-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J5EEGwuHVvd6FtuUr4gxFM1WBJ+amKvJQX7TJr5zgzG1a4RgFFAh6S+2pzY095ZY kypZoUHy1dszsTtrCEVT5w== 0001129633-02-000024.txt : 20021108 0001129633-02-000024.hdr.sgml : 20021108 20021108165735 ACCESSION NUMBER: 0001129633-02-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 ITEM INFORMATION: Change in fiscal year ITEM INFORMATION: FILED AS OF DATE: 20021108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX COMPANIES INC/DE CENTRAL INDEX KEY: 0001129633 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 060493340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16517 FILM NUMBER: 02814611 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 061025056 BUSINESS PHONE: 8604035000 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 06012 8-K 1 q3_earn.htm 3RD Q EARNINGS AND HRH

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: November 7, 2002
------------------------------
(Date of earliest event reported)

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

Delaware 1-16517 06-0493340
-------- ------- ----------
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)

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

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

Item 9. Other Information.

On November 7, 2002, The Phoenix Companies, Inc., a Delaware corporation, reported its third quarter 2002 results, a copy of
which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9. Other Information.

On November 8, 2002, The Phoenix Companies, Inc. announced it had priced its offering of 3,150,000 stock purchase contracts
to be settled in common shares of Hilb, Rogal and Hamilton Company (NYSE: HRH), a copy of which is attached hereto as Exhibit 99.2
and is incorporated herein by reference.

Item 7. Exhibits.

99.1 Press release of The Phoenix Companies Inc., dated November 7, 2002, regarding third quarter 2002 results.
99.2 Press release of The Phoenix Companies Inc., dated November 8, 2002, regarding pricing of stock purchase contracts.

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.

By: /s/ Carole A. Masters
-------------------------------------------
Name: Carole A. Masters
Title: Vice President and Counsel

Date: November 8, 2002

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EXHIBIT INDEX

Exhibit Number Exhibit
- -------------- -------
99.1 Press release of The Phoenix Companies, Inc. dated November 7, 2002,
regarding third quarter 2002 results.

99.2 Press release of The Phoenix Companies Inc., dated November 8, 2002,
regarding pricing of stock purchase contracts.

Exhibit 99.1

[GRAPHIC OMITTED][GRAPHIC OMITTED]

The Phoenix Companies, Inc. N E W S R E L E A S E

One American Row
PO Box 5056
Hartford CT 06102-5056
www.phoenixwm.com

Note: The company considers operating income and cash operating income, excluding venture capital, in evaluating its financial
performance, in addition to net income presented in accordance with Generally Accepted Accounting Principles (GAAP). (See
attached table reconciling these measures.) Operating income represents net income adjusted for realized investment gains and
losses and nonrecurring items. Nonrecurring items include expenses related to Phoenix's demutualization and its acquisition of
the PXP minority interest, an early retirement program, a first quarter 2002 adjustment to the amortization of deferred
acquisition costs related to the closed block, management restructuring reserves, surplus tax, and the cumulative effect of
accounting changes. For cash operating income, the company adds back amortization of intangible assets to operating income to
measure the ability of the business to generate cash earnings. The company excludes the Venture Capital segment, a separate
reporting segment, to measure the performance of its core operating businesses in order to provide greater transparency when
evaluating operating performance.

For Immediate Release

Contacts: Media Relations Investor Relations
--------------- ------------------
Alice S. Ericson Peter A. Hofmann
860-403-5946 860-403-7100

