DEFA14A 1 ddefa14a.htm ADDITIONAL MATERIALS Additional Materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨ Definitive Proxy Statement
x Definitive Additional Materials
¨ Soliciting Material Pursuant to §240.14a-12

 

 

THE PHOENIX COMPANIES, INC.

 

(Name of Registrant as Specified In Its Charter)

 

 

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which the transaction applies:

 

  

 
  (2) Aggregate number of securities to which the transaction applies:

 

  

 
  (3) Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  

 
  (4) Proposed maximum aggregate value of the transaction:

 

  

 
  (5) Total fee paid:

 

  

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:

 

  

 
  (2) Form, Schedule or Registration Statement No.:

 

  

 
  (3) Filing Party:

 

  

 
  (4) Date Filed:

 

  

 

 

Commencing on March 26, 2008, certain directors and members of senior management of The Phoenix Companies, Inc. will use the slide deck set forth below in meetings with shareholders:

Investor Briefing
March 2008

1
Important Disclosures
This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which, by their nature, are subject to risks and uncertainties.
We intend for 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 our future transactions, strategies, operations and financial results, as well as other statements including, but not limited to,
words such as “anticipate,”
“believe,”
“plan,”
“estimate,”
“expect,”
“intend,”
“may,”
“should”
and other similar expressions. Forward-looking statements are made based upon our current
expectations
and
beliefs
concerning
trends
and
future
developments
and
their
potential
effects
on
us.
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
market
and
business
conditions,
interest
rates
and
the
debt
and
equity
markets;
(ii)
the
possibility
that
mortality
rates,
persistency
rates
or
funding
levels
may
differ
significantly
from
our
pricing
expectations;
(iii)
the
availability,
pricing
and
terms
of
reinsurance
coverage
generally
and
the
inability
or
unwillingness
of
our
reinsurers
to
meet
their
obligations
to
us
specifically;
(iv)
our
dependence
on
non-affiliated
distributors
for
our
product
sales,
(v)
downgrades
in
our
debt
or
financial
strength
ratings;
(vi)
our
dependence
on
third
parties
to
maintain
critical
business
and
administrative
functions;
(vii)
the
ability
of
independent
trustees
of
our
mutual
funds
and
closed-end
funds,
intermediary
program
sponsors,
managed
account
clients
and
institutional
asset
management
clients
to
terminate
their
relationships
with
us;
(viii)
our
ability
to
attract
and
retain
key
personnel
in
a
competitive
environment;
(ix)
the
poor
relative
investment
performance
of
some
of
our
asset
management
strategies
and
the
resulting
outflows
in
our
assets
under
management;
(x)
the
possibility
that
the
goodwill
or
intangible
assets
associated
with
our
asset
management
business
could
become
impaired,
requiring
a
charge
t
o earnings;
(xi)
the
strong
competition
we
face
in
our
business
from
mutual
fund
companies,
banks,
asset
management
firms
and
other
insurance
companies;
(xii)
our
reliance,
as
a
holding
company,
on
dividends
and
other
payments
from
our
subsidiaries
to
meet
our
financial
obligations
and
pay
future
dividends,
particularly
since
our
insurance
subsidiaries’
ability
to
pay
dividen
ds is
subject
to
regulatory
restrictions;
(xiii)
the
potential
need
to
fund
deficiencies
in
our
Closed
Block;
(xiv)
tax
developments
that
may
affect
us
directly,
or
indirectly
through
the
cost
of,
the
demand
for
or
profitability
of
our
products
or
services;
(xv)
other
legislative
or
regulatory
developments;
(xvi)
legal
or
regulatory
actions;
(xvii)
changes
in
accounting
standards;
(xviii)
the
potential effects of the spin-off of our asset management subsidiary on our expense levels, liquidity and third-party relationships; and (xix) other risks and uncertainties described herein or in any
of our filings with the SEC. We undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
In
managing
our
business,
we
analyze
our
performance
on
the
basis
of
“operating
income”
which
does
not
equate
to
net
income
as
determined
in
accordance
with
GAAP.
Rather,
it
is
the
measure of profit or loss used by our management to evaluate performance, allocate resources and manage our operations. We believe that operating income, and measures that are derived
from or incorporate operating income, are appropriate measures that are useful to investors as well, because they identify the earnings of, and underlying profitability factors affecting, the
ongoing operations of our business.  Operating income is calculated by excluding realized investment gains (losses) and certain other items because we do not consider them to be related to
our operating performance. The size and timing of realized investment gains (losses) are often subject to our discretion. Certain other items are also excluded from operating income if, in our
