PACIFIC SELECT

ESTATE PRESERVER II PROSPECTUS MAY 1, 2008

Pacific Select Estate Preserver II is a last survivor flexible premium variable life insurance policy issued by Pacific Life Insurance Company.

• Last survivor means the Policy insures the lives of two people and provides a Death Benefit that’s payable after both people have died.

• Flexible premium means you can vary the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing costs of Policy benefits.

• Variable means the Policy’s value depends on the performance of the Investment Options you choose.

• Life insurance means the Policy provides a Death Benefit to the Beneficiary you choose.

This prospectus provides information that you should know before buying a Policy. It’s accompanied by the current prospectuses for the Funds that provide the underlying portfolios for the Variable Investment Options offered under the Policy. The Variable Investment Options are funded by the Pacific Select Exec Separate Account of Pacific Life. Please read these prospectuses carefully and keep them for future reference.

Here’s a list of all of the Investment Options available under your Policy:

VARIABLE INVESTMENT OPTIONS

Pacific Select Fund

Small-Cap Growth
International Value
Long/Short Large-Cap
International Small-Cap
Equity Index
Small-Cap Index
Diversified Research
Equity
American Funds^® Growth- Income American Funds^® Growth
Large-Cap Value
Technology
Short Duration Bond
Floating Rate Loan
Diversified Bond
Growth LT
Focused 30
Health Sciences Mid-Cap Equity
(formerly Mid-Cap Value)
Large-Cap Growth
International Large-Cap
Small-Cap Value
Multi-Strategy
Main Street^® Core
Emerging Markets
Money Market High Yield Bond
Managed Bond
Inflation Managed
Comstock
Mid-Cap Growth
Real Estate
Small-Cap Equity

BlackRock Variable Series Funds, Inc.
BlackRock Basic Value V.I. Fund Class III

BlackRock Global Allocation V.I. Fund Class III

Fidelity^® Variable Insurance Products Funds
Fidelity VIP Contrafund^® Portfolio Service Class 2
Fidelity VIP Freedom Income Class 2
Fidelity VIP Freedom 2010 Class 2
Fidelity VIP Freedom 2015 Class 2
Fidelity VIP Freedom 2020 Class 2
Fidelity VIP Freedom 2025 Class 2
Fidelity VIP Freedom 2030 Class 2
Fidelity VIP Growth Portfolio Service Class 2
Fidelity VIP Mid Cap Portfolio Service Class 2
Fidelity VIP Value Strategies Portfolio Service Class 2

Janus Aspen Series
International Growth Portfolio Service Class
INTECH Risk-Managed Core Portfolio Service Class
Mid Cap Growth Portfolio Service Class Lazard Retirement Series, Inc.
US Strategic Equity

Legg Mason Partners Variable Equity Trust
Legg Mason Partners Variable Aggressive Growth Portfolio – Class II
Legg Mason Partners Variable Mid Cap Core Portfolio – Class II

MFS^® Variable Insurance Trust
MFS New Discovery Series Service Class
MFS Utilities Series Service Class

Premier VIT
OpCap Small Cap Portfolio

T. Rowe Price Equity Series, Inc.
T. Rowe Price Blue Chip Growth Portfolio – II
T. Rowe Price Equity Income Portfolio – II

Van Eck Worldwide Insurance Trust
Van Eck Worldwide Hard Assets Fund

FIXED OPTIONS

Fixed Account

Fixed LT Account

This Policy is not available in all states. This prospectus is not an offer in any state or jurisdiction where we’re not legally permitted to offer the Policy.

The Policy is described in detail in this prospectus and its Statement of Additional Information (SAI). Each Fund is described in its prospectus and in its SAI. No one has the right to describe the Policy or any Fund any differently than they have been described in these documents.

You should be aware that the Securities and Exchange Commission (SEC) has not reviewed the Policy for its investment merit, and does not guarantee that the information in this prospectus is accurate or complete. It’s a criminal offense to say otherwise.

A life insurance policy may be appropriate if you are looking to provide a death benefit for family members or others or to help meet other long-term financial objectives. Discuss with your qualified investment professional whether a variable life insurance policy, optional benefits and underlying Investment Options are appropriate for you, taking into consideration your age, income, net worth, tax status, insurance needs, financial objectives, investment goals, liquidity needs, time horizon, risk tolerance and relevant information. Together you can decide if a variable life insurance policy is right for you.

Pacific Life does not provide legal or tax advice. Any statement contained in this communication is not intended or written to be legal or tax advice, nor may it be used for the purpose of avoiding any tax penalties that may be imposed on the taxpayer. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

YOUR GUIDE TO THIS PROSPECTUS

Benefits and Risks of Pacific Select Estate Preserver II	3
Fee Tables	6
Terms Used in this Prospectus	9
Pacific Select Estate Preserver II basics	11
Issuing the Policy	11
Owners, the Insureds and Beneficiaries	11
Your Policy Date	12
Timing of Payments, Forms and Requests	13
Understanding Policy Expenses and Cash Flow	14
Your Free Look Right	15
Statements and reports we’ll send you	16
Telephone and Electronic Transactions	16
The Death Benefit	18
The Face Amount	18
The Death Benefit	18
Choosing Your Death Benefit Option	18
The Guideline Minimum Death Benefit	19
Comparing the Death Benefit Options	19
When We Pay the Death Benefit	20
Changing Your Death Benefit Option	20
Decreasing the Face Amount	21
Optional Riders	21
How Premiums Work	23
Your Initial Premium	23
Planned Periodic Premium Payments	23
Paying Your Premium	24
Deductions From Your Premiums	24
Limits on the Premium Payments You Can Make	25
Allocating Your Premiums	25
Your Policy’s Accumulated Value	30
Calculating Your Policy’s Accumulated Value	30
Monthly Deductions	30
Lapsing and Reinstatement	32
Your Investment Options	34
Variable Investment Options	34
Fixed Options	40
Transferring Among Investment Options and Market-timing Restrictions	41
Transfer Services	43
Withdrawals, Surrenders and Loans	44
Making Withdrawals	44
Taking Out a Loan	45
Ways to Use Your Policy’s Loan and Withdrawal Features	46
Surrendering Your Policy	47
General Information About Your Policy	48
Variable Life Insurance and Your Taxes	50
About Pacific Life	54
Appendices
Appendix A: Death Benefit Calculation Tables	A-1
Appendix B: Portfolio Optimization Models Until May 2, 2008	B-1
Where to Go For More Information	back cover

2

BENEFITS AND RISKS OF PACIFIC SELECT ESTATE PRESERVER II

This overview tells you some key things you should know about your Policy. It’s designed as a summary only – please read the entire prospectus and your Policy for more detailed information, or contact us or your registered representative for additional information about your Policy.

The Policy is offered for sale in all jurisdictions where we are authorized to do business and where the Policy is approved by the appropriate insurance department or regulatory authorities. Individual Policy features may not be available in all states or may vary by state. The state in which your Policy is issued governs whether or not certain features, Riders, charges and fees are allowed in your Policy. Any significant variations from the information appearing in this prospectus which are required due to individual state requirements are contained in your Policy, or provided by separate endorsement. You should refer to your Policy for these state specific features.

 Benefits of your policy

 Flexibility

The Policy is designed to be flexible to meet your specific life insurance needs. Within certain limits, you can:

• choose the timing, amount and frequency of premium payments

• change the Death Benefit Option

• decrease the Policy’s Face Amount

• change the Beneficiary

• change your investment selections.

 Death Benefit

The Death Benefit will always be the greater of the Death Benefit under the Death Benefit Option you choose or the Guideline Minimum Death Benefit. The Guideline Minimum Death Benefit is the minimum Death Benefit that we must pay to ensure that your Policy qualifies as life insurance.

You may choose one of four Death Benefit Options:

• Option A – your Death Benefit will be the Face Amount of your Policy.

• Option B – your Death Benefit will be the Face Amount of your Policy plus its Accumulated Value.

• Option C – your Death Benefit will be the Face Amount of your Policy plus the total premiums you’ve paid minus any withdrawals or distributions made.

• Option D – your Death Benefit will be the Face Amount of your Policy multiplied by a Death Benefit factor.

 Accumulated Value

Accumulated Value is the value of your Policy on any Business Day. It is not guaranteed – it depends on the performance of the Investment Options you’ve chosen, the timing and amount of premium payments you’ve made, Policy charges, and how much you’ve borrowed or withdrawn from the Policy.

You can access your Accumulated Value in several ways:

• Withdrawals – you can withdraw part of your Policy’s Net Cash Surrender Value.

• Loans – you can take out a loan from us using your Policy’s Accumulated Value as security.

• Surrender – you can surrender or cash in your Policy for its Net Cash Surrender Value while either Insured is alive.

• Income benefits – you can use withdrawal or surrender benefits to buy an income benefit that provides a monthly income. In addition, your Policy’s Beneficiary can use Death Benefit proceeds to buy an income benefit.

3

BENEFITS AND RISKS OF PACIFIC SELECT ESTATE PRESERVER II

 Investment Options

You can choose to allocate your net premiums and Accumulated Value among a selection of Variable Investment Options, each of which invests in a corresponding portfolio of various underlying Funds. The Policy also offers two Fixed Options, both of which provide a guaranteed minimum rate of interest.

You can transfer among the Investment Options during the life of your Policy without paying any current income tax. There is currently no charge for transfers.

 Tax Benefits

Your Beneficiary generally will not have to pay federal income tax on Death Benefit Proceeds. You’ll also generally not be taxed on any or all of your Policy’s Accumulated Value unless you receive a cash distribution.

Risks of your policy

 Long-term Financial Planning

This Policy is designed to provide a Death Benefit for family members or others or to help meet other long-term financial objectives. It is not suitable as a short-term savings vehicle. It may not be the right kind of policy if you plan to withdraw money or surrender your Policy for short-term needs. Taking a withdrawal or surrendering your Policy may incur charges. See the Fee Tables and your Policy for charges assessed when withdrawing from or surrendering your Policy.

Please discuss your insurance needs and financial objectives with your registered representative.

 Last Survivor Policy

The Pacific Select Estate Preserver II is a last survivor policy. This means that the Death Benefit will not be paid to your Beneficiary until after the second person Insured under the Policy dies. This may be appropriate for two spouses who want to provide a Death Benefit for their children.

This may not be the right kind of Policy for someone who wants to provide a Death Benefit for his or her spouse. In that case, a policy that insures a single life may be more appropriate.

 Premium Payments

Federal tax law puts limits on the premium payments you can make in relation to your Policy’s Death Benefit. We may refuse all or part of a premium payment you make, or remove all or part of a premium from your Policy and return it to you under certain circumstances.

 Lapse

Your Policy stays In Force as long as you have sufficient Accumulated Value to cover your monthly deductions of Policy charges. Insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest may cause your Policy to lapse – which means you’ll no longer have any insurance coverage. There are costs associated with reinstating a lapsed Policy.

There is no guarantee that your Policy will not lapse even if you pay your planned periodic premium. You should consider a periodic review of your coverage with your registered representative.

 Investment Performance

Each Variable Investment Option invests in a corresponding portfolio of an underlying Fund, as detailed in Your Investment Options. The value of each portfolio fluctuates with the value of the investments it holds. Returns are not guaranteed. You bear the investment risk of any Variable Investment Option you choose.

See each Fund’s prospectus for more information on the underlying portfolios and their individual risks.

4

 Withdrawals and Loans

Making a withdrawal or taking out a loan may:

• change your Policy’s tax status

• reduce your Policy’s Face Amount

• reduce your Policy’s Death Benefit

• reduce the Death Benefit Proceeds paid to your Beneficiary

• make your Policy more susceptible to lapsing.

Be sure to plan carefully before using these Policy benefits.

Your Policy’s withdrawal feature is not available until your first Policy Anniversary.

 Tax Consequences of Withdrawals, Surrenders and Loans

You may be subject to income tax if you take any withdrawals or surrender the Policy, or if your Policy lapses and you have not repaid any outstanding Policy Debt.

If your Policy is a Modified Endowment Contract, all distributions you receive during the life of the Policy may be subject to tax and a 10% penalty.

There are other tax issues to consider when you own a life insurance policy. These are described in more detail in Variable Life Insurance and Your Taxes.

5

FEE TABLES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. Please read the entire prospectus, your Policy and the SAI for more detailed information regarding these fees and expenses.

 Transaction fees

This table describes the fees and expenses that you will pay at the time you buy the Policy, surrender the Policy, or transfer Accumulated Value between Investment Options.

CHARGE	WHEN CHARGE IS DEDUCTED	AMOUNT DEDUCTED
Maximum sales load imposed on premiums	Upon receipt of premium	6.0% of premium1
Premium based tax charges2	Upon receipt of premium	State and local charge:  2.35% of premium Federal charge:  1.50% of premium
Maximum surrender charge	Upon full surrender of Policy	$0
Withdrawal charge	Upon partial withdrawal of Accumulated Value	$25 per withdrawal
Transfer fees	Upon transfer of Accumulated Value between Investment Options	$503
OPTIONAL BENEFITS4
Accelerated Living Benefits Rider	At exercise of benefit	$150
Enhanced Policy Split Option Rider	No charge	$0
Policy Split Option Rider	At exercise of benefit	$200
ADMINISTRATIVE AND UNDERWRITING SERVICE FEES5
Audits of premium/loan	Upon request of audit of over 2 years or more	$25
Duplicate Policy	Upon request of duplicate Policy6	$50
Illustration request	Upon request of Policy Illustration in excess of 1 per year	$25
Death Benefit Option change	Upon request for Death Benefit Option change	$100
Risk Class change	Upon request for Risk Class change	$100 per Insured7
Adding or increasing an optional Rider	Upon approval of specific request	$100

1	Starting in Policy Year 11 and thereafter, the sales load is reduced to 4.0% of premium paid.
2	We do not expect to increase the state and local charge or federal charge unless the rates we pay change or a change in law requires us to do so.
3	There is no charge currently imposed upon a transfer.
4	Riders are briefly described under The Death Benefit: Optional Riders and more information appears in the SAI.
5	We do not currently charge administrative or underwriting service fees.
6	Certificate of Coverage is available without charge.
7	We charge a maximum of $50 for a request for Risk Class change on Policies issued on or before April 30, 2004.

6

 Periodic charges other than Fund operating expenses

This table describes the fees and expenses that you will pay periodically during the time you own the Policy, not including portfolio fees and expenses.

				AMOUNT DEDUCTED—
			WHEN CHARGE IS	MAXIMUM GUARANTEED	AMOUNT DEDUCTED—
CHARGE			DEDUCTED	CHARGE	CURRENT CHARGES
Cost of Insurance1,2 Minimum and maximum			Monthly Payment Date	$0.01–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.01–$34.06 per $1,000 of a discounted Net Amount At Risk
	Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue			$0.01 per $1,000 of a discounted Net Amount At Risk	Same
Administrative charge2			Monthly Payment Date	$16.003	Same
Mortality and expense risk
	Face amount charge Minimum and maximum		Monthly Payment Date	$0.06–$1.13 per $1,000 of initial Face Amount4	Same
	Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue			$0.12 per $1,000 of Coverage Segment	Same
	Asset charge2		Monthly Payment Date	0.30% annually (0.025% monthly) of Accumulated Value in Investment Options5	Same
Loan interest charge			Policy Anniversary	4.5% of Policy’s Loan Account balance annually6	Same
OPTIONAL BENEFITS Minimum and Maximum7
Individual Annual Renewable Term Rider			Monthly Payment Date, beginning on effective date of coverage for each Coverage Segment	$0.09–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.02–$24.02 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a male select non-smoker who is Age 56 at Policy issue		$0.97 per $1,000 of a discounted Net Amount At Risk	$0.11 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a female select non-smoker who is Age 53 at Policy issue		$0.52 per $1,000 of a discounted Net Amount At Risk	$0.06 per $1,000 of a discounted Net Amount At Risk
Last Survivor Added Protection Benefit Rider			Monthly Payment Date, beginning on effective date of coverage for each Coverage Segment	$0.01–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.01–$34.06 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue		$0.01 per $1,000 of a discounted Net Amount At Risk	$0.01 per $1,000 of a discounted Net Amount At Risk

7

FEE TABLES

1	Cost of insurance rates apply uniformly to all members of the same Class. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your Policy Specifications will indicate the guaranteed cost of insurance charge applicable to your Policy, and more detailed information concerning your cost of insurance charges is available on request from your registered representative or us. Also, before you purchase the Policy, you may request personalized Illustrations of your future benefits under the Policy based upon the Insureds’ Class, the Death Benefit Option, Face Amount, planned periodic premiums, and any Riders requested. Cost of insurance rates for your Policy will be stated in the Policy Specifications and calculated per $1,000 of coverage.
2	When the younger person insured by your Policy reaches Age 100, this charge is reduced $0.
3	The administrative charge is $16.00 per month for the first five Policy Years, and reduces to $6.00 thereafter.
4	The mortality and risk face amount charge rate is based on the Joint Equal Age of the Insureds and the Face Amount on the Policy Date. The charge is calculated and deducted monthly for the first 10 Policy Years, and reduces to $0 thereafter. The mortality and expense risk face amount charges shown in the table may not be typical of the charges you will pay. Ask your registered representative for more information on this charge for your Policy. The mortality and expense risk face amount charge for your Policy will be stated in the Policy Specifications.
5	Starting in Policy Year 21 and continuing thereafter, the charge reduces to 0.10% annually (0.0083% monthly) of Accumulated Value in Investment Options.
6	Starting in Policy Year 11 and continuing thereafter, the charge reduces to 4.25% annually. Interest owing on the amount you borrow accrues daily at the annual rate. Interest accrued during a Policy Year is due on your Policy Anniversary. If you do not pay interest when due, we transfer an amount equal to the interest that was due from your Accumulated Value and add it to your loan. Loan interest not paid begins accruing interest on the day it is due.
7	Riders are briefly described under The Death Benefit: Optional Riders and more detailed information appears in the SAI. The Rider charges are based on the Age and Risk of the person or persons insured under the Rider on the effective date of the Rider. The Rider charges shown in the table may not be typical of the charges you will pay. Ask your registered representative for more information on optional Rider charges for your Policy. The charges for any optional Riders you add to your Policy will be stated in the Policy Specifications.

