10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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

For the fiscal year ended December 31, 2008

OR

o 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 incorporation or organization)	(I.R.S. Employer Identification No.)
One American Row, Hartford, Connecticut	06102-5056
(Address of principal executive offices)	(Zip Code)
(860) 403-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common stock, $.01 par value	New York Stock Exchange
7.45% Quarterly Interest Bonds, due 2032	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   YES o    NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   YES o    NO þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES þ    NO o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES o    NO þ

As of June 30, 2008, the aggregate market value of voting common equity held by non-affiliates of the registrant was approximately $0.9 billion based on the last reported sale price of $7.61 per share of the common stock on the New York Stock Exchange on that date. On February 13, 2009 the registrant had 115.4 million shares of common stock outstanding; it had no non-voting common equity.

DOCUMENTS INCORPORATED BY REFERENCE

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

TABLE OF CONTENTS
Part I			Page
Item 1.	Business		3
Item 1A.	Risk Factors		10
Item 1B.	Unresolved Staff Comments		20
Item 2.	Properties		20
Item 3.	Legal Proceedings		20
Item 4.	Submission of Matters to a Vote of Security Holders		20
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
	Equity Securities		21
Item 6.	Selected Financial Data		22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		60
Item 8.	Financial Statements and Supplementary Data		61
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		61
Item 9A.	Controls and Procedures		61
Item 9B.	Other Information		62
Part III
Item 10.	Directors, Executive Officers and Corporate Governance		63
Item 11.	Executive Compensation		64
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		64
Item 13.	Certain Relationships and Related Transactions, and Director Independence		66
Item 14.	Principal Accounting Fees and Services		66
Part IV
Item 15.	Exhibits, Financial Statement Schedules		67
Signatures		68
Exhibit Index		E-1

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

PART I

Item 1.

Business

Description of Business

We provide life insurance and annuity products through a variety of third-party financial professionals and intermediaries, supported by wholesalers and financial planning specialists employed by us. These products and services reflect a particular focus on the high-net-worth and affluent market. Our life insurance product line is focused on permanent life insurance (universal and variable universal life) insuring one or more lives, but we also offer a portfolio of term life insurance products. Our annuity products include deferred and immediate variable annuities with a variety of death benefit and guaranteed living benefit options.

In the first quarter of 2009, we announced a strategic repositioning of our business. We intend to build our future business by leveraging existing manufacturing strengths and partnering capabilities in ways that will be less capital intensive and ratings sensitive. We have developed a three-pronged strategy that shifts the focus of new business development to private labeling, expanding alternative retirement product offerings, and developing new distribution channels for core product offerings.

On December 31, 2008, we completed the spin-off of our asset management business through a distribution of common stock of our majority-owned subsidiary, Virtus, formerly known as Phoenix Investment Partners, Ltd., to our shareholders. See “Spin-Off of Asset Management Business” below for additional information. Prior to the spin-off of Virtus, we operated two businesses and reported our results in two corresponding operating segments—Life and Annuity and Asset Management. In addition to the two segments, we separately reported results for corporate operations that were not allocated to business segments. As of December 31, 2008, we report our results in one reporting unit. In this Annual Report on Form 10-K, we have presented results for all periods in conformity with this revised reporting unit structure.

SUMMARY OF BUSINESSES December 31, 2008
Market Presence		Distribution Channels		Products Offered
·	$62.3 billion of net life insurance	·	National and regional broker-dealers	·	Universal life insurance
	in force	·	Financial planning firms	·	Variable universal life insurance
·	$6.9 billion of annuity assets	·	Advisor groups	·	Term life insurance
	under management	·	Insurance companies	·	Variable annuities
		·	Brokerage general agencies	·	Immediate annuities
Principal operating subsidiaries:		·	Banks	·	Private placement life insurance
·	Phoenix Life Insurance Company				and annuities
·	PHL Variable Insurance Company
·	AGL Life Assurance Company

Our business offers a variety of life insurance and annuity products through third-party distributors. We believe our competitive advantage includes:

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competitive and innovative products;

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underwriting and mortality risk management expertise;

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partnering capabilities; and

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value-added support provided to distributors by our wholesalers and operating personnel.

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Products

Life Products

Our life insurance products include universal life, variable universal life, term life and other insurance products. We offer single life, first-to-die and second-to-die products. Under first-to-die policies, up to five lives may be insured with the policy proceeds paid after the death of the first of the five insured lives. Second-to-die products are typically used for estate planning purposes and insure two lives rather than one, with the policy proceeds paid after the death of both insured individuals.

Universal Life: Universal life products provide insurance coverage and may allow the policyholder to increase or decrease the amount of death benefit coverage over the term of the policy. They also may allow the policyholder to adjust the frequency and amount of premium payments. Premiums, net of expenses, and the resulting accumulated account balances are allocated to our general account for investment. The policyholder’s account earns interest at rates determined by us, subject to certain minimums. Specific charges are made against the account for expenses. We retain the right within limits to adjust the fees we assess for providing administrative services. We also collect fees to cover mortality costs; these fees may be adjusted by us but may not exceed contractual limits.

Some universal life products provide secondary guarantees that protect the policy’s death benefit even if there is insufficient value in the policy to pay the monthly charges and mortality costs. These secondary guarantees are provided through a “shadow account” design, which provides for a monthly test that determines if the policy will remain in effect when the policy’s cash value is insufficient to cover monthly charges. In 2008, 10% of universal life sales contained secondary guarantees.

We also offer an indexed universal life product that provides death benefit protection and the opportunity to invest policy value in any combination of three different accounts. It can be allocated to a fixed account that earns interest at a declared rate or in two indexed accounts that earn an annual index credit based on the positive performance of the S&P 500 Index.

Variable Universal Life: Like universal life products, variable universal life products provide insurance coverage and may allow the policyholder to increase or decrease the amount of death benefit coverage over the term of the policy. They also may allow the policyholder to adjust the frequency and amount of premium payments. Premiums, net of expenses, and the resulting accumulated account balances may be directed into a variety of separate investment accounts (accounts that are maintained separately from the other assets of the Life Companies) or into the general accounts of the Life Companies. In separate investment accounts, the policyholder bears the entire risk of the investment results. We collect fees for the management of these various investment accounts and the net return is credited directly to the policyholder’s accounts. Account balances invested in the general account earn interest at rates determined by us, subject to certain minimums. Specific charges are ma de against the accounts for expenses. We retain the right within limits to adjust the fees we assess for providing administrative services. We also collect fees to cover mortality costs; these fees may be adjusted by us but may not exceed contractual limits.

With some variable universal products, maintaining a certain premium level provides the policyholder with guarantees that protect the policy’s death benefit if, due to adverse investment experience, the policyholder’s account balance is zero.

Term Life: Term life insurance provides a guaranteed benefit upon the death of the insured within a specified time period, in return for the periodic payment of premiums. Specified coverage periods range from one to 30 years, but not longer than the period over which premiums are paid. Premiums may be level for the coverage period or may vary. Term insurance products are sometimes referred to as pure protection products, in that there are normally no savings or investment elements. Term contracts generally expire without value at the end of the coverage period. Our term insurance policies allow policyholders to convert to permanent coverage within a limited period of time, generally without evidence of insurability.

We offer a return-of-premium rider on many of our term products. In exchange for higher periodic premium payments, this rider provides for the return of cumulative premiums paid, for both the term insurance coverage and rider, at the end of the specified coverage period (e.g., 10, 20 or 30 years). After a specified number of years, the policyholder can terminate coverage prior to the end of the specified coverage period and receive a portion of the cumulative premiums paid.

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Annuity Products

We offer a variety of variable annuities to meet the accumulation and preservation needs of the affluent and high-net-worth market. Deferred annuities, in which funds accumulate for a number of years before periodic payments begin, enable the contract owner to save for retirement and provide options that protect against outliving assets during retirement. Immediate annuities are purchased by means of a single lump sum payment and begin paying periodic income immediately.

Deposits, net of expenses, may be directed into a variety of separate investment accounts (accounts that are maintained separately from the other assets of the Life Companies) or into the general accounts of the Life Companies. In separate investment accounts, the contract owner bears the entire risk of the investment results. We collect fees for the management of these various investment accounts and the net return is credited directly to the contract owner’s accounts. Account balances invested in the general account earn interest at rates determined by us, subject to certain minimums. Specific charges are made against the accounts for expenses. We retain the right within limits to adjust the fees we assess for providing administrative services.

We also offer a single-premium deferred equity index annuity registered with the Securities and Exchange Commission (“SEC”), featuring a choice of three equity-indexed accounts and a fixed account. Each of the indexed accounts earns an annual index credit based on the positive performance of the S&P 500 Index.

Contract owners also may elect certain enhanced living benefit guarantees, for which they are assessed a specific charge. For example, our guaranteed minimum withdrawal benefit (“GMWB”) option guarantees an income stream for the lifetime of the contract owners and their spouses. Our major sources of revenue from annuities are mortality and expense fees charged to the contract owner, generally determined as a percentage of the market value of any underlying separate account balances, and the excess of investment income over credited interest for funds invested in our general account. We also earn a portion of the fees we collect for the management of the various investment accounts.

Other Products and Services

Life and Annuity also focuses on other products and services that respond to the affluent and high-net-worth market’s demand for wealth management solutions.

For example, many of our products are designed to be used by corporations to fund special deferred compensation plans and benefit programs for key employees, commonly referred to as executive benefits. In addition, our products can be applied to a number of situations to meet the sophisticated needs of business owners and individuals, including for charitable giving.

In 2007, we established the Alternative Retirement Solutions unit to develop innovative ways to extend features of life insurance and annuity products to other financial products to help meet the retirement income needs of consumers. In 2008, we were the first company to launch a hybrid insurance/investment product, which wraps a lifetime income guarantee around an investor’s managed account assets.

Our private placement life and annuity products, which we sell through Philadelphia Financial Group, our wholly owned private placement distributor, are individually customized life and annuity offerings that include single life, second-to-die life and variable annuity products. These products have minimum deposits of $500,000, targeting the wealthiest segment of the high-net-worth market.

Underwriting and Mortality Risk Management

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

We believe we have particular expertise in evaluating the underwriting risks relevant to our target market. We believe this expertise enables us to make appropriate underwriting decisions, including, in some instances, the issuance of policies on more competitive terms than other insurers would offer. Phoenix Life has a long tradition of underwriting innovation. In 1955, we were the first insurance company to offer reduced rates to women. We were among the first companies to offer reduced rates to non-smokers across all policy lines, beginning in 1967. In 2006, we became the first insurer to offer premium discounts over time for policyholders who maintain a healthy weight in the years after the initial underwriting

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decision. Our underwriting team includes doctors and other medical staff to ensure, among other things, that we are focused on current developments in medical technology.

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

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

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

Reinsurance

While we have underwriting expertise and have experienced favorable mortality trends, we believe it is prudent to spread the risks associated with our life insurance products through reinsurance. As is customary in the life insurance industry, our reinsurance program is designed to provide for greater diversification of business, control exposure to potential losses arising from large risks and provide additional capacity for growth.

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

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

The following table lists our five principal life reinsurers.

Principal Life Reinsurers:	As of December 31, 2008
	Reinsurance		Face Amount of		Reinsurer’s
	Receivable		Life Insurance		A.M. Best
	Balances		Ceded		Rating
	($ in millions)		($ in billions)
RGA Reinsurance Company	$	170.0	$	30.4	A+
Swiss Re (US) Inc.(1)	$	138.9	$	13.7	A+
AEGON USA(2)	$	110.3	$	18.9	A+
Munich American	$	63.6	$	4.6	A+
Scottish Re(3)	$	59.4	$	8.4	C-

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⁽¹⁾

Swiss Re includes Reassure America.

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Note Transamerica Financial and Transamerica Occidental Life are both subsidiaries of AEGON.

⁽³⁾

Scottish Re (US) rating as of December 31, 2008 was C-. Rating as of February 27, 2009 is E (under regulatory supervision).

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Distribution and Support Services

We maintain a broad range of distribution relationships, having built relationships with distributors who are, or who have access to, advisors to the affluent and high-net-worth market.

State Farm: Our relationship with a subsidiary of State Farm Mutual Automobile Insurance Company (“State Farm”) to provide our life and annuity products and related services to State Farm’s affluent and high-net-worth customers, through qualified State Farm agents began in 2001. We have historically been the only third-party provider of life and annuity products and services at State Farm, and State Farm’s only provider of variable life and annuity products. By the end of 2008, we had trained and certified approximately 11,025, or 98%, of State Farm’s approximately 11,202 securities licensed agents to sell Phoenix products. State Farm provides potential access to approximately 37% of the high-net-worth households in the U.S. In 2008, State Farm accounted for approximately 27% of our total life premiums and 68% of our annuity deposits. On March 3, 2009, State Farm informed us that it intends to suspend the sale of Phoenix products pending a re-evaluat ion of the relationship between the companies.

National Life: In February 2007, we entered into an alliance with National Life Group to offer our variable annuity products through their registered representatives. Under the alliance, members of the National Life Group have historically co-marketed Phoenix’s variable annuity products, including flexible premium deferred variable annuities and a single premium immediate variable annuity, through their registered representatives. The alliance also added Sentinel Variable Product Funds as investment options to our variable annuity and life insurance products. Phoenix wholesalers have historically provided sales and product assistance to the registered representatives affiliated with the National Life Group. On March 4, 2009, National Life Group informed us that it intends to suspend the sale of Phoenix products.

Jefferson National: We have formed a strategic alliance with Jefferson National Life Insurance Company (“Jefferson National”) to target the rapidly growing segment of fee-based advisors in wirehouses, regional broker-dealers and financial institutions. Under this alliance, the companies will leverage Jefferson National’s technology platform, designed expressly to serve the fee-based market, and Phoenix’s product expertise in applying innovative living benefits riders, such as the guaranteed minimum withdrawal benefit, to financial products.

Brokerage General Agencies: We also use Brokerage General Agencies (“BGAs”) which offer specialty products and services to agents and advisors. The services they provide include product and case design, underwriting negotiation and delivery, commission payment and service. BGAs, in turn, look for carriers who understand their business and can execute in these areas. We believe BGAs provide opportunity for the Company because of our focus on the high-net-worth marketplace and our strengths in the areas of product, retention and underwriting capability.

National and Regional Broker-Dealers: National and regional broker-dealers are brokerage firms that engage financial advisors as employees rather than as independent contractors. To meet the evolving wealth management needs of their customers, national and regional broker-dealers offer products from third-party providers such as Phoenix. We have relationships across all product lines in important distribution outlets that target the high-net-worth market including UBS, Wachovia and Raymond James.

Advisor Groups: The recent industry trend toward affiliations among small independent financial advisory firms has led to advisor groups becoming a distinct class of distributors. We are a provider of life insurance products through Partners Marketing Group, Inc. (“PartnersFinancial”) which, since 1999, has been an important component of the National Financial Partners (“NFP”) organization. In 2008, we introduced two additional NFP entities, Highland Capital and NFP Brokerage General Agencies, to the Phoenix platform.

Insurance Companies: Insurance companies have been moving their agents into an advisor/planner role, resulting in a need to provide their agents, particularly their top producers, with a wider selection of life insurance products to sell. Insurance companies responded to this need, in part, by negotiating arrangements with third-party providers, including other insurance companies. In addition, we continue to maintain relationships with individual agents of other companies and independent agents.

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

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Other Distribution Sources: Philadelphia Financial Group offers Phoenix private placement life and annuity products through a variety of distribution sources with access to the high-net-worth market including family offices, financial institutions, private client groups, accountants and attorneys. We also offer our life and annuity products through non-traditional sources such as private banks, private banking groups within commercial banks, and regional and commercial banks that are focused on a high-net-worth client base.

The service and support we provide our distributors includes:

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customized advice on estate planning, charitable giving planning, executive benefits and retirement planning, provided by a staff of professionals with specialized expertise in the advanced application of life insurance and variable annuity products. Our experienced attorneys combine their advice with tailored presentations, educational materials and specimen legal documents;

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

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

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

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

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distribution service organizations for our major distribution channels that align all support services for that specific channel.

Competition

We face strong competition in our businesses. We believe that our ability to compete is based on a number of factors, including product features, investment performance, service, price, distribution capabilities, scale, commission structure, name recognition and financial strength ratings. While there is no single company that we identify as a dominant competitor in our business overall, our actual and potential competitors include a large number of insurance companies and other financial services firms, many of which have advantages over us in one or more of the above competitive factors. Recent domestic and international consolidation in the financials services industry, driven by regulatory action and other opportunistic transactions in response to adverse economic and market developments, has resulted in an environment in which larger competitors with better financial strength ratings, greater financial resources, marketing and distribution capabilities may be better positioned comp etitively. Larger firms may be better able to withstand further market disruption, able to offer more competitive pricing, and have superior access to debt and equity capital. We may also be subject to claims by competitors that our products infringe their patents. In addition, some of our competitors are regulated differently than we are, which may give them a competitive advantage. If we fail to compete effectively in this environment, our profitability and financial condition could be materially and adversely affected.

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General Development of Business

PNX was incorporated in Delaware in 2000. Our principal executive offices are located at One American Row, Hartford, Connecticut 06102-5056. Our telephone number is (860) 403-5000. Our web site is located at www.phoenixwm.com. (This and all other URLs included herein are intended to be inactive textual references only. They are not intended to be an active hyperlink to our web site. The information on our web site is not, and is not intended to be, part of this Form 10-K and is not incorporated into this report by reference.)

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

On June 25, 2001, the effective date of its demutualization, Phoenix Home Life converted from a mutual life insurance company to a stock life insurance company, became a wholly owned subsidiary of PNX and changed its name to Phoenix Life Insurance Company. All policyholder membership interests in the mutual company were extinguished on the effective date. At the same time, PNX also completed an initial public offering and listed its shares on the New York Stock Exchange.

On February 7, 2008, we announced that our board of directors had decided to pursue the spin-off of our asset management subsidiary, Virtus, excluding the assets and business of Goodwin Capital Advisers, Inc. (“Goodwin”), in order to enhance stockholder value. On December 12, 2008, our board of directors formally approved the spin-off and declared a dividend payable to each holder of record at the close of business on December 22, 2008, of one share of Virtus common stock for every 20 shares of our common stock held by such holder. We distributed 100% of Virtus common stock to our stockholders (other than shares withheld to satisfy certain withholding obligations) on December 31, 2008. Following the spin-off, we and Virtus are independent of each other and have separate boards of directors and management.

In connection with the spin-off, Virtus and we entered into a separation agreement and several other agreements to complete the separation of the asset management business from us and to distribute Virtus common stock to our stockholders. These agreements govern the relationship between us and Virtus following the spin-off and also provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the spin-off. The agreements include a transition services agreement, tax separation agreement and employee matters agreement.

The following chart illustrates our corporate structure as of December 31, 2008 following the spin-off.

	The Phoenix Companies, Inc.
100%	100%		100%
Phoenix Life Insurance Company		Goodwin Capital Advisers	Phoenix Investment Management Company, Inc.
100%
PM Holdings, Inc.
Various %s
Other Domestic and Foreign Subsidiaries

At December 31, 2008, we employed approximately 1,100 people.

Executive Officers of the Registrant

See Part III, Item 10 herein.

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Available Information

We make available free of charge on or through our Internet web site (http://www.phoenixwm.com) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Item 1A.

Risk Factors

In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed below. You should carefully consider the following risk factors before investing in our securities, any of which could have a significant or material adverse effect on our business, financial condition, operating results or liquidity. This information should be considered carefully together with the other information contained in this report and the other reports and materials we file with the SEC. The risks described below are not the only ones we face. Additional risks may also have an adverse effect on our business, financial condition, operating results or liquidity.

Our business, financial condition, and results of operations have been, and are expected to continue to be, materially and adversely affected by unfavorable general economic developments, as well as by specific related factors such as the performance of the debt and equity markets and changes in interest rates.

Over the past year, the U.S. economy has experienced unprecedented credit and liquidity issues and entered into recession. Following several years of rapid credit expansion, a sharp contraction in mortgage lending coupled with dramatic declines in home prices, rising mortgage defaults and increasing home foreclosures, resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to most sectors of the credit markets, and to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, to be subsidized by the U.S. government and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties many lenders and institutional investors have reduce d and, in some cases, ceased to provide funding to borrowers, including other financial institutions. These factors, combined with declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a prolonged recession.

Even under more favorable market conditions, general factors such as the availability of credit, consumer spending, business investment, capital market conditions and inflation affect our business. For example, in an economic downturn, higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending may depress the demand for life insurance, annuities and investment products. In addition, this type of economic environment may result in higher lapses or surrenders of policies. Accordingly, the risks we face related to general economic and business conditions are more pronounced given the severity and magnitude of recent adverse economic and market conditions experienced.

More specifically, our business is exposed to the performance of the debt and equity markets, which have been materially and adversely affected by recent economic developments. Adverse conditions, including but not limited to, a lack of buyers in the marketplace, volatility, credit spread changes, and benchmark interest rate changes, have affected and will continue to impact the liquidity and value of our investments. In addition to other ways set forth in additional risk factors below, the ways that poor debt and equity market performance and changes in interest rates have adversely affected, and will continue to adversely affect, our business, financial condition, growth and profitability include, but are not limited to, the following:

·

The value of our investment portfolio has declined which has resulted in, and may continue to result in, higher realized and/or unrealized losses. For example, in 2008 the value of our general account investments decreased by $1.3 billion, before offsets, due to net unrealized losses on investments. A widening of credit spreads, such as the market has experienced recently, increases the net unrealized loss position of our investment portfolio and may ultimately result in increased realized losses. The value of our investment portfolio can also be affected by illiquidity and by changes in assumptions or inputs we use in estimating fair value. Further, certain types of securities in our investment portfolio, such as asset-backed securities supported by residential and commercial mortgages, have been disproportionately affected. Continued adverse capital market conditions could result in further realized and/or unrealized losses.

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·

Changes in interest rates also have other effects related to our investment portfolio. In periods of increasing interest rates, life insurance policy loans, surrenders and withdrawals could increase as policyholders seek investments with higher returns. This could require us to sell invested assets at a time when their prices are depressed by the increase in interest rates, which could cause us to realize investment losses. Conversely, during periods of declining interest rates, we could experience increased premium payments on products with flexible premium features, repayment of policy loans and increased percentages of policies remaining in force. We would obtain lower returns on investments made with these cash flows. In addition, borrowers may prepay or redeem bonds in our investment portfolio so that we might have to reinvest those proceeds in lower yielding investments. As a consequence of these factors, we could experience a decrease in the spread between the returns on our investment portfolio and amounts credited to policyholders and contract owners, which could adversely affect our profitability.

·

Our investments in alternative asset classes, such as hedge funds, private equity funds and limited partnership interests, have also been adversely affected. There may be similar adverse effects in the future. These assets generate returns that are more volatile than other asset classes. For example, in 2008 our net investment income related to these investments declined $60.6 million. These assets are also relatively illiquid and may be harder to value or sell in adverse market conditions.

·

Asset-based fee revenues related to our variable life and annuity products have declined and may continue to decline. For example, in 2008 our asset-based fees declined $4.6 million. Poor performance of the debt and equity markets diminishes our fee revenues by reducing the value of the assets we manage.

·

The attractiveness of certain of our products may decrease because they are linked to the equity markets and assessments of our financial strength, resulting in lower profits. Increasing consumer concerns about the returns and features of our products or our financial strength may cause existing clients to surrender policies or withdraw assets, and diminish our ability to sell policies and attract assets from new and existing clients, which would result in lower sales and fee revenues.

·

The funding requirements of our pension plan have increased. The funding requirements of our pension plan are dependent on the performance of the debt and equity markets. The value of the assets supporting the pension plan decreased by $143.4 million in 2008, thereby increasing the requirement for future funding. Future market declines could result in additional funding requirements. Also, the funding requirements of our pension plan are sensitive to interest rate changes. Should interest rates decrease materially, the value of the liabilities under the plan would increase, as would the requirement for future funding.

These extraordinary economic and market conditions have materially and adversely affected us. In 2008 we had a net loss of $726.0 million. It is difficult to predict how long the current economic and market conditions will continue, whether the financial markets will continue to deteriorate and which aspects of our products and/or business will be adversely affected. However, the lack of credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity are likely to continue to materially and adversely affect our business, financial condition and results of operations.

Continuing adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital.

Continued adverse capital and credit market conditions may limit our access to liquidity and affect the availability and cost of borrowed funds. We need liquidity to meet policyholder obligations and to pay operating expenses and interest on our debt, as well as any shareholder dividends declared by our board of directors. Without sufficient liquidity, we could be forced to curtail certain of our operations, resulting in reduced profits. The principal internal sources of our liquidity are insurance premiums, annuity considerations, deposit funds and cash flow from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash. Under normal circumstances, we maintain access to external sources of liquidity, including a credit facility and potential issuance of debt and equity securities.

The availability of external sources of liquidity depends on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the financial services industry, and our credit ratings and credit capacity. The current uncertainty or volatility in the financial markets has reduced our ability to obtain new financing in support of our business on favorable terms, and eliminated our ability to access certain markets at all. As a result, we may need to amend or replace our existing credit facility on unattractive terms or may be unable to replace the facility at all.

11

Losses due to defaults by others, including issuers of fixed income securities (which include structured securities such as commercial mortgage backed securities and residential mortgage backed securities or other high yielding bonds) could adversely affect our business, financial condition and results of operations.

Issuers or borrowers whose securities or loans we hold, customers, trading counterparties, counterparties under swaps and other derivative contracts, reinsurers, clearing agents, exchanges, clearing houses and other financial intermediaries and guarantors may default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud or other reasons. Such defaults could have a material adverse effect on business, financial condition and results of operations. Additionally, the underlying assets supporting our structured securities may deteriorate causing these securities to incur losses. Our investment portfolio includes investment securities in the financial services sector that have experienced defaults recently. Further defaults could have a material adverse effect on our business, financial condition and results of operations.

Our valuation of fixed maturity, equity and trading securities may include methodologies, estimations and assumptions that are subject to differing interpretations and could result in changes to investment valuations that may materially adversely affect our results of operations or financial condition.

The unprecedented current market conditions have made it difficult to value certain illiquid securities in our investment portfolio because trading has become less frequent and/or market data less observable. As a result, valuations may include inputs and assumptions that are less observable or require greater estimation and judgment as well as valuation methods which are more complex. These values may not be ultimately realizable in a market transaction, and such values may change very rapidly as market conditions change and valuation assumptions are modified. Decreases in value may have a material adverse effect on our results of operations or financial condition.

The decision on whether to record other-than-temporary impairments or write-downs is determined in part by our assessment of the financial condition and prospects of a particular issuer, projections of future cash flows and recoverability of the particular security as well as an evaluation of our ability and intent to hold the securities to recovery. See “Management’s Discussion and Analysis of Financial Condition—Debt and Equity Securities Held in General Account.” Given current market conditions and liquidity concerns, our determinations of whether a decline in value is other-than-temporary have placed greater emphasis on our analysis of the underlying credit, probability of collecting contractual cash flows and our ability and intent to hold the investment to maturity, versus the extent and duration of a decline in value. Our conclusions on such assessments may ultimately prove to be incorrect as facts and circumstances change.

Guaranteed benefits within our products that protect policyholders against significant downturns in equity markets may decrease our earnings, increase the volatility of our results if hedging strategies prove ineffective, result in higher hedging costs and expose us to increased counterparty risk, which may have a material adverse effect on our profitability, financial condition and liquidity.

Certain of our products include guaranteed benefits. These include guaranteed minimum death benefits, guaranteed minimum accumulation benefits, guaranteed minimum withdrawal benefits and guaranteed minimum income benefits. Periods of significant and sustained downturns in equity markets, increased equity volatility, or reduced interest rates could result in an increase in the valuation of the future policy benefit associated with such products, resulting in a reduction to earnings. For example, in 2008 we experienced a loss of $20.8 million after tax associated with the effect of adverse market conditions on our guaranteed benefit reserves. We use derivative instruments to hedge the liability exposure and the volatility of earnings associated with some of these liabilities, and even when these and other actions would otherwise successfully mitigate the risks related to these benefits, we remain liable for the guaranteed benefits in the event that derivative counterparties are unable or unwilling to pay. In addition, we are subject to the risk that hedging and other management procedures prove ineffective or that unanticipated policyholder behavior, including increased withdrawals or mortality, combined with adverse market events, produces economic losses beyond the scope of the risk management techniques employed. Hedging instruments we hold to manage product and other risks have not, and may continue to not, perform as intended or expected, resulting in higher realized losses and unforeseen cash needs. Market conditions can also increase the cost of executing product related hedges and such costs may not be recovered in the pricing of the underlying products being hedged. For example, in 2008, we experienced increased hedging costs of $38.1 million due to increased execution costs and hedge inefficiency. These factors, individually or collectively, may adversely affect our profitability, financial condition or liquidity.

12

The amount of statutory capital that we have and the amount of statutory capital that we must hold to meet rating agency and other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control, including equity market and credit market conditions and changes in rating agency models.

We conduct the vast majority of our business through our insurance company subsidiaries. Accounting standards and statutory capital and reserve requirements for these entities are prescribed by the applicable insurance regulators and the National Association of Insurance Commissioners (“NAIC”). The NAIC has established regulations that provide minimum capitalization requirements based on risk-based capital (“RBC”) formulas for our insurance company subsidiaries. The RBC formula for our insurance company subsidiaries establishes capital requirements relating to insurance, business, asset and interest rate risks.

In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors: the amount of statutory income or losses generated by our insurance subsidiaries (which itself is sensitive to equity market and credit market conditions), the amount of additional capital our insurance subsidiaries must hold to support business growth, changes in equity market levels, the value of certain fixed-income and equity securities in our investment portfolio, the value of certain derivative instruments that do not get hedge accounting, changes in interest rates and foreign currency exchange rates, as well as changes to the NAIC RBC formulas. Most of these factors are outside of our control. Our financial strength and credit ratings are significantly influenced by the statutory surplus amounts and RBC ratios of our insurance company subsidiaries. In addition, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital they believe we should hold. Further, in extreme scenarios of equity market declines, such as those experienced recently, the amount of additional statutory reserves that we are required to hold for our variable annuity guarantees increases at a disproportionate rate. This reduces the statutory surplus used in calculating our RBC ratios. We have recently taken capital management actions to bolster our capitalization and RBC ratio including, but not limited to, the sale of certain securities in our portfolio and entry into reinsurance arrangements. As of December 31, 2008, Phoenix Life received approval from the New York Insurance Department to accelerate the admission of the remaining $13.7 million indemnity reserve related to the Company’s surplus notes with a corresponding increase to surplus.

Downgrades to debt and financial strength ratings could increase policy surrenders and withdrawals, adversely affect relationships with distributors, reduce new sales and increase our future borrowing costs.

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

Our ratings relative to other companies in the industry affect our competitive position. Downgrades could adversely affect our reputation and, hence, our relationships with existing distributors and our ability to establish additional distributor relationships. If this were to occur, we might experience a decline in sales of certain products and the persistency of existing customers. At this time, we cannot estimate the impact of specific rating agency actions on sales or persistency. A significant decline in our sales or persistency could have a material adverse effect on our financial results. Any rating downgrades may also result in increased interest costs in connection with future borrowings. Such an increase would decrease our earnings and could reduce our ability to finance our future growth on a profitable basis.

We have recently been downgraded and had our outlook revised adversely. On March 4, 2009, Fitch downgraded our financial strength rating to BBB+ from A and placed the rating on Rating Watch Negative. On October 31, 2008, Fitch downgraded our financial strength rating to A from A+ and maintained its negative outlook. On March 2, 2009, Standard and Poor’s downgraded our financial strength rating to BBB from BBB+ and downgraded our senior debt rating to BB from BB+. At the same time, Standard and Poor’s removed the ratings from CreditWatch, where they had been placed with negative implications on February 10, 2009. The outlook is negative. On October 31, 2008, Standard & Poor’s downgraded our financial strength rating to BBB+ from A- and downgraded our senior debt rating to BB+ from BBB-. They also revised our outlook to negative from stable. On February 19, 2009, Moody’s Investor Service downgraded our financial strength rating to Baa1 from A3 and do wngraded our senior debt rating to Ba1 from Baa3. The ratings remain on review for possible further downgrade as was previously announced on December 9, 2008. On January 15, 2009, A.M Best Company, Inc. affirmed our financial strength rating of A and changed our outlook to negative from stable and also revised our senior debt rating outlook to negative from stable. Further, on September 18, September 29, October 2 and October 10, 2008, A.M. Best Company, Inc., Fitch Ratings Ltd., Moody’s Investors Service, and Standard & Poor’s, respectively, each revised its outlook for the U.S. life insurance sector to negative from stable, citing, among other things, the significant deterioration and volatility in the credit and equity markets, economic and political uncertainty, and the expected impact of realized and unrealized investment losses on life insurers’ capital levels and profitability.

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In light of the difficulties experienced recently by many financial institutions, including insurance companies, rating agencies have increased the frequency and scope of their credit reviews and requested additional information from the companies that they rate, including us. They may also adjust upward the capital and other requirements employed in the rating agency models for maintenance of certain ratings levels. We cannot predict what actions rating agencies may take, or what actions we may take in response.

Accordingly, further downgrades and outlook revisions related to us or the life insurance industry may occur in the future at any time and without notice by any rating agency. These could increase policy surrenders and withdrawals, adversely affect relationships with distributors, reduce new sales, reduce our ability to borrow and increase our future borrowing costs.

Our profitability may decline if investment returns, mortality rates, persistency rates, funding levels, expenses or other factors differ significantly from our pricing expectations.

We set prices for many of our insurance and annuity products based upon expected investment returns, claims, expected persistency of these policies and the expected level and pattern of premium payments into these policies. We use assumptions for equity market returns, investment portfolio yields, and mortality rates, or likelihood of death, of our policyholders in pricing our products. Pricing also incorporates the expected persistency of these products, which is the probability that a policy or contract will remain in force from one period to the next, as well as the assumed level and pattern of premium payments and the cost we incur to acquire and administer policies.

Recent trends in the life insurance industry may affect our mortality, persistency and funding levels. The evolution of the financial needs of policyholders and the emergence of a secondary market for life insurance suggest that the reasons for purchasing our products are changing, and we have experienced an increase in life insurance sales to older individuals. The effect that these changes may have on our actual experience and profitability is not yet well understood.

Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our products. Although most of our current products permit us to increase charges and adjust crediting rates during the life of the policy or contract (subject to guarantees in the policies and contracts), the permitted adjustments may not be sufficient to maintain profitability. In addition, increasing charges on inforce policies or contracts may adversely affect our relationships with distributors and future sales. Furthermore, some of our inforce business consists of products that do not permit us to adjust the charges and credited rates of inforce policies or contracts.

Deviations in actual experience from our pricing assumptions could also cause us to increase the amortization of deferred policy acquisition costs, which would have an adverse impact on profitability. We incur significant costs in connection with acquiring new and renewal business. Costs that vary with, and are primarily related to the production of new and renewal business, are deferred and amortized over time. The recovery of deferred policy acquisition costs is dependent upon the future profitability of the related business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The amount of future profit or margin is dependent on investment returns, surrender and lapse rates, interest margin, mortality, premium persistency, funding patterns and expenses. These factors enter into management’s estimates of gross profits or margins, which generally are used to amortize such costs. In particula r, equity market movements and our performance have a significant effect on investment returns. Accordingly, sustained and significant changes in the equity markets, such as we have experienced recently, could have an effect on deferred policy acquisition cost amortization. If the estimates of gross profits or margins cannot support the continued amortization or recovery of deferred policy acquisition costs, as was the case in 2008, the amortization of such costs is accelerated in the period in which the assumptions are changed, resulting in a charge to income. For example, in 2008 we had an unlocking of deferred policy acquisition costs of $183.8 million, of which $136.7 million related to declines in the markets, primarily related to our annuity products. Accordingly, such adjustments have had, and may in the future have, a material adverse effect on our results of operations or financial condition.

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We may incur losses if our reinsurers are unwilling or unable to meet their obligations under reinsurance contracts. The availability, pricing and terms of reinsurance may not be sufficient to protect us against losses.

We utilize reinsurance to reduce the severity and incidence of claims costs, and to provide relief with regard to certain reserves. As of December 31, 2008, 64.5% of the total face amount of our written policies was ceded to reinsurers. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured. Consequently, reinsurance arrangements do not eliminate our obligation to pay claims and we assume credit risk with respect to our ability to recover amounts due from our reinsurers. Although we regularly evaluate the financial condition of our reinsurers, the inability or unwillingness of any reinsurer to meet its financial obligations could negatively affect our operating results. Recent adverse economic and market conditions may exacerbate the inability or unwillingness of our reinsurers to meet their obligations. In addition, market conditions beyond our control determin e the availability and cost of reinsurance. No assurances can be made that reinsurance will remain available to the same extent and on the same terms and rates as have been historically available. Recent adverse economic and market conditions may decrease the availability and increase the cost of reinsurance. If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices that we consider acceptable, we would have to either accept an increase in our net exposure, reduce the amount of business we write, or develop other alternatives to reinsurance. Any of these alternatives may adversely affect our business, financial condition or operating results.

We depend on non-affiliated distribution for our product sales and if our relationships with these distributors were harmed, we could suffer a loss in revenues.

We distribute our products through non-affiliated advisors, broker-dealers and other financial intermediaries. There is substantial competition for business within most of these distributors. We believe that our sales through these distributors depend on a variety of factors, such as our financial strength, the quality and pricing of our products and the support services we provide. In 2008, our largest individual distributor of life insurance was a subsidiary of State Farm Mutual Automobile Company (“State Farm”). Our largest distributors of annuities in 2008 were State Farm and National Life Group. In 2008, State Farm accounted for approximately 27% of our total life insurance premiums. In 2008, State Farm accounted for approximately 68% and National Life Group accounted for approximately 14% of our annuity deposits. Since our relationship with State Farm began in mid-2001, it has generated $260 million in cumulative new total life premiums and $1.6 billion in annuity deposi ts. Our distributors are generally free to sell products from a variety of providers. On March 3, 2009, State Farm informed us that it intends to suspend the sale of our products pending a re-evaluation of the relationship between the companies. On March 4, 2009, National Life Group informed us that it intends to suspend the sale of our products.

We may not be able to establish or maintain satisfactory relationships with State Farm, National Life Group or other distributors if our ratings, products or services are not competitive. Further, in light of recent adverse economic and market developments, our access to, the reliability of, and service levels provided by our non-affiliated distribution intermediaries may be adversely affected. Accordingly, our business, sales, redemptions, revenues and profitability may be materially affected.

Our business operations and profitability could be adversely affected by inadequate performance of third-party relationships.

We are dependent on certain third-party relationships to maintain essential business operations. These services include, but are not limited to, information technology infrastructure, application systems support, transfer agent and cash management services, custodial services, records storage management, backup tape management, security pricing services, medical information, payroll, and employee benefit programs.

We periodically negotiate provisions and renewals of these relationships and there can be no assurance that such terms will remain acceptable to such third parties or us. An interruption in our continuing relationship with certain of these third parties or any material delay or inability to deliver essential services could materially affect our business operations and adversely affect our profitability.

15

We might be unable to attract or retain personnel who are key to our business.

The success of our business is dependent to a large extent on our ability to attract and retain key employees. Competition in the job market for professionals such as securities analysts, portfolio managers, sales personnel, underwriters, technology professionals and actuaries can be intense. In general, our employees are not subject to employment contracts or non-compete agreements. Any inability to retain our key employees, or attract and retain additional qualified employees, could have a negative impact on us.

We face strong competition in our businesses from insurance companies and other financial services firms. This competition could impair our ability to retain existing customers, attract new customers and maintain our profitability.

We face strong competition in our businesses. We believe that our ability to compete is based on a number of factors, including product features, investment performance, service, price, distribution capabilities, scale, commission structure, name recognition and financial strength ratings. While there is no single company that we identify as a dominant competitor in our business overall, our actual and potential competitors include a large number of insurance companies and other financial services firms, many of which have advantages over us in one or more of the above competitive factors. Recent domestic and international consolidation in the financials services industry, driven by regulatory action and other opportunistic transactions in response to adverse economic and market developments, has resulted in an environment in which larger competitors with better financial strength ratings, greater financial resources, marketing and distribution capabilities may be better positioned comp etitively. Larger firms may be able better withstand further market disruption, able to offer more competitive pricing, and have superior access to debt and equity capital. We may also be subject to claims by competitors that our products infringe on their patents. In addition, some of our competitors are regulated differently than we are, which may give them a competitive advantage. If we fail to compete effectively in this environment, our profitability and financial condition could be materially and adversely affected.

Because we are a holding company with no direct operations, the inability of our subsidiaries to pay dividends to us in sufficient amounts would harm our ability to meet our obligations and pay future dividends.

We are a holding company, and we have no direct operations. Our principal asset is the capital stock of our subsidiaries. Our ability to meet our obligations for payment of interest and principal on outstanding debt obligations and to pay dividends to shareholders and corporate expenses depends upon the surplus and earnings of our subsidiaries and the ability of our subsidiaries to pay dividends or to advance or repay funds to us. When economic or market conditions deteriorate, as they have recently, the ability of our subsidiaries to pay dividends or to advance or repay funds may be impaired. This is especially true of our insurance company subsidiaries. Payments of dividends and advances or repayment of funds to us by our insurance company subsidiaries are restricted by the applicable laws of their respective jurisdictions, including laws establishing minimum solvency and liquidity thresholds. For example, during 2008 the ability of Phoenix Life to pay dividends without special regula tory approval declined from $83.8 million to $53.4 million. Changes to these laws, especially those of New York State, the domiciliary state of Phoenix Life, could constrain the ability of our subsidiaries to pay dividends or to advance or repay funds to us in sufficient amounts and at times necessary to meet our debt obligations and corporate expenses.

Difficult market conditions have also affected our ability to pay dividends to the shareholders of our common stock. In February 2009, our Board of Directors determined that we will not pay an annual dividend on our common stock during fiscal year 2009. We may elect not to pay annual dividends in future fiscal years.

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

We have allocated assets to our Closed Block to produce cash flows that, together with additional revenues from the Closed Block policies, are reasonably expected to support our obligations relating to these policies. Our allocation of assets to the Closed Block was based on actuarial assumptions about the performance of policies in the Closed Block and the continuation of the non-guaranteed policyholder dividend scales in effect for 2000, as well as assumptions about the investment earnings the Closed Block assets will generate over time. Since actual performance is likely to be different from these assumptions, it is possible that the cash flows generated by the Closed Block assets and the anticipated revenues from the policies included in the Closed Block will prove insufficient to provide for the benefits guaranteed under these policies even if the non-guaranteed policyholder dividend scale were to be reduced. If this were to occur, we would have to fund the resulting shortfall from assets outside of the Closed Block, which could adversely affect our profitability.

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Changes in tax laws may decrease sales and profitability of products and increase our tax costs.

Under current federal and state income tax law, certain products we offer, primarily life insurance and annuities, receive favorable tax treatment. This favorable treatment may give certain of our products a competitive advantage over noninsurance products. Congress from time to time considers legislation that would reduce or eliminate the favorable policyholder tax treatment currently applicable to life insurance and annuities. Congress also considers proposals to reduce the taxation of certain products or investments that may compete with life insurance and annuities. Legislation that increases the taxation on insurance products or reduces the taxation on competing products could lessen the advantage or create a disadvantage for certain of our products making them less competitive. Such proposals, if adopted, could have a material adverse effect on our financial position or ability to sell such products and could result in the surrender of some existing contracts and policies. In addi tion, changes in the federal estate tax laws could negatively affect the demand for the types of life insurance used in estate planning.

We also benefit from certain tax benefits, including but not limited to, performance-based compensation that exceeds $1.0 million, tax-exempt bond interest, dividends-received deductions, tax credits (such as foreign tax credits), and insurance reserve deductions. Congress, as well as foreign, state and local governments, also consider from time to time legislation that could modify or eliminate these benefits, thereby increasing our tax costs. If such legislation were to be adopted, our consolidated net income or loss could decline.

There can be no assurance that actions and initiatives of the U.S. Government, including those that we elect to participate in, will improve adverse economic and market conditions or our business, financial condition and results of operations.

In response to the financial crises affecting the banking system and financial markets, the U.S. government has taken, and may continue to take, various measures, including, but not limited to, the Emergency Economic Stabilization Act of 2008 (the “EESA”) and the American Recovery and Reinvestment Tax Act of 2009. Pursuant to the EESA, the U.S. Treasury has the authority to, among other things, purchase up to $700 billion of mortgage-backed and other securities from financial institutions for the purpose of stabilizing the financial markets. The U.S. Treasury and the bank regulatory agencies have also announced coordinated programs to invest in securities issued by qualifying U.S. financial institutions pursuant to the Capital Purchase Program (“CPP”) under the Troubled Asset Relief Program (“TARP”) administered by the Office of Financial Stability and to guarantee senior debt of all FDIC insured institutions and their qualifying holding companies , as well as deposits in non-interest bearing transaction accounts. The TARP program involves the issuance by qualifying institutions of preferred stock and warrants to purchase common stock to the U.S. Treasury. We have been approved to become a savings and loan holding company, have submitted an application to participate in the CPP and are currently considering whether we would elect to participate in the event our application is granted. Participation in the CPP currently would require that we complete the acquisition of a savings and loan company, submit to regulation by the Office of Thrift Supervision and adopt certain restrictions on our executive compensation practices, which may affect our business. The U.S. government has taken, or is considering taking, other monetary and fiscal policy actions to address the financial crisis that could further impact our business. There is no guarantee that past, present or future actions taken by the U.S. government will achieve their intended effect and we cann ot predict with any certainty the effect these actions will have on the economy or the financial markets, or on our business, results of operations, cash flows and financial condition.

Potential changes in federal and state regulation may increase our business costs and required capital levels, which could adversely affect our business, consolidated operating results, financial condition or liquidity.

We are subject to extensive laws and regulations. These laws and regulations are complex and subject to change. This is particularly the case given recent adverse economic and market developments. Moreover, they are administered and enforced by a number of different governmental authorities. These authorities include foreign regulators, state insurance regulators, state securities administrators, the SEC, the New York Stock Exchange, the Financial Industry Regulatory Authority (“FINRA”), the U.S. Department of Justice, and state attorneys general. In light of recent events involving certain financial institutions and the current financial crisis, it is possible that the U.S. government will heighten its oversight of the financial services industry, including possibly through a federal system of insurance regulation. In addition, it is possible that these authorities may adopt enhanced or new regulatory requirements intended to prevent future crises in the financial services in dustry and to assure the stability of institutions under their supervision. We cannot predict whether this or other regulatory proposals will be adopted, or what impact, if any, such regulation could have on our business, consolidated operating results, financial condition or liquidity.

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Each of the authorities that regulate us exercises a degree of interpretive latitude. Consequently, we are subject to the risk that compliance with any particular regulator’s or enforcement authority’s interpretation of a legal issue may not result in compliance with another regulator’s or enforcement authority’s interpretation of the same issue, particularly when compliance is judged in hindsight. In addition, there is risk that any particular regulator’s or enforcement authority’s interpretation of a legal issue may change over time to our detriment, or that changes in the overall legal environment may, even absent any particular regulator’s or enforcement authority’s interpretation of a legal issue changing, cause us to change our views regarding the actions we need to take from a legal risk management perspective, thus necessitating changes to our practices that may, in some cases, limit our ability to grow and improve the profitability of our business.

State insurance laws regulate most aspects of our U.S. insurance businesses, and our insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and licensed. State insurance regulators and the National Association of Insurance Commissioners (“NAIC”) regularly re-examine existing laws and regulations applicable to insurance companies and their products. State laws in the U.S. grant insurance regulatory authorities broad administrative powers with respect to, among other things:

·

licensing companies and agents to transact business;

·

calculating the value of assets to determine compliance with statutory requirements;

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mandating certain insurance benefits; regulating certain premium rates; reviewing and approving policy forms;

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regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements;

·

establishing statutory capital and reserve requirements and solvency standards;

·

fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts;

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approving changes in control of insurance companies;

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restricting the payment of dividends and other transactions between affiliates; and

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regulating the types, amounts and valuation of investments.

Changes in all of these laws and regulations, or in interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and thus could have a material adverse effect on our business, consolidated operating results, financial condition and liquidity. Compliance with these laws and regulations is also time consuming and personnel-intensive, and changes in these laws and regulations may increase materially our direct and indirect compliance costs and other expenses of doing business, thus having an adverse effect on our business, consolidated operating results, financial condition and liquidity.

Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm to our businesses.

We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. For example, in the last few years we have been involved in disputes relating to certain portions of our discontinued group accident and health reinsurance business. 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. During the past several years, there has been a significant increase in federal and state regulatory activity relating to financial services companies, with a number of recent regulatory inquiries focusing on late-trading, market timing and valuation issues. Financial services companies have also been the subject of broad industry inquiries by state regulators and attorneys general which do not appear to be company-specific. We have had inquiries relating to mark et timing and distribution practices in the past, and we continue to cooperate with the applicable regulatory authorities in these matters. While no regulatory authority has ever taken action against us with regard to these inquiries, we may be subject to further related or unrelated inquiries or actions in the future. In light of recent events involving certain financial institutions, it is possible that the U.S. government will heighten its oversight of the financial services industry in general or of the insurance industry in particular. Further, recent adverse economic and market events may have the effect of encouraging litigation, arbitration and regulatory action in response to the increased frequency and magnitude of investment losses, which may result in unfavorable judgments, awards and settlements, regulatory fines and an increase in our related legal expenses.

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It is not feasible to predict or determine the ultimate outcome of all legal or regulatory proceedings or to provide reasonable ranges of potential losses. We believe that the outcomes of our litigation and regulatory matters 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 the inherent unpredictability of litigation and regulatory matters, 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 in particular quarterly or annual periods.

Changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect our financial statements.

Our financial statements are subject to the application of accounting principles generally accepted in the United States of America (“GAAP”), which is periodically revised and/or expanded. Accordingly, from time to time we are required to adopt new or revised accounting standards or guidance issued by recognized authoritative bodies, including the Financial Accounting Standards Board.

For example, the U.S. government, under the EESA, conducted an investigation of fair value accounting during the fourth quarter of 2008 and has granted the SEC the authority to suspend fair value accounting for any registrant or group of registrants in its discretion. Similar actions may take place in the future. The impact of such actions on registrants who apply fair value accounting cannot be readily determined at this time; however, actions taken could have a material adverse effect on the financial condition and results of operations of companies, including ours, that apply fair value accounting.

It is possible that these and other future accounting standards we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could significantly affect our reported financial condition and results of operations.

We may be adversely affected by the spin-off of our former asset management business.

On December 31, 2008 we spun off our former asset management business through a dividend of the stock of Virtus Investment Partners, Inc. (“Virtus”) to our stockholders. The spin-off and related transactions pose certain risks. Additionally, our asset management business provides certain benefits, the absence of which could have an adverse impact on our results of operations and financial position. Risks associated with our decision to spin off the asset management business into an independent publicly-traded company include, but are not limited to, the following:

·

We expect to take additional actions to reduce expenses that were formerly allocated to the asset management business. Our failure to effectively and expeditiously achieve these savings could increase our expense levels and thereby depress our profitability.

·

We are a smaller, less diversified company. We now have fewer sources of liquidity in our holding company, and our primary source of liquidity is dividends from our regulated life insurance subsidiary. These dividends are subject to the earnings of our subsidiary and are restricted by the applicable laws of New York state. Constraints on the dividend capacity of our subsidiary could adversely affect our ability to meet holding company obligations.

·

We have certain mutual rights and responsibilities related to agreements executed in connection with the spin-off of Virtus, including, but not limited to, a separation agreement, a tax matters agreement, an employee matters agreement and a loan agreement related to intercompany debt that was outstanding prior to the spin-off. If Virtus is unwilling or unable to meet its obligations under these agreements, our business, financial position or operating results may be adversely affected.

We reported a material weakness in our internal control over financial reporting, and if we are unable to improve our internal controls, our financial results may not be accurately reported.

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008 identified a material weakness in its internal control over financial reporting designed to ensure proper accounting for income taxes, including the allocation of its income tax provision (benefit) among income from continuing operations, income from discontinued operations and other comprehensive loss. As a result of this material weakness, management determined that our disclosure controls and procedures were not effective as of December 31, 2008. The material weakness is described in Item 9A entitled “CONTROLS AND PROCEDURES” of this Annual Report on Form 10-K. This material weakness, or difficulties encountered in implementing new or improved controls or remediation, could prevent us from accurately reporting our financial results, result in material misstatements in our financial statements or cause us to fail to meet our reporting obligatio ns.

19

Item 1B.

Unresolved Staff Comments

As of December 31, 2008, the Company had no unresolved SEC staff comments regarding its periodic or current reports.

Item 2.

Properties

Our executive headquarters consist of our main office building at One American Row in Hartford, Connecticut, which we own and occupy. In December 2008, we sold a second Hartford office building which was no longer needed. We lease property in East Greenbush, New York and Greenfield, Massachusetts. We also lease office space elsewhere in the U.S. as needed for our operations.

Item 3.

Legal Proceedings

See Note 24 to our consolidated financial statements in this Form 10-K for a discussion of our legal proceedings, which is incorporated herein by reference.

Item 4.

Submission of Matters to a Vote of Security Holders

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

20

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Market

Shares of our common stock trade on the New York Stock Exchange under the ticker symbol “PNX”. As of February 12, 2009, there were 219,105 registered holders of our common stock.

Unregistered Shares

We issued the following shares of common stock to eligible policyholders of Phoenix Life, effective as of June 25, 2001, in connection with Phoenix Life’s demutualization on that date: 56,174,373 shares in 2001 and 5,365 shares in the seven years ended December 31, 2008. We issued these shares in exchange for their membership interests without registration in reliance on an applicable exemption from registration under the Securities Act of 1933.

In 2008, we also issued 156,861 restricted stock units (“RSUs”) to our 14 independent directors, without registration in reliance on an applicable exemption from registration under the Securities Act of 1933. Each RSU is potentially convertible into one share of our common stock.

Stock Price

The following table presents the intraday high and low prices for our common stock on the New York Stock Exchange for the years 2008 and 2007. The year end closing price of our common stock was $3.27.

	2008				2007
	High		Low		High		Low
First Quarter	$	12.58	$	9.56	$	16.88	$	13.44
Second Quarter	$	13.88	$	7.59	$	16.54	$	13.86
Third Quarter	$	13.98	$	7.37	$	15.63	$	11.53
Fourth Quarter	$	10.41	$	1.07	$	14.48	$	11.44

Dividends

In 2008 and 2007, we paid a dividend of $0.16 per share to shareholders of record on June 13, 2008 and June 13, 2007. In February 2009, our Board of Directors determined that the Company will not pay an annual dividend on its common stock during fiscal year 2009. For a discussion of restrictions on our ability to pay dividends, see the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K.

Repurchases

Not applicable.

Stock performance

The following graph compares the cumulative total return on PNX Common Stock with the cumulative total returns of the Standard & Poor’s 500 Stock Index and a peer group index selected by us (the “Peer Group Index”) for the period December 31, 2003 through December 31, 2008.

The indices assume that $100 was invested on December 31, 2003 in PNX Common Stock, the Standard & Poor’s 500 Index and the common stock of the Peer Group Index members, with dividends being reinvested. The Peer Group Index members are: Franklin Resources, Inc., Janus Capital Group, Inc. (formerly Stilwell Financial Inc.), Lincoln National Corporation, MetLife, Inc., Nationwide Financial Services, Inc., Principal Financial Group, Inc., Prudential Financial, Inc., T. Rowe Price Group, Inc. and Waddell & Reed Financial, Inc. The Peer Group Index is capitalization-weighted.

21

Cumulative Total Return

December 31, 2003 through December 31, 2008

Item 6.

Selected Financial Data

Our selected historical consolidated financial data as of and for each of the five years in the period ended December 31, 2008 follows. We derived the balance sheet data for 2008 and 2007 and the income statement data for the years 2008, 2007 and 2006 from our consolidated financial statements in this Form 10-K. We derived the balance sheet data for 2006, 2005 and 2004 and the income statement data for the years 2005 and 2004 from audited consolidated financial statements not in this Form 10-K. We have reclassified certain amounts for prior years to conform with our 2008 presentation.

We prepared the following financial data, other than statutory data, in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We derived the statutory data from the Annual Statements of our Life Companies filed with state insurance regulatory authorities and prepared it in accordance with statutory accounting practices prescribed or permitted by state insurance regulators, which vary in certain material respects from GAAP.

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

22

Selected Financial Data:
($ in millions, except per share data)	2008		2007		2006		2005		2004
Income Statement Data
Premiums	$	765.9	$	798.3	$	839.7	$	928.7	$	990.6
Fee income		622.6		516.4		414.1		341.2		350.2
Net investment income		915.6		1,058.8		1,048.5		1,098.6		1,073.1
Unrealized gain on trading equity securities		—		—		—		—		85.9
Net realized investment gains (losses)		(295.8)		(6.0)		75.2		34.6		8.0
Total revenues	$	2,008.3	$	2,367.5	$	2,377.5	$	2,403.1	$	2,507.8
Total benefits and expenses	$	2,299.6	$	2,229.0	$	2,212.1	$	2,249.2	$	2,367.3
Income (loss) from continuing operations	$	(174.4)	$	116.6	$	113.8	$	109.0	$	80.2
Income (loss) from discontinued operations,   net of income taxes		(551.6)		1.0		(18.5)		(0.6)		6.2
Net income (loss)	$	(726.0)	$	117.6	$	95.3	$	108.4	$	86.4
Basic Earnings Per Share
Income (loss) from continuing operations	$	(1.53)	$	1.02	$	1.03	$	1.15	$	0.85
Net income (loss)	$	(6.35)	$	1.03	$	0.86	$	1.14	$	0.91
Diluted Earnings Per Share
Income (loss) from continuing operations	$	(1.53)	$	1.01	$	1.01	$	1.06	$	0.80
Net income (loss)	$	(6.35)	$	1.01	$	0.84	$	1.06	$	0.86
Dividends per share	$	0.16	$	0.16	$	0.16	$	0.16	$	0.16
Ratio of Earnings to Fixed Charges and Preferred Dividends
Ratio of earnings to combined fixed charges   and preferred dividends(1)		—		1.7		1.8		1.8		1.7
Ratio of earnings to combined fixed charges   and preferred dividends –
excluding interest credited on policyholder     contract balances(2)(3)		—		4.2		4.2		4.7		4.3
Balance Sheet Data
Cash and general account investments	$	13,674.8	$	15,764.5	$	16,113.6	$	16,692.8	$	17,283.2
Total assets	$	25,768.8	$	30,418.3	$	29,026.2	$	27,744.4	$	28,426.9
Indebtedness	$	458.0	$	627.7	$	628.2	$	659.9	$	665.8
Total liabilities	$	24,903.8	$	28,139.3	$	26,794.7	$	25,737.3	$	26,404.5
Minority interest in net assets of   consolidated subsidiaries	$	—	$	—	$	—	$	—	$	37.7
Total stockholders’ equity	$	865.0	$	2,279.0	$	2,231.5	$	2,007.1	$	2,022.4
Combined Statutory Data
Premiums, deposits and fees	$	2,487.1	$	2,566.2	$	2,866.0	$	2,646.2	$	2,151.1
Net income (loss)	$	(266.9)	$	(25.2)	$	138.6	$	88.3	$	45.6
Capital and surplus(4)	$	758.9	$	848.1	$	932.5	$	873.2	$	814.6
Asset valuation reserve (“AVR”)(5)		94.8		207.5		202.3		216.5		221.2
Capital, surplus and AVR	$	853.7	$	1,055.6	$	1,134.8	$	1,089.7	$	1,035.8

———————

⁽¹⁾

Due to our losses during 2008, the ratio of earnings to fixed charges for that year was less than 1:1. We would need $476.7 million in additional earnings for the year 2008 to achieve a 1:1 coverage ratio.

⁽²⁾

This ratio is disclosed for the convenience of investors and may be more comparable to the ratio disclosed by other issuers of fixed income securities. See Exhibit 12 to this report on Form 10-K for a reconciliation of the supplemental ratio of earnings to fixed charges.

⁽³⁾

Due to our losses during 2008, the ratio coverages, excluding interest credited on policyholder contract balances, were less than 1:1. We would need $476.7 million in additional earnings for the year 2008 to achieve a 1:1 coverage ratio.

⁽⁴⁾

In accordance with accounting practices prescribed by the New York State Insurance Department, Phoenix Life’s capital and surplus includes $174.1 million, $156.5 million, $156.5 million, $186.7 million and $186.7 million of surplus notes outstanding at December 31, 2008, 2007, 2006, 2005 and 2004, respectively.