PHOENIX REPORTS THIRD QUARTER 2002 RESULTS

HARTFORD, Conn., November 7, 2002 - The Phoenix Companies, Inc. (NYSE: PNX) today reported third quarter 2002 cash
operating income, excluding venture capital, of $7.9 million, or $0.08 per share, compared with $17.9 million, or $0.17 per
share, in the third quarter of 2001. The company also reported an operating loss of $81.8 million, or a $0.85 loss per share,
for the quarter, principally related to a goodwill charge and venture capital losses. This compares with an operating loss of
$27.4 million, or a $0.26 loss per share, in the third quarter of 2001. The company reported a GAAP net loss of $93.0 million, or
a $0.96 loss per share, in the third quarter of 2002, compared with a $21.2 million net loss, or a $0.20 loss per share, in the
third quarter of 2001.
The company's third quarter 2002 operating loss includes:
o a $62.3 million non-cash, after-tax charge to reflect a reduction in goodwill associated with its investment management
business, resulting from the decline of the equity markets in the quarter;
o a $14.4 million after-tax loss on venture capital investments;
o an $8.8 million after-tax acceleration of deferred acquisition costs related to the variable annuity business; and
o a $1.9 million after-tax increase in guaranteed minimum death benefit reserves related to a variable annuity block of
business recently acquired from CNA.
The third quarter 2002 GAAP results also include net realized investment losses of $7.6 million and a previously announced
$3.6 million after-tax reserve related to management restructuring.
"This quarter's difficult financial markets obviously affected our profitability, given our exposure through our
investment management business, our venture capital portfolio and our variable annuity business," said Dona D. Young, president,
chief operating officer and chief executive officer-elect. "Also in the quarter, we took actions to ensure we maintain balance
sheet discipline, including a write-down of goodwill and deferred acquisition costs and establishment of additional reserves for
guaranteed minimum death benefits.
"Looking ahead, two primary factors will affect our ability to reach our goal of 8 to 10 percent cash return on equity,
excluding venture capital, by year-end 2003," Mrs. Young said. "The first factor is expenses, which we can control. That is why
we continue to be focused on aggressive expense management for 2003. The second is the financial markets, which we do not
control. Without improvement in the equity markets, we may be precluded from realizing our goal.
"As we work through the planning process, our priority in 2003 will be to execute our wealth management strategy by
focusing on higher return products, managing our capital to increase financial flexibility and liquidity, and continuing our
expense management effort. Over time, this will help us deliver quality earnings on a consistent, predictable basis," Mrs. Young
said.
On September 27, 2002, the Board of Directors elected Mrs. Young, currently president and chief operating officer, to
succeed Robert W. Fiondella as chief executive officer of the company, effective January 1, 2003.
Year-to-date 2002 cash operating income, excluding venture capital, was $57.1 million, or $0.58 per share, compared with
$58.5 million, or $0.56 per share, through September 30, 2001. The company also reported a year-to-date operating loss of $73.1
million, or a $0.74 loss per share, compared with an operating loss of $96.7 million, or a $0.92 loss per share, for the prior
year's first three quarters. The company reported a GAAP net loss of $231.6 million, or a $2.34 loss per share through September
30, 2002, compared with a $195.2 million net loss, or a $1.87 loss per share, for the prior year's first three quarters. The
loss was primarily due to the first quarter adoption of an accounting change for goodwill and an additional goodwill charge in
the third quarter, realized investment losses, and management restructuring reserves.
Mrs. Young also cited the following developments for the quarter:
o Nearly doubled total life insurance sales from the prior year's quarter, with a significant portion of sales from private
placement insurance. Excluding private placement insurance, annualized life premium rose 18 percent from last year's
third quarter.
o Saw a positive impact from the State Farm distribution relationship in two ways: an increase in submitted life insurance
applications and a rise in the average life insurance face amount, which reached more than $900,000 in the third
quarter, reflecting the company's focus on the high-net-worth market.
o Successfully closed the Phoenix-Mistic 2002-1 CBO, Ltd., a $1 billion collateralized bond obligation consisting primarily of
investment grade fixed income assets. This is the largest structured product ever completed by Phoenix.
o Increased assets under management for the Investment Management segment to $53.3 billion, compared with $48.8 billion on
September 30, 2001, primarily attributable to the inclusion of Kayne Anderson Rudnick Investment Management in 2002 and
the issuance of the Phoenix-Mistic CBO, offset by negative market performance.
o Remained on track to achieve previously announced annualized expense reductions of $29 million by year-end 2002. The
company is currently assessing all of its businesses and initiatives to focus resources only on its most strategic,
profitable activities and expects to achieve meaningful additional expense reductions in 2003.
o Continued to closely monitor its investment in Aberdeen Asset Management, PLC, in light of a 60 percent decline in
Aberdeen's market capitalization during the third quarter.
o Experienced continued good performance of the company's well-diversified, high quality bond portfolio, which accounts for 72
percent of invested assets and cash, with incurred credit default losses of less than $10 million, or 8 basis points.
While current quarter credit losses were modest, bond market default rates were high by historical standards and the
company continues to carefully monitor credit quality. The insurance company's general account portfolio held $16.4
billion in invested assets and cash on September 30, 2002, compared with $15.3 billion on June 30, 2002.
Segment Results
Phoenix has two operating segments, "Life and Annuity" and "Investment Management", and two reporting segments, "Venture
Capital" and "Corporate and Other". The Corporate and Other segment includes unallocated capital, interest expense and other
expenses, as well as certain businesses not of sufficient scale to report independently. The company looks at its segment results
on the basis of operating income (loss) before amortization and taxes to focus on the earnings ability of each segment.