 Total annual Fund operating expenses¹

This table shows the minimum and maximum total annual operating expenses paid by the portfolios that you pay indirectly during the time you own the Policy. This table shows the range (minimum and maximum) of fees and expenses (including management fees, shareholder servicing or distribution (12b-1) fees, and other expenses) charged by any of the portfolios, expressed as an annual percentage of average daily net assets. The amounts are based on expenses paid in the year ended December 31, 2007, adjusted to reflect anticipated changes in fees and expenses, or, for new portfolios, are based on estimates for the current fiscal year.

Each Variable Account of the Separate Account purchases shares of the corresponding Fund portfolio at net asset value. The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of the portfolio. The advisory fees and other expenses are not fixed or specified under the terms of the Policy, and they may vary from year to year. These fees and expenses are described in each Fund’s prospectus.

	Minimum			Maximum
Range of total annual portfolio operating expenses before any waivers or expense reimbursements		0.25	%		4.21	%

	Minimum			Maximum
Range of total annual portfolio operating expenses after waivers or expense reimbursements		0.25	%		1.54	%

1 Pacific Life Fund Advisors, LLC, adviser to Pacific Select Fund, and other advisers to the Funds and/or other service providers have contractually agreed to reduce investment advisory fees or otherwise reimburse certain portfolios of their respective Funds which may reduce the portfolio’s expenses to the other Funds. The range of expenses in the first row above does not include the effect of any fee reduction or expense reimbursement arrangement. The range of expenses in the second row above shows the effect of contractual fee reduction and expense reimbursement arrangements that will remain in effect at least through December 31, 2008. There can be no assurance that expense waivers or reimbursement contracts will be extended beyond their current terms, and they may not cover certain expenses such as extraordinary expenses. See each Fund’s prospectus for complete information regarding annual operating expenses of that Fund.

8

TERMS USED IN THIS PROSPECTUS

In this prospectus, you and your mean the policyholder or Owner. Pacific Life, we, us and our refer to Pacific Life Insurance Company. Fund, or, collectively, the Funds, refer to one of the funds providing underlying portfolios for the Variable Investment Options offered under the Policy. Policy means a Pacific Select Estate Preserver II variable life insurance policy, unless we state otherwise.

We’ve tried to make this prospectus easy to read and understand, but you may find some words and terms that are new to you. We’ve identified some of these below.

If you have any questions, please ask your registered representative or call us at 1-800-800-7681.

Accumulated Value – the total amount of your Policy’s value allocated to the Variable Investment Options and the Fixed Options, plus the amount in the Loan Account, on any Business Day.

Age – at issue, an Insured’s Age on his/her birthday nearest the Policy Date. We add one year to this Age on each Policy Anniversary.

Beneficiary – the person, people, entity or entities you name to receive the Death Benefit Proceeds.

Business Day – any day that the New York Stock Exchange and our Life Insurance Operations Center are open. It usually ends at 4:00 p.m. Eastern time. A Business Day is called a valuation date in your Policy.

Cash Surrender Value – the Policy’s Accumulated Value less any surrender charge.

Class – a subgroup of Insureds determined by a number of factors, including the Age, Risk Class, smoking status and gender (unless unisex rates are required) of both Insureds, and the Policy Date and duration.

Death Benefit – the amount which is payable on the date of the Survivor’s death.

Death Benefit Proceeds – the amount which is payable to the Beneficiary on the date of the Survivor’s death, adjusted as provided in the Policy.

Face Amount – the minimum Death Benefit for so long as your Policy remains In Force. The Face Amount may be increased or decreased under certain circumstances.

Fixed Options – the Fixed Account and Fixed LT Account, which are part of our General Account.

Free Look Right – your right to cancel (or refuse) your Policy and return it for a refund.

Free Look Transfer Date – for Policies issued in states that require return of premium if the Free Look Right is exercised, the day we transfer Accumulated Value from the Money Market Investment Option to the Investment Options you chose.

General Account – includes all of our assets, except for those held in the Separate Account, or any of our other separate accounts.

Guideline Minimum Death Benefit – the minimum Death Benefit needed for the Policy to qualify as life insurance under Section 7702 of the Tax Code.

Illustration – a display of Policy benefits based upon the assumed Age and Risk Class of an Insured, Face Amount of the Policy, Death Benefit, premium payments, and historical or hypothetical gross rate of return.

In Force – the status of a Policy when all requirements are met to provide a Death Benefit upon the death of the Survivor.

Investment Option – a Variable Investment Option or Fixed Option.

Insured – a person on whose life the Policy is issued. Collectively referred to as the Insureds.

Joint Equal Age – a calculation that combines the Ages and insurance risks of two people Insured by a Policy. It changes many possible combinations of Ages, Risk Classes, nonstandard ratings and genders for the Insureds into a two life status used in some Policy calculations.

Loan Account – an account which holds amounts transferred from the Investment Options as collateral for Policy loans.

9

TERMS USED IN THIS PROSPECTUS

Modified Endowment Contract – a type of life insurance policy as described in Section 7702A of the Tax Code, which receives less favorable tax treatment on distributions of cash value than conventional life insurance policies. Classification of a Policy as a Modified Endowment Contract is generally dependent on the amount of premium paid during the first seven Policy Years, or after a material change has been made to the Policy.

Monthly Payment Date – the day we deduct monthly charges from your Policy’s Accumulated Value. The first Monthly Payment Date is your Policy Date, and it’s the same day each month thereafter.

Net Amount At Risk – the difference between the Death Benefit payable if both Insureds died and the Accumulated Value of your Policy.

Net Cash Surrender Value – the Cash Surrender Value less any Policy Debt.

Net Premium – premium paid less any premium load deducted.

Owner – the person named on the application who makes the decisions about the Policy and its benefits while it’s In Force. Two or more Owners are called Joint Owners.

Policy Anniversary – the same day as your Policy Date every year after we issue your Policy.

Policy Date – the date used to determine the Monthly Payment Date, Policy months, Policy Years, and Policy monthly, quarterly, semi-annual and annual anniversaries. The term “Issue Date” is substituted for Policy Date for Policies issued in Massachusetts.

Policy Debt – the amount in the Loan Account, plus any interest you owe.

Policy Specifications – summarize information specific to your Policy at the time the Policy is issued. We’ll send you updated Policy Specification pages if you change your Policy’s Face Amount or any of the Policy’s other benefits.

Policy Year – starts on your Policy Date and each Policy Anniversary, and ends on the day before the next Policy Anniversary.

Riders – provide extra benefits, some at additional cost.

Risk Class – is based on an Insured’s gender, health, tobacco use and is used to calculate certain Policy charges.

Separate Account – the Pacific Select Exec Separate Account, a separate account of ours registered as a unit investment trust under the Investment Company Act of 1940.

Survivor – the living Insured after one of the Insureds dies.

Tax Code – the Internal Revenue Code.

Variable Account – a subaccount of the Separate Account which invests in shares of a corresponding portfolio of an underlying Fund.

Variable Investment Option – a Variable Account.

Written Request – your signed request in writing, which may be required on a form we provide, and received by us.

10

PACIFIC SELECT ESTATE PRESERVER II BASICS

Pacific Select Estate Preserver II is a last survivor flexible premium variable life insurance policy that insures the lives of two people and pays Death Benefit Proceeds after both people have died.

When you buy a Pacific Select Estate Preserver II life insurance Policy, you’re entering into a contract with Pacific Life Insurance Company. Your contract with us is made up of your application, your Policy, applications to change or reinstate the Policy, any amendments, Riders or endorsements to your Policy, and Policy Specifications.

Issuing the Policy

Your registered representative will assist you in completing your application for the Policy. Your registered representative’s broker-dealer firm has up to 7 business days to review the application before it is sent to us. When we approve your signed application, we’ll issue your Policy. If your application does not meet our underwriting and administrative requirements, we can reject it or ask you for more information. Your Policy will be sent to your registered representative for delivery to you. You will be asked to sign a policy delivery receipt. For Policy delivery status, check with your registered representative.

Our obligations to you under the Policy begin when it is In Force. We consider your Policy In Force when the following requirements are met:

• all necessary contractual and administrative requirements are met, and

• we receive and apply the initial premium to the Policy.

If there are any outstanding contractual or administrative requirements that prevent your Policy from being placed In Force, your registered representative will review them with you no later than when the Policy is delivered. See How Premiums Work: Your initial premium for more information.

Your Policy will be In Force until one of the following happens:

• the Survivor under the Policy dies

• the grace period expires and your Policy lapses, or

• you surrender your Policy.

If your Policy is not In Force when the Survivor dies, we are not obligated to pay the Death Benefit Proceeds to your Beneficiary.

Owners, the Insureds, and Beneficiaries

Owners

You can own a Policy by yourself or with someone else. You need the signatures of all Owners for all Policy transactions.

If one of the Joint Owners dies, the surviving Owners will hold all rights under the Policy. If the Owner or the last Joint Owner dies, his or her estate will own the Policy unless you’ve given us other instructions.

You can change the Owner of your Policy by completing a Change of Owner Form. Please contact us or your registered representative for a Change of Owner Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Owner Form. You should consult your financial advisor or a lawyer about designating ownership interests.

The Insureds

This Policy insures the lives of two people who are between the Ages of 20 and 85 at the time you apply for your Policy, and who have given us satisfactory evidence of insurability. The Policy pays Death Benefit Proceeds after the Survivor dies.

Each Insured is assigned an underwriting or insurance Risk Class which we use to calculate cost of insurance and other charges. We normally use the medical or paramedical underwriting method to assign underwriting or insurance Risk Classes, which may require a medical examination.

When we use a person’s Age in Policy calculations, we generally use his or her Age as of the nearest Policy Date, and we add one year to this Age on each Policy Anniversary. For example, when we talk about someone “reaching Age 100”, we’re referring to the Policy Anniversary closest to that person’s 100th birthday, not to the day when he or she actually turns 100.

11

PACIFIC SELECT ESTATE PRESERVER II BASICS

Beneficiaries

Here are some things you need to know about naming Beneficiaries:

• You can name one or more primary Beneficiaries who each receive an equal share of the Death Benefit Proceeds unless you tell us otherwise. If one Beneficiary dies, his or her share will pass to the surviving primary Beneficiaries in proportion to the share of the Death Benefit Proceeds they’re entitled to receive, unless you tell us otherwise.

• You can also name a contingent Beneficiary for each primary Beneficiary you name. The contingent Beneficiary will receive the Death Benefit Proceeds if the primary Beneficiary dies.

• You can choose to make your Beneficiary permanent (sometimes called irrevocable). You cannot change a permanent Beneficiary’s rights under the Policy without his or her permission.

If no Beneficiary is living when the Death Benefit Proceeds are payable, you as the Policy Owner will receive the Death Benefit Proceeds. If you’re no longer living, the Death Benefit Proceeds will go to your estate.

You can change your Beneficiary at any time while either Insured is alive, and while the Policy is In Force. If you would like to change your Policy’s Beneficiary, please contact us or your registered representative for a Change of Beneficiary Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Beneficiary Form.

Your Policy Date

Your Policy Date

This is usually the later of the day we approve your Policy application or when we receive all administrative requirements needed to issue the Policy. It’s also the beginning of your first Policy Year. Your Policy’s monthly, quarterly, semi-annual and annual anniversary dates are based on your Policy Date.

The Policy Date is set so that it never falls on the 29th, 30th or 31st of any month.

You or your registered representative may request that multiple applications have the same Policy Date and be placed In Force on a common date. For multilife or employer sponsored cases, please contact your registered representative for additional details.

Backdating your Policy

You can have your Policy backdated up to six months, as long as we approve it. In Ohio, your Policy can be backdated only three months.

Backdating in some cases may lower your cost of insurance rates since these rates are based on the Ages of the Insureds. Your first premium payment must cover the premium load and monthly charges for the period between the backdated Policy Date and the day your Policy is issued.

Re-dating your Policy

Once your Policy is issued, you may request us to re-date your Policy. This means your Policy will have a new Policy Date. Re-dating will only be allowed back to the date money is received on your Policy, and can be the earlier of:

• the date your Policy is delivered to you and you paid initial premium, or

• the date we received the initial premium, if earlier than the delivery date.

If your delivery date is the 29th, 30th or 31st of any month, the Policy will be dated the 28th of that month.

If the Policy is re-dated, no Policy charges will be deducted for any period during which coverage was not provided under the terms of the Policy and all Policy charges will be calculated from the new Policy Date. There will be no coverage before the new Policy Date.

It may be disadvantageous to request that the Policy be re-dated. A new Policy Date may cause an Insured’s Age for insurance purposes to change and the cost of insurance rates to increase. It will also affect events based on time elapsed since Policy Date, such as suicide and contestable clauses and surrender charge periods.

We will not re-date Policies that are issued with a temporary insurance premium. Policies with the Policy Date pre-determined under an employer or corporate sponsored plan may not be eligible to re-date.

12

Timing of Payments, Forms and Requests

Effective date

Once your Policy is In Force, the effective date of payments, forms and requests you send us is usually determined by the day and time we receive the item in proper form at the appropriate mailing address that appears in Where To Go For More Information: How To Contact Us on the back cover of this prospectus. Any application, premium payment, form, request or any other correspondence sent to any Pacific Life address other than to the mailing address appearing in Where To Go For More Information: How To Contact Us will not be deemed received in proper order and may result in a processing delay.

Premium payments, loan requests, transfer requests, loan payments or withdrawal or surrender requests that we receive in proper form on a Business Day before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, will normally be effective as of the end of that day, unless the transaction is scheduled to occur on another Business Day. If we receive your payment or request at or after the time of the close of the New York Stock Exchange on a Business Day, your payment or request will be effective as of the end of the next Business Day. If a scheduled transaction falls on a day that is not a Business Day, we’ll process it as of the end of the next Business Day.

Other forms, notices and requests are normally effective as of the next Business Day after we receive them in proper form, unless the transaction is scheduled to occur on another Business Day. Change of Owner and Beneficiary Forms are effective as of the day you sign the change form, once we receive them in proper form.

Proper form

We’ll process your requests once we receive all letters, forms or other necessary documents, completed to our satisfaction. Proper form may require, among other things, a signature guarantee or some other proof of authenticity. We do not generally require a signature guarantee, but we may ask for one if it appears that your signature has changed, if the signature does not appear to be yours, if we have not received a properly completed application or confirmation of an application, or for other reasons to protect you and us. Call us or contact your registered representative if you have questions about the proper form required for a request.

When we make payments and transfers

We’ll normally send the proceeds of withdrawals, loans, surrenders, exchanges and Death Benefit payments, and process transfer requests, within seven days after the effective date of the request in proper form. We may delay payments and transfers, or the calculation of payments and transfers based on the value in the Variable Investment Options under unusual circumstances, for example, if:

• the New York Stock Exchange closes on a day other than a regular holiday or weekend

• trading on the New York Stock Exchange is restricted

• an emergency exists as determined by the SEC, as a result of which the sale of securities is not practicable, or it is not practicable to determine the value of a Variable Account’s assets, or

• the SEC permits a delay for the protection of policy owners.

