                      -------------  -------------  -------------  -------------  -------------
Debt securities in closed block:
    Unrealized gains.................      5,926.6        5,445.0          481.6           --            481.6
    Unrealized losses................        986.1        1,017.9           --            (31.8)         (31.8)
                                      -------------  -------------  -------------  -------------  -------------
    Total in the closed block........      6,912.7        6,462.9          481.6          (31.8)         449.8
                                      -------------  -------------  -------------  -------------  -------------
Total debt securities................  $  13,338.5    $  12,725.8    $     694.0    $     (81.3)   $     612.7
                                      =============  =============  =============  =============  =============



                                                      61





                                                                      As of September 30, 2004
                                                     ----------------------------------------------------------
Debt Securities by Type and Credit Quality:               Investment Grade            Below Investment Grade
($ amounts in millions)                              ----------------------------  ----------------------------
                                                      Fair Value        Cost        Fair Value        Cost
                                                     -------------  -------------  -------------  -------------

U.S. government and agency......................      $     669.8    $     609.5    $      --      $      --
State and political subdivision.................            463.8          427.8           --             --
Foreign government..............................            142.3          131.3          165.9          152.7
Corporate.......................................          6,483.0        6,166.0          711.8          691.2
Mortgage-backed.................................          3,056.2        2,924.9           58.1           49.3
Other asset-backed..............................          1,424.9        1,396.1          162.7          177.0
                                                     -------------  -------------  -------------  -------------
Total debt securities...........................      $  12,240.0    $  11,655.6    $   1,098.5    $   1,070.2
                                                     =============  =============  =============  =============

Percentage of total debt securities.............             91.8%          91.6%           8.2%           8.4%
                                                     =============  =============  =============  =============

Investment Grade Debt Securities (Fair Value):                               As of September 30, 2004
($ amounts in millions)                                             -------------------------------------------
                                                                        Total        AAA/AA/A          BBB
                                                                    -------------  -------------  -------------

U.S. government and agency.....................................      $     669.8    $     669.8    $      --
State and political subdivision................................            463.8          450.2           13.6
Foreign government.............................................            142.3           40.0          102.3
Corporate......................................................          6,483.0        3,351.2        3,131.8
Mortgage-backed................................................          3,056.2        2,895.4          160.8
Other asset-backed.............................................          1,424.9        1,118.3          306.6
                                                                    -------------  -------------  -------------
Total debt securities..........................................      $  12,240.0    $   8,524.9    $   3,715.1
                                                                    =============  =============  =============

Percentage of total debt securities............................             91.8%          63.9%          27.9%
                                                                    =============  =============  =============

                                                             As of September 30, 2004
                                      -------------------------------------------------------------------------
Below Investment Grade                                                                             In or Near
Debt Securities at Fair Value:            Total           BB              B         CC or Lower      Default
($ amounts in millions)               -------------  -------------  -------------  -------------  -------------

Foreign government...................  $     165.9    $     150.7    $      15.2    $      --      $      --
Corporate............................        711.8          575.6           97.7           34.9            3.6
Mortgage-backed......................         58.1           57.9           --              0.2           --
Other asset-backed...................        162.7           60.7           45.5           47.5            9.0
                                      -------------  -------------  -------------  -------------  -------------
Total debt securities................  $   1,098.5    $     844.9    $     158.4    $      82.6    $      12.6
                                      =============  =============  =============  =============  =============

Percentage of total debt securities..          8.2%           6.3%           1.2%           0.6%           0.1%
                                      =============  =============  =============  =============  =============

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 September 30, 2004 in our
debt securities portfolios are banks (3.66%), insurance (3.18%), electrical utilities (2.43%), broker-dealers
(2.30%) and diversified financial services (1.70%).

Our corporate bond exposure to recently troubled industries, including telecommunication equipment, telephone
utilities, airlines, media, publishing and broadcasting, comprises 5.5% of our debt securities portfolios at
September 30, 2004. In addition, within the asset-backed securities sector, our exposure to securitized
aircraft receivable securities comprises approximately 1.1% of our debt securities portfolios, with slightly
more than one-third of that exposure rated below investment grade at September 30, 2004.

                                                      62


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                          Three Months Ended           Nine Months Ended
Investment Gains (Losses) in General Account:                 September 30,                September 30,
($ amounts in millions)                               ----------------------------  ---------------------------
                                                                         2003                         2003
                                                          2004         Restated         2004        Restated
                                                      -------------  -------------  ------------- -------------

Debt and equity security impairments................   $      (4.6)   $     (18.2)   $      (8.6)  $     (64.7)
Debt securities pledged as collateral impairments...          (8.3)          (0.8)         (16.6)         (2.7)
Affiliate equity securities.........................          --             --             --           (96.9)
Other investment impairments........................          --             (1.3)          (3.3)        (19.0)
                                                      -------------  -------------  ------------- -------------
Impairment losses...................................         (12.9)         (20.3)         (28.5)       (183.3)
                                                      -------------  -------------  ------------- -------------
Debt and equity security transaction gains..........           6.2           17.9           39.2         103.8
Debt and equity security transaction losses.........          (2.3)          (1.9)          (9.3)        (36.1)
Other investments transaction gains (losses)........          (0.1)           0.9            7.6          (6.6)
                                                      -------------  -------------  ------------- -------------
Net transaction gains...............................           3.8           16.9           37.5          61.1
                                                      -------------  -------------  ------------- -------------
Net realized investment gains (losses)..............          (9.1)          (3.4)           9.0        (122.2)
                                                      -------------  -------------  ------------- -------------
Applicable closed block
  policyholder dividend obligation..................          (2.5)          (3.5)           4.8          (4.5)
Applicable deferred policy acquisition costs........          (0.1)          (2.8)          (0.9)         (1.1)
Applicable deferred income tax (benefit)............           2.0            1.2            7.8         (44.8)
                                                      -------------  -------------  ------------- -------------
Offsets to realized investment losses...............          (0.6)          (5.1)          11.7         (50.4)
                                                      -------------  -------------  ------------- -------------
Net realized investment gains (losses)
  included in net income............................   $      (8.5)   $       1.7    $      (2.7)  $     (71.8)
                                                      =============  =============  ============= =============

Realized impairment losses on debt and equity securities pledged as collateral relating to our direct
investments in the consolidated collateralized obligation trusts are $16.6 million and $2.7 million for the
nine months ended September 30, 2004 and 2003, respectively, and $8.3 million and $0.8 million for the three
months ended September 30, 2004 and 2003, respectively.

The reduction in realized investment losses related to the impairment of debt and equity securities for the
three and nine months ended September 30, 2004 compared to 2003 reflects a substantial improvement in the
credit market since early 2004. Other investment impairments of $1.3 million and $115.9 million for the three
and nine months ended September 30, 2003 primarily relate to the impairment of three international investments
in the second quarter of 2003, $89.1 million of which related to our equity investment in Aberdeen.



                                                      63


Gross and Net Unrealized Gains (Losses)
from General Account Debt and Equity
Securities:                                                       As of September 30, 2004
($ amounts in millions)                       -----------------------------------------------------------------
                                                      Total         Outside Closed Block      Closed Block
                                              --------------------- --------------------- ---------------------
                                                 Gains     Losses     Gains      Losses     Gains      Losses
                                              ---------- ---------- ---------- ---------- ---------- ----------
Debt securities
Number of positions......................         2,349        563      1,115        367      1,234        196
                                              ---------- ---------- ---------- ---------- ---------- ----------
Unrealized gains (losses)................      $  694.0   $  (81.3)  $  212.4   $  (49.5)  $  481.6   $  (31.8)
                                              ---------- ---------- ---------- ---------- ---------- ----------
Applicable policyholder dividend
  obligation (reduction).................         481.6      (31.8)      --         --        481.6      (31.8)
Applicable deferred policy acquisition
  costs (benefit)........................          96.9      (19.4)      96.9      (19.4)      --         --
Applicable deferred
   income taxes (benefit)................          40.4      (10.5)      40.4      (10.5)      --         --
                                              ---------- ---------- ---------- ---------- ---------- ----------
Offsets to net unrealized gains (losses).         618.9      (61.7)     137.3      (29.9)     481.6      (31.8)
                                              ---------- ---------- ---------- ---------- ---------- ----------
Unrealized gains (losses) after offsets..      $   75.1   $  (19.6)  $   75.1   $  (19.6)  $   --     $   --
                                              ========== ========== ========== ========== ========== ==========
Net unrealized gains after offsets.......      $   55.5              $   55.5              $   --
                                              ==========            ==========            ==========

Equity securities
Number of positions......................           271         99         91         41        180         58
                                              ---------- ---------- ---------- ---------- ---------- ----------
Unrealized gains (losses)................      $  103.8   $   (6.0)  $   95.8   $   (3.5)  $    8.0   $   (2.5)
                                              ---------- ---------- ---------- ---------- ---------- ----------
Applicable policyholder dividend
  obligation (reduction).................           8.0       (2.5)      --         --          8.0       (2.5)
Applicable deferred
  income taxes (benefit).................          33.5       (1.2)      33.5       (1.2)      --         --
                                              ---------- ---------- ---------- ---------- ---------- ----------
Offsets to net unrealized gains (losses).          41.5       (3.7)      33.5       (1.2)       8.0       (2.5)
                                              ---------- ---------- ---------- ---------- ---------- ----------
Unrealized gains (losses) after offsets..      $   62.3   $   (2.3)  $   62.3   $   (2.3)  $   --     $   --
                                              ========== ========== ========== ========== ========== ==========
Net unrealized gains after offsets.......      $   60.0              $   60.0              $   --
                                              ==========            ==========            ==========

As of September 30, 2004, total net unrealized gains on debt and equity securities were $710.5 million
(unrealized gains of $797.8 million less unrealized losses of $87.3 million). Of that net amount, $255.2
million was outside the closed block ($115.5 million after applicable deferred policy acquisition costs and
deferred income taxes) and $455.3 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 and greater than 12 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.


                                                      64


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 September
30, 2004. 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-Q for more information regarding the closed block. Applicable deferred policy
acquisition costs and income taxes further reduce the effect on our comprehensive income.



                                                      65


Gross Unrealized Losses On General Account Debt and Equity
Securities by Duration of Unrealized Loss:                          As of September 30, 2004
($ amounts in millions)                             ----------------------------------------------------------
                                                                       0 - 6         6 - 12        Over 12
                                                        Total         Months         Months         Months
                                                    -------------- -------------- -------------  -------------
Debt securities outside closed block
Number of positions...............................          367            266             11             90
                                                    -------------- -------------- -------------  -------------
Total fair value..................................   $  1,552.2     $  1,142.7     $     34.6     $    374.9
Total amortized cost..............................      1,601.7        1,158.2           36.4          407.1
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $    (49.5)    $    (15.5)    $     (1.8)    $    (32.2)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $    (19.6)    $     (6.1)    $     (0.7)    $    (12.8)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $    (21.7)    $     (1.9)    $     (0.5)    $    (19.3)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $     (8.2)    $     (0.7)    $     (0.2)    $     (7.3)
                                                    ============== ============== =============  =============

Investment grade:
Number of positions...............................          307            238              5             64
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $    (29.0)    $    (11.2)    $     (0.8)    $    (17.0)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $    (11.6)    $     (4.4)    $     (0.2)    $     (7.0)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $     (8.1)    $     --       $     --       $     (8.1)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $     (3.2)    $     --       $     --       $     (3.2)
                                                    ============== ============== =============  =============

Below investment grade:
Number of positions...............................           60             28              6             26
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $    (20.5)    $     (4.3)    $     (1.0)    $    (15.2)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $     (8.0)    $     (1.7)    $     (0.5)    $     (5.8)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $    (13.6)    $     (1.9)    $     (0.5)    $    (11.2)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $     (5.0)    $     (0.7)    $     (0.2)    $     (4.1)
                                                    ============== ============== =============  =============

Equity securities outside closed block
Number of positions...............................           41             34              2              5
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $     (3.5)    $     (1.5)    $     (1.6)    $     (0.4)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $     (2.2)    $     (1.1)    $     (1.0)    $     (0.1)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $     (3.1)    $     (1.4)    $     (1.6)    $     (0.1)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $     (2.0)    $     (0.9)    $     (1.0)    $     (0.1)
                                                    ============== ============== =============  =============

For debt securities outside of the closed block with gross unrealized losses, 59.2% of the unrealized losses
after offsets pertains to investment grade securities and 40.8% of the unrealized losses after offsets pertains
to below investment grade securities at September 30, 2004.

                                                      66


Gross Unrealized Losses on General Account Debt and Equity
Securities by Duration of Unrealized Loss:                          As of September 30, 2004
($ amounts in millions)                             ----------------------------------------------------------
                                                                       0 - 6         6 - 12        Over 12
                                                        Total         Months         Months         Months
                                                    -------------- -------------- -------------  -------------
Debt securities inside closed block
Number of positions...............................           196            118             11             67
                                                    -------------- -------------- -------------  -------------
Total fair  value.................................   $     986.1    $     586.1    $      53.3    $     346.7
Total amortized cost..............................       1,017.9          595.5           55.4          367.0
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $     (31.8)   $      (9.4)   $      (2.1)   $     (20.3)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $      (5.7)   $      --      $      --      $      (5.7)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============

Investment grade:
Number of positions...............................           159             96              8             55
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $     (21.2)   $      (7.9)   $      (1.2)   $     (12.1)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============

Below investment grade:
Number of positions...............................            37             22              3             12
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $     (10.6)   $      (1.5)   $      (0.9)   $      (8.2)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $      (5.7)   $      --      $      --      $      (5.7)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============

Equity securities inside closed block
Number of positions...............................            58             56              1              1
                                                    -------------- -------------- -------------  -------------
Unrealized losses.................................   $      (2.5)   $      (2.0)   $      (0.1)   $      (0.4)
                                                    ============== ============== =============  =============
Unrealized losses after offsets...................   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost................   $      (1.2)   $      (0.8)   $      --      $      (0.4)
                                                    ============== ============== =============  =============
Unrealized losses over 20% of cost after offsets..   $      --      $      --      $      --      $      --
                                                    ============== ============== =============  =============

As of September 30, 2004, for debt securities in the closed block with gross unrealized losses, 66.7% of the
unrealized losses pertains to investment grade securities and 33.3% of the unrealized losses pertains to below
investment grade securities.

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 effect 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.

                                                      67


Aberdeen Asset Management PLC

As of September 30, 2004 and December 31, 2003, we owned $27.5 million of Aberdeen convertible subordinated
notes. The 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. Aberdeen has
exercised all four extensions of the maturity, and the notes, net of two pay downs of $5.0 million each in
March and November 2003, now have a maturity of March 29, 2005 and are subject to an interest rate of 8%. 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.