opinion, they are not indicative of overall operating trends. The criteria used to identify an item that will be excluded from operating income include: whether the item is infrequent and is material
to
our
income;
or
whether
it
results
from
a
change
in
regulatory
requirements,
or
relates
to
other
unusual
circumstances.
Items
excluded
from
operating
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. Some of these items may be significant components of net
income
in
accordance
with
GAAP.
Accordingly,
operating
income,
and
other
measures
that
are
derived
from
or
incorporate
operating
income,
are
not
substitutes
for
net
income,
or
measures
that are derived from or incorporate net income, determined in accordance with GAAP and may be different from similarly titled measures of other companies.  Within our Asset Management
segment, we also consider earnings before interest, taxes, depreciation and amortization (“EBITDA”).  Our management believes EBITDA provides additional perspective on the operating
efficiency and profitability of the Asset Management segment. EBITDA represents pre-tax operating income before depreciation and amortization of goodwill and intangibles.  Total operating
return on equity (“ROE”) is an internal performance measure used in the management of our operations, including our compensation plans and planning processes. Our management believes
that
this
measure
provides
investorswith
a
useful
metric
to
assess
our
performance
and
the
effectiveness
of
our
use
of
historic
capital.
ROE
is
calculated
by
dividing
(i)
total
operating
income,
by
(ii)
average
equity,
excluding
accumulated
OCI,
FIN
46-R
and
discontinued
operations.
Total
operating
return
on
tangible
equity
("return
on
tangible
equity")
is
also
an
internal
performance
measure
used
in
the
evaluation
of
our
operations.
Our
management
believes
that
this
measure
provides
investors
with
a
useful
metric
to
assess
our
performance
and
the
effectiveness
of
our
use
of
current
capital.
Return
on
tangible
equity
is
calculated
by
dividing
(i)
total
operating
income,
by
(ii)
average
equity,
excluding
accumulated
OCI,
FIN
46-R,
discontinued
operations
and
the
carrying
value
of
goodwill
and
intangible
assets.
More
detailed
financial
information,
including
reconciling
information
regarding
our
non-GAAP
financial
measures,
can
be
found
in
the
Appendix
hereto,
and
in
our
financial
supplement
for
the
fourth
quarter
of
2007,
which
is
available
on
our
web
site,
www.phoenixwm.com
in
the
Investor
Relations
section.
In
connection
with
our
2008
Annual
Meeting,
we
have
filed
a
definitive
proxy
statement,
BLUE
proxy
card
and
other
materials
with
the
U.S.
Securities
and
Exchange
Commission.
The
Phoenix
Companies, Inc. and its directors and executive officers are deemed to be participants in the solicitation of proxies from its shareholders in connection with our upcoming annual meeting and the
notice
we
received
from
one
of
our
shareholders.
Information
regarding
the
special
interests
of
the
directors
and
executive
officers
in
the
proposals
that
are
the
subject
of
the
meeting
is
include
d in
the
proxy
statement
that
we
have
filed.
Our
shareholders
are
strongly
advised
to
read
the
proxy
statement
filed
in
connection
with
the
annual
meeting
carefully
before
making
any
voting
or
investment decision, as it contains important information. Shareholders are able to obtain this proxy statement, any amendments or supplements to the proxy statement, along with the annual,
quarterly
and
special
reports
we
file,
for
free
at
theweb
site
maintained
by
the
Securities
and
Exchange
Commission
at
www.sec.gov
or
at
our
web
site
at
www.phoenixwm.com,
in
the
Investor
Relations
section.
In
addition,
copies
of
the
proxy
materials
may
be
requested
by
contacting
our
proxy
solicitor,
Morrow
&
Co.,
LLC,
toll-free
at
(800)
414-4313.
Banks
and
Brokers
may
call collect at (203) 658-9400.

2
Agenda
•
Profile and History of Phoenix
•
Value Creation Through Business Momentum
•
Oliver Press Campaign: Nothing New
•
Strong Governance Profile

3
Phoenix history and profile
Profile
•
Life, Annuity & Asset Management business focus
•
$1.3 billion market capitalization
History
•
PNX demutualization and IPO in June 2001 at share price of $17.50
•
Difficult economic environment after September 11, 2001, compounded by concentrated equity
market exposures drove significant financial losses in 2001 and 2002; three-notch downgrade
by
Moody’s
on
November
25,
2002
•
New CEO on January 1, 2003; share price $7.60
•
Board, CEO and strengthened management team have acted decisively in past five years to
position company for growth; 17%
1
operating EPS CAGR
Objective
•
Seek to maintain this momentum by asking shareholders to keep existing board intact and
reject Oliver Press slate
1. 2003-2007 Operating EPS; 2002 Operating EPS $(0.61); after fully dilutive effect of equity units, which converted to shares in 2006; no
share repurchases for PNX since 2002.