We may delay transfers and payments from the Fixed Options, including the proceeds from withdrawals, surrenders and loans, for up to six months. We’ll pay interest at an annual rate of at least 4% on any withdrawals or surrender proceeds from the Fixed Options that we delay for 30 days or more.

We pay interest at an annual rate of at least 4% on Death Benefit Proceeds, calculated from the day the Survivor dies to the day we pay the Death Benefit Proceeds.

13

PACIFIC SELECT ESTATE PRESERVER II BASICS

Understanding Policy Expenses and Cash Flow (including fees and charges of fund portfolios)

The chart to the right illustrates how cash normally flows through a Pacific Select Estate Preserver II Policy.

Under a flexible premium life insurance policy, you have the flexibility to choose the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing cost of Policy benefits.

Investment earnings will increase your Policy’s Accumulated Value, while investment losses will decrease it. The premium payments you’ll be required to make to keep your Policy In Force will be influenced by the investment results of the Investment Options you choose.

The dark shaded boxes show the fees and expenses you pay directly or indirectly under your Policy.

In some states we’ll hold your Net Premium payments in the Money Market Investment Option until the Free Look Transfer Date. Please turn to Your Free Look Right for details.

14

PACIFIC SELECT ESTATE PRESERVER II BASICS

Your Free Look Right

Your Policy provides a free look period once the Policy is delivered to you and you sign the Policy delivery receipt. During the free look period, you have the Free Look Right to cancel (or refuse) your Policy and return it to us or your registered representative for a refund.

You’ll find a complete description of the free look period that applies to your Policy on the Policy’s cover sheet, or on a notice that accompanied your Policy. Generally, the free look period ends on the latest of the following:

• 10 days after you receive your Policy (20 days for many states if you are replacing another life insurance policy)

• 10 days after we mail or deliver this prospectus which includes a notice of your right of withdrawal

• 45 days after you complete and sign your Policy application.

Some states may have a different free look period if you are replacing another life insurance policy. Please call us or your registered representative if you have questions about your Free Look Right.

The amount of your refund may be more or less than the premium payments you’ve made, depending on the state where you signed your application. We’ll always deduct any Policy Debt from the amount we refund to you.

In most states, your refund will be based on the Accumulated Value of your Policy. In these states, we’ll allocate your Net Premiums to the Investment Options you’ve chosen. If you exercise your Free Look Right, your refund will be:

• any charges or taxes we’ve deducted from your premiums

• the Net Premiums allocated to the Fixed Options

• the Accumulated Value allocated to the Variable Investment Options

• any monthly charges and fees we’ve deducted from your Policy’s Accumulated Value in the Variable Investment Options.

In some states we’re required to refund the premium payments you’ve made. If you sign your application in one of these states, we’ll hold the Net Premiums in the Money Market Investment Option until the Free Look Transfer Date. On that day, we’ll transfer the Accumulated Value in the Money Market Investment Option to the Investment Options you’ve chosen.

The Free Look Transfer Date is the latest of the following:

• 15 days after we issue your Policy

• 45 days after your application is completed

• when we consider your Policy to be In Force.

California insureds age 60 and over

For Policies issued in the state of California, if any Insured is Age 60 or older as of the Policy effective date, the Policy’s free look period is 30 days from date of delivery. During the 30-day free look period, we’ll hold the Net Premiums in the Money Market Investment Option. On the day following the end of the 30-day free look period, we’ll automatically transfer the Accumulated Value in the Money Market Investment Option to the Investment Options you chose. This automatic transfer to your Investment Option allocation choices is excluded from the transfer limitations described later in this prospectus.

If you exercise your Free Look Right during the 30-day free look period, we will refund the premium payments you’ve made, less any Policy Debt.

You may specifically direct that, during the 30-day free look period, all Net Premiums received by us be immediately allocated to the Investment Options according to your most recent allocation instructions. You may do this:

• on your application

• in writing any time prior to the end of the 30-day free look period.

If you specifically request your Net Premiums be immediately allocated to the Investment Options, and you exercise your Free Look Right during the 30-day free look period, the amount of your refund may be more or less than the premium payments you’ve made. Your refund will be calculated as of the day we or your registered representative receive your request and the Policy. The refund will be:

• any charges or taxes we’ve deducted from your premiums

• the Net Premiums allocated to the Fixed Options

• the Accumulated Value allocated to the Variable Investment Options

15

PACIFIC SELECT ESTATE PRESERVER II BASICS

• any monthly charges and fees we’ve deducted from your Policy’s Accumulated Value in the Variable Investment Options.

Statements and Reports We’ll Send You

We send the following statements and reports to Policy Owners:

• a confirmation for certain financial transactions, usually including premium payments and transfers, loans, loan repayments, withdrawals and surrenders. Monthly deductions and scheduled transactions made under the dollar cost averaging, portfolio rebalancing and first year transfer services are reported on your quarterly Policy statement.

• a quarterly Policy statement. The statement will tell you the Accumulated Value of your Policy by Investment Options, Cash Surrender Value, the amount of the Death Benefit, the Policy’s Face Amount, and any Policy Debt. It will also include a summary of all transactions that have taken place since the last quarterly statement, as well as any other information required by law.

• supplemental schedules of benefits and planned periodic premiums. We’ll send these to you if you change your Policy’s Face Amount or change any of the Policy’s other benefits.

• financial statements, at least annually or as required by law, of the Separate Account and Pacific Select Fund, that include a listing of securities for each portfolio of the Pacific Select Fund. We’ll also send you financial statements that we receive from the other Funds.

If you suspect an error on a confirmation, quarterly or annual statement, you must notify us in writing as soon as possible to ensure proper accounting to your Policy. We assume transactions are accurate unless you notify us otherwise within 90 days after the transaction confirmation date or, if the transaction is first confirmed on the quarterly statement, within 90 days after the quarterly statement date. All transactions are deemed final and may not be changed after the applicable 90 day period. When you write us, include your name, Policy number and a description of the suspected error.

Prospectus and Fund Report Format Authorization

Subject to availability, you may request us to deliver prospectuses, statements, and other information (“Documents”) electronically. You may also elect to receive prospectus and Fund reports on CD-ROM, via US mail service. If you wish to receive Documents electronically or via CD-ROM, you authorize us to do so by indicating this preference on the application, via telephone, or by sending us a Written Request to receive such Documents electronically. We do not charge for this service.

For electronic delivery, you must provide us with a current and active e-mail address and have Internet access to use this service. While we impose no additional charge for this service, there may be potential costs associated with electronic delivery, such as on-line charges. Documents will be available on our Internet website. You may access and print all Documents provided through this service. As Documents become available, we will notify you of this by sending you an e-mail message that will include instructions on how to retrieve the Document. You are responsible for any e-mail filters that may prevent you from receiving e-mail notifications and for notifying us promptly in the event that your e-mail address changes. You may revoke your consent for electronic delivery at any time, provided that we are properly notified, and we will then start providing you with a paper copy of all required Documents. We will provide you with paper copies at any time upon request. Such a request will not constitute revocation of your consent to receive required Documents electronically.

Telephone and Electronic Transactions

You may authorize us to accept telephone or electronic instructions by completing the appropriate section on your application, or later by a Telephone and Electronic Authorization Form. As long as we have your signed authorization on file, you may give us instructions regarding the following Policy transactions by telephone or electronically through our website:

• change your premium allocations

• make transfers between Investment Options

• give us instructions regarding the dollar cost averaging or portfolio rebalancing services

• request a Policy loan (by telephone only).

Certain registered representatives are able to give us instructions electronically if authorized by you. You may appoint your registered representative to give us instructions on your behalf by completing and filing a Telephone and Electronic Authorization Form with us.

16

Here are some things you need to know about telephone and electronic transactions:

• If your Policy is jointly owned, all Joint Owners must sign the telephone and electronic authorization. We’ll take instructions from any Owner or anyone you appoint.

• We may use any reasonable method to confirm that your telephone or electronic instructions are genuine. For example, we may ask you to provide personal identification or we may record all or part of the telephone conversation. We may refuse any transaction request made by telephone or electronically.

We’ll send you a written confirmation of each telephone and electronic transaction.

Sometimes, you may not be able to make loans or transfers by telephone or electronically, for example, if our telephone lines or our website are busy because of unusual market activity or a significant economic or market change, or our telephone lines or the Internet are out of service during severe storms or other emergencies. In these cases, you can send your request to us in writing, or call us the next Business Day or when service has resumed.

When you authorize us to accept your telephone and electronic instructions, you agree that:

• we can accept and act upon instructions you or anyone you appoint give us over the telephone or electronically

• neither we, any of our affiliates, the Pacific Select Fund, or any director, trustee, officer, employee or agent of ours or theirs will be liable for any loss, damages, cost or expenses that result from transactions processed because of a request by telephone or submitted electronically that we believe to be genuine, as long as we have followed our own procedures

• you bear the risk of any loss that arises from your right to make loans or transfers over the telephone or electronically.

17

THE DEATH BENEFIT

We’ll pay Death Benefit Proceeds to your Beneficiary after the Survivor dies while the Policy is still In Force. Your Beneficiary generally will not have to pay federal income tax on Death Benefit Proceeds.

The Face Amount

Your Policy’s initial amount of insurance coverage is its initial Face Amount. We determine the Face Amount based on instructions provided in your application.

The minimum Face Amount when a Policy is issued is usually $100,000, but we may reduce this in some circumstances. You’ll find your Policy’s Face Amount, which includes any increases or decreases, in the Policy Specifications in your Policy.

The Death Benefit

This Policy offers four Death Benefit Options, Options A, B, C and D. The Death Benefit Option you choose will generally depend on which is more important to you: a larger Death Benefit or building the Accumulated Value of your Policy.

Here are some things you need to know about the Death Benefit:

• You choose your Death Benefit Option on your Policy application.

• If you do not choose a Death Benefit Option, we’ll assume you’ve chosen Option A.

• The Death Benefit will always be the greater of the Death Benefit under the Death Benefit Option you choose or the Guideline Minimum Death Benefit.

• The Death Benefit will never be lower than the Face Amount of your Policy if you’ve chosen Option A, B or D. The Death Benefit Proceeds will always be reduced by any Policy Debt.

• We’ll pay the Death Benefit Proceeds to your Beneficiary when we receive proof of the deaths of both Insureds.

Choosing Your Death Benefit Option

You can choose one of the following four options for the Death Benefit on your application. The graphs below help you compare the options using several hypothetical examples.

Option A – the Face Amount of your Policy.	Option B – the Face Amount of your Policy plus its Accumulated Value.
	The Death Benefit changes as your Policy’s Accumulated Value changes. The better your Investment Options perform, the larger the Death Benefit will be.
Option C – the Face Amount of your Policy plus the total premiums you’ve paid minus any withdrawals or distributions made.	Option D – the Face Amount of your Policy multiplied by a Death Benefit Factor.
The more premiums you pay and the less you withdraw, the larger the Death Benefit will be.	The Death Benefit gradually increases over time no matter how your Investment Options perform, as long as there is enough Accumulated Value to keep your Policy in force.

The examples are intended to show how the Death Benefit Options work and are not predictive of investment performance in your Policy.

18

How we calculate the Death Benefit for Option D

If you choose Option D, we’ll calculate the Death Benefit by multiplying the Face Amount by a Death Benefit factor. The Death Benefit factor is a number from 1.0 to 2.0. A factor of 1.0 means the Death Benefit equals the Face Amount. A factor of 2.0 means the Death Benefit is two times the Face Amount.

The factor changes on each Policy Anniversary and is based on the Joint Equal Age of the Insureds and the number of completed Policy Years. Generally, the Death Benefit factor will reach the maximum of 2.0 when Joint Equal Age plus the number of completed Policy Years is between 85 and 90.

You’ll find more information about the Death Benefit factor in Appendix A and in your Policy.

The Guideline Minimum Death Benefit

The Guideline Minimum Death Benefit is the minimum Death Benefit needed for your Policy to qualify as life insurance under Section 7702 of the Internal Revenue Code. If the amount of the Death Benefit under the Death Benefit Option you choose is less than the Guideline Minimum Death Benefit, we’ll adjust your Death Benefit to equal the Guideline Minimum Death Benefit.

We calculate the Guideline Minimum Death Benefit by multiplying the Accumulated Value of your Policy by a Death Benefit Percentage. This percentage is based on the Age of the younger Insured and will decrease over time. You’ll find a table of Guideline Minimum Death Benefit percentages in Appendix A and in your Policy.

If your Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit, and the Net Amount At Risk is more than three times the Death Benefit on the Policy Date, we may reduce the Death Benefit by requiring you to make a withdrawal from your Policy. If we require you to make a withdrawal, we will not charge you our usual $25 withdrawal fee, but the withdrawal may be taxable. Please turn to Withdrawals, Surrenders and Loans for information about making withdrawals.

Comparing the Death Benefit Options

The tables below compare the Death Benefits provided by the Policy’s four Death Benefit Options. The examples are intended only to show differences in Death Benefits and Net Amounts At Risk. Accumulated Value assumptions may not be realistic.

These examples show that each Death Benefit Option provides a different level of protection. Keep in mind that cost of insurance charges, which affect your Policy’s Accumulated Value, increase with the amount of the Death Benefit, as well as over time. The cost of insurance is charged at a rate per $1,000 of the discounted Net Amount At Risk. As the Net Amount At Risk increases, your cost of insurance increases. Accumulated Value also varies depending on the performance of the Investment Options in your Policy.

The example below is based on the following:

• the Insureds are a male non-smoker Age 56 and a female non-smoker Age 53 at the time the Policy was issued

• Face Amount is $1,000,000

• Accumulated Value at year 20 is $600,000

• total premiums paid into the Policy at year 20 is $300,000

• the Death Benefit factor for Death Benefit Option D at year 20 is 123.2%

• the Death Benefit percentage for the Guideline Minimum Death Benefit is 111%

• the Guideline Minimum Death Benefit is $666,000 (Accumulated Value times a Death Benefit percentage factor of 111%)

Example A		The Death Benefit is the
		larger of these two amounts
Death		Death Benefit	Guideline	Net Amount At Risk
Benefit	How it’s	under the	Minimum	used for cost of
Option	calculated	Death Benefit Option	Death Benefit	insurance charge
Option A	Face Amount	$1,000,000	$666,000	$396,736.94
Option B	Face Amount plus Accumulated Value	$1,600,000	$666,000	$994,779.11
Option C	Face Amount plus premiums less distributions	$1,300,000	$666,000	$695,758.03
Option D	Face Amount times Death Benefit factor	$1,232,000	$666,000	$627,979.91

19

THE DEATH BENEFIT

If the Death Benefit equals the Guideline Minimum Death Benefit, any increase in Accumulated Value will cause an automatic increase in the Death Benefit.

Here’s the same example, but with an Accumulated Value of $1,400,000. Because Accumulated Value has increased, the Guideline Minimum Death Benefit is now $1,554,000 ($1,400,000 times a death benefit factor of 111.1%).

Example B		The Death Benefit is the
		larger of these two amounts
Death		Death Benefit	Guideline	Net Amount At Risk
Benefit	How it’s	under the	Minimum	used for cost of
Option	calculated	Death Benefit Option	Death Benefit	insurance charge
Option A	Face Amount	$1,000,000	$1,554,000	$148,929.21
Option B	Face Amount plus Accumulated Value	$2,400,000	$1,554,000	$992,168.66
Option C	Face Amount plus premiums less distributions	$1,300,000	$1,554,000	$148,929.21
Option D	Face Amount times Death Benefit factor	$1,232,000	$1,554,000	$148,929.21

When We Pay the Death Benefit

We calculate the amount of the Death Benefit Proceeds as of the end of the day the Survivor dies. If that person dies on a day that is not a Business Day, we calculate the Death Benefit Proceeds as of the next Business Day.

Your Policy’s Beneficiary must send us proof that both Insureds died while the Policy was In Force, along with payment instructions. If both Insureds die at the same time, or if it’s not clear who died first, we’ll assume the younger Insured died first.

Death Benefit Proceeds equal the total of the Death Benefits provided by your Policy and any Riders you’ve added, minus any Policy Debt, minus any overdue charges.

We’ll pay interest at an annual rate of at least 4% on the Death Benefit Proceeds, calculated from the day the Survivor dies to the day we pay the Death Benefit Proceeds. In some states we may pay a higher rate of interest if required by law.

