2. Restatement and Amendment of Previously Reported Financial Information

12 Months Ended

Dec. 31, 2012

Accounting Changes and Error Corrections [Abstract]

Note 2 - Restatement and Amendment of Previously Reported Financial Information

These interim financial statements should be read in conjunction with the restated and amended consolidated financial statements for the year ended December 31, 2011 contain in the 2012 Annual Report on Form 10-K (the "2012 Form 10-K"), which was filed on April 1, 2014. As previously presented in the 2012 Form 10-K, during the preparation of the Company’s Form 10-Q for the period ended September 30, 2012, certain errors were identified within the consolidated statement of cash flows for the nine months ended September 30, 2012, as well as for previously reported periods. Following the identification of these cash flow related errors, management initiated a comprehensive internal review of the Company’s historical financial information and identified additional errors. As part of its internal review, the Company evaluated the financial reporting process and the resulting financial statements as well as the appropriateness of prior accounting and reporting decisions in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). As a result, the Company has restated and amended its consolidated financial statements as of and for the three and nine months ended September 30, 2011 to: (i) adjust for impact of these errors; (ii) record previously identified out-of-period errors that were previously determined not to be material individually, or in the aggregate, in the appropriate period; and (iii) amend the financial statements for the impact of the retrospective adoption of amended accounting guidance discussed more fully in the “Revision for the Retrospective Adoption of Amended Accounting Guidance” section below.

The Company has classified the errors that were affected by the restatement into the following major categories:

1.      Actuarial Finance (which includes various subcategories as noted more fully below)

2.      Investments (which includes various subcategories as noted more fully below)

3.      Reinsurance Accounting

4.      Pensions

5.      Limited Partnerships and Other Investments Taxable Income Reporting

6.      Cash Flows and Changes in Classification

In addition to these six categories, there are certain items labeled “other restatement adjustments” which primarily relate to previously recorded out-of-period errors that were previously identified and determined not to be material individually or in the aggregate. The Company reconsidered each of these errors individually and in the aggregate during the course of the restatement and concluded that certain of these previously identified errors, namely actuarial and pension, would be most appropriately presented within the “Actuarial Finance” and “Pensions” sections below, with the remaining errors most appropriately categorized into “other restatement adjustments” rather than any of the six major categories. In an effort to provide greater transparency into these remaining “other restatement adjustments,” the Company has provided additional details underlying select errors for certain financial statement line items, as deemed appropriate. These details are presented in the financial statement tables detailed more fully within this Note below.

Actuarial Finance

The Company determined that there were errors related to the actuarial valuation of insurance liabilities and the amortization of deferred policy acquisition costs. Errors were identified related to data, assumptions and valuation methodologies and separated into the following sub-categories detailed below:

● Accounting for Certain Universal Life Type Products:  Certain of the Company’s universal life products have benefit features that are expected to produce profits in earlier periods followed by losses in later periods. Under U.S. GAAP accounting, the Company is required to establish reserves for the anticipated benefits that exceed the projected contract value and arise from these features. The Company did not properly evaluate certain benefit features and, therefore, did not properly establish the required reserves. The resulting changes in the reserve had a secondary impact on gross profits used to amortize deferred acquisition costs and unearned revenue reserves.

In addition, the Company must periodically assess each of its lines of business for a potential premium deficiency including whether the line of business is expected to produce profits in earlier years followed by losses in later years. The Company did not properly assess the universal life or variable universal life lines of businesses for this profits followed by losses condition. Accordingly, the Company accrued additional reserves over the restatement period to provide for expected losses in the future.

The Company also determined it was using inappropriate approximations of reinsurance that when aggregated did not properly reflect the underlying reinsurance costs accurately within the models it uses to amortize deferred policy acquisition costs and to value policyholder liabilities. The impact of the correction of this reinsurance modeling error indirectly impacted the balances discussed above.

In addition, the impact of this error indirectly impacted the calculation of the “Shadow Accounting” error which is a separately identifiable component of actuarial errors and, accordingly, is described within the “Shadow Accounting” section of “Actuarial Finance” directly below.

The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Shadow Accounting:  Under U.S. GAAP accounting, assets and liabilities that are backed by a portfolio of assets classified as available-for-sale must be adjusted to reflect the amount of unrealized gains or unrealized losses “as if the amounts were realized” with a corresponding offset to other comprehensive income (loss) in a process commonly referred to as “shadow accounting.” The Company failed to recognize all of the relationships between the available-for-sale assets and the supported assets and liabilities in calculating these adjustments. During the restatement, the shadow accounting policy and valuation process were corrected to ensure all interrelated assets and liabilities were being properly identified and to ensure that the impacts of these unrealized gains or losses were properly recorded. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Loss Recognition:  Under U.S. GAAP accounting, the Company must periodically assess the net liability (net of deferred policy acquisition costs) to ensure it is sufficient to provide for the expected policyholder benefits and related expenses. Upon analysis, the Company determined that for certain lines of business the “locked-in” historical estimates used to calculate the policyholder liabilities were insufficient prior to, and also as a result of, entering into a new reinsurance treaty (as discussed within the “Reinsurance Accounting” section below) and in light of the current interest rate environment. Upon identification of loss recognition events, the Company reduced its deferred policy acquisition cost asset and established additional liabilities to rectify the insufficiency in the net liability which was identified for certain lines of business. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Traditional Product Revenue Recognition:  The Company did not properly recognize premiums when due under the terms of the contract related to its traditional participating life insurance policies. In conjunction with the correction of this error, the Company also revised the projected income (the “glidepath”) from inception of the closed block in order to properly reflect the revised timing of revenue recognition. The correction of these errors did not have a material impact on annual net income in any given period or the amounts disclosed ‘at inception’ within “Note 5: Demutualization and Closed Block.” The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Liability for the Future Cost of a Settlement Agreement:  As a result of the settlement of a class action lawsuit reached prior to demutualization and related to the Company’s participating business, the Company was required to record a liability for the future costs associated with reimbursing certain customers for supplemental premium payments. The calculation of this liability involves estimates of future policy lapses and policyholder mortality that are consistent with the assumptions used to estimate other policyholder liabilities. However, the Company did not properly record this incremental liability within the consolidated financial statements. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Fixed Indexed Annuities (“FIA”):  During the Company’s analysis of the fixed indexed annuity valuation process, errors associated with the actuarial modeling of certain fixed indexed annuity product features which were modeled beginning in 2011 were identified. These errors related to incomplete or inaccurate data and inappropriate approximations of product features which resulted in the incorrect calculation for the policyholder liabilities including the related embedded derivatives and liabilities associated with certain benefits for the product. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

● Other Actuarial Errors:  Included within these amounts are all actuarial out-of-period errors as well as other individually immaterial errors which were identified during the restatement process in conjunction with management’s comprehensive balance sheet review and relating to the Company’s actuarial assumptions, approximations and valuation methods/models for its life and annuity business. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Actuarial Finance Errors” table within the “Actuarial Finance” section of this Note below.

Increase (decrease)	Summary of Correction of Actuarial Finance Errors – December 31, 2011 Balance Sheet Impacts(1)
($ in millions)	Actuarial Finance
	Accounting for UL Type Products			Shadow Accounting			Loss Recognition			Traditional Revenue Recognition			Future Cost of a Settlement			FIA			Other Actuarial			Total Actuarial Finance Errors(2)
ASSETS:
Available-for-sale debt securities, at fair value	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Available-for-sale equity securities, at fair value		—			—			—			—			—			—			—			—
Limited partnerships and other investments		—			—			—			—			—			—			—			—
Policy loans, at unpaid principal balances		—			—			—			—			—			—			—			—
Derivative investments		—			—			—			—			—			—			—			—
Fair value investments		—			—			—			—			—			—			—			—
Total investments		—			—			—			—			—			—			—			—
Cash and cash equivalents		—			—			—			—			—			—			—			—
Accrued investment income		—			—			—			—			—			—			—			—
Receivables		—			—			—			16.6			—			—			1.0			17.6
Deferred policy acquisition costs		57.3			(11.0	)		(1.8	)		(0.7	)		—			(3.4	)		1.1			41.5
Deferred income taxes, net		—			—			—			—			—			—			—			—
Other assets		—			—			(38.6	)		—			—			—			4.8			(33.8	)
Discontinued operations assets		—			—			—			—			—			—			—			—
Separate account assets		—			—			—			—			—			—			—			—
Total assets	$	57.3		$	(11.0	)	$	(40.4	)	$	15.9		$	—		$	(3.4	)	$	6.9		$	25.3
LIABILITIES:
Policy liabilities and accruals	$	179.4		$	9.2		$	11.0		$	12.1		$	7.7		$	—		$	21.3		$	240.7
Policyholder deposit funds		—			—			—			—			—			0.8			2.1			2.9
Dividend obligations		—			—			—			9.4			—			—			(8.4	)		1.0
Indebtedness		—			—			—			—			—			—			—			—
Other liabilities		—			—			—			—			—			—			0.2			0.2
Discontinued operations liabilities		—			—			—			—			—			—			—			—
Separate account liabilities		—			—			—			—			—			—			—			—
Total liabilities		179.4			9.2			11.0			21.5			7.7			0.8			15.2			244.8
STOCKHOLDERS’ EQUITY:
Common stock		—			—			—			—			—			—			—			—
Additional paid-in capital		—			—			—			—			—			—			—			—
Accumulated other comprehensive loss		—			(14.2	)		—			—			—			—			—			(14.2	)
Accumulated deficit		(80.7	)		—			(1.2	)		(0.5	)		(3.8	)		(4.2	)		(24.5	)		(114.9	)
Treasury stock		—			—			—			—			—			—			—			—
Noncontrolling interests		—			—			—			—			—			—			—			—
Total stockholders’ equity –periods presented(3)		(80.7	)		(14.2	)		(1.2	)		(0.5	)		(3.8	)		(4.2	)		(24.5	)		(129.1	)
Total stockholders’ equity – cumulative impact(4)		(41.4	)		(6.0	)		(50.2	)		(5.1	)		(3.9	)		—			16.2			(90.4	)
Total stockholders’ equity –  impact		(122.1	)		(20.2	)		(51.4	)		(5.6	)		(7.7	)		(4.2	)		(8.3	)		(219.5	)
Total liabilities and stockholders’ equity	$	57.3		$	(11.0	)	$	(40.4	)	$	15.9		$	—		$	(3.4	)	$	6.9		$	25.3

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(3)	Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
(4)	Amounts represent cumulative impact of restatement changes to periods prior to 2010.

