9. Financing Activities

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Note 9 - Financing Activities

Indebtedness at Carrying Value:	Sept 30,		Dec 31,
($ in millions)	2012		2011
7.15% surplus notes	$	126.1	$	174.2
7.45% senior unsecured bonds		252.7		252.7
Total indebtedness	$	378.8	$	426.9

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 $0.6 million of unamortized original issue discount. Interest payments are at an annual rate of 7.15%, require the prior approval of the NYDFS and may be made only out of surplus funds which the NYDFS 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. On September 21, 2012, Phoenix Life repurchased $48.3 million par amount of its outstanding 7.15% surplus notes, including $0.2 million in original issue discount, for aggregate consideration of $36.2 million.

The Phoenix Companies, Inc. 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 at a redemption price equal to 100% of principal plus accrued and unpaid interest to the redemption date. We have repurchased a cumulative amount of $47.3 million of par value of these bonds as of September 30, 2012. During the nine months ended, September 30 2012, no repurchases were made. During 2011, we repurchased $0.8 million of par value of these bonds for $0.6 million, resulting in a gain of $0.2 million.

We have recorded indebtedness at unpaid principal balances of each instrument net of issue discount. The Company or its subsidiaries may, from time to time, purchase its debt securities in the open market subject to considerations including, but not limited to, market conditions, relative valuations, capital allocation and the determination that it is in the best interest of the Company and its stakeholders.

Future minimum annual principal payments on indebtedness as of September 30, 2012 are $252.7 million in 2032 and $126.7 million in 2034. There are no debt maturities in 2013 through 2018.

Interest Expense on Indebtedness, including	Three Months Ended						Nine Months Ended
Amortization of Debt Issuance Costs:	September 30,						September 30,
($ in millions)	2012			2011			2012			2011
Surplus notes		$	3.1		$	3.1		$	9.4		$	9.4
Senior unsecured bonds			4.8			4.8			14.3			14.3
Interest expense on indebtedness		$	7.9		$	7.9		$	23.7		$	23.7