It is important that we have a current address for your Beneficiary so that we can pay Death Benefit Proceeds promptly. If we cannot pay the Death Benefit Proceeds to your Beneficiary within five years of the death of the Insured, we’ll be required to pay them to the state.

Changing your Death Benefit Option

You can change your Death Benefit Option after your fifth Policy Year. Here’s how it works:

• You can change the Death Benefit Option once in any Policy Year.

• You must send us your Written Request.

• You can change from any Death Benefit Option to Option A or Option B.

• The change will become effective on the first Monthly Payment Date after we receive your request. If we receive your request on a Monthly Payment Date, we’ll process it that day.

• We may charge you a fee of up to $100 each time you request to change your Death Benefit Option.

• The Face Amount of your Policy will change by the amount needed to make the Death Benefit under the new Death Benefit Option equal the Death Benefit under the old Death Benefit Option just before the change. We will not let you change the Death Benefit Option if doing so means the Face Amount of your Policy will become less than $100,000. We may waive this minimum amount under certain circumstances.

• Changing the Death Benefit Option can also affect the monthly cost of insurance charge since this charge varies with the Net Amount At Risk.

• The new Death Benefit Option will be used in all future calculations.

We will not change your Death Benefit Option if it means your Policy will be treated as a Modified Endowment Contract, unless you’ve told us in writing that this would be acceptable to you. Modified Endowment Contracts are discussed in Variable Life Insurance and Your Taxes.

20

Decreasing the Face Amount

You can decrease your Policy’s Face Amount starting on the first Policy Anniversary as long as we approve it. Here’s how it works:

• You can decrease the Face Amount as long as at least one of the Insureds is alive.

• You can only decrease the Face Amount once in any Policy Year.

• You must send us your request in writing while your Policy is In Force.

• The decrease will become effective on the first Monthly Payment Date on or after we receive and approve your request.

• Decreasing the Face Amount can affect the monthly cost of insurance charge since this charge varies with the Net Amount At Risk.

• We can refuse your request to make the Face Amount less than $100,000. We can waive this minimum amount in certain situations, such as group or sponsored arrangements.

Decreasing the Face Amount may affect your Policy’s tax status. To ensure your Policy continues to qualify as life insurance, we might be required to return:

•  part of your premium payments to you, or

•  make distributions from the Accumulated Value, which may be taxable. For more information, please see Variable Life Insurance and Your Taxes.

We will not decrease the Face Amount if it means your Policy will be treated as a Modified Endowment Contract, unless you’ve told us in writing that this would be acceptable to you.

Optional Riders

There are five optional Riders that provide extra benefits, some at additional cost. Not all Riders are available in every state, and some Riders may only be added when you apply for your Policy. Ask your registered representative for more information about the Riders available with the Policy, or about other kinds of life insurance policies offered by Pacific Life.

• Accelerated Living Benefits Rider

Gives the Policy Owner access to a portion of the Policy’s Death Benefit if the Survivor has been diagnosed with a terminal illness resulting in a life expectancy of six months or less (or longer than six months in some states).

• Enhanced Policy Split Option Rider

Available to married couples, it splits the Policy into two policies without evidence of insurability.

• Individual Annual Renewable Term Rider

Provides level or varying term insurance on either or both Insureds.

• Last Survivor Added Protection Benefit Rider

Provides level or varying term insurance on both Insureds.

• Policy Split Option Rider

Splits the Policy into two individual policies with evidence of insurability.

Some broker/dealers may limit their clients from purchasing some optional benefits based on the client’s age or other factors. You should work with your investment professional to decide whether an optional benefit is appropriate for you.

There may be tax consequences if you exercise your rights under the Accelerated Living Benefits Rider or either of the two Policy Split Option Riders. Please see Variable Life Insurance and Your Taxes for more information.

Certain restrictions may apply and are described in the Rider or benefit. We’ll add any Rider charges to the monthly charge we deduct from your Policy’s Accumulated Value.

More detailed information appears in the SAI. To obtain a copy of the SAI, visit our website at www.Pacificlife.com. Samples of the provisions for the extra optional benefits are available from us upon Written Request.

21

THE DEATH BENEFIT

Things to keep in mind

We offer other variable life insurance policies which provide insurance protection on the lives of two people or on the life of one person. The loads and charges on these policies may be different. Combining a Policy and a Rider, however, may be more economical than adding another Policy. It may also be more economical to provide an amount of insurance coverage through a Policy alone.

22

HOW PREMIUMS WORK

Your Policy gives you the flexibility to choose the amount and frequency of your premium payments.

The amount, frequency, and period of time over which you make premium payments may affect whether your Policy will be classified as a Modified Endowment Contract, or no longer qualifies as life insurance for tax purposes. See Variable Life Insurance and Your Taxes for more information.

We usually set the amount of your first premium payment. You can schedule the amount and frequency of remaining premium payments within certain limits. Each premium payment must be at least $50.

We deduct a premium load from each premium payment, and then allocate your Net Premium to the Investment Options you’ve chosen. Depending on the performance of your Investment Options, and on how many withdrawals, loans or other Policy features you’ve taken advantage of, you may need to make additional premium payments to cover monthly deductions for policy charges to keep your Policy In Force. We may accept premium payments in amounts less than $50.

Your Initial Premium

We usually require you to make a minimum initial premium payment that’s equal to at least 25% of the sum of your premium load and your Policy’s monthly charges for the first year.

The amount of the monthly charge and premium load are calculated based on your Policy’s Face Amount and the Age, smoking status, gender (unless unisex cost of insurance rates apply), and Risk Classes of the Insureds. We describe premium load later in this section. You’ll find an explanation of the monthly charge in Your Policy’s Accumulated Value.

We apply your first premium payment to the Policy on the later of the day we receive it or the day we receive all contractual and administrative requirements necessary for your Policy to be In Force. See How Premiums Work: Allocating Your Premiums for more information on when your first Net Premium is allocated to the Investment Options.

If you have outstanding contractual and administrative requirements, your registered representative will notify you of a delivery date when any outstanding requirements are due to us, not to exceed 45 days from the date we issue your Policy. If we do not receive your first premium payment and all contractual and administrative requirements on or before the delivery date, we can cancel the Policy and refund any premium payment you’ve made. We may extend the delivery date in some cases.

Planned Periodic Premium Payments

You can schedule the amount and frequency of your premium payments. We refer to scheduled premium payments as your planned periodic premium. Here’s how it works:

• On your application, you choose a fixed amount of at least $50 for each premium payment.

• You indicate whether you want to make premium payments annually, semi-annually, or quarterly. You can also choose monthly payments using our monthly Electronic Funds Transfer Plan, which is described below.

• We send you a notice to remind you of your scheduled premium payment (except for monthly Electronic Funds Transfer plan payments, which are paid automatically).

• We’ll treat any payment you make during the life of your Policy as a premium, not as a loan repayment, unless you tell us otherwise in writing.

You do not have to make the premium payments you’ve scheduled. However, not making a premium payment may have an impact on any financial objectives you may have set for your Policy’s Accumulated Value and Death Benefit, and could cause your Policy to lapse. Even if you pay all your premiums when they’re scheduled, your Policy could lapse if the Accumulated Value, less any Policy Debt, is not enough to pay your monthly charges. Turn to Your Policy’s Accumulated Value for more information.

23

HOW PREMIUMS WORK

Paying Your Premium

Premium payments must be made in a form acceptable to us before we can process it. You may pay your premium:

• by personal check, drawn on a U.S. bank

• by cashier’s check, if it originates in a U.S. bank

• by money order in a single denomination of more than $10,000, if it originates in a U.S. bank

• by third party payments, when there is a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

• wire transfers that originate in U.S. banks.

We will not accept premium payments in the following forms:

• cash

• credit card or check drawn against a credit card account

• traveler’s checks

• cashier’s check or money order drawn on a non-U.S. bank, even if the payment may be effected through a U.S. bank

• money order in a single denomination of $10,000 or less

• third party payments, if there is not a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

• wires that originate from foreign bank accounts.

All unacceptable forms of premium payments will be returned to the payor along with a letter of explanation. We reserve the right to reject or accept any form of payment. If you make premium payments or loan repayments by Electronic Funds Transfer or by check other than a cashier’s check, your payment of any withdrawal proceeds and any refund during the free look period may be delayed until we receive confirmation in our administrative office that your payment has cleared.

Monthly Electronic Funds Transfer plan

Once you’ve made your first premium payment, you can make monthly premium payments using our Electronic Funds Transfer Plan. Here’s how it works:

• You authorize us to withdraw a specified amount from your checking account, savings account or money market account each month.

• You can choose any day between the 4th and 28th of the month.

• If you do not specify a day for us to make the withdrawal, we’ll withdraw the premium payment on your Policy’s monthly anniversary. If your Policy’s monthly anniversary falls on the 1st, 2nd or 3rd of the month, we’ll withdraw the payment on the 4th of each month.

• If you make monthly payments by the Electronic Funds Transfer Plan, we will apply the payments as premium payments unless we receive a new form requesting that payments be applied as a loan repayment.

Deductions From Your Premiums

We deduct a premium load from each premium payment you make. The load is made up of three charges:

Sales load

During the first 10 years of your Policy, we deduct a 6% sales load from each premium payment you make. The sales load is reduced to 4% in Policy Year 11 and thereafter. This charge helps pay for the cost of distributing our Policies.

Premium based charges

State and local charge

We deduct 2.35% from each premium payment to pay state and local premium and other taxes. The actual taxes we pay vary from state to state, and in some instances, among municipalities. We do not expect to change the rate unless the rate we pay changes.

24

We deduct 1.50% from each premium payment to compensate us for certain costs or lost investment opportunities we incur associated with certain policy acquisition expenses that we are generally required to capitalize and amortize over a 10-year period, rather than deduct them currently for federal income tax purposes, which may result in a higher corporate federal income tax liability for us in the year the expenses were incurred. These consequences are often referred to as the deferred acquisition cost (“DAC tax”).

Effective January 1, 2006, we reduced the total amount of premium based charges we deduct from each premium payment you make by 0.20%. Effective January 1, 2007, we instituted an additional 0.20% reduction, so that the total reduction in charges deducted from each premium payment you make is 0.40%. This reduction in charge is not guaranteed. We may, in our sole discretion, change the amount of or eliminate the reduction.

We reserve the right to increase or decrease these loads and charges. Like other Policy charges, we may profit from the premium load and may use these profits for any lawful purpose, such as the payment of distribution and administrative expenses. We will notify you in advance if we change our current load rate.

Limits on the Premium Payments You Can Make

We will not accept premium payments after the younger Insured reaches Age 100.

Federal tax law puts limits on the amount of premium payments you can make in relation to your Policy’s Death Benefit. These limits apply in the following situations:

• If accepting the premium means your Policy will no longer qualify as life insurance for federal income tax purposes.

• If applying the premium in that Policy Year means your Policy will become a Modified Endowment Contract. You may direct us to accept premium payments or other instructions that will cause your Policy to be treated as a Modified Endowment Contract by signing a Modified Endowment Contract Election Form. You’ll find a detailed discussion of Modified Endowment Contracts in Variable Life Insurance and Your Taxes. You should speak to a qualified tax adviser for complete information regarding Modified Endowment Contracts.

• If applying the premium payment to your Policy will increase the Net Amount At Risk. This will happen if your Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit or would be equal to it once we applied your premium payment.

You’ll find more detailed information regarding these situations in the SAI.

Allocating Your Premiums

We generally allocate your Net Premiums to the Investment Options you’ve chosen on your application on the day we receive them. Please turn to Your Investment Options for more information about the Investment Options.

When we allocate your first premium depends on the state where you signed your Policy application. If you signed your application in a state that requires us to return the premiums you’ve paid if you exercise your Free Look Right, we’ll hold your Net Premiums in the Money Market Investment Option until the Free Look Transfer Date, and then transfer them to the Investment Options you’ve chosen.

If you signed your application in a state that requires refunds to be based on Accumulated Value if you exercise your Free Look Right, we allocate Net Premiums to the Investment Options you’ve chosen on the day we receive them or your Policy Date, if later. If your Policy has outstanding contractual and/or administrative requirements necessary before it can be placed In Force, we will allocate any Net Premiums received to the Money Market Variable Account until the requirements are satisfied and your Policy is placed In Force.

Portfolio optimization

The service. Portfolio optimization is an asset allocation service that is offered at no additional charge for use within your Policy. Asset allocation refers to the manner that investments are distributed among asset classes to help attain an investment goal. For your Policy, portfolio optimization can help with decisions about how you should allocate your Accumulated Value among available Investment Options. The theory behind portfolio optimization is that diversification among asset classes can help reduce volatility over the long term.

25

HOW PREMIUMS WORK

As part of the portfolio optimization service, several asset allocation models have been developed (portfolio optimization models or models), each based on different profiles of an investor’s willingness to accept investment risk. If you decide to subscribe to the portfolio optimization service and select one of the portfolio optimization models, your initial Net Premium (in the case of a new application) or Accumulated Value, as applicable, will be allocated to the Investment Options according to the model you select. Subsequent Net Premium will also be allocated accordingly, unless you instruct us otherwise in writing. If you choose, you can rebalance your Accumulated Value quarterly, semi-annually, or annually, to maintain the current allocations of your portfolio optimization model, since changes in the net asset values of the underlying portfolios in each model will alter your asset allocation over time. If you also allocate part of your Net Premium or Accumulated Value outside the models with our Portfolio Optimization Plus feature, as described below, and you elect periodic rebalancing, such amounts will not be considered when rebalancing. If you subscribe to portfolio optimization and elect periodic rebalancing, only the Investment Options within your model will be rebalanced.

If you subscribe to portfolio optimization, Pacific Life Fund Advisors LLC (the Adviser), a subsidiary of Pacific Life, will serve as your investment adviser for the service solely for purposes of development of the portfolio optimization models and periodic updates of the models.

On a periodic basis (typically annually), the portfolio optimization models are evaluated and the models are updated, as discussed below. If you subscribe to portfolio optimization, your Accumulated Value or Net Premium, as applicable, will be automatically reallocated in accordance with the model you select as it is updated from time to time based on discretionary authority that you grant to the Adviser, unless you instruct us otherwise. For more information on the role of the investment adviser for the portfolio optimization service, please see the brochure from the Adviser’s Form ADV, the SEC investment adviser registration form, which will be delivered to Policy Owners at the time you subscribe to the portfolio optimization service. Please contact us if you would like to receive a copy of this brochure. In developing and periodically updating the portfolio optimization models, the Adviser currently relies on the recommendations of an independent third-party analytical firm. The Adviser may change the firm that it uses from time to time, or, to the extent permissible under applicable law, use no independent firm at all.

The portfolio optimization models. Five asset allocation models are offered, each comprised of a carefully selected combination of Investment Options (reflecting the underlying portfolios of Pacific Select Fund). Development of the portfolio optimization models is a multi-step process. First, an optimization analysis is performed to determine the breakdown of asset classes. Optimization analysis requires forecasting returns, standard deviations and correlation coefficients of asset classes over the desired investing horizon and an analysis using a state-of-the art program and a statistical analytical technique known as “mean-variance optimization.” Next, after the asset class exposures are known, a determination is made of how available Investment Options (underlying portfolios) can be used to implement the asset class level allocations. The Investment Options are selected by evaluating the asset classes represented by the underlying portfolios and combining Investment Options to arrive at the desired asset class exposures. The portfolio-specific analysis uses historical returns-based style analysis and asset performance and regression and attribution analyses. It may also include portfolio manager interviews. Based on this analysis, Investment Options are selected in a way intended to optimize potential returns for each model, given a particular level of risk tolerance. This process could, in some cases, result in the inclusion of an Investment Option in a model based on its specific asset class exposure or other specific optimization factors, even where another Investment Option may have better historical performance.

Periodic updates of the portfolio optimization model and notices of updates. Each of the portfolio optimization models are evaluated periodically (generally, annually) to assess whether the combination of Investment Options within each model should be changed to better seek to optimize the potential return for the level of risk tolerance intended for the model. As a result of the periodic analysis, each model may change and Investment Options may be added to a model (including Investment Options not currently available), or Investment Options may be deleted from a model.

When your portfolio optimization model is updated, your Accumulated Value and any subsequent Net Premium will automatically be reallocated in accordance with any changes to the model you have selected. This means the allocation of your Accumulated Value, and potentially the Investment Options in which you are invested, will automatically change and your Accumulated Value and any subsequent Net Premium will be automatically reallocated among the Investment Options in your updated model (independently of any automatic rebalancing you may have selected). If you participate in the Portfolio Optimization Plus feature, the Accumulated Value and Net Premium amounts allocated outside the portfolio optimization model will not be reallocated. The Adviser requires that you grant it discretionary investment authority to periodically reallocate your Accumulated Value and any subsequent Net Premium in accordance with the updated version of the portfolio optimization model you have selected, if you wish to participate in portfolio optimization.