Increase (decrease)	Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Actuarial Finance
	Accounting for UL Type Products			Shadow Accounting		Loss Recognition			Traditional Revenue Recognition			Future Cost of a Settlement		FIA			Other Actuarial			Total Actuarial Finance Errors(2)
REVENUES
Premiums	$	—		$	—	$	—		$	(5.3	)	$	—	$	—		$	(0.2	)	$	(5.5	)
Fee income		(1.1	)		—		—			—			—		—			—			(1.1	)
Net investment income		—			—		—			—			—		—			—			—
Net realized investment gains (losses):
Total OTTI losses		—			—		—			—			—		—			—			—
Portion of OTTI losses recognized in OCI		—			—		—			—			—		—			—			—
Net OTTI losses recognized in earnings		—			—		—			—			—		—			—			—
Net realized investment gains (losses), excluding OTTI losses		—			—		—			—			—		—			(2.1	)		(2.1	)
Net realized investment gains (losses)		—			—		—			—			—		—			(2.1	)		(2.1	)
Gain on debt repurchase		—			—		—			—			—		—			—			—
Total revenues		(1.1	)		—		—			(5.3	)		—		—			(2.3	)		(8.7	)
BENEFITS AND EXPENSES
Policy benefits, excluding policyholder dividends		19.7			—		0.8			(5.1	)		—		4.0			6.9			26.3
Policyholder dividends		—			—		—			(0.1	)		—		—			(0.1	)		(0.2	)
Policy acquisition cost amortization		(15.2	)		—		—			—			—		1.5			(0.8	)		(14.5	)
Interest expense on indebtedness		—			—		—			—			—		—			—			—
Other operating expenses		—			—		—			—			—		—			—			—
Total benefits and expenses		4.5			—		0.8			(5.2	)		—		5.5			6.0			11.6
Income (loss) from continuing operations before income taxes		(5.6	)		—		(0.8	)		(0.1	)		—		(5.5	)		(8.3	)		(20.3	)
Income tax expense (benefit)		—			—		—			—			—		—			—			—
Income (loss) from continuing operations		(5.6	)		—		(0.8	)		(0.1	)		—		(5.5	)		(8.3	)		(20.3	)
Noncontrolling interests		—			—		—			—			—		—			—			—
Income (loss) from discontinued operations, net of income taxes		—			—		—			—			—		—			—			—
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(5.6	)	$	—	$	(0.8	)	$	(0.1	)	$	—	$	(5.5	)	$	(8.3	)	$	(20.3	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(Continued from previous page)	Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Actuarial Finance
($ in millions)	Accounting for UL Type Products			Shadow Accounting			Loss Recognition			Traditional Revenue Recognition			Future Cost of a Settlement		FIA			Other Actuarial			Total Actuarial Finance Errors(2)
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(5.6	)	$	—		$	(0.8	)	$	(0.1	)	$	—	$	(5.5	)	$	(8.3	)	$	(20.3	)
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes		—			(37.1	)		—			—			—		—			—			(37.1	)
Non-credit portion of OTTI losses recognized in     OCI before income taxes		—			—			—			—			—		—			—			—
Net pension liability adjustment before income taxes		—			—			—			—			—		—			—			—
Net unrealized other gains (losses) before income taxes		—			—			—			—			—		—			—			—
Net unrealized derivative instruments gains (losses) before income taxes		—			—			—			—			—		—			—			—
Other comprehensive income (loss) before income taxes		—			(37.1	)		—			—			—		—			—			(37.1	)
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)		—			—			—			—			—		—			—			—
Non-credit portion of OTTI losses recognized in OCI		—			—			—			—			—		—			—			—
Net pension liability adjustment		—			—			—			—			—		—			—			—
Net unrealized other gains (losses)		—			—			—			—			—		—			—			—
Net unrealized derivative instruments gains (losses)		—			—			—			—			—		—			—			—
Total income tax expense (benefit)		—			—			—			—			—		—			—			—
Other comprehensive income (loss), net of income taxes		—			(37.1	)		—			—			—		—			—			(37.1	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(5.6	)		(37.1	)		(0.8	)		(0.1	)		—		(5.5	)		(8.3	)		(57.4	)
Add: Comprehensive income attributable to noncontrolling interests		—			—			—			—			—		—			—			—
Comprehensive income (loss)	$	(5.6	)	$	(37.1	)	$	(0.8	)	$	(0.1	)	$	—	$	(5.5	)	$	(8.3	)	$	(57.4	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

Increase (decrease)	Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Actuarial Finance
	Accounting for UL Type Products			Shadow Accounting		Loss Recognition			Traditional Revenue Recognition			Future Cost of a Settlement			FIA			Other Actuarial			Total Actuarial Finance Errors(2)
REVENUES
Premiums	$	—		$	—	$	—		$	(14.6	)	$	—		$	—		$	0.5		$	(14.1	)
Fee income		(0.7	)		—		—			—			—			—			0.6			(0.1	)
Net investment income		—			—		—			—			—			—			—			—
Net realized investment gains (losses):
Total OTTI losses		—			—		—			—			—			—			—			—
Portion of OTTI losses recognized in OCI		—			—		—			—			—			—			—			—
Net OTTI losses recognized in earnings		—			—		—			—			—			—			—			—
Net realized investment gains (losses), excluding OTTI losses		—			—		—			—			—			—			0.8			0.8
Net realized investment gains (losses)		—			—		—			—			—			—			0.8			0.8
Gain on debt repurchase		—			—		—			—			—			—			—			—
Total revenues		(0.7	)		—		—			(14.6	)		—			—			1.9			(13.4	)
BENEFITS AND EXPENSES
Policy benefits, excluding policyholder dividends		41.5			—		2.3			(13.6	)		—			4.0			15.3			49.5
Policyholder dividends		—			—		—			(0.7	)		—			—			(1.6	)		(2.3	)
Policy acquisition cost amortization		(12.6	)		—		—			—			—			2.1			(4.7	)		(15.2	)
Interest expense on indebtedness		—			—		—			—			—			—			—			—
Other operating expenses		—			—		—			—			(0.1	)		—			6.8			6.7
Total benefits and expenses		28.9			—		2.3			(14.3	)		(0.1	)		6.1			15.8			38.7
Income (loss) from continuing operations before income taxes		(29.6	)		—		(2.3	)		(0.3	)		0.1			(6.1	)		(13.9	)		(52.1	)
Income tax expense (benefit)		—			—		—			—			—			—			—			—
Income (loss) from continuing operations		(29.6	)		—		(2.3	)		(0.3	)		0.1			(6.1	)		(13.9	)		(52.1	)
Noncontrolling interests		—			—		—			—			—			—			—			—
Income (loss) from discontinued operations, net of income taxes		—			—		—			—			—			—			—			—
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(29.6	)	$	—	$	(2.3	)	$	(0.3	)	$	0.1		$	(6.1	)	$	(13.9	)	$	(52.1	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(Continued from previous page)	Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Actuarial Finance
($ in millions)	Accounting for UL Type Products			Shadow Accounting			Loss Recognition			Traditional Revenue Recognition			Future Cost of a Settlement		FIA			Other Actuarial			Total Actuarial Finance Errors(2)
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(29.6	)	$	—		$	(2.3	)	$	(0.3	)	$	0.1	$	(6.1	)	$	(13.9	)	$	(52.1	)
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes		—			(29.0	)		—			—			—		—			—			(29.0	)
Non-credit portion of OTTI losses recognized in OCI before income taxes		—			—			—			—			—		—			—			—
Net pension liability adjustment before income taxes		—			—			—			—			—		—			—			—
Net unrealized other gains (losses) before income taxes		—			—			—			—			—		—			—			—
Net unrealized derivative instruments gains (losses) before income taxes		—			—			—			—			—		—			—			—
Other comprehensive income (loss) before income taxes		—			(29.0	)		—			—			—		—			—			(29.0	)
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)		—			—			—			—			—		—			—			—
Non-credit portion of OTTI losses recognized in OCI		—			—			—			—			—		—			—			—
Net pension liability adjustment		—			—			—			—			—		—			—			—
Net unrealized other gains (losses)		—			—			—			—			—		—			—			—
Net unrealized derivative instruments gains (losses)		—			—			—			—			—		—			—			—
Total income tax expense (benefit)		—			—			—			—			—		—			—			—
Other comprehensive income (loss), net of income taxes		—			(29.0	)		—			—			—		—			—			(29.0	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(29.6	)		(29.0	)		(2.3	)		(0.3	)		0.1		(6.1	)		(13.9	)		(81.1	)
Add: Comprehensive income attributable to noncontrolling interests		—			—			—			—			—		—			—			—
Comprehensive income (loss)	$	(29.6	)	$	(29.0	)	$	(2.3	)	$	(0.3	)	$	0.1	$	(6.1	)	$	(13.9	)	$	(81.1	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Actuarial Finance Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

Investments

The Company determined that there were errors related to investment valuation and the accounting treatment for these investments which are specifically identified errors in the following sub-categories as detailed below:

● Limited Partnerships and Other Investments (“OIA”) – The Company did not have an adequate process to properly determine the appropriate accounting method for OIA at acquisition or for determining the appropriate accounting for investee transactions resulting in errors associated with the application of equity or fair value methods of accounting, and conclusions reached regarding consolidation. Additionally, the Company did not perform the proper evaluation necessary for determining impairments of certain OIA assets which led to additional adjustments. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Investments Errors” table within the “Investments” section of this Note below.