⁽⁵⁾

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

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Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

The discussion in this Form 10-K 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 t hose suggested by forward-looking statements as a result of risks and uncertainties which include, among others: (i) unfavorable general economic developments including, but not limited to, specific related factors such as the performance of the debt and equity markets and changes in interest rates; (ii) the effect of continuing adverse capital and credit market conditions on our ability to meet our liquidity needs, our access to capital and our cost of capital; (iii) the possibility of losses due to defaults by others including, but not limited to, issuers of fixed income securities; (iv) changes in our investment valuations based on changes in our valuation methodologies, estimations and assumptions; (v) the effect of guaranteed benefits within our products; (vi) the consequences related to variations in the amount of our statutory capital due to factors beyond our control; (vii) downgrades in our debt or financial strength ratings; (viii) the possibility that mortality rates, persistency rates, fundi ng levels or other factors may differ significantly from our pricing expectations; (ix) the availability, pricing and terms of reinsurance coverage generally and the inability or unwillingness of our reinsurers to meet their obligations to us specifically; (x) our dependence on non-affiliated distributors for our product sales; (xi) our dependence on third parties to maintain critical business and administrative functions; (xii) our ability to attract and retain key personnel in a competitive environment; (xiii) the strong competition we face in our business from banks, insurance companies and other financial services firms; (xiv) 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; (xv) the potential need to fund deficiencies in our Closed Block; (xvi) tax de velopments that may affect us directly, or indirectly through the cost of, the demand for or profitability of our products or services; (xvii) the possibility that the actions and initiatives of the U.S. Government, including those that we elect to participate in, may not improve adverse economic and market conditions generally or our business, financial condition and results of operations specifically (xviii) other legislative or regulatory developments; (xix) legal or regulatory actions; (xx) changes in accounting standards; (xxi) the potential effects of the spin-off of our former asset management subsidiary; (xxii) the potential effect of a material weakness in our internal control over financial reporting on the accuracy of our reported financial results; and (xxiii) 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, fu ture events or otherwise.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s discussion and analysis reviews our consolidated financial condition at December 31, 2008 and 2007; our consolidated results of operations for the years 2008, 2007 and 2006; and, where appropriate, factors that may affect our future financial performance. This discussion should be read in conjunction with “Selected Financial Data” and our consolidated financial statements in this Form 10-K.

Executive Overview

Business

We provide life insurance and annuity products through a wide variety of third-party financial professionals and intermediaries, supported by wholesalers and financial planning specialists employed by us. These products and services reflect a particular focus on the high-net-worth and affluent market. Our life and annuity business encompasses a broad range of product offerings. The principal focus of our life insurance business is on permanent life insurance (universal and variable universal life) insuring one or more lives, but we also offer a portfolio of term life insurance products. Our annuity products include deferred and immediate variable annuities with a variety of death benefit and guaranteed living benefit options.

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On December 31, 2008, we completed the spin-off of our asset management business through a pro rata distribution of common stock of our majority-owned subsidiary, Virtus, formerly known as Phoenix Investment Partners, Ltd., to our shareholders.

A substantial but gradually declining share of net income derives from the Closed Block, which consists primarily of participating life insurance policies sold prior to our demutualization and initial public offering in 2001. We do not expect the net income contribution from the Closed Block to deviate materially from its actuarially projected path. See Note 4 to our consolidated financial statements in this Form 10-K for more information on the Closed Block.

Earnings Drivers

Apart from the Closed Block, our profitability is driven by interaction of the following elements:

·

Mortality margins in our universal and variable universal life product lines. We earn cost of insurance (“COI”) fees based on the difference between face amounts and the account values (referred to as the net amount at risk or NAR). We pay policyholder benefits and set up reserves for future benefit payments on these products. We define mortality margins as the difference between these fees and benefit costs. Mortality margins are affected by:

o

Number and face amount of policies sold;

o

Actual death claims net of reinsurance relative to our assumptions, a reflection of our underwriting and actuarial pricing discipline, the cost of reinsurance and the natural volatility inherent in this kind of risk; and

o

The policy funding levels or actual account values relative to our assumptions, a reflection of policyholder behavior and investment returns.

·

Fees on our life and annuity products. Fees consist primarily of asset-based (including mortality and expense charges) and premium-based fees which we charge on our variable life and variable annuity products and depend on the premiums collected and account values of those products. Asset-based fees are calculated as a percentage of assets under management within our separate accounts. Fees also include surrender charges. Non-asset-based fees are charged to cover premium taxes and renewal commissions.

·

Interest margins. Net investment income (“NII”) earned on universal life and other policyholder funds managed as part of our general account, less the interest credited to policyholders on those funds.

·

Non-deferred expenses including expenses related to selling and servicing the various products offered by the Company, dividends to policyholders and other general business expenses.

·

Deferred policy acquisition cost amortization, which is based on the amount of expenses deferred, actual results in each quarter and management’s assumptions about the future performance of the business. The amount of future profit or margin is dependent principally on investment returns in our separate accounts, investment income in excess of the amounts credited to policyholders, surrender and lapse rates, death claims and other benefit payments, premium persistency, funding patterns and expenses. These factors enter into management’s estimates of gross profits or margins, which generally are used to amortize deferred policy acquisition costs. Actual equity market movements, net investment income in excess of amounts credited to policyholders, claims payments and other key factors can vary significantly from our assumptions, resulting in a misestimate of gross profits or margins, and a change in amortization, with a resulting impact to income. In ad dition, we regularly review and reset our assumptions in light of actual experience, which can result in material changes in amortization.

·

Net realized investment gains or losses on our general account investments.

Certain of our products include guaranteed benefits. These include guaranteed minimum death benefits, guaranteed minimum accumulation benefits, guaranteed minimum withdrawal benefits and guaranteed minimum income benefits. Periods of significant and sustained downturns in equity markets, increased equity volatility, or reduced interest rates would result in an increase in the valuation of the future policy benefit or policyholder account balance liabilities associated with such products, resulting in a reduction to earnings.

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

25

Recent Economic Market Conditions and Industry Trends

Over the past year, the U.S. economy has experienced unprecedented credit and liquidity issues and entered into recession. Following several years of rapid credit expansion, a sharp contraction in mortgage lending coupled with dramatic declines in home prices, rising mortgage defaults and increasing home foreclosures, resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to most sectors of the credit markets, and to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, to be subsidized by the U.S. government and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduc ed and, in some cases, ceased to provide funding to borrowers, including other financial institutions. These factors, combined with declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a prolonged recession.

These extraordinary economic and market conditions have materially and adversely affected us. It is difficult to predict how long the current economic and market conditions will continue, whether the financial markets will continue to deteriorate and which aspects of our products and/or business will be adversely affected. However, the lack of credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity are likely to continue to materially and adversely affect our business, financial condition and results of operations.

In response to, and in some cases in addition to, recent economic and market conditions, we continue to be influenced by a variety of trends that affect the life insurance industry:

·

Statutory capital and surplus and risk-based capital (“RBC”) ratios. Regulated life insurance entities are subject to risk-based capital requirements which are a function of these entities’ statutory capital and surplus and risk-based capital requirements. The impact of economic and market environment has both reduced statutory capital and increased risk-based capital requirements in a variety of ways. For instance, realized losses reduce available capital and surplus, equity market declines increase the amount of statutory reserves that insurers are required to hold for variable annuity guarantees while increasing risk-based capital requirements and credit downgrades of securities increase risk-based capital requirements. We have recently taken capital management actions to improve our capitalization and RBC ratio including, but not limited to, the sale of certain securities in our portfolio and entry into reinsurance arrangements. We may t ake similar actions in the future. Further, we have been approved to become a savings and loan holding company and have submitted an application to participate in the CPP under the TARP program and are currently considering whether to participate. Participation in the CPP would require that we complete the acquisition of a savings and loan company, submit to regulation by the Office of Thrift Supervision and adopt certain restrictions on our executive compensation practices.

·

Debt and Financial Strength Ratings. Recent adverse economic and market conditions have increased the number of debt and financial strength ratings for insurance companies being lowered or placed on negative outlooks. We have recently been downgraded and some of our ratings have negative outlooks. Please see “Management’s Discussion and Analysis—Liquidity and Capital Resources.” Further downgrades and outlook changes related to us or the life insurance industry may occur at any time and without notice by any rating agency. Downgrades or outlook changes could increase policy surrenders and withdrawals, adversely affect relationships with distributors, reduce new sales, reduce our ability to borrow and increase our future borrowing costs.

·

Regulatory Changes. We are subject to extensive laws and regulations. These laws and regulations are complex and subject to change. This is particularly the case given recent adverse economic and market developments. In light of recent events involving certain financial institutions and the current financial crisis, it is possible that the U.S. government will heighten its oversight of the financial services industry, including possibly through a federal system of insurance regulation. In addition, it is possible that these authorities may adopt enhanced or new regulatory requirements intended to prevent future crises in the financial services industry and to assure the stability of institutions under their supervision. We cannot predict whether this or other regulatory proposals will be adopted, or what impact, if any, such regulation could have on our business, consolida ted operating results, financial condition or liquidity.

26

·

Competitive Pressures. Recent domestic and international consolidation in the financials services industry, driven by regulatory action and other opportunistic transactions in response to adverse economic and market developments, has resulted in an environment in which larger competitors with better financial strength ratings, greater financial resources, marketing and distribution capabilities may be better positioned competitively. Larger firms may be better able to withstand further market disruption, able to offer more competitive pricing and have superior access to debt and equity capital. We may also be subject to claims by competitors that our products infringe on their patents. In addition, some of our competitors are regulated differently than we are, which may give them a competitive advantage; for example, many non-insurance company providers of financial servic es are not subject to the costs and complexities of insurance regulation by multiple states. If we fail to compete effectively in this environment, our profitability and financial condition could be materially and adversely affected.

Effect of Recent Economic Market Conditions and Industry Trends on Earnings Drivers

Recent economic market conditions and industry trends primarily affected us in the following areas:

·

Deferred policy acquisition cost amortization. In 2008 we had an unlocking of deferred policy acquisition costs resulting in an acceleration of amortization of $163.5 million, as compared to an unlocking impact to amortization of $4.1 million and $(19.1) million in 2007 and 2006, respectively. We revised our estimates of future gross profits or margins, which generally are used to amortize deferred policy acquisition costs primarily based on equity market movements, net investment income, actual mortality experience, and premium persistency, resulting in a reduction in overall projected gross profits or margins, and an acceleration of the amortization of deferred policy acquisition costs.

·

Net realized investment gains or losses on our general account investments. In 2008 we had net realized losses of $295.8 million, as compared to net realized losses of $6.0 million and net realized gains of $75.2 million in 2007 and 2006, respectively. The realized losses in 2008 were primarily driven by impairments on debt investment securities of $149.6 million as well as increased transaction-related losses on debt and equity securities. A widening of credit spreads, such as the market has experienced recently, has further exacerbated the losses incurred.

·

Fees on our life and annuity products. In 2008, before the impact of the unlocking noted above, we earned net asset-based fees on our variable life and annuity products of $78.9 million, as compared to $83.5 million and $72.6 million in 2007 and 2006, respectively. The decrease in net asset-based fees was driven by market-driven declines in the separate account assets, resulting in lower assets under management and, accordingly, lower fees. In 2008 we recognized premium and policy-based fees of $55.0 million, as compared to $47.3 million and $42.3 million in 2007 and 2006, respectively. The increase is primarily driven by higher premiums in our universal life business.

·

Interest margins. In 2008 our universal life interest margin was $15.5 million, as compared to margins of $23.6 million and $24.7 million in 2007 and 2006, respectively. In 2008 our annuity interest margin was $17.5 million, as compared to margins of $23.9 million and $28.5 million in 2007 and 2006, respectively. These declines were primarily driven by lower yields on our debt securities and lower asset balances. In addition to the above, interest on assets backing surplus was $64.6 million in 2008, as compared to $78.8 million and $74.1 million in 2007 and 2006, respectively. The decrease was driven by lower income from venture capital partnerships investments.

Summary of Consolidated Results of Operations

In 2008 we had a net loss of $726.0 million, compared to net income of $117.6 million and $95.3 million in 2007 and 2006, respectively. Of the net loss in 2008, $551.6 million was related to our discontinued asset management business and was driven by $536.7 million of non-cash impairment charges related to goodwill and intangibles. The decline in net income not related to the discontinuation of our asset management business was primarily a result of the impacts of recent adverse market conditions on deferred policy acquisition cost amortization and investment results.

The negative impact of recent market conditions was partially offset by lower operating expenses and favorable mortality margins in our universal life products, as well as favorable mortality experience in our term life business. Operating expenses decreased in 2008 by $14.2 million compared to 2007 primarily driven by $17 million in expense reductions and operational improvement initiatives in 2008. In 2008 universal life mortality margins, before unlocking impacts, were $189.7 million, as compared to $120.2 million and $95.7 million in 2007 and 2006, respectively.

27

Outlook

The prospect of continued challenges in the economy, including the potential for an extended or deepening recession, may have further material adverse effects on our business, financial condition and results of operations. In such an environment we would face lower fees and net investment income from life and annuity products, additional net realized investment losses on our general account investments, including further other-than-temporary impairments, higher costs for guaranteed benefits, and the potential for further deferred policy acquisition cost unlocking.

In light of these factors, in the first quarter of 2009 we announced a strategic repositioning of our business. We intend to build our future business by leveraging existing manufacturing strengths and partnering capabilities in ways that will be less capital intensive and ratings sensitive. We have developed a three-pronged strategy that shifts the focus of new business development to private labeling, expanding alternative retirement product offerings, and developing new distribution channels for core product offerings.

We expect to focus on the following throughout 2009:

·

A focus on capital preservation through risk management, reinsurance, product design changes and other potential approaches in order to maintain strong statutory risk-based capital ratios and capital to absorb additional adverse market events.

·

A strong emphasis on maintaining liquidity to meet policyholder and other financial obligations.

·

Pursuit of further cost reduction initiatives and a focus on creating a more efficient organization to improve our operating effectiveness and lower costs.

·

A focus on the execution of our strategic repositioning.

Recent Developments

On March 3, 2009, State Farm informed us that it intends to suspend the sale of Phoenix products pending a re-evaluation of the relationship between the two companies. During 2008, State Farm was our largest distributor of annuity and life insurance products accounting for approximately 27% of our total life insurance premiums and approximately 68% of our annuity deposits.

On March 4, 2009, National Life Group also informed us that it intends to suspend the sale of Phoenix products. In 2008, National Life was our second largest distributor of annuity products accounting for approximately 14% of our annuity deposits.

Recent Acquisitions and Dispositions

PFG Holdings, Inc.

In 2003, we acquired the remaining interest in PFG Holdings, Inc. (“PFG”), the holding company for our private placement operation. The initial purchase consideration was $16.7 million in addition to a contingent obligation for additional purchase consideration based on the achievement of certain performance targets through 2007 and the appraised value of PFG as of December 31, 2007. Through November 2007, we paid additional consideration of $19.4 million, including $13.4 million, $0.0 million and $3.0 million during 2007, 2006 and 2005 respectively. In November 2007, we amended the original purchase agreement to extend the term of the agreement through the end of 2009 and to establish a more objective mechanism to value PFG and calculate the final amount of contingent consideration. As a result, we may be obligated to make additional cash payments of $17.6 million by June 2010 if certain performance targets are met through December 2009. Since the cont ingent payments are based on the achievement of performance targets, the actual payments may be lower. If the performance targets are exceeded, the actual payments may be higher, subject to a maximum of $77.1 million. In accordance with EITF 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, a portion of the contingent payments will be accounted for as goodwill, and the amounts related to performance in excess of targets will be expensed, if and when achieved.

Lombard International Assurance S.A.

In 2005, we disposed of our interests in Lombard International Assurance S.A. (“Lombard”). In the first quarters of 2007 and 2006, we realized after-tax gains of $8.9 million and $6.5 million, respectively, which included earn-out gain consideration received. We are not entitled to any additional consideration related to this sale going forward.

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EMCO

On December 20, 2007, we sold all of the outstanding stock of Emprendimiento Compartido S.A. (“EMCO”), an Argentine wholly-owned subsidiary. We realized an after-tax loss of $4.8 million on this sale. This loss and EMCO’s results up through the date of sale are reported in discontinued operations in our consolidated financial statements in this Form 10-K. Prior year results have also been reported in discontinued operations.

Spin-Off of Virtus

On February 7, 2008, we announced that our board of directors had decided to pursue the spin-off our asset management subsidiary, Virtus Investment Partners, Inc. (“Virtus”), formerly known as Phoenix Investment Partners, Ltd., excluding the assets and business of Goodwin Capital Advisers, Inc. (“Goodwin”) in order to enhance stockholder value. On December 12, 2008, our board of directors formally approved the spin-off and declared a dividend payable to each holder of record at the close of business on December 22, 2008 of one share of Virtus common stock for every 20 shares of our common stock held by such holder. We distributed 100% of Virtus common stock to our stockholders (other than shares withheld to satisfy certain withholding obligations) on December 31, 2008. Following the spin-off, we and Virtus are independent of each other and have separate boards of directors and management.

In connection with the spin-off, Virtus and we entered into a separation agreement and several other agreements to complete the separation of the asset management business from us and to distribute Virtus common stock to our stockholders. These agreements govern the relationship between Virtus and us following the spin-off and also provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the spin-off. The agreements include a transition services agreement, tax separation agreement and employee matters agreement.

Impact of New Accounting Standards

For a discussion of accounting standards and change in accounting, see Note 2 to our consolidated financial statements in this Form 10-K.

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 accounting principles generally accepted in the United States of America (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Critical accounting estimates are reflective of significant judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The following are areas that we believe require significant judgments:

Deferred Policy Acquisition Costs and Present Value of Future Profits

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

Each year, we develop future EGPs for the products sold during that year. The EGPs for products sold in a particular year are aggregated into cohorts. Future EGPs are projected for the estimated lives of the contracts. The amortization of deferred policy acquisition costs and present value of future profits requires the use of various assumptions, estimates and judgments about the future. The assumptions, in the aggregate, are considered important in the projections of EGPs. The assumptions developed as part of our annual process are based on our current best estimates of future events, which are likely to be different for each year’s cohort. Assumptions considered to be significant in the development of EGPs include separate account fund performance, surrender and lapse rates, interest margin, mortality, premium persistency, funding patterns, expenses and reinsurance costs and recoveries. These assumptions are reviewed on a regular basis and are based on our past experience, indus try studies, regulatory requirements and estimates about the future.

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To determine the reasonableness of the prior assumptions used and their impact on previously projected account values and the related EGPs, we evaluate, on a quarterly basis, our previously projected EGPs. Our process to assess the reasonableness of our EGPs involves the use of internally developed models, together with studies and actual experience. Incorporated in each scenario are our current best estimate assumptions with respect to separate account returns, surrender and lapse rates, interest margin, mortality, premium persistency, funding patterns, expenses and reinsurance costs and recoveries.

In addition to our quarterly reviews, we complete a comprehensive assumption study during the fourth quarter of each year. Upon completion of an assumption study, we revise our assumptions to reflect our current best estimate, thereby changing our estimate of projected account values and the related EGPs in the deferred policy acquisition cost and unearned revenue amortization models as well as AICPA Statement of Position No. 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts for Separate Accounts (“SOP 03-1”), reserving models. The deferred policy acquisition cost asset, as well as the unearned revenue reserves and SOP 03-1 reserves are then adjusted with an offsetting benefit or charge to income to reflect such changes in the period of the revision, a process known as “unlocking.”

Underlying assumptions for future periods of EGPs are not altered unless experience deviates significantly from original assumptions. For example, when lapses of our insurance products meaningfully exceed levels assumed in determining the amortization of deferred policy acquisition costs, we adjust amortization to reflect the change in future premiums or EGPs resulting from the unexpected lapses. In the event that we were to revise assumptions used for prior year cohorts, our estimate of projected account values would change and the related EGPs in the deferred policy acquisition cost amortization model would be unlocked, or adjusted, to reflect such change. Continued favorable experience on key assumptions, which could include increasing separate account fund return performance, decreasing lapses or decreasing mortality could result in an unlocking which would result in a decrease to deferred policy acquisition cost amortization and an increase in the deferred policy acquisition costs asset. Finally, an analysis is performed periodically to assess whether there are sufficient gross margins or gross profits to amortize the remaining deferred policy acquisition costs balances.

The separate account fund performance assumption is critical to the development of the EGPs related to our variable annuity and variable life insurance businesses. As equity markets do not move in a systematic manner, we use a mean reversion method (reversion to the mean assumption), a common industry practice, to determine the future equity market growth rate assumption used for the amortization of deferred policy acquisition costs. This practice assumes that the expectation for long-term appreciation is not changed by minor short-term market fluctuations. The average long-term rate of assumed separate account fund performance used in estimating gross profits was 6.0% (after fund fees and mortality and expense charges) for the variable annuity business and 6.9% (after fund fees and mortality and expense charges) for the variable life business at both December 31, 2008 and 2007.

Policy Liabilities and Accruals

Reserves are liabilities representing estimates of the amounts that will come due to our policyholders at some point in the future. GAAP prescribes the methods of establishing reserves, allowing some degree of managerial judgment.

See Note 2 to our consolidated financial statements and the Enterprise Risk Management section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for more information.

Embedded Derivative Liabilities

The fair value of our liability for guaranteed minimum accumulation benefit (“GMAB”) and guaranteed minimum withdrawal benefit (“GMWB”) riders are calculated in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as modified by SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 requires a Credit Standing Adjustment. The Credit Standing Adjustment reflects the adjustment that market participants would make to reflect the risk that guaranteed benefit obligations may not be fulfilled (“nonperformance risk”). SFAS 157 explicitly requires nonperformance risk to be reflected in fair value. The Company calculates the Credit Standing Adjustment by applying an average credit spread for companies similar to Phoenix when discounting the rider cash flows for calculation of the liability. This average credit spread is recalculated every quarter and so the fair value will cha nge with the passage of time even in the absence of any other changes that affect the valuation. For example, the December 31, 2008 fair value of $118.5 million would increase to $128.4 million if the chosen spread decreased by 50 basis points. If the chosen spread increased by 50 basis points the fair value would decrease to $107.6 million.

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Goodwill and Other Intangible Assets

For goodwill, we perform impairment tests at least annually. For goodwill, we calculate the fair value of the reporting unit based on the sum of its statutory book value, value of business in force and value of estimated new business. As of December 31, 2008, we did not have any intangible assets recorded on our balance sheet.

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

Valuation of Debt and Equity Securities

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

Fair Value of General Account Fixed Maturity Securities	As of December 31, 2008
by Pricing Source:	Fixed		% of
($ in millions)	Maturities		Total
	at Fair Value		Fair Value
Priced via independent market quotations	$	6,182.1	62.9%
Priced via matrices		2,428.5	24.7%
Priced via broker quotations		360.4	3.7%
Priced via other methods		583.6	5.9%
Short-term investments*		276.4	2.8%
Total	$	9,831.0	100.0%
*Short-term investments are valued at amortized cost, which approximates fair value.

Other-Than-Temporary Impairments

Investments whose value is considered by us to be other-than-temporarily impaired are written down to fair value as a charge to net realized investment losses included in our earnings. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in fair value. We consider a wide range of factors about the security issuer and use our best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near term recovery. Inherent in our evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations we use in the impairment evaluation process include, but are not limited to:

·

the length of time and the extent to which the market value has been below cost or amortized cost;

·

the potential for impairments of securities when the issuer is experiencing significant financial difficulties;

·

the potential for impairments in an entire industry sector or sub-sector;

·

our ability and intent to hold the security for a period of time sufficient to allow for recovery of its value;

·

unfavorable changes in forecasted cash flows on asset-backed securities; and

·

other subjective factors, including concentrations and information obtained from regulators and rating agencies.

Historically, for securitized financial asset securities subject to EITF Issue No. 99-20, we periodically updated our best estimate of cash flows over the life of the security. In estimating cash flows, we use assumptions based on current market conditions that we believe market participants would use. If the fair value was less than amortized cost, or there was an adverse change in the timing or amount of expected future cash flows since the prior analysis, an other-than-temporary impairment was recognized. Projections of future cash flows were subject to change based on new information regarding performance, data received from third party sources, and internal judgments regarding the future performance of the underlying collateral.

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Beginning in the fourth quarter of 2008, we implemented FSP No. EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue No. 99-20. In addition to relying on our best estimate of cash flows that a market participant would use in determining fair value, we apply management judgment of the probability of collecting all amounts due. In making the other-than-temporary impairment assessment, information such as past events, current conditions, reasonable forecasts, expected defaults, and relevant market data are considered. Also as part of this analysis, we assess our intent and ability to retain until recovery those securities judged to be temporarily impaired.

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

See Note 9 to our consolidated financial statements and the Debt and Equity Securities and Enterprise Risk Management sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K for more information.

Deferred Income Taxes

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

Significant management judgment is required in determining the provision for income taxes and, in particular, any valuation allowance recorded against our deferred tax assets. We carried a valuation allowance of $287.9 million on $744.6 million of deferred tax assets at December 31, 2008, due to uncertainties related to our ability to utilize some of the deferred tax assets. The amount of the valuation allowance has been determined based on our estimates of taxable income over the periods in which the deferred tax assets will be recoverable, including consideration of expiration of capital loss carryovers.

We concluded that a valuation allowance on the remaining $456.7 million of deferred tax assets at December 31, 2008, was not required. Our methodology for determining the realizability of deferred tax assets involves estimates of future taxable income from our operations and consideration of available tax planning strategies and actions that could be implemented, if necessary, as well as the expiration dates and amounts of carryforwards related to net operating losses, capital losses, foreign tax credits and general business tax credits. These estimates are projected through the life of the related deferred tax assets based on assumptions that we believe to be reasonable and consistent with current operating results. Changes in future operating results not currently forecasted may have a significant impact on the realization of deferred tax assets.

In concluding that a valuation allowance was not required on the remaining deferred tax assets, we considered both the positive and negative evidence regarding our ability to generate sufficient taxable income to realize those deferred tax assets. Positive evidence included having achieved profitability for financial reporting purposes from 2004 through 2007. Further positive evidence included the fact that the net operating losses will not begin to expire until 2023, while projected earnings indicate that the deferred tax assets will be offset by taxable earnings prior to that expiration. Negative evidence included a history of net operating losses in the non-life insurance company group. In weighing the positive and negative evidence above, we considered the more likely than not criteria pursuant to SFAS 109. Based on this analysis we concluded that it was more likely than not that the deferred tax assets of $456.7 million would be realized.

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We have elected to file a consolidated federal income tax return for 2008 and prior years. Within the consolidated tax return, we are required by regulations of the Internal Revenue Service (“IRS”) to segregate the entities into two groups: life insurance companies and non-life insurance companies. We are limited as to the amount of any operating losses from the non-life group that can be offset against taxable income of the life group. These limitations may affect the amount of any operating loss carryovers that we have now or in the future.

As of December 31, 2008, we had deferred tax assets of $101.8 million and $262.2 million related to net operating and capital losses, respectively, for federal income tax purposes. The related federal net operating loss carryovers of $291.0 million are scheduled to expire between the years 2019 and 2028. The related federal capital loss carryovers of $749.2 million are scheduled to expire in 2009, 2010, 2012 and 2013. At the end of 2008, a valuation allowance of $241.6 million was established relative to the capital loss carryforwards.

As of December 31, 2008, we had deferred income tax assets of $14.6 million related to foreign tax credit carryovers, which are expected to expire between the 2011 and 2017 tax years.

As of December 31, 2008, we had deferred income tax assets of $33.0 million related to general business tax credit carryovers, which are expected to expire between the years 2022 and 2028.

Our federal income tax returns are routinely audited by the IRS, and estimated provisions are routinely provided in the financial statements in anticipation of the results of these audits. 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. As of December 31, 2008, we had current taxes payable of $9.1 million, including $8.7 million of unrecognized tax benefits.

See Note 16 to our consolidated financial statements in this Form 10-K for more information related to income taxes.

Pension and other Postemployment Benefits

See Note 18 to our consolidated financial statements in this Form 10-K for more information on our pension and other postemployment benefits.

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Consolidated Results of Operations

Summary Consolidated							Increase (decrease) and
Financial Data:	Years Ended December 31,						percentage change
($ in millions, except per share data)	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
REVENUES
Premiums	$	765.9	$	798.3	$	839.7	$	(32.4)	(4%)	$	(41.4)	(5%)
Fee income		622.6		516.4		414.1		106.2	21%		102.3	25%
Net investment income		915.6		1,058.8		1,048.5		(143.2)	(14%)		10.3	1%
Net realized investment gains (losses)		(295.8)		(6.0)		75.2		(289.8)	4,830%		(81.2)	(108%)
Total revenues		2,008.3		2,367.5		2,377.5		(359.2)	(15%)		(10.0)	—
BENEFITS AND EXPENSES
Policy benefits, excluding policyholder   dividends		1,370.9		1,318.5		1,341.1		52.4	4%		(22.6)	(2%)
Policyholder dividends		207.5		380.0		399.1		(172.5)	(45%)		(19.1)	(5%)
Policy acquisition cost amortization		409.0		193.0		145.8		216.0	112%		47.2	32%
Interest expense on indebtedness		36.7		44.2		49.2		(7.5)	(17%)		(5.0)	(10%)
Interest expense on non-recourse   collateralized obligations		11.8		15.4		18.7		(3.6)	(23%)		(3.3)	(18%)
Other operating expenses		263.7		277.9		258.2		(14.2)	(5%)		19.7	8%
Total benefits and expenses		2,299.6		2,229.0		2,212.1		70.6	3%		16.9	1%
Income (loss) from continuing operations   before income taxes		(291.3)		138.5		165.4		(429.8)	(310%)		(26.9)	(16%)
Income tax (expense) benefit		116.9		(21.9)		(51.6)		138.8	(634%)		29.7	(58%)
Income (loss) from   continuing operations		(174.4)		116.6		113.8		(291.0)	(250%)		2.8	2%
Income (loss) from discontinued   operations, net of income taxes		(551.6)		1.0		(18.5)		(552.6)	(55,260%)		19.5	(105%)
Net income (loss)	$	(726.0)	$	117.6	$	95.3	$	(843.6)	(717%)	$	22.3	23%
Earnings (loss) per share:
Basic	$	(6.35)	$	1.03	$	0.86	$	(7.38)	(717%)	$	0.17	20%
Diluted	$	(6.35)	$	1.01	$	0.84	$	(7.36)	(729%)	$	0.17	20%
Weighted-average common shares   outstanding (in millions)		114.4		114.1		110.9		0.3	0%		3.2	3%
Weighted-average common shares   outstanding and dilutive potential   common shares (in millions)		114.4		116.0		113.2		(1.6)	(1%)		2.8	2%

Analysis of Consolidated Results of Operations

Year ended December 31, 2008 compared to year ended December 31, 2007

Results for year ended December 31, 2008 reflect losses in our discontinued asset management operations as well as negative impacts from the decline in equity markets and return on variable products. The consolidated net loss for the year was $726.0 million, or $(6.35) per diluted share, down 717% from the prior year.

The net loss from continuing operations of $174.4 in 2008 compares to net income of $116.6 million in 2007, or a decline of $291.0 million. This result reflected unlocking of deferred policy acquisition costs resulting in accelerated amortization of $183.8 million, as compared to an unlocking of $4.1 million in 2007. It also reflected the adverse impacts of the markets on our investments, specifically overall declines and credit spread widening, resulting in $295.8 million in realized capital losses.

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Mortality margins in universal life and variable universal life products increased to $237.6 million in 2008, compared to $173.1 million in 2007, or $64.5 million. This reflects a $98.9 million increase in cost of insurance fees, partially offset by a $34.4 million increase in benefits. While fluctuations in mortality are inherent in our business, this improvement primarily reflects growth in the block of business over recent years. Fee revenues increased to $133.9 million in 2008, compared to $130.8 million, or $3.1 million. The increase was driven by higher premium-based fees of $7.7 million on our universal life and variable universal life products, partially offset by lower asset-based fees of $4.6 million on our variable annuity products.

Net investment income on surplus and assets supporting the open-block traditional life products decreased to $89.2 million in 2008, compared to $148.7 million in 2007, or $59.5 million. The primary driver was lower yields on debt securities which had an adverse impact on our interest margins. Our universal life interest margins declined to $15.5 million in 2008, compared to $23.6 million in 2007, or $8.1 million. Our variable annuity interest margin declined to $17.5 million in 2008, compared to $23.9 million in 2007, or $6.4 million. Additionally, our interest on surplus declined to $24.6 million in 2008, compared to $78.8 million in 2007, or $54.2 million primarily driven by lower investment income on venture capital partnerships.

Non-deferred expenses decreased to $263.7 million in 2008, compared to $277.9 million in 2007, or $14.2 million, reflecting actions to reduce expenses as we reposition our business to compete in a rapidly changing environment. These expenses also included $6.3 million in costs associated with the spin-off of our asset management business. In addition, higher mortality margins and increasing in-force blocks created higher policy costs amortization expense of $236.2, compared to $188.9 million in 2007. Amortization in 2008 also increased $183.8 million due to an unlocking of assumptions, while 2007 amortization increased by $4.1 million for an unlocking in that year.

Our effective tax rate was higher in 2008 than in 2007 in part due to the release in 2007 of a valuation allowance related to foreign tax credits that did not repeat and the release in 2008 of reserves for unrecognized tax benefits related to settlements with taxing authorities.

Year ended December 31, 2007 compared to year ended December 31, 2006

Our 2007 results reflect the growth of our inforce business and funds on deposit in our life and annuity products over the last several years. Consolidated net income for the year was $117.6 million, or $1.01 per diluted share, up 23% from the prior year.

Net income from continuing operations improved slightly in 2007 to $116.6 million, up from $113.8 million in the prior year. This result reflected improvements in mortality margin, fees, and net investment income, largely offset by higher non-deferred expenses, reflecting investments in the growth of new distribution and business initiatives, and by amortization of deferred policy acquisition costs.

Mortality margins in universal life and variable universal life products increased $55.2 million in 2007, reflecting a $78.1 million increase in cost of insurance fees, only partially offset by a $22.9 million increase in benefits. While fluctuations in mortality are inherent in our business, this improvement primarily reflects growth in the block of business over recent years. Fee revenues increased $12.5 million in 2007 for asset-based fees. Net investment income on surplus and assets supporting the open-block traditional life products increased $11.2 million in 2007. Non-deferred expenses increased as we invested in new product development and sales growth. In addition, higher mortality margins and increasing inforce blocks created higher amortization expense of $198.5 million in 2007, compared with $152.1 million in 2006. Amortization in 2007 also increased $4.1 million due to an unlocking of assumptions, while 2006 amortization was lowered $19.1 million for an unlocking in that yea r.

After-tax realized investment losses of $5.8 million, net of offsets, in 2007 compared with net gains of $21.0 million in 2006. This increase in net loss was mainly driven by debt security impairments taken during 2007 as credit markets deteriorated and by a large gain on a collateralized debt obligation in 2006 that did not recur in 2007. Impairments taken on structured finance products, which are in part backed by sub-prime mortgages, were $21.5 million after-tax in 2007. Partially offsetting these increases in net loss were expense reductions and lower interest expense from the repayment of surplus notes and promissory notes in late 2006 and early 2007, respectively.

Our effective income tax rate was lower in 2007 than in 2006 in part due to the release of a valuation allowance that was previously established due to uncertainty about our ability to utilize foreign tax credits. During 2007, we determined that we would be able to utilize foreign tax credits on our future tax returns and released the valuation allowance.

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Results from discontinued operations improved in 2007 to net income of $1.0 million, from a net loss of $18.5 million in the prior year. The main driver of this improvement was an impairment charge on intangible assets taken in 2006 that did not recur in the current year. We also saw a modest improvement of $6.2 million in fee revenues from higher average assets under management, resulting mainly from mutual fund assets.

Annuity Funds on Deposit:	Years Ended December 31,
($ in millions)	2008		2007		2006
Deposits	$	827.1	$	1,030.3	$	1,443.9
Performance and interest credited		(1,622.9)		783.3		949.6
Fees		(70.0)		(72.6)		(70.9)
Benefits and surrenders		(1,467.1)		(1,189.1)		(1,683.1)
Change in funds on deposit		(2,332.9)		551.9		639.5
Funds on deposit, beginning of period		9,229.5		8,677.6		8,038.1
Annuity funds on deposit, end of period	$	6,896.6	$	9,229.5	$	8,677.6

2008 vs. 2007

Annuity funds on deposit decreased by $2.3 billion in 2008 compared to an increase of $551.9 million in 2007. This change was due to lower overall deposits and a significant drop due to weak market performance.

2007 vs. 2006

Annuity funds on deposit increased by $551.9 million in 2007 compared to an increase of $639.5 million in 2006. This change was due to lower overall deposits and performance, offset by lower benefits and surrenders on our discontinued annuity funds. 2006 deposits were higher, largely due to a large private placement deposit of $886.8 million in the fourth quarter. 2006 surrenders were higher from our discontinued annuity products and due to a $206.6 million scheduled maturity from an institutionally-placed contract in 2006.

Variable Universal Life Funds on Deposit:	Years Ended December 31,
($ in millions)	2008		2007		2006
Deposits	$	246.7	$	213.0	$	182.5
Performance and interest credited		(716.7)		195.3		259.9
Acquisitions		11.2		218.8		—
Fees and cost of insurance		(117.3)		(113.4)		(106.2)
Benefits and surrenders		(142.3)		(130.5)		(123.1)
Change in funds on deposit		(718.4)		383.2		213.1
Funds on deposit, beginning of period		2,696.1		2,312.9		2,099.8
Variable universal life funds on deposit, end of period	$	1,977.7	$	2,696.1	$	2,312.9

2008 vs. 2007

Variable universal life funds on deposit decreased by $718.4 million in 2008 compared to an increase of $383.2 million in 2007. This change was primarily due to lower market performance.

2007 vs. 2006

Variable universal life funds on deposit increased by $383.2 million in 2007 compared to an increase of $213.1 million in 2006. This change was due to higher deposits and business assumed by our private placement business, partially offset by lower market performance.

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Universal Life Funds on Deposit:	Years Ended December 31,
($ in millions)	2008		2007		2006
Deposits	$	587.5	$	540.9	$	417.1
Interest credited		97.7		86.3		79.6
Fees and cost of insurance		(405.9)		(307.5)		(221.5)
Benefits and surrenders		(147.2)		(99.9)		(105.2)
Change in funds on deposit		132.1		219.8		170.0
Funds on deposit, beginning of period		2,123.9		1,904.1		1,734.1
Universal life funds on deposit, end of period	$	2,256.0	$	2,123.9	$	1,904.1

2008 vs. 2007

Universal life funds on deposit increased $132.1 million in 2008 compared to $219.8 million in 2007 primarily as a result of sales growth and higher interest credited, partially offset by higher benefits and surrenders, as well as fees and cost of insurance.

2007 vs. 2006

Universal life funds on deposit increased $219.8 million in 2007 compared to $170.0 million in 2006 primarily as a result of sales growth, higher interest credited and lower surrenders, partially offset by the increases to fees and cost of insurance.

Analysis of Consolidated Financial Condition

Stockholders’ equity decreased during 2008 by $1.4 billion to $865.0 million at December 31, 2008, compared to $2,279.0 million at December 31, 2007. The decrease was primarily driven by the net loss of $726.0 million and other comprehensive loss of $605.5 million, of which $530.5 million is unrealized depreciation, net of offsets. In addition, the distribution via spin-off dividend of our discontinued asset management business of $71.1 million contributed to the decrease. Total assets decreased $4.6 billion to $25.8 billion at December 31, 2008, primarily due to equity depreciation in the separate accounts of $2.9 billion and lower fair values of debt securities, driven by widening credit spreads.

Income Taxes

The effective tax rate for 2008, 2007 and 2006 was 40.1%, 15.8% and 31.2%, respectively. The principal cause of the difference between the effective rate and the U.S. statutory rate of 35% for 2008 was investment income not taxed (i.e., dividend received deduction and low income housing tax credits) and the release of reserves as a result of the effective settlement of an IRS audit. The principal cause of the difference between the effective tax rate and the U.S. statutory rate of 35% for 2007 was investment income not taxed and the reversal of the valuation allowance relative to foreign tax credit carryovers.

See Note 16 to our consolidated financial statements in this Form 10-K for more information related to income taxes.

Effects of Inflation

For the years 2008, 2007 and 2006, inflation did not have a material effect on our consolidated results of operations.

General Account

The invested assets in the Life Companies’ general accounts are generally of high quality and broadly diversified across asset classes, sectors and individual credits and issuers. Our investment 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.

37

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

See Note 13 to our consolidated financial statements in this Form 10-K for more information.

Enterprise Risk Management

We have a comprehensive, enterprise-wide risk management program. Our Chief Risk Officer reports to the Chief Financial Officer and monitors our risk management activities. We have established an Enterprise Risk Management Committee, chaired by the Chief Executive Officer, to establish risk management principles, monitor key risks and oversee our risk-management practices. Several management committees oversee and address issues pertaining to all our major risks—operational, market and product—as well as capital management.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. We have established an Operational Risk Committee, chaired by the Chief Risk Officer, to develop an enterprise-wide framework for managing and measuring operational risks. This committee generally meets monthly and has a membership that represents all significant operating, financial and staff departments of the Company. Among the risks the committee reviews and manages and for which it provides general oversight are key person dependency risk, business continuity risk, disaster recovery risk and risks related to the Company’s information technology systems.

Market Risk

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 investment activities and our insurance operations. Our investment objective is to maximize after-tax investment return within defined risk parameters. Our primary sources of market risk are:

·

interest rate risk, which relates to the market price and cash flow variability associated with changes in market interest rates;

·

credit risk, which relates to the uncertainty associated with the ongoing ability of an obligor to make timely payments of principal and interest; and

·

equity risk, which relates to the volatility of prices for equity and equity-like investments, such as venture capital partnerships.

We measure, manage and monitor market risk associated with our insurance and annuity business, as part of our ongoing commitment to fund insurance liabilities. We have developed an integrated process for managing the interaction between product features and market risk. This process involves our Corporate Finance, Corporate Portfolio Management, Life and Annuity Finance, and Life and Annuity Product Development departments. These areas coordinate with each other and report results and make recommendations to our Asset-Liability Management Committee (“ALCO”) chaired by the Chief Financial Officer.

We also measure, manage and monitor market risk associated with our general account investments, both those backing insurance liabilities and those supporting surplus. This process involves Corporate Portfolio Management and Goodwin, our Hartford-based asset management affiliate. These organizations work together, make recommendations and report results to our Investment Policy Committee, chaired by the Chief Investment Officer. Please refer to the sections that follow, including “Debt and Equity Securities Held in General Account”, for more information on our investment risk exposures. We regularly refine our policies and procedures to appropriately balance market risk exposure and expected return.

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Interest Rate Risk Management

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 results primarily from our interest-sensitive insurance liabilities and 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 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 and product development processes. 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 product liabilities. All asset-liability strategies are approved by the ALCO. We manage the interest rate risk in portfolio segments by modeling and analyzing asset and product liability durations and projected cash flows under a number of interest rate scenarios.

One of the key measures we use to quantify our interest rate exposure is duration, a measure of 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 or liability with a duration of five is expected to decrease by 5%. We believe that as of December 31, 2008, our asset and liability portfolio durations were well matched, especially for our largest and most interest-sensitive segments. We regularly undertake a sensitivity analysis that calculates liability durations under various cash flow scenarios. We also calculate key rate durations for assets and liabilities that show the impact of interest rate changes at specific points on the yield curve. In addition, we monitor the short- and medium-term asset and liability cash flows profiles by portfolio to manage our liquidity needs.

To calculate duration for liabilities, we project liability cash flows under a number of stochastically-generated interest rate scenarios and discount them to a net present value using a risk-free market rate increased for our own credit risk. For interest-sensitive liabilities the projected cash flows reflect the impact of the specific scenarios on policyholder behavior as well as the effect of minimum guarantees. 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 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.

The selection of a 100 basis point immediate increase or decrease in interest rates at all points on the yield curve is a hypothetical rate scenario used to demonstrate potential risk. While a 100 basis point immediate increase or decrease of this type does not represent our view of future market changes, it is a hypothetical near-term change that illustrates the potential effect 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.

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

Interest Rate Sensitivity of Fixed Income	As of December 31, 2008
Financial Instruments:			-100 Basis				+100 Basis
($ in millions)	Carrying		Point				Point
	Value		Change		Fair Value		Change
Cash and cash equivalents	$	381.1	$	381.4	$	381.1	$	380.8
Available-for-sale debt securities		9,831.0		10,228.1		9,831.0		9,433.8
Mortgage loans		11.6		11.4		11.1		10.8
Subtotal		10,223.7		10,620.9		10,223.2		9,825.4
Debt and equity securities pledged as collateral		148.0		150.9		148.0		145.1
Totals	$	10,371.7	$	10,771.8	$	10,371.2	$	9,970.5

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We use derivative financial instruments, primarily interest rate swaps, to manage our residual exposure to fluctuations in interest rates. We enter into derivative contracts with a number of highly rated financial institutions, to both diversify and reduce overall counterparty credit risk 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. 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, excluding derivative liabilities embedded in products. These exposures will change as our insurance liabilities are created and discharged and as a result of ongoing portfolio and risk management activities.

Interest Rate Sensitivity of Derivatives:	As of December 31, 2008
($ in millions)			Weighted-	-100				+100
			Average	Basis				Basis
	Notional		Term	Point				Point
	Amount		(Years)	Change		Fair Value		Change
Cross currency swaps	$	35.0	5.2	$	4.2	$	5.2	$	6.2
Equity futures		214.0	0.2		32.1		31.9		31.6
Interest rate swaps		194.0	9.7		44.0		27.0		11.5
Call options		24.0	0.6		1.2		1.2		1.2
Put options		357.0	10.5		92.9		73.1		56.2
Swaptions		356.0	1.8		66.1		37.5		20.1
Totals – general account	$	1,180.0		$	240.5	$	175.9	$	126.8
Non-recourse interest rate swaps held in   consolidated collateralized debt obligations	$	170.7	0.3	$	5.2	$	5.1	$	4.3

See Note 14 to our consolidated financial statements in this Form 10-K for more information on derivative instruments.

Credit Risk Management

We manage credit risk through the fundamental analysis of the underlying obligors, issuers and transaction structures. Through Goodwin, our asset management affiliate, 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 also manage credit risk through industry and issuer diversification and asset allocation. Maximum exposure to an issuer or derivatives counterparty 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. In addition to monitoring counterparty exposures under current market conditions, exposures are monitored on the basis of a hypothetical “stressed” market environment involving a specific combination of declines in stock market prices and interest rates and a spike in implied option activity.

Equity Risk Management

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 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 $25.2 million in available-for-sale equity securities on our balance sheet as of December 31, 2008. A 10% decline or increase in the relevant equity price would have decreased or increased, respectively, the fair value of these assets by approximately $2.5 million as of December 31, 2008.

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Certain annuity products sold by our Life Companies contain guaranteed minimum death benefits. The guaranteed minimum death benefit (“GMDB”) feature provides annuity contract owners 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, if a contract has more than one of these features, the greatest of these values. To the extent that the GMDB is higher than the current account value at the time of death, the Company incurs a cost. This typically results in an increase in annuity policy benefits in periods of declining financial markets and in periods of stable financial markets following a decline. As of December 31, 2008 and 2007, the difference between the GMDB and the current account value (net amount at risk) for all existing contracts was $7 09.5 million and $46.7 million, respectively. This is our exposure to loss should all of our contract owners have died on either December 31, 2008 or 2007. See Note 12 to our consolidated financial statements in this Form 10-K for more information.

Certain life and annuity products sold by our Life Companies contain guaranteed minimum living benefits. These include guaranteed minimum accumulation, withdrawal, income and payout annuity floor benefits. The guaranteed minimum accumulation benefit (“GMAB”) guarantees a return of deposit to a policyholder after 10 years regardless of market performance. The guaranteed minimum withdrawal benefit (“GMWB”) guarantees that a policyholder can withdraw 5% for life regardless of market performance. The guaranteed minimum income benefit (“GMIB”) guarantees that a policyholder can convert his or her account value into a guaranteed payout annuity at a guaranteed minimum interest rate and a guaranteed mortality basis, while also assuming a certain level of growth in the initial deposit. The guaranteed payout annuity floor benefit (“GPAF”) guarantees that the variable annuity payment will not fall below the dollar amount of the initial payment. We have estab lished a hedging program for managing the risk associated with our guaranteed minimum accumulation and withdrawal benefit features. We began hedging our GMAB exposure in 2006 and GMWB exposure during the fourth quarter of 2007. We continue to analyze and refine our strategies for managing risk exposures associated with all our separate account guarantees. The statutory reserves for these totaled $53.7 million and $12.2 million at December 31, 2008 and 2007, respectively. The GAAP reserves totaled $140.5 million and $7.9 million at December 31, 2008 and 2007, respectively.

We perform analysis with respect to the sensitivity of a change in the separate account performance assumption as it is critical to the development of the EGPs related to our variable annuity and variable life insurance business. Equity market movements have a significant impact on the account value of variable life and annuity products and fees earned. EGPs could increase or decrease with these movements in the equity market. Sustained and significant changes in the equity markets could therefore have an impact on deferred policy acquisition cost amortization. Periodically, we also perform analysis with respect to the sensitivity of a change in assumed mortality as it is critical to the development of the EGPs related to our universal life insurance business.

As part of our analysis of separate account returns, we perform two sensitivity tests. If at December 31, 2008 we had used a 100 basis points lower separate account return assumption (after fund fees and mortality and expense charges) for both the variable annuity and the variable life businesses and used our current best estimate assumptions for all other assumptions to project account values forward from the current value to reproject EGPs, the estimated increase to amortization and decrease to net income would be approximately $1.2 million, before taxes.

If, instead, at December 31, 2008 we had used a 100 basis points higher separate account return assumption (after fund fees and mortality and expense charges) for both the variable annuity and variable life businesses and used our current best estimate assumptions for all other assumptions to project account values forward from the current value to reproject EGPs, the estimated decrease to amortization and increase to net income would be approximately $2.9 million, before taxes.

See Note 6 to our consolidated financial statements in this Form 10-K for more information regarding deferred policy acquisition costs.

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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 as of December 31, 2008. To the extent there are deviations in actual returns, there will be changes in our projected expense and funding requirements. As of December 31, 2008, the projected benefit obligation for our funded and unfunded defined benefit plans was in excess of plan assets by $175.2 million and $132.5 million, respectively. We made a payment of $20.0 million to the pension plans during 2007. We made no payments to the pension plans during 2008. We have not made a final determination on our ultimate pension funding methodology for 2009. We have no required contributions in the first quarter, and we will be reviewing our funding assumptions in the second quarter to determine what, if any, contributions are to be made later in the year. See Note 18 to our consolidated finan cial statements in this Form 10-K for more information on our employee benefit plans. In February 2007, we announced a change to our pension plan that was effective July 1, 2007. The change is designed to decrease the volatility of our pension expense over time.

Foreign Currency Exchange Risk Management

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 primarily results from our holdings in non-U.S. dollar-denominated debt and equity securities which are not material to our consolidated financial statements at December 31, 2008.

Debt and Equity Securities Held in General Account

Our general account debt securities portfolio consists primarily of investment grade publicly traded and privately placed corporate bonds, residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities. As of December 31, 2008, our general account debt securities, with a carrying value of $9,831.0 million, represented 74.0% of total general account investments. Public debt securities represented 70.4% of total debt securities, with the remaining 29.6% represented by private debt securities.

We consolidate debt and equity securities on our consolidated balance sheet that are pledged as collateral for the settlement of collateralized obligation liabilities related to two collateralized obligation trusts which we sponsor. See Note 13 of our consolidated financial statements in this Form 10-K for additional information on these debt and equity securities pledged as collateral.

Each year, the majority of our general account’s net cash flows are invested in investment grade debt securities. In addition, we maintain a portfolio allocation of between 6% and 10% of debt securities in below investment grade rated bonds. Allocations are based on our assessment of relative value and the likelihood of enhancing risk-adjusted portfolio returns. The size of our allocation to below investment grade bonds is also constrained by the size of our net worth. We are subject to the risk that the issuers of the debt securities we own may default on principal and interest payments, particularly in the event of a major economic downturn. Our investment strategy has been to invest the majority of our below investment grade rated bond exposure in the BB rating category, which is equivalent to a Securities Valuation Office (“SVO”) securities rating of 3. The BB rating category is the highest quality tier within the below investment grade universe, a nd BB rated securities historically experienced lower defaults compared to B or CCC rated bonds. As of December 31, 2008, our total below investment grade securities totaled $805.1 million, or 8.2%, of our total debt security portfolio. Of that amount, $475.3 million, or 4.8%, of our debt security portfolio was invested in the BB category.

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

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General Account Debt Securities at Fair Value:
($ in millions)		As of December 31,
		Total Debt Securities				Public Debt Securities				Private Debt Securities
SVO	S&P Equivalent	(Fair Value)				(Fair Value)				(Fair Value)
Rating	Designation	2008		2007		2008		2007		2008		2007
1	AAA/AA/A	$	6,124.7	$	7,473.6	$	4,801.8	$	5,950.6	$	1,322.9	$	1,523.0
2	BBB		2,901.2		3,567.7		1,584.7		1,997.9		1,316.5		1,569.8
Total investment grade			9,025.9		11,041.3		6,386.5		7,948.5		2,639.4		3,092.8
3	BB		475.3		604.3		347.3		507.7		128.0		96.6
4	B		212.4		227.3		112.6		179.3		99.8		48.0
5	CCC and lower		103.7		84.0		70.4		33.8		33.3		50.2
6	In or near default		13.7		13.1		3.8		6.1		9.9		7.0
Total debt securities		$	9,831.0	$	11,970.0	$	6,920.6	$	8,675.4	$	2,910.4	$	3,294.6

General Account Debt Securities	As of December 31, 2008
by Type:					Unrealized Gains (Losses)
($ in millions)	Fair				Gross		Gross
	Value		Cost		Gains		Losses		Net
U.S. government and agency	$	608.7	$	609.4	$	23.9	$	(24.6)	$	(0.7)
State and political subdivision		192.7		195.2		4.8		(7.3)		(2.5)
Foreign government		182.5		174.3		11.0		(2.8)		8.2
Corporate		5,812.0		6,767.3		43.0		(998.3)		(955.3)
Mortgage-backed		2,433.3		2,805.8		22.1		(394.6)		(372.5)
Other asset-backed		601.8		924.2		3.5		(325.9)		(322.4)
Total debt securities	$	9,831.0	$	11,476.2	$	108.3	$	(1,753.5)	$	(1,645.2)
Debt securities outside Closed Block:
Unrealized gains	$	1,009.0	$	975.7	$	33.3	$	—	$	33.3
Unrealized losses		2,810.6		3,703.8		—		(893.2)		(893.2)
Total outside the Closed Block		3,819.6		4,679.5		33.3		(893.2)		(859.9)
Debt securities in Closed Block:
Unrealized gains		2,201.9		2,126.9		75.0		—		75.0
Unrealized losses		3,809.5		4,669.8		—		(860.3)		(860.3)
Total in the Closed Block		6,011.4		6,796.7		75.0		(860.3)		(785.3)
Total debt securities	$	9,831.0	$	11,476.2	$	108.3	$	(1,753.5)	$	(1,645.2)

General Account Debt Securities	As of December 31, 2008
by Type and Credit Quality:	Investment Grade				Below Investment Grade
($ in millions)	Fair Value		Cost		Fair Value		Cost
U.S. government and agency	$	608.7	$	609.4	$	—	$	—
State and political subdivision		186.5		187.9		6.2		7.3
Foreign government		110.4		107.4		72.1		66.9
Corporate		5,219.4		5,978.7		592.6		788.6
Mortgage-backed		2,423.6		2,796.1		9.7		9.7
Other asset-backed		477.3		726.0		124.5		198.2
Total debt securities	$	9,025.9	$	10,405.5	$	805.1	$	1,070.7
Percentage of total debt securities		91.8%		90.7%		8.2%		9.3%

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General Account Investment Grade Debt Securities at Fair Value:	As of December 31, 2008
($ in millions)	Total		AAA/AA/A		BBB
U.S. government and agency	$	608.7	$	546.5	$	62.2
State and political subdivision		186.5		129.0		57.5
Foreign government		110.4		39.5		70.9
Corporate		5,219.4		2,672.5		2,546.9
Mortgage-backed		2,423.6		2,381.5		42.1
Other asset-backed		477.3		355.6		121.7
Total debt securities	$	9,025.9	$	6,124.6	$	2,901.3
Percentage of total debt securities		91.8%		62.3%		29.5%

General Account Below Investment Grade	As of December 31, 2008
Debt Securities at Fair Value:							CC or		In or Near
($ in millions)	Total		BB		B		Lower		Default
U.S. government and agency	$	—	$	—	$	—	$	—	$	—
State and political subdivision		6.2		6.2		—		—		—
Foreign government		72.1		72.1		—		—		—
Corporate		592.6		368.6		150.1		63.3		10.6
Mortgage-backed		9.7		—		6.7		3.0		—
Other asset-backed		124.5		28.4		55.6		37.4		3.1
Total debt securities	$	805.1	$	475.3	$	212.4	$	103.7	$	13.7
Percentage of total debt securities		8.2%		4.8%		2.2%		1.1%		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 December 31, 2008 in our debt securities portfolio were banking (6.0%), electrical utilities (4.1%), insurance (3.2%), diversified financial services (3.0%) and services (2.4%).

Residential Mortgage-Backed Securities

The weakness in the U.S. residential real estate markets, increases in mortgage rates and the effects of relaxed underwriting standards for mortgages and home equity loans have led to higher delinquency rates and losses for the residential mortgage-backed securities market. Delinquency rates for all sectors of the residential mortgage-backed market, including sub-prime, Alt-A and prime, have increased beyond historical averages.

We invest directly in residential mortgage-backed securities through our general account. To the extent these assets deteriorate in credit quality and decline in value for an extended period, we may realize impairment losses. We have been focused on identifying those securities that can withstand significant increases in delinquencies and foreclosures in the underlying mortgage pools before incurring a loss of principal.

Most of our residential mortgage-backed securities portfolio is highly rated. As of December 31, 2008, 97% of the total residential portfolio was rated AAA or AA. We have $165.2 million of sub-prime exposure, $192.2 million of Alt-A exposure and $458.8 million of prime exposure, which combined amount to 6% of our general account. Substantially all of our sub-prime, Alt-A and prime exposure is investment grade, with 82% being AAA rated and another 11% in AA securities. We have employed a disciplined approach in the analysis and monitoring of our mortgage-backed securities. Our approach involves a monthly review of each security. Underlying mortgage data is obtained from the security’s trustee and analyzed for performance trends. A security-specific stress analysis is performed using the most recent trustee information. This analysis forms the basis for our determination of whether the security will pay in accordance with the contractual cash flows. Year-to-date through December  31, 2008, we have taken impairments of $83.1 million on our residential mortgage-backed securities portfolio. This represents 4.7% of our total residential mortgage-backed securities portfolio and 0.6% of the general account. The losses consist of $25.9 million from prime, $32.3 million from Alt-A and $24.9 million from sub-prime.

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General Account Residential Mortgage-Backed Securities:
($ in millions)	As of December 31, 2008
	Carrying		Market		% General					BB and	% Closed
	Value		Value		Account(1)	AAA	AA	A	BBB	Below	Block
Collateral
Agency	$	917.6	$	938.1	6.9%	100.0%	0.0%	0.0%	0.0%	0.0%	77.3%
Prime		581.6		458.8	3.4%	86.5%	8.3%	2.6%	2.4%	0.2%	41.2%
Alt-A		288.6		192.2	1.4%	67.5%	20.3%	2.6%	3.4%	6.2%	36.5%
Sub-prime		224.2		165.2	1.2%	86.0%	7.4%	0.1%	5.7%	0.8%	5.1%
Total	$	2,012.0	$	1,754.3	12.9%	91.6%	5.1%	1.0%	1.5%	0.8%	56.6%

———————

⁽¹⁾

Percentages based on Market Value.