26

When the Adviser updates the portfolio optimization models, a written notice of the updated models will be sent to participants at least 30 days in advance of the date the Adviser intends the updated version of the model to be effective. You should carefully review these notices. If you wish to accept the changes in your selected model, you will not need to take any action, as your Accumulated Value and any subsequent Net Premium will automatically be reallocated in accordance with the updated model automatically. If you do not wish to accept the changes to your selected model, you can change to a different model or withdraw from the portfolio optimization service.

Selecting a portfolio optimization model. If you choose to subscribe to the portfolio optimization service, you need to determine which portfolio optimization model is best for you. Neither the Adviser nor its affiliates will make this decision. You should consult with your registered representative on this decision. Your registered representative can help you determine which model is best suited to your financial needs, investment time horizon, and willingness to accept investment risk. You should periodically review these factors with your registered representative to determine if you should change models to keep up with changes in your personal circumstances. Your registered representative can assist you in completing the proper forms to subscribe to the portfolio optimization service or to change to a different model. You may, in consultation with your registered representative, utilize analytical tools made available by the Adviser, including an investor profile questionnaire, which asks questions intended to help you or your registered representative assess your financial needs, investment time horizon, and willingness to accept investment risk. Your responses can be analyzed using the service available on our website. While the information from our website may assist you, it is your decision, in consultation with your registered representative, to select a model or to change to a different model, and the Adviser and its affiliates bear no responsibility for this decision.

You may change to a different model at any time by completing an Investment Policy Statement. Please contact us or your registered representative for a copy of this form. You may discontinue the portfolio optimization service for your Policy at any time with a proper Written Request or by telephone or electronic instructions provided we have your completed telephone and electronic authorization on file.

Risks. Although the models are designed to optimize returns given the various levels of risk, there is no assurance that a model portfolio will not lose money or that investment results will not experience volatility. Investment performance of your Accumulated Value could be better or worse by participating in a portfolio optimization model than if you had not participated. A model may perform better or worse than any single Investment Option or asset class or other combinations of Investment Options or asset classes. Model performance is dependent upon the performance of the component Investment Options (and their underlying portfolios). The timing of your investment and the frequency of automatic rebalancing may affect performance. Your Accumulated Value will fluctuate, and when redeemed, may be worth more or less than the original cost.

A portfolio optimization model may not perform as intended. Although the models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the models are based, which could cause the models to be ineffective or less effective in reducing volatility.

Periodic updating of the portfolio optimization models can cause the underlying portfolios to incur transactional expenses to raise cash for money flowing out of the portfolios or to buy securities with money flowing into the portfolios. These expenses can adversely affect performance of the pertinent portfolios and the models.

The Adviser may be subject to competing interests that have the potential to influence its decision making with regard to portfolio optimization. For example, one portfolio may provide a higher advisory fee to the Adviser than another portfolio, and provide the Adviser with incentive to use the portfolio with the higher fee as part of a portfolio optimization model. In addition, the Adviser may believe that certain portfolios may benefit from additional assets or could be harmed by redemptions. As adviser to Pacific Select Fund, the Adviser monitors performance of the portfolios, and may, from time to time, recommend to the Pacific Select Fund’s Board of Trustees a change in portfolio management firm or strategy or the closure or merger of a portfolio, all of which could impact a model. All Pacific Select Fund portfolios, except those expected to be liquidated or merged, are analyzed by the independent third-party analytical firm. The third-party analytical firm determines the number of portfolios in a model, the percent that any portfolio represents in a model, and which portfolios may be selected. The Adviser will work together with the analytical firm to resolve any investment related matters derived from the analytical firm’s recommendations. The Adviser believes that its reliance on the recommendations of an independent third-party analytical firm to develop and update the models (as described above) reduces or eliminates the potential for the Adviser to be influenced by these competing interests, but there can be no assurance of this.

27

HOW PREMIUMS WORK

The Adviser and its affiliates are under no contractual obligation to continue this service and has the right to terminate or change the portfolio optimization service at any time.

Portfolio Optimization Plus. With our Portfolio Optimization Plus feature, you may choose to allocate a portion of your Accumulated Value and/or Net Premiums outside of the portfolio optimization model you selected. You may change these allocations at any time, and make transfers as described later in this prospectus under Your Investment Options: Transferring Among Investment Options and Market-timing Restrictions.

While you participate in Portfolio Optimization Plus, only the Net Premium or Accumulated Value allocated to a portfolio optimization model will be automatically reallocated if the model updates, or rebalanced if you elect to have the Accumulated Value in the model periodically rebalanced as described above. You may not use the dollar cost averaging service, portfolio rebalancing service or first year transfer service while you participate in Portfolio Optimization Plus.

There is no charge for using this feature.

The models. Information concerning the portfolio optimization models is described below. These models are available effective May 2, 2008. For more information regarding the portfolio optimization models available until May 2, 2008, see Appendix B. You should review this information carefully before selecting or changing a model.

28

The current asset class exposure and portfolio optimization model allocations shown in the chart below may change over time, based on the periodic review of the models and reallocations which reflect updated recommendations.

	Model A Conservative	Model B Moderate-Conservative	Model C Moderate	Model D Moderate-Aggressive	Model E Aggressive
Investor Profile
You are looking for a relatively stable investment and do not tolerate short- term market swings.		Your focus is on keeping pace with inflation and you can tolerate a moderate level of risk.	You want the opportunity for long-term moderate growth.	You want an investment that is geared for growth and are willing to accept above average risk.	You are an aggressive investor and can tolerate short-term market swings.
Shorter Investment Time Horizon  < --------------------------------------------------------------------------------- > Longer Investment Time Horizon Investor Objective
Primarily preservation of capital		Moderate growth	Steady growth in asset values	Moderately high growth in asset values	High growth in asset values
Risk Characteristics
There may be some losses in the values of the investment as asset values fluctuate.		There may be some losses in the values of the investment from year to year.	There will probably be some losses in the values of the underlying investments from year to year.
			Fluctuations in value should be less than those of the overall stock markets.	Some of these might be large, but the overall fluctuations in asset values should be less than those of the U.S. stock market.
Lower Risk  < ------------------------------------------------------------------------------------- > Higher Risk Asset Class Target Exposure as of May 2, 2008

	Model A			Model B			Model C			Model D			Model E
Cash		7	%		5	%		2	%		—			—
Bonds		73			55			38			20	%		4	%
Domestic Stocks		15			29			43			55			66
International Stocks		5			11			17			25			30

Portfolio Optimization Model Target Allocations as of May 2, 2008
		Model A			Model B			Model C			Model D			Model E
	Small-Cap Growth		—			—			2	%		2	%		3	%
	International Value		3	%		5	%		6			9			10
	Long/Short Large-Cap		1			2			2			3			4
	International Small-Cap		—			1			2			3			3
	Equity Index		2			3			3			4			4
	Small-Cap Index		—			—			—			—			2
	Diversified Research		1			2			2			2			2
	American Funds® Growth-Income		—			—			3			5			5
	American Funds® Growth		—			4			4			4			5
	Large-Cap Value		4			5			6			6			7
	Short Duration Bond		12			9			4			2			—
	Floating Rate Loan		8			5			3			—			—
	Focused 30		—			—			1			1			2
	Growth LT		—			2			3			3			4
	Diversified Bond		15			10			6			2			—
	Mid-Cap Equity (formerly Mid-Cap Value)		3			6			8			10			11
	Large-Cap Growth		—			—			2			2			2
	International Large-Cap		3			4			4			8			9
	Small-Cap Value		—			1			1			1			1
	Main Street® Core		3			4			4			4			5
	Emerging Markets		—			—			3			4			5
	High Yield Bond		4			3			2			—			—
	Managed Bond		21			16			11			4			—
	Inflation Managed		18			14			11			8			—
	Mid-Cap Growth		—			1			2			2			2
	Comstock		2			3			4			6			6
	Real Estate		—			—			—			2			4
	Small-Cap Equity		—			—			1			3			4
Less Volatile  < ---------------------------------------------------------------- > More Volatile

29

YOUR POLICY’S ACCUMULATED VALUE

Accumulated Value is the value of your Policy on any Business Day. It is used as the basis for determining Policy benefits and charges.

We use it to calculate how much money is available to you for loans and withdrawals, and how much you’ll receive if you surrender your Policy. It also affects the amount of the Death Benefit if you choose a Death Benefit Option that’s calculated using Accumulated Value.

The Accumulated Value of your Policy is not guaranteed – it depends on the performance of the Investment Options you’ve chosen, the premium payments you’ve made, Policy charges and how much you’ve borrowed or withdrawn from the Policy.

Calculating Your Policy’s Accumulated Value

Your Policy’s Accumulated Value is the total amount allocated to the Variable Investment Options and the Fixed Options, plus the amount in the Loan Account. Please see Withdrawals, Surrenders and Loans: Taking Out a Loan for information about loans and the Loan Account.

We determine the value allocated to the Variable Investment Options on any Business Day by multiplying the number of accumulation units for each Variable Investment Option credited to your Policy on that day, by the Variable Investment Option’s unit value at the end of that day. The process we use to calculate unit values for the Variable Investment Options is described in Your Investment Options.

Monthly Deductions

We deduct a monthly charge from your Policy’s Accumulated Value. If there is not enough Accumulated Value to pay the monthly charge, your Policy could lapse. The performance of the Investment Options you choose, not making planned premium payments, or taking out a withdrawal or a loan all affect the Accumulated Value of your Policy. You’ll find a discussion about when your Policy might lapse, and what you can do to reinstate it, later in this section.

Unless you tell us otherwise, we deduct the monthly charge from the Investment Options that make up your Policy’s Accumulated Value, in proportion to the Accumulated Value you have in each Investment Option. This charge is made up of four charges:

• cost of insurance

• administrative charge

• mortality and expense risk charge

• charges for optional Riders.

Cost of insurance

This charge is for providing you with life insurance protection. Like other Policy charges, we may profit from the cost of insurance charge and may use these profits for any lawful purpose such as the payment of distribution and administrative expenses.

There are maximum or guaranteed cost of insurance rates associated with your Policy. These rates are shown in your Policy’s Specifications pages. When the younger Insured reaches Age 100, the guaranteed cost of insurance rate is reduced to $0.

The guaranteed rates include the insurance risks associated with insuring two people. They are calculated using 1980 Commissioners Standard Ordinary Mortality Tables or the 1980 Commissioners Ordinary Mortality Table B, which are used for unisex cost of insurance rates. The rates are also based on the Ages, gender and Risk Classes of the Insureds unless unisex rates are required.

Our current cost of insurance rates are based on the Ages, Risk Classes and genders (unless unisex rates are required) of the two Insureds. These rates generally increase as the Ages of the two people increase, and they vary with the number of years the Policy has been In Force. Our current rates are lower than the guaranteed rates and they will not exceed the guaranteed rates in the future.

30

How we calculate cost of insurance

We calculate cost of insurance by multiplying the current cost of insurance rate by a discounted Net Amount At Risk at the beginning of each Policy month.

The discounted Net Amount At Risk used in the cost of insurance calculation is the difference between a discounted Death Benefit that would be payable if both Insureds died, and the Accumulated Value of your Policy. We calculate it in two steps:

• Step 1: we divide the Death Benefit that would be payable at the beginning of the Policy Month by 1.00327374.

• Step 2: we subtract your Policy’s Accumulated Value at the beginning of the Policy Month from the amount we calculated in step 1.

Premiums, Net Premiums, Policy fees and charges, withdrawals, investment performance and fees and expenses of the underlying portfolios may affect your Net Amount At Risk, depending on the Death Benefit Option you choose or if your Death Benefit under the Policy is the Guideline Minimum Death Benefit.

Administrative charge

We deduct a charge of $16 a month during the first five Policy Years to help cover the costs of administering and maintaining our Policies. After five Policy Years, we reduce this charge to $6 a month. We guarantee that this charge will not increase. When the younger Insured reaches Age 100, the administrative charge is reduced to $0.

If you buy additional Pacific Select Estate Preserver II Policies that insure the same two people, we will not deduct the administrative charge from the additional Policies. Instead, we’ll deduct $200 from each Policy’s first premium payment to help cover our processing costs.

Mortality and expense risk charge

Mortality risk is the chance that the people insured by policies we’ve issued do not live as long as expected. This means the cost of insurance charges specified in the policies may not be enough to pay out actual claims.

Expense risk is the chance that our actual administrative and operating expenses are more than expenses we expected.

The mortality and expense risk charge helps compensate us for these risks. It has two components, which are described in the box below. We guarantee this charge will not increase.

How we calculate the mortality and expense risk charge

The mortality and expense risk charge has two components: a Face Amount component and an Accumulated Value component.

•  Face Amount component We deduct a Face Amount component every month during the first 10 Policy Years, at a rate that is based on the Joint Equal Age on the Policy Date and each $1,000 of the initial Face Amount of your Policy.

•  Accumulated Value component We deduct an Accumulated Value component every month during the first 20 Policy Years at an annual rate of 0.30% (0.025% monthly) of your Policy’s Accumulated Value in the Investment Options. During Policy Years 21 and thereafter, we reduce the annual rate to 0.10% (0.008333% monthly) of the Accumulated Value in the Investment Options. For the purposes of this charge, the amount of Accumulated Value is calculated on the Monthly Payment Date after we deduct the cost of insurance and charges for any optional Riders.

An example

For a Policy that insures a male non-smoker Age 56 and a female non-smoker Age 53 when the Policy is issued, with:

•  a Face Amount of $2,000,000

•  Accumulated Value of $60,000 after deducting any Policy Debt.

The monthly charge for the Face Amount Component is $226 (($2,000,000 ÷ 1,000) × 0.113).

The monthly charge for the Accumulated Value Component is $15 ($60,000 × 0.025%) during Policy Years 1 through 20, and $5 ($60,000 × 0.008333%) during Policy Year 21 and thereafter.

Charges for optional Riders

If you add any Riders to your Policy, we add any charges for them to your monthly charge.

31

YOUR POLICY’S ACCUMULATED VALUE

Lapsing and Reinstatement

There is no guarantee that your Policy will not lapse even if you pay your planned periodic premium. Your Policy will lapse if there is not enough Accumulated Value, after subtracting any Policy Debt, to cover the monthly charge on the day we make the deduction. Your Policy’s Accumulated Value is affected by the following:

• loans or withdrawals you make from your Policy

• not making planned premium payments

• the performance of your Investment Options

• charges under the Policy.

If there is not enough Accumulated Value to pay the total monthly charge, we deduct the amount that’s available and send you, and anyone you’ve assigned your Policy to, a notice telling you the amount to pay to keep your Policy In Force. This amount is based on the sum of the monthly charges not deducted plus three times the monthly charges due when the insufficiency occurred. However, the minimum amount you must pay to keep your Policy In Force is equal to three times the monthly charge that was due on the Monthly Payment Date when there was not enough Accumulated Value to pay the charge.

We’ll give you a grace period of 61 days from the date we send the notice to pay sufficient premium to keep your Policy In Force. Your Policy will remain In Force during the grace period.

If you do not make the minimum payment

If we do not receive your payment within the grace period, your Policy will lapse with no value. This means we’ll end your life insurance coverage.

If you make the minimum payment

If we receive your payment within the grace period, we’ll allocate your Net Premium to the Investment Options you’ve chosen and deduct the monthly charge from your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

If your Policy is in danger of lapsing and you have Policy Debt, you may find that making the minimum payment would cause the total premiums paid to exceed the maximum amount for your Policy’s Face Amount under tax laws. In that situation, we will not accept the portion of your payment that would exceed the maximum amount. To stop your Policy lapsing, you’ll have to repay a portion of your Policy Debt.

Remember to tell us if a payment is a premium payment or a loan payment.

How to avoid future lapsing

To stop your Policy from lapsing in the future, you may want to make larger or more frequent premium payments if tax laws permit it. Or if you have a loan, you may want to repay a portion of it.

Paying Death Benefit Proceeds during the grace period

If the Survivor dies during the grace period, we’ll pay Death Benefit Proceeds to your Beneficiary. We’ll reduce the payment by any unpaid monthly charges and any Policy Debt.

Reinstating a lapsed Policy

If your Policy lapses, you have five years from the end of the grace period to apply for a reinstatement. We’ll reinstate it if you send us the following:

• a written application

• evidence satisfactory to us that both Insureds are still insurable

• a premium payment sufficient to:

• cover all unpaid monthly charges that were due in the grace period, and

• keep your Policy In Force for three months after the day your Policy is reinstated.