● Available-for-Sale Securities – The Company did not have an adequate process over: (1) the valuation and recording of private placement debt, private equity securities, and certain publicly traded securities; and (2) utilizing an appropriate model for identifying impairments related to these securities. The errors identified were related to: (i) inaccurate inputs used in the valuation models; (ii) and inappropriate valuation methodologies used to value certain instruments; and (iii) ineffective review of internally developed (matrix or manual) prices. The Company also failed to maintain an adequate process over the leveling and disclosure of fair value measurements. In the course of correcting these valuation errors, the Company also reassessed the presentation of the fair value hierarchy as disclosed within “Note 13: Fair Value of Financial Instruments.” This resulted in the determination in the leveling classification of $5,939.1 million of securities to Level 3 in the fair value hierarchy. The classification in Level 3 had no impact on the fair value of these securities.

In addition to these valuation errors, the Company did not receive the proceeds from a zero coupon private placement bond which had been called in 2011 and subsequently determined that the original notice for the bond had not been received or recorded.

The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Investments Errors” table within the “Investments” section of this Note below.

● Derivative Valuation – The Company did not appropriately apply U.S. GAAP accounting standards regarding the valuation of certain derivative instruments. Specifically, the Company did not properly recognize and measure counterparty non-performance risk on non-collateralized derivative assets. The impact of the correction of these errors on the consolidated financial statements is presented in the “Summary of Correction of Investments Errors” table within the “Investments” section of this Note below.

● Structured Securities – The Company did not appropriately maintain a process over the assessment of accounting methodologies used to determine the appropriate interest income models. This resulted in improper income recognition and impairments for certain structured securities. In addition, the Company did not properly assess securitized financial assets for potential embedded derivatives which, when properly assessed, resulted in the reclassification of assets to fair value investments. The reclassification of these assets results in the recognition of the change in fair value of these assets in net investment income. The impact of the correction of these errors on the consolidated statements of comprehensive income is presented in the “Summary of Correction of Investments Errors” table within the “Investments” section of this Note below.

Increase (decrease)	Summary of Correction of Investments Errors – December 31, 2011 Balance Sheet Impacts(1)
($ in millions)	Investments
	OIA			Available-for-Sale Securities						Derivative Valuation			Structured Securities			Total Investments Errors(2)
				Valuation			Bond Call
ASSETS:
Available-for-sale debt securities, at fair value	$	—		$	(10.0	)	$	(25.3	)	$	—		$	(55.7	)	$	(91.0	)
Available-for-sale equity securities, at fair value		—			—			—			—			—			—
Limited partnerships and other investments		(35.9	)		—			—			—			—			(35.9	)
Policy loans, at unpaid principal balances		—			—			—			—			—			—
Derivative investments		—			—			—			(12.6	)		—			(12.6	)
Fair value investments		44.0			(2.2	)		—			—			55.7			97.5
Total investments		8.1			(12.2	)		(25.3	)		(12.6	)		—			(42.0	)
Cash and cash equivalents		2.0			—			—			—			—			2.0
Accrued investment income		—			—			—			—			—			—
Receivables		—			—			—			—			—			—
Deferred policy acquisition costs		—			—			—			(13.1	)		—			(13.1	)
Deferred income taxes, net		—			—			—			—			—			—
Other assets		(4.4	)		—			23.2			(6.7	)		—			12.1
Discontinued operations assets		—			—			—			—			—			—
Separate account assets		—			—			—			—			—			—
Total assets	$	5.7		$	(12.2	)	$	(2.1	)	$	(32.4	)	$	—		$	(41.0	)
LIABILITIES:
Policy liabilities and accruals	$	—		$	—		$	—		$	—		$	—		$	—
Policyholder deposit funds		—			—			—			—			—			—
Dividend obligations		4.1			(9.6	)		(2.1	)		—			—			(7.6	)
Indebtedness		—			—			—			—			—			—
Other liabilities		5.4			7.1			—			—			—			12.5
Discontinued operations liabilities		—			—			—			—			—			—
Separate account liabilities		—			—			—			—			—			—
Total liabilities		9.5			(2.5	)		(2.1	)		—			—			4.9
STOCKHOLDERS’ EQUITY:
Common stock		—			—			—			—			—			—
Additional paid-in capital		—			—			—			—			—			—
Accumulated other comprehensive loss		(15.7	)		24.3			—			—			3.0			11.6
Accumulated deficit		0.9			4.9			—			(16.6	)		(3.0	)		(13.8	)
Treasury stock		—			—			—			—			—			—
Noncontrolling interests		(1.0	)		—			—			—			—			(1.0	)
Total stockholders’ equity –periods presented(3)		(15.8	)		29.2			—			(16.6	)		—			(3.2	)
Total stockholders’ equity – cumulative impact(4)		12.0			(38.9	)		—			(15.8	)		—			(42.7	)
Total stockholders’ equity – impact		(3.8	)		(9.7	)		—			(32.4	)		—			(45.9	)
Total liabilities and stockholders’ equity	$	5.7		$	(12.2	)	$	(2.1	)	$	(32.4	)	$	—		$	(41.0	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(3)	Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
(4)	Amounts represent cumulative impact of restatement changes made to periods prior to 2010.

Increase (decrease)	Summary of Correction of Investments Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Investments
	OIA			Available-for-Sale Securities					Derivative Valuation			Structured Securities			Total Investments Errors(2)
				Valuation			Bond Call
REVENUES
Premiums	$	—		$	—		$	—	$	—		$	—		$	—
Fee income
Net investment income		6.2			0.1			—		—			(1.1	)		5.2
Net realized investment gains (losses):		—			—			—		—			—			—
Total OTTI losses		—			—			—		—			—			—
Portion of OTTI losses recognized in OCI		—			—			—		—			—			—
Net OTTI losses recognized in earnings		—			—			—		—			—			—
Net realized investment gains (losses), excluding OTTI losses		(2.1	)		(0.4	)		—		(10.7	)		(0.8	)		(14.0	)
Net realized investment gains (losses)		(2.1	)		(0.4	)		—		(10.7	)		(0.8	)		(14.0	)
Gain on debt repurchase		—			—			—		—			—			—
Total revenues		4.1			(0.3	)		—		(10.7	)		(1.9	)		(8.8	)
		—			—			—		—			—			—
BENEFITS AND EXPENSES		—			—			—		—			—			—
Policy benefits, excluding policyholder dividends		—			—			—		—			—			—
Policyholder dividends		2.1			0.2			—		—			0.1			2.4
Policy acquisition cost amortization		—			—			—		(0.4	)		—			(0.4	)
Interest expense on indebtedness		—			—			—		—			—			—
Other operating expenses		0.3			—			—		—			—			0.3
Total benefits and expenses		2.4			0.2			—		(0.4	)		0.1			2.3
Income (loss) from continuing operations before income taxes		1.7			(0.5	)		—		(10.3	)		(2.0	)		(11.1	)
Income tax expense (benefit)
Income (loss) from continuing operations		1.7			(0.5	)		—		(10.3	)		(2.0	)		(11.1	)
Noncontrolling interests		(0.3	)		—			—		—			—			(0.3	)
Income (loss) from discontinued operations, net of income taxes		—			—			—		—			—			—
Net income (loss) attributable to The Phoenix Companies, Inc.	$	2.0		$	(0.5	)	$	—	$	(10.3	)	$	(2.0	)	$	(10.8	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(Continued from previous page)	Summary of Correction of Investments Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Investments
($ in millions)	OIA			Available-for-Sale Securities					Derivative Valuation			Structured Securities			Total Investments Errors(2)
				Valuation			Bond Call
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	2.0		$	(0.5	)	$	—	$	(10.3	)	$	(2.0	)	$	(10.8	)
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes		(4.8	)		(3.6	)		—		—			1.9			(6.5	)
Non-credit portion of OTTI losses recognized in OCI before income taxes		—			—			—		—			—			—
Net pension liability adjustment before income taxes		—			—			—		—			—			—
Net unrealized other gains (losses) before income taxes		—			—			—		—			—			—
Net unrealized derivative instruments gains (losses) before income taxes		—			—			—		—			—			—
Other comprehensive income (loss) before income taxes		(4.8	)		(3.6	)		—		—			1.9			(6.5	)
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)		—			—			—		—			—			—
Non-credit portion of OTTI losses recognized in OCI		—			—			—		—			—			—
Net pension liability adjustment		—			—			—		—			—			—
Net unrealized other gains (losses)		—			—			—		—			—			—
Net unrealized derivative instruments gains (losses)		—			—			—		—			—			—
Total income tax expense (benefit)		—			—			—		—			—			—
Other comprehensive income (loss), net of income taxes		(4.8	)		(3.6	)		—		—			1.9			(6.5	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(2.8	)		(4.1	)		—		(10.3	)		(0.1	)		(17.3	)
Add: Comprehensive income attributable to noncontrolling interests		—			—			—		—			—			—
Comprehensive income (loss)	$	(2.8	)	$	(4.1	)	$	—	$	(10.3	)	$	(0.1	)	$	(17.3	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