General Account Commercial Mortgage-Backed Securities:
($ in millions)	As of December 31, 2008
	Carrying		Market		% General					2003 and	% Closed
	Value(1)		Value		Account(2)	2007	2006	2005	2004	Prior	Block
Rating
AAA	$	1,033.0	$	924.2	6.8%	4.9%	6.8%	3.3%	11.2%	73.8%	76.6%
AA		131.1		85.0	0.6%	3.6%	9.8%	11.5%	13.1%	62.0%	61.9%
A		119.8		80.1	0.6%	8.4%	8.1%	13.3%	5.8%	64.4%	53.4%
BBB		6.7		4.7	0.0%	0.0%	0.0%	16.5%	0.0%	83.5%	0.0%
BB and Below		1.0		1.0	0.0%	0.0%	0.0%	100.0%	0.0%	0.0%	33.3%
Total	$	1,291.6	$	1,095.0	8.0%	5.0%	7.1%	4.8%	10.9%	72.2%	73.4%

———————

⁽¹⁾

Includes $63 million of commercial mortgage-backed CDOs also outlined in the CDO exposure exhibit.

⁽²⁾

Percentages based on Market Value.

General Account Prime Mortgage-Backed Securities:
($ in millions)	As of December 31, 2008
	Carrying		Market		% General					2003 and
	Value		Value		Account(1)	2007	2006	2005	2004	Prior
Rating
AAA	$	492.1	$	396.9	2.9%	3.4%	8.4%	19.8%	23.8%	44.6%
AA		52.8		38.3	0.3%	0.0%	40.9%	1.3%	22.5%	35.2%
A		19.0		11.7	0.1%	0.0%	92.2%	0.0%	0.0%	7.8%
BBB		17.0		11.2	0.1%	0.0%	0.0%	20.6%	55.0%	24.4%
BB and Below		0.7		0.7	0.0%	0.0%	0.0%	98.7%	0.0%	1.3%
Total	$	581.6	$	458.8	3.4%	3.0%	13.0%	17.9%	23.8%	42.4%

———————

⁽¹⁾

Percentages based on Market Value.

General Account Alt-A Mortgage-Backed Securities:
($ in millions)	As of December 31, 2008
	Carrying		Market		% General					2003 and
	Value		Value		Account(1)	2007	2006	2005	2004	Prior
Rating
AAA	$	202.8	$	129.7	1.0%	5.5%	29.0%	30.1%	33.7%	1.7%
AA		53.1		39.0	0.3%	0.0%	21.2%	0.4%	41.1%	37.3%
A		7.3		5.1	0.0%	0.0%	0.0%	25.7%	12.3%	62.0%
BBB		8.1		6.5	0.0%	0.0%	65.0%	35.0%	0.0%	0.0%
BB and Below		17.3		11.9	0.1%	30.8%	69.2%	0.0%	0.0%	0.0%
Total	$	288.6	$	192.2	1.4%	5.6%	30.4%	22.2%	31.4%	10.4%

———————

⁽¹⁾

Percentages based on Market Value.

45

General Account Sub-Prime Mortgage-Backed Securities:
($ in millions)	As of December 31, 2008
	Carrying		Market		% General					2003 and
	Value		Value		Account(1)	2007	2006	2005	2004	Prior
Rating
AAA	$	185.5	$	142.2	1.0%	22.3%	14.6%	34.6%	22.0%	6.5%
AA		24.4		12.3	0.1%	46.3%	0.0%	13.2%	0.0%	40.5%
A		—		—	0.0%	100.0%	0.0%	0.0%	0.0%	0.0%
BBB		13.1		9.5	0.1%	0.0%	44.9%	6.4%	45.1%	3.6%
BB and Below		1.2		1.2	0.0%	0.0%	55.3%	28.4%	16.3%	0.0%
Total	$	224.2	$	165.2	1.2%	22.6%	15.6%	31.3%	21.7%	8.8%

———————

⁽¹⁾

Percentages based on Market Value.

Realized Gains and Losses

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 of Realized Investment Gains (Losses):	Years Ended December 31,
($ in millions)	2008		2007		2006
Debt security impairments	$	(224.0)	$	(46.7)	$	(7.9)
Equity security impairments		(2.7)		(0.5)		—
Other investments impairments		(16.0)		(3.9)		—
Debt and equity securities pledged as collateral impairments		(2.3)		(0.8)		(1.0)
Impairment losses		(245.0)		(51.9)		(8.9)
Debt security transaction gains		8.1		21.9		62.1
Debt security transaction losses		(17.9)		(10.3)		(20.1)
Equity security transaction gains		13.4		12.5		25.7
Equity security transaction losses		(42.9)		(3.0)		(3.8)
Mortgage loan transaction gains (losses)		(0.1)		1.4		3.2
Venture capital partnership transaction gains (losses)		(3.0)		—		2.4
Affiliate equity security transaction gains		—		13.7		10.4
Other investments transaction gains		—		9.3		4.4
Other investments transaction losses		(0.9)		(1.8)		(0.1)
Real estate transaction gains		2.4		1.6		—
Real estate transaction losses		—		(0.2)		—
Debt and equity securities pledged as collateral gains		2.2		2.6		—
Debt and equity securities pledged as collateral losses		—		(0.8)		—
Net transaction gains (losses)		(38.7)		46.9		84.2
Realized gains (losses) on fair value option investments		(18.4)		—		—
Realized gains (losses) on derivative assets and liabilities		6.3		(1.0)		(0.1)
Net realized investment gains (losses)	$	(295.8)	$	(6.0)	$	75.2

Impairment losses increased from $51.9 million in 2007 to $245.0 million in 2008. Affiliate transaction gains of $13.7 million and $10.4 million for the years ended December 31, 2007 and 2006, respectively, were attributable to the earn-out associated with the sale of Lombard that occurred in the first quarter of 2005. Transaction activity resulted in a loss of $38.7 million for the year ended December 31, 2008 compared to a net gain of $46.9 million for the year ended December 31, 2007. This decrease was primarily due to the sale of equities in the closed block portfolio in 2008. See Note 9 to our consolidated financial statements in this Form 10-K for additional information.

Other-Than-Temporary Impairments

We employ a comprehensive process to determine whether or not a security is in an unrealized loss position and are other-than-temporarily impaired. This assessment is done on a security-by-security basis and involves significant management judgment, especially given the significant market dislocations.

46

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 all securities whose carrying value has been below amortized cost on a continuous basis for zero to six months, six months to 12 months and greater than 12 months. 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 experienced lesser declines in value on a more selective basis to determine whether any are other-than-temporarily impaired.

Our assessment of whether an investment 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;

·

a 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.

A debt security impairment is deemed other-than-temporary if:

·

we do not have the ability and intent to hold an investment until a forecasted recovery of fair value up to (or beyond) the cost of the investment which, in certain cases, may mean until maturity; or

·

it is probable that we will be unable to collect all amounts due according to the contractual terms of the debt security.

Impairments due to deterioration in credit that result in a conclusion that non-collection is probable are considered other-than-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or company-specific rating changes that do not result in a conclusion that non-collection of contractual principal and interest is probable) may also result in a conclusion that an other-than-temporary impairment has occurred.

Further, in situations where the Company has asserted its ability and intent to hold a security to a forecasted recovery, but now no longer has the ability and intent to hold until recovery, an impairment should be considered other-than-temporary, even if collection of cash flows is probable. The determination of the impairment is made when the assertion to hold to recovery changes, not when the decision to sell is made.

In determining whether collateralized securities are impaired, we obtain underlying mortgage data from the security’s trustee and analyze it for performance trends. A security-specific stress analysis is performed using the most recent trustee information. This analysis forms the basis for our determination of whether the security will pay in accordance with the contractual cash flows.

Fixed maturity other-than-temporary impairments taken in the later half of 2008 were concentrated in asset-backed securities and in corporate debt of service companies and financial institutions. These impairments were driven primarily by significant rating downgrades, bankruptcy or other adverse financial conditions of respective issuers. In our judgment, these credit events or other adverse conditions of the respective issuers have caused, or will lead to, a deficiency in the contractual cash flows related to the investment and, therefore, resulted in other than temporary impairments. Total impairments taken in 2008 related to such credit-related circumstances were $224.0 million.

47

In addition, further impairments were taken as a result of circumstances where we cannot assert our ability or intent to hold for a period of time to allow for recovery of value. In certain of these circumstances the decrease in fair value, at the time the impairment was recorded, was driven primarily by market or sector credit spread widening or by liquidity concerns and we believe the recoverable value of the investment based on the expected cash flows is greater than the current fair value. The amount of impairments taken due to these factors was $22.8 million in 2008.

Given the significant credit spread widening and lack of liquidity in the current environment, management exercised significant judgment with respect to certain securities in determining whether impairments were other-than-temporary. This included securities with $530.3 million ($204.8 million after offsets) of gross unrealized losses of 50% or more for which no other-than-temporary impairment was ultimately indicated. In making its assessments, management used a number of issuer-specific quantitative and qualitative assessments of the probability of receiving contractual cash flows, including the issue’s implied yields to maturity, cumulative default rate based on the issue’s rating, comparisons of issue specific spreads to industry or sector spreads, specific trading activity in the issue, other market data such as recent debt tenders and upcoming refinancing exposure, as well as fundamentals such as issuer credit and liquidity metrics, business outlook and industry conditio ns. In addition to these reviews, management in each case assessed its ability and intent to hold the securities for an extended time to recovery, up to and including maturity.

Unrealized Gains and Losses

The following tables present certain information with respect to our gross unrealized losses related to our investments in general account debt securities, both outside and inside the Closed Block, as of December 31, 2008. In the tables, we separately present information that is applicable to unrealized losses both outside and inside the Closed Block. See Note 4 to our consolidated financial statements in this Form 10-K for more information regarding the Closed Block. Applicable deferred policy acquisition costs and deferred income taxes further reduce the effect on our comprehensive income.

Gross and Net Unrealized
Gains (Losses):	As of December 31, 2008
($ in millions)	Total				Outside Closed Block				Closed Block
	Gains		Losses		Gains		Losses		Gains		Losses
Debt Securities
Unrealized gains (losses)	$	108.3	$	(1,753.5)	$	33.3	$	(893.2)	$	75.0	$	(860.3)
Applicable policyholder dividend   obligation (reduction)		75.0		(156.7)		—		—		75.0		(156.7)
Applicable deferred policy acquisition   costs (benefit)		14.5		(787.4)		14.5		(490.2)		—		(297.2)
Applicable deferred income taxes (benefit)		6.6		(283.3)		6.6		(141.1)		—		(142.2)
Offsets to net unrealized gains (losses)		96.1		(1,227.4)		21.1		(631.3)		75.0		(596.1)
Unrealized gains (losses) after offsets	$	12.2	$	(526.1)	$	12.2	$	(261.9)	$	—	$	(264.2)
Net unrealized losses after offsets			$	(513.9)			$	(249.7)			$	(264.2)
Equity Securities
Unrealized gains (losses)	$	1.1	$	(0.2)	$	1.1	$	(0.1)	$	—	$	(0.1)
Applicable policyholder dividend   obligation (reduction)		—		(0.1)		—		—		—		(0.1)
Applicable deferred income taxes (benefit)		0.4		—		0.4		—		—		—
Offsets to net unrealized gains (losses)		0.4		(0.1)		0.4		—		—		(0.1)
Unrealized gains (losses) after offsets	$	0.7	$	(0.1)	$	0.7	$	(0.1)	$	—	$	—
Net unrealized gains after offsets	$	0.6			$	0.6			$	—

Total net unrealized losses on debt and equity securities were $1,644.3 million (unrealized gains of $109.4 million less unrealized losses of $1,753.7 million). Of that net amount, $858.9 million was outside the Closed Block ($249.1 million after applicable deferred policy acquisition costs and deferred income taxes) and $785.4 million was in the Closed Block ($264.2 million after applicable policyholder dividend obligation).

If we determine that the security is impaired, we write it down to its then current fair value and record a realized loss in that period.

48

Duration of Gross Unrealized Losses on
General Account Securities:	As of December 31, 2008
($ in millions)			0 – 6		6 – 12		Over 12
	Total		Months		Months		Months
Debt Securities Outside Closed Block
Total fair value	$	2,810.6	$	562.6	$	785.2	$	1,462.8
Total amortized cost		3,703.8		626.5		936.4		2,140.9
Unrealized losses	$	(893.2)	$	(63.9)	$	(151.2)	$	(678.1)
Unrealized losses after offsets	$	(261.9)	$	(20.1)	$	(42.8)	$	(199.0)
Number of securities		2,320		433		682		1,205
Investment grade:
Unrealized losses	$	(749.0)	$	(40.9)	$	(124.3)	$	(583.8)
Unrealized losses after offsets	$	(215.9)	$	(13.5)	$	(34.0)	$	(168.4)
Below investment grade:
Unrealized losses	$	(144.2)	$	(23.0)	$	(26.9)	$	(94.3)
Unrealized losses after offsets	$	(46.0)	$	(6.6)	$	(8.8)	$	(30.6)
Equity Securities Outside Closed Block
Unrealized losses	$	(0.1)	$	—	$	(0.1)	$	—
Unrealized losses after offsets	$	(0.1)	$	—	$	(0.1)	$	—
Number of securities		4		—		4		—

For debt securities outside of the Closed Block with gross unrealized losses, 82.4% of the unrealized losses after offsets pertain to investment grade securities and 17.6% of the unrealized losses after offsets pertain to below investment grade securities at December 31, 2008.

The following table represents those securities whose fair value is less than 80% of amortized cost (significant unrealized loss), that have been at a significant unrealized loss position on a continuous basis.

Duration of Gross Unrealized Losses on
General Account Securities:	As of December 31, 2008
($ in millions)			0 – 6		6 – 12		Over 12
	Total		Months		Months		Months
Debt Securities Outside Closed Block
Unrealized losses over 20% of cost	$	(721.6)	$	(573.7)	$	(120.9)	$	(27.0)
Unrealized losses over 20% of cost after offsets	$	(209.6)	$	(164.6)	$	(36.4)	$	(8.6)
Number of securities		1,008		876		113		19
Investment grade:
Unrealized losses over 20% of cost	$	(595.5)	$	(476.9)	$	(102.1)	$	(16.5)
Unrealized losses over 20% of cost after offsets	$	(169.5)	$	(134.6)	$	(28.5)	$	(6.4)
Below investment grade:
Unrealized losses over 20% of cost	$	(126.1)	$	(96.8)	$	(18.8)	$	(10.5)
Unrealized losses over 20% of cost after offsets	$	(40.1)	$	(30.0)	$	(7.9)	$	(2.2)
Equity Securities Outside Closed Block
Unrealized losses over 20% of cost	$	—	$	—	$	—	$	—
Unrealized losses over 20% of cost after offsets	$	—	$	—	$	—	$	—
Number of securities		3		1		2		—

49

Duration of Gross Unrealized Losses on
General Account Securities:	As of December 31, 2008
($ in millions)			0 – 6		6 – 12		Over 12
	Total		Months		Months		Months
Debt Securities Inside Closed Block
Total fair  value	$	3,809.5	$	1,175.6	$	1,177.9	$	1,456.0
Total amortized cost		4,669.8		1,293.6		1,365.7		2,010.5
Unrealized losses	$	(860.3)	$	(118.0)	$	(187.8)	$	(554.5)
Unrealized losses after offsets	$	(264.2)	$	(36.2)	$	(57.7)	$	(170.3)
Number of securities		954		264		267		423
Investment grade:
Unrealized losses	$	(729.9)	$	(92.9)	$	(165.7)	$	(471.3)
Unrealized losses after offsets	$	(224.2)	$	(28.5)	$	(50.9)	$	(144.8)
Below investment grade:
Unrealized losses	$	(130.4)	$	(25.1)	$	(22.1)	$	(83.2)
Unrealized losses after offsets	$	(40.0)	$	(7.7)	$	(6.8)	$	(25.5)
Equity Securities Inside Closed Block
Unrealized losses	$	(0.1)	$	—	$	(0.1)	$	—
Unrealized losses after offsets	$	—	$	—	$	—	$	—
Number of securities		5		3		2		—

For debt securities in the Closed Block with gross unrealized losses, 84.8% of the unrealized losses pertain to investment grade securities and 15.2% of the unrealized losses pertain to below investment grade securities at December 31, 2008.

The following table represents those securities whose fair value is less than 80% of amortized cost (significant unrealized loss) that have been at a significant unrealized loss position on a continuous basis.

Duration of Gross Unrealized Losses on
General Account Securities:	As of December 31, 2008
($ in millions)			0 – 6		6 – 12		Over 12
	Total		Months		Months		Months
Debt Securities Inside Closed Block
Unrealized losses over 20% of cost	$	(593.0)	$	(455.0)	$	(113.3)	$	(24.7)
Unrealized losses over 20% of cost after offsets	$	(171.8)	$	(131.8)	$	(32.8)	$	(7.2)
Number of securities		354		296		47		11
Investment grade:
Unrealized losses over 20% of cost	$	(479.7)	$	(364.6)	$	(102.8)	$	(12.3)
Unrealized losses over 20% of cost after offsets	$	(139.0)	$	(105.6)	$	(29.8)	$	(3.6)
Below investment grade:
Unrealized losses over 20% of cost	$	(113.3)	$	(90.4)	$	(10.5)	$	(12.4)
Unrealized losses over 20% of cost after offsets	$	(32.8)	$	(26.2)	$	(3.0)	$	(3.6)
Equity Securities Inside Closed Block
Unrealized losses over 20% of cost	$	—	$	—	$	—	$	—
Unrealized losses over 20% of cost after offsets	$	—	$	—	$	—	$	—
Number of securities		3		3		—		—

50

In determining that the securities giving rise to the previously mentioned unrealized losses were not other-than-temporarily impaired, we considered and evaluated the factors cited above. 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 a nd believe our investment portfolio is prudently diversified.

Lombard International Assurance S.A.

In 2005, we disposed of our interests in Lombard International Assurance S.A. (“Lombard”). In the first quarters of 2007 and 2006, we realized after-tax gains of $8.9 million and $6.5 million, respectively, which included earn-out gain consideration received. We are not entitled to any additional consideration related to this sale going forward.

Liquidity and Capital Resources

Liquidity refers to the ability of a company to generate sufficient cash flow to meet its cash requirements. Capital resources refer to the ability to raise new capital to meet operating and growth needs.

The Phoenix Companies, Inc. (consolidated)

Summary Consolidated Cash Flows:							Increase (decrease) and
($ in millions)	Years Ended December 31,						percentage change
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
Continuing operations:
Cash from operating activities	$	99.8	$	248.2	$	183.4	$	(148.4)	(60%)	$	64.8	35%
Cash from investing activities		260.4		384.5		696.7		(124.1)	(32%)		(312.2)	(45%)
Cash for financing activities		(531.5)		(461.8)		(764.6)		(69.7)	(15%)		302.8	40%
Discontinued operations:
Cash from (for) operating activities		(45.9)		40.6		56.8		(86.5)	(213%)		(16.2)	(29%)
Cash from (for) investing activities		22.1		15.8		(44.1)		6.3	40%		59.9	136%
Cash from (for) financing activities		35.0		(57.2)		(34.8)		92.2	161%		(22.4)	(64%)

2008 vs. 2007

Continuing Operations

Cash from operating activities decreased $148.4 million compared to 2007. This decrease was primarily driven by higher death benefits paid of $207.5 million and lower investment income. The higher death benefits were due to death claims incurred in late 2007, but not paid until early 2008. The lower investment income was primarily due to lower yields and lower earnings on alternative investments. These items were partially offset by higher fees of $102.0 million, primarily cost of insurance on our universal life products and lower acquisition costs primarily due to lower universal life sales. Historically cash flows from operations have been positive, but the timing of the payment for the death benefits in January 2008 caused the current year to have higher than usual death benefits.

Discontinued Operations

Cash from discontinued operations decreased $86.5 million primarily due to lower levels of cash settlements in our discontinued reinsurance business and, to a lesser extent, non-recurring expenses associated with the spin-off of our asset management business.

51

2007 vs. 2006

Continuing Operations

Cash from operating activities increased primarily due to higher fees received and lower benefits paid of $111.4 million and $155.2 million, respectively. Partially offsetting these increases were lower premiums received of $52.3 million and higher policy acquisition costs paid of $134.7 million.

Cash from investing activities decreased primarily due to lower proceeds from sales, repayments and maturities, net of new purchases of $308.1 million, resulting from lower policyholder withdrawals.

Cash for financing activities decreased due to higher policyholder deposits and lower policyholder withdrawals, resulting in part from a $206.6 million scheduled maturity in 2006 which did not recur in 2007.

Discontinued Operations

Cash for operating activities decreased primarily due to net outflows of $12.1 million due to higher cash settlements in our discontinued reinsurance business in 2006 compared to the lower settlement activity in 2007.

Cash from investing activities improved due to lower capital requirement for the discontinued reinsurance business and the sale of an Argentine subsidiary. See Note 3 to our consolidated financial statements in this Form 10-K for more information.

See Note 10 to our consolidated financial statements in this Form 10-K for additional information on financing activities.

The Phoenix Companies, Inc. Sources and Uses of Cash (parent company only)

Our primary sources of liquidity have been dividends from Phoenix Life and interest income from our former asset management subsidiary, Virtus. Under New York Insurance Law, Phoenix Life can pay stockholder dividends to the holding company in any calendar year without prior approval from the New York Superintendent of Insurance in the amount of the lesser of 10% of Phoenix Life’s surplus to policyholders as of the immediately preceding calendar year or Phoenix Life’s statutory net gain from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life paid dividends of $83.8 million during 2008 and is able to pay a dividend of $53.4 million in 2009 under this provision. See Note 22 to our consolidated financial statements in this Form 10-K for more information on Phoenix Life statutory financial information and regulatory matters.

Effective as of November 7, 2008, the Company and its subsidiary, Phoenix Life (Phoenix Life, together with the Company, the “Borrowers”) amended our existing $150 million unsecured senior revolving credit facility (the “Amendment”). Please see Part II Item 5 of our September 30, 2008 Quarterly Report on Form 10-Q for a discussion of the terms of the Amendment.

Potential borrowers on the credit facility are the Company and Phoenix Life. The Company unconditionally guarantees any loans under this facility to Phoenix Life. Base rate loans will bear interest at the greater of Wachovia Bank, National Association’s prime commercial rate or the federal funds rate plus 0.50%. Eurodollar rate loans will bear interest at LIBOR plus an applicable percentage based on our Standard & Poor’s and Moody’s ratings. In connection with the spin-off of our asset management business, with the close of business on December 31, 2008, the facility was reduced to $100 million. There are no current borrowings on the credit facility.

The credit facility contains covenants that require us at all times to maintain a minimum level of consolidated tangible net worth, based on GAAP standards in effect on June 6, 2006 and excluding the effect of FIN 46(R). In addition, Phoenix Life must maintain a maximum consolidated debt-to-capital ratio of 30%, a minimum risk-based capital ratio of 325%, a minimum A.M. Best financial strength rating of “A-”, a minimum level of surplus on a statutory basis and a minimum parent cash flow coverage ratio.

We were in compliance with all of our credit facility covenants as of December 31, 2008. We have limited ability to absorb future declines in net worth under the debt-to-capital and tangible net worth covenants. In the event that we fail to meet the requirements of the credit facility covenants, we would evaluate the costs and benefits of amending or replacing the facility as part of its ongoing liquidity management.

52

On January 6, 2009, we filed an automatic shelf registration statement with the SEC (our “existing shelf registration statement”) for the potential offering and sale of debt and equity securities. The existing shelf registration statement allows for the following types of securities to be offered: common stock, debt securities, preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units of PNX. Because we were a well-known seasoned issuer (“WKSI”) at the time of filing, as defined in Rule 405 under the Securities Act of 1933, the existing shelf registration statement went effective immediately upon filing. As we are no longer a WKSI as of the date hereof, we intend to promptly file a new registration statement on Form S-3 as a non-automatic shelf registration statement (the “new shelf registration statement”). However, as we followed applicable SEC guidance in filing the existing shelf registration statement, we believe w e will be able to offer and sell securities under the existing registration statement until such time as the new shelf registration statement is declared effective by the SEC. Our intent is for the new shelf registration to be substantially similar to and, upon being declared effective, to replace the existing shelf registration statement. We intend to retain the ability, in our discretion, to offer and sell up to a maximum of $750 million of securities under the new shelf registration statement during the three-year life of the shelf.

In 2008 and 2007, we paid dividends of $0.16 per share, totaling $18.8 million and $18.4 million, respectively. In February 2009, our Board of Directors determined that the Company will not pay an annual dividend on its common stock during fiscal year 2009.

We sponsor postemployment benefit plans through pension and savings plans for employees of Phoenix Life. Funding of these obligations is provided by Phoenix Life on a 100% cost reimbursement basis through administrative services agreements with the holding company. See Note 18 to our consolidated financial statements in this Form 10-K for additional information.

The Phoenix Companies, Inc. Summary Cash Flows (parent company only)

Summary Cash Flows:	Years Ended December 31,						Increase (decrease) and percentage change
($ in millions)	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
Cash from operating activities	$	24.0	$	80.4	$	83.3	$	(56.4)	(70%)	$	(2.9)	(3%)
Cash from (for) investing activities		9.2		23.0		(200.7)		(13.8)	(60%)		223.7	111%
Cash from (for) financing activities		(171.5)		(11.1)		147.5		(160.4)	(1,445%)		(158.6)	(108%)

2008 vs. 2007

Net cash received from operating activities decreased due to higher expense payments driven by proxy solicitation costs and preparation for the spin-off of our asset management business and a reduction in interest income on intercompany debt.

Cash received from investing activities decreased primarily due to lower net sales of debt securities. This was driven by higher redemptions in 2008 to fund the repayment of our equity unit notes in February.

Cash used for financing activities increased due to the February 2008 repayment of our equity unit notes.

2007 vs. 2006

Cash from investing activities changed to net inflows in 2007 from net outflows in 2006 primarily due to activities related to our equity units. In 2006, we used the proceeds from the equity units remarketed as senior unsecured obligations to purchase debt securities, while in 2007 we began liquidating certain debt security holdings to prepare for the final payment on the senior unsecured obligations.

Cash for financing activities changed to a net outflow in 2007 from a net inflow in 2006 due to the receipt of equity unit proceeds in 2006 which did not recur in 2007.

53

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 parent company; 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 investing 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 investing 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 reinsurance, recoveries from other retrocessionaires and investing activities.

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 under which Phoenix Life has direct borrowing rights, discussed above, 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 contract owner 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 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	As of December 31,
Withdrawal Characteristics:	2008			2007
($ in millions)	Amount(1)		Percent	Amount(1)		Percent
Not subject to discretionary withdrawal provision	$	299.0	6%	$	201.1	3%
Subject to discretionary withdrawal without adjustment		1,046.3	22%		1,127.6	18%
Subject to discretionary withdrawal with market value  adjustment		265.0	6%		343.9	5%
Subject to discretionary withdrawal at contract value   less surrender charge		208.6	4%		367.2	6%
Subject to discretionary withdrawal at market value		2,906.1	62%		4,238.4	68%
Total annuity contract reserves and deposit fund liability	$	4,725.0	100%	$	6,278.2	100%

———————

⁽¹⁾

Annuity contract reserves and deposit fund liability amounts are reported on a statutory basis, which more accurately reflects the potential cash outflows and include variable product liabilities. Annuity contract reserves and deposit fund liabilities are monetary amounts that an insurer must have available to provide for future obligations with respect to its annuities and deposit funds. These are liabilities in our 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.

54

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 up to a certain percentage of the cash value of their policies at any time. As of December 31, 2008, our Life Companies had approximately $12.9 billion in cash values with respect to which policyholders had rights to take policy loans. The majority of cash values eligible for policy loans are at variable interest rates that are reset annually on the policy anniversary. Policy loans at December 31, 2008 were $2.5 billion.

The primary liquidity risks regarding cash inflows from the investing 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.

In 2004 we issued $175.0 million principal of surplus notes with a scheduled maturity of 30 years for proceeds of $171.6 million, net of discount and issue costs. Interest payments are at an annual rate of 7.15%, require the prior approval of the Superintendent of Insurance of the State of New York and may be made only out of surplus funds which the Superintendent determines to be available for such payments under New York insurance law.

During 2008, Phoenix Life paid dividends of $83.8 million to the Company, 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 $53.4 million for the year ended December 31, 2008. The maximum dividend that Phoenix Life can pay in 2009 without prior approval is $53.4 million.

Ratings

Rating agencies assign Phoenix Life financial strength ratings and assign the holding company debt ratings based in each case on their opinions of the relevant company’s ability to meet its financial obligations. Ratings declines may result in lower sales, higher surrenders and increased or decreased interest costs in connection with future borrowings.

On September 18, September 29, October 2 and October 10, 2008, A.M. Best Company, Inc., Fitch Ratings Ltd., Moody’s Investors Service and Standard & Poor’s, respectively, each revised its outlook for the U.S. life insurance sector to negative from stable, citing, among other things, the significant deterioration and volatility in the credit and equity markets, economic and political uncertainty, and the expected impact of realized and unrealized investment losses on life insurers’ capital levels and profitability.

On March 4, 2009, Fitch downgraded our financial strength rating to BBB+ from A and placed the rating on Rating Watch Negative. On October 31, 2008, Fitch downgraded our financial strength rating to A from A+ and maintained its negative outlook.

On March 2, 2009, Standard and Poor’s downgraded our financial strength rating to BBB from BBB+ and downgraded our senior debt rating to BB from BB+. At the same time, Standard and Poor’s removed the ratings from CreditWatch, where they had been placed with negative implications on February 10, 2009. The outlook is negative. On October 31, 2008, Standard & Poor’s downgraded our financial strength rating to BBB+ from A- and downgraded our senior debt rating to BB+ from BBB-. They also revised our outlook to negative from stable.

On February 19, 2009, Moody’s Investor Service downgraded our financial strength rating to Baa1 from A3 and downgraded our senior debt rating to Ba1 from Baa3. The ratings remain on review for possible further downgrade as was previously announced on December 9, 2008.

On January 15, 2009, A.M Best Company, Inc. affirmed our financial strength rating of A and changed our outlook to negative from stable and also revised our senior debt rating outlook to negative from stable.

Given these developments, it is possible that rating agencies will heighten the level of scrutiny that they apply to us, will increase the frequency and scope of their credit reviews, will request additional information from us, and may adjust upward the capital and other requirements employed in their models for maintenance of certain ratings levels.

55

We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business. As with other companies in the financial services industry, our ratings could be downgraded at any time and without any notice by any rating agency.

The financial strength and debt ratings as of March 4, 2009 were as follows:

	Financial Strength Rating
Rating Agency	of Phoenix Life	Outlook	Senior Debt Rating of PNX	Outlook
A.M. Best Company, Inc.	A (“Excellent”)	Negative	bbb (“Adequate”)	Negative
Fitch	BBB+ (“Good”)	Rating Watch Negative	Not Rated
Moody’s	Baa1 (“Adequate”)	Under review	Ba1 (“Questionable”)	Under review
Standard & Poor’s	BBB (“Good”)	Negative	BB (“Marginal”)	Negative

These ratings are not a recommendation to buy or hold any of our securities.

Consolidated Financial Condition

Consolidated Balance Sheet:					Increase (decrease) and
($ in millions)	As of December 31,				percentage change
	2008		2007		2008 vs. 2007
ASSETS
Available-for-sale debt securities, at fair value		9,831.0		11,970.0		(2,139.0)	(18%)
Available-for-sale equity securities, at fair value		25.2		191.8		(166.6)	(87%)
Venture capital partnerships, at equity in net assets		200.8		173.7		27.1	16%
Policy loans, at unpaid principal balances		2,535.7		2,380.5		155.2	7%
Other investments		616.9		507.3		109.6	22%
Fair value option investments		84.1		—		84.1	—
		13,293.7		15,223.3		(1,929.6)	(13%)
Available-for-sale debt and equity securities pledged as collateral,   at fair value		148.0		219.1		(71.1)	(32%)
Total investments		13,441.7		15,442.4		(2,000.7)	(13%)
Cash and cash equivalents		381.1		541.2		(160.1)	(30%)
Accrued investment income		203.4		209.6		(6.2)	(3%)
Receivables		411.5		321.4		90.1	28%
Deferred policy acquisition costs		2,731.4		2,089.9		641.5	31%
Deferred income taxes		456.7		53.9		402.8	747%
Goodwill		30.1		30.1		—	—
Other assets		182.7		909.5		(726.8)	(80%)
Separate account assets		7,930.2		10,820.3		(2,890.1)	(27%)
Total assets	$	25,768.8	$	30,418.3	$	(4,649.5)	(15%)
LIABILITIES
Policy liabilities and accruals	$	14,008.8	$	14,002.4	$	6.4	—
Policyholder deposit funds		1,616.6		1,808.9		(192.3)	(11%)
Indebtedness		458.0		627.7		(169.7)	(27%)
Other liabilities		645.0		562.1		82.9	15%
Non-recourse collateralized obligations		245.2		317.9		(72.7)	(23%)
Separate account liabilities		7,930.2		10,820.3		(2,890.1)	(27%)
Total liabilities		24,903.8		28,139.3		(3,235.5)	(11%)
STOCKHOLDERS’ EQUITY
Common stock and additional paid in capital		2,627.7		2,617.4		10.3	—
Accumulated deficit		(839.5)		(20.7)		(818.8)	3,956%
Accumulated other comprehensive loss		(743.7)		(138.2)		(605.5)	438%
Treasury stock		(179.5)		(179.5)		—	—
Total stockholders’ equity		865.0		2,279.0		(1,414.0)	(62%)
Total liabilities and stockholders’ equity	$	25,768.8	$	30,418.3	$	(4,649.5)	(15%)

56

2008 vs. 2007

Available-for-sale debt securities decreased primarily due to unrealized losses driven by credit spread widening.

Available-for-sale equity securities decreased as we actively manage the portfolio to obtain beneficial statutory capital treatment.

Venture capital partnerships increased due to additional contributions, partially offset by distributions of $18.5 million.

Other investments increased primarily to new investments made in partnerships and increased derivative assets that support our GMAB and GMWB product rider liabilities.

Available-for-sale debt and equity securities pledged as collateral decreased due to unrealized investment losses and principal repayments.

Receivables in 2008 included higher amounts recoverable from reinsurers, primarily due to new reinsurance contracts effective in 2008.

Composition of Deferred Policy Acquisition Costs					Increase (decrease) and
by Product:	As of December 31,				percentage change
($ in millions)	2008		2007		2008 vs. 2007
Variable universal life	$	336.9	$	367.2	$	(30.3)	(8%)
Universal life		1,215.3		821.2		394.1	48%
Variable annuities		321.3		310.0		11.3	4%
Fixed annuities		10.4		14.0		(3.6)	(26%)
Traditional life		847.5		577.5		270.0	47%
Total deferred policy acquisition costs	$	2,731.4	$	2,089.9	$	641.5	31%

Deferred policy acquisition costs increased due to the effect of unrealized investment losses included in other comprehensive income and the deferral of acquisition costs related primarily to universal life sales, partially offset by amortization.

Deferred income taxes increased primarily due to the effect of unrealized investment losses included in other investment income.

Other assets in 2007 included assets associated with our discontinued asset management operations. The decrease in 2008 was driven by impairment charges on goodwill and other intangible assets and the subsequent distribution of the asset management business in a spin-off dividend.

Separate account assets decreased in 2008 due to unrealized investment losses. Separate account liabilities decreased by a corresponding amount.

Policyholder deposit funds decreased due to net outflows, primarily from discontinued annuity products.

Indebtedness decreased due to the repayment in February 2008 of our equity unit notes.

Non-recourse collateralized obligations decreased due to scheduled principal repayments.

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

57

Contractual Obligations and Commercial Commitments

Contractual Obligations and Commercial Commitments:
($ in millions)	As of December 31, 2008
	Total		2009		2010 – 2011		2012 – 2013		Thereafter
Contractual Obligations Due
Indebtedness	$	1,270.7	$	33.7	$	67.3	$	67.3	$	1,102.4
Operating lease obligations		10.1		1.8		2.9		2.2		3.2
Other purchase liabilities(1)(2)		80.5		38.8		36.8		3.4		1.5
Total fixed contractual obligations		1,361.3		74.3		107.0		72.9		1,107.1
Other long-term liabilities(3)		69,078.1		2,561.8		5,065.5		5,098.1		56,352.7
Subtotal	$	70,439.4	$	2,636.1	$	5,172.5	$	5,171.0	$	57,459.8
Non-recourse collateralized obligations(4)		240.1		—		—		—		240.1
Total contractual obligations(5)	$	70,679.5	$	2,636.1	$	5,172.5	$	5,171.0	$	57,699.9
Commercial Commitment Expirations
Standby letters of credit(6)	$	6.4	$	—	$	—	$	—	$	6.4
Other commercial commitments(2)(7)		117.8		25.7		53.3		34.2		4.6
Total commercial commitments	$	124.2	$	25.7	$	53.3	$	34.2	$	11.0

———————

⁽¹⁾

Other purchase liabilities relate to open purchase orders, required pension funding and other contractual obligations.

⁽²⁾

Commitments related to recent business combinations are not included in amounts presented in this table. See the discussion on the following pages.

⁽³⁾

Policyholder contractual obligations represent estimated benefits from life insurance and annuity contracts issued by our life insurance subsidiaries. Policyholder contractual obligations also include separate account liabilities, which are contractual obligations of the separate account assets established under applicable state insurance laws and are legally insulated from our general account assets.

Future obligations are based on our estimate of future investment earnings, mortality, surrenders and applicable policyholder dividends. Included in the amounts above are policyholder dividends generated by estimated favorable future investment and mortality, in excess of guaranteed amounts for our Closed Block. Actual obligations in any single year, or ultimate total obligations, may vary materially from these estimates as actual experience emerges. As described in Note 2 to our consolidated financial statements in this Form 10-K, policy liabilities and accruals are recorded on the balance sheet in amounts adequate to meet the estimated future obligations of the policies in force. The policyholder obligations reflected in the table above exceed the policy liabilities, policyholder deposit fund liabilities and separate account liabilities reported on our December 31, 2008 Consolidated Balance Sheet because the above amounts do not reflect future investment earnings and future premiums and deposits on those policies. Separate account obligations will be funded by the cash flows from separate account assets, while the remaining obligations will be funded by cash flows from investment earnings on general account assets and premiums and deposits on contracts in force.

⁽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 13 to our consolidated financial statements in this Form 10-K for additional information.

⁽⁵⁾

Due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2008, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $8.7 million of unrecognized tax benefits have been excluded from this table. See Note 16 to our consolidated financial statements in this Form 10-K for additional information on unrecognized tax benefits.

⁽⁶⁾

Our standby letters of credit automatically renew on an annual basis.

⁽⁷⁾

Other commercial commitments relate to venture capital partnerships. 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.

58

Commitments Related to Recent Business Combinations

PFG Holdings, Inc. (“PFG”)

In 2003, we acquired the remaining interest in PFG Holdings, Inc. (“PFG”), the holding company for our private placement operation. The initial purchase consideration was $16.7 million in addition to a contingent obligation for additional purchase consideration based on the achievement of certain performance targets through 2007 and the appraised value of PFG as of December 31, 2007. Through November 2007, we paid additional consideration of $19.4 million, including $13.4 million, $0.0 million and $3.0 million during 2007, 2006 and 2005 respectively. In November 2007, we amended the original purchase agreement to extend the term of the agreement through the end of 2009 and to establish a more objective mechanism to value PFG and calculate the final amount of contingent consideration. As a result, we may be obligated to make additional cash payments of $17.6 million by June 2010 if certain performance targets are met through December 2009. Since the contingent payments are base d on the achievement of performance targets, the actual payments may be lower. If the performance targets are exceeded, the actual payments may be higher, subject to a maximum of $77.1 million. In accordance with EITF 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, a portion of the contingent payments will be accounted for as goodwill, and the amounts related to performance in excess of targets will be expensed, if and when achieved.

Obligations Related to Pension and Postretirement Employee Benefit Plans

We provide our employees with postemployment benefits that include retirement benefits, through pension and savings plans, and other benefits, including health care and life insurance. Employee benefit expense related to these plans totaled $23.5 million, $26.1 million and $33.8 million for 2008, 2007 and 2006, respectively.

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

Funded Status of Qualified and Non-Qualified	Employee Plan				Supplemental Plan
Pension Plans:	As of December 31,
($ in millions)	2008		2007		2008		2007
Plan assets, end of year	$	357.8	$	501.2	$	—	$	—
Projected benefit obligation, end of year		(533.0)		(526.8)		(132.5)		(140.7)
Plan assets less than projected benefit obligations, end of year	$	(175.2)	$	(25.6)	$	(132.5)	$	(140.7)

The changes in the projected benefit obligations of the employee plan and the supplemental plan at December 31, 2008 as compared to December 31, 2007 are principally the result of accrued service cost and interest cost.

We made no payments to the pension plans during 2008. We have not made a final determination on our ultimate pension funding methodology for 2009. We have no required contributions in the first quarter, and we will be reviewing our funding assumptions in the second quarter to determine what, if any, contributions are to be made later in the year.

We also have a postretirement benefit plan, which is unfunded and had projected benefit obligations of $(66.1) million and $(70.9) million as of December 31, 2008 and 2007, respectively.

We have entered into agreements with certain key executives of the Company that will, in certain circumstances, provide separation benefits upon the termination of the executive’s employment by the Company for reasons other than death, disability, cause or retirement, or by the executive for “good reason,” as defined in the agreements. For most of these executives, the agreements provide this protection only if the termination occurs following (or is effectively connected with) the occurrence of a change of control, as defined in the agreements. As soon as reasonably possible upon a change in control, as so defined, we are required to make an irrevocable contribution to a trust in an amount sufficient to pay benefits due under these agreements.

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

59

Off-Balance Sheet Arrangements

As of December 31, 2008, 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 13 to our consolidated financial statements in this Form 10-K for more information on variable interest entities.

Reinsurance

We maintain life reinsurance programs designed to protect against large or unusual losses in our life insurance business. We actively monitor the financial condition and ratings of our reinsurance partners throughout the term of the reinsurance contract. Due to the recent downgrade of Scottish Re, we will continue to closely monitor the situation and will reassess the recoverability of the reinsurance recoverable during the interim reporting periods of 2009. Based on our review of their financial statements, reputations in the reinsurance marketplace and other relevant information, we believe that we have no material exposure to uncollectible life reinsurance.

Statutory Capital and Surplus and Risk-Based Capital

Phoenix Life’s and its subsidiaries’ combined statutory basis capital and surplus (including AVR) decreased from $1,055.6 million at December 31, 2007 to $853.7 million at December 31, 2008. The principal factors resulting in this decrease were losses from operations of $83.6 million, net realized losses of $185.4 million and dividends to its sole shareholder, The Phoenix Companies, Inc., of $83.8 million. Offsetting these decreases were reinsurance agreements contributing $90.4 million to surplus.

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

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

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

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

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

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

At December 31, 2008, Phoenix Life’s Total Adjusted Capital level was in excess of 325% of Company Action Level and each of its insurance subsidiaries’ levels were in excess of 325%.

See Note 22 to our consolidated financial statements in this Form 10-K regarding the Life Companies’ statutory financial information and regulatory matters.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

For information about our management of market risk, see the Enterprise Risk Management section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

60

Item 8.

Financial Statements and Supplementary Data

The Financial Statements and Supplementary Data required by this item are presented beginning on page F-1.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have carried out an evaluation under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation and the identification of a material weakness in our internal control over financial reporting, as further discussed below under “Management’s Annual Report on Internal Control over Financial Reporting”, these officers have concluded that, as of December 31, 2008, our disclosure controls and procedures (as defined in Rule 13a- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were not effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms.

However, giving full consideration to the material weakness discussed below, we have performed additional analyses and other procedures in order to provide assurance that our Consolidated Financial Statements included in this Annual Report were prepared in accordance with GAAP and present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP. As a result of our consideration of the events and circumstances giving rise to the material weakness and these procedures, we concluded that the Consolidated Financial Statements included in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, including our Principal Executive Officer and our Principal Financial Officer, is responsible for establishing and maintaining an adequate system of internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our Principal Executive Officer and our Principal Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making its assessment, management has used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

61

Management has concluded that, as of December 31, 2008, the Company had a material weakness in its internal control over financial reporting designed to ensure proper accounting for income taxes, including the allocation of its income tax provision (benefit) among income from continuing operations, income from discontinued operations and other comprehensive loss. This material weakness, or difficulties encountered in implementing new or improved controls or remediation, could prevent the Company from accurately reporting its financial results, result in material misstatements in its financial statements or cause it to fail to meet its reporting obligations. Additionally, this control deficiency could have resulted in misstatement of the consolidated financial statements that would not be prevented or detected. Accordingly, management determined that this control deficiency constitutes a material weakness in the Company’s internal control over financial reporting. Because of this ma terial weakness, management concluded that our internal control over financial reporting was not effective as of December 31, 2008 based on criteria in Internal Control – Integrated Framework issued by the COSO.

The effectiveness of our internal control over financial reporting as of December 31, 2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears on pages F-1 through F-2.

Remediation Plan

In the first half of 2009 we intend to hire internal resources, or to otherwise engage external resources, to provide dedicated expertise to oversee accounting for income taxes. These resources will complete effective control reviews of the effective tax rate reconciliation, the allocation of the income tax provision and other supporting tax workpapers as well as applying relevant tax accounting guidance to the circumstances of the Company, including transaction-related activity.

Changes in Internal Control over Financial Reporting

During the three months ended December 31, 2008, there were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As discussed above, in the first half of 2009, we intend to hire internal resources, or to otherwise engage external resources, to provide dedicated expertise to ensure proper accounting for income taxes.

Item 9B.

Other Information

None.

62

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The information required by Items 401, 405, 406 and paragraphs (c)(3), (d)(4) and (d)(5) of Item 407 of Regulation S-K, except for Item 401 with respect to the executive officers as disclosed below, is incorporated herein by reference to the information set forth in our definitive proxy statement for the 2009 annual meeting of shareholders, or our 2009 Proxy Statement, to be filed with the SEC within 120 days after the close of the fiscal year covered by this Form 10-K and under the sections entitled: “Proposal 1: Election of Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Audit Committee Charter and Report”.

Set forth below is a description of the business positions held during at least the past five years by the current executive officers of Phoenix. All ages are as of March 1, 2009.

DONA D. YOUNG, age 55, has been Chairman of the Company and Phoenix Life since April 2003, Chief Executive Officer since January 2003, President since 2000; Chief Operating Officer of the Company and Phoenix Life from February through December 2002; Executive Vice President, Individual Insurance and General Counsel of Phoenix Life from 1994 to 2000.

PETER A. HOFMANN, age 50, has been Senior Executive Vice President and Chief Financial Officer of the Company since November 2007. Previously, Mr. Hofmann served as Executive Vice President, head of the Office of the Chairman and Strategic Relations and Chief Strategic Officer of the Company since February 2007, and as Senior Vice President and Chief Strategic Officer of the Company since January 2004. Mr. Hofmann joined the Company in 2001 to establish the investor relations function and to prepare the Company for its demutualization and initial public offering.

PHILIP K. POLKINGHORN, age 51, has been Senior Executive Vice President and President, Life and Annuity of the Company since February 2007. Previously, Mr. Polkinghorn served as Executive Vice President, Life and Annuity of the Company since March 2004. Prior to joining the Company in 2004, Mr. Polkinghorn had been Vice President of Sun Life Financial Company since 2001 with responsibility for the overall management of its annuity business.

JAMES D. WEHR, age 51, has been Senior Executive Vice President and Chief Investment Officer of the Company since February 2007. Previously, Mr. Wehr served as Executive Vice President and Chief Investment Officer of the Company since February 2005 and as Senior Vice President and Chief Investment Officer of the Company and Phoenix Life since January 1, 2004. Prior to that, he was Senior Managing Director and Portfolio Manager of Virtus from 1995 through 2003. He joined the Company in 1981 and held a series of increasingly senior investment positions prior to 1995.

DAVID R. PELLERIN, age 49, has been Senior Vice President and Chief Accounting Officer of the Company since November 2007. Previously, Mr. Pellerin served as Senior Vice President and Chief Financial Officer, Asset Management of the Company since February 2007 and as Vice President and Chief Financial Officer, Asset Management of the Company since November 2006. Mr. Pellerin joined the Company in 1983 and has held numerous senior financial roles, including Vice President, Corporate Finance of the Company and Vice President and Chief Financial Officer of American Phoenix, which was formerly the Company’s wholly-owned property casualty brokerage subsidiary.

Code of Ethics

We have a code of ethics that is applicable to all of our Company directors and employees, including our principal executive officer, principal financial officer and principal accounting officer. A copy of this code (our “Code of Conduct”) may be reviewed on our web site at www.phoenixwm.com, in the Investor Relations section. The latest amendments to the Code of Conduct will be reflected, together with a description of the nature of any amendments, other than ones that are technical, administrative or non-substantive, on the above web site. In the event we ever waive compliance with the code by our principal executive officer, our principal financial officer, or our principal accounting officer, we will disclose the waiver on that web site. Copies of our code may also be obtained without charge by sending a request either by mail to: Corporate Secretary, The Phoenix Companies, Inc., One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056, or by e-mail to: corporate. secretary@phoenixwm.com.

63

Item 11.

Executive Compensation

The information required by Item 402 and paragraphs (e)(4) and (e)(5) of Item 407 of Regulation S-K is incorporated herein by reference to the information set forth under the sections entitled: “Compensation of Executive Officers”, “Compensation Committee Charter, Processes, Interlocks and Report” and “Compensation of Directors” of our 2009 Proxy Statement.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 403 of Regulation S-K is incorporated herein by reference to the information set forth under the section entitled “Ownership of Common Stock” of our 2009 Proxy Statement.

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

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of the end of the Company’s 2008 fiscal year with respect to compensation plans under which equity securities of the Company are authorized for issuance. In connection with the spin-off dividend, outstanding stock option and RSU awards were modified through the issuance of additional stock options and RSUs and the adjustment of the stock option exercise prices for existing awards. For each award outstanding, the aggregate intrinsic value of the award immediately after the modification was the same as the aggregate intrinsic value immediately before the modification. The modifications were structured to preserve the value of the awards upon completion of the spin-off and, accordingly, resulted in no additional compensation cost. Also in connection with the spin-off dividend, invested awards to Virtus employees were cancelled. As such, unless noted otherwise, the figures listed in the table below and the accompanying footnotes reflect the status of our equity compensation plans after these modifications were made.

	(A)		(B)	(C)
				Number of securities
	Number of securities to be		Weighted-average	remaining available for
	issued upon exercise		issue price of	future issuance under
Plan Category	of outstanding options,		outstanding options,	equity compensation plans,
	warrants and rights		warrants and rights(1)	excluding securities
				reflected in Column (A)
Equity compensation plans   approved by the Company’s   shareholders:
– 2003 Restricted Stock,       Restricted Stock Unit and       Long-Term Incentive Plan(2)	3,133,392	(3)	N/A	1,690,710
Equity compensation plans not   approved by the Company’s   shareholders:
– Stock Incentive Plan(4)	4,660,478	(5)	$11.82	834,819
– Directors Stock Plan(6)	174,746	(7)	$13.98	833,043
– Executive Employment       Agreement(9)	394,737	(8)	N/A	—
Total plans not approved by     shareholders	5,229,961		$11.90	1,667,862
Total	8,363,353		$11.90	3,358,572

———————

⁽¹⁾

Does not take RSUs into account.

⁽²⁾

A copy of the 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan was filed as an exhibit to our first quarter 2008 Form 10-Q filed by the Company with the SEC on May 8, 2008.

⁽³⁾

This figure consists of the shares underlying 923,724 RSUs that vest over time, 1,343,741 RSUs that are subject to performance contingencies and 865,927 RSUs that are subject to no contingencies (but which are not currently convertible). Included in these figures are RSUs granted to Mrs. Young in connection with her Amended and Restated Employment Agreement as described in the Form 8-K filed by the Company on May 18, 2005.

64

⁽⁴⁾

A copy of the Stock Incentive Plan was filed as an exhibit to the first quarter 2008 Form 10-Q filed by the Company with the SEC on May 8, 2008. The first amendment to the Stock Incentive Plan is being filed as an exhibit to this Form 10-K. The following summary of the material features of the plan is qualified in its entirety by reference to the full text of the plan, which is hereby incorporated by reference.

Under the Company’s Stock Incentive Plan, the Compensation Committee (or if the committee delegates such authority to the CEO) may grant stock options to officers and employees of the Company and its subsidiaries. The maximum number of shares issuable under the plan with respect to officers and employees of the Company other than Phoenix Investment Partners, Ltd. (now Virtus Investment Partners, Inc., which was spun off by the Company on December 31, 2008, and hereinafter “Virtus”),(including those who are also employees, officers or directors of Virtus and those individuals who were officers or employees of the Company on April 17, 2000) is the aggregate of 5% (approximately 5.25 million prior to adjustment for the spin-off of Virtus) of the shares outstanding on June 26, 2001 (approximately 105 million shares) reduced by the shares issuable pursuant to options or other awards grant ed under the Company’s Directors Stock Plan and, with respect to officers and employees of Virtus (other than those officers, employees or insurance agents described above), 1% (approximately 1.05 million prior to adjustment for the spin-off of Virtus) of the shares outstanding on June 26, 2001. During any five-year period, no participant may be granted options in respect of more than 5% of the shares available for issuance under the plan. The Board may terminate or amend the plan, but such termination or amendment may not adversely affect any outstanding stock options without the consent of the affected participant. The plan will continue in effect until it is terminated by the Board or until no more shares are available for issuance.

The exercise price per share subject to an option will be not less than the fair market value of such share on the option’s grant date. Each option will generally become exercisable in equal installments on each of the first three anniversaries of the grant date, except that no option may be exercised after the tenth anniversary of its grant date. Options may not be transferred by the grantee, except in the event of death or, if the committee permits, the transfer of non-qualified stock options by gift or domestic relations order to the grantee’s immediate family members. Upon a grantee’s death, any outstanding options previously granted to such grantee will be exercisable by the grantee’s designated beneficiary until the earlier of the expiration of the option or five years following the grantee’s death. If the grantee terminates employment by reason of disability or retirement, any outs tanding option will continue to vest as if the grantee’s service had not terminated and the grantee may exercise any vested option until the earlier of five years following termination of employment or the expiration of the option. If the grantee’s employment is terminated for cause, the grantee will forfeit any outstanding options. If the grantee’s employment terminates in connection with a divestiture of a business unit or subsidiary or similar transaction, the committee may provide that all or some outstanding options will continue to become exercisable and may be exercised at any time prior to the earlier of the expiration of the term of the options and the third anniversary of the grantee’s termination of service. If the grantee terminates employment for any other reason, any vested options held by the grantee at the date of termination will remain exercisable for a period of 30 days and any then unvested options will be forfeited.

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

⁽⁵⁾

This figure consists of the shares which underlie the options issued under the Stock Incentive Plan (2,913,348 of which are fully vested and 1,747,130 of which are subject to vesting with the passage of time).

⁽⁶⁾

A copy of the Directors Stock Plan was filed as an exhibit to the first quarter 2008 Form 10-Q filed by the Company on May 8, 2008. The following summary of the material features of the plan is qualified in its entirety by reference to the full text of the plan, which is hereby incorporated by reference.

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

⁽⁷⁾

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

⁽⁸⁾

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

⁽⁹⁾

A copy of the Company’s Executive Employment Agreement with Mrs. Young was filed as an exhibit to the Form 8-K filed by the Company as of January 1, 2003. The following summary of the material features of the RSUs subject to that agreement is qualified in its entirety by reference to the full text of the agreement. For all purposes other than governing the terms of the RSUs, the Executive Employment Agreement with Mrs. Young is no longer effective and has been replaced by the Amended and Restated Employment Agreement between the Company and Mrs. Young, filed as an exhibit to the 10-Q filed by the Company on August 9, 2005 and, most recently, the Second Amended and Restated Employment Agreement between the Company and Mrs. Young, filed as an exhibit to the Form 10-K.

65

The Company’s Executive Employment Agreement with Mrs. Young provides for the issuance to her of that number of RSUs equal to the number resulting from dividing $3,000,000 by the closing price of our Common Stock on December 31, 2002 ($7.60) (i.e. 394,737 RSUs). The agreement expressly provides for the issuance of stock to Mrs. Young on a specified period of time following the termination of her employment with the Company (the period from the grant date of January 1, 2003 to that date being the “Restricted Period”). The agreement further provides that while Mrs. Young holds the RSUs, she will not have any right to transfer, vote or to direct the vote of the underlying shares of stock. The Company will credit each RSU with dividend equivalents and interest thereon, both to be distributed to Mrs. Young at the end of the Restricted Period. Dividend equivalents were reduced in 2006 to satisfy required tax withholding on vesting. Mrs. Young was given the opportunity in 2008 to accelerate the conversion of vested RSUs to common stock in 2009 pursuant to the transition rules under Internal Revenue Code Section 409A. Mrs. Young elected to accelerate the conversion of her vested RSUs to January 2, 2009.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the information set forth under the section entitled “Proposal 1: Election of Directors” of our 2009 Proxy Statement.

Item 14.

Principal Accounting Fees and Services

The information required by Item 9(e) of Schedule 14A is incorporated herein by reference to the information set forth under the section entitled “Proposal 2: Ratification of the Appointment of our Independent Registered Public Accounting Firm” of our 2009 Proxy Statement.

66

PART IV

Item 15.

Exhibits, Financial Statement Schedules

(a)

Documents filed as part of this Form 10-K include:

1.

Financial Statements. The financial statements listed in Part II of the Table of Contents to this Form 10-K are filed as part of this Form 10-K;

2.

Financial Statement Schedules. All financial statement schedules are omitted as they are not applicable or the information is shown in the consolidated financial statements or notes thereto; and

3.

Exhibits. The exhibits listed under the caption “Exhibit Index” herein are filed as part of this Form 10-K. Exhibit numbers 10.1 through 10.33 are management contracts or compensatory plans or arrangements.

In reliance upon Item 601(4)(iii) of Regulation S-K, we hereby give notice that, in connection with the filing of this Annual Report on Form 10-K, we do not intend to file as exhibits copies of our instruments with respect to long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. We hereby agree to furnish a copy of any such instrument to the SEC upon request.

67

SIGNATURES

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

		THE PHOENIX COMPANIES, INC.
		(Registrant)
Dated:	March 5, 2009	By:	/s/ Dona D. Young
		Dona D. Young
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)
Dated:	March 5, 2009	By:	/s/ Peter A. Hofmann
		Peter A. Hofmann
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
Dated:	March 5, 2009	By:	/s/ David R. Pellerin
		David R. Pellerin
		Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, dated March 5, 2009, by the following persons on behalf of the Registrant and in the capacities indicated.

*	*
Sal H. Alfiero, Director	John H. Forsgren, Jr., Director
*	*
Martin N. Baily, Director	Ann Maynard Gray, Director
*	*
Jean S. Blackwell, Director	John E. Haire, Director
*	*
Peter C. Browning, Director	Jerry J. Jasinowski, Director
*	*
Arthur P. Byrne, Director	Thomas S. Johnson, Director
*	*
Sanford Cloud, Jr., Director	Augustus K. Oliver, II, Director
*	*
Gordon J. Davis, Director	Arthur F. Weinbach, Director
	/s/ Dona D. Young
*By:  /s/ Tracy L. Rich	Dona D. Young, Chairman
Tracy L. Rich
Attorney-in-Fact

68

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

  The Phoenix Companies, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and comprehensive income, cash flows and changes in stockholders’ equity present fairly, in all material respects, the financial position of The Phoenix Companies, Inc. and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because a material weakness in internal control over financial reporting designed to ensure proper accounting for income taxes, including the allocation of its income tax provision (benefit) among income from continuing operations, income from discontinued operations and other comprehensive loss existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the December 31, 2008 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. The Compa ny’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 29 to the consolidated financial statements, two significant distributors suspended sales of the Company’s products and the Company had downgrades from four rating agencies.

As discussed in Notes 2 and 18 to the consolidated financial statements, the Company changed the manner in which it accounts for reinsurance of long duration insurance contracts effective April 1, 2008 and accounts for defined pension and other postretirement plans effective December 31, 2006.

F-1

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized a cquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut

March 5, 2009

F-2

THE PHOENIX COMPANIES, INC.