We’ll reinstate your Policy as of the first Monthly Payment Date on or after the day we approve the reinstatement. When we reinstate your Policy, its Accumulated Value will be the same as it was on the day your Policy lapsed. We’ll allocate the Accumulated Value according to your most recent premium allocation instructions.

32

Reinstating a lapsed Policy with Policy Debt

If you had Policy Debt when your Policy lapsed, we will not pay or credit interest on it during the period between the lapsing and reinstatement of your Policy. There are special rules that apply to reinstating a Policy with Policy Debt:

• If we reinstate your Policy on the first Monthly Payment Date that immediately follows the lapse, we’ll also reinstate the Policy Debt that was outstanding the day your Policy lapsed.

• If we reinstate your Policy on any Monthly Payment Date other than the Monthly Payment Date that immediately follows the lapse, we’ll deduct the Policy Debt from your Policy’s Accumulated Value. This means you will no longer have Policy Debt when your Policy is reinstated.

33

YOUR INVESTMENT OPTIONS

This section tells you about the Investment Options available under your Policy and how they work.

We put your Net Premium in our General Account and Separate Account. We own the assets in our accounts and allocate your Net Premiums, less any charges, to the Investment Options you’ve chosen. Amounts allocated to the Fixed Options are held in our General Account. Amounts allocated to the Variable Investment Options are held in our Separate Account. You’ll find information about when we allocate Net Premiums to your Investment Options in How Premiums Work.

You choose your initial Investment Options on your application. If you choose more than one Investment Option, you must tell us the dollar amount or percentage you want to allocate to each Investment Option. You can change your premium allocation instructions at any time.

You can change your premium allocation instructions by writing or sending a fax. If we have your completed telephone and electronic authorization on file, you can call us at 1-800-800-7681 or submit a request electronically. Or you can ask your registered representative to contact us. You’ll find more information regarding telephone and electronic instructions in Pacific Select Estate Preserver II Basics.

The Investment Options you choose, and how they perform, will affect your Policy’s Accumulated Value and may affect the Death Benefit. Please review the Investment Options carefully. You may ask your registered representative to help you choose the right ones for your goals and tolerance for risk. Any financial firm or representative you engage to provide advice and/or make transfers for you is not acting on our behalf. We are not responsible for any investment decisions or allocations you make, recommendations such financial representatives make or any allocations or specific transfers they choose to make on your behalf. Make sure you understand any costs you may pay directly and indirectly on your Investment Options because they will affect the value of your Policy.

Variable Investment Options

You can choose from a selection of Variable Investment Options. Each Variable Investment Option is set up as a Variable Account under our Separate Account and invests in a corresponding portfolio of the Pacific Select Fund, the BlackRock Variable Series Funds, Inc., the Fidelity Variable Insurance Products Funds (“Fidelity VIP Funds”), the Janus Aspen Series, the Lazard Retirement Series, Inc., the Legg Mason Partners Variable Equity Trust, the MFS Variable Insurance Trust, the Premier VIT, the T. Rowe Price Equity Series, Inc. and the Van Eck World Insurance Trust. Each portfolio invests in different securities and has its own investment goals, strategies and risks. The value of each portfolio will fluctuate with the value of the investments it holds, and returns are not guaranteed. Your Policy’s Accumulated Value will fluctuate depending on the Investment Options you’ve chosen. You bear the investment risk of any Variable Investment Options you choose.

Pacific Life Fund Advisors LLC is the investment adviser for the Pacific Select Fund. They oversee the management of all the Pacific Select Fund’s portfolios. Pacific Life Fund Advisors LLC also does business under the name “Pacific Asset Management”, and manages two of the portfolios directly as Pacific Asset Management. They retain other portfolio managers to manage the other portfolios.

BlackRock Advisors, LLC is the investment adviser of the BlackRock Variable Series Funds, Inc. and has retained various sub-advisors for the portfolios available under your Policy.

Fidelity Management & Research Company is the manager of the Fidelity Variable Insurance Products Funds. They retain other portfolio managers to manage the portfolios of the Fidelity VIP Funds available under your Policy.

Janus Capital Management LLC is the investment adviser of the Janus Aspen Series. For the portfolios available under your Policy, they manage two of the portfolios directly, and have retained a sub-adviser for one portfolio.

Lazard Asset Management LLC is the investment manager of the Lazard Retirement Series, Inc. and manages the portfolio available under your Policy directly.

Legg Mason Partners Fund Advisor, LLC is the investment manager of the Legg Mason Partners Variable Equity Trust and has retained a sub-advisor to manage the portfolios available under your Policy.

Massachusetts Financial Services Company is the investment adviser of the MFS Variable Insurance Trust and manages the portfolios available under your Policy directly.

34

OpCap Advisors LLC is the investment adviser of the Premier VIT, and has retained a sub-adviser to manage the portfolio available under your Policy.

T. Rowe Price Associates, Inc. is the investment manager of the T. Rowe Price Equity Series, Inc. and manages the portfolios available under your Policy directly.

Van Eck Associates Corporation is the investment adviser of the Van Eck Worldwide Insurance Trust and manages the portfolio available under your Policy directly.

Pacific Life is not responsible for the operation of the underlying Funds or any of their portfolios. We also are not responsible for ensuring that the underlying Funds and their portfolios comply with any laws that apply.

The following chart is a summary of the Fund portfolios. You’ll find detailed descriptions of the portfolios in each Fund prospectus that accompanies this prospectus. There’s no guarantee that a portfolio will achieve its investment objective. You should read each Fund prospectus carefully before investing.

35

YOUR INVESTMENT OPTIONS

PACIFIC SELECT FUND PORTFOLIO	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Small-Cap Growth	Capital appreciation.	Equity securities of small, fast growing companies.	Fred Alger Management, Inc.
International Value	Long-term capital appreciation.	Equity securities of relatively large non- U.S. companies believed to be undervalued.	AllianceBernstein L.P.
Long/Short Large-Cap	Above-average total returns.	Equity securities of large-capitalization companies including both long and short positions.	Analytic Investors, LLC, J.P. Morgan Investment Management, Inc.
International Small-Cap	Long-term growth of capital.	Equity securities of non-U.S. companies with small market capitalizations.	Batterymarch Financial Management, Inc.
Equity Index	Investment results that correspond to the total return of common stocks publicly traded in the U.S.	Equity securities of companies that are included in or representative of the S&P 500 Index® (including derivatives).	BlackRock Investment Management, LLC
Small-Cap Index	Investment results that correspond to the total return of an index of small-capitalization companies.	Equity securities of small companies that are included in or representative of the Russell 2000 Index (including derivatives).	BlackRock Investment Management, LLC
Diversified Research	Long-term growth of capital.	Equity securities of companies located in the U.S., or whose principal markets are in the U.S.	Capital Guardian Trust Company
Equity	Capital appreciation. (Current income is of secondary importance.)	Equity securities of growth-oriented companies located in the U.S., or whose principal markets are in the U.S.	Capital Guardian Trust Company
American Funds Growth-Income	Long-term growth of capital and income.	A master fund that invests in equity securities of both U.S. and non-U.S. companies of any size and other securities which demonstrate the potential for appreciation and/or dividends.	Capital Research and Management Company   (adviser to the Master Growth- Income Fund)
American Funds Growth	Long-term growth of capital.	A master fund that invests in equity securities of both U.S. and non-U.S. companies of any size that appear to offer superior opportunities for growth of capital.	Capital Research and Management Company   (adviser to the Master Growth Fund)
Large-Cap Value	Long-term growth of capital. (Current income is of secondary importance.)	Equity securities of large U.S. companies.	ClearBridge Advisors, LLC
Technology	Long-term growth of capital.	Equity securities in the technology sector.	Columbia Management Advisors, LLC
Short Duration Bond	Current income. (Capital appreciation is of secondary importance.)	High quality fixed income securities with an average portfolio duration not likely to exceed 3 years.	Goldman Sachs Asset Management, L.P.
Floating Rate Loan	High level of current income.	Interests in floating rate senior loans.	Highland Capital Management, L.P.
Diversified Bond	Maximize total return consistent with prudent investment management.	Fixed income securities of varying qualities and terms to maturity of both U.S. and non-U.S. companies and derivatives relating to such securities or related indexes.	J.P. Morgan Investment Management, Inc.
Growth LT	Long-term growth of capital.	Equity securities of companies of any size.	Janus Capital Management LLC
Focused 30	Long-term growth of capital.	U.S. and foreign equity securities selected for their growth potential.	Janus Capital Management LLC

36

PACIFIC SELECT FUND PORTFOLIO	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Health Sciences	Long-term growth of capital.	Equity securities of companies in the health sciences sector.	Jennison Associates LLC
Mid-Cap Equity
(formerly Mid-Cap Value)	Capital appreciation.	Equity securities of medium-sized U.S. companies believed to be undervalued.	Lazard Asset Management LLC
Large-Cap Growth	Long-term growth of capital. (Current income is of secondary importance.)	Equity securities of large companies with the potential for long-term growth of capital.	Loomis, Sayles & Company, L.P.
International Large-Cap	Long-term growth of capital.	Equity securities of companies with large market capitalizations located outside the U.S.	MFS Investment Management
Small-Cap Value	Long-term growth of capital.	Equity securities of small companies believed to be undervalued.	NFJ Investment Group L.P.
Multi-Strategy	High total return.	A mix of equity and fixed income securities.	OppenheimerFunds, Inc.
Main Street Core	Long-term growth of capital and income.	Equity securities of large U.S. companies.	OppenheimerFunds, Inc.
Emerging Markets	Long-term growth of capital.	Equity securities of companies that are located in countries generally regarded as “emerging market” countries.	OppenheimerFunds, Inc.
Money Market	Current income consistent with preservation of capital.	Highest quality money market instruments believed to have limited credit risk.	Pacific Asset Management
High Yield Bond	High level of current income.	Fixed income securities with lower and medium-quality credit ratings and intermediate to long terms to maturity.	Pacific Asset Management
Managed Bond	Maximize total return consistent with prudent investment management.	Medium and high-quality fixed income securities with varying terms to maturity, and derivatives relating to such securities or related indexes.	Pacific Investment Management Company LLC
Inflation Managed	Maximize total return consistent with prudent investment management.	Fixed income securities of varying maturities with a focus on inflation-indexed bonds, and forward contracts and derivatives relating to such securities.	Pacific Investment Management Company LLC
Comstock	Long-term growth of capital.	Equity securities of companies believed to have the potential for long-term growth of capital and income.	Van Kampen
Mid-Cap Growth	Long-term growth of capital.	Equity securities of medium-sized companies believed to have above-average growth potential.	Van Kampen
Real Estate	Current income and long-term capital appreciation.	Equity securities of companies principally engaged in the U.S. real estate industry, including REITs and real estate operating companies (REOCs).	Van Kampen
Small-Cap Equity	Long-term growth of capital.	Equity securities of small companies believed to be undervalued.	Vaughan Nelson Investment Management, L.P.

37

YOUR INVESTMENT OPTIONS

BLACKROCK VARIABLE SERIES FUNDS, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
BlackRock Basic Value V.I. Fund Class III	Capital appreciation. (Income is of secondary importance.)	Equity securities believed to be undervalued.	BlackRock Advisors, LLC
BlackRock Global Allocation V.I. Fund Class III	High total investment return.	A mix of U.S. and foreign equity, debt and money market securities	BlackRock Advisors, LLC

FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Fidelity VIP Contrafund® Portfolio Service Class 2	Long-term capital appreciation.	Equity securities of companies whose value is believed not fully recognized by the public.	FMR Co., Inc.
Fidelity VIP Freedom Income	High total return. (Principal preservation is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers®, Inc.
Fidelity VIP Freedom 2010	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2015	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2020	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2025	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2030	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Growth Portfolio Service Class 2	Capital appreciation.	Equity securities of companies believed to have above-average growth potential.	FMR Co., Inc.
Fidelity VIP Mid Cap Portfolio Service Class 2	Long-term growth of capital.	Equity securities primarily of companies with medium market capitalization.	FMR Co., Inc.
Fidelity VIP Value Strategies Portfolio Service Class 2	Capital appreciation.	Equity securities of companies believed to be undervalued in the marketplace.	FMR Co., Inc.

38

JANUS ASPEN SERIES	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
International Growth Portfolio Service Class	Long-term growth of capital.	Securities of issuers from countries outside the United States.	Janus Capital Management LLC
INTECH Risk-Managed Core Portfolio Service Class	Long-term growth of capital.	Common stocks from the universe of the Portfolio’s benchmark index, which is the S&P 500® Index.	Janus Capital Management LLC
Mid Cap Growth Portfolio Service Class	Long-term growth of capital.	Equity securities of mid-sized companies.	Janus Capital Management LLC

LAZARD RETIREMENT SERIES, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
US Strategic Equity	Long-term capital appreciation.	Equity securities, principally common stocks.	Lazard Asset Management LLC

LEGG MASON PARTNERS VARIABLE EQUITY TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Legg Mason Partners Variable Aggressive Growth Portfolio – Class II	Capital appreciation.	Common stocks of companies believed to be experiencing, or will experience, above average growth of earnings.	Legg Mason Partners Fund Advisor, LLC
Legg Mason Partners Variable Mid Cap Core Portfolio – Class II	Long-term growth of capital.	Equity securities or investments with similar characteristics of medium sized companies.	Legg Mason Partners Fund Advisor, LLC

MFS VARIABLE INSURANCE TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
MFS New Discovery Series Service Class	Capital appreciation.	Equity securities of companies believed to have above average earnings growth potential.	Massachusetts Financial Services Company
MFS Utilities Series Service Class	Total return.	Securities of issuers in the utilities industry1.	Massachusetts Financial Services Company

PREMIER VIT	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
OpCap Small Cap Portfolio	Capital appreciation.	Equity securities of companies with market capitalization of less than $2.2 billion at time of purchase.	OpCap Advisors LLC

T. ROWE PRICE EQUITY SERIES, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
T. Rowe Price Blue Chip Growth Portfolio – II	Long-term capital growth. (Current income is a secondary objective.)	Common stocks of well-established large and medium-sized companies with the potential for above-average earnings increases	T. Rowe Price Associates, Inc.
T. Rowe Price Equity Income Portfolio – II	Substantial dividend income and long-term capital growth.	Common stocks of established companies. In selecting such stocks, the Fund emphasizes companies that appear to be temporarily undervalued by various measures, such as price/earnings (P/E) rations.	T. Rowe Price Associates, Inc.

VAN ECK WORLDWIDE INSURANCE TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Van Eck Worldwide Hard Assets Fund	Long-term capital appreciation. (Income is a secondary consideration.)	A mix of U.S. and foreign hard asset2 securities	Van Eck Associates Corporation

¹ Issuers in the utilities industry include issuers engaged in the manufacture, production, generation, transmission, sale or distribution of electric, gas or other types of energy, water or other sanitary services; and issuers engaged in telecommunications, including telephone, cellular telephone, telegraph, satellite, microwave, cable television, and other communications media (but not engaged in public broadcasting).

39

YOUR INVESTMENT OPTIONS

² Hard asset securities are stocks, bonds and other securities of companies that derive at least 50% of their revenues from exploration, development, production, distribution or facilitation of processes relating to: a) precious metals, b) natural resources, c) real estate and d) commodities. In addition, hard asset securities shall include any derivative securities the present value of which are based upon hard asset securities and/or hard asset commodities.

Calculating unit values

When you choose a Variable Investment Option, we credit your Policy with accumulation units. The number of units we credit equals the amount we’ve allocated divided by the unit value of the Variable Account. Similarly, the number of accumulation units in your Policy will be reduced when you make a transfer, withdrawal or loan from a Variable Investment Option, and when your monthly charges are deducted.

An example

You ask us to allocate $6,000 to the Inflation Managed Investment Option on a Business Day. At the end of that day, the unit value of the Variable Account is $15. We’ll credit your Policy with 400 units ($6,000 divided by $15).

The value of an accumulation unit is the basis for all financial transactions relating to the Variable Investment Options. The value of an accumulation unit is not the same as the value of a share in the underlying portfolio. We calculate the unit value for each Variable Account once every Business Day, usually at or about 4:00 p.m. Eastern time.

Generally, for any transaction, we’ll use the next unit value calculated after we receive your Written Request. If we receive your Written Request before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, on a Business Day, we’ll use the unit value calculated as of the end of that Business Day. If we receive your request at or after the time of the close of the New York Stock Exchange on a Business Day, we’ll use the unit value calculated as of the end of the next Business Day.