Increase (decrease)	Summary of Correction of Investments Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Investments
	OIA			Available-for-Sale Securities					Derivative Valuation			Structured Securities			Total Investments Errors(2)
				Valuation			Bond Call
REVENUES
Premiums	$	—		$	—		$	—	$	—		$	—		$	—
Fee income
Net investment income		16.4			1.8			—		—			(1.4	)		16.8
Net realized investment gains (losses):		—			—			—		—			—			—
Total OTTI losses		—			—			—		—			—			—
Portion of OTTI losses recognized in OCI		—			—			—		—			—			—
Net OTTI losses recognized in earnings		—			—			—		—			—			—
Net realized investment gains (losses), excluding OTTI losses		—			(0.1	)		—		(12.3	)		(1.3	)		(13.7	)
Net realized investment gains (losses)		—			(0.1	)		—		(12.3	)		(1.3	)		(13.7	)
Gain on debt repurchase		—			—			—		—			—			—
Total revenues		16.4			1.7			—		(12.3	)		(2.7	)		3.1
		—			—			—		—			—			—
BENEFITS AND EXPENSES		—			—			—		—			—			—
Policy benefits, excluding policyholder dividends		—			—			—		—			—			—
Policyholder dividends		13.0			(1.1	)		—		—			1.0			12.9
Policy acquisition cost amortization		—			—			—		(0.4	)		—			(0.4	)
Interest expense on indebtedness		—			—			—		—			—			—
Other operating expenses		0.9			—			—		—			—			0.9
Total benefits and expenses		13.9			(1.1	)		—		(0.4	)		1.0			13.4
Income (loss) from continuing operations before income taxes		2.5			2.8			—		(11.9	)		(3.7	)		(10.3	)
Income tax expense (benefit)
Income (loss) from continuing operations		2.5			2.8			—		(11.9	)		(3.7	)		(10.3	)
Noncontrolling interests		(0.4	)		—			—		—			—			(0.4	)
Income (loss) from discontinued operations, net of income taxes		—			—			—		—			—			—
Net income (loss) attributable to
The Phoenix Companies, Inc.	$	2.9		$	2.8		$	—	$	(11.9	)	$	(3.7	)	$	(9.9	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Investments Errors” which is further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

(Continued from previous page)	Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Investments
($ in millions)	OIA			Available-for-Sale Securities				Derivative Valuation			Structured Securities			Total Investments Errors(2)
				Valuation		Bond Call
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	2.9		$	2.8	$	—	$	(11.9	)	$	(3.7	)	$	(9.9	)
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes		(3.8	)		4.6		—		—			3.6			4.4
Non-credit portion of OTTI losses recognized in OCI before income taxes		—			—		—		—			—			—
Net pension liability adjustment before income taxes		—			—		—		—			—			—
Net unrealized other gains (losses) before income taxes		—			—		—		—			—			—
Net unrealized derivative instruments gains (losses) before income taxes		—			—		—		—			—			—
Other comprehensive income (loss) before income taxes		(3.8	)		4.6		—		—			3.6			4.4
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)		—			—		—		—			—			—
Non-credit portion of OTTI losses recognized in OCI		—			—		—		—			—			—
Net pension liability adjustment		—			—		—		—			—			—
Net unrealized other gains (losses)		—			—		—		—			—			—
Net unrealized derivative instruments gains (losses)		—			—		—		—			—			—
Total income tax expense (benefit)		—			—		—		—			—			—
Other comprehensive income (loss), net of income taxes		(3.8	)		4.6		—		—			3.6			4.4
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(0.9	)		7.4		—		(11.9	)		(0.1	)		(5.5	)
Add: Comprehensive income attributable to noncontrolling interests		—			—		—		—			—			—
Comprehensive income (loss)	$	(0.9	)	$	7.4	$	—	$	(11.9	)	$	(0.1	)	$	(5.5	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Amounts represent the total “Summary of Correction of Investments Errors” which are further aggregated into the “Consolidated Summary of Correction of Errors” in the following pages.

Reinsurance Accounting

In 2008 and in 2009, the Company entered into complex reinsurance agreements with one of its reinsurers which resulted in net costs incurred to the Company. Rather than appropriately deferring and amortizing these costs over the life of the underlying business, the Company had previously recognized these costs immediately in net income. The impact of the correction of these errors on the consolidated financial statements is presented in the “Consolidated Summary of Correction of Errors” table within this Note below.

The Company also determined that loss recognition was appropriate for a portion of the underlying block of business both, prior to and subsequent to, entering into the reinsurance agreement. The impact of the loss recognition prior to the reinsurance then indirectly impacted the amount of costs deferred at day one. The impact of the loss recognition error on those costs deferred resulted in a reduction of approximately $39.6 million and is reflected within the “Summary of Correction of Actuarial Finance Errors” table above. The impact of the reinsurance component of this error on the consolidated financial statements is presented in the “Consolidated Summary of Correction of Errors” table within this Note below.

In addition, certain errors were identified related to the Company’s net presentation of direct and ceded reinsurance liabilities on the consolidated balance sheets. As a result, ceded policy liabilities were reclassified from policy liabilities and accruals to receivables within the consolidated balance sheets to correct the error and reflect the proper gross presentation required under U.S. GAAP. See “Changes in Classifications” section below for additional information.

Pensions

Pension adjustments summarized below primarily relate to the valuation of our defined benefit plans and post retirement liabilities as a result of census data errors and incorrect application of the Company’s benefit plan features in the calculation of the liabilities. The impact of the correction of these errors on the consolidated financial statements is presented in the “Consolidated Summary of Correction of Errors” table within this Note below.

Limited Partnerships and Other Investments Taxable Income Reporting

An error related to the completeness and accuracy of taxable income related to our OIA portfolio was identified resulting in the inappropriate exclusion of taxable income reported from partnerships. The impact of the correction of these errors on the consolidated financial statements is presented in the “Consolidated Summary of Correction of Errors” table within this Note below.

Cash Flows and Changes in Classifications

● Consolidated Statement of Cash Flows – The Company identified errors within its previously issued consolidated statement of cash flows which primarily consisted of: (i) the incorrect classification of deposits and withdrawals of universal life products as cash flows used for operating activities; (ii) the incorrect classification of capitalized interest on policy loans as an investing activity; (iii) certain other classification errors within cash flows from investing activities primarily related to investment purchases and sales; and (iv) the net impact of all other errors previously and separately described within this Note. The impact of the correction of these errors to each individual financial statement line item within the consolidated statement of cash flows is summarized below and included in detail within the restated and amended consolidated statement of cash flows within this Note.

Increase (decrease)	For the
($ in millions)	period ended
	Sept 30, 2011
Consolidated Statement of Cash Flows
Cash provided by (used for) operating activities	$	(227.1	)
Cash provided by (used for) investing activities		90.2
Cash provided by (used for) financing activities		143.4

In addition to these errors noted above, the Company made certain changes in presentation to enhance disclosure of certain cash activity within the consolidated statement of cash flows. Most significantly: (i) interest credited to policyholder accounts has been separately disclosed within cash flows used for operating activities; and (ii) deposits into and withdrawals from separate accounts have been presented gross, rather than net, within cash flows provided by financing activities which are also reflected in the correction of errors above and within the restated and amended consolidated statement of cash flows within this Note. These changes in presentation did not have any impact on total cash flows provided by (used for) continuing operations, investing activities or financing activities.

● Changes in Classifications – The Company made certain corrections to: (i) present outstanding checks and cash held as collateral by a third party related to our derivative transactions in order to appropriately reflect the legal right of offset and to properly reclassify certain suspense accounts; (ii) reflect direct and ceded reinsurance liabilities gross in the consolidated balance sheets as described above in “Reinsurance Accounting” section; and (iii) reclassify sales inducements assets from deferred policy acquisition costs to other assets as well as separately present dividend obligations as its own financial statement line within the consolidated balance sheets. These corrections had no impact to net income or total stockholders’ equity. The impact of the changes in classification are reflected in the correction of errors column in the “Consolidated Summary of Correction of Errors” table within this Note.

Revision for the Retrospective Adoption of Amended Accounting Guidance

In October 2010, the Financial Accounting Standards Board (the “FASB”) issued amended guidance to ASC 944, Financial Services – Insurance, to address the diversity in practice for accounting for costs associated with acquiring or renewing insurance contracts. The amendment clarifies the definition of acquisition costs (i.e., costs which qualify for deferral) to include only incremental direct costs that result directly from, and are essential to, a contract and would not have been incurred by the insurance entity had the contract transaction not occurred. Therefore, only costs related to successful efforts of acquiring a new, or renewal, contract should be deferred. This guidance was retrospectively adopted on January 1, 2012 and such retrospective adoption results in amendments to previously reported balances as shown in the table below as if the guidance was applied at the inception of all policies in force. The cumulative effect of retrospective adoption reduced deferred policy acquisition costs and beginning stockholders’ equity by $166.5 million as of January 1, 2012. In any period, the adoption resulted in a decrease in amortization of policy acquisition costs due to the reduced deferred policy acquisition cost asset. Adjustments for the retrospective adoption reflect the impact of the adoption after consideration of correcting the errors associated with the restatement as noted more fully in the tables reflecting the impact of the retrospective adoption on consolidated financial statements presented within this Note below.