Consolidated Balance Sheet

($ in millions, except share data)

December 31, 2008 and 2007

	2008		2007
ASSETS:
Available-for-sale debt securities, at fair value	$	9,831.0	$	11,970.0
Available-for-sale equity securities, at fair value		25.2		191.8
Venture capital partnerships, at equity in net assets		200.8		173.7
Policy loans, at unpaid principal balances		2,535.7		2,380.5
Other investments		616.9		507.3
Fair value option investments		84.1		—
		13,293.7		15,223.3
Available-for-sale debt and equity securities pledged as collateral, at fair value		148.0		219.1
Total investments		13,441.7		15,442.4
Cash and cash equivalents		381.1		541.2
Accrued investment income		203.4		209.6
Receivables		411.5		321.4
Deferred policy acquisition costs		2,731.4		2,089.9
Deferred income taxes		456.7		53.9
Goodwill		30.1		30.1
Other assets		182.7		909.5
Separate account assets		7,930.2		10,820.3
Total assets	$	25,768.8	$	30,418.3
LIABILITIES:
Policy liabilities and accruals	$	14,008.8	$	14,002.4
Policyholder deposit funds		1,616.6		1,808.9
Indebtedness		458.0		627.7
Other liabilities		645.0		562.1
Non-recourse collateralized obligations		245.2		317.9
Separate account liabilities		7,930.2		10,820.3
Total liabilities		24,903.8		28,139.3
COMMITMENTS AND CONTINGENCIES (NOTES 23, 24 & 25)
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value: 126.7 million and 125.6 million shares issued		1.3		1.3
Additional paid-in capital		2,626.4		2,616.1
Accumulated deficit		(839.5)		(20.7)
Accumulated other comprehensive loss		(743.7)		(138.2)
Treasury stock, at cost: 12.3 million and 11.3 million shares		(179.5)		(179.5)
Total stockholders’ equity		865.0		2,279.0
Total liabilities and stockholders’ equity	$	25,768.8	$	30,418.3

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

F-3

THE PHOENIX COMPANIES, INC.

Consolidated Statement of Income and Comprehensive Income

($ in millions, except per share data)

Years Ended December 31, 2008, 2007 and 2006

	2008		2007		2006
REVENUES:
Premiums	$	765.9	$	798.3	$	839.7
Fee income		622.6		516.4		414.1
Net investment income		915.6		1,058.8		1,048.5
Net realized investment gains (losses)		(295.8)		(6.0)		75.2
Total revenues		2,008.3		2,367.5		2,377.5
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends		1,370.9		1,318.5		1,341.1
Policyholder dividends		207.5		380.0		399.1
Policy acquisition cost amortization		409.0		193.0		145.8
Interest expense on indebtedness		36.7		44.2		49.2
Interest expense on non-recourse collateralized obligations		11.8		15.4		18.7
Other operating expenses		263.7		277.9		258.2
Total benefits and expenses		2,299.6		2,229.0		2,212.1
Income (loss) from continuing operations before income taxes		(291.3)		138.5		165.4
Income tax (expense) benefit		116.9		(21.9)		(51.6)
Income (loss) from continuing operations		(174.4)		116.6		113.8
Income (loss) from discontinued operations, net of income taxes		(551.6)		1.0		(18.5)
Net income (loss)	$	(726.0)	$	117.6	$	95.3
EARNINGS (LOSS) PER SHARE:
Earnings (loss) from continuing operations – basic	$	(1.53)	$	1.02	$	1.03
Earnings (loss) from continuing operations – diluted	$	(1.53)	$	1.01	$	1.01
Earnings (loss) from discontinued operations – basic	$	(4.82)	$	—	$	0.17
Earnings (loss) from discontinued operations – diluted	$	(4.82)	$	—	$	0.16
Net earnings (loss) – basic	$	(6.35)	$	1.03	$	0.86
Net earnings (loss) – diluted	$	(6.35)	$	1.01	$	0.84
Basic weighted-average common shares outstanding (in thousands)		114,382		114,091		110,932
Diluted weighted-average common shares outstanding (in thousands)		114,382		115,989		113,181
COMPREHENSIVE INCOME (LOSS):
Net income (loss)	$	(726.0)	$	117.6	$	95.3
Other comprehensive income (loss)		(605.5)		(63.5)		13.9
Comprehensive income (loss)	$	(1,331.5)	$	54.1	$	109.2

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

F-4

THE PHOENIX COMPANIES, INC.

Consolidated Statement of Cash Flows

($ in millions)

Years Ended December 31, 2008, 2007 and 2006

	2008		2007		2006
OPERATING ACTIVITIES:
Premiums collected	$	775.7	$	776.8	$	829.1
Fee income collected		622.8		529.8		442.7
Investment income collected		918.2		982.3		992.2
Policy benefits paid, excluding policyholder dividends		(1,137.9)		(930.4)		(1,085.6)
Policyholder dividends paid		(347.3)		(338.4)		(339.8)
Policy acquisition costs paid		(400.0)		(463.8)		(329.1)
Interest expense on indebtedness paid		(37.4)		(44.6)		(41.8)
Interest expense on collateralized obligations paid		(11.6)		(16.5)		(17.8)
Other operating expenses paid		(280.0)		(244.0)		(274.6)
Income taxes (paid) refunded		(2.7)		(3.0)		8.1
Cash from continuing operations		99.8		248.2		183.4
Discontinued operations, net		(45.9)		40.6		56.8
Cash from operating activities		53.9		288.8		240.2
INVESTING ACTIVITIES:
Investment purchases (Note 9)		(5,786.2)		(4,404.8)		(5,244.6)
Investment sales, repayments and maturities (Note 9)		6,016.4		4,789.0		5,933.0
Debt and equity securities pledged as collateral sales		39.8		33.3		26.5
Subsidiary purchases		—		(13.4)		—
Premises and equipment additions		(17.9)		(19.6)		(18.2)
Premises and equipment disposals		8.3		—		—
Discontinued operations, net		22.1		15.8		(44.1)
Cash from investing activities		282.5		400.3		652.6
FINANCING ACTIVITIES:
Policyholder deposit fund deposits		761.1		745.9		638.6
Policyholder deposit fund withdrawals		(1,070.2)		(1,167.4)		(1,470.9)
Indebtedness repayments		(163.6)		—		(30.2)
Common stock issued for equity units stock purchase contracts		—		—		153.7
Collateralized obligations repayments		(40.7)		(23.3)		(39.5)
Common stock dividends paid		(18.4)		(18.4)		(18.1)
Proceeds from stock options exercised		0.3		1.4		1.8
Discontinued operations, net		35.0		(57.2)		(34.8)
Cash for financing activities		(496.5)		(519.0)		(799.4)
Change in cash and cash equivalents		(160.1)		170.1		93.4
Cash and cash equivalents, beginning of year		541.2		371.1		277.7
Cash and cash equivalents, end of year	$	381.1	$	541.2	$	371.1

Included in cash and cash equivalents above is cash pledged as collateral of $7.3 million, $12.0 million, and $3.1 million at December 31, 2008, 2007 and 2006, respectively.

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

F-5

THE PHOENIX COMPANIES, INC.

Consolidated Statement of Changes in Stockholders’ Equity

($ in millions, except share data)

Years Ended December 31, 2008, 2007 and 2006

	2008		2007		2006
COMMON STOCK:
Balance, beginning of year	$	1.3	$	1.3	$	1.1
Common shares issued		—		—		0.2
Balance, end of year	$	1.3	$	1.3	$	1.3
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	2,616.1	$	2,600.3	$	2,437.6
Issuance of shares and compensation expense on stock compensation awards		10.3		14.7		9.2
Common shares issued on settlement of equity units		—		—		153.5
Tax benefit on employee stock options and awards		—		1.1		—
Balance, end of year	$	2,626.4	$	2,616.1	$	2,600.3
ACCUMULATED DEFICIT:
Balance, beginning of year	$	(20.7)	$	(115.9)	$	(193.1)
Adjustment for initial application of FIN 48 (Note 2)		—		(4.0)		—
Adjustment for initial application of SFAS 159 (Note 2)		(2.9)		—		—
Net income		(726.0)		117.6		95.3
Common stock dividend ($0.16 per share)		(18.8)		(18.4)		(18.1)
Spin-off dividend distribution		(71.1)		—		—
Balance, end of year	$	(839.5)	$	(20.7)	$	(115.9)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance, beginning of year	$	(138.2)	$	(74.7)	$	(59.0)
Other comprehensive income (loss)		(605.5)		(63.5)		13.9
Adjustment for initial application of SFAS 158 (Notes 2 and 18)		—		—		(29.6)
Balance, end of year	$	(743.7)	$	(138.2)	$	(74.7)
TREASURY STOCK, AT COST:
Balance, beginning and end of year	$	(179.5)	$	(179.5)	$	(179.5)
TOTAL STOCKHOLDERS’ EQUITY:
Balance, beginning of year	$	2,279.0	$	2,231.5	$	2,007.1
Change in stockholders’ equity		(1,414.0)		47.5		224.4
Stockholders’ equity, end of year	$	865.0	$	2,279.0	$	2,231.5

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

F-6

THE PHOENIX COMPANIES, INC.

Notes to Consolidated Financial Statements

($ in millions, except per share and per unit data)

Years Ended December 31, 2008, 2007 and 2006

1.

Organization and Description of Business

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

On June 25, 2001, the effective date of its demutualization, Phoenix Home Life converted from a mutual life insurance company to a stock life insurance company, became a wholly owned subsidiary of The Phoenix Companies, Inc. (“PNX”) and changed its name to Phoenix Life Insurance Company.

The Phoenix Companies, Inc. is a holding company and our operations are conducted through subsidiaries, principally Phoenix Life Insurance Company and PHL Variable Insurance Company. We provide life insurance, annuity and investment products through a wide variety of third-party financial professionals and intermediaries. We have eliminated significant intercompany accounts and transactions in consolidating these financial statements.

Effective December, 31, 2008, we distributed our interest in our asset management subsidiary, Virtus Investment Partners, Inc. (“Virtus”), formerly known as Phoenix Investment Partners, Ltd., to PNX’s shareholders in a spin-off dividend. See Note 21 for further information regarding the spin-off transaction. We have reflected the results of Virtus prior to the distribution as discontinued operations in these financial statements.

Prior to the spin-off of Virtus, we reported our results in two operating segments. In addition to the two segments, we separately reported corporate operations that were not allocated to operating segments. Effective with the spin-off, we revised our reportable segments to report all of our results, including corporate operations, in one reporting unit.

2.

Basis of Presentation and Significant Accounting Policies

We have prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which differ materially from the accounting practices prescribed by various insurance regulatory authorities. Our consolidated financial statements include the accounts of The Phoenix Companies, Inc., its subsidiaries and certain sponsored collateralized obligation trusts as described in Note 13 to these financial statements. Significant intercompany balances and transactions have been eliminated. We have reclassified certain amounts for 2007 and 2006 to conform with the 2008 presentation.

Use of Estimates

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 the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. We employ significant estimates and assumptions in the determination of deferred policy acquisition costs; policyholder liabilities and accruals; the valuation of goodwill and other intangible assets; the valuation of investments in debt and equity securities and venture capital partnerships; the valuation of deferred tax assets; pension and other postemployment benefits liabilities; and accruals for contingent liabilities.

F-7

2.

Basis of Presentation and Significant Accounting Policies (continued)

Risks Associated with Current Economic Environment

Over the past year, the U.S. economy has experienced unprecedented credit and liquidity issues and entered into recession. Following several years of rapid credit expansion, a sharp contraction in mortgage lending coupled with dramatic declines in home prices, rising mortgage defaults and increasing home foreclosures, resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to most sectors of the credit markets, and to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, to be subsidized by the U.S. government and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties many lenders and institutional investors have reduce d and, in some cases, ceased to provide funding to borrowers, including other financial institutions. These factors, combined with declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a prolonged recession.

Even under more favorable market conditions, general factors such as the availability of credit, consumer spending, business investment, capital market conditions and inflation affect our business. For example, in an economic downturn, higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending may depress the demand for life insurance, annuities and investment products. In addition, this type of economic environment may result in higher lapses or surrenders of policies. Accordingly, the risks we face related to general economic and business conditions are more pronounced given the severity and magnitude of recent adverse economic and market conditions experienced.

More specifically, our business is exposed to the performance of the debt and equity markets, which have been materially and adversely affected by recent economic developments. Adverse conditions, including but not limited to, a lack of buyers in the marketplace, volatility, credit spread changes, and benchmark interest rate changes, have affected and will continue to impact the liquidity and value of our investments. In addition to other ways set forth in additional risk factors below, the ways that poor debt and equity market performance and changes in interest rates have adversely affected, and will continue to adversely affect, our business, financial condition, growth and profitability include, but are not limited to, the following:

·

The value of our investment portfolio has declined which has resulted in, and may continue to result in, higher realized and/or unrealized losses. For example, in 2008 the value of our general account investments decreased by $1.3 billion, before offsets, due to net unrealized losses on investments. A widening of credit spreads, such as the market has experienced recently, increases the net unrealized loss position of our investment portfolio and may ultimately result in increased realized losses. The value of our investment portfolio can also be affected by illiquidity and by changes in assumptions or inputs we use in estimating fair value. Further, certain types of securities in our investment portfolio, such as asset-backed securities supported by residential and commercial mortgages, have been disproportionately affected. Continued adverse capital market conditions could result in further realized and/or unrealized losses.

·

Changes in interest rates also have other effects related to our investment portfolio. In periods of increasing interest rates, life insurance policy loans, surrenders and withdrawals could increase as policyholders seek investments with higher returns. This could require us to sell invested assets at a time when their prices are depressed by the increase in interest rates, which could cause us to realize investment losses. Conversely, during periods of declining interest rates, we could experience increased premium payments on products with flexible premium features, repayment of policy loans and increased percentages of policies remaining in force. We would obtain lower returns on investments made with these cash flows. In addition, borrowers may prepay or redeem bonds in our investment portfolio so that we might have to reinvest those proceeds in lower yielding investments. As a consequence of these factors, we could experience a decrease in the spread between the returns on our investment portfolio and amounts credited to policyholders and contract owners, which could adversely affect our profitability.

·

Our investments in alternative asset classes, such as hedge funds, private equity funds and limited partnership interests, have also been adversely affected. There may be similar adverse effects in the future. These assets generate returns that are more volatile than other asset classes. For example, in 2008 our net investment income related to these investments declined $60.6 million. These assets are also relatively illiquid and may be harder to value or sell in adverse market conditions.

·

Asset-based fee revenues related to our variable life and annuity products have declined and may continue to decline. For example, in 2008 our asset-based fees declined $4.6 million. Poor performance of the debt and equity markets diminishes our fee revenues by reducing the value of the assets we manage.

F-8

2.

Basis of Presentation and Significant Accounting Policies (continued)

·

The attractiveness of certain of our products may decrease because they are linked to the equity markets and assessments of our financial strength, resulting in lower profits. Increasing consumer concerns about the returns and features of our products or our financial strength may cause existing clients to surrender policies or withdraw assets, and diminish our ability to sell policies and attract assets from new and existing clients, which would result in lower sales and fee revenues.

·

The funding requirements of our pension plan have increased. The funding requirements of our pension plan are dependent on the performance of the debt and equity markets. The value of the assets supporting the pension plan decreased by $143.4 million in 2008, thereby increasing the requirement for future funding. Future market declines could result in additional funding requirements. Also, the funding requirements of our pension plan are sensitive to interest rate changes. Should interest rates decrease materially, the value of the liabilities under the plan would increase, as would the requirement for future funding.

These extraordinary economic and market conditions have materially and adversely affected us. In 2008 we had a net loss of $726.0 million. It is difficult to predict how long the current economic and market conditions will continue, whether the financial markets will continue to deteriorate and which aspects of our products and/or business will be adversely affected. However, the lack of credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity are likely to continue to materially and adversely affect our business, financial condition and results of operations.

Accounting Change

Effective April 1, 2008, we changed our method of accounting for the cost of certain of our long duration reinsurance contracts accounted for in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 113, Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts (“SFAS 113”). In conjunction with this change, we also changed our method of accounting for the impact of reinsurance costs on deferred acquisition costs. SFAS 113 requires us to amortize the estimated cost of reinsurance over the life of the underlying reinsured contracts. Under our previous method, we recognized reinsurance recoveries as part of the net cost of reinsurance and amortized this balance over the estimated lives of the underlying reinsured contracts in proportion to estimated gross profits (“EGPs”) consistent with the method used for amortizing deferred policy acquisition costs. Under the new method, reinsurance recoveries are recognized in the same period as the related reinsured claim. In conjunction with this change, we also changed our policy for determining EGPs relating to these contracts to include the effects of reinsurance, where previously these effects had not been included.

Adoption of New Accounting Standards

In January 2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. EITF 99-20-1, which amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets (“EITF 99-20-1”). The FSP revises EITF 99-20’s impairment guidance to make it consistent with the requirements of SFAS No. 115 for determining whether an other-than-temporary impairment has occurred. The FSP is effective for these financial statements. Our adoption of the FSP had no material effect on our financial statements.

In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities, which requires public entities to provide additional disclosures about transfers of financial assets. It also requires sponsors that have a variable interest in a variable interest entity to provide additional disclosures about their involvement with variable interest entities. The FSP is effective for these financial statements. Our adoption of the FSP had no material effect on our financial statements.

In September 2008, the FASB issued FSP No. FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161. The FSP introduces new disclosure requirements for credit derivatives and certain guarantees. The FSP is effective for these financial statements. Our adoption of the FSP had no material effect on our financial statements.

F-9

2.

Basis of Presentation and Significant Accounting Policies (continued)

On October 10, 2008, the FASB issued FASB Staff Position FAS 157-3 (“FSP FAS 157-3”), which clarifies the application of SFAS No. 157, Fair Value Measurements (“SFAS 157”) in an inactive market. The FSP addresses application issues such as how management’s internal assumptions should be considered when measuring fair value when relevant observable data do not exist; how observable market information in a market that is not active should be considered when measuring fair value and how the use of market quotes should be considered when assessing the relevance of observable and unobservable data available to measure fair value. FSP FAS 157-3 was effective upon issuance. Our adoption of FSP FAS 157-3 had no material effect on our financial condition or results of operations.

On February 15, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”), which gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value (i.e., the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value must be recorded in earnings. Additionally, SFAS 159 allows for a one-time election for existing positions upon adoption, with the transition adjustment recorded to beginning retained earnings. We adopted SFAS 159 as of January 1, 2008 with no net effect to equity, as further described below.

We elected to apply the SFAS 159 fair value option to available-for-sale equity securities with a fair value of $74.6 million at January 1, 2008. These securities back our deferred compensation liabilities. Previously, changes in the fair value of the securities were recorded in other comprehensive income while changes in the liability were recorded in earnings. Electing the fair value option resulted in a decrease to accumulated other comprehensive loss and an offsetting increase to accumulated deficit of $2.9 million, net of tax, and allows us to mitigate the associated accounting volatility. Following election of the fair value option, changes in the fair value of these securities are recorded in earnings.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. The statement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (“Level 1, 2 and 3”). Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date. Level 2 inputs are observable inputs, other than quoted prices included in Level 1, for the asset or liability. Level 3 inputs are unobservable inputs reflecting our estimates of the assumptions that market participants would use in pricing the asset or liability (including assum ptions about risk). Quantitative and qualitative disclosures will focus on the inputs used to measure fair value for both recurring and non-recurring fair value measurements and the effects of the measurements in the financial statements. We adopted SFAS 157 effective January 1, 2008 with no material impact on our financial position and results of operations.

We adopted the provisions of the FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, we recognized an increase in reserves for uncertain tax benefits through a cumulative effect adjustment of approximately $4.0 million, which was accounted for as an increase to the January 1, 2007 balance of accumulated deficit. Including the cumulative effect adjustment, we had approximately $23.9 million of total gross unrecognized tax benefits as of January 1, 2007. The amount of unrecognized tax benefits at January 1, 2007 that would, if recognized, impact the annual effective tax rate upon recognition was $21.0 million. See Note 16 to these financial statements for more information.

F-10

2.

Basis of Presentation and Significant Accounting Policies (continued)

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106 and 132(R) (“SFAS 158”). SFAS 158 requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status through comprehensive income in the period in which the changes occur. The funded status of a plan is measured as the difference between the fair value of plan assets and the benefit obligation as defined by SFAS 158. Additional minimum pension liabilities (“AML”) and related intangible assets are derecognized upon adoption of the new standard. SFAS 158 also requires increased disclosures surrounding defined benefit postretirement plans. This guidance is effective for fiscal years ending after December 15, 2006. The new guidance also requires that the plan assets and benefit obligation be measured as of the date of the employer’s fiscal year end effective for fiscal years ending after December 15, 2008. We adopted SFAS 158 as of December 31, 2006. The effect, as of that date, increased assets by $9.8 million, increased liabilities by $39.4 million and decreased equity, through accumulated other comprehensive income, by $29.6 million. See Note 18 to these financial statements for additional information related to employee benefit plans.

In September 2006, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides guidance for how errors should be evaluated to assess materiality from a quantitative perspective. SAB 108 permits companies to initially apply its provisions by either restating prior financial statements or recording the cumulative effect of initially applying the approach as adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment to retained earnings. We adopted SAB 108 on December 31, 2006 with no effect to the financial statements.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140 (“SFAS 156”). SFAS 156 provides guidance on recognition and disclosure of servicing assets and liabilities and is effective beginning January 1, 2007. We adopted this standard effective January 1, 2007 with no material impact on our financial position and results of operations.

Accounting Standards Not Yet Adopted

In January 2009, the FASB issued FSP No. FAS 132(R)-1, Employer’ Disclosures about Postretirement Benefit Plan Assets (“FAS 132(R)-1”). The FSP expands the disclosures set forth in SFAS 132(R) by adding required disclosures about: how investment allocation decisions are made by management, major categories of plan assets, and significant concentrations of risk. Additionally, the FSP requires an employer to disclose: the level of the fair value hierarchy into which plan assets fall, information about the inputs that valuation techniques used to measure the fair value of plan assets, and a reconciliation of the beginning and ending balances of plan assets in level 3 of the fair value hierarchy. The FSP will not have a material effect on our financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of GAAP-basis financial statements. The Standard is effective 60 days following SEC approval of the Public Company Accounting Oversight Board amendments to remove the hierarchy of generally accepted accounting principles from the auditing standards. SFAS 162 is not expected to have an impact on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141(R), Accounting for Business Combinations (“SFAS 141(R)”). SFAS 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed and requires the acquirer to disclose all information needed to evaluate and understand the nature and financial effect of the combination and is effective beginning for fiscal years beginning after December 15, 2008. We will adopt this standard effective January 1, 2009 and do not expect it to have a material impact on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires all entities to report noncontrolling interests in subsidiaries in the same way—as equity in the consolidated financial statements and requires that associated transactions be treated as equity transactions—and is effective beginning for fiscal years beginning after December 15, 2008. We will adopt this standard effective January 1, 2009 and do not expect it to have a material impact on our financial position and results of operations.

F-11

2.

Basis of Presentation and Significant Accounting Policies (continued)

Significant Accounting Policies

Investments

Debt and Equity Securities

Our debt and equity securities classified as available-for-sale are reported on our balance sheet at fair value. Fair value is based on quoted market price, where available. When quoted market prices are not available, we estimate fair value by discounting debt security cash flows to reflect interest rates currently being offered on similar terms to borrowers of similar credit quality (private placement debt securities), by quoted market prices of comparable instruments (untraded public debt securities) and by independent pricing sources or internally developed pricing models (equity securities). We recognize unrealized investment gains and losses on investments in debt and equity securities that we classify as available-for-sale. We report these unrealized investment gains and losses as a component of other comprehensive income, net of the Closed Block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable deferred income taxes.

For mortgage-backed and other asset-backed debt securities, we recognize income using a constant effective yield based on anticipated prepayments and the estimated economic lives of the securities. When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and any resulting adjustment is included in net investment income. For certain asset-backed securities, changes in estimated yield are recorded on a prospective basis and specific valuation methods are applied to these securities to determine if there has been an other-than-temporary decline in value.

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. We utilize the equity method of accounting, initially recording the investment at cost, and adjust the carrying amount of the investment to recognize our share of the earnings or losses incurred subsequent to the date of acquisition. Recognition of net investment income is delayed due to the availability of the related financial statements, as venture capital partnerships are generally on a three-month delay.

Policy Loans

Policy loans are carried at their unpaid principal balances and are collateralized by the cash values of the related policies. We estimate the fair value of fixed rate policy loans by discounting loan interest and loan repayments. We base the discount rate on the 10-year U.S. Treasury rate. We assume that loan interest payments are made at the fixed rate less 17.5 basis points and that loan repayments only occur as a result of anticipated policy lapses. For variable rate policy loans, we consider the unpaid loan balance as fair value, as interest rates on these loans are reset annually based on market rates.

Other Investments

Other investments primarily include leveraged lease investments and other partnership and joint venture interests as well as mortgage loans. Leveraged lease investments represent the net amount of the estimated residual value of the lease assets, rental receivables and unearned and deferred income to be allocated over the lease term. Partnership and joint venture interests in which we do not have control or a majority ownership interest are recorded using the equity method of accounting. These investments include affordable housing, mezzanine and other partnership interests. We record the net income from investments in partnerships and joint ventures in net investment income. We report mortgage loans at unpaid principal balances, net of valuation reserves on impaired loans.

Derivative Instruments

We use derivative financial instruments, including options, futures and swaps as a means of hedging exposure to interest rate, equity price change, equity volatility and foreign currency risk. We also use derivative instruments to economically hedge our exposure on living benefits offered on certain of our variable products. We recognize derivative instruments on the balance sheet at fair value. The derivative contracts are reported as assets or liabilities in other investments and other liabilities, respectively, on the balance sheet, excluding embedded derivatives. Embedded derivatives are recorded on the balance sheet with the associated host contract.

F-12

2.

Basis of Presentation and Significant Accounting Policies (continued)

We do not designate the purchased derivatives related to living benefits as hedges for accounting purposes. For other derivatives, we designate each instrument according to the associated exposure as either a fair value or cash flow hedge at its inception as we do not enter into derivative contracts for trading or speculative purposes.

To qualify for hedge accounting, the changes in value of the derivative must be expected to substantially offset the changes in value of the hedged item. Hedges are monitored to ensure that there is a high correlation between the change in the value of the derivative instruments and the change in value of the hedged investment. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings.

Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in accumulated other comprehensive income and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains (losses). If it is probable that a hedged forecasted transaction will no longer occur, the effective portions of the gains or losses on derivative instruments designated as cash flow hedges are reclassified into earnings immediately.

Changes in the fair value of derivatives that are designated and qualify as foreign currency hedges are recorded in either current period earnings or accumulated other comprehensive income, depending on whether the hedged transaction is a fair value hedge or cash flow hedge. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains (losses).

Changes in the fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in net realized investment gains (losses) in the period incurred.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, money market instruments and other debt instruments with maturities of three months or less when purchased.

Deferred Policy Acquisition Costs

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

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

Each year, we develop future EGPs for the products sold during that year. The EGPs for products sold in a particular year are aggregated into cohorts. Future EGPs are projected for the estimated lives of the contracts. The amortization of deferred policy acquisition costs requires the use of various assumptions, estimates and judgments about the future. The assumptions, in the aggregate, are considered important in the projections of EGPs. The assumptions developed as part of our annual process are based on our current best estimates of future events, which are likely to be different for each year’s cohort. Assumptions considered to be significant in the development of EGPs include separate account fund performance, surrender and lapse rates, interest margin, mortality, premium persistency, funding patterns, expenses and reinsurance costs and recoveries. These assumptions are reviewed on a regular basis and are based on our past experience, industry studies, regulatory requirements and estimates about the future.

F-13

2.

Basis of Presentation and Significant Accounting Policies (continued)

To determine the reasonableness of the prior assumptions used and their impact on previously projected account values and the related EGPs, we evaluate, on a quarterly basis, our previously projected EGPs. Our process to assess the reasonableness of our EGPs involves the use of internally developed models, together with studies and actual experience. Incorporated in each scenario are our current best estimate assumptions with respect to separate account returns, surrender and lapse rates, interest margin, mortality, premium persistency, funding patterns, expenses and reinsurance costs and recoveries.

In addition to our quarterly reviews, we complete a comprehensive assumption study during the fourth quarter of each year. Upon completion of an assumption study, we revise our assumptions to reflect our current best estimate, thereby changing our estimate of projected account values and the related EGPs in the deferred policy acquisition cost and unearned revenue amortization models as well as AICPA Statement of Position No. 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts for Separate Accounts (“SOP 03-1”), reserving models. The deferred policy acquisition cost asset, as well as the unearned revenue reserves and SOP 03-1 reserves are then adjusted with an offsetting benefit or charge to income to reflect such changes in the period of the revision, a process known as “unlocking.”

Underlying assumptions for future periods of EGPs are not altered unless experience deviates significantly from original assumptions. For example, when lapses of our insurance products meaningfully exceed levels assumed in determining the amortization of deferred policy acquisition costs, we adjust amortization to reflect the change in future premiums or EGPs resulting from the unexpected lapses. In the event that we were to revise assumptions used for prior year cohorts, our estimate of projected account values would change and the related EGPs in the deferred policy acquisition cost amortization model would be unlocked, or adjusted, to reflect such change. Continued favorable experience on key assumptions, which could include increasing separate account fund return performance, decreasing lapses or decreasing mortality could result in an unlocking which would result in a decrease to deferred policy acquisition cost amortization and an increase in the deferred policy acquisition costs asset. Finally, an analysis is performed periodically to assess whether there are sufficient gross margins or gross profits to amortize the remaining deferred policy acquisition costs balances.

Goodwill and Other Intangible Assets

We do not record amortization expense on goodwill. For goodwill, we perform impairment tests at the reporting-unit level at least annually. To test for impairment, we calculate the fair value of the reporting unit based on the sum of its statutory book value, value of business in force and value of estimated new business. We compare the calculated fair value to the recorded values and record an impairment, if warranted.

Premises and Equipment

Premises and equipment, consisting primarily of our home office building, are stated at cost less accumulated depreciation and amortization and are included in other assets. We depreciate buildings on the straight-line method over 10 to 45 years and equipment primarily on a modified accelerated method over three to 10 years. We amortize leasehold improvements over the terms of the related leases or the useful life of the improvement, whichever is shorter.

Separate Account Assets and Liabilities

Separate account assets and liabilities related to policyholder funds are carried at fair value. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and the related liability increases are excluded from benefits and expenses. Fees assessed to the contract owners for management services are included in revenues when services are rendered.

F-14

2.

Basis of Presentation and Significant Accounting Policies (continued)

Policy Liabilities and Accruals

Policy liabilities and accruals includes future benefit liabilities for certain life and annuity products. We establish liabilities in amounts adequate to meet the estimated future obligations of policies in force. Future benefit liabilities for traditional life insurance are computed using the net level premium method on the basis of actuarial assumptions as to contractual guaranteed rates of interest, mortality rates guaranteed in calculating the cash surrender values described in such contracts and morbidity. Future benefit liabilities for term and annuities in the payout phase that have significant mortality risk are computed using the net premium method on the basis of actuarial assumptions at the issue date of these contracts for rates of interest, contract administrative expenses, mortality and surrenders. We establish liabilities for outstanding claims, losses and loss adjustment expenses based on individual case estimates for reported losses and estimates of unreported losses b ased on past experience.

Certain contracts may also include additional death or other insurance benefit features, such as guaranteed minimum death or income benefits offered with variable annuity contracts or no-lapse guarantees offered with universal life insurance contracts. An additional liability is established for these benefits by estimating the expected present value of the excess benefits and recognizing the excess ratably over the accumulation period based on total expected assessments.

Policyholder Deposit Funds

Amounts received as payment for certain universal life contracts, deferred annuities and other contracts without life contingencies are reported as deposits to Policyholder deposit funds. The liability for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the financial statement date, including interest credited, amounts that have been assessed to compensate us for services to be performed over future periods, and any amounts previously assessed against the policyholder that is refundable. The liability for deferred annuities and other contracts without life contingencies is equal to the balance that accrues to the benefit of the contract owner as of the financial statement date which includes the accumulation of deposits plus interest credited, less withdrawals and amounts assessed through the financial statement date.

Contingent Liabilities

Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonably estimable.

Demutualization and Closed Block

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

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

Investments Pledged as Collateral and Non-Recourse Collateralized Obligations

Collateralized obligations for which Goodwin Capital Advisers, Inc. (“Goodwin”) is the sponsor and actively manages the assets, where we are deemed to be a primary beneficiary as a result of our variable interests, are consolidated in our financial statements.

F-15

2.

Basis of Presentation and Significant Accounting Policies (continued)

Debt and equity securities pledged as collateral are recorded at fair value with any applicable unrealized investment gains or losses reflected as a component of accumulated other comprehensive income, net of applicable minority interest. We recognize realized investment losses on debt and equity securities in these collateralized obligations when declines in fair values, in our judgment, are considered to be other-than-temporarily impaired. Non-recourse obligations issued by the consolidated collateralized obligation trusts at face value and are recorded at unpaid principal balance. Non-recourse derivative cash flow hedges are carried on our consolidated balance sheet at fair value with an offsetting amount recorded in accumulated other comprehensive income.

Revenue Recognition

We recognize premiums for participating life insurance products and other long-duration life insurance products as revenue when due from policyholders. We recognize life insurance premiums for short-duration life insurance products as premium revenue pro rata over the related contract periods. We match benefits, losses and related expenses with premiums over the related contract periods.

Amounts received as payment for interest sensitive life contracts, deferred annuities and other contracts without life contingencies are considered deposits and are not included in revenue. Revenues from these products consist primarily of fees assessed during the period against the policyholders’ account balances for mortality charges, policy administration charges and surrender charges. Fees assessed that represent compensation for services to be provided in the future are deferred and amortized into revenue over the life of the related contracts. Related benefit expenses include universal life benefit claims in excess of fund values, net investment income credited to policyholders’ account balances and amortization of deferred policy acquisition costs.

Net Investment Income and Net Realized Investment Gains (Losses)

We recognize realized investment gains (losses) on asset dispositions on a first-in, first-out basis. We recognize realized investment losses when declines in fair value of debt and equity securities are considered to be other-than-temporarily impaired. We adjust the cost basis of these written-down investments to fair value at the date the determination of impairment is made and do not change the new cost basis for subsequent recoveries in value. For fixed maturities, we accrue the new cost basis to par or the estimated future cash flows over the expected remaining life of the security. In evaluating whether a decline in value is other than temporary, we consider several factors including, but not limited to the following:

·

the extent and the duration of the decline;

·

the reasons for the decline in value (credit event, interest related or market fluctuations);

·

our ability and intent to hold the investment for a period of time to allow for a recovery of value; and

·

the financial condition of and near term prospects of the issuer.

A debt security impairment is deemed other-than-temporary if:

·

we do not have the ability and intent to hold an investment until a forecasted recovery of fair value up to (or beyond) the cost of the investment which, in certain cases, may mean until maturity; or

·

it is probable that we will be unable to collect all amounts due according to the contractual terms of the debt security.

Impairments due to deterioration in credit that result in a conclusion that non-collection is probable are considered other-than-temporary. Other declines in fair value (for example, due to interest rate changes, sector credit rating changes or company-specific rating changes that do not result in a conclusion that non-collection of contractual principal and interest is probable) may also result in a conclusion that an other-than-temporary impairment has occurred.

Further, in situations where the Company has asserted its ability and intent to hold a security to a forecasted recovery, but now no longer has the ability and intent to hold until recovery, an impairment should be considered other-than-temporary, even if collection of cash flows is probable. The determination of the impairment is made when the assertion to hold to recovery changes, not when the decision to sell is made.

The Closed Block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable income taxes, which offset realized investment gains and losses, are each reported separately as components of net income.

F-16

2.

Basis of Presentation and Significant Accounting Policies (continued)

Income Taxes

We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes (“SFAS 109”). Accordingly, income tax expense or benefit is recognized based upon amounts reported in the financial statements and the provisions of currently enacted tax laws. We allocate income taxes to income, other comprehensive income and additional paid-in capital, as applicable.

We recognize current income tax assets and liabilities for estimated income taxes refundable or payable based on the current year’s income tax returns. We recognize deferred income tax assets and liabilities for the estimated future income tax effects of temporary differences and carryovers. Temporary differences are the differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as well as the timing of income or expense recognized for financial reporting and tax purposes of items not related to assets or liabilities. If necessary, we establish valuation allowances to reduce the carrying amount of deferred income tax assets to amounts that are more likely than not to be realized. We periodically review the adequacy of these valuation allowances and record any increase or reduction in allowances in accordance with SFAS 109’s intraperiod allocation rules. We recognize interest and penalties related to amounts accrued on uncertain tax positions and amounts paid or refunded from federal and state income tax authorities in tax expense.

Pension and Other Postemployment Benefits

We recognize pension and other postretirement benefit costs and obligations over the employees’ expected service periods by discounting an estimate of aggregate benefits. We estimate aggregate benefits by using assumptions for employee turnover, future compensation increases, rates of return on pension plan assets and future health care costs. We recognize an expense for differences between actual experience and estimates over the average future service period of participants. We recognize an expense for our contributions to employee and agent savings plans at the time employees and agents make contributions to the plans. We also recognize the costs and obligations of severance, disability and related life insurance and health care benefits to be paid to inactive or former employees after employment but before retirement.

3.

Business Combinations and Dispositions

PFG Holdings, Inc.

In 2003, we acquired the remaining interest in PFG Holdings, Inc. (“PFG”), the holding company for our private placement operation. The initial purchase consideration was $16.7 million in addition to a contingent obligation for additional purchase consideration based on the achievement of certain performance targets through 2007 and the appraised value of PFG as of December 31, 2007. Through November 2007, we paid additional consideration of $19.4 million, including $13.4 million, $0.0 million and $3.0 million during 2007, 2006 and 2005 respectively. In November 2007, we amended the original purchase agreement to extend the term of the agreement through the end of 2009 and to establish a more objective mechanism to value PFG and calculate the final amount of contingent consideration. As a result, we may be obligated to make additional cash payments of $17.6 million by June 2010 if certain performance targets are met through December 2009. Since the contingent payments are base d on the achievement of performance targets, the actual payments may be lower. If the performance targets are exceeded, the actual payments may be higher, subject to a maximum of $77.1 million. In accordance with EITF 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, a portion of the contingent payments will be accounted for as goodwill, and the amounts related to performance in excess of targets will be expensed, if and when achieved.

EMCO

On December 20, 2007, we sold all of the outstanding stock of Emprendimiento Compartido S.A. (“EMCO”), an Argentine wholly-owned subsidiary. We realized an after-tax loss of $4.8 million on this sale. This loss, as well as EMCO’s results up through the date of sale, are reported in discontinued operations in these financial statements. Prior year results have also been reported in discontinued operations.

F-17

3.

Business Combinations and Dispositions (continued)

Lombard International Assurance S.A.

In 2005, we disposed of our interests in Lombard International Assurance S.A. (“Lombard”). In the first quarter of 2007 and 2006, we realized after-tax gains of $8.9 million and $6.5 million, respectively, which included earn-out gain consideration received. We are not entitled to any additional consideration related to this sale going forward.

4.

Demutualization and 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 also established a Closed Block for their existing policies.

Because Closed Block liabilities exceed Closed Block assets, we have a net Closed Block liability at each period-end. This net liability represents the maximum future earnings contribution to be recognized from the Closed Block and the change in this net liability each period is in the earnings contribution recognized from the Closed Block for the period. To the extent that actual cash flows differ from amounts anticipated, we may adjust policyholder dividends. If the Closed Block has excess funds, those funds will be available only to the Closed Block policyholders. However, if the Closed Block has insufficient funds to make policy benefit payments that are guaranteed, the payments will be made from assets outside of the Closed Block.

Closed Block Assets and Liabilities:	As of December 31,
($ in millions)	2008		2007		Inception
Debt securities	$	6,011.4	$	6,919.4	$	4,773.1
Equity securities		9.0		134.0		—
Mortgage loans		8.9		12.7		399.0
Venture capital partnerships		188.5		157.3		—
Policy loans		1,377.0		1,357.1		1,380.0
Other investments		153.3		123.7		—
Total Closed Block investments		7,748.1		8,704.2		6,552.1
Cash and cash equivalents		57.2		67.8		—
Accrued investment income		113.0		112.1		106.8
Receivables		49.5		44.7		35.2
Deferred income taxes		418.3		329.3		389.4
Other Closed Block assets		338.0		10.0		6.2
Total Closed Block assets		8,724.1		9,268.1		7,089.7
Policy liabilities and accruals		9,742.7		9,811.2		8,301.7
Policyholder dividends payable		311.1		332.8		325.1
Policyholder dividend obligation		—		246.0		—
Other Closed Block liabilities		72.0		49.3		12.3
Total Closed Block liabilities		10,125.8		10,439.3		8,639.1
Excess of Closed Block liabilities over Closed Block assets	$	1,401.7	$	1,171.2	$	1,549.4

F-18

4.

Demutualization and Closed Block (continued)

Closed Block Revenues and Expenses and Changes in	Cumulative		Years Ended
Policyholder Dividend Obligations:	From		December 31,
($ in millions)	Inception		2008		2007		2006
Closed Block revenues
Premiums	$	8,303.8	$	719.3	$	745.6	$	786.5
Net investment income		4,963.1		523.1		571.6		540.7
Net realized investment losses		(197.8)		(124.4)		(0.6)		40.2
Total revenues		13,069.1		1,118.0		1,316.6		1,367.4
Policy benefits, excluding dividends		8,963.1		847.6		869.2		898.6
Other operating expenses		84.0		5.1		6.1		6.3
Total benefits and expenses, excluding policyholder dividends		9,047.1		852.7		875.3		904.9
Closed Block contribution to income before dividends   and income taxes		4,022.0		265.3		441.3		462.5
Policyholder dividends		(3,348.6)		(206.9)		(379.3)		(398.5)
Closed Block contribution to income before income taxes		673.4		58.4		62.0		64.0
Applicable income tax expense		(233.5)		(19.2)		(20.9)		(22.0)
Closed Block contribution to income	$	439.9	$	39.2	$	41.1	$	42.0
Policyholder dividend obligation
Policyholder dividends provided through earnings	$	3,393.8	$	206.9	$	379.3	$	398.5
Policyholder dividends provided through   other comprehensive income		(81.6)		(128.0)		(121.5)		(73.7)
Additions to policyholder dividend liabilities		3,312.2		78.9		257.8		324.8
Policyholder dividends paid		(3,326.2)		(346.6)		(337.6)		(339.2)
Decrease in policyholder dividend liabilities		(14.0)		(267.7)		(79.8)		(14.4)
Policyholder dividend liabilities, beginning of period		325.1		578.8		658.6		673.0
Policyholder dividend liabilities, end of period		311.1		311.1		578.8		658.6
Policyholder dividends payable, end of period		(311.1)		(311.1)		(332.8)		(331.7)
Policyholder dividend obligation, end of period	$	—	$	—	$	246.0	$	326.9

5.

Reinsurance

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

We remain liable to the extent that reinsuring companies may not be able to meet their obligations under reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses to us; consequently, we establish reserves for amounts deemed or estimated to be uncollectible. To minimize our exposure to significant losses from reinsurance insolvencies, we evaluate the financial condition of our reinsurers and monitor concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers. Due to the recent downgrade of Scottish Re, we will continue to closely monitor the situation and will reassess the recoverability of the reinsurance recoverable during the interim reporting periods of 2009.

Our reinsurance program varies based on the type of risk. Listed below are our most significant reinsurance agreements:

·

On all direct life insurance policies, the maximum of individual life insurance retained by us on any one life is $10 million for single life and joint first-to-die policies and $12 million for joint last-to-die policies, with excess amounts ceded to reinsurers.

·

We cede 70% to 90% of the mortality risk on most new issues of term insurance.

·

Effective January 1, 2008, we entered into an agreement to cede 50% to 75% of the risk in between $6.0 million to $10.0 million on universal life and variable universal life policies issued from January 1, 2006 through December 31, 2007, inclusive.

·

Effective November 30, 2008, PHL Variable Insurance Company ceded all the benefit risks, net of existing reinsurance, on all its term life business inforce as of December 31, 2008, excluding the term plans introduced in 2008.

F-19

5.

Reinsurance (continued)

Direct Business and Reinsurance in Continuing Operations:	Years Ended December 31,
($ in millions)	2008		2007		2006
Direct premiums	$	1,025.2	$	886.6	$	917.5
Premiums assumed from reinsureds		13.5		13.6		13.7
Premiums ceded to reinsurers		(272.8)		(101.9)		(91.5)
Premiums	$	765.9	$	798.3	$	839.7
Percentage of amount assumed to net premiums		1.8%		1.7%		1.6%
Direct policy benefits incurred	$	686.4	$	560.7	$	486.4
Policy benefits assumed from reinsureds		(5.3)		17.9		14.8
Policy benefits ceded to reinsurers		(205.1)		(91.9)		(64.8)
Policy benefits	$	476.0	$	486.7	$	436.4
Direct life insurance in force	$	169,630.1	$	155,862.7	$	143,120.6
Life insurance in force assumed from reinsureds		2,008.0		1,937.0		1,838.7
Life insurance in force ceded to reinsurers		(109,353.1)		(96,150.1)		(90,812.5)
Life insurance in force	$	62,285.0	$	61,649.6	$	54,146.8
Percentage of amount assumed to net insurance in force		3.2%		3.1%		3.4%

The policy benefit amounts above exclude changes in reserves, interest credited to policyholders, withdrawals and policyholder dividends, which total $1,213.6 million, $1,200.2 million and $1,249.1 million, net of reinsurance, for the years ended December 31, 2008, 2007 and 2006, respectively.

Irrevocable letters of credit aggregating $57.0 million at December 31, 2008 have been arranged with commercial banks in our favor to collateralize the ceded reserves.

We assume and cede business related to our discontinued group accident and health reinsurance operations. While we are not writing any new contracts, we are contractually obligated to assume and cede premiums related to existing contracts. See Note 24 to these financial statements for more information.

6.

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs:	Years Ended December 31,
($ in millions)	2008		2007		2006
Policy acquisition costs deferred	$	341.7	$	463.9	$	329.2
Costs amortized to expenses:
Recurring costs		(435.3)		(192.8)		(149.2)
Realized investment gains (losses)		25.8		(0.2)		3.4
Offsets to net unrealized investment gains or losses included in   other comprehensive income (Note 17)		709.3		63.4		16.2
Change in deferred policy acquisition costs		641.5		334.3		199.6
Deferred policy acquisition costs, beginning of year		2,089.9		1,755.6		1,556.0
Deferred policy acquisition costs, end of year	$	2,731.4	$	2,089.9	$	1,755.6

F-20

6.

Deferred Policy Acquisition Costs (continued)

Upon completion of a study during the fourth quarter of 2008, we updated our best estimate assumptions used to project expected gross profits and margins in the deferred policy acquisition cost amortization schedules. Major projection assumptions updated include mortality, lapse experience, expense, net investment income, and separate account investment return. In our review to develop the best estimate for these assumptions, we examined our own experience and market conditions. We updated our maintenance expenses and reallocated them among various lines of business. We also updated our projected separate account investment return assumption to the long term investment return as of January 1, 2009. The impact was to fully absorb the actual investment performance through December 31, 2008 into the amortization of deferred policy acquisition cost amortization and the projection of benefits under SOP 03-1 for the guaranteed minimum death benefit (“GMDB”) and guaranteed minim um income benefit (“GMIB”) riders. The greatest impact of the unlocking was on the annuity block, where the effects of these adjustments resulted in an overall increase in deferred policy acquisition cost amortization for the annuity block of $116.8 million and an increase in the GMIB and GMDB reserves of $11.3 million and $3.4 million, respectively. The UL/VUL lines had a decrease of $19.9 million to pre-tax net income due to unlocking. For the Traditional Life line the effects of these adjustments resulted in an increase in deferred policy acquisition cost amortization of $32.4 million.

Upon completion of a study during the fourth quarter of 2007, we updated our best estimate assumptions used to project expected gross profits and margins in the deferred policy acquisition cost amortization schedules. Major projection assumptions updated include lapse experience, investment margins and expenses. In our review to develop the best estimate, we examined our own experience and market conditions. We reflected higher interest earned in the investments, consistent with recent experience. Maintenance expenses were updated and reallocated among various lines of business. Additionally, we updated our system for calculating the SOP 03-1 reserves for guaranteed minimum death benefits, resulting in a release in the benefit reserve and a corresponding increase in deferred policy acquisition cost amortization for the quarter. The effects of these adjustments resulted in an overall $4.3 million pre-tax benefit to net income.

During the fourth quarter of 2006, Life and Annuity segment income benefited from an unlocking of assumptions. The unlocking was driven by revised assumptions for expected mortality, lapse experience, investment margins, and expenses. The effects of the unlocking resulted in an overall $8.2 million pre-tax benefit to net income.

7.

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 3.00% to 5.25% as of December 31, 2008, less administrative and mortality charges.

Participating Life Insurance

Participating life insurance in force was 20.1% and 23.0% of the face value of total gross individual life insurance in force at December 31, 2008 and 2007, respectively.

8.

Goodwill

Goodwill relates primarily to our investment in Philadelphia Financial Group.

Activity in Goodwill:	Years Ended December 31,
($ in millions)	2008		2007		2006
Balance, beginning of year(1)	$	30.1	$	16.7	$	16.7
Asset purchases		—		13.4		—
Balance, end of year(1)	$	30.1	$	30.1	$	16.7

———————

⁽¹⁾

Prior period goodwill balances associated with the asset management business were reclassified into discontinued operations on December 31, 2008, the effective date of the spin-off.

F-21

9.

Investing Activities

Debt and Equity Securities

See Note 13 to these financial statements for information on available-for-sale debt and equity securities pledged as collateral.

Fair Value and Cost of	As of December 31,
General Account Securities:	2008				2007
($ in millions)	Fair Value		Cost		Fair Value		Cost
U.S. government and agency	$	608.7	$	609.4	$	618.8	$	605.2
State and political subdivision		192.7		195.2		234.3		224.7
Foreign government		182.5		174.3		197.2		172.0
Corporate		5,812.0		6,767.3		7,048.4		7,073.2
Mortgage-backed		2,433.3		2,805.8		2,830.8		2,880.2
Other asset-backed		601.8		924.2		1,040.5		1,116.0
Available-for-sale debt securities	$	9,831.0	$	11,476.2	$	11,970.0	$	12,071.3
Amounts applicable to the Closed Block	$	6,011.4	$	6,796.7	$	6,919.4	$	6,898.1
Available-for-sale equity securities	$	25.2	$	24.3	$	191.8	$	159.5
Amounts applicable to the Closed Block	$	9.0	$	9.1	$	134.0	$	109.2

Unrealized Gains and Losses from	As of December 31,
General Account Securities:	2008				2007
($ in millions)	Gains		Losses		Gains		Losses
U.S. government and agency	$	23.9	$	(24.6)	$	21.8	$	(8.2)
State and political subdivision		4.8		(7.3)		10.9		(1.3)
Foreign government		11.0		(2.8)		25.3		(0.1)
Corporate		43.0		(998.3)		161.4		(186.2)
Mortgage-backed		22.1		(394.6)		39.8		(89.2)
Other asset-backed		3.5		(325.9)		9.7		(85.2)
Debt securities gains (losses)	$	108.3	$	(1,753.5)	$	268.9	$	(370.2)
Debt securities net losses			$	(1,645.2)			$	(101.3)
Equity securities gains (losses)	$	1.1	$	(0.2)	$	37.0	$	(4.7)
Equity securities net gains	$	0.9			$	32.3

F-22

9.

Investing Activities (continued)

Aging of Temporarily Impaired	As of December 31, 2008
General Account Securities:	Less than 12 months				Greater than 12 months				Total
($ in millions)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt Securities
U.S. government and agency	$	79.8	$	(5.1)	$	33.7	$	(19.5)	$	113.5	$	(24.6)
State and political subdivision		37.9		(4.7)		39.3		(2.6)		77.2		(7.3)
Foreign government		64.9		(2.8)		1.0		—		65.9		(2.8)
Corporate		2,694.0		(358.4)		1,765.2		(639.9)		4,459.2		(998.3)
Mortgage-backed		659.0		(81.9)		722.7		(312.7)		1,381.7		(394.6)
Other asset-backed		165.7		(68.0)		356.9		(257.9)		522.6		(325.9)
Debt securities	$	3,701.3	$	(520.9)	$	2,918.8	$	(1,232.6)	$	6,620.1	$	(1,753.5)
Equity securities		0.9		(0.2)		—		—		0.9		(0.2)
Total temporarily impaired securities	$	3,702.2	$	(521.1)	$	2,918.8	$	(1,232.6)	$	6,621.0	$	(1,753.7)
Amounts inside the Closed Block	$	2,353.9	$	(305.9)	$	1,456.1	$	(554.5)	$	3,810.0	$	(860.4)
Amounts outside the Closed Block	$	1,348.3	$	(215.2)	$	1,462.7	$	(678.1)	$	2,811.0	$	(893.3)
Amounts outside the Closed Block   that are below investment grade	$	145.5	$	(49.9)	$	159.4	$	(94.3)	$	304.9	$	(144.2)
Total after offsets for deferred policy   acquisition cost adjustment and taxes			$	(62.9)			$	(199.0)			$	(261.9)
Number of securities				1,655				1,628				3,283

Unrealized losses of below investment grade debt securities outside the Closed Block with a fair value of less than 80% of the securities amortized cost totaled $126.1 million at December 31, 2008 ($40.1 million after offsets for taxes and deferred policy acquisition cost amortization), of which $10.5 million is greater than 20% and over 12 months.

Unrealized losses of below investment grade debt securities held in the Closed Block with a fair value of less than 80% of the securities amortized cost totaled $113.3 million at December 31, 2008 ($32.8 million after offsets for change in policy dividend obligation), of which $12.4 million is greater than 20% and over 12 months.

The securities are considered to be temporarily impaired at December 31, 2008 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.

F-23

9.

Investing Activities (continued)

Aging of Temporarily Impaired	As of December 31, 2007
General Account Securities:	Less than 12 months				Greater than 12 months				Total
($ in millions)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt Securities
U.S. government and agency	$	12.6	$	(0.7)	$	133.9	$	(7.5)	$	146.5	$	(8.2)
State and political subdivision		1.2		—		47.4		(1.3)		48.6		(1.3)
Foreign government		0.2		—		8.9		(0.1)		9.1		(0.1)
Corporate		1,069.6		(68.3)		2,247.1		(117.9)		3,316.7		(186.2)
Mortgage-backed		449.7		(35.0)		1,201.8		(54.2)		1,651.5		(89.2)
Other asset-backed		547.7		(59.1)		249.8		(26.1)		797.5		(85.2)
Debt securities	$	2,081.0	$	(163.1)	$	3,888.9	$	(207.1)	$	5,969.9	$	(370.2)
Equity securities		50.2		(4.7)		—		—		50.2		(4.7)
Total temporarily impaired securities	$	2,131.2	$	(167.8)	$	3,888.9	$	(207.1)	$	6,020.1	$	(374.9)
Amounts inside the Closed Block	$	1,083.2	$	(85.4)	$	1,880.4	$	(93.0)	$	2,963.6	$	(178.4)
Amounts outside the Closed Block	$	1,048.0	$	(82.4)	$	2,008.5	$	(114.1)	$	3,056.5	$	(196.5)
Amounts outside the Closed Block   that are below investment grade	$	94.7	$	(4.6)	$	173.6	$	(21.6)	$	268.3	$	(26.2)
Total after offsets for deferred policy   acquisition cost adjustment and taxes			$	(25.8)			$	(39.2)			$	(65.0)
Number of securities				1,094				1,456				2,550

Unrealized losses of below investment grade debt securities outside the Closed Block with a fair value of less than 80% of the securities amortized cost totaled $10.6 million at December 31, 2007 ($2.6 million after offsets for taxes and deferred policy acquisition cost amortization). These have been at significant unrealized loss positions on a continuous basis for six months or less.

Unrealized losses of below investment grade debt securities held in the Closed Block with a fair value of less than 80% of the securities amortized cost totaled $10.0 million at December 31, 2007 ($0.0 million after offsets for change in policy dividend obligation). These have been at significant unrealized loss positions on a continuous basis for six months or less.

The securities are considered to be temporarily impaired at December 31, 2007 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.

Unrealized Investment Gains (Losses)

Sources of Changes in Net Unrealized Investment Gains (Losses):	Years Ended December 31,
($ in millions)	2008		2007		2006
Debt securities	$	(1,543.9)	$	(247.1)	$	(125.9)
Equity securities		(31.4)		1.2		10.9
Debt and equity securities pledged as collateral		(2.0)		(16.4)		(9.1)
Other investments		(2.9)		(1.6)		—
Net unrealized investment losses	$	(1,580.2)	$	(263.9)	$	(124.1)
Net unrealized investment losses	$	(1,580.2)	$	(263.9)	$	(124.1)
Applicable policyholder dividend obligation		(128.0)		(121.5)		(73.8)
Applicable deferred policy acquisition cost benefit		(709.3)		(63.4)		(16.2)
Applicable deferred income tax benefit		(212.4)		(20.2)		(8.8)
Offsets to net unrealized investment losses		(1,049.7)		(205.1)		(98.8)
Net unrealized investment losses included in   other comprehensive income (Note 17)	$	(530.5)	$	(58.8)	$	(25.3)

F-24

9.

Investing Activities (continued)

Investment Activity in Venture Capital Partnerships:	Years Ended December 31,
($ in millions)	2008		2007		2006
Contributions	$	50.3	$	60.0	$	41.8
Equity in earnings of partnerships		(4.7)		27.0		3.2
Sale of partnership interests		—		—		(51.9)
Distributions		(18.5)		(30.1)		(23.8)
Realized gain on sale of partnership interests		—		—		2.4
Change in venture capital partnerships		27.1		56.9		(28.3)
Venture capital partnership investments, beginning of period		173.7		116.8		145.1
Venture capital partnership investments, end of period	$	200.8	$	173.7	$	116.8
Amounts applicable to the Closed Block	$	188.5	$	157.3	$	97.9

Other Investments

Other Investments:	As of December 31,
($ in millions)	2008		2007
Transportation and other equipment leases	$	52.6	$	57.7
Mezzanine partnerships		174.8		151.6
Affordable housing partnerships		15.3		17.7
Derivative instruments (Note 14)		177.7		22.7
Real estate		42.4		48.1
Other partnership interests		111.6		119.3
Other interests		30.9		—
Assets backing deferred compensation liabilities		—		74.6
Mortgage loans		11.6		15.6
Other investments	$	616.9	$	507.3

Statutory Deposits

Pursuant to certain statutory requirements, as of December 31, 2008, our Life Companies had on deposit securities with a fair value of $72.9 million in insurance department special deposit accounts. Our Life Companies are not permitted to remove the securities from these accounts without approval of the regulatory authority.

Net Investment Income

Sources of Net Investment Income:	Years Ended December 31,
($ in millions)	2008		2007		2006
Debt securities	$	706.6	$	774.4	$	800.7
Equity securities		4.3		8.2		7.0
Mortgage loans		1.0		1.7		6.2
Venture capital partnerships		(4.7)		27.0		3.3
Policy loans		187.0		179.5		169.3
Other investments		13.4		43.9		40.0
Other income		3.8		8.3		—
Cash and cash equivalents		7.5		18.8		16.3
Total investment income		918.9		1,061.8		1,042.8
Discontinued operations		(3.0)		(9.1)		(8.0)
Investment expenses		(8.2)		(9.6)		(5.3)
Net investment income, general account investments		907.7		1,043.1		1,029.5
Debt and equity securities pledged as collateral (Note 13)		7.9		15.7		19.0
Net investment income	$	915.6	$	1,058.8	$	1,048.5
Amounts applicable to Closed Block	$	523.1	$	571.6	$	540.7

F-25

9.

Investing Activities (continued)

Net Realized Investment Gains (Losses)

Sources and Types of Realized Investment Gains (Losses):	Years Ended December 31,
($ in millions)	2008		2007		2006
Debt security impairments	$	(224.0)	$	(46.7)	$	(7.9)
Equity security impairments		(2.7)		(0.5)		—
Other investments impairments		(16.0)		(3.9)		—
Debt and equity securities pledged as collateral impairments		(2.3)		(0.8)		(1.0)
Impairment losses		(245.0)		(51.9)		(8.9)
Debt security transaction gains		8.1		21.9		62.1
Debt security transaction losses		(17.9)		(10.3)		(20.1)
Equity security transaction gains		13.4		12.5		25.7
Equity security transaction losses		(42.9)		(3.0)		(3.8)
Mortgage loan transaction gains (losses)		(0.1)		1.4		3.2
Venture capital partnership transaction gains (losses)		(3.0)		—		2.4
Affiliate equity security transaction gains		—		13.7		10.4
Other investments transaction gains		—		9.3		4.4
Other investments transaction losses		(0.9)		(1.8)		(0.1)
Real estate transaction gains		2.4		1.6		—
Real estate transaction losses		—		(0.2)		—
Debt and equity securities pledged as collateral gains		2.2		2.6		—
Debt and equity securities pledged as collateral losses		—		(0.8)		—
Net transaction gains (losses)		(38.7)		46.9		84.2
Realized losses on fair value option investments		(18.4)		—		—
Realized gains (losses) on derivative assets and liabilities		6.3		(1.0)		(0.1)
Net realized investment gains (losses)	$	(295.8)	$	(6.0)	$	75.2

Debt security impairments for the year ended December 31, 2008 include impairment losses of $92.4 million related to residential mortgage-backed securities. Of these impairment losses, $28.4 million relate to the closed block.