4
Growing business with great potential
Actions taken to strengthen Phoenix
Rebuilt balance sheet
Recreated effective infrastructure for company
-
Established risk management framework
-
Rebuilt talent pool
-
Improved expense profile
Reinvigorated growth engines of Life and Annuity business through strengthened and expanded
core distribution and products
Repaired investment and financial performance, organizational structure and net flows of Asset
Management business
Next steps to drive growth
•
Realize value through executing planned asset management spin-off
•
Enhance shareholder value through expected redeployment of closed block capital: structures in
place –
continuous review of redeployment opportunities that meet return hurdles, provide strategic
fit and support strong ratings
•
Use Operational Excellence to drive growth
•
Launch new business initiatives (Life Solutions and Alternative Financial Solutions) to enhance
growth in Life & Annuity

5
Rebuilt life company balance sheet
•
Increased statutory surplus while:
-
Supporting strong sales growth
-
Nearly $1 billion in cumulative
annualized life premium
-
$2.4 billion in cumulative annuity
deposits
-
Making $80.5 million in pension plan
contributions
-
Paying $284.5 million in dividends to
holding company
•
Increased RBC at even greater pace
-
Disposed of almost $1 billion in high-risk,
non-strategic assets
-
Discontinued sale of low-profit, capital-
intensive products
$1,040.7
$961.5
2003
2007
2003
2007
310%
419%
PLIC Risk-Based Capital Ratio
PLIC Statutory Surplus + AVR
$ in millions

6
Life & Annuity business vibrant and growing
•
Successfully established partnerships with key
insurance/annuity distributors
-
State Farm
-
National Life Group
-
Jefferson National
-
Brokerage General Agent channel
•
Improved service and operations to meet distribution
partner needs
•
Improved open block operating earnings almost eight-fold
between 2003 and 2007 ($19.3 million to $148.7 million
pre-tax)
•
Continued consistent growth at State Farm
-
10,600 agents enrolled to sell Phoenix products;
penetration has grown to approximately 50% with
significant upside remaining
-
Life sales: $51 million; up 15% from 2006 and
targeting $100 million by 2010
-
Annuity deposits: $391 million, up 43% from 2006
-
Cumulative sales of $290 million in life premium and
$1.2 billion in annuity deposits
-
Shareholder since IPO, with approximate 5.1%
ownership, publicly stated support for existing Board
and management
$352
$259
$137
$117
$81
2003
2004
2005
2006
2007
$627
$620
$423
$313
$415
2003
2004
2005
2006
2007
36%
51%
1. Life and annuity sales exclude private placements.
2. Annuity deposits exclude discontinued products.
Life Sales
Annualized Premium¹
Annuity Deposits
1, 2
$ in millions

7
Earnings and credit profile materially stronger
Return on Equity
2001
2002
2003
2004
2005
2006
2007
2001
2002
2003
2004
2005
2006
2007
Operating Income
$59.8
$78.9
$100.6
$135.3
3.0%
4.2%
5.0%
5.6%
2001
2002
2003
2004
2005
2006
2007
Interest Coverage
4.8x
5.7x
3.9x
4.3x
4.6x
$ in millions
3.9%
$87.1
22.5%
20.2%
26.2%
25.5%
24.9%
25.0%
20.5%
2001
2002
2003
2004
2005
2006
2007
6.675% senior notes matured 02/08
Debt / Capital
16.0%
Net Income      $(215.2)   $(272.3)   $(6.2)     $86.4    $108.4
$99.9    $123.9
$(59.4)
$(74.6)
(3.5)%
(2.9)%
(1.6)x
1.3x

8
Significant accomplishments in 2007
•
Extended State Farm contract to
2016, five additional years
•
Entered BGA distribution channel
with strong results
•
Agreed with National Life Group  to
promote Phoenix variable annuities
and add their Sentinel Funds
•
Agreed with Jefferson National to
develop a low-cost, no-load
variable annuity aimed at the fee-
based advisor market
•
Formed two new businesses: Life
Solutions and Alternative Financial
Solutions
•
Record operating income of $135.3
million; 22% CAGR since 2003
•
Record Life & Annuity pre-tax
operating earnings of $215.7
million
•
Record life sales of $425 million
•
Record mutual fund sales of $3.6
billion
•
51% year-over-year growth in
annuity deposits to $627 million
•
5.6% ROE; 7.9% return on tangible
equity
Business Highlights
Results