As of June 30, 2003, our ownership of Aberdeen common stock included 22% of the company's outstanding common
shares that we had purchased between 1996 and 2001 for $109.1 million. At that time 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 quarter ended June 30,
2003. The carrying value of our equity investment in Aberdeen was $39.0 million and $38.3 million at September
30, 2004 and December 31, 2003, respectively. The fair value, based on the quoted market price of underlying
shares and foreign currency exchange rate, of our equity investment in Aberdeen was $58.3 million and $54.4
million at September 30, 2004, December 31, 2003, respectively.

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. As a result of this acquisition, 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 believe that we continue to 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.

On May 25, 2004, Aberdeen closed on the sale of its UK and Continental European property investment management
business to an unrelated party. We recognized an after-tax, non-cash realized gain of $0.7 million, recorded as
a realized investment gain, during the second quarter of 2004 related to our share of Aberdeen's realized gain.

Hilb, Rogal & Hobbs Company

We own shares of common stock in HRH, a Virginia-based property and casualty insurance and employee benefit
products distributor. See Notes 5 and 6 to our consolidated financial statements in this Form 10-Q 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 includes both liquidity and capital resources as these subjects are interrelated.

                                                      68


The Phoenix Companies, Inc. (consolidated)

                                                                                Nine Months Ended
                                                                                  September 30,
                                                                    -------------------------------------------
Summary Consolidated Cash Flow Data:                                                   2003
($ amounts in millions)                                                 2004         Restated        Change
                                                                    -------------- -------------  -------------

Cash from continuing operations...................................   $      58.2    $    237.7     $   (179.5)
Cash for discontinued operations..................................         (25.1)        (60.0)          34.9
Cash from (for) continuing operations investing activities........         147.2        (862.2)       1,009.4
Cash from (for) discontinued operations investing activities......           6.3          (6.7)          13.0
Cash from (for)financing activities...............................        (183.5)        272.9         (456.4)

Nine months ended September 30, 2004 vs. September 30, 2003

Cash from continuing operations decreased $179.5 million, or 76%, over the comparable period in 2003, primarily
due to higher benefits paid, partially offset by higher revenues received and lower policy acquisition costs
paid. Benefit payments were higher in 2004 due primarily to a scheduled maturity of a $177.0 million corporate
owned life insurance policy.

Cash from continuing operations investing activities increased $1,009.4 million, or 117%, from the comparable
period in 2003, primarily due to lower investment purchases resulting from lower cash from operating and
financing activities in 2004 and higher cash balances at the beginning of 2003 that were invested during 2003.

Cash from financing activities decreased $456.4 million, or 167%, due to reductions in policyholder deposit
fund deposits of $481.8 million in 2004 compared to 2003. This decrease was partially offset by proceeds from
borrowings in 2004 of $25.0 million.

On April 30, 2004, The Phoenix Companies, Inc. received a $69.7 million dividend from Phoenix Life.

On April 29, 2004, we declared a cash dividend of $0.16 per share, which was paid July 12, 2004 to
stockholders of record on June 14, 2004.

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 PXP. 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-. On March 15, 2004 we drew $25.0
million of our $37.5 million, three-year revolving credit facility tranche to fund a $30.1 million payment
related to our acquisition of Kayne Anderson Rudnick as further described in Notes 1 and 6 of our consolidated
financial statements in this Form 10-Q.

On April 16, 2004, we executed a technical amendment to the credit agreement, effective as of December 31,
2003, to: (1) exclude the accounting effects of FIN 46-R from the definition of shareholders' equity and (2)
clarify that the lenders did not intend to treat CDOs as indebtedness, for purposes of calculating financial
covenant compliance.

We were in compliance with all credit facility covenants at September 30, 2004. We are currently renegotiating
this revolving credit facility and expect to have a new facility in place prior to December 20, 2004.

                                                      69


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 11 to our consolidated financial statements in this Form 10-Q 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 the revolving credit facility, discussed above, 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.

Annuity Actuarial Reserves and Deposit Liabilities
Withdrawal Characteristics:                                      September 30, 2004       December 31, 2003
($ amounts in millions)                                       ------------------------ ------------------------
                                                                Amount(1)    Percent     Amount(1)     Percent
                                                              ------------ ----------- ------------  ----------

Not subject to discretionary withdrawal provision...........   $    230.9         3%    $    220.8         3%
Subject to discretionary withdrawal without adjustment......      1,902.2        27%       1,967.2        28%
Subject to discretionary withdrawal
  with market value adjustment..............................        803.0        11%         811.6        11%
Subject to discretionary withdrawal at contract value
  less surrender charge.....................................        836.1        12%         869.8        12%
Subject to discretionary withdrawal at market value.........      3,295.2        47%       3,294.0        46%
                                                              ------------ ----------- ------------  ----------
Total annuity contract reserves and deposit fund liability..   $  7,067.4       100%    $  7,163.4       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

                                                      70


     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 September 30, 2004, 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 September 30,
2004 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.

On April 30, 2004, Phoenix Life paid a dividend of $69.7 million to The Phoenix Companies, Inc., as Phoenix
Life's sole shareholder. Under New York Insurance Law, Phoenix Life can pay dividends to The Phoenix Companies
in any calendar year without the 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's statutory gain from operations was $7.1 million for the nine months
ended September 30, 2004. Phoenix Life's statutory gain from operations through September 30, 2004 is net of a
$16.0 million tax payment related to the forgiveness of debt on a restructured investment, and $10.2 million in
after-tax restructuring charges primarily associated with the sale of our retail broker-dealer operations.

Phoenix Investment Partners, Ltd. (PXP)

PXP's liquidity requirements are primarily to fund operating expenses and pay its debt and interest
obligations. PXP also would require liquidity to fund the costs of any contingent payments for previous
acquisitions, as well as any potential acquisitions. Historically, PXP's principal source of liquidity has been
cash flows from operations. We expect that cash flow from operations will continue to be PXP's principal source
of working capital. PXP's current sources of liquidity also include the revolving credit facility, discussed
above, under which PXP has direct borrowing rights subject to the unconditional guarantee of The Phoenix
Companies, Inc. We believe that PXP's 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-Q for
further details on our financing activities. In March 2004, PXP borrowed $25.0 million against the credit
facility to fulfill an obligation related to the Kayne Anderson Rudnick acquisition. See Commitments Related to
Recent Business Combinations and Note 4 to our consolidated financial statements in this Form 10-Q for
additional information.

                                                      71



Consolidated Financial Condition

Consolidated Balance Sheet:                                   Sept 30,          Dec 31,
($ amounts in millions)                                         2004             2003           Change
                                                           ---------------  --------------- ---------------

ASSETS:
Available-for-sale debt securities, at fair value.........  $   13,338.5     $   13,273.0    $       65.5
Available-for-sale equity securities, at fair value.......         309.2            312.0            (2.8)
Mortgage loans, at unpaid principal balances..............         223.7            284.1           (60.4)
Venture capital partnerships, at equity in net assets.....         244.1            234.9             9.2
Affiliate equity securities, at equity in net assets......          53.3             47.5             5.8
Policy loans, at unpaid principal balances................       2,236.6          2,227.8             8.8
Other investments.........................................         371.2            402.0           (30.8)
                                                           ---------------  --------------- ---------------
                                                                16,776.6         16,781.3            (4.7)
Available-for-sale debt and equity securities pledged
  as collateral, at fair value............................       1,289.4          1,350.0           (60.6)
                                                           ---------------  --------------- ---------------
Total investments.........................................      18,066.0         18,131.3           (65.3)
Cash and cash equivalents.................................         451.0            447.9             3.1
Accrued investment income and receivables.................         417.4            447.2           (29.8)
Deferred policy acquisition costs.........................       1,428.7          1,367.7            61.0
Deferred income taxes.....................................          16.4             58.7           (42.3)
Goodwill and other intangible assets......................         732.6            755.0           (22.4)
Other general account assets..............................         245.7            268.2           (22.5)
Separate account assets...................................       6,440.2          6,083.2           357.0
                                                           ---------------  --------------- ---------------
Total assets..............................................  $   27,798.0     $   27,559.2    $      238.8
                                                           ===============  =============== ===============

LIABILITIES:
Policy liabilities and accruals...........................  $   13,163.3     $   13,088.6    $       74.7
Policyholder deposit funds................................       3,531.3          3,642.7          (111.4)
Stock purchase contracts and indebtedness.................         793.8            767.8            26.0
Other general account liabilities.........................         450.6            525.7           (75.1)
Non-recourse collateralized obligations...................       1,360.5          1,472.0          (111.5)
Separate account liabilities..............................       6,440.2          6,083.2           357.0
                                                           --------------   --------------- ---------------
Total liabilities.........................................      25,739.7         25,580.0           159.7
                                                           --------------   --------------- ---------------

MINORITY INTEREST:
Minority interest in net assets of consolidated
  subsidiaries............................................          37.3             31.4             5.9
                                                           ---------------  --------------- ---------------

STOCKHOLDERS' EQUITY:
Common stock and additional paid in capital...............       2,429.9          2,429.8             0.1
Deferred compensation on restricted stock units...........          (2.7)            (3.6)            0.9
Accumulated deficit.......................................        (329.8)          (352.7)           22.9
Accumulated other comprehensive income....................         107.6             63.7            43.9
Treasury stock............................................        (184.0)          (189.4)            5.4
                                                           ---------------  --------------- ---------------
Total stockholders' equity................................       2,021.0          1,947.8            73.2
                                                           ---------------  --------------- ---------------
Total liabilities, minority interest and stockholders'
  equity..................................................  $   27,798.0     $   27,559.2    $      238.8
                                                           ===============  =============== ===============

September 30, 2004 vs. December 31, 2003

Available-for-sale debt securities increased $65.5 million from December 31 2003 to September 30, 2004,
reflecting slight appreciation of bond values as a result of a modest decline in market interest rates since
December 31, 2003.

Mortgage loans decreased $60.4 million, or 21%, from December 31, 2003 to September 30, 2004 due to continued
pay downs as no new investments are being made in this asset class.

                                                      72


Other investments decreased $30.8 million, or 8%, from December 31, 2003 to September 30, 2004, primarily
attributable to the return of seed money held in separate accounts and the planned liquidation of a hedge fund
investment.

Available-for-sale debt and equity securities pledged as collateral decreased $60.6 million, or 4%, in 2004
from December 31, 2003, primarily due to the liquidation of securities to fund pay down of non-recourse
collateralized obligations.

Deferred policy acquisition costs increased $61.0 million, or 4%, in 2004 from December 31, 2003 to September
30, 2004, due primarily to policy acquisition costs of $123.4 million plus $14.0 million for the effect of
unrealized investment losses included in other comprehensive income, less amortization of $77.1 million. See
Note 3 to our consolidated financial statements in this Form 10-Q for additional information.

The decrease in other general account assets of $22.5 million, or 8%, in 2004 from December 31, 2003 primarily
relates to a reduction in premises and equipment due to the second quarter 2004 sale of our Enfield,
Connecticut office facility.

Composition of Deferred Policy Acquisition Cost Assets
  by Product:                                                  Sept 30,          Dec 31,
($ amounts in millions)                                          2004             2003           Change
                                                            ---------------  --------------- ---------------

Variable universal life..................................    $      332.1     $      328.7    $        3.4
Universal life...........................................           209.3            169.3            40.0
Variable annuities.......................................           278.0            260.3            17.7
Fixed annuities..........................................            46.4             45.2             1.2
Participating life.......................................           528.2            536.7            (8.5)
Other....................................................            34.7             27.5             7.2
                                                            ---------------  --------------- ---------------
Total deferred policy acquisition costs..................    $    1,428.7     $    1,367.7    $       61.0
                                                            ===============  =============== ===============


Policyholder deposit funds decreased $111.4 million, or 3%, in 2004 from December 31, 2003, primarily due to
net withdrawals from variable annuity guaranteed interest account sub-accounts.

Stock purchase contracts and indebtedness increased $26.0 million, or 3%, in 2004 from December 31, 2003,
primarily due to borrowing $25.0 million on our bank credit facility. See Note 6 of our consolidated financial
statements in this Form 10-Q for additional information.

Non-recourse collateralized obligations decreased $111.5 million, or 8%, in 2004 from December 31, 2003, due to
distributions to investors in non-recourse collateralized obligations and a decrease in the fair value of
non-recourse derivative cash flow hedges as a result of higher interest rates. See Note 7 of our consolidated
financial statements in this Form 10-Q for additional information.

                                                      73


Contractual Obligations and Commercial Commitments

As of September 30, 2004, our outstanding contractual obligations and commercial commitments were as follows:

Contractual Obligations and
Commercial Commitments:
($ amounts in millions)                                      Remainder of                             2009
                                                   Total         2004     2005 - 2006  2007 - 2008  and Later
                                                ------------ ------------ ------------ ------------ ---------
Contractual Obligations Due
Indebtedness(1)..............................    $   653.7    $    25.0    $   175.0    $   153.7    $   300.0
Stock purchase contracts(2)..................         --           --           --           --           --
Operating lease obligations ................          --           --           --           --           --
Other purchase liabilities(3)(7)..............        114.3          7.7         39.2         34.2         33.2
Other long-term liabilities(8)...............     11,533.8         --           --           --           --
                                                ------------ ------------ ------------ ------------ ---------
Subtotal....................................    $12,301.8    $    32.7    $   214.2    $   187.9    $   333.2
Non-recourse collateralized obligations(4)...      1,254.1         --           --           --        1,254.1
                                                ------------ ------------ ------------ ------------ ----------
Total contractual obligations...............    $13,555.9    $    32.7    $   214.2    $   187.9    $ 1,587.3
                                                ============ ============ ============ ============ ==========

Commercial Commitment Expirations
Standby letters of credit(5).................    $     9.0    $     9.0    $    --      $    --      $    --
Other commercial commitments(6)(7) ...........        183.6         57.3          3.7         19.2        103.4
                                                ------------ ------------ ------------ ------------ ----------
Total commercial commitments................    $   192.6    $    66.3     $    3.7    $    19.2    $   103.4
                                                ============ ============ ============ ============ ==========
- -------

(1)   Indebtedness amounts include principal only. $153.7 million of indebtedness represents mandatorily
     convertible debt to be settled with our stock in November 2005.
(2)   Stock purchase contracts are prepaid forward contracts issued by us that will be settled in shares of HRH,
     as further described in Note 6 of our consolidated financial statements in this Form 10-Q.
(3)   Other purchase liabilities relate to open purchase orders and other contractual obligations.
(4)   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 7 to our consolidated financial
     statements in this Form 10-Q for additional information.
(5)   Our standby letters of credit automatically renew on an annual basis.
(6)   Other commercial commitments relate to venture capital partnerships ($129.1 million) and private
     placements ($54.5 million). The venture capital 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 the nine
     months ended September 30, 2004 was $42.8 million. The obligations related to private placements total
     $54.5 million and are due to be funded during the remainder of 2004.
(7)   Obligations and commitments related to post-employment benefit plans and commitments related to recent
     business combinations are not included in amounts presented in this table. See the discussion on the
     following pages.
(8)   We offer various investment-type products through which customers deposit funds with us. These products
     typically provide for a rate of interest on the amount invested through the maturity or termination of the
     contract. These obligations are backed by our general account assets, and we bear all of the investment
     and asset/liability management risk on these contracts. Examples of these types of products include
     annuities without life contingencies and universal life insurance policies. These liabilities are
     reflected within "Policy liabilities and accruals" and "Policyholder deposit funds" on our consolidated
     balance sheet. All of these contracts can be surrendered at anytime, some with surrender charges and some
     without. Because the timing of payments under these contracts is subject to significant contractholder
     discretion, it is not possible to segregate the liability into time periods with any certainty.