Investing Cash Flows

Investment Purchases, Sales, Repayments and Maturities:	Years Ended December 31,
($ in millions)	2008		2007		2006
Debt security purchases	$	(5,052.0)	$	(4,051.1)	$	(4,979.7)
Equity security purchases		(85.2)		(76.6)		(54.9)
Venture capital partnership investments		(50.3)		(60.0)		(41.8)
Other investments purchases		(443.5)		(158.6)		(91.2)
Policy loan advances, net		(155.2)		(58.5)		(77.0)
Investment purchases	$	(5,786.2)	$	(4,404.8)	$	(5,244.6)
Debt securities sales	$	4,209.5	$	3,085.6	$	4,010.9
Debt securities maturities and repayments		1,174.4		1,428.0		1,592.3
Equity security sales		172.1		68.6		87.4
Mortgage loan maturities and principal repayments		3.9		57.7		60.3
Venture capital partnership capital distributions		18.5		30.0		75.7
Real estate and other invested assets sales		438.0		119.1		106.4
Investment sales, repayments and maturities	$	6,016.4	$	4,789.0	$	5,933.0

The maturities of general account debt securities and mortgage loans, by contractual sinking fund payment and maturity, as of December 31, 2008 are summarized in the following table. Actual maturities will differ from contractual maturities as certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties, we have the right to put or sell certain obligations back to the issuers and we may refinance mortgage loans. Refinancing of mortgage loans was not significant during the three years ended December 31, 2008.

F-26

9.

Investing Activities (continued)

Maturities of General Account Debt Securities:	Maturities at
($ in millions)	Fair Value
Due in one year or less	$	540.2
Due after one year through five years		1,977.1
Due after five years through ten years		2,622.2
Due after ten years		4,691.5
Total	$	9,831.0

Issuer and Counterparty Credit Exposure

Credit exposure related to issuers and derivatives counterparties is inherent in investments and derivatives contracts with positive fair value or asset balances. We manage credit risk through the analysis of the underlying obligors, issuers and transaction structures. We review our debt security portfolio regularly to monitor the performance of obligors and assess the stability of their credit ratings. We also manage credit risk through industry and issuer diversification and asset allocation. Maximum exposure to an issuer or derivatives counterparty 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. To further mitigate the risk of loss on derivatives, we only enter into contracts in which the counterparty is a financial institution with a rating of A or higher.

As of December 31, 2008, we held derivative assets with a fair value of $177.7 million. Of these assets, $86.9 million were held with two counterparties. As we also held debt securities of these issuers with a carrying value of $30.2 million, our maximum amount of loss due to credit risk with these two issuers was $117.1 million. See Note 14 to these financial statements for more information regarding derivatives.

10.

Financing Activities

Indebtedness

Indebtedness:	As of December 31,
($ in millions)	2008				2007
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
7.15% surplus notes	$	174.1	$	133.5	$	174.0	$	179.6
7.45% senior unsecured bonds		283.9		109.0		300.0		243.1
6.675% senior unsecured bonds		—		—		153.7		153.7
Total indebtedness	$	458.0	$	242.5	$	627.7	$	576.4

Our 7.15% surplus notes are an obligation of Phoenix Life and are due December 15, 2034. The carrying value of the 2034 notes is net of $0.9 million of unamortized original issue discount. Interest payments are at an annual rate of 7.15%, require the prior approval of the Superintendent of Insurance of the State of New York and may be made only out of surplus funds which the Superintendent determines to be available for such payments under New York Insurance Law. The notes may be redeemed at the option of Phoenix Life at any time at the “make-whole” redemption price set forth in the offering circular. New York Insurance Law provides that the notes are not part of the legal liabilities of Phoenix Life.

Our senior unsecured bonds were issued in December 2001 for gross proceeds of $300.0 million (net proceeds of $290.6 million) and mature in January 2032. We pay interest at an annual rate of 7.45%. We may redeem any or all of the bonds from January 2007 at a redemption price equal to 100% of principal plus accrued and unpaid interest to the redemption date. During 2008, we repurchased $16.1 million of par value of these bonds for $10.0 million resulting in a gain of $6.1 million.

Effective as of November 7, 2008, the Company and its subsidiary, Phoenix Life (Phoenix Life, together with the Company, the “Borrowers”) amended our existing $150 million unsecured senior revolving credit facility (the “Amendment”). The Amendment amends the terms of the First Amended and Restated Credit Agreement dated April 2, 2008 (the “First Amended and Restated Facility”).

F-27

10.

Financing Activities (continued)

Potential borrowers on the credit facility are the Company and Phoenix Life. We unconditionally guarantee any loans under this facility to Phoenix Life. Base rate loans will bear interest at the greater of Wachovia Bank, National Association’s prime commercial rate or the federal funds rate plus 0.50%. Eurodollar rate loans will bear interest at LIBOR plus an applicable percentage based on our Standard & Poor’s and Moody’s ratings. In connection with the spin-off of our asset management business, with the close of business on December 31, 2008, the facility was reduced to $100 million. There are no current borrowings on the credit facility.

The credit facility contains covenants that require us at all times to maintain a minimum level of consolidated tangible net worth, based on GAAP standards in effect on June 6, 2006 and excluding the effect of FIN 46(R). In addition, Phoenix Life must maintain a maximum consolidated debt-to-capital ratio of 30%, a minimum risk-based capital ratio of 325%, a minimum A.M. Best financial strength rating of “A-”, a minimum level of surplus on a statutory basis and a minimum parent cash flow coverage ratio. The financing commitments under the Amendment will terminate on June 6, 2009.

We were in compliance with all of our credit facility covenants at December 31, 2008. We have limited ability to absorb future declines in net worth under the debt-to-capital and tangible net worth covenants. In the event that we fail to meet the requirements of the credit facility covenants, we would evaluate the costs and benefits of amending or replacing the facility as part of its ongoing liquidity management.

In December 2002, we issued 6,147,500 of 7.25% equity units in a public offering. Each equity unit consisted of an unsecured, subordinated note and a purchase contract (equity forward on our common stock collateralized by the note). On November 7, 2005, the notes were remarketed as senior unsecured obligations and the interest rate was reset to 6.675% at that time. On February 16, 2006, these holders purchased 17,423,839 shares of our common stock in aggregate as part of the settlement of the original transaction. On February 19, 2008, the $153.7 million of senior unsecured obligations matured and were paid in full.

We have recorded indebtedness at unpaid principal balances of each instrument net of issue discount. We have determined the fair value of indebtedness based on quoted market prices for surplus notes and bonds. The Phoenix Companies, Inc. and its subsidiaries may, from time to time, purchase its bond securities in the open market subject to considerations including, but not limited to, market conditions, relative valuations, capital allocation and the continued determination that it is in the best interest of the company and its stakeholders.

Future minimum annual principal payments on indebtedness as of December 31, 2008 are: in 2032, $283.9 million and in 2034, $175.0 million.

Interest Expense on Indebtedness, including Amortization of Debt Issuance Costs:	Years Ended December 31,
($ in millions)	2008		2007		2006
Surplus notes	$	12.5	$	12.4	$	14.5
Senior unsecured bonds		22.8		20.6		20.1
Bank credit facility and other		—		0.2		3.5
Equity units		1.4		11.0		11.1
Interest expense on indebtedness	$	36.7	$	44.2	$	49.2

Common Stock Dividends

In 2008 and 2007, we paid a dividend of $0.16 per share to shareholders of record on June 13, 2008 and June 13, 2007, respectively.

The Phoenix Life Board of Directors paid dividends of $83.8 million during 2008 to the Company, Phoenix Life’s sole shareholder. During 2007, Phoenix Life paid total dividends of $92.2 million to the Company.

F-28

11.

Common Stock and Stock Repurchase Program

We have authorization for the issuance of one billion shares of our common stock. Through December 31, 2008, we have issued 126.7 million common shares (56.2 million shares to our policyholders in exchange for their interests in the mutual company and 70.5 million shares in sales to the public and to settle share-based compensation awards). As of December 31, 2008, we had 114.4 million shares outstanding, net of 12.3 million common shares of treasury stock. Treasury shares include 1.0 million outstanding shares that we own, which have voting rights but are treated as treasury shares for accounting and reporting purposes under GAAP. As of December 31, 2008, we also had 10.3 million common shares reserved for issuance under our stock option plans (5.9 million shares) and our restricted stock unit (“RSU”) plans (4.4 million shares). We have an outstanding authorization from our board of directors to repurchase up to 0.7 million additional shares of our common stock .

State Farm Mutual Automobile Insurance Company (“State Farm”) currently owns of record more than 5% of our outstanding common stock. In 2008, 2007 and 2006, we incurred $73.9 million, $62.3 million and $50.1 million, respectively, as compensation costs for the sale of our insurance and annuity products by entities that were either subsidiaries of State Farm or owned by State Farm agents.

12.

Separate Accounts, Death Benefits and Other Insurance Benefit Features

Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Investment objectives for these separate accounts vary by fund account type, as outlined in the applicable fund prospectus or separate account plan of operations. Our separate account products include variable annuities and variable life insurance contracts. The assets supporting these contracts are carried at fair value and reported as Separate account assets with an equivalent amount reported as Separate account liabilities. Amounts assessed against the policyholder for mortality, administration, and other services are included within revenue in fee income. In 2008 and 2007 there were no gains or losses on transfers of assets from the general account to a separate account.

Many of our variable contracts offer various guaranteed minimum death, accumulation, withdrawal and income benefits. These benefits are offered in various forms as described in the footnotes to the table below. We currently reinsure a significant portion of the death benefit guarantees associated with our in-force block of business. We establish policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity policies as follows:

·

Liabilities associated with the guaranteed minimum death benefit (“GMDB”) are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating the liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.

·

Liabilities associated with the guaranteed minimum income benefit (“GMIB”) are determined by estimating the expected value of the income benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating such guaranteed income benefit liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.

For annuities with GMDB and GMIB, 200 stochastically generated scenarios were used.

Separate Account Investments of Account Balances of Contracts with Guarantees:	As of December 31,
($ in millions)	2008		2007
Debt securities	$	619.8	$	736.7
Equity funds		1,810.1		2,895.4
Other		135.7		103.9
Total	$	2,565.6	$	3,736.0

F-29

12.

Separate Accounts, Death Benefits and Other Insurance Benefit Features (continued)

Changes in Guaranteed Liability Balances:	Year Ended
($ in millions)	December 31, 2008
	Annuity		Annuity
	GMDB(1)		GMIB
Liability balance as of January 1, 2008	$	3.2	$	5.9
Incurred		11.7		16.2
Paid		(5.0)		—
Liability balance as of December 31, 2008	$	9.9	$	22.1

Changes in Guaranteed Liability Balances:	Year Ended
($ in millions)	December 31, 2007
	Annuity		Annuity
	GMDB(1)		GMIB
Liability balance as of January 1, 2007	$	32.2	$	3.7
Incurred		(26.3)		2.2
Paid		(2.7)		—
Liability balance as of December 31, 2007	$	3.2	$	5.9

Changes in Guaranteed Liability Balances:	Year Ended
($ in millions)	December 31, 2006
	Annuity		Annuity
	GMDB(1)		GMIB
Liability balance as of January 1, 2006	$	32.7	$	2.5
Incurred		3.2		1.2
Paid		(3.7)		—
Liability balance as of December 31, 2006	$	32.2	$	3.7

———————

⁽¹⁾

The reinsurance recoverable asset related to the GMDB was $0.0 million, $1.4 million and $21.5 million as of December 31, 2008, 2007 and 2006, respectively.

The GMDB and GMIB guarantees are recorded in policy liabilities and accruals on our balance sheet. Changes in the liability are recorded in Policy benefits, excluding policyholder dividends, on our statement of operations. In a manner consistent with our policy for deferred policy acquisition costs, we regularly evaluate estimates used and adjust the additional liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised.

We also offer certain variable products with a guaranteed minimum withdrawal benefit (“GMWB”), a guaranteed minimum accumulation benefit (“GMAB”) and a guaranteed pay-out annuity floor (“GPAF”).

The GMWB rider guarantees the policyholder a minimum amount of withdrawals and benefit payments over time, regardless of the investment performance of the contract, subject to an annual limit. Optional resets are available. In addition, we have introduced a feature for these contracts, beginning in the fourth quarter of 2005, that allows the policyholder to receive the guaranteed annual withdrawal amount for as long as they are alive.

The GMAB rider provides the contract owner with a minimum accumulation of their purchase payments deposited within a specific time period, adjusted for withdrawals, after a specified amount of time determined at the time of issuance of the variable annuity contract.

The GPAF rider provides the policyholder with a minimum payment amount if the variable annuity payment falls below this amount on the payment calculation date.

The Combination rider includes the GMAB and GMWB riders as well as the GMDB rider at the policyholder’s option.

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12.

Separate Accounts, Death Benefits and Other Insurance Benefit Features (continued)

The GMWB, GMAB and GPAF represent embedded derivatives in the variable annuity contracts that are required to be reported separately from the host variable annuity contract. They are carried at fair value and reported in policyholder deposit funds. The fair value of the GMWB, GMAB and GPAF obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions.

As of December 31, 2008 and 2007, there was no reinsurance of the aggregate account value with the GMWB, GMAB and GPAF features. In order to minimize the volatility associated with the unreinsured liabilities, we have established an alternative risk management strategy. We began hedging our GMAB exposure in 2006 and GMWB exposure during fourth quarter 2007 using equity options, equity futures, swaps and swaptions. These investments are included in other investments on our balance sheet. Embedded derivative liabilities for GMWB, GMAB and GPAF are shown in the shown in the table below. Benefit payments made for the GMWB, GMAB and GPAF during 2008 or 2007 were immaterial.

Embedded Derivative Liabilities:	As of December 31,
($ in millions)	2008		2007
GMWB	$	63.7	$	(1.5)
GMAB		52.8		1.8
GPAF		2.0		1.7
Total embedded derivatives	$	118.5	$	2.0

For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. For guarantees of benefits that are payable upon annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the policyholder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance.

Additional Insurance Benefits:				Net Amount			Average
($ in millions)	Account			At Risk After			Attained Age
	Value			Reinsurance			of Annuitant
GMDB return of premium		$	1,069.4		$	184.6	60
GMDB step up			1,438.8			509.4	60
GMDB earnings enhancement benefit (EEB)			50.1			7.3	60
GMDB greater of annual step up and roll up			28.1			15.2	63
Total GMDB at December 31, 2008		$	2,586.4		$	716.5
Combination Rider		$	5.3				59
GMAB			335.6				55
GMIB			464.1				60
GMWB			413.2				60
GPAF			18.5				75
Total at December 31, 2008		$	1,236.7

With the return of premium the death benefit is the greater of current account value or premiums paid (less any adjusted partial withdrawals).

With the step up, the death benefit is the greater of current account value, premiums paid (less any adjusted partial withdrawals) or the annual step up amount prior to the eldest original owner attaining a certain age. On and after the eldest original owner attains that age, the death benefit is the greater of current account value or the death benefit at the end of the contract year prior to the eldest original owner’s attaining that age plus premium payments (less any adjusted partial withdrawals) made since that date.

With the EEB, the death benefit is the greater of the premiums paid (less any adjusted partial withdrawals) or the current account value plus the EEB. The EEB is an additional amount designed to reduce the impact of taxes associated with distributing contract gains upon death.

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12.

Separate Accounts, Death Benefits and Other Insurance Benefit Features (continued)

With the greater of annual step up and annual roll up, the death benefit is the greatest of premium payments (less any adjusted partial withdrawals), the annual step up amount, the annual roll up amount or the current account value prior to the eldest original owner attaining age 81. On and after the eldest original owner attained age 81, the death benefit is the greater of current account value or the death benefit at the end of the contract year prior to the eldest original owner’s attained age of 81 plus premium payments (less any adjusted partial withdrawals) made since that date.

Liabilities for universal life are generally determined by estimating the expected value of losses when death benefits exceed revenues and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating these liabilities are consistent with those used for amortizing deferred policy acquisition costs. A single set of best estimate assumptions is used since these insurance benefits do not vary significantly with capital markets volatility. At December 31, 2008 and 2007, we held additional universal life benefit reserves of $68.0 million and $34.7 million, respectively.

13.

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 tow collateralized obligation trusts that were organized to take advantage of bond market arbitrage opportunities.The collateralized obligation trusts reside in bankruptcy remote special purpose entities (“SPEs”) for which we provide neither recourse nor guarantees. We consolidated two collateralized obligation trusts as of December 31, 2008, 2007 and 2006. As of December 31, 2008, we had no direct investment in the two consolidated collateralized obligation trusts. We earned investment income on debt and equity securities pledged as collateral, net of interest expense on collateralized obligations and applicable minority interest of $0.4 million, $0.5 million and $0.7 million for the years ended December 31, 2008, 200 7 and 2006, respectively, related to these consolidated obligation trusts.

Fair Value and Cost of Debt and Equity Securities	As of December 31,
Pledged as Collateral:	2008				2007
($ in millions)	Fair Value		Cost		Fair Value		Cost
Debt securities pledged as collateral	$	148.0	$	150.5	$	219.1	$	219.3
Equity securities pledged as collateral		—		0.1		—		0.1
Total debt and equity securities pledged as collateral	$	148.0	$	150.6	$	219.1	$	219.4

Cash and accrued investment income included $8.4 million and $13.4 million at December 31, 2008 and 2007, respectively.

Non-recourse collateralized obligations are comprised of callable collateralized obligations of $240.1 million and $307.2 million at December 31, 2008 and 2007, respectively, and non-recourse derivative cash flow hedge liability of $5.1 million (notional amount of $170.7 million with a maturity of June 1, 2009) and $10.7 million (notional amount of $211.1 million with a maturity of June 1, 2009) at December 31, 2008 and 2007, respectively.

Gross and Net Unrealized Gains and Losses from	As of December 31,
Debt and Equity Securities Pledged as Collateral:	2008				2007
($ in millions)	Gains		Losses		Gains		Losses
Debt securities pledged as collateral	$	11.0	$	(13.5)	$	29.0	$	(29.2)
Equity securities pledged as collateral		—		(0.1)		—		(0.1)
Total	$	11.0	$	(13.6)	$	29.0	$	(29.3)
Net unrealized losses			$	(2.6)			$	(0.3)

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13.

Investments Pledged as Collateral and Non-Recourse Collateralized Obligations (continued)

Aging of Temporarily Impaired	As of December 31, 2008
Debt and Equity Securities	Less than 12 months				Greater than 12 months				Total
Pledged as Collateral:	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
($ in millions)	Value		Losses		Value		Losses		Value		Losses
Corporate	$	11.8	$	(1.4)	$	—	$	(0.1)	$	11.8	$	(1.5)
Mortgage-backed		17.3		(3.0)		8.1		(3.6)		25.4		(6.6)
Other asset-backed		9.5		(2.8)		2.0		(2.6)		11.5		(5.4)
Debt securities		38.6		(7.2)		10.1		(6.3)		48.7		(13.5)
Equity securities pledged as collateral		—		—		—		(0.1)		—		(0.1)
Total temporarily impaired securities   pledged as collateral	$	38.6	$	(7.2)	$	10.1	$	(6.4)	$	48.7	$	(13.6)

Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the security’s amortized cost totaled $13.6 million at December 31, 2008. Gross unrealized losses on debt securities with a fair value less than 80% of the security’s amortized cost totaled $9.9 million at December 31, 2008. The majority of these debt securities are investment grade issues that continue to perform to their original contractual terms at December 31, 2008.

Aging of Temporarily Impaired	As of December 31, 2007
Debt and Equity Securities	Less than 12 months				Greater than 12 months				Total
Pledged as Collateral:	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
($ in millions)	Value		Losses		Value		Losses		Value		Losses
Corporate	$	—	$	—	$	—	$	(0.1)	$	—	$	(0.1)
Mortgage-backed		3.7		(0.4)		7.2		(1.7)		10.9		(2.1)
Other asset-backed		2.6		—		0.2		(0.7)		2.8		(0.7)
Debt securities	$	6.3	$	(0.4)	$	7.4	$	(2.5)	$	13.7	$	(2.9)
Equity securities pledged as collateral		—		—		—		(0.1)		—		(0.1)
Total temporarily impaired securities   pledged as collateral	$	6.3	$	(0.4)	$	7.4	$	(2.6)	$	13.7	$	(3.0)

Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the security’s amortized cost totaled $2.9 million at December 31, 2007. Gross unrealized losses on debt securities with a fair value less than 80% of the security’s amortized cost totaled $2.6 million at December 31, 2007. The majority of these debt securities are investment grade issues that continue to perform to their original contractual terms at December 31, 2007.

Maturities of Debt Securities Pledged as Collateral:			Fair
($ in millions)	Cost		Value
Due in one year or less	$	11.0	$	11.7
Due after one year through five years		9.3		8.7
Due after five years through ten years		20.4		15.6
Due after ten years		109.8		112.0
Total debt securities	$	150.5	$	148.0

The amount of collateralized debt obligation-related derivative cash flow hedge ineffectiveness recognized through earnings for the years ended December 31, 2008, 2007 and 2006 was $0.3 million, $0.8 million and $0.3 million, respectively. See Note 9 to these financial statements for information on realized investment losses related to these collateralized debt obligations.

Effect of Consolidation of	As of and for the
Collateralized Obligation Trusts:	Years Ended December 31,
($ in millions)	2008		2007		2006
Increase (decrease) in net income	$	(4.2)	$	1.0	$	(1.0)
Reduction to stockholders’ equity	$	(88.8)	$	(85.4)	$	(71.2)

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13.

Investments Pledged as Collateral and Non-Recourse Collateralized Obligations (continued)

The above credits (charges) to net income (loss) 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 2012 but contain call provisions. The call provisions may be t riggered at the discretion of the equity investors based on market conditions and are subject to certain contractual limitations.

14.

Derivative Instruments

Derivative Instruments

We use derivatives to manage certain risks in our general account portfolio as well as our insurance liabilities. Our derivatives generally do not qualify for hedge accounting treatment and are stated at fair value (market value) with changes in valuation reported in net realized capital gains/losses.

Derivative Instruments Held in				As of December 31,
General Account:				2008				2007
($ in millions)	Notional
	Amount		Maturity	Asset		Liability		Asset		Liability
Interest rate swaps	$	194	2018-2019	$	28.6	$	1.6	$	0.2	$	0.2
Cross currency swaps		35	2012-2016		5.4		0.2		—		2.9
Swaptions		356	2009-2011		37.5		—		—		—
Put options		357	2018-2023		73.1		—		21.5		—
Call options		24	2009		1.2		—		0.5		—
Futures contracts		214	2009		31.9		—		0.5		—
Total general account   derivative instrument positions	$	1,180		$	177.7	$	1.8	$	22.7	$	3.1

Interest Rate Swaps

We maintain an overall interest rate risk-management strategy that primarily incorporates the use of interest rate swaps as hedges of our exposure to changes in interest rates. Our exposure to changes in interest rates primarily results from our commitments to fund interest-sensitive insurance liabilities, as well as from our significant holdings of fixed rate financial instruments. We use interest rate swaps that effectively convert variable rate cash flows to fixed cash flows in order to hedge the interest rate risks associated with guaranteed minimum living benefit (GMAB/GMWB) rider liabilities.

Interest Rate Options

We use interest rate options, such as swaptions, to hedge against market risks to assets or liabilities from substantial changes in interest rates. An interest rate swaption gives us the right but not the obligation to enter into an underlying swap. Swaptions are options on interest rate swaps. All of our swaption contracts are receiver swaptions, which give us the right to enter into a swap where we will receive the agreed-upon fixed rate and pay the floating rate. If the market conditions are favorable and the swap is needed to continue hedging our inforce liability business, we will exercise the swaption and enter into a fixed rate swap. If a swaption contract is not exercised by its option maturity date, it expires with no value.

Cross Currency Swaps

We use cross currency swaps to hedge against market risks from changes in foreign currency exchange rates. Currency swaps are used to swap bond asset cash flows denominated in a foreign currency back to U.S. dollars. Under foreign currency swaps, we agree with another party (referred to as the counterparty) to exchange principal and periodic interest payments denominated in foreign currency for payments in U.S. dollars.

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14.

Derivative Instruments (continued)

Exchange Traded Future Contracts

We use equity index futures to hedge the market risks from changes in the value of equity indices, such as S&P 500, associated with guaranteed minimum living benefit (GMAB/GMWB) rider liabilities. Positions are short-dated, exchange-traded futures with maturities of three months.

Equity Index Options

The Company uses the following derivative contracts to hedge against market risks from changes in volatility, interest rates and equity indices associated with our Life and Annuity products:

·

Equity index options, such as S&P 500 puts for the variable annuity guaranteed minimum living benefit (GMAB/GMWB) rider liabilities;

·

Equity index options, such as S&P 500 European calls for the Equity Index Universal Life (EIUL); and

·

Equity index options, such as S&P European, Asian and Binary calls for the Equity Index Annuity (EIA).

An equity index put option affords the Company the right to sell a specified equity index at the established price determined at the time the instrument was purchased. The Company may use short-dated options, which are traded on exchanges or use long-dated over-the-counter options, which require entering into an agreement with another party (referred to as the counterparty).

An equity index call option affords the Company the right to buy a specified equity index at the established price determined at the time the instrument was purchased. The Company used exact-dated options, which are traded over-the-counter with another party (referred to as the counterparty) to closely replicate the option payoff profile embedded in EIA and EIUL liabilities.

15.

Fair Value of Financial Instruments

SFAS No. 157, Fair Value Measurements (“SFAS 157”), defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

SFAS 157 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels, from highest to lowest, are defined as follows:

·

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 securities include highly liquid government bonds, mortgage products, exchange-traded equities and exchange-traded corporate debt.

·

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Examples of such instruments include certain collateralized mortgage and debt obligations and certain high-yield debt securities.

·

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Securities classified within Level 3 include broker quoted investments, certain residual interests in securitizations and other less liquid securities. Most valuations that are based on brokers’ prices are classified as Level 3 due to a lack of transparency in the process they use to develop prices.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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15.

Fair Value of Financial Instruments (continued)

The following table presents the financial instruments carried at fair value as of December 31, 2008, by SFAS 157 valuation hierarchy (as described above).

Fair Values of Financial Instruments by Level:	As of December 31, 2008
($ in millions)	Level 1		Level 2		Level 3		Total
Assets
Available-for-sale debt securities	$	224.4	$	8,701.6	$	944.0	$	9,870.0
Available-for-sale equity securities		0.8		1.0		23.4		25.2
Derivative assets		—		177.7		—		177.7
Separate account assets		7,259.9		610.3		60.0		7,930.2
Debt and equity securities pledged as collateral		—		139.2		8.8		148.0
Fair value option investments		49.7		34.4		—		84.1
Total assets	$	7,534.8	$	9,664.2	$	1,036.2	$	18,235.2
Liabilities
Derivative liabilities	$	—	$	1.8	$	118.5	$	120.3
Total liabilities	$	—	$	1.8	$	118.5	$	120.3

Carrying Amounts and Fair Values	As of December 31,
of Financial Instruments:	2008				2007
($ in millions)	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Cash and cash equivalents	$	381.1	$	381.1	$	541.2	$	541.2
Available-for-sale debt securities		9,831.0		9,831.0		11,970.0		11,970.0
Available-for-sale equity securities		25.2		25.2		191.8		191.8
Mortgage loans		11.6		11.1		15.6		14.3
Debt and equity securities pledged as collateral		148.0		148.0		219.1		219.1
Derivative financial instruments		177.7		177.7		22.7		22.7
Financial assets	$	10,574.6	$	10,574.1	$	12,960.4	$	12,959.1
Investment contracts	$	1,616.6	$	1,627.3	$	1,808.9	$	1,803.9
Non-recourse collateralized obligations		245.2		156.4		317.9		232.5
Indebtedness		458.0		242.5		627.7		576.4
Derivative financial instruments		120.3		120.3		5.1		5.1
Financial liabilities	$	2,440.1	$	2,146.5	$	2,759.6	$	2,617.9

Available-for-sale debt securities are reported net of $39.0 million of investments included in other assets on our balance sheet because they are allocated to discontinued reinsurance operations. See Note 17 to these financial statements for further information.

Fair value option investments at December 31, 2008 include $49.7 million of available-for-sale equity securities backing our deferred compensation liabilities. Prior to our adoption of SFAS 159, changes in the fair value of the securities were recorded in other comprehensive income while changes in the deferred compensation liability were recorded in earnings. Electing the fair value option allows us to mitigate the associated accounting volatility.

Fair value option investments also include a structured loan asset valued at $34.4 million as of December 31, 2008. We elected to apply the fair value option to this note at the time of its acquisition. We purchased the note to obtain principal protection without sacrificing earnings potential. Election of the fair value option allows current earnings recognition and is more consistent with management’s view of the security’s underlying economics.

We have an established process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models that use primarily market-based or independently-sourced market parameters, including interest rate yield curves, option volatilities and currency rates. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, our own creditworthiness, liquidity and unobservable parameters that are applied consistently over time. The majority of the valuations of Level 3 assets were internally calculated or obtained from independent third-party broker quotes.

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15.

Fair Value of Financial Instruments (continued)

Following is a description of our valuation methodologies for assets and liabilities measured at fair value. Such valuation methodologies were applied to all of the assets and liabilities carried at fair value, whether as a result of the adoption of SFAS 159 or previously carried at fair value.

Structured Assets

To determine fair values for certain structured, collateralized loan obligations (“CLO”) and collateralized debt obligation (“CDO”) assets for which current pricing indications either do not exist, or are based on inactive markets or sparse transactions, we utilize the following method.

For CLO and CDO assets, fair value was determined based on projected cash flows under default, recovery, collateral prepayment, and reinvestment spread assumptions which reflect the underlying collateral’s actual default experience, collateral performance, assessment of the collateral manager’s ability to actively manage and effect portfolio credit decisions, 12-month trailing credit migration trends in the bank loan and corporate debt markets, and historical studies, where available. An appropriate discount rate was then applied, determined by using a rate composed of the current U.S. treasury rate, plus a current net credit spread derived from corporate bonds with the same credit rating, plus an additional spread for liquidity and structure relative to active markets, based on average life, and credit rating. In addition to the level of implied liquidity spreads embedded in broker pricing indications, current AAA-rated CLO spreads and normalized liquidity spreads by rating, we also gave consideration to deal-specific characteristics, such as rating stability, credit subordination, collateral performance tests, collateral composition, collateral manager and default scenario sensitivity testing results to show adequate cushion against emergence of future losses. Approximately $134.1 million of debt securities, or 1.0% of our general account portfolio, was priced in accordance with this methodology.

Derivatives

Exchange-traded derivatives valued using quoted prices are classified within Level 1 of the valuation hierarchy. However, few classes of derivative contracts are listed on an exchange; therefore, the majority of our derivative positions are valued using internally developed models that use as their basis readily observable market parameters and are classified within Level 2 of the valuation hierarchy. Such derivatives include basic interest rate swaps, options and credit default swaps.

Fair values for over-the-counter (“OTC”) derivative financial instruments, principally forwards, options and swaps, represent the present value of amounts estimated to be received from or paid to a marketplace participant in settlement of these instruments (i.e., the amount we would expect to receive in a derivative asset assignment or would expect to pay to have a derivative liability assumed). These derivatives are valued using pricing models based on the net present value of estimated future cash flows and directly observed prices from exchange-traded derivatives or other OTC trades, while taking into account the counterparty’s credit ratings, or our own credit ratings, as appropriate. Determining the fair value for OTC derivative contracts can require a significant level of estimation and management judgment.

New and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation often incorporate significant estimates and assumptions that market participants would use in pricing the instrument, which may impact the results of operations reported in the consolidated financial statements. For long-dated and illiquid contracts, extrapolation methods are applied to observed market data in order to estimate inputs and assumptions that are not directly observable. This enables us to mark to market all positions consistently when only a subset of prices are directly observable. Values for OTC derivatives are verified using observed information about the costs of hedging the risk and other trades in the market. As the markets for these products develop, we will continually refine our pricing models to correlate more closely to the market risk of these instruments.

Retained Interest in Securitization

Retained interests in securitizations do not trade in an active, open market with readily observable prices. Accordingly, we estimate the fair value of certain retained interests in securitizations using discounted cash flow (“DCF”) models.

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15.

Fair Value of Financial Instruments (continued)

For certain other retained interests in securitizations (such as interest-only strips), a single interest rate path DCF model is used and generally includes assumptions based upon projected finance charges related to the securitized assets, estimated net credit losses, prepayment assumptions and contractual interest paid to third-party investors. Changes in the assumptions used may have a significant impact on our valuation of retained interests and such interests are therefore typically classified within Level 3 of the valuation hierarchy.

We compare the fair value estimates and assumptions to observable market data where available and to recent market activity and actual portfolio experience.

Private Equity Investments

The valuation of nonpublic private equity investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such assets. Private equity investments are valued initially based upon transaction price. The carrying values of private equity investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing reviews by senior investment managers. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of the particular investment, industry valuations of comparable public companies, changes in market outlook and the third-party financing environment over time. In determining valuation adjustment s resulting from the investment review process, emphasis is placed on current company performance and market conditions. Private equity investments are included in Level 3 of the valuation hierarchy.

Private equity investments may also include publicly held equity securities, generally obtained through the initial public offering of privately held equity investments. Such securities are marked-to-market at the quoted public value less adjustments for regulatory or contractual sales restrictions. Discounts for restrictions are quantified by analyzing the length of the restriction period and the volatility of the equity security.

Beneficial Interests Issued by Consolidated Variable Interest Entities (“VIEs”)

The fair value of beneficial interests issued by consolidated VIEs (beneficial interests) is estimated based upon the fair value of the underlying assets held by the VIEs. The valuation of beneficial interests does not include an adjustment to reflect our credit quality as the holders of these beneficial interests do not have recourse to our general credit. As the inputs into the valuation are generally based upon readily observable pricing information, the majority of beneficial interests used by consolidated VIEs are classified within Level 2 of the valuation hierarchy.

Separate Accounts

Separate account assets are primarily invested in mutual funds but also have investments in fixed maturity and equity securities. The separate account investments are valued in the same manner, and using the same pricing sources and inputs, as the fixed maturity, equity security and short-term investments of the Company. Mutual funds are included in Level 1. Most debt securities and short-term investments are included in Level 2.

Fair Value of Investment Contracts

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

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

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15.

Fair Value of Financial Instruments (continued)

Valuation of Embedded Derivatives

Embedded derivatives are guarantees that we make on certain variable annuity contracts, including GMAB and GMWB. These embedded derivatives are fair valued using a risk neutral stochastic valuation methodology. The inputs to our fair value methodology include information derived from the asset derivatives market, including the volatility surface and the swap curve. Several additional inputs are not obtained from independent sources, but instead reflect our own assumptions about what market participants would use in pricing the contracts. These inputs are therefore considered “unobservable” and fall into Level 3 of the fair value hierarchy. These inputs include mortality rates, lapse rates and policyholder behavior assumptions. Because there are significant Level 3 inputs included in our fair value methodology for these embedded derivative liabilities, we consider the above-described methodology as a whole to be Level 3.

SFAS 157 requires a Credit Standing Adjustment. The Credit Standing Adjustment reflects the adjustment that market participants would make to reflect the risk that guaranteed benefit obligations may not be fulfilled (“nonperformance risk”). SFAS 157 explicitly requires nonperformance risk to be reflected in fair value. The Company calculates the Credit Standing Adjustment by applying an average credit spread for companies similar to Phoenix when discounting the rider cash flows for calculation of the liability. This average credit spread is recalculated every quarter and so the fair value will change with the passage of time even in the absence of any other changes that affect the valuation.

Level 3 Financial Assets and Liabilities

The following table sets forth a summary of changes in the fair value of our Level 3 financial assets and liabilities. As required by SFAS 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. For example, a hypothetical derivative contract with Level 1, Level 2 and significant Level 3 inputs would be classified as a Level 3 financial instrument in its entirety. Subsequently, even if only Level 1 and Level 2 inputs are adjusted, the resulting gain or loss is classified as Level 3. Further, Level 3 instruments are frequently hedged with instruments that are classified as Level 1 or Level 2 and, accordingly, gains or losses reported as Level 3 in the table below may be offset by gains or losses attributable to instruments classified in Level 1 or 2 of the fair value hierarchy.

Level 3 Financial Assets and Liabilities:	Year Ended December 31,
($ in millions)	2008
	Assets		Liabilities
Balance, beginning of year	$	1,518.9	$	(2.0)
Purchases/(sales), net		(171.8)		—
Net transfers		106.2		—
Realized gains (losses)		(77.2)		(116.5)
Unrealized gains (losses) included in  other comprehensive income (loss)		(342.5)		—
Amortization/accretion		2.6		—
Balance, end of year	$	1,036.2	$	(118.5)
Portion of gain (loss) included in net income relating to those assets/liabilities still held	$	(140.0)	$	(116.5)

16.

Income Taxes

Allocation of Income Taxes:	Years Ended December 31,
($ in millions)	2008		2007		2006
Income taxes (benefit) applicable to:
Current	$	(1.2)	$	3.1	$	7.9
Deferred		(115.7)		18.8		43.7
Continuing operations		(116.9)		21.9		51.6
Discontinued operations		(46.1)		6.3		(10.8)
Net income (loss)		(163.0)		28.2		40.8
Other comprehensive income (loss)		(255.8)		(23.6)		8.6
Comprehensive income (loss)	$	(418.8)	$	4.6	$	49.4

F-39

16.

Income Taxes (continued)

In addition to the allocation of taxes above, the initial application of SFAS 158 resulted in an additional $1.1 million deferred tax benefit being recorded directly to accumulated other comprehensive income in 2006. See Notes 2 and 18 for additional information regarding the adoption of SFAS 158.

Effective Income Tax Rate:	Years Ended December 31,
($ in millions)	2008		2007		2006
Income tax expense (benefit) at statutory rate of 35%	$	(101.9)	$	48.5	$	57.9
Dividend received deduction		(4.8)		(4.3)		(7.1)
Low income housing tax credit		(3.5)		(4.1)		(0.6)
Valuation allowance increase (release)		1.0		(11.0)		—
Realized losses (gains) on available-for-sale securities pledged as collateral		1.5		(0.4)		0.3
State income taxes (benefit)		(0.9)		0.2		0.1
FIN 48 increase (decrease)		(6.6)		(2.0)		—
Other, net		(1.7)		(5.0)		1.0
Income tax expense (benefit) applicable to continuing operations	$	(116.9)	$	21.9	$	51.6
Effective income tax rates		40.1%		15.8%		31.2%

Deferred Income Tax Balances Attributable to Temporary Differences:	As of December 31,
($ in millions)	2008		2007
Deferred income tax assets
Future policyholder benefits	$	330.7	$	338.2
Unearned premiums / deferred revenues		108.8		104.1
Employee benefits		129.9		86.7
Investments		266.6		—
Net operating and capital loss carryover benefits		364.3		51.8
Foreign tax credits carryover benefits		14.6		14.3
General business tax credits		33.0		29.8
Valuation allowance		(287.9)		(8.3)
Gross deferred income tax assets		960.0		616.6
Deferred tax liabilities
Deferred policy acquisition costs		(501.6)		(527.1)
Investments		—		(34.3)
Other		(1.7)		(1.3)
Gross deferred income tax liabilities		(503.3)		(562.7)
Deferred income tax assets	$	456.7	$	53.9

We have elected to file a consolidated federal income tax return for 2008 and prior years. Within the consolidated tax return, we are required by regulations of the Internal Revenue Service (“IRS”) to segregate the entities into two groups: life insurance companies and non-life insurance companies. We are limited as to the amount of any operating losses from the non-life group that can be offset against taxable income of the life group. These limitations may affect the amount of any operating loss carryovers that we have now or in the future.

As of December 31, 2008, we had deferred tax assets of $101.8 million and $262.2 million related to net operating and capital losses, respectively, for federal income tax purposes. The related federal net operating losses of $291.0 million are scheduled to expire between the years 2019 and 2028. The federal capital losses of $749.2 million are scheduled to expire in 2009, 2010, 2012 and 2013. At the end of 2008, a valuation allowance of $241.6 million was relative to the capital loss carryforwards.

As of December 31, 2008, we had deferred income tax assets of $14.6 million related to foreign tax credit carryovers, which are expected to expire between the 2011 and 2017 tax years.

As of December 31, 2008, we had deferred income tax assets of $33.0 million related to general business tax credit carryovers, which are expected to expire between the years 2022 and 2028.

F-40

16.

Income Taxes (continued)

Significant management judgment is required in determining the provision for income taxes and, in particular, any valuation allowance recorded against our deferred tax assets. We carried a valuation allowance of $287.9 million on $744.6 million of deferred tax assets at December 31, 2008, due to uncertainties related to our ability to utilize some of the deferred tax assets. The amount of the valuation allowance has been determined based on our estimates of taxable income over the periods in which the deferred tax assets will be recoverable, including consideration of expiration of capital loss carryovers.

We concluded that a valuation allowance on the remaining $456.7 million of deferred tax assets at December 31, 2008, was not required. Our methodology for determining the realizability of deferred tax assets involves estimates of future taxable income from our operations and consideration of available tax planning strategies and actions that could be implemented, if necessary, as well as the expiration dates and amounts of carryforwards related to net operating losses, capital losses, foreign tax credits and general business tax credits. These estimates are projected through the life of the related deferred tax assets based on assumptions that we believe to be reasonable and consistent with current operating results. Changes in future operating results not currently forecasted may have a significant impact on the realization of deferred tax assets.

In concluding that a valuation allowance was not required on the remaining deferred tax assets, we considered both the positive and negative evidence regarding our ability to generate sufficient taxable income to realize those deferred tax assets. Positive evidence included having achieved profitability for financial reporting purposes from 2004 through 2007. Further positive evidence included the fact that the net operating losses will not begin to expire until 2023, while projected earnings indicate that the deferred tax assets will be offset by taxable earnings prior to that expiration. Negative evidence included a history of net operating losses in the non-life insurance company group. In weighing the positive and negative evidence above, we considered the more likely than not criteria pursuant to SFAS 109. Based on this analysis we concluded that it was more likely than not that the deferred tax assets of $456.7 million would be realized.

Our federal income tax returns are routinely audited by the IRS, and estimated provisions are routinely provided in the financial statements in anticipation of the results of these audits. 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. As of December 31, 2008, we had current taxes payable of $9.1 million, including $8.7 million of unrecognized tax benefits.

We adopted the provisions of the FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, we recognized an increase in reserves for uncertain tax benefits through a cumulative effect adjustment of approximately $4.0 million, which was accounted for as an increase to the January 1, 2007 balance of accumulated deficit. Including the cumulative effect adjustment, we had approximately $23.9 million of total gross unrecognized tax benefits as of January 1, 2007.

Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits:	2008		2007
($ in millions)
Balance, beginning of year	$	17.9	$	23.9
Reductions for tax positions of prior years		(6.6)		(4.9)
Settlements with taxing authorities		(2.6)		(1.1)
Balance, end of year	$	8.7	$	17.9

The amount of unrecognized tax benefits at December 31, 2008 that would, if recognized, impact the annual effective tax rate upon recognition was $8.7 million.

Based upon the timing and status of our current examinations by taxing authorities, we do not believe that it is reasonably possible that any changes to the balance of unrecognized tax benefits occurring within the next 12 months will result in a significant change to the results of operations, financial condition or liquidity. In addition, we do not anticipate that there will be additional payments made or refunds received within the next 12 months with respect to the years under audit. We do not anticipate any increases to the unrecognized tax benefits that would have a significant impact on the financial position of the Company.

F-41

16.

Income Taxes (continued)

Phoenix and its subsidiaries file consolidated, combined, unitary or separate income tax returns in the U.S. federal, various state and foreign jurisdictions. During 2008, the IRS completed its examination of the Company’s 2004 and 2005 federal income tax returns. There is one issue, in the 2004 tax year, which will proceed to the appeals level. The timing for resolution of this matter remains uncertain due to the nature of the appeals process. The IRS has not yet commenced their examination of the 2006 and 2007 federal income tax returns. We do not believe that the appeals outcome will result in a material change in our financial position. State examinations are being conducted by Connecticut for the years 1996 through 2005 and New York for the years 2003 through 2005. We do not believe that these examinations will result in a material change to our financial position.

To the extent required under the relevant tax law, we recognize interest and penalties related to amounts accrued on uncertain tax positions and amounts paid or refunded from federal and state income tax authorities in tax expense. The interest and penalties recorded during the 12-month periods ending December 31, 2008 and 2007 were not material. We did not require an accrual for the payment of interest and penalties as of December 31, 2008.

17.

Other Comprehensive Income

Sources of Other Comprehensive Income:	Years Ended December 31,
($ in millions)	2008				2007				2006
	Gross		Net		Gross		Net		Gross		Net
Unrealized losses on investments	$	(1,846.3)	$	(621.2)	$	(289.0)	$	(85.0)	$	(60.2)	$	(6.7)
Net realized investment (gains) losses on   available-for-sale securities included in   net income		266.1		90.7		25.1		26.2		(63.9)		(18.6)
Net unrealized investment losses		(1,580.2)		(530.5)		(263.9)		(58.8)		(124.1)		(25.3)
Pension liability adjustment		(131.0)		(85.2)		(4.5)		(2.8)		47.3		30.7
Net unrealized foreign currency translation   adjustment		0.6		0.4		1.4		0.9		(0.3)		(0.1)
Other assets		—		—		(3.9)		(2.5)		—		—
Net unrealized derivative instruments		12.0		9.8		(1.1)		(0.3)		9.6		8.6
Other comprehensive gain (loss)		(1,698.6)	$	(605.5)		(272.0)	$	(63.5)		(67.5)	$	13.9
Applicable policyholder dividend obligation		(128.0)				(121.5)				(73.8)
Applicable deferred policy acquisition   cost amortization		(709.3)				(63.4)				(16.2)
Applicable deferred income tax expense (benefit)		(255.8)				(23.6)				8.6
Offsets to other comprehensive income		(1,093.1)				(208.5)				(81.4)
Other comprehensive gain (loss)	$	(605.5)			$	(63.5)			$	13.9

Components of Accumulated Other Comprehensive Income:	As of December 31,
($ in millions)	2008				2007
	Gross		Net		Gross		Net
Unrealized losses on investments	$	(1,658.8)	$	(585.7)	$	(78.6)	$	(55.2)
Unrecognized loss and prior service costs (Note 18)		(226.6)		(147.2)		(95.6)		(62.0)
Unrealized foreign currency translation adjustment and other		1.1		0.6		0.5		0.2
Other assets		(3.9)		(2.5)		(3.9)		(2.5)
Unrealized losses on derivative instruments		(22.3)		(8.9)		(34.3)		(18.7)
Accumulated other comprehensive loss		(1,910.5)	$	(743.7)		(211.9)	$	(138.2)
Applicable policyholder dividend obligation		(81.8)				46.2
Applicable deferred policy acquisition costs		(773.0)				(63.7)
Applicable deferred income tax benefit		(312.0)				(56.2)
Offsets to accumulated other comprehensive income		(1,166.8)				(73.7)
Accumulated other comprehensive loss	$	(743.7)			$	(138.2)

F-42

18.

Employee Benefit Plans and Employment Agreements

Pension and Other Postemployment Benefits

We provide our employees with postemployment benefits that include retirement benefits, through pension and savings plans, and other benefits, including health care and life insurance. The components of pension and postretirement benefit costs follow:

Components of Pension and Other Postemployment Benefit Cost:	Years Ended December 31,
($ in millions)	2008		2007		2006
Cost components
Pension benefit expense	$	13.4	$	16.6	$	24.4
Other postretirement benefit expense		2.8		3.7		4.6
Savings plans expense		7.3		5.8		4.8
Total pension and other postemployment benefit cost	$	23.5	$	26.1	$	33.8

Principal Rates and Assumptions:	Years Ended December 31,
	2008	2007	2006
Assumptions Used to Determine Benefit Obligations
Projected benefit obligation discount rate – Employee Plan	6.26%	6.0%	5.75%
Projected benefit obligation discount rate – Supplemental Plan	6.28%	6.0%	5.75%
Projected benefit obligation discount rate – Other Postemployment Benefits	6.30%	6.0%	5.75%
Future compensation increase rate	Graded(1)	Graded(1)	Graded(1)
Pension plan assets long-term rate of return	8.5%	8.5%	8.5%
Deferred investment gain/loss amortization corridor	5.0%	5.0%	5.0%
Future health care cost increase rate, age 64 and younger	8.5%	9.0%	9.5%
Future health care cost increase rate, age 65 and older	N/A	10.75%	11.5%
Assumptions Used to Determine Benefit Expense
Projected benefit obligation discount rate – Employee and Supplemental Plans	6.0%	6.0%	5.5%
Projected benefit obligation discount rate – Other Postremployment Benefits	6.0%	5.75%	5.5%
Future compensation increase rate	Graded(1)	Graded(1)	4.0%
Pension plan assets long-term rate of return	8.5%	8.5%	8.5%
Deferred investment gain/loss amortization corridor	5.0%	5.0%	5.0%
Future health care cost increase rate, age 64 and younger	9.0%	9.5%	10.0%
Future health care cost increase rate, age 65 and older	N/A	11.5%	12.25%

———————

⁽¹⁾

Salary scale by age which grades down from 8.5% to 2.5%.

Our investment policy and strategy employs a total return approach combining equities, fixed income, real estate and other assets to maximize the long-term return of the plan assets for a prudent level of risk. Risk tolerance is determined based on consideration of plan liabilities and plan-funded status. The investment portfolio contains a diversified blend of equity, fixed income, real estate and alternative investments. The equity investments are diversified across domestic and foreign markets, across market capitalizations (large, mid and small cap), as well as growth, value and blend. Derivative instruments are not typically used for implementing asset allocation decisions and are never used in conjunction with leverage. Investment performance is measured and monitored on an on-going basis through quarterly investment portfolio reviews, annual liability measurement, and periodic presentations by asset managers included in the plan.

We use a building block approach in estimating the long-term rate of return for plan assets. Historical returns are determined by asset class. The historical relationships between equities, fixed income and other asset classes are reviewed. We apply long-term asset return estimates to the plan’s target asset allocation to determine the weighted-average long-term return. Our long-term asset allocation was determined through modeling long-term returns and asset return volatilities. The allocation reflects proper diversification and was reviewed against other corporate pension plans for reasonability and appropriateness.

F-43

18.

Employee Benefit Plans and Employment Agreements (continued)

Employee Pension Plan Asset Allocation:	As of December 31,
	2008	2007
Asset Category
Equity securities	52%	65%
Debt securities	37%	28%
Real estate	6%	4%
Other	5%	3%
Total	100%	100%

We use a December 31 measurement date for our pension and postemployment benefits.

Initial Application of SFAS 158

As discussed in Note 2, we adopted SFAS 158 as of December 31, 2006. SFAS 158 requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status through comprehensive income in the period in which the changes occur. Additional minimum pension liabilities (“AML”) and related intangible assets are derecognized upon adoption of the new standard. The effect of adoption increased assets by $9.8 million, increased liabilities by $39.4 million and decreased equity through accumulated other comprehensive income (“AOCI”) by $29.6 million.

The following table shows the incremental effect of applying SFAS 158 on individual balance sheet items for the employee pension plan, the supplemental plan and the postretirement plan:

($ in millions)	Year Ended December 31, 2006
							Subtotal
	Prior to						After AML
	AML and						Before						After
	SFAS 158			AML			SFAS 158			SFAS 158			SFAS 158
	Adjustment			Adjustment			Adjustment			Adjustment			Adjustment
Accrued liability	$	(254.5)	$		48.2	$		(206.3)	$		(39.4)	$		(245.7)
Intangible asset		7.0			(0.9)			6.1			(6.1)			—
Deferred tax asset		32.5			(16.6)			15.9			15.9			31.8
Accumulated other comprehensive income		60.3			(30.7)			29.6			29.6			59.2

The following table summarizes the effect of the required changes in the AML prior to the adoption of SFAS 158 and the effect of applying SFAS 158 on certain line items for the change in other comprehensive income (“OCI”) and AOCI:

($ in millions)	Dec 31, 2005		Year Ended
	AOCI		December 31, 2006
	Ending		Change in		SFAS 158		AOCI
	Balance		OCI		Adjustment		Balance
Minimum pension liability, net of taxes	$	60.3	$	(30.7)	$	(29.6)	$	—
Unrecognized loss and prior service cost, net of taxes		—		—		59.2		59.2

Pension Plans

We have two defined benefit pension plans covering our employees. The employee pension plan, covering substantially all of our employees, provides benefits up to the amount allowed under the Internal Revenue Code. The supplemental plan provides benefits in excess of the primary plan. Retirement benefits under both plans are a function of years of service and compensation. Effective July 1, 2007 except for grandfathered employees, the formula for accruals from July 1, 2007 and thereafter was amended to a pension equity formula.

F-44

18.

Employee Benefit Plans and Employment Agreements (continued)

Components of Pension Benefit Expense:	Years Ended December 31,
($ in millions)	2008		2007		2006
Service cost	$	8.1	$	11.4	$	13.3
Interest cost		39.1		38.4		35.2
Plan assets expected return		(41.3)		(40.5)		(34.9)
Net loss amortization		6.9		6.4		9.9
Prior service cost amortization		0.3		0.9		0.9
Curtailment expense		0.3		—		—
Pension benefit expense	$	13.4	$	16.6	$	24.4

The employee pension plan is funded with assets held in a trust. The assets within the plan include corporate and government debt securities, equity securities, real estate and venture capital partnerships. The supplemental plan is unfunded. Upon a change in control (as defined in the plan) of The Phoenix Companies, Inc., we are required to make an irrevocable contribution to a trust to fund the benefits payable under the supplemental plan.

Changes in Plan Assets and Benefit Obligations:	Years Ended December 31,
($ in millions)	2008		2007		2008		2007
	Employee Plan				Supplemental Plan
Plans’ Assets
Plan assets’ actual return	$	(114.0)	$	27.3	$	—	$	—
Employer contributions		—		20.0		6.5		6.2
Participant benefit payments		(29.4)		(29.0)		(6.5)		(6.2)
Change in plan assets		(143.4)		18.3		—		—
Plan assets, beginning of year		501.2		482.9		—		—
Plans’ assets, end of year	$	357.8	$	501.2	$	—	$	—
Plans’ Projected Benefit Obligation
Service and interest cost accrual	$	(38.3)	$	(39.6)	$	(8.8)	$	(10.3)
Actuarial gain (loss)		(2.3)		6.7		10.1		(10.0)
Participant benefit payments		29.4		29.0		6.5		6.2
Curtailment gain		5.0		—		0.4
Change in projected benefit obligation		(6.2)		(3.9)		8.2		(14.1)
Projected benefit obligation, beginning of year		(526.8)		(522.9)		(140.7)		(126.6)
Projected benefit obligation, end of year	$	(533.0)	$	(526.8)	$	(132.5)	$	(140.7)
Plan assets less than projected benefit obligations, end of year	$	(175.2)	$	(25.6)	$	(132.5)	$	(140.7)
Accumulated benefit obligation	$	504.9	$	492.6	$	117.2	$	122.3

Amounts Recognized in Consolidated Balance Sheet:	Years Ended December 31,
($ in millions)	2008		2007		2008		2007
	Employee Plan				Supplemental Plan
Other liabilities	$	(175.2)	$	(25.6)	$	(132.5)	$	(140.7)

Amounts recognized in accumulated other comprehensive	Years Ended December 31,
loss consist of:	2008		2007		2008		2007
($ in millions)	Employee Plan				Supplemental Plan
Prior service (credit) cost	$	3.4	$	5.2	$	(1.3)	$	(2.5)
Net actuarial loss		188.9		38.3		48.1		63.7
Total	$	192.3	$	43.5	$	46.8	$	61.2

F-45

18.

Employee Benefit Plans and Employment Agreements (continued)

Amounts in AOCI loss that are expected to be recognized as components	Employee		Supplemental
of net periodic cost (credit) during the next fiscal year are as follows:	Plan		Plan
($ in millions)
Prior service (credit) cost	$	0.8	$	(0.7)
Net actuarial loss		17.3		4.6
Total	$	18.1	$	3.9

We made a payment of $20.0 million to the pension plans during 2007. We made no payments to the pension plans during 2008. We have not made a final determination on our ultimate pension funding methodology for 2009. We have no required contributions in the first quarter, and we will be reviewing our funding assumptions in the second quarter to determine what, if any, contributions are to be made later in the year.

Other Postemployment Benefits

Components of Postretirement Benefit Expense:	Years Ended December 31,
($ in millions)	2008		2007		2006
Service cost	$	1.6	$	1.7	$	1.9
Interest cost		3.9		3.8		4.3
Net gain amortization		(0.1)		(0.2)		—
Prior service cost amortization		(1.6)		(1.6)		(1.6)
Curtailment credit		(1.0)		—		—
Other postretirement benefit expense	$	2.8	$	3.7	$	4.6

Changes in Plan Accumulated Benefit Obligation:	Years Ended December 31,
($ in millions)	2008		2007
Service and interest cost accrued	$	(5.6)	$	(5.5)
Actuarial gain (loss)		2.9		6.5
Participant benefit payments		6.9		7.1
Curtailment gain		0.6		—
Change in projected benefit obligation		4.8		8.1
Projected benefit obligations, beginning of year		(70.9)		(79.0)
Projected benefit obligations, end of year	$	(66.1)	$	(70.9)

Amounts Recognized in Consolidated Balance Sheet:	As of December 31,
($ in millions)	2008		2007
Other liabilities	$	(66.1)	$	(70.9)

Amounts Recognized in Accumulated Other Comprehensive Loss consist of:	As of December 31,
($ in millions)	2008		2007
Prior service credit	$	(1.1)	$	(3.2)
Net actuarial gain		(8.7)		(5.9)
Total	$	(9.8)	$	(9.1)

Amounts in AOCI loss that are expected to be recognized as components of net periodic postretirement credits for the next fiscal year are $(1.3) million.

The health care cost trend rate affects the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation by $0.2 million with an immaterial change to the annual service and interest costs. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation by $0.3 million with an immaterial change to the annual service and interest costs.

F-46

18.

Employee Benefit Plans and Employment Agreements (continued)

10-Year Benefit Payout Projection:	Employee		Supplemental		Other
($ in millions)	Plan		Plan		Postretirement		Total
2009	$	28.7	$	6.5	$	6.8	$	42.0
2010		29.0		6.7		6.7		42.4
2011		29.3		6.9		6.6		42.8
2012		29.8		7.3		6.2		43.3
2013		30.4		7.5		5.9		43.8
2014 to 2018		166.9		42.4		26.3		235.6

Employment Agreements and Restructuring Expense

We have entered into agreements with certain key executives of the Company that will, in certain circumstances, provide separation benefits upon the termination of the executive’s employment by the Company for reasons other than death, disability, cause or retirement, or by the executive for “good reason,” as defined in the agreements. For most of these executives, the agreements provide this protection only if the termination occurs following (or is effectively connected with) the occurrence of a change of control of The Phoenix Companies, Inc., as defined in the agreements. Upon a change in control, we are required to make an irrevocable contribution to a trust as soon as possible following such change in control in an amount equal to pay such benefits payable under such agreements.

19.

Share-Based Payment

On January 1, 2006 the Company adopted SFAS 123(R) using the modified prospective method.

We provide share-based compensation to certain of our employees and non-employee directors, as further described below. The compensation cost that has been charged against income for these plans is summarized in the following table:

Share-based Compensation Plans:	Years Ended December 31,
($ in millions)	2008		2007		2006
Compensation cost charged to income from continuing operations	$	7.4	$	9.2	$	5.1
Income tax benefit	$	2.6	$	3.2	$	1.8

We did not capitalize any cost of stock-based compensation during the three years ended December 31, 2008.