9
Asset management stabilized and rebuilt
A.U.M. ($bn)
EBITDA
($mm)
Significant 
restructuring
efforts undertaken
in PXP
2003                 2004
2005
2006
2007
•
Purchased
Capital West
minority
interest
•
Purchased
Walnut minority
interest
•
SASCO
adoption
•
Purchased KAR
minority interest
•
Purchased
Seneca minority
interest
•
Vontobel
adoptions
•
Sub-advisory
strategy
•
Harris Insight
funds adoption
•
7 fund mergers
•
6 fund
liquidations
•
7 fund mergers
•
3 fund
liquidations
Performance
1
1-Yr
32%
36%
43%
68%                         57%
3-Yr
45%
39%
39%
66%
61%
5-Yr
63%
63%
60%
68%                         60%
1. Percentage of funds exceeding their benchmarks for each time period.
$27.2
$36.1
$35.0
$36.9
$38.9
$46.3
$42.9
$37.4
$45.0
$42.5
Net Income ($mm)          $(9.7)                     $(1.6)    
$(14.4)                     $(25.8)             
$3.6
Net Flows ($bn)             $(1.2)                     $(6.6)  
$(5.6)                      $(4.0)           
$(0.5)

10
The right time to spin off PXP
•
PXP strategically well-positioned
Multi-boutique asset manager; flexible with diverse investment and distribution capabilities
Retail fund platform has broad, balanced product offerings, including high-quality sub-advisory
relationships
Strong investment performance across a variety of products
Broad and powerful distribution access to all major wirehouses and platforms
Innovative product development capabilities and management team (e.g., “Diversifier”)
Continuing growth in revenue and scale benefits would support margin upside
Alignment of ownership and incentives of managers and shareholders through planned spin-off
•
Benefits of planned spin-off
-
Can be catalyzing event for Asset Management
-
Both businesses can focus exclusively on their own strategies
-
Positive ROE impact for the new Phoenix
-
Marketplace can value each business independently; clarifies obscured value of asset
management business
-
Expense
structure of each company can be appropriately sized, eliminating excess overhead

11
Illustrative impact of planned spin-off
Shareholders
Asset Management SpinCo
The Phoenix Companies, Inc.
Book Value
$1,693
$14.82
Operating Income
2
$134
$1.16
Return on Equity
7.5%  
Aggregate  Per Share
1
AUM
$40.4 bn
Revenues
$203.2
EBITDA
3
$37 -
$42
$ in millions, except per share
1. Book value per basic shares outstanding (114.3 million); operating earnings per average diluted shares outstanding (116.0 million).
2. Phoenix 2007 operating earnings less SpinCo operating earnings.
3. Excludes Goodwin’s 2007 EBITDA of approximately $5 million, and is adjusted to reflect a new expense structure for the independent company.
Note:  Numbers are for purposes of illustration and are not a guarantee of actual results.
Phoenix figures reflect expected illustrative impact of planned PXP spin-off at December 31, 2007,
including
adjustment
to
stockholders’
equity
and
reduction
in
operating
earnings.
We
intend
to
eliminate remaining allocated corporate expenses in the next 18 to 24 months while the figures above
assume that remaining allocated corporate expenses are eliminated immediately.

12
Closed block: a significant opportunity for
enhancing shareholder value
•
Created at time of demutualization to segregate
assets and liabilities of participating
policyholders
•
Significantly larger structural constraint than
other demutualizations: largest closed block as
a percentage of general account assets
•
Currently represents 32% of GAAP equity with
very stable mid-single-digit returns
•
Significant opportunity to enhance returns
through effectively executed capital
redeployment
22%
17%
27%
29%
52%
Phoenix
Metlife
John
Hancock
Prudential
AmerUs
Closed Block Assets as a %
of General Account Assets at IPO