In addition, on July 29, 2004, we announced the signing of a seven-year $122.0 million services agreement with
EDS under which we will receive information technology infrastructure services.

                                                      74


Commitments Related to Recent Business Combinations

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

Kayne Anderson Rudnick

Phoenix has an arrangement in which existing non-Phoenix members of Kayne Anderson Rudnick will sell a portion
of their membership interests in Kayne Anderson Rudnick, representing 14.7%, to Phoenix at a rate of 33.3% 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 an arrangement (in the form of a "put/call") with respect to the remaining 25% of the total
membership interests. The purchase price for these interests 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 PXP 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. PXP 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 PXP 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 January 2004 and August 2003, certain members of Kayne Anderson Rudnick accelerated their put/call
arrangements. The purchase price for their interests totaled $1.7 million and $4.5 million, respectively, which
was recorded as additional purchase price by PXP and allocated to goodwill and definite-lived intangible
assets. A portion of the January 2004 put/call effectively increased our ownership interest in Kayne Anderson
Rudnick to 60.3%.

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 $10.0 million during the remainder of 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. During the nine months ended September 30, 2004, we paid $3.0
million under this obligation.

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 present value of
future profits acquired and a related deferred 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 and transaction costs, totaling
$7.6 million, have 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.

                                                      75


Seneca

We have a arrangement (in the form of a "put/call") with respect to the membership interests in Seneca not
owned by PXP. The purchase price for these interests 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 process involves PXP 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. PXP has preferential distribution rights with respect to payments of principal and
interest on these notes. Since these interests have already been purchased by PXP and reissued at least once,
the amount of cash that PXP 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. The estimated range of amounts that
will be payable in 2005 by PNX under these agreements is $4.9 million.

Off-Balance Sheet Arrangements

As of September 30, 2004 and 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 7 to our consolidated financial statements in
this Form 10-Q 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. See Note 11 to our consolidated financial statements in this Form
10-Q for additional information.

Statutory Capital and Surplus and Risk Based Capital

Phoenix Life's consolidated statutory basis capital and surplus (including AVR) decreased from $962.4 million
at December 31, 2003 to $937.5 million at September 30, 2004. The principal factor resulting in this decrease
is a dividend to The Phoenix Companies, Inc. of $69.7 million paid during the second quarter of 2004, partially
offset by a consolidated statutory net gain of $7.1 million, net realized capital gains of $14.5 million and an
increase in admitted assets of $20.7 million.

At September 30, 2004, Phoenix Life's and each of its insurance subsidiaries' RBC levels were in excess of 300%
of Company Action Level.

On April 30, 2004, Phoenix Life paid a dividend of $69.7 million to The Phoenix Companies, Inc., as Phoenix
Life's sole shareholder. Under New York Insurance Law, Phoenix Life can pay dividends to The Phoenix Companies,
Inc. in any calendar year without the 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's statutory gain from operations was $7.1 million for the nine months
ended September 30, 2004. Phoenix Life's statutory gain from operations through September 30, 2004 is net of a
$16.0 million tax payment related to the forgiveness of debt on a restructured investment, $10.2 million in
after-tax restructuring charges primarily associated with the sale of our retail broker-dealer operations, and
$2.1 million in after-tax termination costs associated with the information technology services agreement we
recently signed with EDS.

                                                      76


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. At September 30, 2004, the largest of these subsidiaries
had net capital of approximately $9.5 million, which is $8.8 million in excess of its required minimum net
capital of $0.7 million. The ratio of aggregate indebtedness to net capital for that subsidiary was 1.1:1. The
ratios of aggregate indebtedness to net capital for each of our other broker-dealer subsidiaries were also
below the regulatory ratio at September 30, 2004 and their respective net capital each exceeded the applicable
regulatory minimum.

Obligations Related to Pension and Post-Retirement Employee Benefit 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. The employee pension plan is funded with assets held in a
trust, while the supplemental plan is unfunded.

As of May 31, 2004 we revalued our employee benefit assets and liabilities in connection with the sale of our
retail broker-dealer operations. As a result of the revaluation, we recognized a net curtailment gain during
the nine months ended September 30, 2004 of $6.8 million ($4.4 million after tax) related to the pension and
other post-retirement benefit plans. In addition, as of September 30, 2004 we revalued our employee benefit
assets and liabilities in connection with employee terminations associated with the information technology
services agreement with Electronic Data Systems, or EDS. As a result of this revaluation, we recognized a net
curtailment gain of $1.6 million ($1.1 million after taxes) for the three and nine months ended September 30,
2004.

As previously disclosed in our consolidated financial statements for the year ended December 31, 2003, we
expect to contribute $107.8 million to the employee pension plan through 2008, including $7.2 million during
2004. For the estimated 2004 contribution, quarterly payments of $2.5 million each were made to the pension
plan in April, July and October 2004. In September 2004, we made a payment of $1.6 million, related to the 2003
minimum contribution.

See Note 9 of the consolidated financial statements included in this Form 10-Q for additional information.

Related Party Transactions

State Farm Mutual Automobile Insurance Company, or State Farm, currently owns of record more than five percent
of our outstanding common stock. During the three months ended September 30, 2004 and 2003, our subsidiaries
paid total compensation of $7.0 million and $11.3 million, respectively, to entities which were either
subsidiaries of State Farm or owned by State Farm employees, for the sale of our insurance and annuity
products. Our subsidiaries paid total compensation of $22.1 million and $21.5 million during the nine months
ended September 30, 2004 and 2003, respectively, for such sales.

                                                      77


ITEM 3.  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 September 30,
2004, 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.

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.

                                                      78


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 table below shows the estimated interest rate sensitivity of our fixed income financial instruments
measured in terms of fair value. 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.

                                                                 As of September 30, 2004
                                             -----------------------------------------------------------------
Interest Rate Sensitivity of                                     -100 Basis                      +100 Basis
Fixed Income Financial Instruments:              Carrying          Point                           Point
($ amounts in millions)                           Value            Change        Fair Value        Change
                                             ---------------  ---------------  --------------- ---------------

Cash and cash equivalents..................   $      451.0     $      451.7     $      451.0    $      450.9
Available-for-sale debt securities.........       13,338.5         13,973.7         13,338.5        12,703.8
Commercial mortgages.......................          223.7            250.9            244.8           238.7
                                             ---------------  ---------------  --------------- ---------------
Subtotal...................................       14,013.2         14,676.3         14,034.3        13,393.4
Debt and equity securities pledged as
  collateral...............................        1,289.4          1,347.6          1,289.4         1,231.5
                                             ---------------  ---------------  --------------- ---------------
Totals.....................................   $   15,302.6     $   16,023.9     $   15,323.7    $   14,624.9
                                             ===============  ===============  =============== ===============

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.

The table below shows the interest rate sensitivity of our general account interest rate derivatives measured
in terms of fair value. These exposures will change as our insurance liabilities are created and discharged and
as a result of ongoing portfolio and risk management activities.

                                                                 As of September 30, 2004
                                           --------------------------------------------------------------------
                                                           Weighted-       -100                       +100
Interest Rate Sensitivity of                                Average        Basis                      Basis
Derivatives:                                  Notional        Term         Point                      Point
($ amounts in millions)                        Amount       (Years)        Change     Fair Value      Change
                                           ------------- ------------- ------------- ------------- ------------

Interest rate swaps.....................    $    540.0        9.7       $     25.6    $     15.3    $     5.0
Other...................................          50.0        3.7             --             0.1          0.3
                                           -------------               ------------- ------------- ------------
Totals – general account................    $    590.0                  $     25.6    $     15.4    $     5.3
                                           =============               ============= ============= ============
Non-recourse interest rate swaps
  held in consolidated CDO trusts.......    $  1,117.6        2.78      $    149.9    $    106.4    $    65.9
                                           ============= ============= ============= ============= ============

                                                      79


See Note 9 to the consolidated financial statements in our 2003 Annual Report on 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 $309.2 million in equity securities on our
balance sheet as of September 30, 2004. A 10% decline or increase in the relevant equity price would have
decreased or increased, respectively, the value of these assets by approximately $30.9 million as of September
30, 2004.

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 September 30, 2004 and December 31, 2003, the
difference between the guaranteed minimum death benefit and the current account value (net amount at risk) for
all existing contracts was $173.8 million and $183.1 million, respectively. These represent our exposure to
loss should all of our contractholders have died on either September 30, 2004 or December 31, 2003,
respectively.

Guaranteed Minimum Death Benefit Exposure:                          Sept 30,        Dec 31,
($ amounts in millions)                                               2004           2003          Change
                                                                  -------------- -------------  -------------

Net amount at risk on minimum guaranteed death benefits
  (before reinsurance)..........................................   $    576.4     $    616.9     $    (40.5)
Net amount at risk reinsured....................................       (402.6)        (433.8)          31.2
                                                                  -------------- -------------  -------------
Net amount at risk on minimum guaranteed death benefits
  (after reinsurance)...........................................   $    173.8     $    183.1     $     (9.3)
                                                                  ============== =============  =============

Weighted-average age of contractholder..........................           61             59              2
                                                                  ============== =============  =============

Payments Related to Guaranteed Minimum Death Benefits,        Three Months Ended         Nine Months Ended
Net of Reinsurance Effect:                                      September 30,              September 30,
($ amounts in millions)                                    ------------------------- --------------------------
                                                               2004         2003         2004         2003
                                                           ------------ ------------ ------------ ------------

Death claims payments before reinsurance.................   $     1.3    $     1.4    $     4.1    $     5.1
Reinsurance recoveries and premiums......................        --           (1.4)        (0.9)        (4.4)
                                                           ------------ ------------ ------------ ------------
Net death claims payments................................   $     1.3    $    --      $     3.2    $     0.7
                                                           ============ ============ ============ ============

Effective January 1, 2004, we adopted the AICPA SOP No. 03-1, Accounting and Reporting by Insurance Enterprises
for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. Since this new accounting
standard largely codifies accounting and reserving practices that we already followed, our adoption did not
materially affect our consolidated financial statements. 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 September 30, 2004 and December 31, 2003.

                                                      80


Reserves Related to Guaranteed Minimum Death Benefits,
Net of Reinsurance Recoverables:                                                     Sept 30,        Dec 31,
($ amounts in millions)                                                                2004           2003
                                                                                  -------------  -------------

Statutory reserve (after reinsurance)...........................................   $     18.5     $     17.3
GAAP reserve (after reinsurance)................................................         10.3            7.6

We also provide reserves for guaranteed minimum income benefits and guaranteed payout annuity floor benefits.
The statutory reserves for these totaled $1.2 million and $0.5 million at September 30, 2004 and December 31,
2003, respectively. The GAAP reserves for these totaled $0.5 million and $0.0 million at September 30, 2004 and
December 31, 2003, respectively.

                                                                                     Sept 30,
Interest Rate Sensitivity of Deferred Policy Acquisition Cost           -10%           2004          + 10%
Asset and Guaranteed Minimum Death Benefit Liability:                  Equity        Carrying        Equity
($ amounts in millions)                                                Market         Value          Market
                                                                    -------------- -------------  -------------

Deferred policy acquisition costs (variable annuities)............   $    288.2     $    291.0     $    294.5
Deferred policy acquisition costs (variable universal life).......        324.8          325.9          326.5
Guaranteed minimum death benefit liability (variable annuities)...         13.9           10.3            7.9

See Note 3 to our consolidated financial statements in this Form 10-Q 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 the most recent valuations, performed on May 31, 2004 and in 2003
and 2002. To the extent there are deviations in actual returns, there will be changes in our projected expense
and funding requirements. As of December 31, 2003, the projected benefit obligation for our defined benefit
plans was 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. We revalued our employee benefit plans assets
and liabilities during the second quarter of 2004 in connection with the sale of our retail broker-dealer
operations and recognized a curtailment gain of $6.8 million as a result of this revaluation. We are currently
evaluating our required pension funding and expect future funding requirements to be reduced as a result of the
Pension Funding Act of 2004, the sale of our retail broker-dealer operations and the information technology
services agreement with EDS. See Note 9 to our consolidated financial statements in this Form 10-Q 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
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 nine months ended September 30, 2004 and 2003, we recorded, through other comprehensive income,
foreign currency translation adjustment gains of $0.1 million and $4.1 million, respectively, related to
changes in valuation of the British pound sterling and $0.1 million and $2.0 million, respectively, for the
Argentine peso. During the three months ended September 30, 2004 and 2003, we recorded, through other
comprehensive income, foreign currency translation adjustment loss of $(0.4) million and $(1.1) million,
respectively, related to changes in valuation of the British pound sterling and $0.0 million and $(0.3)
million, respectively, for the Argentine peso.

                                                      81


Foreign Currency Exchanged Gains (Losses) in Accumulated
Other Comprehensive Income by Currency:                           Sept 30,          Dec 31,
($ amounts in millions)                                             2004             2003           Change
                                                               ---------------  --------------- ---------------

British pound sterling.......................................   $       19.3     $       19.2    $        0.1
Argentine peso...............................................           (8.7)            (8.8)            0.1
Other........................................................           (0.1)            (0.1)           --
                                                               ---------------  --------------- ---------------
Total gains..................................................   $       10.5     $       10.3    $        0.2
                                                               ===============  =============== ===============

                                                      82


ITEM 4.  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 September 30, 2004, were effective, both in design and
operation, for achieving the foregoing purpose.