Award Modifications

In connection with the spin-off dividend, outstanding stock option and RSU awards were modified through the issuance of additional stock options and RSUs and the adjustment of the stock option exercise prices for existing awards. For each award outstanding, the aggregate intrinsic value of the award immediately after the modification was the same as the aggregate intrinsic value immediately before the modification. The modifications were structured to preserve the value of the awards upon completion of the spin-off and, accordingly, resulted in no additional compensation cost. Also in connection with the spin-off dividend, awards to Virtus employees were cancelled.

Stock Options

Each option, once vested, entitles the holder to purchase one share of our common stock. The employees’ options vest over a three-year period while the directors’ options vest immediately. Once vested, options become exercisable. For stock options awarded, we recognize expense over the vesting period equal to their fair value at issuance. We calculate the fair value of options using the Black-Scholes option valuation model. The Stock Incentive Plan authorizes the issuance to officers and employees of up to that number of options equal to 5% of the total number of common stock shares outstanding immediately after the initial public offering in June 2001, or approximately 5,250,000 shares, plus an additional 1%, or approximately 1,050,000 shares, for officers and employees, less the number of share options issuable under the Directors’ Stock Plan. The Directors’ Stock Plan authorizes the issuance to non-employee directors of up to that number of options equal to 0.5%, or approximately 525,000 shares, of the total number of common stock shares outstanding immediately after the initial public offering in June 2001, plus 500,000 shares, bringing the total to approximately 1,025,000 shares.

F-47

19.

Share-Based Payment (continued)

Key Assumptions Used in Option Valuation:	Years Ended December 31,
	2008	2007	2006
Expected term	6 years	10 years	10 years
Weighted-average expected volatility	42.9%	29.4%	24.8%
Weighted-average interest rate	2.9%	4.6%	4.6%
Weighted-average common share dividend yield	1.4%	1.1%	1.1%

Weighted-Average Fair Value:	Years Ended December 31,
	2008			2007
	Common			Common
	Shares	Price		Shares	Price
Outstanding, beginning of year	4,087,486	$	14.79	4,522,618	$	14.85
Granted	1,423,832		11.37	511,500		14.05
Exercised	(36,777)		10.33	(195,303)		10.20
Forfeited	(176,207)		12.69	(76,366)		13.93
Canceled/expired	(630,109)		15.82	(674,963)		16.06
Outstanding, prior to spin-off	4,668,225		13.73	4,087,486		N/A
Spin-off cancellations of Virtus employee awards	(498,098)		13.24	—		N/A
Spin-off modification, net	665,097		N/A	—		N/A
Outstanding, end of year	4,835,224	$	11.90	4,087,486	$	14.79

The aggregate intrinsic value of options outstanding at December 31, 2008 was zero.

As of December 31, 2008, 3.1 million options were vested and exercisable, with an aggregate intrinsic value of zero. These options had a weighted-average exercise price of $12.78 and a weighted-average remaining contractual term of 5.6 years.

Weighted-Average Fair Value:	Years Ended December 31,
	2008			2007			2006
	Common	Grant Date		Common	Grant Date		Common	Grant Date
	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Options granted	1,232,244	$	4.47	372,500	$	5.79	305,600	$	5.88

Option Values:	Years Ended December 31,
($ in millions)	2008		2007		2006
Intrinsic value of options exercised	$	0.0	$	0.3	$	0.4

Cash received from option exercises for the years ended December 31, 2008, 2007 and 2006 was $0.3 million, $1.1 million and $1.5 million, respectively. We issue new shares to satisfy option exercises.

As of December 31, 2008, $3.7 million of total compensation cost related to non-vested stock options was unrecognized. That cost is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Units and Restricted Stock

We have restricted stock unit (“RSU”) plans under which we grant RSUs to employees and non-employee directors. Each RSU, once vested, entitles the holder to one share of our common stock when the restriction expires. We recognize compensation expense over the vesting period of the RSUs, which is generally three years for each award.

F-48

19.

Share-Based Payment (continued)

Total RSU Activity at	Years Ended December 31,
Weighted-Average Grant Price:	2008			2007
	RSUs	Fair Value		RSUs	Fair Value
Outstanding, beginning of year	1,664,021	$	11.86	1,432,454	$	10.73
Awarded	761,301		10.66	969,769		13.40
Conversion of performance-contingent awards	141,339		14.86	—		N/A
Converted to common shares/applied to taxes	(106,524)		13.85	(712,617)		11.58
Canceled	(128,505)		13.48	(25,585)		14.55
Outstanding, prior to spin-off	2,331,632		11.47	1,664,021		N/A
Spin-off cancellations of Virtus employee awards	(274,362)		13.76	—		N/A
Spin-off modifications, net	127,118		N/A	—		N/A
Outstanding, end of year	2,184,388	$	2.82	1,664,021	$	11.86

Generally, the shares underlying these awards will be issued upon vesting unless the participant elects to defer receipt. Deferred awards will be issued on each employee’s and each director’s respective termination or retirement. We issue new shares to satisfy RSU conversions.

Weighted-Average Fair Value:	Years Ended December 31,
	2008			2007			2006
		Grant Date			Grant Date			Grant Date
	RSUs	Fair Value		RSUs	Fair Value		RSUs	Fair Value
RSUs awarded	702,099	$	10.93	251,571	$	14.01	718,357	$	14.58

RSU Values:	Years Ended December 31,
	2008		2007		2006
Intrinsic value of RSUs converted		0.1		5.6		12.9
Total grant date fair value of RSUs vested converted to common shares		0.1		6.2		12.2

As of December 31, 2008, $5.0 million of total compensation cost related to service-vested RSU awards was unrecognized. That cost is expected to be recognized over a weighted-average period of 2.0 years.

In addition to the RSU activity above, 2.7 million RSUs are subject to future issuance based on the achievement of performance criteria established under certain of our incentive plans. The performance contingencies for these RSUs will be resolved no later than December 31, 2010.

20.

Earnings Per Share

Shares Used in Calculation of Earnings Per Share:	Years Ended December 31,
(shares in thousands)	2008	2007	2006
Weighted-average common shares outstanding	114,382	114,091	110,932
Weighted-average effect of dilutive potential common shares:
Restricted stock units	1,908	1,751	2,082
Employee stock options	19	147	167
Potential common shares	1,927	1,898	2,249
Less: Potential common shares excluded from calculation due to net losses	(1,927)	—	—
Dilutive potential common shares	—	1,898	2,249
Weighted-average common shares outstanding, including   dilutive potential common shares	114,382	115,989	113,181

F-49

21.

Discontinued Operations

Spin-Off of Virtus

On February 7, 2008, we announced that our board of directors had decided to pursue the spin-off our asset management subsidiary, Virtus, formerly known as Phoenix Investment Partners, Ltd., excluding the assets and business of Goodwin in order to enhance stockholder value. On December 12, 2008, our board of directors formally approved the spin-off and declared a dividend payable to each holder of record at the close of business on December 22, 2008 of one share of Virtus common stock for every 20 shares of our common stock held by such holder. We distributed 100% of Virtus common stock to our stockholders (other than shares withheld to satisfy certain withholding obligations) on December 31, 2008. Following the spin-off, we and Virtus are independent of each other and have separate boards of directors and management.

In connection with the spin-off, we and Virtus entered into a separation agreement and several other agreements to complete the separation of the asset management business from us and to distribute Virtus common stock to our stockholders. These agreements govern the relationship between us and Virtus following the spin-off and also provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the spin-off. The agreements include a transition services agreement, tax separation agreement and employee matters agreement.

Prior to the spin-off, Phoenix Life held an inter-company note receivable from Virtus, with a remaining principal balance of $33 million. In connection with the spin-off, Virtus repaid $13 million in principal and issued to Phoenix Life a new $20 million secured note to replace the $20 million remaining principal balance on the old note. The new note was issued at a market rate of interest and other arms length terms and is scheduled to be repaid by December 31, 2010.

Summarized financial information for our discontinued asset management operations is as follows:

Summarized Balance Sheet for Asset Management:	As of December 31,
($ in millions)	2008		2007
Assets	$	—	$	745.6
Liabilities	$	—	$	80.7

Summarized Results of Operations for Asset Management:	Years Ended December 31,
	2008		2007		2006
Revenues	$	142.6	$	204.7	$	203.7
Expenses		(740.3)		(192.3)		(234.8)
Earnings before taxes		(597.7)		12.4		(31.1)
Income tax (expense) benefit		46.1		(7.8)		11.4
Net earnings from discontinued operations	$	(551.6)	$	4.6	$	(19.7)

Expenses for 2008 include goodwill and intangible asset impairment charges of $536.7 million before taxes, most of which was incurred during the third and fourth quarters. During the third quarter of 2008, we determined that a triggering event had occurred as a result of changes in the market environment, significant reductions in the market multiples for asset managers and accumulation of additional valuation data. The changes in the market environment were primarily driven by equity market declines in the third quarter. We used a discounted cash flow model to calculate the fair value of definite- and indefinite-lived intangible assets. The primary drivers of the impairment were a reduction in assets under management, due to markets being at multi-year lows, and valuation multiples for asset managers also being at multi-year lows.

Sale of EMCO

During 2007, we sold 100% of the stock held by us in Emprendimiento Compartido S.A. (“EMCO”), an Argentine wholly-owned subsidiary. We realized an after-tax loss of $4.8 million on this sale. The net after-tax income (loss) included in discontinued operations for the years ended December 31, 2007 and 2006 was $(3.5) million and $1.1 million, respectively.

Discontinued Reinsurance Operations

During 1999, we discontinued our reinsurance operations as further described in Note 24.

F-50

22.

Phoenix Life Statutory Financial Information and Regulatory Matters

Our insurance subsidiaries are required to file, with state regulatory authorities, annual statements prepared on an accounting basis prescribed or permitted by such authorities.

As of December 31, 2008, statutory surplus differs from equity reported in accordance with GAAP for life insurance companies primarily as follows:

·

policy acquisition costs are expensed when incurred;

·

impairments on investments are based on different assumptions;

·

surplus notes are included in surplus rather than debt;

·

postretirement benefit expense allocated to Phoenix Life relate only to vested participants and expense is based on different assumptions and reflect a different method of adoption;

·

life insurance reserves are based on different assumptions; and

·

net deferred income tax assets in excess of 10% of previously filed statutory capital and surplus are not recorded.

The Company requested as a permitted practice its intent to accelerate the admission of the remaining $13.7 million indemnity reserve related to the Company’s surplus notes into Phoenix Life’s statutory surplus as of December 31, 2008. The request was approved by the New York Department of Insurance on February 20, 2009.

Statutory Financial Data for Phoenix Life:	As of or for the Years Ended December 31,
($ in millions)	2008		2007		2006
Statutory capital, surplus, and surplus notes	$	758.9	$	848.1	$	932.5
Asset valuation reserve (“AVR”)		94.4		192.6		187.8
Statutory capital, surplus, surplus notes and AVR	$	853.3	$	1,040.7	$	1,120.3
Statutory gain from operations	$	53.4	$	115.2	$	131.6
Statutory net income (loss)	$	(82.3)	$	80.0	$	162.0

New York Insurance Law requires that New York life insurers report their risk-based capital. Risk-based capital is based on a formula calculated by applying factors to various assets, premium and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and business risk. New York Insurance Law gives the New York Superintendent of Insurance explicit regulatory authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not exceed certain risk-based capital levels. Each of the U.S. insurance subsidiaries of Phoenix Life is also subject to these same risk-based capital requirements. Phoenix Life and each of its insurance subsidiaries’ risk-based capital was in excess of 325% of Company Action Level (the level where a life insurance enterprise must submit a comprehensive plan to state insurance regulators) as of December 31, 2008 and 2007.

Our primary sources of liquidity are dividends from Phoenix Life. Under New York Insurance Law, Phoenix Life can pay stockholder dividends to us in any calendar year without prior approval from the New York State Insurance Department in the amount of the lesser of 10% of Phoenix Life’s surplus to policyholders as of the immediately preceding calendar year or Phoenix Life’s statutory net gain from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life paid dividends of $83.8 million in 2008 and is able to pay $53.4 million in dividends in 2009 without prior approval from the New York State Insurance Department.

Our principal liquidity needs at the holding company level are debt service ($36 million in 2009), income taxes and operating expenses.

F-51

23.

Premises and Equipment

Cost and Carrying Value of Premises and Equipment:	As of December 31,
($ in millions)	2008				2007
			Carrying				Carrying
	Cost		Value		Cost		Value
Real estate	$	89.7	$	29.0	$	106.8	$	36.1
Equipment		229.2		55.2		213.1		49.2
Premises and equipment cost and carrying value		318.9	$	84.2		319.9	$	85.3
Accumulated depreciation and amortization		(234.7)				(234.6)
Premises and equipment	$	84.2			$	85.3

Depreciation and amortization expense for premises and equipment for 2008, 2007 and 2006 totaled $13.1 million, $12.8 million and $12.1 million, respectively.

Rental expenses for operating leases, principally with respect to buildings, amounted to $2.2 million, $3.0 million and $2.7 million in 2008, 2007 and 2006, respectively. Future minimum rental payments under non-cancelable operating leases were $10.1 million as of December 31, 2008, payable as follows: in 2009, $1.8 million; in 2010, $1.5 million; in 2011, $1.4 million; in 2012, $1.1 million; in 2013, $1.1 million and thereafter, $3.2 million.

24.

Contingent Liabilities

Spin-off

In anticipation of the spin-off of the Company’s asset management business on December 31, 2008, the Company entered into a Separation Agreement, Plan of Reorganization and Distribution by and between the Company and Virtus (the “Separation Agreement”) on December 18, 2008. In addition to other matters, the Separation Agreement requires Virtus to retain all litigation, arbitration and regulatory matter liabilities related to Virtus, its subsidiaries and the Company’s historical asset management business, with certain limited exceptions (the “Liabilities”). Based on current information, and considering the retention of the Liabilities by Virtus, we believe that the outcome of the litigation, arbitration and regulatory matters related to the Liabilities are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition or to have a material adverse effect on our results of operations or cash flows in particular quarterly or annual periods.

Litigation and Arbitration

We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. The litigation and arbitration naming us as a defendant ordinarily involves our activities as an insurer, employer, investor or investment advisor.

It is not feasible to predict or determine the ultimate outcome of all legal or arbitration proceedings or to provide reasonable ranges of potential losses. Based on current information, we believe that the outcomes of our litigation and arbitration matters 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 the inherent unpredictability of litigation and arbitration, 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 in particular quarterly or annual periods.

Regulatory Matters

State regulatory bodies, the SEC, the Financial Industry Regulatory Authority (“FINRA”), the IRS and other regulatory bodies regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our compliance with laws and regulations related to, among other things, our insurance and broker-dealer subsidiaries, securities offerings and registered products. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted.

F-52

24.

Contingent Liabilities (continued)

For example, in fourth quarter of 2008, the New York State Insurance Department completed the on-site portion and initiated the off-site portion of its routine quinquennial financial and market conduct exam of Phoenix Life and its New York domiciled life insurance subsidiary for the five year period ending December 31, 2007. Additionally, in the fourth quarter of 2008, the State of Connecticut Insurance Department initiated the on-site portion of a routine financial examination of the Connecticut domiciled life insurance subsidiaries of Phoenix Life for the five year period ending December 31, 2008.

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. It is not feasible to predict or determine the ultimate outcome of all pending inquiries, investigations, legal proceedings and other regulatory actions, or to provide reasonable ranges of potential losses. Based on current information, we believe that the outcomes of our regulatory matters 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 actions and the inherent unpredictability of regulatory matters, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operation or cash flows in particular quarterly or annual per iods.

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 contracts which have not been commuted.

For example, we participate in a workers’ compensation reinsurance pool formerly managed by Unicover Managers, Inc. (“Unicover”). The pool ceased accepting new risks in early 1999. Further, we were a retrocessionaire (meaning a reinsurer of other reinsurers) of the Unicover pool. We have been involved in disputes relating to the activities of Unicover. These disputes have been substantially resolved or settled.

Our discontinued group accident and health reinsurance operations also include other (non-Unicover) workers’ compensation reinsurance contracts and personal accident reinsurance contracts, including contracts assumed in the London market. We are engaged in arbitrations, disputes or investigations with several ceding companies over the validity of, or amount of liabilities assumed under, their contracts. These arbitrations, disputes and investigations are in various stages.

We bought retrocessional reinsurance for a significant portion of our assumed reinsurance liabilities. Some of the retrocessionaires have disputed the validity of, or amount of liabilities assumed under, their contracts with us. Most of these disputes with retrocessionaires have been resolved or settled. The remaining arbitrations and disputes are at various stages.

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 from our retrocessionaires and the likely legal and administrative costs of winding down the business.

We expect our reserves and reinsurance to cover the run-off of the business; however, 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 well as the lack of sufficient claims information, 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, that any future adverse or favorable development of recorded reserves and/or reinsurance recoverables will not have a material adverse effect on our consolidated financial position. Nevertheless, it is possible that future developments could have a material adverse effect on our consolidated results of operations or cash flows in particular q uarterly or annual periods.

F-53

25.

Other Commitments

During 2008, we announced an agreement under which Electronic Data Systems (“EDS”) will continue managing technology infrastructure and software applications through 2015. Our total investment in business technology with EDS, including the value of the new agreement, will be $129.0 million from January 2009 through December 2015.

During the normal course of business, the Company enters into agreements to fund venture capital partnerships and to purchase private placement investments. As of December 31, 2008, the Company had committed $117.8 million under such investments, of which $25.7 million is expected to be disbursed by December 31, 2009.

In connection with the sale of certain venture capital partnerships, Phoenix Life has issued a guarantee with respect to the outstanding unfunded commitments related to the partnerships that were sold. We believe the likelihood that we will have to perform under this guarantee is remote.

In connection with the sale of a portion of the asset management business through the issuance of preferred stock to Harris Bankcorp, Inc. (“Harris”), there exists a put right which requires Virtus to repurchase certain preferred stock for $10 million liquidation preference if Harris exercises the right, which cannot occur prior to October 31, 2011. If all or any part of Virtus’ obligations are not paid when due, Phoenix has guaranteed payment upon demand by Harris.

26.

Condensed Financial Information of The Phoenix Companies, Inc.

A summary of The Phoenix Companies, Inc. (parent company only) financial information follows:

Parent Company Financial Position:	As of December 31,
($ in millions)	2008		2007
Assets
Available-for-sale debt securities, at fair value	$	15.8	$	45.3
Cash and cash equivalents		34.0		172.3
Investment in Phoenix Life		1,045.5		1,766.8
Investment in Virtus		—		613.5
Investments in other subsidiaries		21.6		15.4
Advances to subsidiaries		137.9		167.4
Deferred income taxes		167.2		133.5
Other assets		157.1		137.7
Total assets	$	1,579.1	$	3,051.9
Liabilities and Stockholders’ Equity
Indebtedness (Note 10)	$	283.9	$	453.7
Accrued pension and postemployment benefits (Note 18)		373.8		237.8
Other liabilities		56.4		81.4
Total liabilities		714.1		772.9
Total stockholders’ equity		865.0		2,279.0
Total liabilities and stockholders’ equity	$	1,579.1	$	3,051.9

Parent Company Results of Operations:	Years Ended December 31,
($ in millions)	2008		2007		2006
Revenues
Dividends received from subsidiary, Phoenix Life	$	83.8	$	92.2	$	87.5
Investment income		1.2		39.0		40.5
Net realized investment gains (losses)		(18.4)		2.2		1.4
Total revenues		66.6		133.4		129.4
Interest expense		24.1		31.7		31.3
Other operating expenses		17.1		18.6		20.6
Total expenses		41.2		50.3		51.9
Income before income taxes and equity in undistributed losses of subsidiaries		25.4		83.1		77.5
Income tax benefit		36.5		14.3		3.8
Income before equity in undistributed earnings of subsidiaries		61.9		97.4		81.3
Equity in undistributed earnings of subsidiaries		(236.3)		19.2		32.5
Income (loss) from continuing operations		(174.4)		116.6		113.8
Income (loss) from discontinued operations		(551.6)		1.0		(18.5)
Net income (loss)	$	(726.0)	$	117.6	$	95.3

F-54

26.

Condensed Financial Information of The Phoenix Companies, Inc. (continued)

Parent Company Cash Flows:	Years Ended December 31,
($ in millions)	2008		2007		2006
Operating Activities
Cash dividends received from subsidiary	$	83.8	$	92.2	$	87.5
Investment income received		1.7		10.1		13.2
Interest, income taxes and other expenses paid, net		(61.5)		(21.9)		(17.4)
Cash from operating activities		24.0		80.4		83.3
Debt security sales (purchases), net		21.6		100.4		(150.9)
Advances to subsidiaries and capital contributed to subsidiaries		(12.4)		(64.0)		(49.8)
Purchase of subsidiaries		—		(13.4)		—
Cash from (for) investing activities		9.2		23.0		(200.7)
Repayment of debt		(153.7)		—		—
Common stock issuance		0.6		7.3		165.6
Common stock dividend paid		(18.4)		(18.4)		(18.1)
Cash from (for) financing activities		(171.5)		(11.1)		147.5
Change in cash and cash equivalents		(138.3)		92.3		30.1
Cash and cash equivalents, beginning of year		172.3		80.0		49.9
Cash and cash equivalents, end of year	$	34.0	$	172.3	$	80.0

27.

Additional Operating Cash Flow Information

Operating Cash Flows on Indirect Basis:	Years Ended December 31,
($ in millions)	2008		2007		2006
OPERATING ACTIVITIES
Income from continuing operations	$	(174.4)	$	116.6	$	113.8
Net realized investment gains (losses)		295.9		6.0		(75.2)
Amortization and depreciation		11.7		12.3		8.7
Investment (gains) losses		1.2		(71.5)		(52.4)
Deferred income tax expense		(110.0)		26.0		42.5
Decrease (increase) in receivables		(23.2)		15.2		(22.9)
Deferred policy acquisition costs increase		9.0		(270.9)		(183.3)
Increase in policy liabilities and accruals		157.3		424.1		354.2
Other assets and other liabilities net change		(67.7)		(9.6)		(2.0)
Cash from continuing operations		99.8		248.2		183.4
Discontinued operations, net		(45.9)		40.6		56.8
Cash from operating activities	$	53.9	$	288.8	$	240.2

28.

Supplemental Unaudited Financial Information

Summarized Selected Quarterly Financial Data:	Quarter Ended
($ in millions, except per share amounts)	Mar 31,		June 30,		Sept 30,		Dec 31,
	2008
Revenues	$	531.3	$	566.0	$	511.3	$	399.7
Income (loss) from continuing operations(1)	$	(4.7)	$	11.2	$	(13.9)	$	(167.0)
Net income (loss)(2)	$	(14.4)	$	6.2	$	(339.5)	$	(378.3)
Earnings per share:
Basic	$	(0.13)	$	0.05	$	(2.97)	$	(3.31)
Diluted	$	(0.13)	$	0.05	$	(2.97)	$	(3.31)

F-55

28.

Supplemental Unaudited Financial Information (continued)

Summarized Selected Quarterly Financial Data:	Quarter Ended
($ in millions, except per share amounts)	Mar 31,		June 30,		Sept 30,		Dec 31,
	2007
Revenues	$	614.3	$	577.5	$	587.2	$	588.5
Income (loss) from continuing operations	$	46.0	$	26.3	$	45.4	$	(1.1)
Net income	$	48.7	$	30.9	$	34.9	$	3.1
Earnings per share:
Basic	$	0.42	$	0.27	$	0.30	$	0.03
Diluted	$	0.42	$	0.27	$	0.30	$	0.03

———————

⁽¹⁾

The primary driver of the significant loss from continuing operations in the fourth quarter of 2008 was the acceleration of deferred policy acquisition cost amortization due to the annual unlocking that occurred in the quarter with a negative impact to earnings of $183.8 million.

⁽²⁾

The primary driver of the significant net loss in the fourth quarter of 2008 was an impairment of goodwill on our discontinued asset management business combined with the deferred policy acquisition cost unlocking noted in (1) above.

29.

Subsequent Events

On January 15, 2009, A.M Best Company, Inc. affirmed our financial strength rating of A and changed our outlook to negative from stable and also revised our senior debt rating outlook to negative from stable.

On February 19, 2009, Moody’s Investor Service downgraded our financial strength rating to Baa1 from A3 and downgraded our senior debt rating to Ba1 from Baa3. The ratings remain on review for possible further downgrade as was previously announced on December 9, 2008.

On March 2, 2009, Standard and Poor’s downgraded our financial strength rating to BBB from BBB+ and downgraded our senior debt rating to BB from BB+. At the same time, Standard and Poor’s removed the ratings from CreditWatch, where they had been placed with negative implications on February 10, 2009. The outlook is negative.

On March 4, 2009, Fitch downgraded our financial strength rating to BBB+ from A and placed the rating on Rating Watch Negative.

On March 3, 2009, State Farm informed us that it intends to suspend the sale of Phoenix products pending a re-evaluation of the relationship between the two companies. During 2008, State Farm was our largest distributor of annuity and life insurance products accounting for approximately 27% of our total life insurance premiums and approximately 68% of our annuity deposits.

On March 4, 2009, National Life Group also informed us that it intends to suspend the sale of Phoenix products. In 2008, National Life was our second largest distributor of annuity products accounting for approximately 14% of our annuity deposits.

The actions by these key distribution partners and rating agencies will likely have a material adverse effect on our future results. We are currently assessing the impact of these recent developments on our business prospects, operations and strategy.

F-56

EXHIBIT INDEX

Exhibit
2.1	Plan of Reorganization (incorporated herein by reference to Exhibit 2.1 to the Phoenix Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-55268), filed February 9, 2001, as amended)
3.1	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 November 21, 2001, as amended)
3.2	By-Laws of The Phoenix Companies, Inc., as amended June 5, 2003 (incorporated herein by reference to Exhibit 3.2 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)
4.1	Amended and Restated Certificate of Incorporation and By-Laws of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibits 3.1 and 3.2 hereto, respectively)
4.2	Stockholder Rights Agreement, dated as of June 19, 2001, between The Phoenix Companies, Inc. and Equiserve Trust Company, N.A. as Rights Agent (incorporated by reference to Exhibit 10.24 to The Phoenix Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-73896), filed November 21, 2001, as amended)
4.3	Form of Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of The Phoenix Companies, Inc. (attached as Exhibit A to the Stockholder Rights Agreement filed as Exhibit 4.2 hereto)
4.4	Form of Right Certificate (attached as Exhibit B to the Stockholder Rights Agreement filed as Exhibit 4.2 hereto)
4.5	Form of Share Certificate for Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 4.1 to The Phoenix Companies, Inc. Registration Statement on Form S-1 (Registration No. 333-55268), filed February 9, 2001, as amended)
10.1	The Phoenix Companies, Inc. Stock Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. Quarterly Report of Form 10-Q filed May 8, 2008)
10.2	First Amendment to The Phoenix Companies, Inc. Stock Incentive Plan, as amended and restated*
10.3	Form of Incentive Stock Option Agreement under The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit 10.3 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)
10.4	Form of Non-Qualified Stock Option Agreement under The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit 10.4 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)
10.5	The Phoenix Companies, Inc. Directors Stock Plan, as amended and restated (incorporated herein by reference to Exhibit 10.6 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.6	The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated (incorporated herein by reference to Exhibit 10.9 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.7	The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.13 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.8	The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan (incorporated herein by reference to Exhibit 10.14 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.9	The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated*

E-1

10.10	The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated*
10.11	The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan, as amended and restated (incorporated herein by reference to Exhibit 10.22 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.12	Form of Award Letter under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 8, 2006)
10.13	Form of Description of Long Term Incentive Cycle under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 8, 2006)
10.14	Form of Restricted Stock Units Agreement of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibit 10.27 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 10, 2006)
10.15	Form of Restricted Stock Units Agreement Individual for Performance-Based Incentive Grants (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 28, 2007)
10.16	Form of Restricted Stock Units Agreement for Cliff Vested Grants (incorporated herein by reference to Exhibit 10.21 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 1, 2007)
10.17	Form of Restricted Stock Units Agreement for Performance-Based Grants Tied to Business Line Metrics (incorporated herein by reference to Exhibit 10.22 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 9, 2007)
10.18	Form of Restricted Stock Units Agreement for 3-Year Performance-Based Long-Term Incentive Cycles (incorporated herein by reference to Exhibit 10.23 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 9, 2007)
10.19	The Phoenix Companies, Inc. Executive Severance Allowance Plan, as amended and restated (incorporated herein by reference to Exhibit 10.33 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.20	The Phoenix Companies, Inc. Annual Incentive Plan for Executive Officers, as amended and restated (incorporated herein by reference to Exhibit 10.35 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.21	The Phoenix Companies, Inc. Equity Deferral Plan (incorporated herein by reference to Exhibit 10.36 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.22	The Phoenix Companies, Inc. Directors Equity Deferral Plan (incorporated herein by reference to Exhibit 10.37 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.23	The Phoenix Companies, Inc. Directors Cash Deferral Plan (incorporated herein by reference to Exhibit 10.38 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.24	Form of Change in Control Agreement (for employees receiving reimbursement for certain excise taxes) (incorporated herein by reference to Exhibit 10.29 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)
10.25	Form of Change in Control Agreement (for use in all other instances) (incorporated herein by reference to Exhibit 10.30 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)

E-2

10.26	Letter Agreement dated May 6, 2008 between The Phoenix Companies, Inc. and Dona D. Young (incorporated herein by reference to Exhibit 10.42 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 8, 2008)
10.27	Second Amended and Restated Employment Agreement dated May 6, 2008 between The Phoenix Companies, Inc. and Dona D. Young *
10.28	Amended and Restated Employment Continuation Agreement effective January 1, 2008, between The Phoenix Companies, Inc. and Dona D. Young*
10.29	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)
10.30	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)
10.31	Discussion of compensation of Peter A. Hofmann (incorporated herein by reference to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 14, 2007)
10.32	Discussion of compensation of David R. Pellerin (incorporated herein by reference to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 14, 2007)
10.33	Table of Board Compensation for the Directors of The Phoenix Companies, Inc. as adopted on October 29, 2007, (incorporated herein by reference to Exhibit 10.39 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)
10.34	Stockholder Rights Agreement dated as of June 19, 2001 (incorporated herein by reference to Exhibit 4.2 hereto)
10.35	Fiscal Agency Agreement dated as of December 15, 2004 between Phoenix Life Insurance Company and The Bank of New York (incorporated herein by reference to Exhibit 10.38 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)
10.36	First Amended and Restated Credit Agreement dated as of April 2, 2008, by and among The Phoenix Companies, Inc., and Phoenix Life Insurance Company as Borrowers; Wachovia Bank, National Association, as Administrative Agent; The Bank of New York, as Syndication Agent; BMO Capital Markets Financing, Inc., JPMorgan Chase Bank, N.A., and PNC Bank, National Association, as Documentation Agents; and the other Lenders party thereto (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed April 7, 2008)
10.37	First Amendment to First Amended and Restated Credit Agreement, dated as of November 7, 2008, by and among The Phoenix Companies, Inc. and Phoenix Life Insurance Company as borrowers; Wachovia Bank, National Association, as administrative agent; The Bank of New York, as syndication agent; BMO Capital Markets Financing, Inc., JPMorgan Chase Bank, N.A., and PNC Bank, National Association, as documentation agents; and the other lenders party thereto (incorporated herein by reference to Exhibit 10.55 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q dated November 10, 2008)
10.38	Agreement, dated as of April 16, 2008, among The Phoenix Companies, Inc. Oliver Press Partners, LLC and certain of its affiliates party thereto (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed April 16, 2008)
10.39	Investment and Contribution Agreement, dated as of October 30, 2008, by and among The Phoenix Companies, Inc., Phoenix Investment Management Company, Virtus Holdings, Inc. and Harris Bankcorp, Inc. (incorporated by reference herein to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 5, 2008)

E-3

10.40	Separation Agreement, Plan of Reorganization and Distribution by and between The Phoenix Companies, Inc. and Virtus Investment Partners, Inc. dated as of December 18, 2008 (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed December 23, 2008)
10.41	Transition Services Agreement by and between The Phoenix Companies, Inc. and Virtus Investment Partners, Inc. dated as of December 18, 2008 (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. Current Report on Form 8-K filed December 23, 2008)
10.42	Tax Separation Agreement by and between The Phoenix Companies, Inc. and Virtus Investment Partners, Inc. dated as of December 18, 2008 (incorporated herein by reference to Exhibit 10.3 to The Phoenix Companies, Inc. Current Report on Form 8-K filed December 23, 2008)
10.43	Employee Matters Agreement by and between The Phoenix Companies, Inc. and Virtus Investment Partners, Inc. dated as of December 18, 2008 (incorporated herein by reference to Exhibit 10.4 to The Phoenix Companies, Inc. Current Report on Form 8-K filed December 23, 2008)
10.44	Amended and Restated Technology Services Agreement by and among Phoenix Life Insurance Company and Electronic Data Systems, LLC dated January 1, 2009 (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K dated January 6, 2009)
12	Ratio of Earnings to Fixed Charges*
21	Subsidiaries of The Phoenix Companies, Inc.*
23	Consent of PricewaterhouseCoopers LLP*
24	Power of Attorney*
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 Peter A. Hofmann, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32	Certification by Dona D. Young, Chief Executive Officer and Peter A. Hofmann, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* Filed herewith

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. Requests for copies should be directed to: Corporate Secretary, The Phoenix Companies, Inc., One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056.

E-4

EX-10.2

EXHIBIT 10.2

FIRST AMENDMENT TO

THE PHOENIX COMPANIES, INC.  STOCK INCENTIVE PLAN

As Amended and Restated Effective January 1, 2009

The Phoenix Companies, Inc. Stock Incentive Plan (the "Plan"), as amended and restated effective January 1, 2009, is amended, effective as of January 1, 2009, as follows:

1.

Section 2.1(g) of the Plan is amended by deleting the definition of “Change of Control Price” and inserting the definition of “Change in Control Settlement Value” to read as follows:

“(g)  "Change in Control Settlement Value" means, with respect to a share of Common Stock, the excess of the Change in Control Stock Value over the option price of the Option covering such share of Common Stock, provided that, (i) with respect to any Option which is an Incentive Stock Option, the Change in Control Settlement Value shall not exceed the maximum amount permitted for such Option to continue to qualify as an Incentive Stock Option and (ii) in respect of that portion, if any, of any Option that had not become exercisable on or before December 31, 2004, the Change in Control Settlement Value shall not exceed the maximum amount permitted for such Option to remain exempt from Section 409A.”

2.

The current Sections 2.1(h) through (v) shall be re-lettered to 2.1(i) through (w) and the following definition of “Change in Control Stock Value” shall be inserted as Section 2.1(h):

“(h) "Change in Control Stock Value" means the value of a share of Common Stock determined as follows:

(i)

if the Change in Control results from an event described in clause (iii) of
the Change in Control definition, the highest per share price paid for shares of
Common Stock of the Company in the transaction resulting

in the Change in
Control; or

(ii)

if the Change in Control results from an event described in clause (i), (ii), (iv) or
(v) of the Change in Control definition and no event described in clause (iii) of
the Change in Control definition has occurred in connection with such Change in
Control, the highest sale price of a share of Common Stock of the Company on
any trading day during the 60 consecutive trading days immediately preceding
and following the date of such Change in Control as reported on the New York
Stock Exchange Composite Tape, or other national securities exchange or
nationally recognized automated quotation system, on which the Common Stock
is then principally traded or listed.”

3.

Section 8.1 of the Plan is amended in its entirety to read as follows:

“8.1 Accelerated Vesting and Payment.   Subject to the provisions of Section 8.2, in the
event of a Change of Control each Option shall be fully exercisable regardless of the

exercise schedule otherwise applicable to such Option and, in connection with such a
Change of Control, the Committee may, in its discretion, provide that each Option shall,
upon the occurrence of such Change of Control, be canceled in exchange for a payment
in an amount equal to the Change in Control Settlement Value.”

 IN WITNESS WHEREOF, this First Amendment to the Plan is adopted this 23rd day of December, 2008.

On Behalf of

Thee Phoenix Companies, Inc.

Benefit Plans Committee

/s/ BONNIE J. MALLEY

Bonnie J. Malley

Executive Vice President

Human Resources and Corporate Services

EX-10.9

EXHIBIT 10.9

THE PHOENIX COMPANIES, INC.
NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As amended and restated effective January 1, 2009

 ARTICLE I.  PURPOSE AND EFFECTIVE DATE

1.1

Purpose  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan is intended to provide retirement benefits for certain employees which are not provided under The Phoenix Companies, Inc. Employee Pension Plan by reason of (a) the exclusion of Incentive Compensation under an Incentive Compensation plan designated in Section 2.10 hereof from the definition of Earnings; (b) the limitation on Earnings that may be taken into account under The Phoenix Companies, Inc. Employee Pension Plan as set forth in Code section 401(a)(17); or (c) the exclusion of amounts deferred under any other deferred compensation program of the Employer from the definition of Earnings.  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement 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 (see Article IX).

1.2

Effective Date  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan was first effective January 1, 1989, was amended and restated effective as of January 1, 2004, was further amended effective as of April 28, 2005, and was amended and restated effective as of July 1, 2007 and January 1, 2008.  This amendment and restatement shall be effective as of January 1, 2009.

ARTICLE II.

DEFINITIONS

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

2.1

"Accrued Benefit" means, as of the relevant date, the benefit accrued by a Participant in accordance with the terms of this Supplemental Plan as defined in the Pension Plan.  The Accrued Benefit of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen and cease to accrue, to the extent it is not already frozen and ceased to accrue, at the end of business on the earlier of December 31, 2008 and the Spin-Off Date, consistent with the Thirteenth Amendment to the Pension Plan.

2.2

"Beneficiary" means the Beneficiary designated under the Pension Plan, except that the Participant may designate a Beneficiary hereunder by delivering to the Plan Administrator a written designation of Beneficiary specifically made with respect to this Plan on a form approved by the Plan Administrator.

2.3

"Benefit Plans Committee" means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan.

2.4

"Code" means the Internal Revenue Code of 1986, as amended.

2.5

"Earnings" means earnings as defined in the Pension Plan.  The Earnings of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it   is not already frozen, for all

1

purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date, consistent with the Thirteenth Amendment to the Pension Plan.

2.6

"Employer" means the Phoenix Life Insurance Company and any affiliated employer that adopts the Plan with the consent of the Benefit Plans Committee.

2.7

"Excess Benefit Plan" means 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 Code section 415.

2.8

"Final Average Earnings" means the average earnings as defined in the Pension Plan.  The Final Average Earnings of any Participant who is an employee of Virtus Investment   Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it is not already frozen, for all purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date, consistent with the Thirteenth Amendment to the Pension Plan.

2.9

"Grandfathered Participant" means a Participant designated as a "Grandfathered Participant" under the Pension Plan.

2.10

 “Incentive Compensation" means compensation payable under the Performance Incentive Plan, the Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive plans or such other incentive compensation arrangements as may be designated from time to time by the Compensation Committee of the Board of Directors of The Phoenix Companies, Inc., the Chief Executive Officer, or the Benefit Plans Committee.  The Incentive Compensation of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it is not already frozen, for all purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date.

2.11

 "Participant" means an employee who meets the eligibility requirements of Article III under this Supplemental Plan.  

2.12  "Participating Employer" means each corporation that has adopted this Supplemental Plan with the consent of the Benefit Plans Committee in accordance with Article XII.

2.13  "Pension Equity Benefits" means the benefits provided under Appendix V of the Pension Plan.  The Pension Equity Benefits of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent they are not already frozen, for all purposes at the end of business   on the earlier of December 31, 2008 and the Spin-Off Date.

2.14  "Pension Plan" means 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.

2.15  "Plan Administrator" means the Benefit Plans Committee or the person or committee designated as such by the Benefit Plans Committee.

2

2.16  "Rehired Participant" has the meaning ascribed thereto in Section 4.3.

2.17  “Retirement” means termination of service after having satisfied the age and/or service criteria to be entitled to retire in accordance with the terms of the Pension Plan.

2.18

  “Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.19  "Supplemental Plan" means The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as set forth in this document and as amended from time to time.

ARTICLE III.

ELIGIBILITY

3.1

Eligibility for this Supplement Plan is limited to persons who were Participants under this Plan prior to August 1, 2004.  On and after July 1, 2007, an individual who was a Participant in this Supplemental Plan and who has been rehired following his or her termination or transfer shall not be eligible to re-commence participation in this Supplemental Plan.

3.2

Effective as of the earlier of January 1, 2009 and the actual spin-off of Virtus Investment Partners, Inc. from The Phoenix companies, Inc. (the “Spin-Off Date”), the Employees of Virtus Investment Partners, Inc. (formerly Phoenix Investment Partners, Ltd.), Phoenix Equity Planning Corporation, Virtus Investment Advisers, Inc. (formerly Phoenix Investment Counsel, Inc.) and Zweig Advisers, LLC (formerly Phoenix/Zweig Advisers, LLC) (and any other predecessor or successor names assigned to these entities) shall no longer be eligible to actively participate in and accrue a benefit under the Plan.  The Accrued Benefits of these employees through December 31, 2008 shall be frozen and Earnings/Final Average Earnings/Incentive Compensation shall be frozen as of December 31, 2008.  Effective as of the earlier of January 1, 2009 and the Spin-Off Date, Virtus Investment Partners, Inc. (formerly Phoeni x Investment Partners, Ltd.), Phoenix Equity Planning Corporation, Virtus Investment Advisers, Inc. (formerly Phoenix Investment Counsel, Inc.) and Zweig Advisers, LLC (formerly Phoenix/Zweig Advisers, LLC) (and any other predecessor or successor names assigned to these entities) shall no longer be Employers or Participating Employers for the purposes of the Plan.  Any new hires of Virtus Investment Partners, Inc. (except Goodwin Capital Advisers, Ltd.) after October 31, 2008 shall not be eligible to participate in the Plan.   

ARTICLE IV.

BENEFITS

4.1

Actively At Work on or After August 1, 2004  The amount of benefits provided under this Supplemental Plan effective July 1, 2007 for Participants actively at work on August 1, 2004 and thereafter shall be the excess of (a) over (b) where:

(a)

is the sum of:

(i)

the amount of benefit that would have been provided under the Pension Plan, excluding any Pension Equity Benefits, if the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings and the limitation set forth in Code section 401(a)(17) did not apply; provided, however, that

3

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) years within the last seven (7) consecutive years that produces the highest average; and

(ii)

the amount of Pension Equity Benefits, if any, that would have been provided under the Pension Plan if the exclusion of deferred compensation from the calculation of the Pension Equity Benefits, if applicable, and the limitation set forth in Code section 401(a)(17) did not apply.

(b)

is the amount of benefits payable under the Pension Plan, including any Pension Equity Benefits.

4.2

Not Actively At Work on or After August 1, 2004  The amount of monthly benefit provided under this Supplemental Plan for Participants who were not actively at work on August 1, 2004 and thereafter shall be the excess of (a) over (b) where:

(a)

is the amount of monthly benefit that would have been provided under the 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 Code section 401(a)(17) 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) years within the last five (5) consecutive years that produces the highest average; and

(b)

is the amount of monthly benefit payable under the Pension Plan.

4.3

Rehired Participant  Notwithstanding Section 4.1 to the contrary, in the event any Participant, including a Grandfathered Participant, terminates employment with or is no longer employed by  (i.e., transfers to a non-Participating Employer) the Employer or a Participating Employer and is rehired by the Employer or a Participating Employer following such termination or transfer (a "Rehired Participant"), for purposes of Sections 4.1(a)(i), the determination, if applicable, of the Rehired Participant's Final Average Earnings, including the amount of Incentive Compensation, shall be made as of the date of the Rehired Participant's initial termination or transfer.

4.4

Benefits Not to Exceed What Could Have been Paid Under Pension Plan But for Limitations  Notwithstanding Section 4.1 or 4.2 to the contrary, the amount of benefits payable to a Participant under this Supplemental Plan shall be reduced to the extent that the aggregate benefits payable to the Participant under the Pension Plan, the Excess Benefit Plan, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated effective January 1, 2008 (and as may be further amended thereafter), and this Supplemental Plan exceeds the amount of benefits that would

4

have been provided under the Pension Plan if the exclusion of Incentive Compensation and deferred compensation from the definition for Earnings, to the extent applicable, the limitation set forth in Code section 401(a)(17) and the limitation imposed by Code section 415 did not apply.

4.5

Special Rules for Subsidiary Employees  The following special rules apply with respect to certain subsidiary employees:

(a)

To the extent that Section 4.1 or 4.2 requires the determination of the amount of benefits payable under the 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 benefits payable under Section 4.1 or 4.2 to an Employee of PIC, PEPCO or PXP who was ineligible to participate in the 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 Employee actually accrued under the Pension Plan as of his or her Annuity Commencement Date and the benefit such Employee would have accrued had he or she not been excluded from participation in the Pension Plan for such period.

4.6

Plant Closing Benefits  In addition to the benefit payable pursuant to Section 4.1 or 4.2 and notwithstanding the provisions of Section 4.5 to the contrary, this Supplemental Plan shall also pay to each Pension Plan Participant identified in Section 2.05 of the Pension Plan as not being a Plant Closing Eligible Employee, the Plant Closing Benefit that would have been payable to such Pension Plan Participant under Section 3.08 of the Pension Plan had such Pension Plan Participant not been excluded from the definition of Plant Closing Eligible Employee.

4.7

Timing of Inclusion of Incentive Compensation   For purposes of Sections 4.1(a)(i) and 4.2 above, Incentive Compensation shall be deemed Earnings with respect to the year in which such Incentive Compensation is actually paid or deferred.

4.8

Cost of Living Adjustment for Pre- March 1, 2003 Benefits Benefits accrued under this Supplemental Plan before March 1, 2003 are subject to cost of living adjustments as described in the Pension Plan.

4.9

No Modification of Pension Plan Any benefit payable under the 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 Pension Plan.

4.10

Death Benefits  If the spouse or domestic partner of a Participant in the Supplemental Plan is entitled to a death benefit under the Pension Plan, said spouse or domestic partner 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 under the 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

5

payable under the Pension Plan as of the date of the Participant’s death, calculated in accordance with the terms of the 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.  Following the commencement of payments under this Supplemental Plan, death benefits shall only be payable to the extent the Participant is receiving benefits in the form of a survivor benefit or an annuity or installments that has a period certain component and the minimum payment period has not lapsed.

ARTICLE V.

VESTING

5.1

Employees eligible to participate in this Supplemental Plan on or before July 31, 2004, and except for Pension Plan Participants to whom a Plant Closing Benefit is payable under Section 4.6 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 Supplemental Plan on account of its sale by the Employer, shall have a vested interest in his or her Supplemental Plan benefits upon the earliest to occur of (i) such Participant’s attainment of Normal Retirement Age under the Pension Plan, (ii) termination of the Participant’s employment by death or disability as defined in the Pension Plan or (iii) upon completion of five (5) Years of Vesting Service, as defined under the Pension Plan.

5.2

Effective as of the earlier of January 1, 2009 and the Spin-Off Date, any Participant whose Accrued Benefit is frozen because he or she is an employee of Virtus Investment Partners, Inc. and a Participant in the Plan shall be 100% vested in his or her Accrued Benefit under the Plan through the earlier of his or her termination of employment or December 31, 2008.  In addition, any Participant, who was involuntarily terminated not for cause on or after January 1, 2008 through December 31, 2008, who had or has a non-vested Accrued Benefit in the Plan on his or her termination of employment date, shall be fully vested in his or her Accrued Benefit as of his or her termination of employment date.

ARTICLE VI.

DISTRIBUTIONS

6.1

Payments in Accordance with Pension Plan   Except as otherwise expressly provided in Section 6.7, with respect to any Participant whose benefits under the Pension Plan become payable prior to January 1, 2009, payment of a Participant’s Accrued Benefit shall be made in the same form and manner and at the same time as is applicable or elected under the Employee Pension Plan.

6.2

Default Provisions for Payments After 2008  

(a)

Traditional or Non-Pension Equity Benefits  Except for vested Participants whose Separation from Service (including Retirement) occurred prior to January 1, 2009 and their payments have not commenced prior to January 1, 2009, with respect to any Participant whose benefits do not become payable prior to January 1, 2009, unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of  a Participant’s Accrued Benefit attributable to non-

6

Pension Equity Benefits shall commence at the later of (i) the date the Participant incurs a Separation from Service, or (ii) the earlier of (a) the date the Participant attains age 55 with 10 years of Vesting Service (or, with respect to a Participant who dies prior to age 55, the date the Participant would have attained age 55), or (b) age 65 (the later of (i) and (ii) to be known as the “Pension Commencement Date”, which does not include the six-month wait period), and shall be made in the form of a single life annuity.  For vested Participants whose Separation from Service occurred prior to January 1, 2009 and whose payments have not commenced prior to January 1, 2009 and do not include Pension Equity Benefits, payment of the portion of the Participant’s Accrued Benefit attributable to service prior to January 1, 2005 shall be made in the same form and manner a nd at the same time as is applicable or elected under the Employee Pension Plan and payment of the portion of the Participant’s Accrued Benefit attributable to service subsequent to December 31, 2004 shall commence on the Pension Commencement Date in the form in the form of a single life annuity unless they elect among the actuarially-equivalent annuity payment options listed in Section 6.4(a)(i).

(b)

Pension Equity Benefits  Unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of a Participant’s Accrued Benefit attributable to Pension Equity Benefits shall commence at the date the Participant incurs a Separation from Service and shall be made in a lump sum.  With regard to a Participant that has Separated from Service prior to January 1, 2009, unless the Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of the Participant’s Accrued Benefit attributable to Pension Equity Benefits shall commence January 1, 2009 and shall be made in a lump sum.

6.3

Elections of Payment Forms  A Participant who (a) is not a terminated vested Participant prior to January 1, 2009, and (b) is not described in Section 6.1 may elect (i) at any time prior to January 1, 2009, or (ii) within 30 days of the date that the Participant first becomes eligible for this Supplemental Plan (or any other plans aggregated with this Supplemental Plan in accordance with Code section 409A) after December 31, 2008, to have payment of his or her Accrued Benefit in one of the optional forms set forth in Section 6.4, to commence at  the times set forth in Section 6.2.  Additionally, a Participant who (a) is a terminated vested Participant prior to January 1, 2009 and (b) has Pension Equity Benefits that have not commenced prior to January 1, 2009, may elect at any time prior to January 1, 2009 to have payment of his or her Pension Equity Benefit s in one of the optional forms set forth in Section 6.4(b), to commence January 1, 2009.

6.4

Optional Forms of Payments  Payment of a Participant’s Accrued Benefit shall be payable in whichever of the following forms the Participant shall elect:

(a)

Traditional or Non-Pension Equity Benefits

(i) Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  

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straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and 50% or 100% survivor with 10 years certain;  or

(ii) Short-Term Installments   The Participant may elect to receive payment of his or her Accrued Benefit attributable to Non-Pension Equity Benefits in three-year certain installments (that is, in equal annual payments over a period of three calendar years; no interest will be credited and paid during the installment period).

The assumptions used to calculate the value of the three-year installment benefit will be based on the assumptions utilized for the end of year (calendar year immediately preceding the Pension Commencement Date)  disclosure for projected benefit obligations under FAS 158.  

(b)

Pension Equity Benefits

(i) Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and 50% or 100% survivor with 10 years certain.

The factors used to determine the Pension Equity annuity benefits above are based on the same factors used in the Pension Plan. If you elect the annuity option for your Pension Equity benefits, the determination of the actual annuity amount will be based on the factors in effect for the year of the Pension Commencement Date and on the type of annuity that you choose at that time.

(ii) Lump Sum     The Participant may elect to receive a lump sum cash payment of his or her Pension Equity Benefits.

6.5

Accrued Benefit Distribution Provisions  Notwithstanding any provision in this Supplemental Plan to the contrary, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Participant’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) the first day of the month following the Participant’s death, and the amount payable to the Participant under the form of payment determined in accordance with this Article VI shall, unless otherwise determined by the plan Administrator, be credited with interest for any such postponement period based upon an interest rate determined solely by the Plan Administrator.

6.6

Change in Form of Life Annuity  If a Participant’s Accrued Benefit is payable in the form of a life annuity described in Section 6.3(a), whether pursuant to Section 6.2 or 6.3, at any time prior to the date the Participant’s Accrued Benefits would commence to be paid hereunder, the Participant may elect on a form approved by the Plan Administrator and received by the Plan Administrator or an administrator approved by the Plan Administrator, to change the form of life annuity under which such Accrued Benefit is payable.  

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6.7

Mandatory Distributions of Small Accrued Benefits   If the Actuarial Equivalent value of the Participant’s Accrued Benefit under this Supplemental Plan is equal to $25,000 or less on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her Accrued Benefit within 90 days after his or her Separation from Service.

6.8

Suspension of Benefits   If a Participant who has incurred a Separation of Service is re-employed or re-hired, any benefits which have commenced payment prior to such re-employment or re-hire shall continue to be paid, and any benefits that have not commenced to be paid shall still be paid at the time that they would have been paid, without regard to the change in the Participant’s employment status.

ARTICLE VII.

CLAIMS FOR BENEFITS

7.1

Claims Procedure   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 descriptio n 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 ERISA section 502(a) following an adverse benefit determination on review.  A claimant must exhaust the claims procedure under this Supplemental Plan and 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, in whole or in part, 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 fo r 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

9

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 ERISA section 502(a) 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.

7.2

Full Satisfaction, Release, Special Payment Rules 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.  Subject to the immediately preceding sentence, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Accrued Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.3

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 by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15^th day of the third calendar month following the date specified under the Plan after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Employer.

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ARTICLE VIII.

AMENDMENT AND TERMINATION

8.1

Amendment   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, except with respect to an amendment described in Section 10.1, no amendment (i) shall result in or cause an acceleration of payments or benefits under the Plan or (ii) shall, without the express written consent of such Participant, reduce or otherwise adversely affect the Participant Accrued Benefit as of the date of such amendme nt.  

8.2

Termination   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 no such termination shall (i) result in or cause an acceleration of payments or benefits under this Supplemental Plan, unless the termination satisfies the Code section 409A safe harbor summarized in the last sentence of this Section 8.2, or (ii) without the express written consent of such Participant, reduce or otherwise adversely affect the Participant’s Accrued Benefit as of the date of such termination.  Any such termination shall be accomplished by resolution of the Benefit Pla ns 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.  Payments under this Supplemental Plan may be accelerated upon plan termination only if:

(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);

(ii)

all payments to the Directors as a result of the plan termination are not made until at least twelve (12) months after action taken to terminate the plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and

(iii)

no similar successor plan can be established within three (3) years following the date the action to terminate the plan was taken.

ARTICLE IX.

SOURCE OF BENEFIT PAYMENTS

9.1

Unfunded Plan   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

11

Plan, such right shall be no greater than the right of an unsecured general creditor of the Employer.

ARTICLE X.    CODE SECTION 409A MISCELLANEOUS PROVISIONS

10.1

Interpretation Consistent with Code Section 409A   The intent is that payments and benefits under this Supplemental Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Supplemental Plan shall be interpreted to be in compliance therewith.  If any provision of this Supplemental Plan would cause the Participant to incur any additional tax or interest under Code section 409A, the Benefit Plans Committee, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Supplemental Plan without violating the provisions of Code section 409A.

ARTICLE XI.

GENERAL

11.1

Benefits Non-Alienable   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.

11.2

Plan Administration   The Supplemental Plan shall be operated and administered by the Plan Administrator.  The Plan Administrator may delegate any or all of its administrative authority to any officer or employee or committee of officers or employees as it shall designate.  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 determinations 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.

11.3

Governing Law   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.

11.4

No Right to Continued Employment   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.

12

11.5

Tax Withholding   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.

11.6

Severability   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 XII.

PARTICIPATING EMPLOYERS

12.1

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.

12.2

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.

12.3

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

12.4

Delegation of Power to Amend   Each Participating Employer hereby delegates to the Benefit Plans Committee the right at any time to amend the Supplemental

13

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.  

12.5

Withdrawal of a Participating Employer   Subject to Section 8.2, 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 (or such lesser period as the Benefits Plans Committee shall specify) subsequent to the date such notice is delivered to the Benefit Plans Committee.  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 n otice.  Notwithstanding the foregoing provisions of this Section 12.5, in no event shall the withdrawal by, or the termination of the participation of, any such Participating Employer result in an acceleration of the timing of distributions under this Plan, unless (and solely to the extent) permitted under Code Section 409A or the regulations and interpretations thereunder.

12.6

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.

IN WITNESS WHEREOF, this Amended and Restated Plan is adopted this 23rd day of

December, 2008.

On Behalf of

Thee Phoenix Companies, Inc.

Benefit Plans Committee

/s/ BONNIE J. MALLEY

Bonnie J. Malley

Executive Vice President

Human Resources and Corporate Services

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EX-10.10

EXHIBIT 10.10

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

As amended and restated effective January 1, 2009

ARTICLE I.  PURPOSE AND EFFECTIVE DATE

1.1

Purpose  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B is intended to provide retirement benefits for certain employees which are not provided under the Phoenix Companies, Inc. Employee Pension Plan by reason of (a) the exclusion of Incentive Compensation under an Incentive Compensation plan designated in Section 2.10 hereof from the definition of Earnings; (b) the limitation on Earnings that may be taken into account under the Phoenix Companies, Inc. Employee Pension Plan as set forth in Code section 401(a)(17); or (c) the exclusion of amounts deferred under any other deferred compensation program of the Employer from the definition of Earnings.  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation fo r a select group of management or highly compensated employees (see Article IX).

1.2

Effective Date  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B was first effective August 1, 2004, was amended effective as of April 28, 2005, and was amended and restated effective as of July 1, 2007 and January 1, 2008.  This amendment and restatement shall be effective as of January 1, 2009.

ARTICLE II.

DEFINITIONS

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

2.1

"Accrued Benefit" means, as of the relevant date, the benefit accrued by a Participant in accordance with the terms of this Supplemental Plan B as defined in the Pension Plan.  The Accrued Benefit of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen and cease to accrue, to the extent it is not already frozen and ceased to accrue, at the end of business on the earlier of December 31, 2008 and the Spin-Off date, consistent with the Thirteenth Amendment to the Pension Plan.

2.2

"Beneficiary" means the Beneficiary designated under the Pension Plan, except that the Participant may designate a Beneficiary hereunder by delivering to the Plan Administrator a written designation of Beneficiary specifically made with respect to this Plan on a form approved by the Plan Administrator.

2.3

"Benefit Plans Committee" means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan.

2.4

"Code" means the Internal Revenue Code of 1986, as amended.

2.5

"Earnings" means earnings as defined in the Pension Plan.  The Earnings of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it is not already frozen, for all

1

purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date, consistent with the Thirteenth Amendment   to the Pension Plan.

2.6

"Employer" means Phoenix Life Insurance Company and any affiliated employer that adopts the Supplemental Plan B with the consent of the Benefit Plans Committee.

2.7

"Excess Benefit Plan" means 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 Code section 415.

2.8

"Final Average Earnings" means the average earnings as defined in the Pension Plan.  The Final Average Earnings of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it is not already frozen, for all purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date, consistent with the Thirteenth Amendment to the Pension Plan.

2.9

"Grandfathered Participant" means a Participant designated as a "Grandfathered Participant" under the Pension Plan.

2.10

"Incentive Compensation" means compensation payable under the Performance Incentive Plan, the Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive plans or such other incentive compensation arrangements as may be designated from time to time by the Compensation Committee of the Board of Directors of The Phoenix Companies, Inc., the Chief Executive Officer, or the Benefit Plans Committee.  The Incentive Compensation of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent it is not already frozen, for all purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date.  

2.11

"Participant" means an employee who meets the eligibility requirements of Article III under the Supplemental Plan B.

2.12

"Participating Employer" means each corporation that has adopted this Supplemental Plan B with the consent of the Benefit Plans Committee in accordance with Article XII.

2.13

"Pension Equity Benefits" means the benefits provided under Appendix V of the Pension Plan.  The Pension Equity Benefits of any Participant who is an employee of Virtus Investment Partners, Inc. or its subsidiaries (except Goodwin Capital Advisers, Ltd.) shall be frozen, to the extent they are not already frozen, for all purposes at the end of business on the earlier of December 31, 2008 and the Spin-Off Date.

2.14

"Pension Plan" means 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.

2.15

"Plan Administrator" means the Benefit Plans Committee or the person or committee designated as such by the Benefit Plans Committee.

2.16

"Rehired Participant" has the meaning ascribed thereto in Section 4.2.

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2.17

“Retirement” means termination of service after having satisfied the age and/or service criteria to retire in accordance with the terms of the Pension Plan.