Third Quarter Third Quarter
2002 2001
---------------- -----------------
(in millions)
Life and Annuity $(2.0) $ 11.7
Investment Management 9.8 10.7
Venture Capital (22.1) (48.4)
Corporate and Other (12.3) (1.6)

Life and Annuity - Solid momentum in life insurance earnings was offset by several negative developments in annuities,
----------------
resulting in an operating loss before taxes of $2.0 million in the third quarter of 2002, compared with operating income of $11.7
million in the third quarter of 2001. The company maintained strong mortality and persistency and stable investment margins
within its life insurance business. In addition, the closed block continued to perform well, as evidenced by the continued
growth in the policyholder dividend obligation. Offsetting these favorable life results was a $13.5 million pre-tax acceleration
of deferred acquisition costs primarily related to the variable annuity business. The company also increased its guaranteed
minimum death benefit reserves by $2.9 million, pre-tax, on a variable annuity block of business recently acquired from CNA.
Total life insurance sales (annualized premium and single premium) were $101.8 million in the third quarter of 2002,
almost double the $52.0 million in the prior year's quarter and a record high for the company. A significant portion of the
sales were from private placement insurance. Annualized premium was $41.6 million in the third quarter of 2002, compared with
$26.7 million in the prior year's quarter, with wholesaled annualized life premium rising 18 percent from last year's third
quarter, from $19.0 million to $22.5 million.
Annuity deposits in the third quarter of 2002 were $804.2 million, compared with $235.5 million in the prior year's
quarter, dominated by the Phoenix Retirement Planner's Edge (RPE) variable annuity. New sales of RPE were discontinued during
the quarter because the product's design was not consistent with current market conditions, which prevented it from meeting the
company's profit objectives.
Excluding RPE, annuity deposits rose 36 percent from the third quarter of 2001, from $198.7 million to $270.1 million,
driven by fixed annuities and by annuity sales from State Farm advisors.
Investment Management - Operating income before amortization and taxes was $9.8 million for the third quarter of 2002,
---------------------
compared with $10.7 million in the third quarter of 2001. The current quarter includes results from the acquisition of a 60
percent interest in Kayne Anderson Rudnick Investment Management on January 29, 2002.
Assets under management for the segment on September 30, 2002 were $53.3 billion, compared with $48.8 billion on September
30, 2001. The year-over-year increase in assets is primarily attributable to the inclusion of Kayne Anderson Rudnick in 2002
and the issuance of the Phoenix-Mistic CBO, offset by negative market performance.
Net flows were $410.1 million in the third quarter of 2002, compared with negative net flows of $363.8 million in the
prior year's quarter. The improvement was driven by the Phoenix-Mistic CBO, reflected in this quarter's positive institutional
flows. Inflows totaled $3.0 billion in the third quarter of 2002, compared with inflows of $2.1 billion in the prior year's
quarter. Outflows were $2.6 billion in the third quarter of 2002, much improved from the $3.6 billion of outflows in the second
quarter of 2002 and about even with outflows of $2.5 billion in the prior year's quarter.
Venture Capital - Venture capital, which represents 1 percent of the $16.4 billion of invested assets and cash in the
---------------
general account portfolio, had a $22.1 million operating loss before taxes in the third quarter of 2002, due to the impact of the
weak equity markets. In the prior year's quarter, venture capital had an operating loss of $48.4 million. Total distributions
in the third quarter of 2002 were $19.3 million, compared with $7.8 million in the third quarter of 2001. Capital contributions
were $10.2 million in the third quarter of 2002, compared with $11.2 million in the third quarter of 2001. On September 30,
2002, venture capital assets were $230.6 million.
Corporate and Other - In the third quarter of 2002, the Corporate and Other segment had a $12.3 million operating loss
--------------------
before amortization and taxes, compared with a $1.6 million operating loss in the third quarter of 2001. The decline is due to a
reduction in corporate investment income, an increase in interest expense, and losses in international operations.
Other Developments
Through November 6, 2002, the company had repurchased 12.3 million shares of its outstanding common stock out of the 13
million shares authorized by its Board of Directors.
Conference Call
The Phoenix Companies, Inc. will host a conference call today at 11:00 a.m. Eastern time to discuss with the investment
community Phoenix's third quarter financial results. The conference call will be broadcast live over the Internet at
WWW.PHOENIXWM.COM in the Investor Relations section. To listen to the live call, please go to the Web site at least fifteen
-----------------
minutes prior to register, download and install any necessary audio software. The call can also be accessed by telephone at
973-321-1020. A replay of the call will be available by telephone at 973-341-3080 (passcode 3511816) and on Phoenix's Web site,
WWW.PHOENIXWM.COM in the Investor Relations section through November 14, 2002.
-----------------
Additional financial information can be accessed on Phoenix's Web site, WWW.PHOENIXWM.COM, in the Investor Relations
-----------------
section.
The Phoenix Companies, Inc. (NYSE: PNX) is a leading provider of wealth management products and services to individuals
and institutions. Through a variety of advisors and financial services firms, Phoenix helps the affluent and high net worth
accumulate, preserve and transfer their wealth with an innovative portfolio of life insurance, annuity and investment management
products and services. With a history dating back to 1851, The Phoenix Companies, Inc. has two principal operating subsidiaries,
Phoenix Life Insurance Company and Phoenix Investment Partners, Ltd. The company offers trust services through Phoenix National
Trust Company and private placement insurance products through Philadelphia Financial Group, both subsidiaries. Phoenix has
corporate offices in Hartford, Conn. For more information on Phoenix, visit WWW.PHOENIXWM.COM.
-----------------