13
Closed block: a valuable asset to be
deployed strategically
•
Have continuously and actively assessed
monetization opportunities since 2002
-
Rating agency views on leverage treatment
have evolved
-
Market developments have positioned us to
monetize using several different techniques
-
Strengthened balance sheet and core earnings
growth create basis for transformational action
•
Focus on potential uses of proceeds that:
-
Meet return hurdles
-
Maintain soundness of the block and support
core business
-
Meet rating agency requirements
•
Unwilling to settle for sub-optimal use of proceeds
-
Rating agencies hesitant to endorse share
repurchases
-
Need to remain disciplined with respect to
acquisitions
Moody’s, May 2003
Phoenix recently announced that it will not
implement a securitization of Phoenix Life’s closed
block related assets at this time.  While such a
transaction might have improved the company’s
overall liquidity position, Moody’s would have
treated the proceeds of such a transaction as an
increase in PNX’s overall financial leverage.
Standard & Poor’s, April 2007
…the potential monetization of its closed block
provides for significant financial flexibility.
Redeployment of proceeds would be expected to go to
the life and annuity lines of business and not to a
share repurchase program.
Moody’s, March 2006
Phoenix has publicly stated that a key 2006 corporate
objective is to consider monetizing the closed block in an
effort to improve the company's overall ROE. Such an
effort, if successful, could considerably raise the overall
ROE of the life and annuity segment since the closed block
requires almost half of the segment's total capital
allocation. At this time, Moody's is unable to evaluate the
potential credit effects of such a possibility since no
specific transaction has yet been proposed. The use of the
proceeds from the closed block's monetization would be an
important consideration in Moody's evaluation of such a
transaction.

14
Opportunities to drive growth in earnings
Operational Excellence
•
Combines Lean and strict expense discipline to meet goal of providing high-quality products
and services to customers and distribution partners, delivered cost effectively and with speed
•
2008 Goal: $15-$20 million increase in pre-tax earnings related to operating efficiencies
New Businesses in Life and Annuity
•
Alternative Financial Solutions
-
Extends
features
of
life
and
annuity
products
to
other
financial
products
•
Guaranteed
Retirement
Income
Solution:
provides
annual
stream
of
income
for
life
•
Longevity Product: provides protection against outliving one’s assets
•
Life Solutions
-
Initially will participate in originations of life settlements as well as in the institutional arena

15
Key initiatives and goals
•
Increase pre-tax operating earnings
$15-$20 million through Operational
Excellence
-
Building on operating expense
reductions of $108 million from
2004-2006
•
Continue to invest in Life & Annuity
growth through:
-
New and expanded distribution
initiatives
-
New businesses: Life Solutions &
Alternative Financial Solutions
•
Complete planned spin-off
•
Implement expense rationalization
resulting from planned spin-off
•
Continue to seek appropriate uses of
proceeds for a closed block
monetization
•
Double-digit ROE: 10% by 2010
•
Double-digit CAGR in operating EPS,
2008-10
•
Top 10 life insurance company in
sales
•
Top 20 seller of variable annuities
2010
2008

16
Executive compensation
Compensation aligns with shareholder interests
•
In 2003, the Board established pay-for-performance
policy with overhaul of long-term and short-term plans
-
Heavily weighted total comp to variable pay
-
ROE improvement key metric
-
LTI plan paid in performance RSUs
-
Aggressive targets: LTI paid in 2 of last 5 years,
Annual plan paid in 3 of last 5 years
•
Executive compensation targets market levels
-
Compensation targeted at levels based on 12
smaller life insurance companies in Diversified
Insurance Study of Executive Compensation
(“DIS”)
•
Between 2002 and 2007, reduced number of change
in control agreements by 75%
-
Terms are aligned to current and emerging
market practice
CEO Compensation
•
80% of targeted compensation through
performance-based incentives
•
Actual compensation below target for 2 out of
last 5 years
•
2007 compensation of $4.9 million reported in
proxy reflects accruals of time-vested and
performance-contingent
awards,
change
in
pension value and non-qualified deferred
compensation
earnings,
and
includes
the
following:
Salary
$950,000
2007 Annual incentive
$1,923,000
Long-term incentive
$0
Other compensation
$144,143