2.18

“Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.19

"Supplemental Plan B" means The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B as set forth in this document and as amended from time to time.

ARTICLE III.

ELIGIBILITY

3.1

Individuals who do not participate and are not eligible to participate in, or are no longer eligible to participate in, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2009, will be eligible to participate in this Supplemental Plan B in accordance with Section 3.2.

3.2

On or after August 1, 2004, any Highly Compensated Employee, as defined under the Pension Plan, of the Employer or any Participating Employer, that has been approved by the Chief Executive Officer of the Employer, 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 set forth in Code section 401(a)(17) shall be eligible for benefits under this Supplemental Plan B effective as of the date so approved.

3.3

Effective as of the earlier of January 1, 2009 and the actual spin-off of Virtus Investment Partners, Inc. from The Phoenix companies, Inc. (the “Spin-Off Date”), the Employees of Virtus Investment Partners, Inc. (formerly Phoenix Investment Partners, Ltd.), Phoenix Equity Planning Corporation, Virtus Investment Advisers, Inc. (formerly Phoenix Investment Counsel, Inc.) and Zweig Advisers, LLC (formerly Phoenix/Zweig Advisers, LLC) (and any other predecessor or successor names assigned to these entities) shall no longer be eligible to actively participate in and accrue a benefit under the Plan.  The Accrued Benefits of these employees through October 31, 2008 shall be frozen and Earnings/Final Average Earnings/Incentive Compensation shall be frozen as of December 31, 2008.  Effective as of the earlier of January 1, 2009 and the Spin-Off Date, Virtus Investment Partners, Inc. (formerly Phoenix Investment Partners, Ltd.), Phoenix Equity Planning Corporation, Virtus Investment Advisers, Inc. (formerly Phoenix Investment Counsel, Inc.) and Zweig Advisers, LLC (formerly Phoenix/Zweig Advisers, LLC) (and any other predecessor or successor names assigned to these entities) shall no longer be Employers or Participating Employers for the purposes of the Plan.  Any new hires of Virtus Investment Partners, Inc. (except Goodwin Capital Advisers, Ltd.) after October 31, 2008 shall not be eligible to participate in the Plan.

ARTICLE IV.

BENEFITS

4.1

Actively At Work on or After August 1, 2004  The amount of benefits provided under this Supplemental Plan B effective July 1, 2007 for Participants actively at work on August 1, 2004 or thereafter shall be the excess of (a) over (b) where:

(a)

is the sum of:

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(i)

the amount of benefit that would have been provided under the Pension Plan, excluding any Pension Equity Benefits, if the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings and the limitation set forth in Code section 401(a)(17) 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) years within the last seven (7) consecutive years that produces the highest average; and

(ii)

the amount of Pension Equity Benefits, if any, that would have been provided under the Pension Plan if the exclusion of deferred compensation from the calculation of the Pension Equity Benefits, if applicable, and the limitation set forth in Code section 401(a)(17) did not apply.

(b)

is the amount of benefits payable under the Pension Plan, including any Pension Equity Benefits.

4.2

Rehired Participant  Notwithstanding Section 4.1 to the contrary, in the event any Participant, including a Grandfathered Participant, terminates employment with or is no longer employed by  (i.e., transfers to a non-Participating Employer) the Employer or a Participating Employer and is rehired by the Employer or a Participating Employer following such termination or transfer (a "Rehired Participant"), for purposes of Sections 4.1(a)(i), the determination, if applicable, of the Rehired Participant's Final Average Earnings, including the amount of Incentive Compensation, shall be made as of the date of the Rehired Participant's initial termination or transfer.  Any Rehired Participant (including former Grandfathered Participants and former participants in The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restat ed effective January 1, 2008) who has been re-approved pursuant to Section 3.2 shall accrue benefits on and after his or her rehire date solely under Section 4.1(a)(ii).

4.3

Benefits Not to Exceed What Could Have been Paid Under Pension Plan But for Limitations

(a)

Rehired or Transferred Participants. Notwithstanding Section 4.1 to the contrary, the amount of benefits payable to a Participant under this Supplemental   Plan B shall be reduced to the extent that the aggregate benefits payable to the Participant under the Pension Plan, the Excess Benefit Plan, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2008, and this Supplemental Plan B exceeds the amount of benefits that would have been provided under the Pension Plan if the exclusion of Incentive Compensation and deferred compensation from the definition for Earnings, to the extent applicable, the limitation set forth in Code section 401(a)(17) and the limitation imposed by Code section 415   did not apply.

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(b)

Newly Eligible Grandfathered Participants After June 30, 2007. If a Grandfathered Participant becomes a Participant in this Supplemental Plan B after   June 30, 2007, such Grandfathered Participant shall only accrue Pension Equity Benefits under Section 4.1(a)(ii) of this Supplemental Plan B.   

4.4

Special Rules for Subsidiary Employees  The following special rules apply with respect to certain subsidiary employees:

(a)

To the extent that Section 4.1 requires the determination of the amount of benefits payable under the 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 B to a Former Home Life Employee.

(b)

The amount of benefits payable under Section 4.1 to an Employee of PIC, PEPCO or PXP who was ineligible to participate in the 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 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 Pension Plan for such period.

4.5

Timing of Inclusion of Incentive Compensation   For purposes of Section 4.1(a)(i) above, Incentive Compensation shall be deemed Earnings with respect to the year in which such Incentive Compensation is actually paid or deferred.

4.6

No Modification of Pension Plan   Any benefit payable under the Pension Plan shall be solely in accordance with the terms and provisions thereof, and nothing in this Supplemental Plan B shall operate or be construed in a way to modify, amend or affect the terms and provisions of the Pension Plan.

4.7

Death Benefits  If the spouse or domestic partner of a Participant in the Supplemental Plan B is entitled to a death benefit under the Pension Plan, said spouse or domestic partner shall be entitled to receive from the Employer a death benefit under this Supplemental Plan B equal to the difference between (a) the death benefit that would be payable under the 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 under the Pension Plan as of the date of the Participant’s death, calculated in accordance with the terms of the Pension Plan.  No death benefit other than that set forth in this Section 4.7 shall be payable under this Supplemental Plan B if a Participant dies prior to the commencement of benefit payments under this Supplemental Plan B.  Following the commencement of payments under this Supplemental Plan B, death benefits shall only be payable to the extent the Participant is receiving benefits in the form of a survivor benefit or an annuity or installments that has a period certain component and the minimum payment period has not lapsed.

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ARTICLE V.

VESTING

5.1

Employees eligible to participate in this Supplemental Plan B on or after August 1, 2004,  shall have a vested interest in his or her Supplemental Plan B benefits upon such Participant’s attainment of Normal Retirement Age under the Pension Plan or on earlier termination of employment by death or disability as defined in the Pension Plan.  Prior to any such occurrence, the Participant shall have a vested interest in his or her benefits under this Supplemental Plan B in accordance with the following schedule:  

Service at selection into SERP	Vesting Schedule	Full Vesting
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

5.2

Effective as of the earlier of January 1, 2009 and the Spin-Off Date, any Participant whose Accrued Benefit is frozen because he or she is an employee of Virtus Investment Partners, Inc. and a Participant in the Plan shall be 100% vested in his or her Accrued Benefit under the Plan through the earlier of his or her termination of employment or December 31, 2008.  In addition, any Participant, who was involuntarily terminated not for cause on or after January 1, 2008 through December 31, 2008, who had or has a non-vested Accrued Benefit in the Plan on his or her termination of employment date, shall be fully vested in his or her Accrued Benefit as of his or her termination of employment date.

ARTICLE VI. DISTRIBUTIONS

6.1

Payments in Accordance with Pension Plan  Except as otherwise expressly provided in Section 6.7, with respect to any Participant whose benefits under the Pension Plan become payable prior to January 1, 2009, payment of a Participant’s Accrued Benefit shall be made in the same form and manner and at the same time as is applicable or elected under the Employee Pension Plan.

6.2

Default Provisions for Payments After 2008  

(a)

Traditional or Non-Pension Equity Benefits  Except for vested Participants whose Separation from Service (including Retirement) occurred prior to January 1, 2009 and their payments have not commenced prior to January 1, 2009, with respect to any Participant whose benefits under the Pension Plan do not become payable prior to January 1, 2009, unless a Participant otherwise elects in accordance with the   procedures set forth in this Article VI, payment of  a Participant’s Accrued Benefit attributable to non-Pension Equity Benefits shall commence at the later of (i) the date the Participant incurs a Separation from Service, or (ii)   the earlier of (a) the date the Participant attains age 55 with 10 years of

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Vesting Service (or, with respect to a Participant who dies prior to age 55, the date the Participant would have attained age 55), or (b) age 65 (the later of (i) and (ii) to be known as the “Pension Commencement Date”, which does not include the six-month wait period), and shall be made in the form of a single life annuity.  For vested Participants whose Separation from Service occurred prior to January 1, 2009 and whose payments have not commenced prior to January 1, 2009 and do not   include Pension Equity Benefits, payment of the portion of the Participant’s Accrued Benefit attributable to service prior to January 1, 2005 shall be made in the same form and manner and at the same time as is applicable or elected under the Employee Pension Plan and payment of the portion of the Participant’s Accrued Benefit attributable to service subsequent to Dec ember 31, 2004 shall commence on the Pension Commencement Date in the form in the form of a single life annuity unless they elect among the actuarially-equivalent annuity payment options listed in Section 6.4(a)(i).

(b)

Pension Equity Benefits  Unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of a Participant’s Accrued Benefit attributable to Pension Equity Benefits shall commence at the date the Participant incurs a Separation from Service and shall be made in a lump sum. With regard to a Participant that has Separated from Service prior to January 1, 2009, unless the Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of the Participant’s Accrued Benefit attributable to Pension Equity Benefits shall commence January 1, 2009 and shall be made in a lump sum.

6.3

Elections of Payment Forms  A Participant who (a) is not a terminated vested Participant prior to January 1, 2009, and (b) is not described in Section 6.1 may elect (i) at any time prior to January 1, 2009, or (ii) within 30 days of the date that the Participant first becomes eligible for this Supplemental Plan B (or any other plans aggregated with this Supplemental Plan B in accordance with Code section 409A) after December 31, 2008, to have payment of his or her Accrued Benefit in one of the optional forms set forth in Section 6.4, to commence at  the times set forth in Section 6.2. Additionally, a Participant who (a) is a terminated vested Participant prior to January 1, 2009 and (b) has Pension Equity Benefits that have not commenced prior to January 1, 2009, may elect at any time prior to January 1, 2009 to have payment of his or her Pension Equity Benefits i n one of the optional forms set forth in Section 6.4(b), to commence January 1, 2009.

6.4     Optional Forms of Payments  Payment of a Participant’s Accrued Benefit shall be payable in whichever of the following forms the Participant shall elect:

(a)     Traditional or Non-Pension Equity Benefits

(i) Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and 50% or 100% survivor with 10 years certain;  or

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Short-Term Installments  The Participant may elect to receive payment of his or her Accrued Benefit attributable to Non-Pension Equity Benefits in three-year certain installments (that is, in equal annual payments over a period of three calendar years; no interest will be credited and paid during the installment period).

The assumptions used to calculate the value of the three-year installment benefit will be based on the assumptions utilized for the end of year (calendar year immediately preceding the Pension Commencement Date)  disclosure for projected benefit obligations under FAS 158.    

(b)

Pension Equity Benefits

(i) Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and 50% or 100% survivor with 10 years certain.

The factors used to determine the Pension Equity annuity benefits above are based on the same factors used in the Pension Plan. If you elect the annuity option for your Pension Equity benefits, the determination of the actual annuity amount will be based on the factors in effect for the year of the Pension Commencement Date and on the type of annuity that you choose at that time.

(ii) Lump Sum     The Participant may elect to receive a lump sum cash payment of his or her Pension Equity Benefits.  

6.5  Accrued Benefit Distribution Provisions Notwithstanding any provision  in this Supplemental Plan B to the contrary, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Participant’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) the first day of the month following the Participant’s death, and the amount payable to the Participant under the form of payment determined in accordance with this Article VI shall, unless otherwise determined by the Plan Administrator, be credited with interest for any such postponement period based upon an interest rate determined solely by the Plan Administrator .

6.6  Change in Form of Life Annuity  If a Participant’s Accrued Benefit is payable in the form of a life annuity described in Section 6.3(a), whether pursuant to Section 6.2 or 6.3, at any time prior to the date the Participant’s Accrued Benefits would commence to be paid hereunder, the Participant may elect on a form approved by the Plan Administrator and received by the Plan Administrator or an administrator approved by the Plan Administrator, to change the form of life annuity under which such Accrued Benefit is payable.  

6.7  Mandatory Distributions of Small Accrued Benefits   If the Actuarial Equivalent value of the Participant’s Accrued Benefit under this Supplemental Plan B is equal to $25,000 or less on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump

8

sum payment of his or her Accrued Benefit within 90 days after his or her Separation from Service.

6.8  Suspension of Benefits   If a Participant who has incurred a Separation of Service is re-employed or re-hired, any benefits which have commenced payment prior to such re-employment or re-hire shall continue to be paid, and any benefits that have not commenced to be paid shall still be paid at the time that they would have been paid, without regard to the change in the Participant’s employment status.

ARTICLE VII. CLAIMS FOR BENEFITS

7.1

Claims Procedure   Claims for benefits under the Supplemental Plan B 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 B on which the decision is based shall be cited, and, where appropriate, a descrip tion 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 B'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 ERISA section 502(a) following an adverse benefit determination on review.  A claimant must exhaust the claims procedure under this Supplemental Plan B and 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, in whole or in part, 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 clai m 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 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

9

decision, specific references to the pertinent Supplemental Plan B provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) 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 B and that Supplemental Plan B provisions have been applied consistently with respect to similarly situated claimants.

7.2

Full Satisfaction, Release, Special Payment Rules   Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Supplemental Plan B, 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 B 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 B, any such payment, or any part thereof, may, unless claim th erefor 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.  Subject to the immediately preceding sentence, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Accrued Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.3

If any benefits payable under this Supplemental Plan B to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15^th day of the third calendar month following the date specified under the Plan after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Employer.

ARTICLE VIII. AMENDMENT AND TERMINATION

8.1

Amendment   The Benefit Plans Committee shall have the right to amend this Supplemental Plan B 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, except with respect to an amendment described in Section 10.1, no amendment

10

(i) shall result in or cause an acceleration of payments or benefits under the Plan or (ii) shall, without the express written consent of such Participant, reduce or otherwise adversely affect the Participant Accrued Benefit as of the date of such amendment.  

8.2

Termination   The Employer has established this Supplemental Plan B 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 B in its entirety at any time without the consent of any Participant; provided, however, that no such termination shall (i) result in or cause an acceleration of payments or benefits under this Supplemental Plan B, unless the termination satisfies the Code section 409A safe harbor summarized in the last sentence of this Section 8.2, or (ii) without the express written consent of such Participant, reduce or otherwise adversely affect the Participant’s Accrued Benefit as of the date of such termination.  Any such termination shall be accomplished by resolution of the Benef it 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.  Payments under this Supplemental Plan B may be accelerated upon plan termination only if:

(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);

(ii)

all payments to the Directors as a result of the plan termination are not made until at least twelve (12) months after action taken to terminate the plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and

(iii)

no similar successor plan can be established within three (3) years following the date the action to terminate the plan was taken.

ARTICLE IX. SOURCE OF BENEFIT PAYMENTS

9.1

Unfunded Plan  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 B. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Employer.  Nothing contained in this Supplemental Plan B 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 B, such right shall be no greater than the right of an unsecured general creditor of the Employer.

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ARTICLE X. CODE SECTION 409A MISCELLANEOUS PROVISIONS

10.1

Interpretation Consistent with Code Section 409A The intent is that payments and benefits under this Supplemental Plan B comply with Code section 409A and, accordingly, to the maximum extent permitted, this Supplemental Plan B shall be interpreted to be in compliance therewith.  If any provision of this Supplemental Plan B would cause the Participant to incur any additional tax or interest under Code section 409A, the Benefit Plans Committee, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent of the applicable provision of th is Supplemental Plan B without violating the provisions of Code section 409A.  

ARTICLE XI. GENERAL

11.1

Benefits Non-Alienable   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.

11.2

Plan Administration   The Supplemental Plan B shall be operated and administered by the Plan Administrator or its duly authorized representative.  The Plan Administrator may delegate any or all of its administrative authority to any officer or employee or committee of officers or employees as it shall designate.  The Plan Administrator shall have sole discretionary authority to determine all questions arising in connection with the Supplemental Plan B, to interpret the provisions of the Supplemental Plan B and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Supplemental Plan B and to make all determinations in connection with the Supplemental Plan B as may be necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all persons.

11.3

Governing Law   This Supplemental Plan B 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.

11.4

No Right to Continued Employment   The establishment of this Supplemental Plan B 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 B had never been adopted.

11.5

Tax Withholding   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.

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11.6

Severability   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 XII. PARTICIPATING EMPLOYERS

12.1

Adoption of Supplemental Plan B by Other Employers  With the consent of the Benefit Plans Committee, any other corporation may adopt the Supplemental Plan B 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.

12.2

Requirements of Participating Employers

(a)

Benefits payable under the Supplemental Plan B 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 B 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 B.  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 B 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 B 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 B which are to be paid by the Employer.

12.3

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

12.4

Delegation of Power to Amend   Each Participating Employer hereby delegates to the Benefit Plans Committee the right at any time to amend the Supplemental Plan B in accordance with the terms of the Supplemental Plan B, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Supplemental Plan B.  If an amendment could significantly affect the Participating Employer’s share of the cost of the Supplemental Plan B, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.  

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12.5

Withdrawal of a Participating Employer  Subject to Section 8.2, a Participating Employer may terminate its participation in the Supplemental Plan B 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 such withdrawal is not permitted under the law wherein such notice of withdrawal will not be honored or the Benefit Plans Committee shall have waived its right to such notice.  The Benefit Plans Committee may terminate a Participating Employer’s participation in this Supplemental Plan B 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 d elivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.  Notwithstanding the foregoing provisions of this Section 12.5, in no event shall the withdrawal by, or the termination of the participation of, any such Participating Employer result in an acceleration of the timing of distributions under this Plan, unless (and solely to the extent) permitted under Code section 409A or the regulations and interpretations thereunder.

12.6

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

IN WITNESS WHEREOF, this Amended and Restated Plan is adopted this 23rd day of December, 2008.

On Behalf of

Thee Phoenix Companies, Inc.

Benefit Plans Committee

/s/ BONNIE J. MALLEY

Bonnie J. Malley

Executive Vice President

Human Resources and Corporate Services

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EX-10.27

EXHIBIT 10.27

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of May 6, 2008 (the “Second Restatement Date”), by and between The Phoenix Companies, Inc., a Delaware corporation (the “Company”) and Dona D. Young (the “Executive”).

WITNESSETH

WHEREAS, prior to the Second Restatement Date the Executive served the Company and Phoenix Life Insurance Company (“PLIC”) as the Chief Executive Officer and Chairman and served on the Boards of Directors of the Company  and PLIC (collectively, the “Board”);

WHEREAS, the Company and the Executive entered into an Amended and Restated Employment Agreement as to the terms of her continuing employment dated as of May 18, 2005 (the “Restatement Date”);

WHEREAS, the Company and the Executive desire to enter into the Agreement to bring the Amended and Restated Employment Agreement into compliance with Section 409A of the Internal Revenue Code of 1986, as amended; and

WHEREAS, except as otherwise expressly provided herein, this Agreement shall supersede any prior written agreement entered into between the Executive and the Company prior to the Second Restatement Date with respect to the subject matter hereof, including, without limitation, the agreement dated January 1, 2003 and the Amended and Restated Agreement dated as of January 1, 2008.

NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.

POSITION/DUTIES.

(a)

During the Employment Term (as defined in Section 2 below), the Executive shall serve as the Chief Executive Officer and Chairman of the Company and PLIC.  In this capacity the Executive shall have such duties, authorities and responsibilities commensurate with the position of Chief Executive Officer and any other position she may then hold; in addition, the Executive shall have such other duties and responsibilities as the Board shall designate that are consistent with the Executive’s position.  The Executive shall report directly to the Board.  During the Employment Term, the Company shall use its best efforts to cause the Executive to be re-nominated by the Company to be a member of the Board as necessary so that her membership on the Board may continue uninterrupted during the Employment Term.

(b)

During the Employment Term, the Executive shall devote substantially all of her business time to the performance of her duties with the Company and its affiliates and use good faith efforts to discharge her duties.  However, so long as the following activities do not (individually or in the aggregate) materially interfere with the performance of the Executive’s

duties with the Company and are conducted in compliance with the Company’s Code of Conduct (as in effect from time to time), the Executive may (i) participate in charitable, civic, educational, professional, community or industry affairs or serve on the boards of directors or advisory boards of other companies; provided, however, that the Executive shall not serve as a director on more than three (3) boards of directors or advisory boards of other for-profit companies without the prior written approval of the Board, and (ii) manage her and her family’s personal investments.

2.

EMPLOYMENT TERM.  Subject to earlier termination as provided in this Section 2 or in Section 6, the Executive’s term of employment under this Agreement shall be for the period commencing on the Second Restatement Date and ending on December 31, 2008; provided, however, that, the term of this Agreement shall automatically extend for successive one-year periods without further action by either party hereto on December 31, 2008 and each anniversary thereof, unless either party shall give the other party written notice, at least 90 days prior to the date on which the term would otherwise extend pursuant to this proviso, that she or it does not want the term to so extend.  In no event, however, shall the term of Executive’s employment under this Agreement extend beyond any mandatory retirement date at or after age 65 applicable to the Executive under the Company’s policies and e stablished in a manner consistent with applicable law (the “Mandatory Retirement Date”).  The term of this Agreement, as the same may be extended pursuant to the second preceding sentence, shall hereafter be referred to as the “Employment Term.”

3.

BASE SALARY.  The Company agrees to pay the Executive a base salary (the “Base Salary”) at an annual rate of not less than $950,000, payable in accordance with the regular payroll practices of the Company.  The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof) and may be increased, but not decreased, from time to time by the Board.  Once increased, the Executive’s Base Salary may not be decreased below such increased amount.  No increase in Base Salary shall be used to offset or otherwise reduce any obligations of the Company to the Executive hereunder or otherwise.  The Base Salary as increased from time to time shall constitute the “Base Salary” for purposes of this Agreement.

4.

INCENTIVE COMPENSATION.

(a)

SHORT-TERM BONUS.  During the Employment Term, the Executive shall have the opportunity to earn an annual bonus under the Performance Incentive Plan (or a successor or supplemental annual bonus plan, including, without limitation, any short-term plan referenced in Section 4(f) hereof) (“PIP”), with a target amount not less than 160% of the Executive’s Base Salary, based upon the satisfaction of generally applicable financial criteria (as determined in good faith by the Board or a committee thereof after consultation with the Executive), with a higher or lower amount received for higher or lower achievement (the “PlP Bonus”).  Unless the Executive shall otherwise elect (in accordance with the requirements of applicable law, including, if applicable, Code Section 409A), any amount payable under this Section 4(a) shall be paid to the Executive hereunder not later than March 15 of the calendar year following the year in respect of which such bonus is payable.

(b)

LONG-TERM INCENTIVE COMPENSATION.  During the Employment Term, the Executive shall have the opportunity to earn long-term incentive compensation, in such form and manner as the Board, or a duly authorized committee of the Board, shall determine,

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including in cash, Company stock or other Company equity, under the Company’s Long Term Incentive Plan (or a successor or supplemental long-term incentive compensation plan) (“LTIP”), with a target amount for the three (3) year cycle starting in such year not less than the percentage of the Executive’s Base Salary determined below, and based upon the satisfaction of generally applicable financial criteria (as determined in good faith by the Board or a committee thereof after consultation with the Executive), with a higher or lower amount received for higher or lower achievement (the “LTIP Awards”).  The percentage of Base Salary referenced in the immediately preceding sentence shall be (i) 225%, with respect to the cycle commencing in calendar year 2005, (ii) 235%, with respect to the cycle commencing in calendar year 2006, and (iii) 250%, with respect to the cycle com mencing in each calendar year during the Employment Term after 2006.  Unless the Executive shall otherwise elect (in accordance with the requirements of applicable law, including, if applicable, Code Section 409A) or the LTIP Award expressly specifies another payment date, any amount payable under this Section 4(b) shall be paid to the Executive hereunder not later than March 15 of the calendar year following the year in which such LTIP Award ceased to be subject to a substantial risk of forfeiture.  For the avoidance of doubt, no portion of the awards referenced in Section 4(c) or 4(d) shall be treated as being made in respect of the Company’s obligations under this Section 4(b).

(c)

RESTRICTED STOCK UNITS.  

(i)

2003 Grant.  Notwithstanding that this Agreement supersedes the employment agreement between the Executive and the Company dated as of January 1, 2003, the terms and conditions of that agreement related to the grant to the Executive of restricted stock units (the “Initial RSUs”) as set forth in Exhibit A thereto shall continue in full force and effect, except that the distribution date referenced in Section 1.4 of such Exhibit A shall be changed to the earlier of (1) six months and one day following Executive’s “separation from service,” as such term is defined under Section 409A or (2) the Executive’s date of death, and the distribution date specified in Section 2.4 of such Exhibit A shall be the distribution date specified in such Section 1.4.

(ii)

2005 Grant.  The Executive was also granted in the Amended and Restated Employment Agreement an additional award of restricted stock units (the “Supplemental RSUs”) in respect of the greatest number of whole units (excluding fractions) equal to or less than the quotient of (x) $1,000,000 and (y) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding the Restatement Date (the “Average Value”).  The Supplemental RSUs shall vest at the conclusion of the three (3) year period commencing on the Restatement Date, and was issued in accordance with and subject to the terms and conditions set forth in, Annex A hereto, which shall be amended to comply with Section 409A as provided in the amended Annex A hereto.

(d)

PERFORMANCE BASED RESTRICTED STOCK UNITS.  The Executive was also granted in the Amended and Restated Employment Agreement an award of performance based restricted stock units in respect of the greatest number of whole units (excluding fractions) equal to or less than the quotient of (x) $500,000 and (y) the Average Value (the “Performance Based RSUs”).  If the performance criteria established with respect to performance based

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restricted stock unit awards granted to other employees of the Company for the long-term incentive plan 2005-07 performance period (the “2007 PSUs”) are satisfied (i) at a level that enables a payment in respect of such 2007 PSUs at or above target levels, the Performance Based RSUs shall vest in full, (ii) at threshold, one-half of the Performance Based RSUs shall vest or (iii) at a level above threshold, but below target, the number of Performance Based RSUs that shall vest shall be determined based on the actual performance achieved, using calculated pro rata between threshold and target levels (e.g., if the actual performance is mid-way between the threshold level and the target level of performance, 75% of the Performance Based RSUs shall vest).  The remaining terms and conditions of the Performance Based RSUs shall be as specified in Annex B hereto, which shall be amended to comply with Section 409A as provided in the amended Annex B hereto.

(e)

FUTURE EQUITY GRANTS.  The Board (or a duly authorized committee thereof) shall have the authority, in its sole discretion (but subject to the Company’s governing documents, the terms of any applicable plan, the rules of the New York Stock Exchange and applicable law), but no obligation, to make such additional grants or opportunities available on such terms and conditions, in such form and in such amounts as the Board (or such committee) shall determine.

5.

EMPLOYEE BENEFITS.

(a)

BENEFIT PLANS.  The Executive shall be entitled to participate in any employee benefit plan of the Company and PLIC, including, but not limited to, equity, pension, thrift, profit sharing, medical coverage, education, or other retirement or welfare benefits that the Company or PLIC has adopted or may adopt, maintain or contribute to, for the benefit of its senior executives, at a level commensurate with her position within the Company.

(b)

VACATIONS.  The Executive shall be entitled to annual paid vacation, holidays and floating days in accordance with the Company’s policy applicable to senior executives, but in no event less than the Executive’s paid vacation, holidays and floating days in effect prior to the Second Restatement Date, which vacation may be taken at such times as the Executive elects with due regard to the needs of the Company.

(c)

PERQUISITES.  The Company shall provide to the Executive, at the Company’s cost, all perquisites to which other senior executives of the Company generally are (or become) entitled, and such other perquisites as are suitable to the character of the Executive’s position with the Company and adequate for the performance of her duties hereunder, subject to such specific limits on such perquisites as may from time to time be imposed by the Board.  To the extent legally permissible, the Company shall not treat such amounts or any of the following amounts or benefits as income to the Executive.  In any event, the Executive shall be entitled to receive the following during the Employment Term:

(i)

During the Employment Term, the Executive shall receive all perquisites the Executive was entitled to receive as Chief Executive Officer of the Company immediately prior to the Second Restatement Date; provided that (x) any amount of any benefits to be provided during Executive’s taxable year shall not affect the benefits to be provided in any other of Executive’s taxable years; (y) the right to in-kind benefits shall

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not be subject to liquidation or exchange for another benefit, and (z) the reimbursement of any eligible expense is made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.  

(ii)

Subject to the ability of the Company to be able to continue to insure such obligations through the purchase of policies from one or more reputable insurers, the Company shall provide Executive supplemental disability insurance benefits which are substantially the same as those provided to the Executive immediately prior to the Second Restatement Date.

(d)

BUSINESS AND ENTERTAINMENT EXPENSES.  Upon presentation of appropriate documentation, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy for all reasonable business and entertainment expenses incurred in connection with the performance of her duties hereunder.

6.

TERMINATION.  The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

(a)

DISABILITY.  Upon 30 days’ written notice by the Company to the Executive of termination due to Disability, provided that the Executive has not returned to full-time employment within such 30-day period.  For purposes of this Agreement, “Disability” shall mean that by reason of physical or mental illness or incapacity the Executive (i) has been unable to carry out her material duties pursuant to this Agreement for 180 days or more during any 365-day period and (ii) has qualified for long-term disability and health coverage under the terms of the Company’s applicable long-term disability program.  Notwithstanding the foregoing, in the event that the Executive shall incur a separation from service from the Company (within the meaning of Code Section 409A and the regulations and other guidance promulgated thereunder) due to a mental or physical impairment earl ier than the time specified in the immediately preceding sentence, then the Executive shall be deemed to have terminated employment due to Disability as of such earlier separation from service.  

(b)

DEATH.  Automatically on the date of death of the Executive.

(c)

CAUSE.  Immediately upon written notice by the Company to the Executive of a termination for Cause, provided that such notice is given within 90 days after the Chairman of the Executive Committee or the Audit Committee has actual knowledge of the Cause event.  “Cause” shall mean (i) the willful misconduct of the Executive (including, without limitation, a willful material violation of the Code of Conduct) with regard to the Company that is materially injurious to the Company (including, without limitation, material financial or reputational harm); provided, however, that no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith or without reasonable belief that her action or omission was not adverse to the best interests of the Company; (ii) the willful and continued failure of the Executive to attempt in good faith to substantially perform the Executive’s duties with the Company (other that any such failure resulting from incapacity due to physical or mental illness), which failure is not remedied within 15 business days after written notice from the Company specifying the details thereof; or (iii) the conviction of the Executive of (or the plea by the Executive of guilty or nolo contendere to) any

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(A) felony or (B) criminal misdemeanor involving fraud, false statements or misleading omissions, embezzlement, bribery, counterfeiting, extortion or an intentional wrongful taking, other than in the case of both (A) and (B), traffic-related offenses or as a result of vicarious liability for acts in which the Executive, except when acting on advice of counsel, had no direct involvement and no actual knowledge; provided that the Executive may be suspended with full compensation and benefits as if she remained in active service during any period prior to a conviction and after an indictment for such a felony or misdemeanor; or (iv) the Executive’s disqualification or bar by any governmental or self-regulatory authority from serving as Chief Executive Officer of the Company, Chairman of the Board or member of the Board, in each case, as a result of disciplinary or similar action and afte r the conclusion of an appeal from a final administrative determination to a court of first impression; provided that the Executive may be suspended with full compensation and benefits as if she remained in active service during any period prior to the conclusion of such appeal and after such disqualification or bar.

Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause without (i) advance written notice, provided to the Executive not less than five business days prior to the date of termination, setting forth the Company’s intention to consider terminating the Executive, including a statement of the date of termination and the specific basis for such consideration for Cause; (ii) an opportunity for the Executive, together with her counsel, to be heard before the Board before termination and after such notice; (iii) a duly-adopted resolution of the Board, after such opportunity, stating that in accordance with the provisions of the next to last sentence of tins Section 6(d), the actions of the Executive constituted Cause and the basis thereof; and (iv) a written determination provided by the Board setting forth the acts and omissions that form the basis of such termination.  The failure to include any fact in such written determination that contributes to a showing of Cause does not preclude the Company from asserting that fact in enforcing its rights under this Agreement, provided that such fact is generally within the category (of categories (i)-(iv) enumerated in the definition of “Cause” above) specified as the basis for the Cause termination in the written determination and provided, further, in the case of assertions within category (ii) of the definition of “Cause” above, that such later assertion shall not be valid to the extent that, prior to the Cause termination, the Executive had not been given, with respect to such assertion, the required notice and right to effect a remedy.  Any determination by the Board hereunder shall be made by the affirmative vote of at least a two-thirds majority of the members of the Board (other than the Executive).  Any purported termination of empl oyment of the Executive by the Company that does not meet all substantive and procedural requirements of this Section 6 shall be treated for all purposes under this Agreement as a termination without Cause.

(d)

WITHOUT CAUSE.  Upon written notice by the Company to the Executive of an involuntary termination without Cause, other than for death or Disability or on account of the Executive attaining her Mandatory Retirement Date.  

(e)

GOOD REASON.  Upon written notice by the Executive to the Company of a termination for Good Reason, provided that such notice is given within 90 days after the Executive has knowledge of the Good Reason event.  The failure to include any fact in such written notice that contributes to a showing of Good Reason does not preclude the Executive from asserting that fact in enforcing her rights under this Agreement, provided that such later assertion shall not be valid to the extent that, prior to the Good Reason termination, the Company

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had not been given, with respect to such assertion, the required notice and right to correct set forth in the following sentence.  “Good Reason” shall mean, without the express written consent of the Executive, the occurrence of any of the following events unless such events are fully corrected in all material respects by the Company within 30 days following written notification by the Executive to the Company that she intends to terminate her employment hereunder for one of the reasons set forth below:

(i)

any reduction or diminution (except temporarily during any period of physical or mental illness or incapacity) of the Executive’s title as Chief Executive Officer, or a material reduction or diminution of the Executive’s then authorities, duties or responsibilities or reporting requirements with the Company;

(ii)

anyone other than the Executive is elected as the Chairman of the Board, unless service by the Executive as Chairman is prohibited by applicable law, regulation, or listing requirements;

(iii)

the assignment to the Executive of duties or responsibilities that are materially inconsistent with, and adverse to, her position;

(iv)

a material breach by the Company of any provision of this Agreement, including, but not limited to, any reduction in Base Salary and target levels with respect to the PIP Bonus (other than any reductions therein expressly permitted under Section 4(a) of this Agreement) or LTIP Awards, or any failure timely to pay any part of Executive’s compensation (including Base Salary and any bonus, if any) when due or to provide the benefits or perquisites contemplated herein;

(v)

the failure of the Company to obtain and deliver to the Executive a reasonably satisfactory written agreement from any successor to the Company to assume and agree to perform this Agreement;

(vi)

the Company giving Executive notice pursuant to Section 2 hereof that it does not want to extend the Employment Term as provided in such Section;

(vii)

the giving of a notice of non-renewal or non-extension by the Company of, or failure of the Company to elect to extend, after the agreement would otherwise expire, the change in control agreement then existing between the Company and the Executive, which event the Executive may treat as a Good Reason Event either at the time of the giving of the notice or upon the expiration of such change in control agreement; or

(viii)

the Executive’s no longer serving as a member of the Board unless (a) she resigned from the Board or (b) service by the Executive as a member of the Board is prohibited by applicable law, regulation, or listing requirements.

Suspension of the Executive with full compensation and benefits (in accordance with clause (iii) or (iv) of the definition of “Cause” set forth in the first paragraph of Section 6(c)) and

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termination of Executive’s employment on account of her attaining her Mandatory Retirement Date shall not constitute a basis for a Good Reason termination.

(f)

WITHOUT GOOD REASON.  Upon not less than 10 days’ advance written notice by the Executive to the Company of the Executive’s voluntary termination of employment without Good Reason, provided that the Company may, in its sole discretion, elect to make such termination effective earlier than as of the date that is specified in such notice.

7.

CONSEQUENCES OF TERMINATION.

(a)

DISABILITY.  In the event the Executive’s employment is terminated as a result of Disability, the Company shall pay or provide the Executive

(i)

any unpaid Base Salary through the date of termination and any accrued but unused vacation;

(ii)

any unpaid bonus as declared or, if not then declared, as determined by the Board in good faith, with respect to any year or years ending prior to the date of termination, including the PIP Bonus and any LTIP Award for any completed performance period, which unpaid bonus shall be paid when it would otherwise be paid in such year of termination;

(iii)

reimbursement for any unreimbursed expenses (in accordance with Section 5(d)) incurred through the date of termination; and

(iv)

all other payments, benefits or fringe benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement, in accordance with the terms thereof (collectively, “Accrued Benefits”).  

In addition, after the Executive’s termination of employment as a result of Disability, the Executive shall receive:

(y)

a cash payment equal to the PIP Bonus for the year in which termination occurs, based on the target level payable, at such time in the following year as the PIP Bonus would otherwise have been paid to her pursuant to Section 4(a); and

(z)

full payment of any LTIP Award granted under this Agreement (or any similar award made prior to the Second Restatement Date) that is payable upon the achievement of performance criteria (other than stock price) over a pre-determined performance period, including, without limitation, the Performance Based RSUs awarded pursuant to Section 4(d) and any other performance share award (each such LTIP Award and similar previously granted award, a “Performance-Based LTIP Award”), with payment for each performance period determined as if the Executive were a participant for the full term of each of applicable performance period and paid at target levels, with payment to be made at the same time such amounts would have been paid to her pursuant to Section

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4(b) or 4(d), whichever is applicable, had she continued to be in the Company’s employment;

provided, however, that notwithstanding subclauses (x) and (y) the excess, if any, of any PIP Bonus or Performance Based LTIP Award which is payable based on target over the amount, if any, that would have been payable based on the actual level of the PIP Bonus or Performance Based-LTIP Award that would have been earned based on performance shall not be paid prior to six months and one day following the date of the Executive’s termination of employment (or the date of Executive’s death, if earlier).  All of the Initial RSUs referenced in Section 4(c) and all of the Supplemental RSUs referenced in Section 4(d) and any other outstanding unvested equity awards (other than any Performance-Based LTIP Awards, which are addressed above) held by the Executive shall immediately vest upon the Executive’s termination as a result of Disability and shall be paid out in accordance with the terms of the applic able plan or award agreement, and all vested stock options held by the Executive shall remain exercisable for a period of two (2) years thereafter, but in no event longer than the stated term of such options (the “Post-Termination Exercise Period”).

(b)

DEATH.  In the event the Executive’s employment is terminated as a result of the Executive’s death, the Executive’s estate or legal representative shall receive the same payments and benefits as if the Executive’s employment were terminated as a result of Disability (except that she will receive death benefits instead of disability benefits).

(c)

TERMINATION FOR CAUSE, WITHOUT GOOD REASON OR ON ACCOUNT OF MANDATORY RETIREMENT.  If the Executive’s employment should be terminated (i) by the Company for Cause, (ii) by the Executive without Good Reason or (iii) on account of the Executive attaining her Mandatory Retirement Date, the Company shall pay to the Executive any Accrued Benefits.  

(d)

TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.  If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason, the Company shall pay or provide the Executive with the following payments and benefits:

(i)

the Accrued Benefits;

(ii)

subject to Section 22(b), an immediate lump sum cash payment (and in all events not later than 90 days after the date the Executive’s employment terminates) equal to two (2) times the sum of:

(A)

the Base Salary; and

(B)

the PIP Bonus, based on the greater of (1) the stated target bonus for the year of termination and (2) the average of the PIP Bonuses (or, for years prior to 2005, the management incentive bonuses) earned by the Executive in the last two full fiscal years completed prior to termination.

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(iii)

at such time as PIP Bonuses would be payable to Executive in accordance with Section 4(a) had she continued in the Company’s employment, a pro-rata portion of the PIP Bonus the Executive would have earned for the year of her termination of employment (determined by multiplying the amount of said actual earned bonus by a fraction, the numerator of which is the number of days during the applicable year of termination that the Executive was employed by the Company and the denominator of which is 365);

(iv)

in respect of any Performance-Based LTIP Award for any performance period ending in the year of Executive’s termination of employment or any performance period beginning after December 31, 2008 and regardless of when ending, a pro-rata portion of such Performance-Based LTIP Award, equal to the product of (x) the actual bonus that would have been earned for that performance period, and (y) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the applicable performance period and the denominator of which is the number of days in such performance period (the “LTIP Fraction”).  Except as expressly provided in subclause (vi) below, any pro-rated payment in respect of any Performance-Based LTIP Award, shall be payable to the Executive at such time in the year following the end of the performance period as such the Performance-B ased LTIP Award would otherwise have been paid to her pursuant to Section 4(b);

(v)

in respect of each performance period beginning prior to January 1, 2009 and ending in any year after the year of Executive’s termination of employment, a pro-rata portion of such Performance-Based LTIP Award, equal to the product of (x) at least the target amount payable in respect of such Performance-Based LTIP Award and (y) the LTIP Fraction; provided, however, that the excess, if any, of any Performance Based LTIP Award which is payable based on target over the amount, if any, that would have been payable based on the actual level of the Performance Based-LTIP Award earned based on performance shall not be paid prior to six months and one day following the date of the Executive’s termination of employment (or the date of Executive’s death, if earlier);

(vi)

all of the Initial RSUs referenced in Section 4(c)(i), all of the Supplemental Units referenced in Section 4(c)(ii) and all of the Performance Based RSUs referenced in Section 4(d) shall immediately vest upon the Executive’s termination and be payable in accordance with the terms of the applicable plan or agreement and, with regard to all other equity grants (other than any Performance-Based LTIP Awards other than the Performance Based RSUs, each of which is addressed in Section 7(d)(v)), pro rata vesting of the next tranche, to be vested based upon the relative number of days employed from the prior vesting date (or grant date if no prior vesting) to the next vesting date and the Post-Termination Exercise Period and paid in accordance with the terms of the applicable plan or agreement;

(vii)

the Executive (and, to the extent applicable, the Executive’s dependents) shall be entitled, after the date of termination until the second anniversary thereof (the “End Date”), to continue participation in all of the employee and executive plans providing medical, dental and long-term disability benefits that the Executive participated

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in prior to the date of termination, other than supplemental long-term disability policies, (collectively, the “Continuing Benefit Plans”); provided that coverage (with regard to medical and dental benefits for the period after the end of the eighteen (18)-month period following the date of termination) shall be deemed to be monthly, in-kind payments of the premiums and will be taxable income to the Executive; and provided further that the participation by the Executive (and, to the extent applicable, the Executive’s dependents) in any Continuing Benefit Plan shall cease on the date, if any, prior to the End Date on which the Executive becomes eligible for benefits under a similar plan, policy or program of a subsequent employer.  To the extent the plan is a “self-insured medical reimbursement plan” under Section 105(h) of the Code and such coverage would be discriminatory thereunder, the premiums (both during and after the eighteen (18)-month period) shall be treated as taxable income to the Executive and the Executive shall be grossed-up therefor on a monthly basis at the same time as the premium is deemed paid, such that the Executive shall have no after-tax cost therefor or for the gross-up; provided further that any gross-up that would be paid within the Delay Period (as defined in Section 22 hereof) shall not be paid during such period, but shall be paid immediately thereafter;

(viii)

subject to Section 22(b), an amount equal to the lump sum value (based on the actuarial assumptions used under the respective plan) of two years of additional service and age credit for pension purposes under any qualified or nonqualified defined benefit type pension plan or arrangement of the Company (with the Base Salary used as the salary component of “final average earnings” for purposes of this calculation), which payments shall be made at the same time as the payment described in subclause (ii) above;

(ix)

subject to Section 22(b), an amount equal to two (2) years of the maximum Company matching contribution (assuming the Executive deferred the maximum amount and continued to earn her then current Base Salary) under any type of qualified or nonqualified deferred compensation plan sponsored by the Company, which amount shall be paid at the same time as the payment described in subclause (ii) above;

(x)

notwithstanding the terms and conditions of any such plan, program or arrangement, if at the time of her termination of employment the Executive shall not have attained the age generally required to be treated as a retiree (it being recognized that her service to date is sufficient to meet any service condition to such status and that it is expected she would attain such age were her employment to continue for the initial term of this Agreement), the Executive shall be deemed to have met any and all conditions to qualify for all rights and benefits available as a retiree under any such plan, program or arrangement (other than any plan qualified under Section 401(a) of the Code), and shall be treated as having met the conditions to qualify for retirement for all purposes under each such plan, program or arrangement (other than any plan qualified under Section 401(a) of the Code).  Subject to Section 22(b), the benefits that the Executive would have been able to receive from the Company’s Section 401(a) plan had she qualified to retire at the date of her termination will be paid to Executive on a non-qualified basis from the Company’s general assets until such time as Executive is eligible to receive such benefits from the Section 401(a) plan.  If the Executive is eligible for retiree status under the

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Company’s medical reimbursement plan by reason of this Section 7(d)(ix) (and not otherwise) and if it is self-insured, the Company shall, instead of providing coverage for the Executive thereunder for any period after the Executive’s right to continued coverage under COBRA expires, purchase for the benefit of Executive an insurance policy that provides the Executive with medical benefits coverage as close as reasonably available from a reputable provider the coverage to which she would have been provided to her under the Company’s self-insured plan; and

(xi)

outplacement services at a level commensurate with the Executive’s position for up to two (2) years after such termination of employment.  For a period of six (6) months after the Executive’s termination, the Company shall make available to the Executive office space and secretarial support at a level commensurate with the Executive’s position.  The Executive shall pay to the Company the cost of such space and support on a monthly basis.  The Company, at the end of the six month period shall promptly reimburse the Executive for the amounts so paid.

(e)

RETIREMENT.  To the extent the Executive qualifies to be treated as a “retiree” under any plan, program, grant or agreement (or to the extent that the Executive is afforded such status under Section 7(d)(ix)), the Executive shall have the benefit of said classification with regard to a benefit to the extent that it is more favorable to the Executive than the provisions otherwise provided herein.  

8.

RELEASE.  Any and all payments made and benefits provided under this Agreement to the Executive upon termination of employment, including but not limited to, those referenced in Section 7, shall be contingent upon the full execution of a general release of all claims by the Executive against the Company and its affiliates in the form attached hereto as Annex C within sixty (60) days following such termination of employment, provided that the payment of the Accrued Benefits shall not be contingent on the execution of such release.

9.

COVENANTS IN FAVOR OF THE COMPANY.

(a)

CONFIDENTIALITY.  The Executive acknowledges that in her employment hereunder she will occupy a position of trust and confidence.  The Executive shall not, except as in good faith deemed necessary or desirable by the Executive to perform her duties hereunder, or as required by applicable law, legal process or governmental inquiry, without limitation in time or until such information shall have become public or known in the Company’s industry other than by the Executive’s unauthorized disclosure, disclose to others or use, whether directly or indirectly, any Confidential Information.  “Confidential Information” shall mean information about the Company, its subsidiaries and affiliates, and their respective employees, clients and customers that is not disclosed by the Company for financial reporting purposes and that was learned by the Executive in the course of her employm ent by the Company, including (without limitation) any proprietary knowledge, trade secrets, data, formulae, information and client and customer lists and all papers, resumes, and records (including computer records) of the documents containing such Confidential Information.

(b)

NON-SOLICITATION OF EMPLOYEES.  The Executive recognizes that she possesses and will possess confidential information about other employees of the Company

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relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company.  The Executive recognizes that the information she possesses and will possess about these other employees is not generally known, is of substantial value to the Company in developing its business and in securing and retaining customers, and has been and will be acquired by her because of her business position with the Company.  The Executive agrees that, during the Employment Term and for a one (1) year period thereafter, she will not, directly or indirectly, solicit or recruit any non-administrative or non-clerical employee of the Company whose W-2 earnings for the immediately preceding calendar year were $100,000 or above to resign from the Company or to accept employment by her or by any other person or company.  Notwithstanding the fore going, nothing herein shall prevent the Executive from:  (i) placing general advertisements or otherwise generally advertising for employees or (ii) serving as a reference for an employee of the Company.

(c)

NONDISPARAGEMENT.  During the Employment Term and for a period of one (1) year following the Executive’s termination of employment, neither the Executive, on the one hand, nor the Company formally, its senior executives, or a member of its Board of Directors, on the other hand, shall, directly or indirectly, with willful intent to damage the other, issue or communicate any public statement, or statement likely to become public, that is critical of or damaging to the other (or in the case of communications by the Executive, also any of the Company’s officers, directors or employees, and, if the Executive is working for a competitor or a customer, excluding any statements regarding the Company’s products or services made by such competitor or customer without any direct involvement of the Executive).  The foregoing shall not be violated by truthful responses to legal process or gove rnmental inquiry or by the Executive in carrying out her duties in accordance with this Agreement.  No officer, director or employee of the Company shall be a third party beneficiary of these provisions.  

(d)

EQUITABLE RELIEF AND OTHER REMEDIES.  The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

(e)

REFORMATION.  If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

(f)

SURVIVAL OF PROVISIONS.  Without effect as to the survival of other provisions of this Agreement intended to survive the termination or expiration of the Executive’s employment, the obligations contained in this Section 9 shall survive the termination or expiration of the Executive’s employment with the Company and shall be fully enforceable thereafter.

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10.

ATTORNEY’S FEES.  If the Executive asserts any claim in any contest (whether initiated by the Executive or by the Company or any of its affiliates) as to the validity, enforceability or interpretation of arty provision of this Agreement or to collect amounts she asserts are due hereunder, the Company shall pay the Executive’s legal and other professional expenses (or cause such expenses to be paid) incurred in connection with such contest, including, but not limited to, the Executive’s reasonable attorney’s fees, on a quarterly basis, promptly upon presentation of proof of such expenses in a form reasonably acceptable to the Company, which submission shall be made within forty-five (45) days after the end of such quarter, provided that the Executive shall reimburse the Company for such amounts (to the extent permitted under applicable law), plus simple interest there on at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.  The Company shall promptly pay the Executive’s reasonable costs of entering into this Agreement, including the reasonable fees and expenses of her counsel.

11.

ARBITRATION.  Any dispute or controversy arising under or in connection with this Agreement, other than injunctive relief under Section 9, shall be settled exclusively by arbitration, conducted before three arbitrators in Hartford, Connecticut in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect (with the Company and the Executive each being entitled to select one arbitrator and the two arbitrators selecting the third).  The decision of the arbitrators will be final and binding upon the parties hereto.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  Nothing herein shall limit either the right of the Company or the Executive to seek injunctive relief in a court of applicable jurisdiction.  The Company shall bear the cost of the arbitration (including, without limitation, arbitrators 6; fees) provided that the Executive shall reimburse the Company for one half of such amounts (to the extent permitted tinder applicable law), plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.

12.

INDEMNIFICATION.  In addition to any other rights of indemnification of the Executive, the Company hereby covenants and agrees to promptly indemnify the Executive (or, in the event of her death, her heirs, executors, administrators or legal representatives) and hold her harmless, in each case to the fullest extent permitted by law, against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including attorney’s fees), penalties, fines, settlements, losses, and damages resulting from, or in connection with, the Executive’s employment with the Company, including but not limited to as an officer and director of any subsidiary or parent or as a fiduciary of any employee benefit plan.  The Company, within 10 days of presentation of invoices, shall advance to the Executive reimbursement of all legal fees and disbursements reasonably incurre d by the Executive in connection with any potentially indemnifiable matter; provided, however, that such invoices shall be submitted not later than the December 1 following the year in which such legal services were rendered, and that to the extent required by applicable law, in order to receive such advanced fees and disbursements, the Executive must first sign an undertaking reasonably satisfactory to the Company that she will promptly repay to the Company all advanced fees and disbursements in the event it is finally determined in accordance with law that the Executive

14

cannot be indemnified for the matter at issue under applicable law.  The burden of proving that indemnification of the Executive is not permissible at law shall be on the Company.

13.

LIABILITY INSURANCE.  The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists (but no less than six (6) years), after the termination or expiration of this Agreement in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

14.

FULL SETTLEMENT.  Except as set forth in this Agreement, the obligation of the Company to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, set-off counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obliged to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by the Executive as a result of employment by another employer (except as expressly set forth herein with respect to health benefits).

15.

SURVIVAL.  The respective rights and obligations of the parties hereunder, including, without limitation, Sections 7, 9, 10, 11, 12 and 13 hereof, shall survive the termination of the Executive’s employment to the extent necessary to the agreed preservation of such rights and obligations.

16.

NO ASSIGNMENTS.

(a)

This Agreement is personal to each of the parties hereto.  Except as provided in subsection (b) below, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto and any assignment in contravention of this Section 16(a) shall be void.

(b)

The Company shall 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 Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, the “Company” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(c)

This Agreement shall inure to the benefit of and be enforceable by the Executive and her personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to her hereunder had she continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to her estate.

17.

NOTICE.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered by hand, (ii) on the date of transmission, if delivered by

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confirmed facsimile, (iii) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (iv) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

At the address (or to the facsimile number) shown on the records of the Company

If to the Company:

The Phoenix Companies, Inc.
One American Row
Hartford, CT 06102
Attention:  General Counsel

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

18.

REPRESENTATIONS.

(a)

The Company represents and warrants that there is no legal or other impediment or limitation to the Company’s performance of its obligations.

(b)

The Executive represents and warrants to the Company that she has the legal right to enter into this Agreement and to perform all of the obligations on her part to be performed hereunder in accordance with its terms and that she is not a party to any agreement or understanding, written or oral, that could prevent her form entering into this Agreement or performing all of her obligations hereunder.

19.

MISCELLANEOUS.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed, in the case of a modification, by the Executive and the Company, and, in the case of a waiver or discharge, by the party that would have benefited from the provision waived or discharged.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other patty shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Except as otherwise expressly provided in Section 4(c), this Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein, and this Agreement shal l supersede any prior written agreement entered into between the parties with respect to the subject matter hereof (including, without limitation, the employment agreement dated January 1, 2003), other than the employment continuation agreement entered into between the Company and the Executive as of the date hereof.  Furthermore, without limiting the generality of the immediately preceding sentence, and except as otherwise expressly provided in Section 4(c), the Executive hereby for herself and for her heirs, executors, administrators, trustees, legal representatives and assigns, forever releases and discharges the Company and its past, present and future parent entities,

16

subsidiaries, divisions, affiliates and related business entities, successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, employees and assigns, whether acting on behalf of the Company or in their individual capacities from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which the Executive ever had, now has, or may have pursuant to the employment agreement dated January 1, 2003 and the Amended and Restated Employment Agreement dated May 18, 2005.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such state.  To the extent determined by the Board from time to time, decisions with respect to the Executive’s compensation (or otherwise with respect to the Executive) that this Agreement provides shall be made by the Board, may alternatively be made by a committee of the Board or by the outside and/or non-employee members of the Board.  The Company may withhold from all payments due to the Executive (or her beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.  To the extent obligations of the Company under this Agreement are fulfilled by a subsidiary of the Company, such obligations shall be treated as fulfilled by the Company.

20.

SECTION HEADINGS.  The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.

21.

CHANGE OF CONTROL AGREEMENT.  The Company agrees that it shall (i) take no action to revoke or modify the terms of the change of control agreement between the Executive and the Company, dated as of January 1, 2008 (as amended), in a manner that would be adverse to the Executive, unless the Executive otherwise consents in writing, and (ii) make available to the Executive any enhancements to the form of change of control agreement made available to any senior officer of the Company, on terms and conditions no less favorable to the Executive than are available to such other officers.  It is expressly agreed and understood that the Company shall not be in breach of the commitment set forth in the preceding sentence if the terms of any enhancement in the change of control benefits for any senior officer are conditioned upon and otherwise coupled with a reduction in benefits or other con cessions and the Executive is offered, but declines to accept, the enhancement on the terms offered.

22.

SECTION 409A.  

(a)

The intent of the parties is that payments and benefits under this Agreement comply with Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or to qualify for any available exemption therefrom.  If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Section 409A, the Company shall, after consulting with the Executive, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A.  To the extent that any provision

17

hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Section 409A.

(b)

Notwithstanding any provision to the contrary in this Agreement, because Executive is expected to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), with regard to any payment or the provision of any benefit that is specified as subject to this Section or is otherwise deferred compensation subject to the provisions of Section 409A that is payable on account of the Executive’s separation from service, such payment or benefit shall not be made or provided (subject to the last sentence of this Section 22(b)) prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” (as such term is defined under Section 409A), and (ii) the date of Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 22(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.  For purposes of this Agreement, to the extent that any compensation due hereunder is payable in installments, each such installment shall be deemed to be a separate payment, and to the extent that any provision under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.  Notwithstanding anything else contained herein to the contrary, (x) any amount of expenses eligible for reimbursement, or benefits to be provided, during Executive’s taxable year shall not affect the expenses eligible for reimbursement, or benefits to be provided, in any other of Executive’s taxable years; (y) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (z) the reimbursement of any eligible expense is made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

23.

SEVERABILITY.  The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

24.

COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instruments.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

THE PHOENIX COMPANIES, INC.
By:	/s/ BONNIE J. MALLEY
Title:	EVP HR

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/s/ DONA D. YOUNG

Dona D. Young

The undersigned hereby agrees that it is jointly and severally liable with the Company for the Company’s obligations under this Agreement to the extent permitted by applicable law.  To the extent obligations of the Company under this Agreement are fulfilled by the undersigned, such obligations shall be treated as fulfilled by the Company.

PHOENIX LIFE INSURANCE COMPANY
By:	/s/ BONNIE J. MALLEY
Title:	EVP HR

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ANNEX A

TERMS OF RESTRICTED STOCK UNITS

This Annex sets forth the terms of Restricted Stock Units to be awarded to you (your “Award”) under your Amended and Restated Employment Agreement, dated May 18, 2005  (the “Agreement”), with The Phoenix Companies, Inc. (the “Company”), as modified by the Second Amended and Restated Employment Agreement dated August __, 2007.

ARTICLE I
RESTRICTED STOCK UNITS

Section 1.1.

Restricted Stock Unit.  “Restricted Stock Unit” means the right to receive one share of common stock of the Company, par value $0.01 per share (“Common Shares”) subject to the terms of this Annex.  Under the Agreement, the Company is awarding you the greatest number of whole Restricted Stock Units that is equal to or less than the quotient of (i) $1,000,000 divided by (ii) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding May 18, 2005.  The date of your award is May 18, 2005 (the “Grant Date”).

Section 1.2.

Vesting.  Your Restricted Stock Units will vest on the earlier of (a) the conclusion of the three-year period commencing on the Grant Date, (b) the occurrence of a Change in Control (as defined in the Employment Continuation Agreement entered into between you and the Company, dated as of January 1, 2003, or any successor agreement thereto), (c) the termination of your employment as a result of your death or Disability (as defined in the Agreement) or (d) a termination of your employment by the Company without Cause or by you for Good Reason (as each such term is defined in the Agreement).  Any shares of Common Stock issuable in respect of your vested Restricted Stock Units shall be distributed to you at the time following your separation from service specified in Section 1.4.

Section 1.3.

Termination of Employment.  If your employment with the Company terminates for any reason and your Restricted Stock Units do not vest on or before the date of your termination in accordance with Section 1.2, your Restricted Stock Units shall be forfeited and you shall have no rights thereunder or hereunder.

Section 1.4.

Common Shares Issued Upon Separation from Service.  If your Restricted Stock Units vest pursuant to Section 1.2, the Common Shares that underlie your Restricted Stock Units shall be distributed to you upon your “separation from service” (as such term is defined under Section 409A of the Code); provided that if at the time of your “separation from service,” you are a “specified employee” (within the meaning of Section 409A of the Code), the Common Shares that underlie your Restricted Stock Units will be issued on the earlier of (a) six months and one day (or, if such day is not a business day, the next business day) after your “separation from service” with the Company or (b) the date of your death.  The period beginning on the Grant Date and ending on the date specified herein for distribution is referred to in this Annex as the “Restricted Period.&# 148;  No Common Shares will be issued at the time your Award is granted, and the Company will not be required to set aside a fund for the payment of your Award.