Increase (decrease)	Consolidated Summary of Correction of Errors – December 31, 2011 Balance Sheet Impacts(1)
($ in millions)	Total Actuarial Finance(2)	Total Investments(3)	Reinsurance Accounting	Pensions	OIA Taxable Income	Changes in Classification
						Cash and Suspense	Reinsurance	Reclassify & Separately Present	Other Restatement Adjustments	Total Correction of Errors(4)
ASSETS:

Available-for-sale debt securities, at fair value	$	—		$	(91.0	)	$	—	$	—		$	—	$	—		$	—	$	—		$	(2.0	)	$	(93.0	)
Available-for-sale equity securities, at fair value		—			—			—		—			—		—			—		—			—			—
Limited partnerships and other investments		—			(35.9	)		—		—			—		—			—		—			(0.1	)		(36.0	)
Policy loans, at unpaid principal balances		—			—			—		—			—		—			—		—			—			—
Derivative investments		—			(12.6	)		—		—			—		—			—		—			—			(12.6	)
Fair value investments		—			97.5			—		—			—		—			—		—			(0.1	)		97.4
Total investments		—			(42.0	)		—		—			—		—			—		—			(2.2	)		(44.2	)
Cash and cash equivalents		—			2.0			—		—			—		(28.4	)		—		—			0.3			(26.1	)
Accrued investment income		—			—			—		—			—		—			—		—			—			—
Receivables		17.6			—			—		—			—		16.4			196.6		—			2.9			233.5
Deferred policy acquisition costs		41.5			(13.1	)		—		—			—		—			—		(42.2	)		0.1			(13.7	)
Deferred income taxes, net		—			—			—		—			—		—			—		—			2.4			2.4
Other assets		(33.8	)		12.1			39.6		—			—		8.8			—		42.2			(2.4	)		66.5
Discontinued operations assets		—			—			—		—			—		—			14.1		—			2.0			16.1
Separate account assets		—			—			—		(0.7	)		—		—			—		—			—			(0.7	)
Total assets	$	25.3		$	(41.0	)	$	39.6	$	(0.7	)	$	—	$	(3.2	)	$	210.7	$	—		$	3.1		$	233.8

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

Note 2 - Restatement and Amendment of Previously Reported Financial Information Part II

(Continued from previous page)	Consolidated Summary of Correction of Errors – December 31, 2011 Balance Sheet Impacts(1)
Increase (decrease)	Total Actuarial Finance(2)	Total Investments	Reinsurance Accounting	Pensions	OIA Taxable Income	Changes in Classification
($ in millions)						Cash and Suspense	Reinsurance	Reclassify & Separately Present	Other Restatement Adjustments	Total Correction of Errors(4)
LIABILITIES:

Policy liabilities and accruals	$	240.7		$	—		$	—	$	—		$	—		$	—		$	196.6	$	(759.8	)	$	5.3		$	(317.2	)
Policyholder deposit funds		2.9			—			—		—			—			—			—		—			(0.1	)		2.8
Dividend obligation		1.0			(7.6	)		—		—			—			—			—		759.8			(0.7	)		752.5
Indebtedness		—			—			—		—			—			—			—		—			—			—
Other liabilities		0.2			12.5			—		22.9			6.9			(3.2	)		—		—			5.0			44.3
Discontinued operations liabilities		—			—			—		—			—			—			14.1		—			2.0			16.1
Separate account liabilities		—			—			—		(0.7	)		—			—			—		—			—			(0.7	)
Total liabilities		244.8			4.9			—		22.2			6.9			(3.2	)		210.7		—			11.5			497.8
STOCKHOLDERS’ EQUITY:
Common stock		—			—			—		—			—			—			—		—			—			—
Additional paid-in capital		—			—			—		—			—			—			—		—			—			—
Accumulated other comprehensive loss		(14.2	)		11.6			—		(13.4	)		—			—			—		—			(49.7	)		(65.7	)
Accumulated deficit		(114.9	)		(13.8	)		3.0		5.3			(3.3	)		—			—		—			11.1			(112.6	)
Treasury stock		—			—			—		—			—			—			—		—			—			—
Noncontrolling interests		—			(1.0	)		—		—			—			—			—		—			—			(1.0	)
Total stockholders’ equity –  periods presented(5)		(129.1	)		(3.2	)		3.0		(8.1	)		(3.3	)		—			—		—			(38.6	)		(179.3	)
Total stockholders’ equity –  cumulative impact(6)		(90.4	)		(42.7	)		36.6		(14.8	)		(3.6	)		—			—		—			30.2			(84.7	)
Total stockholders’ equity –impact		(219.5	)		(45.9	)		39.6		(22.9	)		(6.9	)		—			—		—			(8.4	)		(264.0	)
Total liabilities and  stockholders’ equity	$	25.3		$	(41.0	)	$	39.6	$	(0.7	)	$	—		$	(3.2	)	$	210.7	$	—		$	3.1		$	233.8

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

(5)	Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
(6)	Amounts represent cumulative impact of restatement changes made to periods prior to 2010.

Increase (decrease)	Summary of Correction of Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Consolidated
	Total Actuarial Finance(2)			Total Investments(3)			Reinsurance Accounting			Pensions			OIA Taxable Income		Other Restatement Adjustments			Total Correction of Errors(4)
REVENUES
Premiums	$	(5.5	)	$	—		$	—		$	—		$	—	$	—		$	(5.5	)
Fee income		(1.1	)		—			—			—			—		—			(1.1	)
Net investment income		—			5.2			—			—			—		(2.7	)		2.5
Net realized investment gains (losses):
Total OTTI losses		—			—			—			—			—		0.1			0.1
Portion of OTTI losses recognized in OCI		—			—			—			—			—		(1.4	)		(1.4	)
Net OTTI losses recognized in earnings		—			—			—			—			—		(1.3	)		(1.3	)
Net realized investment gains (losses), excluding OTTI losses		(2.1	)		(14.0	)		—			—			—		1.2			(14.9	)
Net realized investment gains (losses)		(2.1	)		(14.0	)		—			—			—		(0.1	)		(16.2	)
Gain on debt repurchase		—			—			—			—			—		—			—
Total revenues		(8.7	)		(8.8	)		—			—			—		(2.8	)		(20.3	)
BENEFITS AND EXPENSES
Policy benefits, excluding policyholder dividends		26.3			—			(1.0	)		—			—		(0.2	)		25.1
Policyholder dividends		(0.2	)		2.4			—			—			—		(0.2	)		2.0
Policy acquisition cost amortization		(14.5	)		(0.4	)		—			—			—		—			(14.9	)
Interest expense on indebtedness		—			—			—			—			—		—			—
Other operating expenses		—			0.3			—			2.3			—		(2.8	)		(0.2	)
Total benefits and expenses		11.6			2.3			(1.0	)		2.3			—		(3.2	)		12.0
Income (loss) from continuing operations before income taxes		(20.3	)		(11.1	)		1.0			(2.3	)		—		0.4			(32.3	)
Income tax expense (benefit)		—			—			—			—			—		(1.2	)		(1.2	)
Income (loss) from continuing operations		(20.3	)		(11.1	)		1.0			(2.3	)		—		1.6			(31.1	)
Noncontrolling interests		—			(0.3	)		—			—			—		—			(0.3	)
Income (loss) from discontinued operations, net of income taxes		—			—			—			—			—		0.8			0.8
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(20.3	)	$	(10.8	)	$	1.0		$	(2.3	)	$	—	$	2.4		$	(30.0	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

(Continued from previous page)	Summary of Correction of Errors – Three months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Consolidated
($ in millions)	Total Actuarial Finance(2)			Total Investments(3)			Reinsurance Accounting		Pensions			OIA Taxable Income		Other Restatement Adjustments			Total Correction of Errors(4)
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(20.3	)	$	(10.8	)	$	1.0	$	(2.3	)	$	—	$	2.4		$	(30.0	)
Other comprehensive income (loss) before income taxes:		—			—			—		—			—		—			—
Net unrealized investment gains before income taxes(5)		(37.1	)		(6.5	)		—		—			—		61.3			17.7
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)		—			—			—		—			—		(43.6	)		(43.6	)
Net pension liability adjustment before income taxes		—			—			—		7.2			—		(16.4	)		(9.2	)
Net unrealized other gains (losses) before income taxes		—			—			—		—			—		—			—
Net unrealized derivative instruments gains (losses) before income taxes(5)		—			—			—		—			—		(1.1	)		(1.1	)
Other comprehensive income (loss) before income taxes		(37.1	)		(6.5	)		—		7.2			—		0.2			(36.2	)
Less: Income tax expense (benefit) related to:		—			—			—		—			—		—			—
Net unrealized investment gains (losses)(5)		—			—			—		—			—		20.8			20.8
Non-credit portion of OTTI losses recognized in OCI(5)		—			—			—		—			—		(15.3	)		(15.3	)
Net pension liability adjustment		—			—			—		—			—		—			—
Net unrealized other gains (losses)		—			—			—		—			—		—			—
Net unrealized derivative instruments gains (losses)		—			—			—		—			—		—			—
Total income tax expense (benefit)		—			—			—		—			—		5.5			5.5
Other comprehensive income (loss), net of income taxes		(37.1	)		(6.5	)		—		7.2			—		(5.3	)		(41.7	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(57.4	)		(17.3	)		1.0		4.9			—		(2.9	)		(71.7	)
Add: Comprehensive income attributable to noncontrolling interests		—			—			—		—			—		(0.3	)		(0.3	)
Comprehensive income (loss)	$	(57.4	)	$	(17.3	)	$	1.0	$	4.9		$	—	$	(3.2	)	$	(72.0	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