17
The Oliver Press campaign: no new ideas
“Deal with
Cost
Structure”
Monetize Closed
Block
Undertake
Strategic Review
The Facts
Oliver Press Criticisms
•
Company should undertake a
“complete strategic review”
focused on capital deployment
•
PNX Board has reviewed, and continues to
actively and thoroughly review, strategic and
financial options, with input from advisors
•
Reviews resulted in critical strategic initiatives,
including, most recently, planned spin-off of PXP
•
”We believe there are several
possible transactions that
would serve the dual purpose
of raising the claims-paying
(“financial strength”) rating for
these policies and produce
higher returns for
stockholders.”
•
PNX has already been actively exploring closed
block alternatives with advisors
•
PNX has put structures in place and will execute
the optimal alternative deliberately and
expeditiously
•
Oliver Press acknowledges they have no new
ideas for a closed block transaction
•
Rating agencies have affirmed that use of
proceeds will determine rating impact
•
Company should take
“aggressive steps”
to “deal
with”
operating expenses
•
Various aggressive expense reduction initiatives
implemented since 2002 resulting in 30% head
count reduction, including sale of career agency
force, outsourcing IT infrastructure while building
for long-term value
•
Operating expenses reduced by $108 million 2004-
2006; additional expense reductions to be
implemented in 2008 as part of Operational
Excellence
Oliver Press “proposals”
lag PNX Board’s actions to enhance shareholder value

18
Oliver Press criticisms mischaracterize facts
Executive
Compensation
Operating
Expenses
•
Phoenix cost structure is
“out of step”
with
comparable companies
•
We believe that the $90 million in expense
reductions Oliver Press has spoken about are
unrealistic
•
Comparisons with companies with different
products, distribution and customers are not
meaningful
•
PNX recently engaged Deloitte to conduct an
expense review that suggested an approximately 
$30 million annual reduction would bring the
corporate
expense
structure
to
a
“bare
bones”
level
•
Compensation not
aligned with performance
•
PNX compensation plan rigorously tied to ROE
benchmarks (0.1% miss in long-term targets in ’02-’04
resulted in no payout).
•
Misleading characterization: $22 million relates to 27
years of prior service ($13 million pension benefit; $9
million to deferred compensation, savings plans, and
RSUs)
•
Standard supplemental pension plan is broad-based,
covering almost 400 participants; 27 SVPs or above
•
Phoenix believes transparent disclosure in
compliance with SEC requirements is in the interest of
all shareholders
•
$49 million combined
compensation change-in-
control package for CEO
•
$141 million “special
pension account”
•
43 pages of disclosure
on executive
compensation
The Facts
Oliver Press Criticisms

19
Oliver Press criticisms mischaracterize facts
Stock Price
Ratings
•
“Since 2001 company has had no
fewer than 5 downgrades”
•
Significant challenges in first 18 months
as public company –
ended 2002 at $7.60
•
Appreciated 109% 2003-2006 to $15.89
•
Despite record earnings, 2007 a
challenging year for PNX shares
•
Remains up substantially in current CEO
tenure (up 60% through 3/25/08)
•
Outperformed S&P Life Index since
planned spin-off announced
The Facts
Oliver Press Criticisms
•
Mostly old news; only S&P has acted
since April 2005
•
Maintained A rating with AM Best since
1993
•
Positive momentum with agencies
including recent outlook change to
positive at AM Best
•
Agencies acknowledge Phoenix’s
improvement through:
-
Continued strong balance sheet
-
Continued earnings expansion
-
Elimination of ratings negatives
-
Use of closed block proceeds
•
“The company’s stock is trading
approximately 38% lower today
than its public offering price
nearly seven years ago”

20
Adding risk to Phoenix’s business
Disruptive of
Spin-off and
Strategic Review
Process
Questions
Regarding Long-
Term Focus
Relationships with
Key
Constituencies
•
State Farm
-
In 2007, 14% of PNX life sales and 62% of annuity deposits
-
5.1% owner of PNX stock, with long-term perspective
-
Publicly expressed concerns regarding Oliver Press’s disruption of Phoenix’s
business and strategy
•
“Aggressive”
cost reduction approach suggested by Oliver Press could
-
Negatively impact company
-
Raise concerns with distribution partners and policyholders
-
Undermine growth initiatives
•
Oliver Press has failed to provide specifics on closed block alternatives
•
Phoenix currently executing the planned PXP spin-off and determining the best
alternative for closed block monetization
•
Oliver Press is running a distracting proxy fight in an attempt to oust qualified
and experienced directors
•
There is a risk of significant slow-down or disruption of critical strategic
initiatives
•
Oliver Press rhetoric provides ammunition for competitors, potentially resulting
in lost sales and higher surrenders
Oliver Press “proposals”
seem to add risk to our business