ARTICLE II
RIGHTS AND SETTLEMENT

Section 2.1.

Rights as a Shareholder.  Your Restricted Stock Units will not give you any right to vote on any matter submitted to the Company’s stockholders.  You will have voting rights with respect to the Common Shares that underlie your Restricted Stock Units only after the shares have actually been issued to you.

Section 2.2.

Restrictions on Transferability.  You will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber your Restricted Stock Units.  Any attempt to effect any of the preceding in violation of this Section 2.2, whether voluntary or involuntary, will be void.

Section 2.3.

Dividend Equivalents.  The Company will credit each of your Restricted Stock Units with Dividend Equivalents from the date your Award is granted to the end of the Restricted Period.  A “Dividend Equivalent” is, at the time the Company pays any cash dividend on its Common Shares, an amount equal to the cash dividend per Common Share multiplied by the number of Common Shares then underlying each Restricted Stock Unit.

Section 2.4.

Settlement of Your Restricted Stock Units.

(a)

Promptly after the end of the Restricted Period, the Company will deliver to you the number of Common Shares then underlying your vested Restricted Stock Units, together with any Dividend Equivalents credited to them, with interest on such Dividend Equivalents for each “Crediting Period” during the Restricted Period at the mid-term Applicable Federal Rate (as determined under Section 1274(d) of the Code, in effect on the first day of such Crediting Period.  A Crediting Period shall mean August 1 of one calendar year to July 31 of the subsequent calendar year (or, if earlier, the date on which final distribution is made hereunder in respect of the Restricted Stock Units), provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.  

(b)

For the purpose of assuring that you do not acquire beneficial ownership of any Common Shares within the meaning of Section 7312(w) of the New York Insurance Law, as in effect on the date of the demutualization that occurred on June 25, 2001 of Phoenix Home Life Mutual Insurance Company pursuant to a plan of reorganization approved by the New York State Superintendent of Insurance under Section 7312 of the New York Insurance Law (the “Demutualization”), notwithstanding anything in this Annex to the contrary, in no event will any Common Shares attributable to the Restricted Stock Units granted to you be issued before the fifth anniversary of the Demutualization.

Section 2.5.

Adjustment Due to Change in Capitalization.  If any Adjustment Event occurs from the date your Award is granted to the end of the Restricted Period, the number of Common Shares underlying each Restricted Stock Unit will be proportionately adjusted to reflect, as deemed equitable and appropriate by the Company, the Adjustment Event.  In any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each

2

Restricted Stock Unit shall pertain to the securities and other property to which a holder of the number of Common Shares underlying the Restricted Stock Unit would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, your Restricted Stock Units represent the right to receive cash in whole or in part (other than as a result of Dividend Equivalents), then the Company will promptly pay you such cash on the distribution date specified in Section 1.4..  An “Adjustment Event” means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

ARTICLE III
ADMINISTRATION

Section 3.1.

Administration.  The Company is authorized to reasonably interpret in good faith your Award and this Annex and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of your Award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company with respect to senior management under other similar equity compensation plans.  Determinations, interpretations or other actions made or taken by the Company pursuant to the provisions of this Annex shall be final, binding and conclusive for all purposes and upon all persons.  The Company may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel. &nbs p;Notwithstanding anything else contained in this Section 3.1 to the contrary, any determination made under the Agreement regarding whether your employment has been terminated by the Company with or without Cause or by you for Good Reason shall be dispositive for purposes of determining your rights in respect of your Award.

ARTICLE IV
MISCELLANEOUS

Section 4.1.

Payment on Death.  If any amounts are payable under your Award after you die, the Company will pay them to your estate.

Section 4.2.

Tax Withholding.  The Company will have the power to withhold, or require you to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to your Award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit you to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of your Award withheld by the Company or (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy your statutory minimum Federal, state and local tax obligation associated with the transaction.

3

Section 4.3.

Common Shares Subject to this Award.  The Common Shares to be delivered in connection with your Award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.

Section 4.4.

Successor.  The 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 Company, if your Restricted Stock Units remain outstanding, to unconditionally assume the obligations of the Company with respect to your Restricted Stock Units in writing and will provide a copy of the assumption to you.

Section 4.5.

Requirements of Law.  The granting of your Award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

Section 4.6.

No Impact on Benefits.  Your Award will not be compensation for purposes of calculating your rights under any employee benefit plan.

Section 4.7.

Instrument and Securities Law Compliance.  The Company shall have the authority to determine the instruments by which your Award shall be evidenced.  Instruments evidencing your Award may contain such other provisions, not inconsistent with this Annex, as the Company deems advisable.  In addition, any Common Shares issued in connection with your Award shall be registered with the SEC at the expense of the Company for resale on or before the first day on which you may transfer the shares under the Award (or such later date as yon request) unless such shares are eligible for sale by you pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of your counsel, which registration shall be in a form reasonably acceptable to you, shall be subject to your reasonable prior review and comments, shall remain effective until all Common Shares subject to the A ward have been sold (but need not be effective for more than 365 days after first day on which you may transfer the Common Shares subject to your Award or, if applicable, such later date as to which you shall have requested effectiveness) and the Company and you shall, prior to the effectiveness of the registration, enter into a customary registration rights agreement which will contain provisions, among other things, requiring the Company to indemnify you and any third persons reasonably requested by you in connection with the sale of any Common Shares and reimburse you for your reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of your death, or other permitted private transfer of the Common Shares, all of your rights in this Section 4.7 shall be transferred to your estate or other transferee.

Section 4.8.

Disputes.  This Annex and your Award are subject to the provisions of Section 11 of the Agreement:

Section 4.9.

Governing Law.  The validity, interpretation, construction and performance of this Annex and your Award shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.

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ANNEX B

TERMS OF PERFORMANCE BASED RESTRICTED STOCK UNITS

This Annex sets forth the terms of Performance Based Restricted Stock Units to be awarded to you (your “Award”) under your Amended and Restated Employment Agreement, dated May 18, 2005 (the “Agreement”) with The Phoenix Companies, Inc. (the “Company”).

ARTICLE I
PERFORMANCE BASED RSUS

Section 1.1.

Performance Based RSUs.  “Performance Based RSU” means the right to receive one share of common stock of the Company, par value $0.01 per share (“Common Shares”) subject to the terms of this Annex.  Under the Agreement, the Company is awarding you the greatest number of whole Performance Based RSUs that is equal to or less than the quotient of (i) $500,000 divided by (ii) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding May 18, 2005.  The date of your award is May 18, 2005 (the “Grant Date”).  To the extent that the Performance Based RSUs shall not have become vested on or before December 31, 2007 as provided in Section 1.2 of this Annex, such Performance Based RSUs shall be forfeited as of that date and you shall no further rights th ereunder or hereunder; it being understood, however, that the actual determination as to whether such Performance Based RSUs shall vest on December 31, 2007 pursuant to Section 1.2 (a) will not be made until sometime in the first quarter of 2008 and that such determination shall be given effect as of December 31, 2007 for purposes of this Article I of this Agreement.

Section 1.2.

Vesting.   The Performance Based RSUs awarded hereby shall vest on December 31, 2007 to the extent that the performance criteria applicable for the three-year period 2005-2007 with respect to performance share awards made to other employees of the Company on January 1, 2005 (the “2007 PSUs”) have been achieved, with the number of your Performance Based RSUs that shall vest based on such performance to be determined as provided in the next sentence.  If the applicable performance criteria have been achieved (i) at a level that enables payment in respect of such 2007 PSUs at or above target levels, the Performance Based RSUs shall vest in full, (ii) at threshold, one-half of the Performance Based RSUs shall vest or (iii) at a level above threshold, but below target, the number of Performance Based RSUs that shall vest  shall be determined based on the actual performance achiev ed, using calculated pro rata between threshold and target levels (e.g., if the actual performance is mid-way between the threshold level and the target level of performance, 75% of the Performance Based RSUs shall vest).  Your Performance Based RSUs will also vest in full on  the occurrence on or before December 31, 2007 of  (i) a Change in Control (as defined in the Employment Continuation Agreement entered into between you and the Company, dated as of January 1, 2003, or any successor agreement thereto) or (ii) the termination of your employment (a) as a result of your death or Disability, (b) by the Company without Cause or (c) by you for Good Reason (as each such term is defined in the Agreement).  Any shares of Common Stock issuable in respect of your vested Performance Based RSUs shall be distributed to you at the time following your separation from service specified in Section 1.4.  

Section 1.3.

Termination of Employment.  If your employment with the Company terminates for any reason and your Performance Based RSUs do not vest on or before the date of your termination in accordance with Section 1.2, your Performance Based RSUs shall be forfeited and you shall have no rights thereunder or hereunder.

Section 1.4.

Common Shares Issued Upon Separation from Service.  If your Performance Based RSUs vest pursuant to Section 1.2, the Common Shares that underlie your Performance Based RSUs shall be distributed to you upon your “separation from service” (as such term is defined under Section 409A of the Code); provided that if at the time of your “separation from service,” you are a “specified employee” (within the meaning of Section 409A of the Code), the Common Shares that underlie your Performance Based RSUs will be issued on the earlier of (a) six months and one day (or, if such day is not a business day, the next business day) after your “separation from service” with the Company or (b) the date of your death.  The period beginning on the Grant Date and ending on the date specified herein for distribution is referred to in this Annex as the “Restricted Period.&# 148;  No Common Shares will be issued at the time your Award is granted, and the Company will not be required to set aside a fund for the payment of your Award.

ARTICLE II
RIGHTS AND SETTLEMENT

Section 2.1.

Rights as a Shareholder.  Your Performance Based RSUs will not give you any right to vote on any matter submitted to the Company’s stockholders.  You will have voting rights with respect to the Common Shares that underlie your Performance Based RSUs only after the shares have actually been issued to you.

Section 2.2.

Restrictions on Transferability.  You will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber your Performance Based RSUs.  Any attempt to effect any of the preceding in violation of this Section 2.2, whether voluntary or involuntary, will be void.

Section 2.3.

Dividend Equivalents.  The Company will credit each of your Performance Based RSUs with Dividend Equivalents from the date your Award is granted to the end of the Restricted Period.  A “Dividend Equivalent” is, at the time the Company pays any cash dividend on its Common Shares, an amount equal to the cash dividend per Common Share multiplied by the number of Common Shares then underlying each Performance Stock Unit.

Section 2.4.

Settlement of Your Performance Based RSUs.

(a)

Promptly after the end of the Restricted Period, the Company will deliver to you the number of Common Shares then underlying your vested Performance Based RSUs, together with any Dividend Equivalents credited to them, with interest on such Dividend Equivalents for each “Crediting Period” during the Restricted Period at the mid-term Applicable Federal Rate (as determined under Section 1274(d) of the Code), in effect on the first day of such Crediting Period.  A Crediting Period shall mean August 1 of one calendar year to July 31 of the subsequent calendar year (or, if earlier, the date of on which final distribution is made hereunder in respect of the Performance Based

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RSUs), provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.

(b)

For the purpose of assuring that you do not acquire beneficial ownership of any Common Shares within the meaning of Section 7312(w) of the New York Insurance Law, as in effect on the date of the demutualization that occurred on June 25, 2001 of Phoenix Home Life Mutual Insurance Company pursuant to a plan of reorganization approved by the New York State Superintendent of Insurance under Section 7312 of the New York Insurance Law (the “Demutualization”), notwithstanding anything in this Annex to the contrary, in no event will any Common Shares attributable to the Performance Based RSUs granted to you be issued before the fifth anniversary of the Demutualization.

Section 2.5.

Adjustment Due to Change in Capitalization.  If any Adjustment Event occurs from the date your Award is granted to the end of the Restricted Period, the number of Common Shares underlying each Performance Stock Unit will be proportionately adjusted to reflect, as deemed equitable and appropriate by the Company, the Adjustment Event.  In any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each Performance Stock Unit shall pertain to the securities and other property to which a holder of the number of Common Shares underlying the Performance Stock Unit would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, your Performance Based RSUs represent the right to receive cash in whole or in part (other than as a result of Dividend Equivalents), then the Company will promptly pay you such cash on the distribution date specified in Section 1.4.  An “Adjustment Event” means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

ARTICLE III
ADMINISTRATION

Section 3.1.

Administration.  The Company is authorized to reasonably interpret in good faith your Award and this Annex and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of your Award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company with respect to senior management under other similar equity compensation plans.  Determinations, interpretations or other actions made or taken by the Company pursuant to the provisions of this Annex shall be final, binding and conclusive for all purposes and upon all persons.  The Company may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel. &nbs p;Notwithstanding anything else contained in this Section 3.1 to the contrary, any determination made under the Agreement regarding whether your employment has been terminated by the Company with or without Cause or by you for Good Reason shall be dispositive for purposes of determining your rights in respect of your Award.

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ARTICLE IV
MISCELLANEOUS

Section 4.1.

Payment on Death.  If any amounts are payable under your Award after you die, the Company will pay them to your estate.

Section 4.2.

Tax Withholding.  The Company will have the power to withhold, or require you to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to your Award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit you to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of your Award withheld by the Company or (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy your statutory minimum Federal, state and local tax obligation associated with the transaction.

Section 4.3.

Common Shares Subject to this Award.  The Common Shares to be delivered in connection with your Award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.

Section 4.4.

Successor.  The 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 Company, if your Performance Based RSUs remain outstanding, to unconditionally assume the obligations of the Company with respect to your Performance Based RSUs in writing and will provide a copy of the assumption to you.

Section 4.5.

Requirements of Law.  The granting of your Award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

Section 4.6.

No Impact on Benefits.  Your Award will not be compensation for purposes of calculating your rights under any employee benefit plan.

Section 4.7.

Instrument and Securities Law Compliance.  The Company shall have the authority to determine the instruments by which your Award shall be evidenced.  Instruments evidencing your Award may contain such other provisions, not inconsistent with this Annex, as the Company deems advisable.  In addition, any Common Shares issued in connection with your Award shall be registered with the SEC at the expense of the Company for resale on or before the first day on which you may transfer the shares under the Award (or such later date as yon request) unless such shares are eligible for sale by you pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of your counsel, which registration shall be in a form reasonably acceptable to you, shall be subject to your reasonable prior review and comments, shall remain effective until all Common Shares subject to the A ward have been sold (but need not be effective for more than 365 days after first day on which you may transfer the Common Shares subject to your Award or, if applicable, such later date as to which you shall have requested effectiveness) and the Company and you shall, prior to the effectiveness of the

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registration, enter into a customary registration rights agreement which will contain provisions, among other things, requiring the Company to indemnify you and any third persons reasonably requested by you in connection with the sale of any Common Shares and reimburse you for your reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of your death, or other permitted private transfer of the Common Shares, all of your rights in this Section 4.7 shall be transferred to your estate or other transferee.

Section 4.8.

Disputes.  This Annex and your Award are subject to the provisions of Section 11 of the Agreement:

Section 4.9.

Governing Law.  The validity, interpretation, construction and performance of this Annex and your Award shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.

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ANNEX C

AGREEMENT AND GENERAL RELEASE

Agreement and General Release (“Agreement”), by and between Dona D. Young (“Employee” or “you”) and The Phoenix Companies, Inc. (the “Company”).

1.

As soon as practicable following the Effective Date of this Agreement and in exchange for your waiver of claims against the Company Entities (as defined below) and compliance with other terms and conditions of this Agreement, the Company agrees to provide you with the payments and benefits provided in Section 7 of your Third Amended and Restated Employment Agreement with the Company, dated August __, 2007 (the “Employment Agreement”).

2.

(a)

In consideration for the payments and benefits to be provided to you pursuant to paragraph 1 above, you, for yourself and for your heirs, executors, administrators, trustees, legal representatives and assigns (hereinafter referred to collectively as “Releasors”), forever release and discharge the Company and its past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, employees and assigns, whether acting on behalf of the Company or in their individual capacities (collectively the “Company Entities”) from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which you ever had, now hav e, or may have against any of the Company Entities by reason of any act, omission, transaction, practice, plan; policy, procedure, conduct, occurrence, or other matter related to your employment by (including, but not limited to, termination thereof) the Company Entities up to and including the date on which.  you sign this Agreement, except as provided in subsection (c) below.

(b)

Without limiting the generality of the foregoing, this Agreement is intended to and shall release the Company Entities from any and all claims, whether known or unknown, which Releasors ever had, now have, or may have against the Companies Entities arising out of your employment or termination thereof, including, but not limited to:  (i) any claim under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974 (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Company Entities subject to the terms and conditions of such plan and applicable law), and the Family and Medical Leave Act; (ii) any claim under the Connecticut Human Rights Law, the Connecticut Discriminatory Employment Practices Act and the Connecticut Family Medical Leave Law and Rules; ( iii) any other claim (whether based on federal, state, or local law, statutory or decisional) relating to or arising out of your employment, the terms and conditions of such employment, the termination of such employment, including, but not limited to, breach of contract (express or implied), wrongful discharge, detrimental reliance, defamation, emotional distress or compensatory or punitive damages; and (iv) any claim for attorneys’ fees, costs, disbursements and/or the like.

(c)

Notwithstanding the foregoing, nothing in this Agreement shall be a waiver of claims:  (1) that may arise after the date on which you sign this Agreement; (2) with respect to your right to enforce your rights that survive termination under the Employment Agreement or any other written agreement entered into between you and the Company (including, any equity grants or agreements); (3) regarding rights of indemnification, receipt of legal fees and directors and officers liability insurance to which you are entitled to under the Employment Agreement, Company’s Certificate of Incorporation, By-laws or otherwise with regard to your service with the Company, (4) relating to any benefit or perquisites under any plan or program of the Company, including, without limitation, any amounts that may become due to you under any employment continuation agreement or other change-in-control arrangement; or (5 ) as a stockholder of the Company.

3.

(a)

This Agreement is not intended, and shall not be construed, as an admission that any of the Company Entities has violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever against you.

(b)

Should any provision of this Agreement require interpretation or construction, it is agreed by the parties that the entity interpreting or constructing this Agreement shall not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document.

4.

This Agreement is binding upon, and shall inure to the benefit of, the parties and their respective heirs, executors, administrators, successors and assigns.

5.

This Agreement shall be construed and enforced in accordance with the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.

6.

You acknowledge that you:  (a) have carefully read this Agreement in its entirety; (b) have had an opportunity to consider for at least twenty-one (21) days the terms of this Agreement; (c) are hereby advised by the Company in writing to consult with an attorney of your choice in connection with this Agreement; (d) fully understand the significance of all of the terms and conditions of this Agreement and have discussed them with your independent legal counsel, or have had a reasonable opportunity to do so; (e) have had answered to your satisfaction by your independent legal counsel any questions you have asked with regard to the meaning and significance of any of the provisions of this Agreement; and (f) are signing this Agreement voluntarily and of your own free will and agree to abide by all the terms and conditions contained herein.

7.

You understand that you will have at least twenty-one (21) days from the date of receipt of this Agreement to consider the terms and conditions of this Agreement.  You may accept this Agreement by signing it and returning it to the Company’s General.  Counsel at One American Row, Hartford, CT 06102 on or before.  After executing this Agreement, you shall have seven (7) days (the “Revocation Period”) to revoke this Agreement by indicating your desire to do so in writing delivered to the General Counsel at the address above by no later than 5:00 p.m. on the seventh (7th) day after the date you sign this Agreement.  The effective date of

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this Agreement shall be the eighth (8th) day after you sign the Agreement (the “Effective Date”).  If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next business day.  In the event you do not accept this Agreement as set forth above, or in the event you revoke this Agreement during the Revocation Period, this Agreement, including but not limited to the obligation of the Company to provide the payments and benefits provided in paragraph 1 above, shall be deemed automatically null and void.

Print Name:   Dona D. Young		Date:
Signature:
Employee
The Phoenix Companies, Inc.
By:
	Name:
	Title:

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EX-10.28

EXHIBIT 10.28

AMENDED AND RESTATED EMPLOYMENT CONTINUATION AGREEMENT

This Amended and Restated Employment Continuation Agreement (this “Agreement”) is dated January 1, 2008 (the “Restatement Date”), and is between The Phoenix Companies, Inc., a Delaware corporation (the “Company”), and Dona D. Young (the “Executive”).

WITNESSETH

WHEREAS, Executive and the Company entered into an employment continuation agreement dated January 1, 2003 which, following the conclusion of the initial term and two successive one-year renewal periods provided thereunder, expires on January 1, 2008;

WHEREAS, the Company or one of its Affiliates (as defined below) has employed the Executive in an officer position and has determined that the Executive holds a critical position with the Company and/or such Affiliate;

WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of its shareholders;

WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to the Executive’s financial and job security. The Company desires to assure the Company and its Affiliates of the Executive’s services during the period in which it is confronting such a situation, and to provide the Executive certain financial assurances to enable the Executive to perform the responsibilities of the Executive’s position without undue distraction and to exercise the Executive’s judgment without bias due to the Executive’s personal circumstances. To achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and its Affiliates and the Executive with certain rights and obligations upon the occurrence of a Change of Control; and

WHEREAS, the Company and Executive desire to amend and restate the employment continuation agreement dated January 1, 2003 to extend the term of such agreement for an additional period, to reflect changes required by Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and to make other changes as provided in this Agreement.

NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

1. Operation of Agreement.

(a) Term. The initial term of this Agreement shall commence on the Restatement Date and continue until December 31, 2009. Thereafter, the term of this Agreement will automatically renew for successive one-year terms, unless the Company or the Executive gives the other party written notice at least 12 months prior to the date the term would otherwise renew that it or the Executive does not want the term to be so extended; provided that the Company may not deliver a notice of nonrenewal after a Change of Control (as defined in below). Notwithstanding anything to the contrary in this Agreement, the term of this Agreement shall in all events expire (regardless of when the term would otherwise have expired) on the second anniversary of a Change of Control; provided that any payment obligations hereunder resulting from the Executive’s termination of employment prior to the expiration of the term or from an event covered under Section 7(e) shall continue in full force and effect following the expiration of the term.

(b) Effective Date. If a Change of Control occurs during the term of this Agreement, this Agreement shall govern the terms and conditions of the Executive’s employment and the benefits and compensation to be provided to the Executive commencing on the date on which a Change of Control occurs (the “Effective Date”) and ending on the second anniversary of the Effective Date; provided that if the Executive is not employed by the Company or one of its Affiliates on the Effective Date, this Agreement shall be void and without effect, shall not constitute a contract of employment or a guarantee of employment for any period of time, and shall not limit in any way the right of the Company or its Affiliates to change the terms and conditions of the Executive’s employment or to terminate the Executive’s employment.  Notwithstanding the preceding sentence, but s ubject to Section 13(b), in the event that the Executive’s employment with the Company and its Affiliates is terminated in connection with a Change of Control (which shall in all events be deemed the case if such termination is within 90 days prior to the Effective Date and deemed not to be the case if such termination is more than 180 days before the Effective Date) without Cause or for Good Reason (as such terms are defined in Sections 6(c) and 6(d) below, but without regard to the requirement under Section 6(d) that such termination occur after the Effective Date), the Executive shall be entitled to receive (x) the benefits provided under Section 7(c) (which shall be in lieu of any severance benefits that would otherwise have been provided under her Employment Agreement on account of such termination) and (y) any amounts due under Section 7(e).

2. Definitions.

(a) Affiliate. An “Affiliate” shall mean any corporation, partnership, limited liability company, trust or other entity which directly, or indirectly through one or more intermediaries, controls, is under common control with, or is controlled by, the Company.

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(b) Change of Control. For the purposes of this Agreement, a “Change of Control” shall mean the first occurrence of:

(i) any Person acquires “beneficial ownership” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of securities of the Company representing 25% or more of the combined Voting Power of the Company’s securities;

(ii) within any 24-month period, the persons who were directors of the Company at the beginning of such period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors of the Company (the “Board”) or  the board of directors of any successor to the Company; provided that any director elected or nominated for election to the Board by a majority of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this subclause 2(b)(ii);

(iii) the effective date of any merger, consolidation, share exchange, division, sale or other disposition of all or substantially all of the assets of the Company which is consummated (a “Corporate Event”), if immediately following the consummation of such Corporate Event the stockholders of the Company immediately prior to such Corporate Event do not hold, directly or indirectly, a majority of the Voting Power, in substantially the same proportion as prior to such Corporate Event, of (x) in the case of a merger or consolidation, the surviving or resulting corporation or (y) in the case of a division or a sale or other disposition of assets, each surviving, resulting or acquiring corporation which, immediately following the relevant Corporate Event, holds more than 25% of the consolidated assets of the Company immediately prior to such Corp orate Event;

(iv) the approval by stockholders of the Company of a plan of liquidation with respect to the Company; or

(v) any other event occurs which the Board declares to be a Change of Control.

(c) Person. For purposes of the definition of Change of Control, “Person” shall have the same meaning ascribed to such term in Section 3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act, and shall include any group (within the meaning of Rule 13d-5(b) under the Exchange Act); provided that “Person” shall not include (i) the Company or any of its Affiliates, or (ii) any employee benefit plan (including an employee stock ownership plan) sponsored by the Company or any of its Affiliates.

(d) Voting Power. “Voting Power” shall mean such number of Voting Securities as shall enable the holders thereof to cast all the votes which could be cast in an annual election of directors of a company, and “Voting Securities” shall mean all securities entitling the holders thereof to vote in an annual election of directors of a company.

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3. Employment Period. The period during which the Executive remains employed with the Company or any Affiliate following the Effective Date through the expiration of the term of this Agreement shall be referred to herein as the “Employment Period.”

4. Business Time. During the Employment Period, the Executive shall devote substantially Executive’s full business time and efforts to the performance of Executive’s duties on behalf of the Company, except for (i) time spent in managing the Executive’s personal, financial and legal affairs and serving on corporate, civic or charitable boards or committees, in each case only if and to the extent not substantially interfering with the performance of such responsibilities, and (ii) periods of vacation and sick leave to which the Executive is entitled. It is expressly understood and agreed that the Executive’s continuing to serve on any boards and committees on which the Executive is serving or with which the Executive is otherwise associated immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive’s services to the Company an d its Affiliates. Moreover, so long as the following activities do not (individually or in the aggregate) materially interfere with the performance of the Executive’s duties with the Company and are conducted in compliance with the Company’s Code of Conduct (as in effect from time to time), the Executive may (i) participate in charitable, civic, educational, professional, community or industry affairs or serve on the boards of directors or advisory boards of other companies; provided, however, that the Executive shall not serve as a director on more than three (3) boards of directors or advisory boards of other for-profit companies (in addition to those described in the preceding sentence) without the prior written approval of the Board, and (ii) manage her and her family’s personal investments.

5. Compensation.

(a) Base Salary. During the Employment Period, the Executive shall receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive immediately prior to the Effective Date. The base salary may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof, the board of directors of any Affiliate or any committee thereof in the event the Executive is employed by an Affiliate, and any individual having authority to take such action in accordance with the Company’s or any Affiliate’s regular practices. The Executive’s base salary, as it may be increased from time to time, shall hereafter be referred to as the “Base Salary.”

(b) Total Compensation. During the Employment Period, the total compensation opportunities made available to the Executive in such year in the form of short-term incentive compensation and long-term incentive compensation (“Total Compensation”) shall not be less than the Total Compensation made available to the Executive immediately prior to the Effective Date. For purposes of this Section 5(b), the amount of Total Compensation made available to the Executive, whether prior to or after a Change of Control, shall be conclusively determined by an independent compensation consultant

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selected by the Company prior to the occurrence of a Change of Control (or, if that entity is no longer able to serve or declines to serve in such capacity, such other independent compensation consultant that has no existing client relationship with the Company and its Affiliates as shall be selected by the designated consultant and reasonably acceptable to the Board (either such consultant hereinafter referred to as the “Compensation Consultant”)), using methods of valuation and comparison commonly used in competitive compensation practices, which shall be consistently applied. The Company shall provide the Compensation Consultant with any and all data that the consultant shall reasonably request in order to make its evaluations hereunder.

6. Termination.

(a) Death, Disability or Retirement. This Agreement shall terminate automatically upon the Executive’s death, termination due to “Disability” (as defined below), or voluntary retirement (other than for Good Reason, as defined below) under any of the retirement plans of the Company or its Affiliates applicable to the Executive as in effect from time to time. For purposes of this Agreement, “Disability” shall mean either (i) the Executive’s inability to perform his or her material duties for six consecutive months due to a physical or mental incapacity or (ii) any time earlier than the date specified in subclause (i) as of which the Executive shall have incurred a separation from service within the meaning of Section 409A of the Code and the regulations thereunder due to a physical or mental impairment.

(b) Voluntary Termination. Notwithstanding anything in this Agreement to the contrary, the Executive may voluntarily terminate employment for any reason (including early retirement pursuant to any retirement plan of the Company or any of its Affiliates as in effect from time to time and applicable to the Executive), upon not less than 60 days’ written notice (or such lesser period of notice as the Company shall specify) to the Company or the entity employing the Executive, as applicable; provided that any termination by the Executive pursuant to Section 6(d) hereof on account of Good Reason (as defined below) shall not be treated as a voluntary termination under this Section 6(b).

(c) Cause. The Company and each of its Affiliates that employs the Executive may terminate the Executive’s employment for Cause. For purposes of this Agreement, “Cause” means (i) the Executive’s conviction or plea of nolo contendere to a felony (other than with respect to a traffic violation or an incident of vicarious liability); (ii) an act of willful misconduct (including, without limitation, a willful material violation of the Company’s Code of Conduct) on Executive’s part with regard to the Company or its Affiliates having a material adverse impact on the Company or its Affiliates, and (iii) the Executive’s failure in good faith to attempt or refusal to perform legal directives of the Board or executive officers of the Company, as applicable, which directives are consistent with the scope and nature of the Executive’s employment duties and responsibilities and which failure or refusal is not remedied by the Executive within thirty (30) days after notice of such non-performance is given to the Executive. The Executive

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shall be provided an opportunity, together with his or her counsel, to be heard before the Board prior to termination and after such notice. If the majority of the members of the Board do not confirm, through a duly-adopted resolution following such opportunity, that the Company had grounds for a “Cause” termination, the Executive shall have the option to treat his or her employment as not having terminated or as having been terminated pursuant to a termination without Cause. No event shall constitute grounds for a “Cause” termination in the event that the Company fails to take action within 90 days after the Company’s Chairman or the Chairman of the Company’s Audit Committee obtains knowledge of the occurrence of such event. Additionally, for purposes of clause (ii) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willfu l” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and its subsidiaries.

(d) Good Reason. After the Effective Date, the Executive may resign from employment at any time for Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence after the Effective Date of any of the following, without the express written consent of the Executive:

(i) the assignment to the Executive of duties inconsistent with the Executive’s position or any reduction in the Executive’s title or any material reduction in the Executive’s position, duties or responsibilities from the title, position, duties or responsibilities held or exercised by the Executive prior to the Effective Date;

(ii) any requirement that the Executive change the location where the Executive regularly provides services to the Company outside of the Hartford, Connecticut metropolitan area (i.e., the area within a thirty five (35) mile radius of downtown Hartford);

(iii) a reduction by the Company of the Executive’s Base Salary or Total Compensation opportunity or a reduction in the employee benefits provided to the Executive under the Company’s employee benefit plans (unless the Executive is provided with substantially equivalent replacement benefits);

(iv) any termination of employment by the Executive within the 30 day period following the first anniversary of the Effective Date;

(v) any failure to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 12(b); or

(vi) any other Good Reason (or similar) provision contained in any other employment or severance arrangement in effect between the Company and the Executive.

(e) Notice of Termination. Any termination by the Company and/or its Affiliates for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 13(e). For purposes of this Agreement, a “Notice of Termination” means a written notice given,

6

(i) in the case of a termination for Cause, within 10 business days of the Company and any Affiliate that employs the Executive having actual knowledge of the events giving rise to such termination, or (ii) in the case of a termination for Good Reason, within 10 business days of the Executive’s having actual knowledge of the events giving rise to such termination. Any such Notice of Termination shall (x) indicate the specific termination provision in this Agreement relied upon, (y) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (z) if the termination date is other than the date of receipt of such notice, specify the termination date of this Agreement (which date shall be not more than 15 days after the giving of su ch notice).

(f) Date of Termination. For the purpose of this Agreement, the term “Date of Termination” means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive’s employment terminates during the Employment Period.

7. Obligations of the Company or an Affiliate upon Termination.

(a) Death or Disability. If the Executive’s employment is terminated during the Employment Period by reason of the Executive’s death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company or the Affiliate that employs the Executive shall pay to the Executive (or the Executive’s beneficiary or estate), at the times determined below (i) the Executive’s full Base Salary through the Date of Termination (the “Earned Salary”), (ii) any vested amounts or benefits owing to the Executive under or in accordance with the terms and conditions of any otherwise applicable employee benefit plans, agreements and programs and any accrued vacation pay not yet pai d (the “Accrued Obligations”), and (iii) any other benefits payable in such situation under the plans, agreements, policies or programs of the Company and its Affiliates and in accordance with the terms of such plans, policies and programs (the “Additional Benefits”).

Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement.

(b) Cause and Voluntary Termination. If, during the Employment Period, the Executive’s employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason), the Company or the Affiliate that employs the Executive shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier date required by law), following the Date of Termination, and (ii) the Accrued

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Obligations and Additional Benefits in accordance with the terms of the applicable plan, program or arrangement.

(c) Termination by the Company or the Affiliate that employs the Executive other than for Cause and Termination by the Executive for Good Reason. If, during the Employment Period, the Company or the Affiliate that employs the Executive terminates the Executive’s employment other than for Cause or the Executive terminates his or her employment for Good Reason:

(i) Pension Service Credit and Payment. The Executive’s accrued benefit under any nonqualified defined benefit type pension plan or arrangement of the Company, including, without limitation, the Employee Pension Plan or any successor plan and/or the Supplemental Executive Retirement Plan or any successor plan (all such plans, the “Pension Plans”) shall, to the extent not previously vested, be deemed vested as of the Date of Termination.  In addition, subject to Section 13(b), the Company shall pay to the Executive an amount equal to the lump sum value (based on the actuarial assumptions used under the respective plan) of three years of additional service and age credit for pension purposes under the Pension Plans (with the Base Salary used as the salary component of “final average earnings” for purposes of this calculation), which pa yments shall be made at the same time as the payments referenced in subclause (ii) below.

(ii) Additional Lump Sum Payments. In lieu of (and not in addition to) any severance benefits payable to the Executive under any other plan, policy or program of the Company or any Affiliate (each, a “Severance Policy”) or under any agreement, whether written or oral, between the Executive and the Company (each, a “Prior Agreement”), the Company shall pay to the Executive (or cause the Executive to be paid), at the times determined below, the following amounts:

(A) the Executive’s Earned Salary;

(B) a cash amount (the “Severance Amount”) equal to three times the sum of (x) the Executive’s annual rate of Base Salary as then in effect and (y) the target applicable to the Executive under the PIP for the year in which the Executive’s employment terminates; and

(C) the Accrued Obligations and Additional Benefits.

The Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier date required by law), following the Date of Termination. Subject to Section 13(b), the Severance Amount shall be paid in a single lump sum as soon as practicable (but in no event more than 60 days) following the Date of Termination. The Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement.  

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(iii)  Continuation of Benefits. The Executive (and, to the extent applicable, the Executive’s dependents) shall be entitled, after the Date of Termination until the third anniversary of the Date of Termination (the “End Date”), to continue participation in all of the employee and executive plans providing medical, dental and long-term disability benefits that the Executive participated in prior to the Date of Termination, other than supplemental long-term disability policies, (collectively, the “Continuing Benefit Plans”); provided that coverage (with regard to medical and dental benefits for the period after the end of the eighteen (18)-month period following the Date of Termination) shall be deemed to be monthly, in-kind payments of the premiums and will be taxable income to the Exe cutive; and provided further that the participation by the Executive (and, to the extent applicable, the Executive’s dependents) in any Continuing Benefit Plan shall cease on the date, if any, prior to the End Date on which the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer (“Prior Date”). In addition to the foregoing, for the period after the Date of Termination until the End Date, the Company shall reimburse the Executive for the purchase of long-term disability insurance prior to the end of each calendar year during such period in an amount not to exceed $50,000 per calendar year, upon presentation by the Executive of receipts therefor prior to the end of the calendar year in which such expense is incurred by the Executive. The Executive’s participation in the Continuing Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company or the Affiliate that employs the Executive through the End Date or the Prior Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide (or shall cause to be provided) a comparable benefit under another plan. To the extent any medical or dental plan is a “self-insured medical reimbursement plan” under Section 105(h) of the Code and such coverage would be discriminatory thereunder, the premiums (both during and after the eighteen (18)-month period) shall be taxable income to the Executive and the Company shall pay the Executive promptly (and in all events within 30 days) after the provision of such benefits additional cash payments to the extent necessary for the Executive to receive the same net after-tax benefits that the Executive would have received under such plans if the Executive had continued to receive such plan benefits while employed with the Company; provided that any su ch additional cash payment that would be paid within the Delay Period (as defined in Section 13 hereof) shall not be paid during such period, but shall be paid immediately thereafter.

(iv) Deemed Vesting for Certain Benefits. The Executive shall be deemed to have met all service and other requirements for full vesting of benefits under all stock option or other stock or equity compensation plans of the Company in which the Executive participates and the stock options held by the Executive shall remain exercisable for the lesser of two years or the duration of their normal terms.

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(v) Pro-Rata Payment of PIP and Long-Term Incentive Plan. The Company shall pay to the Executive a cash amount equal to a pro rata portion of (i) the higher of the Executive’s target or actually earned annual incentive award under the PIP for the fiscal year in which the Executive’s Date of Termination occurs and (ii) any awards made to the Executive under the Company’s long-term incentive plan (or any successor plan) determined as if the targets applicable to such awards were achieved. The amount payable in respect of the PIP in accordance with the immediately preceding sentence shall be payable as of the date as of which PIP awards are payable to other executives (but in no event later than the March 15 following the end of the applicable performance period), provided, however, that the excess, if any, of the amount payable on the basis of target over the amount, if any, payable on the basis of actual performance shall not be paid earlier than six (6) months following the Executive’s Date of Termination.  The amount payable in respect of any long-term awards shall be payable as of the date as of which awards are payable in accordance with their terms (but not later than March 15 in the calendar year following the end of the applicable performance period), provided, however, that the excess, if any, of the amount payable in respect of any such award on the basis of target over the amount, if any, payable on the basis of actual performance shall not be paid earlier than six (6) months following the Executive’s Date of Termination.  The pro-rata portion of each award shall be determined by multiplying the value of the award (i.e., in the case of the PIP, the higher of (x) the amount actually earned and (y) the target amount, and in the case of the long term incentive awards, the target amounts) times a fraction, the numerator of which is the number of days during the performance period applicable to each such award prior to the Date of Termination and the denominator of which is the number of days in the performance period applicable to each such award.  Notwithstanding the foregoing, any amount payable under this subparagraph in respect of the annual incentive award or in respect of any long-term incentive plan shall be inclusive of the amounts, if any, otherwise payable to the Executive under the PIP and long-term incentive plans for the year in which the Date of Termination occurs.

(vi) Savings and Investment Plans. If and to the extent the Executive is a participant in the Savings and Investment Plans or any successor plan thereto (“SIP”) and/or the Excess Investment Plan or any successor plan thereto (“EIP”), subject to Section 13(b), the Company shall pay the Executive, as soon as practicable (but not more than 30 days) after the Executive’s Date of Termination, a lump sum amount equal to the amount that the Company would have contributed to the SIP or credited to the EIP, over the three years following the Executive’s Date of Termination assuming that the Executive were contributing to each such plan during such period at the rate in effect immediately prior to the Date of Termination (or, if greater, at the rate in effect immediately prior to the Change of Control).

(vii) Outplacement, Office and Secretarial Support. The Company shall provide the Executive with outplacement services at a level commensurate with the

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Executive’s position for up to two (2) years after such termination of employment. For a period of six (6) months after the Executive’s termination, the Company shall make available to the Executive office space and secretarial support at a level commensurate with the Executive’s position. The Executive shall pay to the Company the cost of such space and support on a monthly basis. The Company, at the end of the six month period shall promptly (and in all events within 30 days thereafter) reimburse the Executive for the amounts so paid.

(d) Discharge of the Company’s and its Affiliates’ Obligations. Except as expressly provided in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of the Executive’s employment shall be in full and complete satisfaction of the Executive’s rights under this Agreement and any other claims the Executive may have in respect of the Executive’s employment by the Company and its Affiliates. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive’s receipt of such amounts, the Company and its Affiliates shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive’s employment by the Company and its Affiliates. Notwithstanding the foregoing, (i) the Executive shall retain all rights with respect to the Company’s continuing obligations to indemnify the Executive as a former officer or director of the Company or its Affiliates, and to provide directors and officers liability insurance, to the fullest extent permitted under the Company’s certificate of incorporation and by-laws or any other arrangement, and (ii) to the extent the Executive is entitled to greater rights with respect to any category of severance payments or benefits in any similar situation under any other arrangement with the Company, the Executive shall be entitled to such greater rights.

(e) Modification of Payments by the Company and its Affiliates.

(i) Application of Section 7(e). In the event that any amount or benefit paid or distributed to, or on behalf of, the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to, or on behalf of, the Executive by the Company, its Affiliates and their successors, including any acquiror of the Company or its Affiliates (or any person or entity required to be aggregated with the Company or its Affiliates for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)) under any other plan, agreement, or arrangement (collectively, the “Covered Payments”), would be an “excess parachute payment” as defined in Section 280G of the Code, and would thereby subject the Executive to the tax (the “Excise Tax”) imposed under Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall pay (or cause to be paid) to the Executive at the time specified in Section 7(e)(iv) below an additional amount (the “Tax Reimbursement Payment”) such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any

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Federal, state and local (including foreign) income tax, payroll tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local (including foreign) income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments; provided that if the aggregate value of all Covered Payments exceeds the maximum amount which can be paid to the Executive without the Executive incurring an Excise Tax (the “Cap Amount”) by less than 10% (ten per cent) of the Cap Amount, the amounts payable to the Executive under this Section 7 shall be reduced (but not below zero) to the maximum amount which may be paid hereunder without the Executive becoming subject to such an Excise Tax as a result of all Covered Payments (such reduced payments to be ref erred to as the “Payment Cap”).  In the event that Executive receives reduced payments and benefits hereunder, such reduction shall be effected in the following manner, in the following order of priority and only to the extent that the required reduction has not been fully affected by reductions in a prior category: (i) the exercisability of any options having an exercise price in excess of the fair market value of the underlying common stock shall not accelerate, if and only to the extent that such acceleration results in a parachute payment under Section 280G of the Code, with the application of this subclause (i) to be effective first to options having the longest remaining period to become exercisable; (ii) any benefits payable hereunder in cash immediately following Executive’s termination; (iii) the vesting of performance based incentive awards shall not accelerate, with the application of this subclause (iii) to be effective first to awards having the longest remainin g period to become vested; (iv) the vesting of any time vesting incentive awards shall not accelerate, with the application of this subclause (iv) to be effective first to awards having the longest remaining period to become vested; and (v) pro-rated with respect to any other element of compensation that is treated as a parachute payment.  Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code without any adverse tax consequences to the Executive under such Section, Executive shall have the right to designate which of the payments and benefits otherwise provided for in this Agreement that the Executive will receive in connection with the application of the Payment Cap.

(ii) Application of Section 280G. For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax,

(A)

such Covered Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company’s independent certified public accountants appointed prior to the Effective Date or tax counsel selected by such accountants (the “Accountants”), it is more likely than not that such

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Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the portion of the “base amount allocable to such Covered Payments,” or such “parachute payments” are otherwise not subject to such Excise Tax, and

(B)

the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code.

(iii) Adjustments in Respect of the Payment Cap. If the Executive receives reduced payments and benefits under this Section 7(e) (or this Section 7(e) is determined not to be applicable to the Executive because the Accountants conclude that Executive is not subject to any Excise Tax) and it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding (a “Final Determination”) that, notwithstanding the good faith of the Executive and the Company in applying the terms of this Agreement, the aggregate “parachute payments” within the meaning of Section 280G of the Code paid to the Executive or for the Executive’s benefit are in an amount that would result in the Executive being subject to an Excise Tax, then the Accountants shall determine whether the Executive should have received the Tax Reimburse ment Payment described in Section 7(e)(i), or whether the amounts payable to the Executive hereunder would still have been reduced pursuant to Section 7(e)(i). If the Tax Reimbursement Payment would have been due, the Accountants shall determine the amount of any interest and penalties that may be imposed on the Executive by reason of having failed to have timely paid any Excise Tax (the “Penalty Amount”), and the amount of the Tax Reimbursement Payment due, treating the Penalty Amount as a Covered Payment. In the event a Tax Reimbursement Payment is due, the Company shall promptly (but in no event later than 10 business days after the Accountants have determined and informed the Company) pay the Executive such Tax Reimbursement Payment (as calculated in accordance with the immediately preceding sentence) and the Penalty Amount. If the Executive would still be subject to a reduction in the Covered Payments due hereunder, the Accountants shall determine the amount by which th e Covered Payments exceeded the Cap Amount and the Executive shall have an obligation (to the extent permitted under applicable law) to repay such excess to the Company on demand, together with interest on such amount at the applicable Federal rate (as defined in Section 1274(d) of the Code) from the date of the payment hereunder to the date of repayment by the Executive. It is expressly understood that such excess is not in the nature of a personal loan to the Executive, but rather a payment made to the Executive as a “mistake in fact.” If the Executive receives reduced payments and benefits by reason of this Section 7(e) and it is established pursuant to a Final Determination that the Executive could have received

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a greater amount without exceeding the Cap Amount, then, to the extent permitted under Section 409A of the Code without any adverse tax consequences to the Executive under such Section, the Company shall promptly (and not later than 30 days) thereafter pay the Executive the aggregate additional amount which could have been paid without exceeding the Cap Amount, together with interest on such amount at the applicable Federal rate (as defined in Section 1274(d) of the Code) from the original payment due date to the date of actual payment by the Company. For greater clarity, if the Executive receives a Tax Reimbursement Payment under Section 7(e)(i), then this Section 7(e)(iii) shall not apply.

(iv) Timing.

(A)

The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than ten (10) business days following the payment of the Covered Payments; provided that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, the Executive shall repay such excess to the Company (to the extent permitted under applicable law), payable as of the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). It is expressly understood that such excess is not in the nature of a personal loan to the Executive.

(B)

Without extending any time period set forth under this Section 7(e), (1) the Tax Reimbursement Payment due hereunder shall in no event be made later than the end of the calendar year next following the calendar year in which the Executive pays the related tax, and (2) the reimbursement of expenses incurred due to a tax audit or litigation addressing the existence or amount of a tax liability shall in no event be made later than the end of the calendar year following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority (or if no taxes are remitted as a result of such audit or litigation, the end of the calendar year next following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation).

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(v) Survival. The provisions of this Section 7(e) of the Agreement shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement with regard to any event that occurred prior thereto.

8. Non-exclusivity of Rights. Except as expressly provided herein, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its Affiliates and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its Affiliates, including employment agreements, stock option agreements, and other stock or equity compensation agreements. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any Affiliate at or subsequent to the Date of Termination shall be payable in accordance with such plan or program.

9. No Offset. The obligation of the Company or any of its Affiliates to make the payments provided for in this Agreement and otherwise to perform the obligations hereunder shall not be diminished or otherwise affected by any circumstances, including, but not limited to, any set-off, counterclaim, recoupment, defense or other right which the Company or any of its Affiliates may have against the Executive or others, whether by reason of the subsequent employment of the Executive or otherwise.

10. Legal Fees and Expenses. If the Executive asserts any claim in any contest (whether initiated by the Executive or by the Company or any of its Affiliates) as to the validity, enforceability or interpretation of any provision of this Agreement or to enforce and/or collect any payment or benefit payable hereunder, the Company shall pay the Executive’s legal expenses (or cause such expenses to be paid) including, but not limited to, the Executive’s reasonable attorney’s fees, on a quarterly basis, upon presentation of proof of such expenses in a form acceptable to the Company, which submission shall be made within forty-five (45) days after the end of such quarter; provided that the Executive shall reimburse the Company for such amounts (to the extent permitted under applicable law), plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect fr om time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.

11. Surviving Agreements. This Agreement provides for certain payments and benefits to the Executive to be determined by the employee benefit plans and programs, incentive plans, stock option, and other stock or equity compensation plans of the Company and its Affiliates. To the extent so provided, such programs and plans constitute part of the agreement and understanding between the Executive and the Company and are incorporated herein and made a part hereof. The Executive and the Company hereby reaffirm their respective commitments under such programs and plans, and again agree to be bound by each of the covenants contained therein for the benefit of the Company in consideration of the benefits made available to the Executive hereby.

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12. Successors. (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives and his or her estate.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and shall be assignable, in writing, by the Company only to the acquiror of all or substantially all, of the assets of the Company. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

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13. Section 409A.

(a) The intent of the parties is that payments and benefits under this Agreement comply with Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or to qualify for any available exemption therefrom. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Section 409A, the Company shall, after consulting with the Executive, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Section 409A.

(b) Notwithstanding any provision to the contrary in this Agreement, because Executive is expected to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), with regard to any payment or the provision of any benefit that is specified as subject to this Section or is otherwise deferred compensation subject to the provisions of Section 409A that is payable on account of the Executive’s separation from service, such payment or benefit shall not be made or provided (subject to the last sentence of this Section 13(b)) prior to the earlier of (i) the expiration of the six-month period measured from the date of the Executive’s “separation from service” (as such term is defined under Section 409A), and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all paym ents and benefits delayed pursuant to this Section 13(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.  For purposes of this Agreement, to the extent that any compensation due hereunder is payable in installments, each such installment shall be deemed to be a separate payment, and to the extent that any provision under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

14. Miscellaneous.

(a) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, applied without reference to principles of conflict of laws.

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(b) Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held in Hartford, Connecticut and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration (or such other rules as the parties may agree to in writing), and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.

(c) Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(d) Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and completely supersedes and replaces any prior agreement between the Executive and the Company concerning the subject matter herein, other than the Amended and Restated Employment Agreement dated as of May 18, 2005 between the Company and the Executive. No other agreement relating to the terms of the Executive’s employment by the Company or any of its Affiliates, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. Except as expressly provided herein, nothing in this Agreement shall be construed or interpreted to enhance, increase, reduce or diminish any rights, duties or obligations of the Executive under any individual agreement between the Executive and the C ompany or any of its affiliates, or under any employee benefit plan program or procedure established by the Company or any of its affiliates. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. The Executive acknowledges that the Executive is entering into this Agreement of the Executive’s own free will and accord, and with no duress, that the Executive has read this Agreement and that the Executive understands it and its legal consequences. Without limiting the generality of the foregoing, the Executive hereby waives any and all rights that the Executive may have under the agreement dated November 6, 2000 and the letter dated November 20, 2000, between Phoenix Home Life Mutual Insurance Company and the Executive, and the employment continuation agreement dated January 1, 2003 between the Company and the Executive. In no event shall the limitations herein with regard to the Executive or the obligations of the Executive hereunder be greater than those set forth in the Amended and Restated Employment Agreement dated as of May 18, 2005 between the Company and the Executive.

(e) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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If to the Executive:	at the home address of the Executive noted on the records of the Company
If to the Company:	The Phoenix Companies, Inc.
	One American Row
	PO Box 5056
	Hartford, CT 06102-5056
	Attn.: Tracy L. Rich, General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(f) Tax Withholding. The Company shall withhold (or cause such withholding) from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(g) Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

(h) Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or the Executive’s rights hereunder on any occasion or series of occasions.

(i) Confidentiality. The Executive, after termination of the Executive’s employment, shall retain in confidence any confidential or proprietary information known to the Executive concerning the Company and its Affiliates and their business so long as such information is not publicly disclosed and shall not use such information in any way injurious to the Company or its Affiliates except for any disclosure to which an authorized officer of the Company or such Affiliate has consented or any disclosure or use required by any order of any governmental body or court (including legal process). If requested, the Executive shall return to the Company and its Affiliates any memoranda, documents or other materials possessed by the Executive and containing confidential or proprietary information of the Company and its Affiliates. Notwithstanding the preceding sentence, the Executive shall not be requ ired to return to the Company or its Affiliates, any memoranda, documents or other materials containing confidential or proprietary information of the Company or its Affiliates, if such materials were provided to the Executive in his or her capacity as a director of the Company or its Affiliates.

19

(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(k) Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written.

	THE PHOENIX COMPANIES, INC.
	/s/ BONNIE J. MALLEY
	By:	Bonnie J. Malley
	Title:	EVP HR
WITNESSED:
/s/ BABETTE MANTILLA
	PHOENIX LIFE INSURANCE COMPANY
	/s/ BONNIE J. MALLEY
	By:	Bonnie J. Malley
	Title:	EVP HR
WITNESSED:
/s/ BABETTE MANTILLA
	EXECUTIVE:
	/s/ DONA D. YOUNG
WITNESSED:
/s/ PATRICIA F. FONTANA

20

EX-12

EXHIBIT 12

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND

EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS ⁽¹⁾

($ amounts in millions)
Years Ended 2007, 2006, 2005, 2004 and 2003
	2008		2007		2006		2005		2004
Income (loss) from continuing operations before income taxes,
minority interest and earnings attributed to mandatorily
redeemable noncontrolling interests (2)	$	(291.3)	$	138.5	$	165.4	$	153.9	$	140.5
Less:  Equity in earnings (losses) of venture capital partnership investments		(3.9)		0.3		1.1		14.8		19.3
Add: Distributed earnings of affiliates		—		—		—		—		1.5
Distributed earnings of venture capital partnership investments		2.8		6.9		6.7		68.0		50.4
Income (loss) from continuing operations before income taxes,
minority interest, equity in undistributed earnings of affiliates and
venture capital partnership investments	$	(284.6)	$	145.1	$	171.0	$	207.1	$	173.1
Fixed Charges:
Interest expense on indebtedness (3)	$	36.7	$	44.2	$	49.2	$	46.6	$	40.8
Stock purchase contract adjustment payments		—		—		—		7.4		8.2
Interest expense attributable to rentals		1.1		1.2		4.2		2.3		3.5
Fixed charges, exclusive of interest credited on policyholder
contract balances	$	37.8	$	45.4	$	53.4	$	56.3	$	52.5
Interest credited on policyholder contract balances		154.3		157.0		171.8		191.2		201.6
Total fixed charges, inclusive of interest credited on policyholder
contract balances	$	192.1	$	202.4	$	225.2	$	247.5	$	254.1
Income (loss) from continuing operations before income taxes,
minority interest, equity in undistributed earnings of affiliates and
venture capital partnership investments and fixed charges	$	(92.5)	$	347.5	$	396.2	$	454.6	$	427.2
Ratio of earnings to fixed charges and preferred stock dividends		—		1.7		1.8		1.8		1.7
Additional earnings required to achieve 1:1 ratio coverage	$	476.7	$	—	$	—	$	—	$	—
SUPPLEMENTAL RATIO — ratio of earnings to fixed charges
and preferred stock dividends exclusive of interest credited on
policyholder contract balances:
Income (loss) from continuing operations before income taxes,
minority interest , equity in undistributed earnings of affiliates
and venture capital partnership investments	$	(284.6)	$	145.1	$	171.0	$	207.1	$	173.1
Fixed Charges:
Total fixed charges, as above	$	37.8	$	45.4	$	53.4	$	56.3	$	52.5
Income (loss) from continuing operations before income taxes,
minority interest, equity in undistributed earnings of affiliates and
venture capital partnership investments and fixed charges	$	(246.8)	$	190.5	$	224.4	$	263.4	$	225.6
Ratio of earnings to fixed charges and preferred stock dividends		—		4.2		4.2		4.7		4.3
Additional earnings required to achieve 1:1 ratio coverage	$	476.7	$	—	$	—	$	—	$	—

_______

⁽¹⁾

We had no dividends on preferred stock for the years 2004 to 2008.

⁽²⁾

Earnings attributed to mandatorily redeemable noncontrolling interests included in Other operating expenses for the years 2008 through 2004 were $0.0 million, $0.0 million, $0.0 million, $6.7 million and $14.3 million, respectively.

⁽³⁾

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-21

EXHIBIT 21

LIST OF THE PHOENIX COMPANIES, INC. SUBSIDIARIES

Name	Jurisdiction of Incorporation
AGL Life Insurance Company	Pennsylvania
American Phoenix Life and Reassurance Company	Connecticut
Goodwin Capital Advisers, Inc.	New York
Holland Re Holdings, LLC	Delaware
Holland Re, Inc.	South Carolina
Next Generation Ventures LLC	Connecticut
PFG Holdings, Inc.	Pennsylvania
Philadelphia Financial Group, Inc.	Delaware
PHL Variable Insurance Company	Connecticut
Phoenix Distribution Holding Company	Connecticut
Phoenix Equity Planning Corporation	Delaware
The Phoenix Foundation	Connecticut
Phoenix Founders, Inc.	Connecticut
Phoenix International Capital Corporation	Connecticut
Phoenix Investment Management Company	Connecticut
Phoenix Life and Annuity Company	Connecticut
Phoenix Life and Reassurance Company of New York	New York
Phoenix Life Insurance Company	New York
Phoenix Life Solutions, Inc.	Delaware
Phoenix National Trust Holding Company	Connecticut
Phoenix New England Trust Holding Company	Connecticut
Phoenix Variable Advisors, Inc.	Delaware
PM Holdings, Inc.	Connecticut
PractiCare, Inc.	Delaware
The Phoenix Companies, Inc.	Delaware

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Registration No. 333-156601), Form S-8 (Registration No. 333-128256), Form S-8 (Registration No. 333-122701) and Form S-8 (Registration No. 333-75346) of The Phoenix Companies, Inc. of our report dated March 5, 2009 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut

March 5, 2009

EX-24

EXHIBIT 24

POWER OF ATTORNEY

Each person whose signature appears below does hereby make, constitute and appoint TRACY L. RICH, STEVEN L. BRAY and JOHN H. BEERS, and each of them, with full power to act as his or her true and lawful attorneys-in-fact and agents, in his or her name, place and stead to execute on his or her behalf, as a director of The Phoenix Companies, Inc. (the "Company"), an Annual Report on Form 10-K for the year ended December 31, 2008 (the "Annual Report"), and any and all amendments or supplements to the Annual Report, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1934, as amended (the "Act"), and any applicable securities exchange or securities self-regulatory body, and any and all other instruments which any of said attorneys-in-fact and agents deem necessary or advisable to enable the C ompany to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, giving and granting to each of said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as he or she might or could do in person, with full power of substitution and resubstitution, hereby ratifying and confirming all that his or her said attorneys-in-fact and agents or substitutes may or shall lawfully do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of attorney this 30th day of January, 2009.

/s/ Sal H. Alfiero	/s/ John H. Forsgren, Jr.
Sal H. Alfiero	John H. Forsgren, Jr.
/s/ Martin N. Baily	/s/ Ann Maynard Gray
Martin N. Baily	Ann Maynard Gray
/s/ Jean S. Blackwell	/s/ John E. Haire
Jean S. Blackwell	John E. Haire
/s/ Peter C. Browning	/s/ Jerry J. Jasinowski
Peter C. Browning	Jerry J. Jasinowski
/s/ Arthur P. Byrne	/s/ Thomas S. Johnson
Arthur P. Byrne	Thomas  S. Johnson
/s/ Sanford Cloud, Jr.	/s/ Augustus K. Oliver, II
Sanford Cloud, Jr.	Augustus K. Oliver, II
/s/ Gordon J. Davis	/s/ Arthur F. Weinbach
Gordon J. Davis	Arthur F. Weinbach

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, the Chairman, President and Chief Executive Officer of The Phoenix Companies, Inc. (the “registrant”), certify that:

1.

I have reviewed this Annual Report on Form 10-K of the registrant;

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 report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’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

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

Date:  March 5, 2009	/s/ Dona D. Young
	Name:	Dona D. Young
	Title:	Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, the Chief Financial Officer of The Phoenix Companies, Inc. (the “registrant”), certify that:

1.

I have reviewed this Annual Report on Form 10-K of the registrant;

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 report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’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

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

Date:  March 5, 2009	/s/ Peter A. Hofmann
	Name:	Peter A. Hofmann
	Title:	Senior Executive Vice President and   Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION

The undersigned hereby certify that the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 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/ Peter A. Hofmann
Name:	Dona D. Young	Name:	Peter A. Hofmann
Title:	Chairman, President and	Title:	Senior Executive Vice President
	Chief Executive Officer		and Chief Financial Officer
Date:	March 5, 2009	Date:	March 5, 2009

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.