Increase (decrease)	Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
($ in millions)	Consolidated
	Total Actuarial Finance(2)			Total Investments(3)			Reinsurance Accounting			Pensions			OIA Taxable Income		Other Restatement Adjustments			Total Correction of Errors(4)
REVENUES
Premiums	$	(14.1	)	$	—		$	—		$	—		$	—	$	—		$	(14.1	)
Fee income		(0.1	)		—			—			—			—		(0.1	)		(0.2	)
Net investment income		—			16.8			—			—			—		(1.3	)		15.5
Net realized investment gains (losses):
Total OTTI losses		—			—			—			—			—		0.4			0.4
Portion of OTTI losses recognized in OCI		—			—			—			—			—		(1.8	)		(1.8	)
Net OTTI losses recognized in earnings		—			—			—			—			—		(1.4	)		(1.4	)
Net realized investment gains (losses), excluding OTTI losses		0.8			(13.7	)		—			—			—		3.3			(9.6	)
Net realized investment gains (losses)		0.8			(13.7	)		—			—			—		1.9			(11.0	)
Gain on debt repurchase		—			—			—			—			—		—			—
Total revenues		(13.4	)		3.1			—			—			—		0.5			(9.8	)
BENEFITS AND EXPENSES
Policy benefits, excluding policyholder dividends		49.5			—			(4.2	)		—			—		0.1			45.4
Policyholder dividends		(2.3	)		12.9			—			—			—		(0.4	)		10.2
Policy acquisition cost amortization		(15.2	)		(0.4	)		—			—			—		—			(15.6	)
Interest expense on indebtedness		—			—			—			—			—		—			—
Other operating expenses		6.7			0.9			—			3.9			—		(0.9	)		10.6
Total benefits and expenses		38.7			13.4			(4.2	)		3.9			—		(1.2	)		50.6
Income (loss) from continuing operations before income taxes		(52.1	)		(10.3	)		4.2			(3.9	)		—		1.7			(60.4	)
Income tax expense (benefit)		—			—			—			—			—		(0.3	)		(0.3	)
Income (loss) from continuing operations		(52.1	)		(10.3	)		4.2			(3.9	)		—		2.0			(60.1	)
Noncontrolling interests		—			(0.4	)		—			—			—		—			(0.4	)
Income (loss) from discontinued operations, net of income taxes		—			—			—			—			—		0.8			0.8
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(52.1	)	$	(9.9	)	$	4.2		$	(3.9	)	$	—	$	2.8		$	(58.9	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

(Continued from previous page)	Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts(1)
Increase (decrease)	Consolidated
($ in millions)	Total Actuarial Finance(2)			Total Investments(3)			Reinsurance Accounting		Pensions			OIA Taxable Income		Other Restatement Adjustments			Total Correction of Errors(4)
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	(52.1	)	$	(9.9	)	$	4.2	$	(3.9	)	$	—	$	2.8		$	(58.9	)
Other comprehensive income (loss) before income taxes:		—			—			—		—			—		—			—
Net unrealized investment gains before income taxes(5)		(29.0	)		4.4			—		—			—		60.6			36.0
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)		—			—			—		—			—		(44.9	)		(44.9	)
Net pension liability adjustment before income taxes		—			—			—		8.9			—		(16.3	)		(7.4	)
Net unrealized other gains (losses) before income taxes		—			—			—		—			—		—			—
Net unrealized derivative instruments gains (losses) before income taxes(5)		—			—			—		—			—		0.1			0.1
Other comprehensive income (loss) before income taxes		(29.0	)		4.4			—		8.9			—		(0.5	)		(16.2	)
Less: Income tax expense (benefit) related to:		—			—			—		—			—		—			—
Net unrealized investment gains (losses)(5)		—			—			—		—			—		29.6			29.6
Non-credit portion of OTTI losses recognized in OCI(5)		—			—			—		—			—		(15.8	)		(15.8	)
Net pension liability adjustment		—			—			—		—			—		—			—
Net unrealized other gains (losses)		—			—			—		—			—		—			—
Net unrealized derivative instruments gains (losses)		—			—			—		—			—		—			—
Total income tax expense (benefit)		—			—			—		—			—		13.8			13.8
Other comprehensive income (loss), net of income taxes		(29.0	)		4.4			—		8.9			—		(14.3	)		(30.0	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.		(81.1	)		(5.5	)		4.2		5.0			—		(11.5	)		(88.9	)
Add: Comprehensive income attributable to noncontrolling interests		—			—			—		—			—		(0.4	)		(0.4	)
Comprehensive income (loss)		(81.1	)	$	(5.5	)	$	4.2	$	5.0		$	—	$	(11.9	)	$	(89.3	)

———————

(1)	All amounts are shown before income taxes, unless otherwise noted.
(2)	Represents “Summary of Correction of Actuarial Finance Errors” from the previous pages of this Note.

(3)	Represents “Summary of Correction of Investments Errors from the previous pages of this Note.
(4)	Amounts represent total correction of errors which is also presented in the “Consolidated Statement of Comprehensive Income” reflected in the tables on the following pages.

(5)   In addition to adjustments described within this footnote, the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

	Consolidated Balance Sheet
($ in millions, except share data)	As of and for the year ended December 31, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
ASSETS:
Available-for-sale debt securities, at fair value	$	11,890.0		$	(93.0	)	$	11,797.0		$	—		$	11,797.0
Available-for-sale equity securities, at fair value		35.7			—			35.7			—			35.7
Limited partnerships and other investments		601.3			(36.0	)		565.3			—			565.3
Policy loans, at unpaid principal balances		2,379.3			—			2,379.3			—			2,379.3
Derivative investments		174.8			(12.6	)		162.2			—			162.2
Fair value investments		86.6			97.4			184.0			—			184.0
Total investments		15,167.7			(44.2	)		15,123.5			—			15,123.5
Cash and cash equivalents		194.3			(26.1	)		168.2			—			168.2
Accrued investment income		175.6			—			175.6			—			175.6
Receivables		415.1			233.5			648.6			—			648.6
Deferred policy acquisition costs		1,317.6			(13.7	)		1,303.9			(184.7	)		1,119.2
Deferred income taxes, net		118.2			2.4			120.6			—			120.6
Other assets		164.6			66.5			231.1			(1.0	)		230.1
Discontinued operations assets		69.2			16.1			85.3			—			85.3
Separate account assets		3,817.6			(0.7	)		3,816.9			—			3,816.9
Total assets	$	21,439.9		$	233.8		$	21,673.7		$	(185.7	)	$	21,488.0
LIABILITIES:
Policy liabilities and accruals(3)	$	12,967.8		$	(317.2	)	$	12,650.6		$	(19.2	)	$	12,631.4
Policyholder deposit funds		2,429.4			2.8			2,432.2			—			2,432.2
Dividend obligations(4)		—			752.5			752.5			—			752.5
Indebtedness		426.9			—			426.9			—			426.9
Other liabilities		613.7			44.3			658.0			—			658.0
Discontinued operations liabilities		58.3			16.1			74.4			—			74.4
Separate account liabilities		3,817.6			(0.7	)		3,816.9			—			3,816.9
Total liabilities		20,313.7			497.8			20,811.5			(19.2	)		20,792.3
COMMITMENTS AND CONTINGENT
LIABILITIES (Notes 21 & 22)
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value: 5.8 million shares outstanding(5)		1.3			—			1.3			—			1.3
Additional paid-in capital		2,630.5			—			2,630.5			—			2,630.5
Accumulated other comprehensive income (loss)		(170.7	)		(103.5	)		(274.2	)		43.5			(230.7	)
Accumulated deficit		(1,155.4	)		(163.3	)		(1,318.7	)		(210.0	)		(1,528.7	)
Treasury stock, at cost: 0.6 million shares(5)		(179.5	)		—			(179.5	)		—			(179.5	)
Total The Phoenix Companies, Inc. stockholders’ equity		1,126.2			(266.8	)		859.4			(166.5	)		692.9
Noncontrolling interests		—			2.8			2.8			—			2.8
Total stockholders’ equity		1,126.2			(264.0	)		862.2			(166.5	)		695.7
Total liabilities and stockholders’ equity	$	21,439.9		$	233.8		$	21,673.7		$	(185.7	)	$	21,488.0

———————

(1)

Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.

(2)

Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26), have been updated from those originally disclosed in the First Quarter 2012 Quarterly Report on Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.

(3)	Included within policyholder liabilities and accruals is the post-ASU gross profits followed by losses reserve of $211.8 million. The corresponding net post-ASU amount of $200.5 million reported within the consolidated financial statements includes $(11.2) million of shadow profits followed by losses, both of which are discussed further within the “Actuarial Finance” section of this Note.
(4)	Dividend obligations were previously included in policy liabilities and accruals.

(5)   All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.