If a scheduled transaction falls on a day that is not a Business Day, we’ll process it as of the end of the next Business Day. For your monthly charge, we’ll use the unit value calculated on your Monthly Payment Date. If your Monthly Payment Date does not fall on a Business Day, we’ll use the unit value calculated as of the end of the next Business Day. For information about timing of transactions, see Pacific Select Estate Preserver II Basics.

The unit value calculation is based on the following:

• the investment performance of the underlying portfolio

• any dividends or distributions paid by the underlying portfolio

• any charges for any taxes that are, or may become, associated with the operation of the Variable Account.

The unit value of a Variable Account will change with the value of its corresponding portfolio. Changes in the unit value of a Variable Account will not change the number of accumulation units credited to your Policy.

Fees and expenses paid by the Funds

Each Fund pays advisory fees and other expenses. These are deducted from the assets of the Fund’s portfolios and may vary from year to year. They are not fixed and are not part of the terms of your Policy. You’ll find more about Fund fees and expenses in Fee Tables and in each Fund’s prospectus. If you choose a Variable Investment Option, these fees and expenses affect you indirectly because they reduce portfolio returns. Each Fund is governed by its own Board of Trustees or Board of Directors.

The SEC recently approved a rule change which will require the Boards of Trustees/ Directors of mutual funds to determine whether a redemption fee (not to exceed 2%) or other trading (transfer) restrictions should be imposed. A redemption fee is a fee that would be charged by and paid to the Fund (not to Pacific Life). In the event the Board of Trustees/Directors of any underlying Funds imposes such fees or limitations, we will pass them on to you.

Fixed Options

You can also choose from two Fixed Options: the Fixed Account and the Fixed LT Account. The Fixed Options provide a guaranteed minimum annual rate of interest. The amounts allocated to the Fixed Options are held in our General Account. For more information about the General Account, see About Pacific Life.

Here are some things you need to know about the Fixed Options:

• Accumulated Value allocated to the Fixed Options earns interest on a daily basis, using a 365-day year. Our minimum annual interest rate is 4%.

40

• We may offer a higher annual interest rate on the Fixed Options. If we do, we’ll guarantee the higher rate until your next Policy Anniversary.

• There are no investment risks or direct charges. Policy charges still apply.

• There are limitations on when and how much you can transfer from the Fixed Options. These limitations are described below, in Transferring Among Investment Options. It may take several Policy Years to transfer your Accumulated Value out of either of the Fixed Options.

• We may place a limit of $1,000,000 on amounts allocated to the Fixed LT Account in any 12-month period. This includes allocations of Net Premium, transfers, and loan repayments for all Pacific Life policies you own. Any allocations in excess of $1,000,000 will be allocated to your other Investment Options according to your most recent instructions. We may increase the $1,000,000 limit at any time at our sole discretion. To find out if a higher limit is in effect, ask your registered representative or contact us.

Transferring Among Investment Options and Market-timing Restrictions

Transfers

You can transfer among your Investment Options any time during the life of your Policy without triggering any current income tax. If your state requires us to refund your premiums when you exercise your Free Look Right, you can make transfers and use transfer programs only after the Free Look Transfer Date. Your transfer of Accumulated Value on the Free Look Transfer Date does not count as a transfer for purpose of applying the limitations described in this section. You can make transfers by writing to us, by making a telephone or electronic transfer, or by signing up for one of our automatic transfer services. You’ll find more information about making telephone and electronic transfers in Pacific Select Estate Preserver II Basics.

Transfers will normally be effective as of the end of the Business Day we receive your written, telephone or electronic request.

Here are some things you need to know about making transfers:

• Transfers are limited to 25 for each calendar year.

• If you have used all 25 transfers available to you in a calendar year, you may no longer make transfers between the Investment Options until the start of the next calendar year. However, you may make one (1) transfer of all or a portion of your Policy’s Accumulated Value remaining in the Variable Investment Options into the Money Market Investment Option prior to the start of the next calendar year.

• You may only make two (2) transfers in any calendar month to or from each of the following Investment Options: American Funds Growth-Income, American Funds Growth, Fidelity VIP Contrafund^® Service Class 2, Fidelity VIP Freedom Income Class 2, Fidelity VIP Freedom 2010, Fidelity VIP Freedom 2015, Fidelity VIP Freedom 2020, Fidelity VIP Freedom 2025, Fidelity VIP Freedom 2030, Fidelity VIP Growth Service Class 2, Fidelity VIP Mid Cap Service Class 2 and Fidelity VIP Value Strategies Service Class 2.

• Additionally, only two (2) transfers in any calendar month may involve any of the following Investment Options: International Value, International Small-Cap, International Large-Cap, Emerging Markets, BlackRock Global Allocation V.I. Fund Class III, International Growth Service Class or Van Eck Worldwide Hard Assets Fund.

• For the purpose of applying the limitations, multiple transfers that occur on the same day are considered one (1) transfer. Transfers into the Loan Account, a transfer of Accumulated Value from the Loan Account into your Investment Options following a loan payment, or transfers that occur as a result of the dollar cost averaging service, the portfolio rebalancing service, approved corporate owned life insurance policy rebalancing programs, the first year transfer service or an approved asset allocation service are excluded from the transfer limitations. Also, allocations of premium payments are not subject to these limitations.

• Transfers to or from a Variable Investment Option cannot be made before the seventh calendar day following the last transfer to or from the same Variable Investment Option. If the seventh calendar day is not a Business Day, then a transfer may not occur until the next Business Day. The day of the last transfer is not considered a calendar day for purposes of meeting this requirement. For example, if you make a transfer into the Diversified Research Variable Investment Option on Monday, you may not make any transfers to or from that Variable Investment Option before the following Monday. Transfers to or from the Money Market Variable Investment Option are excluded from this limitation.

41

YOUR INVESTMENT OPTIONS

• There is no minimum amount required if you’re making transfers between Variable Investment Options.

• You can make transfers from the Variable Investment Options to the Fixed Options only in the Policy Month right before each Policy Anniversary. However, if your Policy was issued in Connecticut, Georgia, Maryland, North Dakota, or Pennsylvania, you can make transfers to the Fixed Account any time during the first 18 months of your Policy. If you live in North Carolina, you can make transfers to the Fixed Account any time during the first 24 months of your Policy as long as your Policy is not in the grace period.

• You can make one transfer in any 12-month period from each Fixed Option, except if you’ve signed up for the first year transfer service (see Transfer Services later in this section). Such transfers are limited to:

• $5,000 or 25% of your Policy’s Accumulated Value in the Fixed Account

• $5,000 or 10% of your Policy’s Accumulated Value in the Fixed LT Account

We reserve the right, in our sole discretion, to waive the transfer restrictions on the Fixed Options. Please contact us or your registered representative to find out if a waiver is currently in effect.

• Currently, there is no charge for making a transfer but we may charge you in the future. The maximum fee we will charge for a transfer is $50.

• There is no minimum required value for the Investment Option you’re transferring to or from.

• You cannot make a transfer if your Policy is in the grace period and is in danger of lapsing.

• We can restrict or suspend transfers.

• We will notify you or your representative if we refuse or delay your transfer request.

• We have the right to impose limits on transfer amounts, the value of the Investment Options you’re transferring to or from, or impose further limits on the number and frequency of transfers you can make. Any policy we establish with regard to the exercise of any of these rights will be applied uniformly to all Policy Owners.

There are no exceptions to the above transfer limitations in the absence of an error by us, a substitution of Investment Options, or reorganization of underlying portfolios or other extraordinary circumstances.

Market-timing restrictions

The Policy is not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the market. Accordingly, organizations or individuals that use market-timing investment strategies and make frequent transfers should not purchase the Policy. Such frequent trading can disrupt management of the underlying portfolios and raise expenses. The transfer limitations set forth above are intended to reduce frequent trading. In addition, we monitor certain large transaction activity in an attempt to detect trading that may be disruptive to the portfolios. In the event transfer activity is found to be disruptive, certain future subsequent transfers by such Policy Owners, or by a registered representative or other party acting on behalf of one or more Policy Owners, will require preclearance. Frequent trading and large transactions that are disruptive to portfolio management can have an adverse effect on portfolio performance and therefore your Policy’s performance. Such trading may also cause dilution in the value of the Investment Options held by long-term Policy Owners. While these issues can occur in connection with any of the underlying portfolios, portfolios holding securities that are subject to market pricing inefficiencies are more susceptible to abuse. For example, portfolios holding international securities may be more susceptible to time-zone arbitrage which seeks to take advantage of pricing discrepancies occurring between the time of the closing of the market on which the security is traded and the time of pricing of the portfolios.

Our policies and procedures which limit the number and frequency of transfers and which may impose preclearance requirements on certain large transactions are applied uniformly to all Policy Owners, subject to the transfer restrictions outlined above. However, there is a risk that these policies and procedures will not detect all potentially disruptive activity or will otherwise prove ineffective in whole or in part. Further, we and our affiliates make available to our variable life insurance policy owners and variable annuity contract owners underlying Funds not affiliated with us. We are unable to monitor or restrict the trading activity with respect to shares of such Funds not sold in connection with our contracts. In the event the Board of Trustees/Directors of any underlying Fund imposes a redemption fee or trading (transfers) limitations, we will pass them on to you.

42

We reserve the right to restrict, in our sole discretion and without prior notice, transfers initiated by a market timing organization or individual or other party authorized to give transfer instructions on behalf of multiple Policy Owners. Such restrictions could include:

• not accepting transfer instructions from a representative acting on behalf of more than one Policy Owner, and

• not accepting preauthorized transfer forms from market timers or other entities acting on behalf of more than one Policy Owner at a time.

We further reserve the right to impose, without prior notice, restrictions on transfers that we determine, in our sole discretion, will disadvantage or potentially hurt the rights or interests of other policy owners.

Transfer Services

We offer three services that allow you to make automatic transfers of Accumulated Value from one Investment Option to another. Under the dollar cost averaging and portfolio rebalancing services, you can transfer among the Variable Investment Options. Under the first year transfer service, you can make transfers from the Fixed Account to the Fixed LT Account and the Variable Investment Options.

You may only participate in one transfer service at any time. We have the right to discontinue, modify or suspend any of these transfer services at any time.

Detailed information regarding each transfer service appears in the SAI.

Dollar cost averaging

Our dollar cost averaging service allows you to make scheduled transfers of $50 or more between Variable Investment Options. It does not allow you to make transfers to or from either of the Fixed Options. We process transfers as of the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you choose. You must have at least $5,000 in a Variable Investment Option to start the service.

Since the value of accumulation units can change, more units are credited for a scheduled transfer when unit values are lower, and fewer units when unit values are higher. This allows you to average the cost of investments over time. Investing this way does not guarantee profits or prevent losses.

We will not charge you for the dollar cost averaging service or for transfers made under this service, even if we decide to charge you in the future for transfers outside of the service, except if we have to by law.

Portfolio rebalancing

As the value of the underlying portfolios changes, the value of the allocations to the Variable Investment Options will also change. The portfolio rebalancing service automatically transfers your Policy’s Accumulated Value among the Variable Investment Options according to your original percentage allocations. We process transfers as of the end of the Business Day on your Policy’s next monthly, quarterly, semi-annual or annual anniversary, depending on the interval you choose, unless you specify a different start date.

Because the portfolio rebalancing service matches your original percentage allocations, we may transfer money from an Investment Option with relatively higher returns to one with relatively lower returns.

We do not charge for the portfolio rebalancing service and we do not currently charge for transfers made under this service.

First year transfer

Our first year transfer service allows you to make monthly transfers from the Fixed Account to the Variable Investment Options or the Fixed LT Account during the first year your Policy is In Force. It does not allow you to transfer among Variable Investment Options. You enroll in the service when you apply for your Policy and include specific details on your application.

This service allows you to average the cost of investments over the first 12 months from the date your initial premium is applied to your Policy. Investing this way does not guarantee profits or prevent losses.

We do not charge for the first year transfer service and we do not currently charge for transfers made under this service.

43

WITHDRAWALS, SURRENDERS AND LOANS

You can take out all or part of your Policy’s Accumulated Value while your Policy is In Force by making withdrawals or surrendering your Policy. You can take out a loan from us using your Policy as security. You can also use your Policy’s loan and withdrawal features to supplement your income, for example, during retirement.

Making a withdrawal, taking out a loan or surrendering your Policy can change your Policy’s tax status, generate taxable income, or make your Policy more susceptible to lapsing. Be sure to plan carefully before using these Policy benefits.

If you withdraw a larger amount than you’ve paid into your Policy, your withdrawal may be considered taxable income.

For more information on the tax treatment of withdrawals or loans, or in the event you surrender your Policy, see Variable Life Insurance and Your Taxes.

Making Withdrawals

You can withdraw part of your Policy’s Net Cash Surrender Value starting on your Policy’s first anniversary. Here’s how it works:

• You must send us a Written Request that’s signed by all Owners.

• Each withdrawal must be at least $500, and the Net Cash Surrender Value of your Policy after the withdrawal must be at least $500.

• If your Policy has existing Policy Debt, the maximum withdrawal you can take is the Cash Surrender Value just before the withdrawal, less the Policy Debt divided by 90%.

• We will not accept your request to make a withdrawal if it will cause your Policy to become a Modified Endowment Contract, unless you’ve told us in writing that you want your Policy to become a Modified Endowment Contract.

• We may charge you $25 for each withdrawal you make.

• You can choose to receive your withdrawal in a lump sum or use it to buy an income benefit. Please see the discussion about income benefits in General Information About Your Policy.

• If you do not tell us which Investment Options to take the withdrawal from, we’ll deduct the withdrawal and the withdrawal charge from all of your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

• The Accumulated Value, Cash Surrender Value and Net Cash Surrender Value of your Policy will be reduced by the amount of each withdrawal.

• If the Survivor dies after you’ve sent a withdrawal request to us, but before we’ve made the withdrawal, we’ll deduct the amount of the withdrawal from any Death Benefit Proceeds owing.

How withdrawals affect your Policy’s Death Benefit

Making a withdrawal will affect your Policy’s Death Benefit in the following ways:

• If your Policy’s Death Benefit does not equal the Guideline Minimum Death Benefit, the Death Benefit may decrease by the amount of your withdrawal.

• If your Policy’s Death Benefit equals the Guideline Minimum Death Benefit, the Death Benefit may decrease by more than the amount of your withdrawal.

How withdrawals affect your Policy’s Face Amount

If you’ve chosen Death Benefit Option B or Option C, making a withdrawal does not reduce your Policy’s Face Amount.

If you’ve chosen Death Benefit Option A or Option D, a withdrawal may reduce your Face Amount. You can make one withdrawal during each of the first 15 Policy Years of $10,000 or 10% of your Policy’s Cash Surrender Value, whichever is less, without reducing your Policy’s Face Amount. If you withdraw a larger amount, or make additional withdrawals, the Face Amount will be reduced by the amount if any, by which the Face Amount exceeds the result of the Death Benefit immediately before the withdrawal minus the amount of the withdrawal.

44

Taking Out a Loan

You can borrow money from us any time while your Policy is In Force. The minimum amount you can borrow is $500, unless there are other restrictions in your state. The maximum amount available to borrow is less than 100% of your Accumulated Value.

Taking out a loan will affect the growth of your Policy’s Accumulated Value, and may affect the Death Benefit.

You may request a loan either by sending us a request in writing, over the telephone or electronically. You’ll find more information about requesting a loan by telephone or electronically in Pacific Select Estate Preserver II Basics.

When you borrow money from us, we use your Policy’s Accumulated Value as security. You pay interest on the amount you borrow. The Accumulated Value set aside to secure your loan also earns interest. Here’s how it works:

• To secure the loan, we transfer an amount equal to the amount you’re borrowing from your Accumulated Value in the Investment Options to the Loan Account. We’ll transfer this amount from your Investment Options in proportion to the Accumulated Value you have in each Investment Option, unless you tell us otherwise.

• Interest owing on the amount you’ve borrowed accrues daily at an annual rate of 4.5% during the first 10 policy years, and 4.25% thereafter. Interest that has accrued during the Policy Year is due on your Policy Anniversary. If you do not pay the interest when it’s due, we’ll add it to the amount of your loan and begin accruing interest on it from the day it was due. We’ll also transfer an amount equal to the interest that was due, from your Policy’s Accumulated Value to the Loan Account. We’ll transfer this amount from your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

• The amount in the Loan Account earns interest daily at an annual rate of at least 4%. On your Policy Anniversary, we transfer the interest that has been credited to the Loan Account proportionately to your Investment Options according to your most recent allocation instructions.