Forward-Looking Statement
This release contains statements which constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. 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 rates and currency exchange rates; (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 from its subsidiaries to meet debt payment
obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (iv) regulatory,
accounting or tax changes that may affect the cost of, or demand for, the products or services of the company's subsidiaries; (v)
downgrades in the claims paying ability or financial strength ratings of the company's subsidiaries; (vi) discrepancies between
actual claims experience and assumptions used in setting prices for the products of the company's insurance subsidiaries and
establishing the liabilities of such subsidiaries for future policy benefits and claims relating to such products; (vii)
movements in the equity markets that affect our investment results including those from venture capital, the fees we earn from
assets under management and the demand for our variable products; (viii) the company's success in achieving its planned expense
reductions; and (ix) other risks and uncertainties described from time to time in the company's filings with the Securities and
Exchange Commission. The company specifically disclaims any obligation to update or revise any forward-looking statement,
whether as a result of new information, future developments or otherwise.

Exhibit 99.2

[GRAPHIC OMITTED][GRAPHIC OMITTED]

The Phoenix Companies, Inc. N E W S R E L E A S E

One American Row
PO Box 5056
Hartford CT 06102-5056
www.phoenixwm.com

For: Immediate Release

Contact: Media Relations: Jon Sandberg 860-403-5066
---------------
Investor Relations: Peter A. Hofmann 860-403-7100
------------------

The Phoenix Companies, Inc. Prices Stock Purchase Contracts Offer

HARTFORD, Conn. - November 8, 2002 - The Phoenix Companies, Inc. (NYSE: PNX) today announced it had priced its offering
of 3,150,000 stock purchase contracts to be settled in common shares of Hilb, Rogal and Hamilton Company (NYSE: HRH).
The company also granted the underwriters an overallotment option of up to 472,500 purchase contracts. The stock
purchase contracts are initially priced at $38.10 per purchase contract, and the company expects to receive aggregate net
proceeds of $115.5 million from the sales after deducting underwriting discounts and expenses. The company will not
list the purchase contracts for trading on any securities exchange.
Under each purchase contract, Phoenix will make quarterly contract adjustment payments at the rate of 7.0 percent of
the initial price per year, payable quarterly beginning on February 13, 2003. Contract holders will receive shares of
HRH from Phoenix on November 13, 2005. The number of shares to be delivered for each purchase contract on the settlement
date will range between 0.8197 shares and one share, depending on HRH's stock price during a specified period prior to
the settlement date.
The purchase contract offer is concurrent with a separate secondary offering of 1,804,000 shares of HRH common stock,
654,000 of which are being offered by Phoenix, with the remaining 1,150,000 being offered by HRH. Those shares initially
were priced at $38.10 per share. Phoenix also granted the underwriters an overallotment option of up to 266,770 shares.
Phoenix will convey the net proceeds of approximately $139.0 million from the purchase contract and common stock
sales to its subsidiary, Phoenix Life Insurance Company, which will use the proceeds for general corporate purposes.
The joint book-running managers for both offerings are Banc of America Securities LLC, Merrill Lynch & Co. and Morgan
Stanley.
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PNX Prices Stock Purchase Contracts Offer ... 2

Copies of the prospectus relating to this offering may be obtained from Banc of America Securities LLC, Prospectus
Department, 9 W. 57th Street, New York, New York 10019 (telephone: 646-733-4166), Merrill Lynch & Co., Prospectus
Department, 4 World Financial Center, New York, New York 10080 (telephone: 212-449-1000), and Morgan Stanley, Prospectus
Department, 1585 Broadway, New York, New York 10036 (telephone: 212-761-6775).
The Phoenix Companies, Inc. is a leading provider of wealth management products and services to individuals and
institutions. Through a variety of advisors and financial services firms, Phoenix helps the affluent and high net worth
accumulate, preserve and transfer their wealth with an innovative portfolio of life insurance, annuity and investment
management products and services. Phoenix has corporate offices in Hartford, Conn.
###

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