	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Three months ended September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
REVENUES:
Premiums	$	117.4		$	(5.5	)	$	111.9		$	—		$	111.9
Fee income		147.6			(1.1	)		146.5			—			146.5
Net investment income		201.0			2.5			203.5			—			203.5
Net realized investment gains (losses):
Total OTTI losses		(31.0	)		0.1			(30.9	)		—			(30.9	)
Portion of OTTI losses recognized in OCI		22.6			(1.4	)		21.2			—			21.2
Net OTTI losses recognized in earnings		(8.4	)		(1.3	)		(9.7	)		—			(9.7	)
Net realized investment gains (losses), excluding OTTI losses		14.5			(14.9	)		(0.4	)		—			(0.4	)
Net realized investment losses		6.1			(16.2	)		(10.1	)		—			(10.1	)
Gain on debt repurchase		—			—			—			—			—
Total revenues		472.1			(20.3	)		451.8			—			451.8
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends		268.2			25.1			293.3			(0.2	)		293.1
Policyholder dividends		51.5			2.0			53.5			—			53.5
Policy acquisition cost amortization		57.5			(14.9	)		42.6			(7.5	)		35.1
Interest expense on indebtedness		7.9			—			7.9			—			7.9
Other operating expenses		57.2			(0.2	)		57.0			0.4			57.4
Total benefits and expenses		442.3			12.0			454.3			(7.3	)		447.0
Income (loss) from continuing operations before income taxes		29.8			(32.3	)		(2.5	)		7.3			4.8
Income tax benefit		(6.7	)		(1.2	)		(7.9	)		1.1			(6.8	)
Income (loss) from continuing operations		36.5			(31.1	)		5.4			6.2			11.6
Income (loss) from discontinued operations, net of income taxes		(4.7	)		0.8			(3.9	)		—			(3.9	)
Net income (loss)		31.8			(30.3	)		1.5			6.2			7.7
Less: Net income (loss) attributable to noncontrolling interests		—			(0.3	)		(0.3	)		—			(0.3	)
Net income (loss) attributable to The Phoenix Companies, Inc.	$	31.8		$	(30.0	)	$	1.8		$	6.2		$	8.0

(Continued from previous page)	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Three months September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	31.8		$	(30.0	)	$	1.8		$	6.2		$	8.0
Less: Net income (loss) attributable to noncontrolling interests		—			(0.3	)		(0.3	)		—			(0.3	)
Net income (loss)		31.8			(30.3	)		1.5			6.2			7.7
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes(5)		(13.3	)		17.7			4.4			1.6			6.0
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)		22.4			(43.6	)		(21.2	)		—			(21.2	)
Net pension liability adjustment before income taxes		1.1			(9.2	)		(8.1	)		—			(8.1	)
Net unrealized other gains (losses) before income taxes		—			—			—			—			—
Net unrealized derivative instruments gains (losses) before income taxes(5)		1.1			(1.1	)		—			—			—
Other comprehensive income (loss) before income taxes		11.3			(36.2	)		(24.9	)		1.6			(23.3	)
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)		(42.2	)		20.8			(21.4	)		(1.2	)		(22.6	)
Non-credit portion of OTTI losses recognized in OCI(5)		7.8			(15.3	)		(7.5	)		—			(7.5	)
Net pension liability adjustment(5)		—			—			—			—			—
Net unrealized other gains (losses)		—			—			—			—			—
Net unrealized derivative instruments gains (losses)		—			—			—			—			—
Total income tax benefit		(34.4	)		5.5			(28.9	)		(1.2	)		(30.1	)
Other comprehensive income (loss), net of income taxes		45.7			(41.7	)		4.0			2.8			6.8
Comprehensive income (loss)		77.5			(72.0	)		5.5			9.0			14.5
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income taxes		—			(0.3	)		(0.3	)		—			(0.3	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.	$	77.5		$	(71.7	)	$	5.8		$	9.0		$	14.8

(Continued from previous page)	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Three months ended September 30, 2011
	As previously reported			Correction of errors (1)			Adjusted prior to the retrospective adoption		Retrospective Adoption(2)		As restated and amended
EARNINGS (LOSS) PER SHARE: (3)
Earnings (loss) from continuing operations – basic	$	6.25		$	(5.35	)		NM	$	1.07	$	1.99
Earnings (loss) from continuing operations – diluted	$	6.23		$	(5.28	)		NM	$	1.05	$	1.97
Earnings (loss) from discontinued operations – basic	$	(0.80	)	$	0.14			NM	$	—	$	(0.67	)
Earnings (loss) from discontinued operations – diluted	$	(0.80	)	$	0.14			NM	$	—	$	(0.66	)
Net earnings (loss) attributable to The Phoenix Companies, Inc. – basic	$	5.44		$	(5.16	)		NM	$	1.07	$	1.38
Net earnings (loss) attributable to The Phoenix Companies, Inc. – diluted	$	5.43		$	(5.09	)		NM	$	1.05	$	1.36
Basic weighted-average common shares outstanding (in thousands)		5,844			5,816	(4)		NM		5,816		5,816
Diluted weighted-average common shares outstanding (in thousands)		5,856			5,890	(4)		NM		5,890		5,890

———————

(1)	Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)	Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

(3)	All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
(4)	Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Nine months ended September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
REVENUES:
Premiums	$	337.7		$	(14.1	)	$	323.6		$	—		$	323.6
Fee income		456.0			(0.2	)		455.8			—			455.8
Net investment income		612.6			15.5			628.1			—			628.1
Net realized investment gains (losses):
Total OTTI losses		(45.0	)		0.4			(44.6	)		—			(44.6	)
Portion of OTTI losses recognized in OCI		27.9			(1.8	)		26.1			—			26.1
Net OTTI losses recognized in earnings		(17.1	)		(1.4	)		(18.5	)		—			(18.5	)
Net realized investment gains (losses), excluding OTTI losses		10.1			(9.6	)		0.5			—			0.5
Net realized investment losses		(7.0	)		(11.0	)		(18.0	)		—			(18.0	)
Gain on debt repurchase		—			—			—			—			—
Total revenues		1,399.3			(9.8	)		1,389.5			—			1,389.5
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends		800.0			45.4			845.4			3.2			848.6
Policyholder dividends		188.8			10.2			199.0			—			199.0
Policy acquisition cost amortization		172.0			(15.6	)		156.4			(29.4	)		127.0
Interest expense on indebtedness		23.7			—			23.7			—			23.7
Other operating expenses		175.4			10.6			186.0			1.1			187.1
Total benefits and expenses		1,359.9			50.6			1,410.5			(25.1	)		1,385.4
Income (loss) from continuing operations before income taxes		39.4			(60.4	)		(21.0	)		25.1			4.1
Income tax expense (benefit)		2.4			(0.3	)		2.1			7.4			9.5
Income (loss) from continuing operations		37.0			(60.1	)		(23.1	)		17.7			(5.4	)
Income (loss) from discontinued operations, net of income taxes		(6.9	)		0.8			(6.1	)		—			(6.1	)
Net income (loss)		30.1			(59.3	)		(29.2	)		17.7			(11.5	)
Less: Net income (loss) attributable to noncontrolling interests		—			(0.4	)		(0.4	)		—			(0.4	)
Net income (loss) attributable to The Phoenix Companies, Inc.	$	30.1		$	(58.9	)	$	(28.8	)	$	17.7		$	(11.1	)

(Continued from previous page)	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Nine months ended September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
COMPREHENSIVE INCOME (LOSS):
Net income (loss) attributable to The Phoenix Companies, Inc.	$	30.1		$	(58.9	)	$	(28.8	)	$	17.7		$	(11.1	)
Net income (loss) attributable to noncontrolling interests		—			(0.4	)		(0.4	)		—			(0.4	)
Net income (loss)		30.1		$	(59.3	)	$	(29.2	)	$	17.7		$	(11.5	)
Other comprehensive income (loss) before income taxes:
Net unrealized investment gains before income taxes(5)		19.9			36.0			55.9			4.4			60.3
Non-credit portion of OTTI losses recognized in OCI before income taxes(5)		23.4			(44.9	)		(21.5	)		—			(21.5	)
Net pension liability adjustment before income taxes		5.2			(7.4	)		(2.2	)		—			(2.2	)
Net unrealized other gains (losses) before income taxes		—			—			—			—			—
Net unrealized derivative instruments gains (losses) before income taxes(5)		(0.1	)		0.1			—			—			—
Other comprehensive income (loss) before income taxes		48.4			(16.2	)		32.2			4.4			36.6
Less: Income tax expense (benefit) related to:
Net unrealized investment gains (losses)(5)		(13.4	)		29.6			16.2			(7.5	)		8.7
Non-credit portion of OTTI losses recognized in OCI(5)		8.2			(15.8	)		(7.6	)		—			(7.6	)
Net pension liability adjustment		—			—			—			—			—
Net unrealized other gains (losses)		—			—			—			—			—
Net unrealized derivative instruments gains (losses)		—			—			—			—			—
Total income tax expense (benefit)		(5.2	)		13.8			8.6			(7.5	)		1.1
Other comprehensive income net of income taxes		53.6			(30.0	)		23.6			11.9			35.5
Comprehensive income (loss)		83.7		$	(89.3	)	$	(5.6	)	$	29.6		$	24.0
Less: Comprehensive income attributable to noncontrolling interests, net of income taxes		—			(0.4	)		(0.4	)		—			(0.4	)
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.	$	83.7		$	(88.9	)	$	(5.2	)	$	29.6		$	24.4

(Continued from previous page)	Consolidated Statement of Comprehensive Income
($ in millions, except share data)	Nine months ended September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption		Retrospective Adoption(2)		As restated and amended
EARNINGS (LOSS) PER SHARE: (3)
Earnings (loss) from continuing operations – basic	$	6.34		$	(10.34	)		NM	$	3.04	$	(0.93	)
Earnings (loss) from continuing operations – diluted	$	6.33		$	(10.34	)		NM	$	3.04	$	(0.93	)
Earnings (loss) from discontinued operations – basic	$	(1.18	)	$	0.14			NM	$	—	$	(1.05	)
Earnings (loss) from discontinued operations –  diluted	$	(1.18	)	$	0.14			NM	$	—	$	(1.05	)
Net earnings (loss) attributable to The Phoenix Companies, Inc. – basic	$	5.15		$	(10.13	)		NM	$	3.04	$	(1.91	)
Net earnings (loss) attributable to The Phoenix Companies, Inc. – diluted	$	5.15		$	(10.13	)		NM	$	3.04	$	(1.91	)
Basic weighted-average common shares outstanding (in thousands)		5,840			5,814	(4)		NM		5,814		5,814
Diluted weighted-average common shares outstanding (in thousands)		5,849			5,814	(4)		NM		5,814		5,814

———————

(1)	Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)	Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

(3)	All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
(4)	Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.