Changes in Internal Control over Financial Reporting. During the three months ended on September 30, 2004,
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.

                                                      83


PART II.
                                               OTHER INFORMATION


ITEM 1.  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 currently, the regional offices of the SEC are conducting compliance examinations of our mutual fund,
variable annuity and mutual fund transfer agent operations. 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 market timing, late trading and valuation issues. 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.

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

We recently received a subpoena from the Connecticut Attorney General's office requesting information regarding
distribution practices since 1988 of our commercial property-casualty and group life, disability and health
insurance operations. We sold our property-casualty brokerage operation in 1999 and our group life and health
business in early 2000. One of approximately 35 companies that received such a subpoena, we intend to cooperate
fully.

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.

                                                      84


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 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 $155.0 million as of September 30, 2004. Our total amounts recoverable
from retrocessionaires related to paid losses were $145.0 million as of September 30, 2004. We did not
recognize any gains or losses related to our discontinued group accident and health reinsurance business during
the nine months ended September 30, 2004 and 2003.

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 two of our own retrocessionaires, which have sought 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 11 to our consolidated financial statements in this Form 10-Q 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.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)  During the three months ended September 30, 2004, we issued 54 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. 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.

     During the three months ended September 30, 2004, we also issued 15,372 restricted stock units, or RSUs,
     to 11 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.

(b)  Not applicable.

(c)  Not applicable.


                                                      85


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.  OTHER INFORMATION

(a)  Not applicable.

(b)  No material changes.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

         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)

        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)

        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)

                                                      86


        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   The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended
               and restated effective as of January 1, 2004*

       10.11   The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B effective as
               of August 1, 2004*

       10.12   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)

       10.13   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)

       10.14   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)

       10.15   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)

       10.16   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)

       10.17   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)

       10.18   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)

       10.19   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)

       10.20   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)

                                                      87


       10.21   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)

       10.22   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)

       10.23   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)

       10.24   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)

       10.25   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)

       10.26   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, 2002)

       10.27   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, 2002)

       10.28   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
               (incorporated herein by reference to Exhibit 10.33 to The Phoenix Companies, Inc. annual
               report on Form 10-K filed March 22, 2004)

       10.29   Technical Amendment to Credit Agreement dated as of April 16, 2004 by and among The Phoenix
               Companies, Inc., Phoenix Life Insurance Company, Phoenix Investment Partners, Ltd. and various
               financial institutions (incorporated herein by reference to Exhibit 10.34 to The Phoenix
               Companies, Inc. quarterly report on Form 10-Q dated May 10, 2004)

       10.30   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)

       10.31   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)

                                                      88


       10.32   Restricted 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)

       10.33   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)

       10.34   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)

       10.35   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)

       10.36   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)

       10.37   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)

       10.38   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)

       10.39   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)

       10.40   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)

       10.41   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)

       10.42   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)

       10.43   Offer Letter dated February 9, 2004, by The Phoenix Companies, Inc. to Philip K. Polkinghorn
               (incorporated herein by reference to Exhibit 10.50 to The Phoenix Companies, Inc. annual
               report on Form 10-K filed March 22, 2004)

       10.44   Change in Control Agreement dated as of March 8, 2004, between The Phoenix Companies, Inc. and
               Philip K. Polkinghorn (incorporated herein by reference to Exhibit 10.52 to The Phoenix
               Companies, Inc. quarterly report on Form 10-Q dated May 10, 2004)

                                                      89


       10.45   Restricted Stock Units Agreement dated as of March 8, 2004 between The Phoenix Companies, Inc.
               and Philip K. Polkinghorn (incorporated herein by reference to Exhibit 10.53 to The Phoenix
               Companies, Inc. quarterly report on Form 10-Q dated May 10, 2004)

       10.46   Transition Agreement dated as of September 20, 2004 among The Phoenix Companies, Inc., Phoenix
               Life Insurance Company and Michael J. Gilotti*

       10.47   Technology Services Agreement effective as of July 29, 2004 by and among Phoenix Life
               Insurance Company, Electronic Data Systems Corporation and EDS Information Services, L.L.C.
               (incorporated herein by reference to Exhibit 10.49 to The Phoenix Companies, Inc. quarterly
               report on Form 10-Q dated August 9, 2004)

          12   Ratio of Earnings to Fixed Charges*

        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

     We will furnish any exhibit upon the payment of a reasonable fee, which fee shall be limited to
     our reasonable expenses in furnishing such exhibit.

(b)  Reports

     During the three months ended September 30, 2004, we filed the following reports on Form 8-K:

     •   Filed July 29, 2004, containing The Phoenix Companies, Inc., earnings release for the quarter ended
         June 30, 2004.

     •   Filed August 3, 2004, containing The Phoenix Companies, Inc. Financial Supplement for the quarter
         ended June 30, 2004.

     •   Filed September 21, 2004, announcing that The Phoenix Companies, Inc. had entered into a Transition
         Agreement with Mr. Michael J. Gilotti, Executive Vice President.

                                                      90


                                                Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                 THE PHOENIX COMPANIES, INC.

Date:    November 9, 2004                                        By:   /s/ Michael E. Haylon

                                                                 Michael E. Haylon, Executive Vice President
                                                                  and Chief Financial Officer

                                                      91

EX-99.10-10

                                                                                                  Exhibit 10.10






                                            THE PHOENIX COMPANIES, INC.
                                NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                 as amended and restated effective January 1, 2004







                                                                                                  Exhibit 10.10


ARTICLE I.    PURPOSE AND EFFECTIVE DATE

     1.1      Purpose. The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan (the
"Supplemental Plan") is intended to provide retirement benefits for certain current and former employees which
are not provided under the Employee Pension Plan (the "Employee Pension Plan") by reason of (a) the exclusion
from the definition of Earnings of Incentive Compensation under an Incentive Compensation Plan designated in
Section 2.7 hereof; (b) the limitation on Earnings that may be taken into account under the Employee Pension
Plan as set forth in Section 401(a)(17) of the Internal Revenue Code; or (c) the exclusion from the definition
of Earnings of amounts deferred under any other deferred compensation program of the Employer. The Supplemental
Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees.

     1.2      Effective Date. The Supplemental Plan was first effective January 1, 1989. This amendment and
restatement shall be effective as of January 1, 2004.

ARTICLE II.   DEFINITIONS

     2.1      "Beneficiary" shall mean the Beneficiary designated under the Employee Pension Plan.

     2.2      "Benefit Plans Committee" shall mean the committee appointed by and serving at the pleasure of he
Board of Directors of the Employer to administer the Supplemental Plan.

     2.3      "Code" shall mean the Internal Revenue Code of 1986, as amended.

     2.4      "Employee Pension Plan" shall mean The Phoenix Companies, Inc. Employee Pension Plan, a defined
benefit pension plan maintained by the Employer, as it may be amended from time to time.

     2.5      "Employer" shall mean Phoenix Life Insurance Company.

     2.6      "Excess Benefit Plan" shall mean The Phoenix Companies, Inc. Excess Benefit Plan, a plan
maintained by the Employer for the purpose of providing benefits for certain Employees in excess of the
limitations imposed by Section 415 of the Internal Revenue Code.

     2.7      "Incentive Compensation" shall mean compensation payable under Performance Incentive Plan, the
Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive
plan or such other incentive compensation arrangements as the Employer may designate from time to time as
approved by the Compensation Committee of the Board of Directors of  The Phoenix Companies, Inc. or the Benefit
Plans Committee.

     2.7      "Plan Administrator" shall mean the Benefit Plans Committee or the person designated as such by
the Benefit Plans Committee.





     2.8      "Supplemental Plan" shall mean The Phoenix Companies, Inc. Nonqualified Supplemental Executive
Retirement Plan as is set forth in this document as it may be amended from time to time.

     Unless the context otherwise indicates, words and phrases capitalized and not otherwise defined herein
are terms defined in the Employee Pension Plan and have the same meaning ascribed to them under the Employee
Pension Plan.

ARTICLE III.  ELIGIBILITY

     3.1      Prior to August 1, 2004, a Vice President or more senior officer of the Employer or any of its
subsidiaries that have adopted this Supplemental Plan or a Career Agency, Ordinary Brokerage or Group Sales
Manager employed by the Employer who is eligible for the Managers Deferred Compensation Program, whose
retirement benefits under the Employee Pension Plan are limited by reason of the exclusion of Incentive
Compensation or deferred compensation amounts from the definition of Earnings or the limitation on Earnings set
forth in Section 401(a)(17) of the Code shall be eligible for benefits under this Supplemental Plan. Employees
of Phoenix Investment Partners, Ltd. in grades 17 through 24 whose retirement benefits under the Employee
Pension Plan are limited by reason of the exclusion of Incentive Compensation or deferred compensation amounts
from the definition of Earnings or the limitation on Earnings set forth in Section 401(a)(17) of the Code
became eligible to participate in this Supplemental Plan effective November 1, 1995. Former Home Life Employees
became eligible to participate in this Supplemental Plan effective January 1, 1993, except for certain Former
Home Life Employees to whom a Plant Closing Benefit is payable pursuant to Section 4.4 of this Supplemental
Plan. Employees of Phoenix Equity Planning Corporation ("PEPCO"), Phoenix Investment Counsel, Inc. ("PIC") and
Phoenix Investment Partners, Ltd. ("PXP") who were hired by Phoenix Duff & Phelps Corporation (now PXP) after
December 31, 1996 became eligible to participate in this Supplemental Plan as of January 1, 2000. Employees of
Zweig/Glaser Advisers, LLC became eligible to participate in this Supplemental Plan as of January 1, 2000.



ARTICLE IV.   BENEFITS

     4.1      The amount of monthly benefit provided under this Supplemental Plan effective August 1, 2004 for
participants actively at work on that day or thereafter shall be the excess of (a) over (b) where:

              (a)     is the amount of monthly benefit that would have been provided under the Employee Pension
                      Plan if the exclusion of Incentive Compensation or deferred compensation amounts from the
                      definition of Earnings and the limitation on Earnings set forth in Section 401(a)(17) of
                      the Code did not apply; provided, however, that in determining the amount of a
                      Participant's Final Average Earnings, the amount of Incentive Compensation which shall be
                      taken into account shall be equal to such annual Incentive Compensation received by the
                      Participant averaged over

                                                      -2-


                      any three (3) full calendar years within the last seven (7) consecutive full calendar
                      years that produces the highest average; and

              (b)     is the amount of monthly benefit payable under the Employee Pension Plan.

     The amount of monthly benefit provided under this Supplemental Plan for periods prior to August 1, 2004
for participants who were not actively at work on that day shall be the excess of (c) over (d) where:

              (c)     is the amount of monthly benefit that would have been provided under the Employee Pension
                      Plan if the exclusion of Incentive Compensation or deferred compensation amounts from the
                      definition of Earnings, limitation of benefits due to Section 415 and the limitation on
                      Earnings set forth in Section 401(a)(17) of the Code did not apply; provided, however,
                      that in determining the amount of a Participant's Final Average Earnings, the amount of
                      Incentive Compensation which shall be taken into account shall be equal to such Annual
                      Incentive Compensation is the amount of monthly benefit payable under the Employee
                      Pension Plan received by the Participant averaged over any three (3) full calendar years
                      within the last five (5) consecutive full calendar years that produces the highest
                      average; and

              (d)     is the amount of monthly benefit payable under the Employee Pension Plan.

     4.2      Notwithstanding 4.1 to the contrary, the amount of monthly benefit payable to a Participant under
this Supplemental Plan shall be reduced to the extent that the aggregate monthly benefit payable to the
Participant under the Employee Pension Plan, the Excess Benefit Plan and this Supplemental Plan exceeds the
amount of monthly benefit that would have been provided under the Employee Pension Plan if the exclusion of
Incentive Compensation or deferred compensation from the definition for Earnings, the limitation on Earnings
set forth in Section 401(a)(17) of the Code and the limitations imposed by Section 415 of the Code did not
apply.

     4.3      (a)     To the extent that 4.1 requires the determination of the amount of monthly benefit
                      payable under the Employee Pension Plan, only the benefit payable with respect to Service
                      credited on and after January 1, 1993 shall be taken into account for purposes of
                      calculating the benefit payable under this Supplemental Plan to a Former Home Life
                      Employee.

              (b)     The amount of monthly benefit payable under Section 4.1 to an Employee of PIC, PEPCO or
                      PXP who was ineligible to participate in the Employee Pension Plan for the period January
                      1, 1997, through December 31, 1999, shall be computed to include an additional amount
                      equal to the difference between the benefit such officer actually accrued under the
                      Employee Pension Plan as of his or her Annuity Commencement Date and the

                                                      -3-


                      benefit such officer would have accrued had he or she not been excluded from
                      participation in the Employee Pension Plan for such period.

     4.4      In addition to the benefit payable pursuant to 4.1 and notwithstanding the provisions of 4.3 to
the contrary, this Supplemental Plan shall also pay to each Employee Pension Plan Participant identified in
Section 2.05(g) of the Employee Pension Plan as not being a Plant Closing Eligible Employee, the Plant Closing
Benefit that would have been payable to such Employee Pension Plan Participant under Section 3.8 of the
Employee Pension Plan had such Employee Pension Plan Participant not been excluded from the definition of Plant
Closing Eligible Employee.

     4.5      For purposes of 4.1 above, Incentive Compensation shall be deemed Earnings with respect to the
year in which such Incentive Compensation is actually paid or deferred.

     4.6      The payment of benefits to which a Participant or Beneficiary shall be entitled under this
Supplemental Plan shall be made in the same form and manner and at the same time as is applicable or elected
under the Employee Pension Plan. Notwithstanding the foregoing, the payment of benefits to a Participant, who
has indicated in writing, including email, to the Plan Administrator or the President after August 1, 2002 and
before January 1, 2003 such Participant's intention to retire, shall be made in accordance with the terms of
the Supplemental Plan in effect on December 31, 2002.

     4.7      Benefits accrued under this Supplemental Plan before March 1, 2003 are subject to cost of living
adjustments as described in the Employee Pension Plan.

     4.8      The provisions of the Employee Pension Plan concerning suspension of benefits upon re-employment
are applicable to the benefits payable under this Supplemental Plan.

     4.9      Any benefit payable under the Employee Pension Plan shall be solely in accordance with the terms
and provisions thereof, and nothing in this Supplemental Plan shall operate or be construed in a way to modify,
amend or affect the terms and provisions of the Employee Pension Plan.