21
Phoenix commitment to strong governance
Actively Engaged
Highly Rated
Fresh Perspectives
Independent
Oversight
•
12 out of 13 directors are independent
•
Lead independent director chairs Executive Committee, conducts all
meetings of independent directors, can call a meeting of the Board
•
Independent directors meet without CEO
•
Five directors added since IPO while shrinking board from 17 to 13,
including the removal of three inside directors
•
Three directors, or ~25% of board, added in past three years
•
ISS CGQ scores:
-
99% v. Russell 3000
-
95% v. Insurance Peers
•
All committees except Executive Committee comprised solely of
independent directors
•
Executive Committee chaired by lead independent director with CEO
serving as member
•
Five regularly scheduled board meetings per year through 2007; six per
year starting in 2008
•
Committee meetings: 22 in person; 23 telephonic in 2007
•
Frequent informal dialogue among directors

22
Phoenix directors: the right choice
•
PNX directors have proactively undertaken initiatives to resolve
performance and structural issues, the same initiatives Oliver Press is
calling for
Key Initiatives
•
PNX directors have the support of major shareholders, including State
Farm, our largest shareholder and an important business partner
Support of Key
Constituents
•
PNX
directors
initiated
a
meeting
with
Oliver
Press
after
Oliver
Press
disclosed its concerns following its several meetings with
management.  Directors have remained open to a constructive
dialogue with them
•
Governance Committee considered and evaluated Oliver Press’s
nominees consistent with past practices
Responsive to
Shareholders
Phoenix’s directors are actively involved in driving the business, have the
support of major shareholders and are responsive to shareholder concerns

23
Phoenix directors:
deep experience, independence & continuity
Alfiero
Haire
Johnson
•
Shares: 208,667
•
Director since 1988
•
Previous lead
director
•
Financial/audit
experience
•
Director HSBC
•
Shares: 45,114
•
Director since 1999
•
Extensive media/
internet expertise
•
Former publisher of
TIME
•
Shares: 61,312
•
Director since 2000
•
Former Chairman/
CEO Greenpoint
•
Financial/audit
experience
•
Director Freddie Mac
Oliver
Clinton
Santillo
•
Indirect beneficial
ownership of shares
through Oliver Press:
5,688,206
•
No prior financial
services company
experience
•
Hedge fund principal
•
Shares: 10,000
(1/23/08)
•
No public company
board experience
•
P&C insurance
company
experience; no life
insurance
experience
•
Shares: 10,000
(1/24/08)
•
No public company
board experience
•
Former insurance
executive
•
Not actively
employed
Oliver Press
Nominees
Phoenix
Directors
Note: Phoenix director holdings include restricted stock units.

24
Summary: “New blood”
–
Can it hurt?
•
Phoenix’s
core
life
business
is
sensitive
to
the
stability
and
strength
of
the
company
–
real
and
perceived.  Distribution partners, independent agents and current and prospective policyholders
are primarily concerned with the long-term ability of the company to meet its promises to
policyholders and stability of company
•
The current board has effectively steered the turnaround of the company through external and
internal challenges, driving significant financial improvement and business growth that positions
the company for enhanced shareholder returns
•
Phoenix is not a large company, but its structural and legacy challenges are complex beyond its
size; thoughtfulness, a longer-term perspective and experience are key for realizing the potential
for increased shareholder value
•
The
current
board
has
taken
significant
transformational
actions
when
they
were
supported
by
sound strategic reasons: a prime example is the sale of the company’s career life insurance
agency force
•
Governance at Phoenix is working: governance scores are excellent, director independence
unassailable.  There have been regular additions of new board members.  Compensation
practices
have
been
continually
enhanced
and
recalibrated
to
the
market
–
they
are
performance-based, grounded in competitive analysis and aligned with shareholders

25
Vote Your Blue
Proxy Card
Experience
Phoenix Directors
Constructive
Strategic Plan
Building Long-
Term Value
Disruption
& Cost
Increased Risk
Extracting Short-
Term Value
Oliver Press Nominees

Appendix

27
Reconciliation of Income Measures
$ in millions
December 31,
2001
2002
2003
2004
2005
2006
2007
Total Operating Income
(74.6)
(59.4)
59.8
78.9
100.6
87.1
135.3
Net Realized Investment Gains
(43.0)
(39.3)
3.2
11.8
25.5
21.8
(8.9)
Realized Gains (Losses) -
Investments Pledged as Collateral Consolidated Under FIN 46-R
(12.5)
(26.3)
(2.4)
(12.9)
1.3
(1.0)
1.0
Realized and Unrealized Gains (Losses) on Equity Investment in Aberdeen
-
-
(55.0)
55.9
(7.0)
Share of Aberdeen's Extraordinary Charge for FSA Settlement
-
-
-
(14.7)
Surplus Notes Tender Costs
-
-
-
(6.4)
Management Restructuring and Early Retirement Costs
(15.5)
(28.5)
(8.4)
(21.9)
(12.5)
(9.1)
Other, Demutualization Related Items
(55.7)
13.8
Other income
5.3
-
1.3
Income (Loss) from Continuing Operations
(196.0)
(139.7)
(1.5)
90.7
107.9
98.8
127.4
Income (Loss) from Discontinued Operations
(2.6)
(2.3)
(4.7)
(4.3)
0.5
1.1
(3.5)
Income (Loss) before Cumulative Effect of Accounting changes
(198.6)
(142.0)
(6.2)
86.4
108.4
99.9
123.9
Cumulative Effect of Accounting changes
(16.6)
(130.3)
-
-
-
-
-
Net Income (Loss)
(215.2)
$       
(272.3)
$       
(6.2)
$           
86.4
$        
108.4
$    
99.9
$       
123.9
$   