(5)   In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.

	Consolidated Statement of Cash Flows
($ in millions)	For the period ended September 30, 2011
	As previously Reported(1)			Correction of errors(2)			Adjusted prior to the retrospective adoption			Retrospective Adoption(3)			As restated and amended
OPERATING ACTIVITIES:
Net income (loss)	$	30.1		$	(58.9	)	$	(28.8	)	$	17.7		$	(11.1	)
Net realized investment gains		7.0			11.0			18.0			—			18.0
Gain on debt repurchase		—			—			—			—			—
Policy acquisition costs deferred		(104.3	)		38.6			(65.7	)		1.1			(64.6	)
Amortization of deferred policy acquisition costs		172.0			(15.6	)		156.4			(29.4	)		127.0
Amortization and depreciation		9.1			—			9.1			—			9.1
Interest credited		—			89.4			89.4			—			89.4
Equity in earnings of limited partnerships and other investments		—			(48.2	)		(48.2	)		—			(48.2	)
Change in:
Accrued investment income		(66.9	)		(42.9	)		(109.8	)		—			(109.8	)
Deferred income taxes		1.3			(11.4	)		(10.1	)		7.4			(2.7	)
Receivables		(7.6	)		18.2			10.6			—			10.6
Policy liabilities and accruals		(175.9	)		(190.8	)		(366.7	)		3.2			(363.5	)
Dividend obligations		—			16.2			16.2			—			16.2
Impact of operating activities of consolidated investment entities, net		—			(2.7	)		(2.7	)		—			(2.7	)
Other operating activities, net		(10.4	)		(23.8	)		(34.2	)		—			(34.2	)
Cash from (for) continuing operations		(145.6	)		(220.9	)		(366.5	)		—			(366.5	)
Discontinued operations, net		6.2			(6.2	)		—			—			—
Cash used for operating activities		(139.4	)		(227.1	)		(366.5	)		—			(366.5	)
INVESTING ACTIVITIES:
Purchases of:
Available-for-sale debt securities		(5,017.7	)		2,763.8			(2,253.9	)		—			(2,253.9	)
Available-for-sale equity securities		—			(5.7	)		(5.7	)		—			(5.7	)
Derivative instruments		—			(32.9	)		(32.9	)		—			(32.9	)
Fair value investments		—			(35.0	)		(35.0	)		—			(35.0	)
Other investments		—			(1.1	)		(1.1	)		—			(1.1	)
Sales, repayments and maturities of:
Available-for-sale debt securities		4,540.3			(2,778.1	)		1,762.2			—			1,762.2
Available-for-sale equity securities		—			1.9			1.9			—			1.9
Derivative instruments		—			61.4			61.4			—			61.4
Fair value investments		—			10.9			10.9			—			10.9
Other investments		—			22.0			22.0			—			22.0
Contributions to limited partnerships and limited liability corporations		—			(67.1	)		(67.1	)		—			(67.1	)
Distributions from limited partnerships and limited liability corporations		—			78.7			78.7			—			78.7
Policy loans, net		34.1			67.7			101.8			—			101.8
Impact of investing activities of consolidated investment entities, net		—			—			—			—			—
Other investing activities, net		—			(4.6	)		(4.6	)		—			(4.6	)
Premises and equipment additions		(3.4	)		3.4			—			—			—
Discontinued operations, net		(4.9	)		4.9			—			—			—
Cash provided by (used for) investing activities		(451.6	)		90.2			(361.4	)		—			(361.4	)
($ in millions)	For the period ended September 30, 2011
	As previously reported			Correction of errors(2)			Adjusted prior to the retrospective adoption			Retrospective Adoption(3)			As restated and amended
FINANCING ACTIVITIES:
Policyholder deposit fund deposits		1,068.6			267.7			1,336.3			—			1,336.3
Policyholder deposit fund withdrawals		(450.7	)		(469.7	)		(920.4	)		—			(920.4	)
Net transfers to/from separate accounts		—			344.1			344.1			—			344.1
Impact of financing activities of consolidated investment entities, net		—			1.3			1.3			—			1.3
Cash provided by financing activities		617.9			143.4			761.3			—			761.3
Change in cash and cash equivalents		26.9			6.5			33.4			—			33.4
Change in cash included in discontinued operations assets		—			1.2			1.2			—			1.2
Cash and cash equivalents, beginning of period		121.9			(28.2	)		93.7			—			93.7
Cash and cash equivalents, end of period	$	148.8		$	(20.5	)	$	128.3		$	—		$	128.3
Supplemental Disclosure of Cash Flow Information
Income taxes paid	$	(6.2	)	$	—		$	(6.2	)	$	—		$	(6.2	)
Interest expense on indebtedness paid	$	(23.0	)	$	2.6		$	(20.4	)	$	—		$	(20.4	)
Non-Cash Transactions During the Year
Investment exchanges	$	—		$	54.5		$	54.5		$	—		$	54.5

———————

(1)	Operating activities of the consolidated statement of cash flows for the period ended September 30, 2011 was previously reported using the direct method. Reported numbers herein reflect adjustment to indirect method currently presented.
(2)	Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 3 for additional information regarding these amounts and the retrospective adoption.

(3)   Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

	Consolidated Statement of Changes in Stockholders’ Equity
($ in millions, except share data)	For the period ended September 30, 2011
	As previously reported			Correction of errors(1)			Adjusted prior to the retrospective adoption			Retrospective Adoption(2)			As restated and amended
COMMON STOCK:(3)
Balance, beginning of period	$	1.3		$	—		$	1.3		$	—		$	1.3
Adjustment for reverse stock split		—			—			—			—			—
Balance, end of period	$	1.3		$	—		$	1.3		$	—		$	1.3
ADDITIONAL PAID-IN CAPITAL:
Balance, beginning of period	$	2,631.0		$	—		$	2,631.0		$	—		$	2,631.0
Issuance of shares and compensation expense on stock compensation awards		1.8			—			1.8			—			1.8
Adjustment for reverse stock split		—			—			—			—			—
Balance, end of period	$	2,632.8		$	—		$	2,632.8		$	—		$	2,632.8
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance, beginning of period	$	(133.8	)	$	(50.7	)	$	(184.5	)	$	28.3		$	(156.2	)
Adjustment for initial application of accounting changes		—			—			—			—			—
Other comprehensive income (loss)		53.6			(30.0	)		23.6			11.9			35.5
Balance, end of period	$	(80.2	)	$	(80.7	)	$	(160.9	)	$	40.2		$	(120.7	)
ACCUMULATED DEFICIT:
Balance, beginning of period	$	(1,163.5	)	$	(102.1	)	$	(1,265.6	)	$	(232.4	)	$	(1,498.0	)
Adjustment for initial application of accounting changes		—			—			—			—			—
Net income (loss)		30.1			(58.9	)		(28.8	)		17.7			(11.1	)
Balance, end of period	$	(1,133.4	)	$	(161.0	)	$	(1,294.4	)	$	(214.7	)	$	(1,509.1	)
TREASURY STOCK, AT COST: (3)
Balance, beginning of period	$	(179.5	)	$	—		$	(179.5	)	$	—		$	(179.5	)
Change in treasury stock		—			—			—			—			—
Balance, end of period	$	(179.5	)	$	—		$	(179.5	)	$	—		$	(179.5	)
TOTAL STOCKHOLDERS’ EQUITY ATTRIBUTABLE TO THE PHOENIX COMPANIES, INC.:
Balance, beginning of period	$	1,155.5		$	(152.8	)	$	1,002.7		$	(204.1	)	$	798.6
Adjustment for initial application of accounting changes		—			—			—			—			—
Change in stockholders’ equity attributable to
The Phoenix Companies, Inc.		85.5			(88.9	)		(3.4	)		29.6			26.2
Stockholders’ equity, end of period	$	1,241.0		$	(241.7	)	$	999.3		$	(174.5	)	$	824.8
NONCONTROLLING INTERESTS:
Balance, beginning of period	$	—		$	1.8		$	1.8			—		$	1.8
Change in noncontrolling interests		—			0.8			0.8			—			0.8
Balance, end of period	$	—		$	2.6		$	2.6		$	—		$	2.6
TOTAL STOCKHOLDERS’ EQUITY:
Balance, beginning of period	$	1,155.5		$	(151.0	)	$	1,004.5		$	(204.1	)	$	800.4
Adjustment for initial application of accounting changes		—			—			—			—			—
Change in stockholders’ equity		85.5			(88.1	)		(2.6	)		29.6			27.0
Stockholders’ equity, end of period	$	1,241.0		$	(239.1	)	$	1,001.9		$	(174.5	)	$	827.4

———————

(1)	Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
(2)	Adjustments related to the retrospective adoption of amended guidance to ASC 944, Financial Services – Insurance (ASU 2010-26).

(3)   Reflects the 1-for-20 reverse stock split, which was effective August 10, 2012.