     4.10     If the spouse of a Participant in the Supplemental Plan is entitled to a death benefit under the
Employee Pension Plan, said spouse shall be entitled to receive from the Employer a death benefit under this
Supplemental Plan equal to the difference between (a) the death benefit that would be payable to said spouse
under the Employee Pension Plan as of the date of the Participant's death if such benefit were calculated based
on the benefit described in this Article IV; and (b) the death benefit actually payable to said spouse under the
Employee Pension Plan as of the date of the Participant's death, calculated in accordance with the terms of the
Employee Pension Plan. No death benefit other than that set forth in this Section 4.10 shall be payable under
this Supplemental Plan if a Participant dies prior to the commencement of benefit payments under this
Supplemental Plan.

ARTICLE V.   VESTING

     5.1      Employees eligible to participate in this  Supplemental Plan on or before July 31, 2004, and
except for Employee Pension Plan Participants to whom a Plant Closing Benefit is

                                                      -4-


payable under Section 4.4 of this Supplemental Plan who shall be fully vested in said Plant Closing Benefit,
and except for Participants who are Employees of Phoenix American Life Insurance Company ("PAL"), a
participating Employer in this Supplemental Plan, whose failure to meet the conditions for payment of benefits
hereunder is by reason of PAL's termination of participation in this Plan on account of its sale by the
Employer, a Participant shall have a vested, non-forfeitable interest in his or her Supplemental Plan benefits
upon such Participant's attainment of Normal Retirement Age under the Employee Pension Plan or on earlier
termination of employment by death or disability as defined in the Employee Pension Plan. Otherwise, a
Participant shall be fully vested in his or her benefits under this Supplemental Plan upon completion of five
(5) Years of Vesting Service, as defined under the Employee Pension Plan.

ARTICLE VI.   CLAIMS FOR BENEFITS

     6.1      Claims for benefits under the Supplemental Plan may be filed with the Plan Administrator on forms
supplied by the Plan Administrator. Written or electronic notice of the disposition of a claim shall be
furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty
(180) days if special circumstances require an extension of time for processing the claim and if written notice
of such extension and circumstances are communicated to the claimant within the initial ninety (90)-day
period). In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically
set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the
Supplemental Plan on which the decision is based shall be cited, and, where appropriate, a description of any
additional material or information necessary to perfect the claim, and an explanation of why such material or
information is necessary, will be provided. In addition, the claimant shall be furnished with an explanation of
the Supplemental Plan's claims review procedure and the time limits applicable to such procedures, including a
statement of the claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review. A claimant must request a review of a denied claim in accordance with the
procedures described in the following paragraph before the claimant is permitted to bring a civil action for
benefits.

     Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied
a benefit by a decision of the Plan Administrator shall be entitled to request the Plan Administrator to give
further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from
the Plan Administrator) a request for review. Such request, together with a written statement of the reasons
why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than
sixty (60) days after receipt of the notification provided for above. If such request is so filed, the claimant
or his representative may submit written comments, documents, records and other information relating to the
claim to the Plan Administrator within sixty (60) days after receipt of the notification provided for above.
The claim for review shall be given a full and fair review that takes into account all comments, documents,
records and other information submitted that relates to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. The Plan Administrator shall provide the
claimant or his representative with written or electronic notice of the final decision as to the allowance of
the claim within sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days
if special circumstances requires an extension of time for processing the request and

                                                      -5-


if written notice of such extension and circumstances is given to the claimant or his representative within the
initial sixty (60)-day period). Such communication shall be written in a manner calculated to be understood by
the claimant and shall include specific reasons for the decision, specific references to the pertinent
Supplemental Plan provisions on which the decision is based, a statement of the claimant or his
representative's right to bring a civil action under Section 502(a) of ERISA and a statement that the claimant
or his beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of,
all documents, records and other information relevant to the claim for benefits. A document is relevant to the
claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in
the course of making the determination or demonstrates that benefit determinations are made in accordance with
the Supplemental Plan and that Supplemental Plan provisions have been applied consistently with respect to
similarly situated claimants.

     6.2      Any payment to any Participant, or to such Participant's legal representative or Beneficiary, in
accordance with the provisions of this Supplemental Plan, shall be in full satisfaction of all claims hereunder
against the Employer. The Plan Administrator may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form
as it shall determine. If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator
that any payee under this Supplemental Plan is a minor, or is legally, physically, or mentally incompetent to
receive and to give valid release for any payment due him or her under this Supplemental Plan, any such
payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a
duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be
paid by the Plan Administrator to such payee's spouse, child, parent or other blood relative, or to any person,
persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such
payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect
of such payee. If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its
sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined
by a court of competent jurisdiction or shall have been settled by the parties concerned.

     6.3      If any benefits payable under this Supplemental Plan to a Participant, or to such Participant's
legal representative or Beneficiary, cannot be paid by reason that such person cannot be located for three (3)
years after reasonable efforts have been made to locate such person, the Plan Administrator may declare such
benefits forfeited and return such benefits to the Employer; provided, however, that in the event such
Participant, or such Participant's legal representative or Beneficiary, is subsequently located or files a
claim for benefits, such amount plus interest shall be reinstated to the Participant's account for the benefit
of such Participant, or such Participant's legal representative or Beneficiary, as the case may be.

ARTICLE VII.  AMENDMENT AND TERMINATION

     7.1      The Benefit Plans Committee shall have the right to amend this Supplemental Plan at any time and
from time to time, including a retroactive amendment, by resolution adopted by it at a meeting duly called or
by unanimous written consent in accordance with the Employer's Articles of Incorporation, Bylaws and applicable
law. Any such amendment shall

                                                      -6-


become effective upon the date stated therein, and shall be binding on all Participants and Beneficiaries,
except as otherwise provided in such amendment; provided, however that said amendment shall not adversely
affect benefits payable to a Participant or Beneficiary where the cause giving rise to such benefit (e.g.,
retirement) has already occurred.

     7.2      The Employer has established this Supplemental Plan with the bona fide intention and expectation
that from year to year it will deem it advisable to continue it in effect. However, the Employer, in its sole
discretion, reserves the right to terminate the Supplemental Plan in its entirety at any time without the
consent of any Participant; provided, however, that in such event, benefits shall not be affected where the
cause giving rise to such benefit (e.g. retirement) has already occurred. All other benefits accrued hereunder
shall immediately be forfeited. Any such termination shall be accomplished by resolution of the Benefit Plans
Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer's
Articles of Incorporation, Bylaws and applicable law.

ARTICLE VIII. SOURCE OF BENEFIT PAYMENTS

     8.1      No special or separate fund shall be established by the Employer and no segregation of assets
shall be made to assure the payment of benefits under the Supplemental Plan. No Participant shall have any
right, title, or interest whatsoever in any specific asset of the Employer. Nothing contained in this
Supplemental Plan and no action taken pursuant to its provisions shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Employer and a Participant or any other person. To the
extent that any person acquires a right to receive payments under this Supplemental Plan, such right shall be
no greater than the right of an unsecured general creditor of the Employer.

ARTICLE IX.   GENERAL

     9.1      To the extent permitted by law, the right of any Participant or Beneficiary to any benefit or
payment hereunder shall not be subject in any manner to attachment or other legal process, and no such benefit
or payment shall be subject to anticipation, alienation, sale, transfer, assignment, or encumbrance.

     9.2      The Supplemental Plan shall be operated and administered by the Plan Administrator or its duly
authorized representative.  The Plan Administrator shall have sole discretionary authority to determine all
questions arising in connection with the Supplemental Plan, to interpret the provisions of the Supplemental
Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration
of the Supplemental Plan and to make all determination in connection with the Supplemental Plan as may be
necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all
persons.

     9.3      This Supplemental Plan shall be governed by and construed in accordance with the laws of the
State of Connecticut other than and without reference to any provisions of such laws regarding choice of laws
or conflict of laws, to the extent such laws are not pre-empted by the Employee Retirement Income Security Act
of 1974, as amended.

                                                      -7-


     9.4      The establishment of this Supplemental Plan shall not be construed as giving to any Participant,
Employee or any person whomsoever, any legal, equitable or other rights against the Employer, or its officers,
directors, agents or shareholders, or as giving to any Participant or Beneficiary any interest in the assets or
business of the Employer or giving any Employee the right to be retained in the employment of the Employer. All
Employees and Participants shall be subject to discharge to the same extent they would have been if this
Supplemental Plan had never been adopted.

     9.5      The Employer may withhold from a payment any federal, state or local taxes required by law to be
withheld with respect to such payments and such sums as the Employer may reasonably estimate are necessary to
cover taxes for which the Employer may be liable and which may be assessed with regard to such payment.

     9.6      The illegality of any particular provision of this document shall not affect the other provisions
and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE X.    PARTICIPATING EMPLOYERS

     10.1     Adoption of Supplemental Plan by Other Employers. With the consent of the Benefit Plans
Committee, any other corporation may adopt the Supplemental Plan and all of the provisions hereof and
participate herein as a Participating Employer by a properly executed document evidencing said intent and will
of such Participating Employer.

     10.2     Requirements of Participating Employers.

              (a)     Benefits payable under the Supplemental Plan to employees of the Participating Employer
                      are funded through the Participating Employer's general assets. The Participating
                      Employer agrees to pay and assumes all liability with respect to all benefits payable
                      under the Supplemental Plan to past, present and future employees of the Participating
                      Employer, their spouses and other dependents and beneficiaries in accordance with the
                      terms of the Supplemental Plan. Notwithstanding the foregoing, Phoenix Life Insurance
                      Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc.
                      shall pay and assume liability for benefits payable under the Supplemental Plan to
                      Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc.
                      with respect to service completed before January 1, 1996.

              (b)     The Plan Administrator shall keep separate books and records concerning the contributions
                      and benefits payable under the Supplemental Plan with respect to the Participating
                      Employer and the Employees of the Participating Employer.

              (c)     The Participating Employer shall pay to Phoenix Life Insurance Company its proportionate
                      share of any administrative expenses of the Supplemental Plan which are to be paid by the
                      Employer.

                                                      -8-


     10.3     Designation of Agent.  Each Participating Employer shall be deemed to have designated irrevocably the
Benefit Plans Committee and the Plan Administrator as its agents.

     10.4     Plan Amendment.

              (a)     Subject to the provisions of paragraph (b) hereof, each Participating Employer hereby
                      delegates to the Employer the right at any time to amend the Supplemental Plan in
                      accordance with the terms of the Supplemental Plan, provided that any such amendment
                      could not affect the Participating Employer's share of the cost of the Supplemental Plan.
                      If an amendment could significantly affect the Participating Employer's share of the cost
                      of the Supplemental Plan, then such amendment shall not be effective with respect to the
                      Participating Employer until approved by the Participating Employer. Any such amendment
                      shall be adopted by the Participating Employer's Benefit Plans Committee unless such
                      amendment could significantly affect the Participating Employer's share of the cost of
                      the Supplemental Plan, as determined by the Participating Employer's Benefit Plans
                      Committee, in which case such amendment shall be adopted by the Participating Employer's
                      Board of Directors in accordance with the Participating Employer's Articles of
                      Incorporation, Bylaws and applicable law and shall become effective as provided therein
                      upon its execution.

              (b)     No amendment to the Supplemental Plan shall be effective with respect to the
                      Participating Employer until 45 days after a copy of the amendment shall have been
                      delivered to the Participating Employer, unless the Participating Employer shall have
                      waived its right to receive such advance copy of the amendment.

     10.5     Withdrawal of a Participating Employer. A Participating Employer may terminate its participation
in the Supplemental Plan by giving the Benefit Plans Committee prior written notice specifying a termination
date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to
the Benefit Plans Committee, unless the Benefit Plans Committee shall have waived its right to such notice. The
Benefit Plans Committee may terminate a Participating Employer's participation in the Supplemental Plan as of
any termination date by giving the Participating Employer prior written notice specifying a termination date
which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the
Participating Employer, unless the Participating Employer shall have waived its right to such notice.

     10.6     Plan Administrator's Authority. The Plan Administrator shall have all of the duties and
responsibilities authorized by the Supplemental Plan and shall have the authority to make any and all rules,
regulations and decisions necessary or appropriate to effectuate the terms of the Supplemental Plan, which
shall be binding upon each Participating Employer and all Participants.

                                                      -9-

EX-99.10-11

                                                                                                  Exhibit 10.11





                                            THE PHOENIX COMPANIES, INC.
                               NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN B


                                          Effective as of August 1, 2004






                                                                                                  Exhibit 10.11


ARTICLE I.    PURPOSE AND EFFECTIVE DATE

     1.1      Purpose. The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B(the
"Supplemental Plan") is intended to provide retirement benefits for certain current and former employees which
are not provided under the Employee Pension Plan (the "Employee Pension Plan") by reason of (a) the exclusion
from the definition of Earnings of Incentive Compensation under an Incentive Compensation Plan designated in
Section 2.7 hereof; (b) the limitation on Earnings that may be taken into account under the Employee Pension
Plan as set forth in Section 401(a)(17) of the Internal Revenue Code; or (c) the exclusion from the definition
of Earnings of amounts deferred under any other deferred compensation program of the Employer. The Supplemental
Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees.

     1.2      Effective Date. The Supplemental Plan was first effective August 1, 2004.

ARTICLE II.   DEFINITIONS

     2.1      "Beneficiary" shall mean the Beneficiary designated under the Employee Pension Plan.

     2.2      "Benefit Plans Committee" shall mean the committee appointed by and serving at the pleasure of he
Board of Directors of the Employer to administer the Supplemental Plan.

     2.3      "Code" shall mean the Internal Revenue Code of 1986, as amended.

     2.4       "Employee Pension Plan" shall mean The Phoenix Companies, Inc. Employee Pension Plan, a defined
benefit pension plan maintained by the Employer, as it may be amended from time to time.

     2.5      "Employer" shall mean Phoenix Life Insurance Company.

     2.6      "Excess Benefit Plan" shall mean The Phoenix Companies, Inc. Excess Benefit Plan, a plan
maintained by the Employer for the purpose of providing benefits for certain Employees in excess of the
limitations imposed by Section 415 of the Internal Revenue Code.

     2.7      "Incentive Compensation" shall mean compensation payable under Performance Incentive Plan, the
Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive
plan or such other incentive compensation arrangements as the Employer may designate from time to time as
approved by the Compensation Committee of the Board of Directors of The Phoenix Companies, Inc. or the Benefit
Plans Committee.

     2.7      "Plan Administrator" shall mean the Benefit Plans Committee or the person designated as such by
the Benefit Plans Committee.