28
Reconciliation of Operating Income to EBITDA
$ in millions
December 31,
2003
2004
2005
2006
2007
Asset Management Pre-tax Operating Income (Loss)
(8.7)
$        
0.1
$         
(10.5)
$      
(28.6)
$      
7.4
$        
Adjustments for:
Intangible asset amortization and impairments
33.2
33.8
43.8
64.5
30.4
Depreciation
2.7
2.2
1.7
1.0
1.1
EBITDA
27.2
$       
36.1
$       
35.0
$       
36.9
$       
38.9
$      

IMPORTANT INFORMATION REGARDING THE SOLICITATION AND

PARTICIPANTS THEREIN

In connection with its 2008 Annual Meeting, The Phoenix Companies, Inc. has filed a definitive proxy statement, BLUE proxy card and other materials with the U.S. Securities and Exchange Commission. The Phoenix Companies, Inc. and its directors and executive officers may be deemed to be participants in the solicitation of proxies from its shareholders in connection with our upcoming annual meeting and the notice we received from one of our shareholders. Information regarding the special interests of the directors and executive officers in the proposals that are the subject of the meeting is included in the proxy statement that we have filed. The Phoenix Companies, Inc.’s shareholders are strongly advised to read the proxy statement filed in connection with the annual meeting carefully before making any voting or investment decision, as it contains important information. Shareholders are able to obtain this proxy statement, any amendments or supplements to the proxy statement, along with the annual, quarterly and special reports we file, for free at the web site maintained by the Securities and Exchange Commission at www.sec.gov or at our web site at www.phoenixwm.com, in the Investor Relations section. In addition, copies of the proxy materials may be requested by contacting our proxy solicitor, Morrow & Co., LLC, toll-free at (800) 414-4313. Banks and Brokers may call collect at (203) 658-9400.

FORWARD-LOOKING STATEMENTS

The discussion herein may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for 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 our future strategies, operations and financial results, as well as other statements including, but not limited to, 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 us. 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 market and business conditions, interest rates and the debt and equity markets; (ii) the possibility that mortality rates, persistency rates or funding levels may differ significantly from our pricing expectations; (iii) the availability, pricing and terms of reinsurance coverage generally and the inability or unwillingness of our reinsurers to meet their obligations to us specifically; (iv) our dependence on non-affiliated distributors for our product sales, (v) downgrades in our debt or financial strength ratings; (vi) our dependence on third parties to maintain critical business and administrative functions; (vii) the ability of independent trustees of our mutual funds and closed-end funds, intermediary program sponsors, managed account clients and institutional asset management clients to terminate their relationships with us; (viii) our ability to attract and retain key personnel in a competitive environment; (ix) the poor relative investment performance of some of our asset management

strategies and the resulting outflows in our assets under management; (x) the possibility that the goodwill or intangible assets associated with our asset management business could become impaired, requiring a charge to earnings; (xi) the strong competition we face in our business from mutual fund companies, banks, asset management firms and other insurance companies; (xii) our reliance, as a holding company, on dividends and other payments from our subsidiaries to meet our financial obligations and pay future dividends, particularly since our insurance subsidiaries’ ability to pay dividends is subject to regulatory restrictions; (xiii) the potential need to fund deficiencies in our Closed Block; (xiv) tax developments that may affect us directly, or indirectly through the cost of, the demand for or profitability of our products or services; (xv) other legislative or regulatory developments; (xvi) legal or regulatory actions; (xvii) changes in accounting standards; (xviii) the potential effects of the spin-off of our asset management subsidiary on our expense levels, liquidity and third-party relationships; and (xix) other risks and uncertainties described herein or in any of our filings with the SEC. We undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.