     2.8      "Supplemental Plan" shall mean The Phoenix Companies, Inc. Nonqualified Supplemental Executive
Retirement Plan B as is set forth in this document as it may be amended from time to time.




         Unless the context otherwise indicates, words and phrases capitalized and not otherwise defined herein
are terms defined in the Employee Pension Plan and have the same meaning ascribed to them under the Employee
Pension Plan.

ARTICLE III.  ELIGIBILITY

     3.1      Individuals who do not participate and are not eligible to participate in the amended and
restated Nonqualified Supplemental Executive Retirement Plan effective January 1, 2004 on July 31, 2004 will be
eligible to participate in this Supplemental Plan in accordance with section 3.2.

     3.2      After August 1, 2004, any Highly Compensated Employee, as defined under the Employee Pension
Plan, of the Employer or any of its subsidiaries or affiliates that has adopted this Supplemental Plan, that
has been nominated to participate in this Supplemental Plan by his or her supervisor and approved by the Chief
Executive Officer, whose retirement benefits under the Employee Pension Plan are limited by reason of the
exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings or the
limitation on Earnings set forth in Section 401(a)(17) of the Code shall be eligible for benefits under this
Supplemental Plan effective August 1, 2004.

ARTICLE IV.   BENEFITS

     4.1      The amount of monthly benefit provided under this Supplemental Plan effective August 1, 2004 for
participants actively at work on that day or thereafter shall be the excess of (a) over (b) where:

              (a)     is the amount of monthly benefit that would have been provided under the Employee Pension
                      Plan if the exclusion of Incentive Compensation or deferred compensation amounts from the
                      definition of Earnings and the limitation on Earnings set forth in Section 401(a)(17) of
                      the Code did not apply; provided, however, that in determining the amount of a
                      Participant's Final Average Earnings, the amount of Incentive Compensation which shall be
                      taken into account shall be equal to such annual Incentive Compensation received by the
                      Participant averaged over any three (3) full calendar years within the last seven (7)
                      consecutive full calendar years that produces the highest average; and

              (b)     is the amount of monthly benefit payable under the Employee Pension Plan.

     4.2      Notwithstanding 4.1 to the contrary, the amount of monthly benefit payable to a Participant under
this Supplemental Plan shall be reduced to the extent that the aggregate monthly benefit payable to the
Participant under the Employee Pension Plan, the Excess Benefit Plan and this Supplemental Plan exceeds the
amount of monthly benefit that would have been provided under the Employee Pension Plan if the exclusion of
Incentive Compensation or deferred compensation from the definition for Earnings, the limitation on Earnings
set forth in Section 401(a)(17) of the Code and the limitations imposed by Section 415 of the Code did not
apply.

                                                      -2-


     4.3      (a)     To the extent that 4.1 requires the determination of the amount of monthly benefit
                      payable under the Employee Pension Plan, only the benefit payable with respect to Service
                      credited on and after January 1, 1993 shall be taken into account for purposes of
                      calculating the benefit payable under this Supplemental Plan to a Former Home Life
                      Employee.

              (b)     The amount of monthly benefit payable under Section 4.1 to an Employee of PIC, PEPCO or
                      PXP who was ineligible to participate in the Employee Pension Plan for the period January
                      1, 1997, through December 31, 1999, shall be computed to include an additional amount
                      equal to the difference between the benefit such officer actually accrued under the
                      Employee Pension Plan as of his or her Annuity Commencement Date and the benefit such
                      officer would have accrued had he or she not been excluded from participation in the
                      Employee Pension Plan for such period.

     4.4      For purposes of 4.1 above, Incentive Compensation shall be deemed Earnings with respect to the
year in which such Incentive Compensation is actually paid or deferred.

     4.5      The payment of benefits to which a Participant or Beneficiary shall be entitled under this
Supplemental Plan shall be made in the same form and manner and at the same time as is applicable or elected
under the Employee Pension Plan.

     4.6      The provisions of the Employee Pension Plan concerning suspension of benefits upon re-employment
are applicable to the benefits payable under this Supplemental Plan.

     4.7      Any benefit payable under the Employee Pension Plan shall be solely in accordance with the terms
and provisions thereof, and nothing in this Supplemental Plan shall operate or be construed in a way to modify,
amend or affect the terms and provisions of the Employee Pension Plan.

     4.8      If the spouse of a Participant in the Supplemental Plan is entitled to a death benefit under the
Employee Pension Plan, said spouse shall be entitled to receive from the Employer a death benefit under this
Supplemental Plan equal to the difference between (a) the death benefit that would be payable to said spouse
under the Employee Pension Plan as of the date of the Participant's death if such benefit were calculated based
on the benefit described in this Article IV; and (b) the death benefit actually payable to said spouse under
the Employee Pension Plan as of the date of the Participant's death, calculated in accordance with the terms of
the Employee Pension Plan. No death benefit other than that set forth in this Section 4.8 shall be payable
under this Supplemental Plan if a Participant dies prior to the commencement of benefit payments under this
Supplemental Plan.

ARTICLE V.    VESTING

     5.1      Employees eligible to participate in this Supplemental Plan on or after August 1, 2004, shall
have a vested, non-forfeitable interest in his or her Supplemental Plan benefits upon such Participant's
attainment of Normal Retirement Age under the Employee Pension Plan or on earlier termination of employment by
death or disability as defined in the Employee Pension

                                                      -3-


Plan. Otherwise, a Participant shall be fully vested in his or her benefits under this Supplemental Plan in the
following manner:

Service at selection                Vesting Schedule                                    Full Vesting
into SERP
- ----------------------------------------------------------------------------------------------------------

Less than 5 years             0% immediate, 50% cliff at 5 years, then 10% per year   10 years for full vesting
5 years but less than 6      10% immediate, then 10% per year                          9 years for full vesting
6 years but less than 7      20% immediate, then 10% per year                          8 years for full vesting
7 years but less than 8      30% immediate, then 10% per year                          7 years for full vesting
8 years but less than 9      40% immediate, then 10% per year                          6 years for full vesting
9 years but less than 20     50% immediate, then 10% per year                          5 years for full vesting
20 years or more            100% immediate vesting



ARTICLE VI.   CLAIMS FOR BENEFITS

     6.1      Claims for benefits under the Supplemental Plan may be filed with the Plan Administrator on forms
supplied by the Plan Administrator. Written or electronic notice of the disposition of a claim shall be
furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty
(180) days if special circumstances require an extension of time for processing the claim and if written notice
of such extension and circumstances are communicated to the claimant within the initial ninety (90)-day
period). In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically
set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the
Supplemental Plan on which the decision is based shall be cited, and, where appropriate, a description of any
additional material or information necessary to perfect the claim, and an explanation of why such material or
information is necessary, will be provided. In addition, the claimant shall be furnished with an explanation of
the Supplemental Plan's claims review procedure and the time limits applicable to such procedures, including a
statement of the claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review. A claimant must request a review of a denied claim in accordance with the
procedures described in the following paragraph before the claimant is permitted to bring a civil action for
benefits.

     Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been
denied a benefit by a decision of the Plan Administrator shall be entitled to request the Plan Administrator to
give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained
from the Plan Administrator) a request for review. Such request, together with a written statement of the
reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no
later than sixty (60) days after receipt of the notification provided for above. If such request is so filed,
the claimant or his representative may submit written comments, documents, records and other information
relating to the claim to the Plan Administrator within sixty (60) days after receipt of the notification
provided for above. The claim for review shall be given a full and fair review that takes into account all
comments, documents, records and other information submitted that relates to the claim, without regard to
whether such information was submitted or considered in the initial benefit determination. The Plan
Administrator shall provide the claimant or his

                                                      -4-


representative with written or electronic notice of the final decision as to the allowance of the claim within
sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days if special
circumstances requires an extension of time for processing the request and if written notice of such extension
and circumstances is given to the claimant or his representative within the initial sixty (60)-day period).
Such communication shall be written in a manner calculated to be understood by the claimant and shall include
specific reasons for the decision, specific references to the pertinent Supplemental Plan provisions on which
the decision is based, a statement of the claimant or his representative's right to bring a civil action under
Section 502(a) of ERISA and a statement that the claimant or his beneficiary is entitled to receive, upon
request and free of charge, reasonable access to and copies of, all documents, records and other information
relevant to the claim for benefits. A document is relevant to the claim for benefits if it was relied upon in
making the determination, was submitted, considered or generated in the course of making the determination or
demonstrates that benefit determinations are made in accordance with the Supplemental Plan and that
Supplemental Plan provisions have been applied consistently with respect to similarly situated claimants.

     6.2      Any payment to any Participant, or to such Participant's legal representative or Beneficiary, in
accordance with the provisions of this Supplemental Plan, shall be in full satisfaction of all claims hereunder
against the Employer. The Plan Administrator may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form
as it shall determine. If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator
that any payee under this Supplemental Plan is a minor, or is legally, physically, or mentally incompetent to
receive and to give valid release for any payment due him or her under this Supplemental Plan, any such
payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a
duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be
paid by the Plan Administrator to such payee's spouse, child, parent or other blood relative, or to any person,
persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such
payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect
of such payee. If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its
sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined
by a court of competent jurisdiction or shall have been settled by the parties concerned.

     6.3      If any benefits payable under this Supplemental Plan to a Participant, or to such Participant's
legal representative or Beneficiary, cannot be paid by reason that such person cannot be located for three (3)
years after reasonable efforts have been made to locate such person, the Plan Administrator may declare such
benefits forfeited and return such benefits to the Employer; provided, however, that in the event such
Participant, or such Participant's legal representative or Beneficiary, is subsequently located or files a
claim for benefits, such amount plus interest shall be reinstated to the Participant's account for the benefit
of such Participant, or such Participant's legal representative or Beneficiary, as the case may be.

                                                      -5-


ARTICLE VII.  AMENDMENT AND TERMINATION

     7.1      The Benefit Plans Committee shall have the right to amend this Supplemental Plan at any time and
from time to time, including a retroactive amendment, by resolution adopted by it at a meeting duly called or
by unanimous written consent in accordance with the Employer's Articles of Incorporation, Bylaws and applicable
law. Any such amendment shall become effective upon the date stated therein, and shall be binding on all
Participants and Beneficiaries, except as otherwise provided in such amendment; provided, however that said
amendment shall not adversely affect benefits payable to a Participant or Beneficiary where the cause giving
rise to such benefit (e.g., retirement) has already occurred.

     7.2      The Employer has established this Supplemental Plan with the bona fide intention and expectation
that from year to year it will deem it advisable to continue it in effect. However, the Employer, in its sole
discretion, reserves the right to terminate the Supplemental Plan in its entirety at any time without the
consent of any Participant; provided, however, that in such event, benefits shall not be affected where the
cause giving rise to such benefit (e.g. retirement) has already occurred. All other benefits accrued hereunder
shall immediately be forfeited. Any such termination shall be accomplished by resolution of the Benefit Plans
Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer's
Articles of Incorporation, Bylaws and applicable law.

ARTICLE VIII. SOURCE OF BENEFIT PAYMENTS

     8.1      No special or separate fund shall be established by the Employer and no segregation of assets
shall be made to assure the payment of benefits under the Supplemental Plan. No Participant shall have any
right, title, or interest whatsoever in any specific asset of the Employer. Nothing contained in this
Supplemental Plan and no action taken pursuant to its provisions shall create or be construed to create a trust
of any kind, or a fiduciary relationship, between the Employer and a Participant or any other person. To the
extent that any person acquires a right to receive payments under this Supplemental Plan, such right shall be
no greater than the right of an unsecured general creditor of the Employer.

ARTICLE IX.   GENERAL

     9.1      To the extent permitted by law, the right of any Participant or Beneficiary to any benefit or
payment hereunder shall not be subject in any manner to attachment or other legal process, and no such benefit
or payment shall be subject to anticipation, alienation, sale, transfer, assignment, or encumbrance.

     9.2      The Supplemental Plan shall be operated and administered by the Plan Administrator or its duly
authorized representative. The Plan Administrator shall have sole discretionary authority to determine all
questions arising in connection with the Supplemental Plan, to interpret the provisions of the Supplemental
Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration
of the Supplemental Plan and to make all determination in connection with the Supplemental Plan as may be
necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all
persons.

                                                      -6-


     9.3      This Supplemental Plan shall be governed by and construed in accordance with the laws of the
State of Connecticut other than and without reference to any provisions of such laws regarding choice of laws
or conflict of laws, to the extent such laws are not pre-empted by the Employee Retirement Income Security Act
of 1974, as amended.

     9.4      The establishment of this Supplemental Plan shall not be construed as giving to any Participant,
Employee or any person whomsoever, any legal, equitable or other rights against the Employer, or its officers,
directors, agents or shareholders, or as giving to any Participant or Beneficiary any interest in the assets or
business of the Employer or giving any Employee the right to be retained in the employment of the Employer. All
Employees and Participants shall be subject to discharge to the same extent they would have been if this
Supplemental Plan had never been adopted.

     9.5      The Employer may withhold from a payment any federal, state or local taxes required by law to be
withheld with respect to such payments and such sums as the Employer may reasonably estimate are necessary to
cover taxes for which the Employer may be liable and which may be assessed with regard to such payment.

     9.6      The illegality of any particular provision of this document shall not affect the other provisions
and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE X.    PARTICIPATING EMPLOYERS

     10.1     Adoption of Supplemental Plan by Other Employers. With the consent of the Benefit Plans
Committee, any other corporation may adopt the Supplemental Plan and all of the provisions hereof and
participate herein as a Participating Employer by a properly executed document evidencing said intent and will
of such Participating Employer.

     10.2     Requirements of Participating Employers.

              (a)     Benefits payable under the Supplemental Plan to employees of the Participating Employer
                      are funded through the Participating Employer's general assets. The Participating
                      Employer agrees to pay and assumes all liability with respect to all benefits payable
                      under the Supplemental Plan to past, present and future employees of the Participating
                      Employer, their spouses and other dependents and beneficiaries in accordance with the
                      terms of the Supplemental Plan. [Notwithstanding the foregoing, Phoenix Life Insurance
                      Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc.
                      shall pay and assume liability for benefits payable under the Supplemental Plan to
                      Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc.
                      with respect to service completed before January 1, 1996.] {What about IMG and Engemann}

              (b)     The Plan Administrator shall keep separate books and records concerning the contributions
                      and benefits payable under the Supplemental Plan with

                                                      -7-


                      respect to the Participating Employer and the Employees of the Participating Employer.

              (c)     The Participating Employer shall pay to Phoenix Life Insurance Company its proportionate
                      share of any administrative expenses of the Supplemental Plan which are to be paid by the
                      Employer.

     10.3     Designation of Agent. Each Participating Employer shall be deemed to have designated irrevocably
the Benefit Plans Committee and the Plan Administrator as its agents.

     10.4     Plan Amendment.

              (a)     Subject to the provisions of paragraph (b) hereof, each Participating Employer hereby
                      delegates to the Employer the right at any time to amend the Supplemental Plan in
                      accordance with the terms of the Supplemental Plan, provided that any such amendment
                      could not affect the Participating Employer's share of the cost of the Supplemental Plan.
                      If an amendment could significantly affect the Participating Employer's share of the cost
                      of the Supplemental Plan, then such amendment shall not be effective with respect to the
                      Participating Employer until approved by the Participating Employer. Any such amendment
                      shall be adopted by the Participating Employer's Benefit Plans Committee unless such
                      amendment could significantly affect the Participating Employer's share of the cost of
                      the Supplemental Plan, as determined by the Participating Employer's Benefit Plans
                      Committee, in which case such amendment shall be adopted by the Participating Employer's
                      Board of Directors in accordance with the Participating Employer's Articles of
                      Incorporation, Bylaws and applicable law and shall become effective as provided therein
                      upon its execution.

              (b)     No amendment to the Supplemental Plan shall be effective with respect to the
                      Participating Employer until 45 days after a copy of the amendment shall have been
                      delivered to the Participating Employer, unless the Participating Employer shall have
                      waived its right to receive such advance copy of the amendment.

     10.5     Withdrawal of a Participating Employer. A Participating Employer may terminate its
participation in the Supplemental Plan by giving the Benefit Plans Committee prior written notice specifying a
termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is
delivered to the Benefit Plans Committee, unless the Benefit Plans Committee shall have waived its right to
such notice. The Benefit Plans Committee may terminate a Participating Employer's participation in the
Supplemental Plan as of any termination date by giving the Participating Employer prior written notice
specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date
such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its
right to such notice.

                                                      -8-


     10.6     Plan Administrator's Authority. The Plan Administrator shall have all of the duties and
responsibilities authorized by the Supplemental Plan and shall have the authority to make any and all rules,
regulations and decisions necessary or appropriate to effectuate the terms of the Supplemental Plan, which
shall be binding upon each Participating Employer and all Participants.

                                                      -9-

EX-99.10-46

                                                                                                  Exhibit 10.46


                                        One American Row                        Phone 860.403.5941
                                        PO Box 5056                             Fax 860.403.7269
                                        Hartford, CT 06102-5056                 bonnie.malley@phoenixwm.com

Phoenix Life Insurance Company
A member of The Phoenix Companies. Inc.


BONNIE MALLEY
Senior Vice President
Corporate Services



September 20, 2004



Michael J. Gilotti
Meadow Ridge
Avon, CT 06001


Re:  Transition Agreement



Dear Mr. Gilotti:

         We are proposing the following transition arrangements in connection with your separation from service
with The Phoenix Companies, Inc. (the "Holding Company"), the Phoenix Life Insurance Company (the "Insurance
Company") and their affiliates (together, the "Group"). The proposal provides for your continued service to the
Holding Company, the Insurance Company and the Group through December 31, 2004 and sets forth the arrangements
relating to your transition.

         On your agreement, this letter becomes your TRANSITION AGREEMENT with the Holding Company and the
Insurance Company.

1. Prior Arrangements

         This Agreement supersedes any other severance or similar rights you may have with the Group. Your
Change of Control Agreement dated January 1, 2003, is terminated, and no party will have any further liability
under that agreement.

2. Your Service Through December 31, 2004

         (a) Position and Authority. Through December 31,2004, you will continue to serve as Executive Vice
President of the Holding Company and be employed as Executive Vice President of the Insurance Company. You
shall devote all your efforts completing your current assignments and assisting in an orderly transition. Your
authority will be limited to that expressly granted to you by this agreement or in writing by Dona D. Young, or
her designate. You agree not to represent your authority to those inside or outside the Group beyond the scope
of that expressly granted to you by this agreement or in writing by Mrs. Young or her designate.

         (b) Performance. During your service and employment as Executive Vice President, you will devote your
entire business time, attention and efforts to your responsibilities and will use good faith efforts to
discharge your responsibilities to the best of your ability. Your services will be performed in the Hartford,
Connecticut




metropolitan area at places designated by the Group (except for travel required in connection with the
performance of your responsibility).

         (c) Resignation as Executive Vice President. Effective at 11:59 p.m., December 31, 2004, you will
resign from your position as Executive Vice President of both the Holding Company and the Insurance Company as
well as from all other positions as an officer or director of the Group. You understand that your resignation
will be irrevocable and that no other action is required for it to become effective. You agree, however, to
sign the additional letters of resignation in the form attached in Annex 1.

3. Your Transition Date

         Your "Transition Date" will be December 31, 2004.

4. Your Compensation and Benefits

         (a) Salary. During your employment and until your Transition Date, you will receive an annual base
salary at the rate currently in effect (your "Salary"). The time at which your salary will be paid will be in
accordance with the normal practices of the Group for senior executives.

         (b) Annual Incentive Plan. You will be entitled to receive payment based upon an award in the 2004
Annual Incentive Plan ("award") for the cycle ending in 2004. The award will be determined based upon the rules
under that Plan. Phoenix waives the requirement that you be employed at the time payment is made.

         (c) Employee Benefit Plans. After termination date and until the conclusion of the severance payment
period, you will be permitted to maintain your present employee group insurance coverages for Group Health,
Group Life and Group Dental, provided the Group does not revoke, amend or terminate these plans and you do not
revoke your current payroll deductions for authorization for premiums for these coverages. At the end of the
severance payment period you will be entitled to any conversion rights available to Group employees terminating
at that time under the terms and conditions of the employee group insurance coverages specifically identified.
Except for these coverages specifically identified within the Agreement, and contributions to the Savings and
Investment Plan and Employee Pension Plan accruals, you shall not be able to contribute to nor participate in
any other employee benefit or benefit programs subsequent to your Transition Date. You will not participate in
the disability plan. You will continue to accrue a retirement benefit through the end of your severance period.

         (d) Other Perquisites. During your employment and until your Transition Date, you will receive your
current office, administrative support on an as needed basis and other business services, as the Group, in its
sale discretion, elects to provide you. Travel and business expenses will continue to be reimbursed in
accordance with the Group's existing policies and practices. Tax preparation services will be provided in
accordance with the Group's existing policies and practices.


                                                     - 2 -



         (e) Elections. The time periods for making elections under the Group's pension or welfare
arrangements, will be determined by terms of each respective plan.

5. Obligations of You and the Group after Transition Date

         (a) Other Group Obligations to You After Transition. You will also receive the following:

              (1) Any (A) unpaid Salary through your Transition Date, (B) accrued expense reimbursements and
         other cash entitlements through the end of your employment, (C) other cash compensation accrued by you
         through the end of your employment, (D) unpaid deferred compensation at such times and in accordance
         with the terms of your deferred compensation agreements, if any and (E) full compensation for all
         earned but unused vacation days.

              (2) Timely payment of any amounts and provision of any benefits that are required, or to which
         you are entitled, under any pension or retirement plan, contract or arrangement of the Group.

              (3) Timely payment of any amounts and provision of any benefits that are required, or to which
         you are entitled under any welfare plan, contract or arrangement of the Group. .

              (4) Exercisability of your stock options and other equity awards to which you are entitled under
         equity-based compensation plans, in accordance with their terms.

              (5) Thirty-eight (38) weeks of severance in addition to fourteen (14) weeks of severance payable
         under the Group's Severance Plan. The severance period will commence on January 1, 2005.

              [6] Twelve months of outplacement services.

         (b) Release and Letters of Resignation Required. The Holding Company and the Insurance Company will
not be required to provide you with the Annual Incentive Plan award provided for in Section 4(b), the
additional severance provided for in Section 5(a)(5), or to continue your employment to the Transition Date,
unless the Holding Company (for itself and the other members of the Group) receives (1) an effective release
from you of all liability or obligation or potential liability or obligation other than the payments and
benefits set forth in this Agreement, which shall be substantially in the form of Annex 2, and (2) any letters
of resignation in the form attached as Annex 1.

6. Your Continuing Obligations to the Group

         (a) General Effect. This Section 6 applies during your employment and, as stated below, for some time
after your employment ends. After your Transition Date, you will have no further obligations to the Group
except as provided in this Section 6 or as may exist under any employee benefit plan, contract or arrangement
of the


                                                     - 3 -






Group in which you participate (including any retirement or pension plan in which you participate). This
Section uses the following defined terms:

              "Client" means any person or entity to whom you provided services, or for whom you transacted
         business in connection with the asset management business and the underwriting and distribution of
         life insurance and annuities businesses within the United States.

              "Customer" means any policy holders or purchasers of mutual funds or other investment products of
         the Group.

              "Proprietary Information" means confidential or proprietary information, knowledge or data
         concerning (1) the Group's businesses, strategies, operations, financial affairs, organizational
         matters, personnel matters, budgets, business plans, marketing plans, studies, policies, procedures,
         products, ideas, processes, software systems, trade secrets and technical know-how and (2) any matter
         relating to Clients and/ or Customers of the Group. Proprietary Information includes (a) investment
         techniques and trading strategies used in, and the performance records of, Client and/ or Customer
         accounts or other investment products and (b) information and materials concerning the personal
         affairs of employees of the Group. In addition, Proprietary Information may include information
         furnished to you orally or in writing (whatever the form or storage medium) or gathered by inspection,
         in each case before or after the date of this Agreement. However, Proprietary Information does not
         include (w) information that was or becomes generally available to you on a non-confidential basis, if
         the source of this information was not reasonably known to you to be bound by a duty of
         confidentiality, (x) information that was or becomes generally available to the public, other than as
         a result of a disclosure by you, directly or indirectly, (y) information that you can establish was
         independently developed by you without reference to any Proprietary Information, or (z) the names,
         addresses, and phone numbers of Clients and/ or Customers and prospective Clients and/ or Customers of
         the Group.

              "Solicit' means any direct or indirect communication of any kind that invites, advises,
         encourages or requests any person to take or refrain from taking any action.

         (b) Your Importance to the Group and the Effect of this Section 6. You acknowledge that:

              (1) In return for the benefits you will receive from the Group and to induce the Group to enter
         into this Agreement, and in light of the potential harm you could cause the Group, you agree to the
         provisions of this Section 6.

              (2) This Section 6 could limit your ability to earn a livelihood in a Competitive Enterprise and
         your relationships with Clients and/ or Customers. You acknowledge, however, that complying with this
         Section 6 will not result in severe economic hardship for you or your family.


                                                     - 4 -



         (c) Non-Solicitation of Clients/ Customers. Following the termination of your employment (other than
by the Group for Cause or by you without Good Reason), you will not attempt to:

              (1) For a period of one year, solicit any Customer to transact business with a Competitive
         Enterprise (that is directly related to any activity that you were engaged in, or that is directly
         related to any activity for which you had direct or indirect managerial or supervisory responsibility)
         or to reduce or refrain from doing any business with the Group, or

              (2) For a period of three (3) years, willfully damage any relationship between the Group and a
         Client and/or Customer by intentionally disparaging the Group's products, reputation or business
         practices; in each case, unless you have obtained a waiver from the Holding Company and the Insurance
         Company.

         (d) Non-Solicitation of Group Employees. Until the second anniversary of the termination of your
employment (other than by the Group for Cause or by you without Good Reason), you will not attempt to Solicit
anyone who is then an employee of the Group (or who was an employee of the Group within the three years prior
to your termination of employment) to resign from the Group or to apply for or accept employment with any
Competitive Enterprise, unless you have obtained a waiver from the Holding Company and the Insurance Company.

         (e) Cooperation. Until the 3-month anniversary of the termination of your employment (other than by
the Group for Cause or by you without Good Reason), you will take all actions the Group may reasonably request
to maintain for the Group the business, goodwill and business relationships with any Clients and/or Customers.
In addition, at all times after the date of this Agreement (1) you will make yourself reasonably available and
cooperate with reasonable requests from the Group for information concerning any business or legal matters
involving facts or events relating to the Group that may be within your knowledge and (2) you will cooperate
with reasonable requests by the Group in connection with any litigation, regulatory proceeding or investigation
that may be brought by or against any member of the Group.

         (f) No Public Statements or Disparagement. You will not make any public statements regarding your
employment or the termination of your employment (for whatever reason), or this Agreement, that are not agreed
to by the Holding Company. You will not make any public statement or instigate or participate in the making of
any public statement that would libel, slander or disparage (whether or not the disparagement legally
constitutes libel or slander) any member of the Group or any of their respective past or present officers,
directors, employees or agents. Upon expiration of the seven-day revocation period in Paragraph 3 the Release,
the Group will ensure that no member of the Group and no senior managers or directors of either the Holding
Company, the Insurance Company or any member of the Group will, make any public statements regarding your
employment, the termination of your employment (for whatever reason), or this Agreement, that are not agreed to
by you, and will not make any public statement or instigate or participate in the making of any publics
statement that would libel, slander or disparage you (whether or not


                                                     - 5 -




the disparagement legally constitutes libel or slander). You will use your best efforts to insure that members of
your immediate family also comply with this Section 6[f]. However, nothing in this Section 6[f] is intended to
interfere with any official investigation by a governmental or regulatory authority, and any cooperation you or
any senior manager or director of either the Holding Company, the Insurance Company or any member of the Group
are requested to provide to governmental or regulatory authorities will not violate this Section 6[f].


         (g) Proprietary Information. You agree that:

              (1) The Proprietary Information is the exclusive property of the Group, and you will use and
         disclose Proprietary Information only for the Group's benefit and in accordance with any restrictions
         placed on its use or disclosure by the Group. In addition, nothing in this Agreement will operate to
         weaken or waive any rights the Group may have under statutory or common law, or any other agreement,
         to the protection of trade secrets, confidential business information and other confidential
         information.

              (2) The existence of, and any information concerning, a dispute between you and the Group will be
         Proprietary Information. However, you may disclose information concerning the dispute to the
         arbitrator or court that is considering the dispute and to your legal counsel (so long as your counsel
         agrees not to disclose any such information other than as necessary to the prosecution or defense of
         the dispute).

              (3) As soon as reasonably practicable after your Transition Date (or if your employment is
         terminated before the Transition Date, promptly after termination of your employment), you agree to
         return to the Group or destroy all Proprietary Information, including all notes, mailing lists,
         rolodexes and computer files that contain any Proprietary Information. You agree to do anything
         reasonably requested by the Group in furtherance of perfecting the Group's possession of, and title
         to, any Proprietary Information that was at any time in your possession.

              (4) Nothing in this Section 6[g] is intended to interfere with any official investigation by a
         governmental or regulatory authority, and any Proprietary Information you are requested to provide to
         governmental or regulatory authorities will not violate this Section 6[g].

7. Successors.

         (a) Payments on Your Death. Any amounts that become payable under this Agreement after you die will be
paid to your estate.

         (b) Assignment by You. You may not assign this Agreement without the Holding Company and Insurance
Company's consent. Also, except as required by law, your right to receive payments or benefits under this
Agreement may not be subject to execution, attachment, levy or similar process. Any attempt to effect any of
the preceding in violation of this Section 8[b], whether voluntary or involuntary, will be void.


                                                      - 6



         (c) Assumption by any Successor Company. The Holding Company and the Insurance Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Holding Company or Insurance Company to unconditionally
assume this Agreement in writing and will provide a copy of the assumption to you. On such assumption, the
successor company will be treated for all purposes as the Holding Company or the Insurance Company (as the case
may be) under this Agreement.

8. Disputes.

         (a) Employment Matter. This Section 8 applies to any controversy or claim between you and any member
of the Group arising out of or relating to or concerning this Agreement or any aspect of your employment with
the Group or the termination of that employment (together, an "Employment Matter").

         (b) Mandatory Arbitration. Subject to the provisions of this Section 8, any Employment Matter will be
finally settled by arbitration in Hartford County, Connecticut administered by the American Arbitration
Association under its Commercial Arbitration Rules then in effect. However, the rules will be modified to
provide that each arbitrator will agree to treat as confidential the evidence and other information presented
to the same extent as the information is required to be kept confidential under Section 6[h].

         (c) Injunctions and Enforcement of Arbitration Awards. You or the Group may bring an action or special
proceeding in any state or federal court located in Hartford County, Connecticut to compel arbitration or to
enforce any arbitration award under Section 8[b]. Also, the Group may bring such an action or proceeding, in
addition to its rights under Section 8[b] and whether or not an arbitration proceeding has been or is ever
initiated, to temporarily, preliminarily or permanently enforce any part of Section 6. You agree that (1) your
violating any part of Section 6 would cause damage to the Group that cannot be measured or repaired, (2) the
Group therefore is entitled to an injunction, restraining order or other equitable relief restraining any
actual or threatened violation of that Section, (3) no bond will need to be posted for the Group to receive
such an injunction, order or other relief and (4) no proof will be required that monetary damages for
violations of that Section would be difficult to calculate and that remedies at law would be inadequate.

         (d) Jurisdiction and Choice of Forum. You and the Group irrevocably submit to the exclusive
jurisdiction of any state or federal court located in Hartford County, Connecticut over any non-arbitral matter
relating to an Employment Matter, including any action or proceeding to compel arbitration or to enforce an
arbitration award. Both you and the Group (1) acknowledge that the forum stated in this Section 8[d] has a
reasonable relation to this Agreement and to the relationship between you and the Group and that the submission
to the forum will apply even if the forum chooses to apply non-forum law, (2) waive, to the extent permitted by
law, any objection to personal jurisdiction or to the laying of venue of any action or proceeding covered by
this Section 8[d] in the forum stated in this Section, (3) agree not to commence any such action or proceeding
in any forum other than the forum stated in this Section 8[d] and (4) agree that, to the extent permitted by
law, a final and non-appealable judgment in any such action or proceeding in any


                                                     - 7 -



such court will be conclusive and binding on you and the Group. However, nothing in this Agreement precludes you
or the Group from bringing any action or proceeding in any court for the purpose of enforcing the provisions of
Sections 6 and this Section 8.

         (e) Waiver of Jury Trial. To the extent permitted by law, you and the Group waive any and all rights
to a jury trial with respect to any matter.

         (f) Governing Law. This Agreement will be governed by and construed in accordance with the law of the
State of Connecticut applicable to contracts made and to be performed entirely within that State. 

9. General Provisions.

         (a) Construction.

              (1) References to [A] Sections are to sections of this Agreement unless otherwise stated and [B]
         any contract (including this Agreement) are to the contract as amended, modified, supplemented or
         replaced from time to time,

              (2) The various headings in this Agreement are for convenience of reference only and in no way
         define, limit or describe the scope or intent of any provisions or Sections of this Agreement.

              (3) Unless the context requires otherwise, (A) words describing the singular number include the
         plural and vice versa, (B) words denoting any gender include all genders and (C) the words "include",
         "includes" and "including" will be deemed to be followed by the words "without limitation."

              (4) It is your and the Group's intention that this Agreement not be construed more strictly with
         regard to you or the Group.

         (b) Withholding. You and the Group will treat all payments to you under this Agreement as compensation
for services. Accordingly, the Group may withhold from any payment any taxes that are required to be withheld
under any law, rule or regulation.

         (c) Allocation. The obligations of the Holding Company and the Insurance Company under this Agreement
are several (and not joint). The Holding Company and the Insurance Company will allocate their respective
obligations under this Agreement in accordance with their customary practices, and the allocation will be final
and binding on you.

         (d) Entire Agreement. This Agreement is the entire agreement between you, on the one hand, and the
Holding Company and Insurance Company, on the other hand, with respect to the relationship contemplated by this
Agreement and supersedes any earlier agreement, written or oral, with respect to the subject matter of this
Agreement. In entering into this Agreement, no party has relied on or made any representation, warranty,
inducement, promise or understanding that is not in this Agreement.


                                                     - 8 -



         (e) Severability. If any provision of this Agreement is found by any court of competent jurisdiction
(or legally empowered agency) to be illegal, invalid or unenforceable for any reason, then (1) the provision
will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit
enforcement and (2) the remainder of this Agreement will not be affected. In particular, if any provision of
Section 6 is so found to violate law or be unenforceable because it applies for longer than a maximum permitted
period or to greater than a maximum permitted area, it will be automatically amended to apply for the maximum
permitted period and maximum permitted area.

         (f) No Set-off or Mitigation. Your and the Holding Company's and the Insurance Company's respective
obligations under this Agreement will not be affected by any set-off, counterclaim, recoupment or other right
you or any member of the Group may have against each other or anyone else. You do not need to seek other
employment or take any other action to mitigate any amounts owed to you under this Agreement, and those amounts
will not be reduced if you do obtain other employment (except as this Agreement specifically states).

         (g) Notices. All notices, requests, demands, waivers and other communications under this Agreement
must be in writing and will be deemed given (1) on the business day sent, when delivered by hand or facsimile
transmission (with confirmation) during normal business hours, (2) on the business day after the business day
sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the
business day sent if delivered by registered or certified mail, return receipt requested, in each case to the
following address or number (or to such other addresses or numbers as may be specified by notice that conforms
to this Section 9:

         If to you, to the address on the first page of this Agreement.

         with a copy to:

             Michael J. Gilotti
             46 Meadow Ridge
             Avon, CT 06001

         If to the Holding Company or any other member of the Group, to:

             The Phoenix Companies, Inc.
             1 American Row
             Hartford, Connecticut 06102
             Attention: General Counsel

         (h) Consideration. This Agreement is in consideration of the mutual covenants contained in it. You and
the Group acknowledge the receipt and sufficiency of the consideration to this Agreement and intend this
Agreement to be legally binding.

         (i) Amendments and Waivers. Any provision of this Agreement may be amended or waived but only if the
amendment or waiver is in writing and signed, in


                                                     - 9 -



the case of an amendment, by you, the Holding Company and the Insurance Company or, in the case of a waiver, by
the party that would have benefited from the provision waived. Except as this Agreement otherwise provides, no
failure or delay by you or the Group to exercise any right or remedy under this Agreement will operate as a
waiver, and no partial exercise of any right or remedy will preclude any further exercise.

         (j) Third Party Beneficiaries. Subject to Section 7, this Agreement will be binding on, inure to the
benefit of and be enforceable by the parties and their respective heirs, personal representatives, successors
and assigns. This Agreement does not confer any rights, remedies, obligations or liabilities to any entity or
person other than you, the Holding Company and the Insurance Company and your and the Holding Company's and the
Insurance Company's permitted successors and assigns, although (1) this Agreement will inure to the benefit of
the Group and (2) Section 7[a] will inure to the benefit of the most recent persons named in a notice under
that Section.

         If this Agreement properly sets forth our understanding, please sign both copies of this Agreement,
keep one copy for your records and return one to me.

Very truly yours,




/s/ Bonnie J. Malley
Senior Vice President





Accepted by:

- ---------------------------------
/s/ Michael J. Gilotti




Transition Agreement


Annex 1  Letters of Resignation

Annex 2  General Release









                                                                                      ANNEX 1





                                             LETTER OF RESIGNATION




I, Michael J. Gilotti, hereby resign as the officer and / or director, as applicable, from THE PHOENIX
COMPANIES, INC.




Dated:   September 20, 2004                          /s/ Michael J. Gilotti







                                                                                      ANNEX 2


GENERAL RELEASE, by MICHAEL J. GILOTTI (the "Executive") in favor of THE PHOENIX COMPANIES, INC. (the
"Company").

              1. The Executive knowingly and voluntarily waives, terminates, cancels and releases forever
         whatever rights, claims or causes of action he (or his heirs, executors, administrators, successors,
         assigns and legal representatives) may have or may yet have against the Company and any of its
         subsidiaries or affiliates, and each of their respective predecessors, successors or assigns, present
         and former directors, officers, employees, shareholders, attorneys and agents, whether known or
         unknown, based upon any matter, cause or thing occurring at any time before and including the
         Effective Date.

              2. Paragraph 1 includes, but is not limited to, all claims under federal, state or local law or
         the national or local law of any other country (statutory or decisional) for breach of contract, for
         tort, for wrongful or abusive or unfair discharge or dismissal, for impairment of economic opportunity
         or for defamation, for intentional infliction of emotional distress, or for discrimination based upon
         race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation or any
         other unlawful criterion or circumstance. Such released rights and claims include, but are not limited
         to, all rights or claims under the Age Discrimination in Employment Act of 1967 ("ADEA") (except that
         the Executive does not waive ADEA rights or claims that may arise after the date of this Agreement).

              3. The Executive affirms that, prior to the execution of this General Release, the Executive was
         advised to consult with an attorney of his choice concerning the terms and conditions of this General
         Release and that he has been given up to 21 days to consider signing this General Release. The
         Executive understands that he has seven days following his signing to revoke and cancel this General
         Release, and the terms and conditions of this General Release will not become effective or enforceable
         until the revocation period has expired (the "Effective Date"). The Executive agrees that a revocation
         will only be effective if he furnishes written notice to the Company's Senior Vice President of Human
         Resources within such seven-day period. The Executive acknowledges that he is receiving consideration
         for this General Release to which he would not otherwise be entitled.

              4. Notwithstanding any term of this General Release, this General Release will not terminate,
         cancel or release the obligation of The Phoenix Life Insurance Company to make the payments, pursuant
         to Sections 4[a] and 5[a][1], [2] and [3] of the Transition Agreement between Executive and The
         Phoenix Companies, Inc. and its affiliates, dated September 20, 2004.


September 20, 2004                                          /s/ Michael J. Gilotti

EX-99.12

                                                                                                     Exhibit 12

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ amounts in millions)
Nine Months Ended September 30, 2004 and 2003

                                                                                           2004         2003
                                                                                         ---------    ---------

Income (loss) from continuing operations before income taxes and minority interest        $  62.2      $ (56.7)

Less:  Equity in earnings (losses) of affiliates                                              0.5          0.8
       Equity in earnings (losses) of venture capital partnership investments                12.1         34.8

Add:   Distributed earnings of affiliates                                                     1.1          1.2
       Distributed earnings of venture capital partnership investments                       39.5         21.2
                                                                                         ---------    ---------


Income (loss) from continuing operations before income taxes, minority interest and
  equity in undistributed earnings of affiliates and venture capital
  partnership investments                                                                 $  90.2      $ (69.9)
                                                                                         =========    =========

Fixed Charges:

  Interest expense on indebtedness (1)                                                     $  29.8      $  29.5
  Stock purchase contract adjustment payments                                                 6.1          6.1
  Rental expense                                                                              1.8          1.9
                                                                                         ---------    ---------
Fixed charges, exclusive of interest credited on policyholder contract balances           $  37.7      $  37.5
  Interest credited on policyholder contract balances                                       146.3        156.2
                                                                                         ---------    ---------
Total fixed charges, inclusive of interest credited on policyholder contract balances     $ 184.0      $ 193.7
                                                                                         =========    =========

Income (loss) from continuing operations before income taxes, minority interest,
  equity in undistributed earnings of affiliates and venture capital
  partnership investments and fixed charges                                               $ 274.2      $ 123.8
                                                                                         =========    =========

Ratio of earnings to fixed charges                                                            1.5          0.6
                                                                                         =========    =========

Additional earnings required to achieve 1:1 ratio coverage                                $   -        $  69.9
                                                                                         =========    =========


SUPPLEMENTAL RATIO - ratio of earnings to fixed charges
exclusive 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                                                                 $  90.2      $ (69.9)
                                                                                         =========    =========

Fixed Charges:
Total fixed charges, as above                                                             $  37.7      $  37.5
                                                                                         =========    =========

Income (loss) from continuing operations before income taxes, minority interest and
  equity in undistributed earnings of affiliates and venture capital partnership
  investments and fixed charges                                                           $ 127.9      $ (32.4)
                                                                                         =========    =========

Ratio of earnings to fixed charges                                                            3.4         (0.9)
                                                                                         =========    =========

Additional earnings required to achieve 1:1 ratio coverage                                $   -        $  69.9
                                                                                         =========    =========



(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-99.31-1

                                                                                                   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-Q 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
quarterly 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 quarterly 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:      November 9, 2004                              /s/ Dona D. Young
                                                         ------------------------------------------------------
                                                         Dona D. Young
                                                         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-Q 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
quarterly 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 quarterly 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:      November 9, 2004                              /s/ Michael E. Haylon
                                                         ------------------------------------------------------
                                                         Michael E. Haylon
                                                         Chief Financial Officer

EX-99.32

                                                                                                     Exhibit 32



                                                   CERTIFICATION

         The undersigned hereby certify that the Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2004 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:    November 9, 2004                                   Date:    November 9, 2004


         A signed original of this written statement required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of
this written statement required by Section 906, has been provided to The Phoenix Companies, Inc. and will be
retained by The Phoenix Companies, Inc. and furnished to the Securities and Exchange Commission or its staff
upon request.