How much you can borrow

You can borrow up to the larger of the following amounts:

• 100% of the Accumulated Value in the Fixed Options, plus 90% of the Accumulated Value in the Variable Investment Options.

• the result of a × (b ÷ c) - d where:

a = the Accumulated Value of your Policy less 12 times the most recent monthly charge

b = 1.04

c = 1.045 during the first 10 Policy Years, and 1.0425 during Policy Year 11 and thereafter

d = any Policy Debt.

An example of how much you can borrow

For a Policy in Policy Year 13 with:

•  Accumulated Value of $100,000

•  Policy Debt of $50,000

•  a most recent monthly charge of $100

The maximum amount you can borrow is $48,563.07:

(a × (b ÷ c)) - d, where:

a = $98,800 ($100,000 - $0 - (12 x $100))

b = 1.04

c = 1.0425

d = $50,000

Paying off your loan

You can pay off all or part of the loan any time while your Policy is In Force. Unless you tell us otherwise, we’ll generally transfer any loan payments you make proportionately to your Investment Options according to your most recent allocation instructions. We may, however, first transfer any loan payments you make to the Fixed Options, up to the amount originally transferred from the Fixed Options to the Loan Account. We’ll then transfer any excess amount to your Variable Investment Options according to your most recent allocation instructions.

Remember to tell us if a payment is a premium payment or a loan payment.

You can make monthly loan payments using our Electronic Funds Transfer Plan. Here’s how it works:

45

WITHDRAWALS, SURRENDERS AND LOANS

• You authorize us to withdraw a specified amount from your checking account, savings account or money market account each month by completing an Electronic Funds Transfer Form. Please contact us or your registered representative for a copy of this form.

• You can choose any day between the 4^th and 28^th of the month for us to make the withdrawal.

• Loan payments made by the Electronic Funds Transfer Plan must be at least $50.

What happens if you do not pay off your loan

If you do not pay off your loan, we’ll deduct the amount in the Loan Account, including any interest you owe, from one of the following:

• the Death Benefit Proceeds before we pay them to your Beneficiary

• the Cash Surrender Value if you surrender your Policy

• the amount we refund if you exercise your Free Look Right.

Taking out a loan, whether or not you repay it, will have a permanent effect on the value of your Policy. For example, while your Policy’s Accumulated Value is held in the Loan Account, it will miss out on the potential earnings available through the Variable Investment Options. The amount of interest you earn on the Loan Account may be less than the amount of interest you would have earned from the Fixed Options. These could lower your Policy’s Accumulated Value, which could reduce the amount of the Death Benefit.

When a loan is outstanding, the amount in the Loan Account is not available to help pay for any Policy charges. If, after deducting your Policy Debt, there is not enough Accumulated Value in your Policy to cover the Policy charges, your Policy could lapse. You may need to make additional premium payments or loan repayments to prevent your Policy from lapsing.

Your Policy Debt could result in taxable income if you surrender your Policy, if your Policy lapses, or if your Policy is a Modified Endowment Contract. You should talk to your tax advisor before taking out a loan under your Policy. See Taxation of distributions in Variable Life Insurance and Your Taxes.

Ways to Use Your Policy’s Loan and Withdrawal Features

You can use your Policy’s loan and withdrawal features to supplement your income, for example, during retirement. If you’re interested in using your life insurance Policy to supplement your retirement income, please contact us for more information.

Setting up an income stream may not be suitable for all Policy Owners.

Here are some things you should consider when setting up an income stream:

• the rate of return you expect to earn on your Investment Options

• how long you would like to receive regular income

• the amount of Accumulated Value you want to maintain in your Policy.

You can ask your registered representative for Illustrations showing how Policy charges may affect existing Accumulated Value and how future withdrawals and loans may affect the Accumulated Value and Death Benefit. You can also ask for accompanying charts and graphs that compare results from various retirement strategies.

Understanding the risks

Using your Policy to supplement your income does not change your rights or our obligations under the Policy. The terms for loans and withdrawals described in this prospectus remain the same. It’s important to understand the risks that are involved in using your Policy’s loan and withdrawal features. Use of these features may increase the chance of your Policy lapsing.

You should consult with your financial adviser and carefully consider how much you can withdraw and borrow from your Policy each year to set up your income stream.

46

Surrendering Your Policy

You can surrender or cash in your Policy at any time while either Insured is still living.

Here are some things you need to know about surrendering your policy:

• You must send us your Policy and a Written Request.

• We’ll send you the Policy’s Net Cash Surrender Value. There’s no surrender charge.

47

GENERAL INFORMATION ABOUT YOUR POLICY

This section tells you some additional things you should know about your Policy.

Income Benefit

If you surrender or make a withdrawal from your Policy, you can use the money to buy an income benefit that provides a monthly income. Your Policy’s Beneficiary can use Death Benefit Proceeds to buy an income benefit. In addition to the income benefit described below, you can choose from other income benefits we may make available from time to time.

The following is one income benefit available under the Pacific Select Estate Preserver II Policy:

• The income benefit is based on the life of the person receiving the income. If the Policy Owner is buying the income benefit, monthly income will be based on the Owner’s life. If the Policy’s Beneficiary buys the income benefit, monthly income will be based on the Beneficiary’s life.

• We’ll pay a monthly income for at least 10 years regardless of whether the person receiving the income is still alive.

• After 10 years, we’ll only pay the monthly income for as long as the person receiving it is still alive.

• The minimum monthly income benefit calculated must be at least $100.

• For this income benefit, the amount you receive will always be at least as much as the amount guaranteed by your Policy.

Paying the Death Benefit in the Case of Suicide

If either Insured, whether sane or insane, commits suicide within two years of the Policy Date (one year for policies issued in Colorado or North Dakota), Death Benefit Proceeds will be the total of all premiums you’ve paid, less any Policy Debt, any withdrawals you’ve made, and any cash dividends we’ve paid.

If your Policy is issued in Arizona, if either Insured commits suicide within two years of the Policy Date, the Survivor has the option of requesting an individual policy with substantially the same coverage provided by the original Policy.

Replacement of Life Insurance or Annuities

The term replacement has a special meaning in the life insurance industry. Before you make a decision to buy, we want you to understand what impact a replacement may have on your existing insurance policy.

A replacement occurs when you buy a new life insurance policy or annuity contract, and a policy or contract you already own has been or will be:

• lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated

• converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values

• amended to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid

• reissued with any reduction in cash value, or

• pledged as collateral or subject to borrowing, whether in a single loan or under a schedule of borrowing over a period of time.

There are circumstances when replacing your existing life insurance policy or annuity contract can benefit you. As a general rule, however, replacement is not in your best interest.

A replacement may affect your plan of insurance in the following ways:

• You will pay new acquisition costs;

• You may have to submit to new medical examinations;

• You may pay increased premiums because of the increased Age or changed health of the Insureds;

• Claims made in the early policy years may be contested;

• You may have to pay surrender charges and/or income taxes on your current policy or contract values;

• Your new policy or contract values may be subject to surrender charges; and

• If part of a financed purchase, your existing policy or contract values or Death Benefit may be reduced.

You should carefully compare the costs and benefits of your existing policy or contract with those of the new policy or contract to determine whether replacement is in your best interest.

48

Policy Exchange

If your Policy is issued in Connecticut, Georgia, Maryland, North Carolina or North Dakota, you may exchange this Policy for a policy with benefits that do not vary with the investment results of a separate account. You must request this in writing within 18 months of your Policy Date and return the original Policy.

The new policy will have the same Owner, Beneficiary and Cash Surrender Value as those of your original Policy on the date of exchange. It will also have the same issue Age, Policy Date, Face Amount, benefits, Riders and underwriting class as the original Policy. However, if your Risk Class under this Policy is select nonsmoker and you exchange to a policy that does not have the select nonsmoker risk classification available, the new policy will be issued as a nonsmoker risk classification. Any Policy Debt will be carried over to the new policy. Evidence of insurability will not be required.

Errors on Your Application

If the Age or gender of either Insured is stated incorrectly on your application, we’ll adjust the Face Amount to reflect the correct Age or gender. Here’s how we’ll do it:

• Using the monthly cost of insurance rate for the Policy Year in which we discover the mistake, we’ll multiply the Face Amount by the rate based on the incorrect Age or gender. We’ll then divide the result by the monthly cost of insurance rate that’s based on the correct Age or gender.

• We’ll calculate Accumulated Value using cost of insurance, Rider and benefit charges based on the correct Age and gender, for all Policy Months following the month we discover the mistake.

• We will not recalculate Accumulated Value for the Policy Months up to and including the month in which we discover the mistake.

• We will not recalculate mortality and expense risk charges or surrender charges.

Contesting the Validity of Your Policy

We have the right to contest the validity of your Policy for two years from the Policy Date. Once your Policy has been In Force for two years from the Policy Date during the lifetime of the Insureds, we generally lose the right to contest its validity.

We also have the right to contest the validity of a Policy that you reinstate for two years from the day that it was reinstated. Once your reinstated Policy has been In Force for two years from the reinstatement date during the lifetime of the Insureds, we generally lose the right to contest its validity. During this period, we may contest your Policy only if there is a material misrepresentation on your application for reinstatement.

Regardless of the above, we can contest the validity of your Policy for failure to pay premiums at any time. The Policy will terminate upon successful contest with respect to either Insured.

Assigning Your Policy as Collateral

You may assign your Policy as collateral to secure a loan, mortgage, or other kind of debt. An assignment will take place only when we receive and record your signed Collateral Assignment Form. When recorded, the assignment will take effect as of the date the form was signed. Any rights created by the assignment will be subject to any payments made or actions taken by us before we record the change. We will not be responsible for the validity of any assignment. Please contact us for a Collateral Assignment Form if you would like to assign your Policy.

Non-participating

This Policy will share in our surplus earnings. However, the current dividend scale is zero and we do not anticipate that dividends will be paid. Any dividends that do become payable will be paid in cash.

49

VARIABLE LIFE INSURANCE AND YOUR TAXES

The tax consequences of owning a Policy or receiving proceeds from it may vary by jurisdiction and according to the circumstances of each Owner or Beneficiary.

The following is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It’s based on the Internal Revenue Code (the Tax Code) and does not cover any state or local tax laws. More detailed information appears in the SAI.

We do not know whether the current treatment of life insurance policies under current federal income tax or estate or gift tax laws will continue. We also do not know whether the current interpretations of the laws by the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of life insurance policies. This may affect the performance and underlying tax assumptions of this Policy, including any Riders. In some cases, these changes could result in a decrease in Policy values or lapse.

We do not make any guarantees about the tax status of your Policy, and you should not consider the discussion that follows to be tax advice. This is not a complete discussion of all federal income tax questions that may arise under a Policy. There are special rules that we do not include here that may apply in certain situations. Speak to a qualified tax adviser for complete information about federal, state and local taxes that may apply to you.

The Policy as Life Insurance

Death benefits from a life insurance policy may be excluded from income under Section 101(a) of the Tax Code.

We believe that the Policy meets the statutory definition of life insurance for federal income tax purposes. That means it will receive the same tax advantages as a conventional fixed life insurance policy. The two main tax advantages are:

• In general, your Policy’s Beneficiary will not be subject to federal income taxes when he or she receives the Death Benefit Proceeds.

• You will generally not be taxed on your Policy’s Accumulated Value unless you receive a cash distribution by making a withdrawal, surrendering your Policy, or in some instances, taking a loan from your Policy.

Policy Features and Charges

The tax laws defining life insurance, however, do not cover all policy features. Your Policy may have features that could prevent it from qualifying as life insurance. For example, the tax laws have yet to address:

• substandard risk policies

• policies with term insurance on the people insured by the policy

• life insurance policies that continue coverage beyond Age 100 or other advanced ages

• certain tax requirements relating to joint survivorship life insurance policies.

The Tax Code and tax regulations impose limitations on unreasonable mortality and expense charges for purposes of determining whether a policy qualifies as life insurance for federal tax purposes. We can change our mortality charges if we believe the changes are needed to ensure that your Policy qualifies as a life insurance contract.

We believe that last survivor policies meet the statutory definition of life insurance under Section 7702 of the Tax Code. However, the area of tax law relating to the definition of life insurance does not explicitly address all relevant issues relating to last survivor life insurance policies.

We reserve the right to make changes to the Policy if we deem the changes appropriate to continue to qualify your Policy as a life insurance contract. If a Policy were determined not to qualify as life insurance, the Policy would not provide the tax advantages normally provided by life insurance. This includes excluding the Death Benefit from the gross income of the Beneficiary.

50

Diversification Rules and Ownership of the Separate Account

Your Policy will not qualify for the tax benefit of a life insurance contract unless, among other requirements, the Separate Account follows certain rules requiring diversification of investments underlying the Policy. Section 817(h) of the Tax Code and related Treasury Regulations describe the diversification rules.

For a variable life insurance policy to qualify for tax deferral, assets in the separate accounts supporting the contract must be considered to be owned by the insurance company and not by the contract owner. If a contract owner is treated as having control over the underlying assets, the contract owner will be taxed currently on income and gains from the account and in such a case of “investor control” the contract owner would not derive the tax benefits normally associated with variable life insurance.

For more information about diversification rules, please refer to the accompanying prospectus of the Pacific Select Fund prospectus. For more information regarding investor control, please refer to the policy SAI.

Policy Exchanges

Policy exchanges fall under Section 1035(a) of the Tax Code.

If you exchange your policy for another one that insures the same people, it generally will be treated as a tax-free exchange and, if so, will not result in the recognition of gain or loss. If any of the people insured by the policy are changed, the exchange will be treated as a taxable exchange.

Change of Ownership

You may have taxable income if you transfer ownership of your Policy, sell your Policy, or change the ownership of it in any way.

Corporate or Employer Owners

There are special tax issues for corporate Owners:

• Section 101(j) of the Internal Revenue Code generally provides that Death Benefits paid in connection with certain life insurance policies involving an employer will be taxable income. Employer-involved policies issued or materially modified on or after August 18, 2006 may be subject to income tax liability on the Policy’s Death Benefit unless certain requirements and conditions of Internal Revenue Code Section 101(j) are met.

• Using your Policy to fund deferred compensation arrangements for employees has special tax consequences.

• Section 59A of the Tax Code deals with the environmental tax. Corporate ownership of a Policy may affect your liability under the alternative minimum tax and the environmental tax.

Please consult your tax adviser for these and other special rules for employer-involved Policies.

Modified Endowment Contracts

Section 7702A of the Tax Code defines conventional life insurance policies. It also defines a class of life insurance policies known as “Modified Endowment Contracts”. If your Policy is a Modified Endowment Contract, any distributions you receive during the life of the Policy are treated less favorably than under conventional life insurance policies. Withdrawals, loans, pledges, assignments and the surrender of your Policy are all considered distributions and may be subject to tax on an income-first basis and a 10% penalty.

When a Policy becomes a Modified Endowment Contract

A life insurance policy becomes a Modified Endowment Contract if, at any time during the first seven policy years, the sum of actual premiums paid exceeds the seven-pay limit. The seven-pay limit is the cumulative total of the level annual premiums (or seven-pay premiums) required to pay for the policy’s future death and endowment benefits.

51

VARIABLE LIFE INSURANCE AND YOUR TAXES

An example

For a policy with seven-pay premiums of $1,000 a year, the maximum premiums you could pay during the first seven years to avoid modified endowment treatment would be:

•  $1,000 in the first year

•  $2,000 through the first two years

•  $3,000 through the first three years, etc.

If there is a material change to your Policy, like a change in the Death Benefit, we may have to retest your Policy and restart the seven-pay premium period to determine whether the change has caused the Policy to become a Modified Endowment Contract.

Taxation of Distributions

Tax treatment of distributions from your Policy’s Accumulated Value may be treated differently, depending upon whether your Policy is a Modified Endowment Contract.

CONVENTIONAL LIFE INSURANCE POLICY	MODIFIED ENDOWMENT CONTRACT
Surrendering your Policy
Proceeds are taxed to the extent of the income1 in your Policy.	Proceeds are taxed to the extent of the income in your Policy.
Making a withdrawal
If you make a withdrawal after your Policy has been In Force for 15 years, you’ll only be taxed on the amount you withdraw that exceeds the cost basis in the Policy.	You will be taxed on the amount of the withdrawal that’s considered income, including all previously non-taxed gains.
Special rules apply if you make a withdrawal within the first 15 Policy Years. You may be taxed on all or a portion of the withdrawal amount, and there is a reduction in Policy benefits.
Taking out a loan
You will not pay tax on the loan amount unless your Policy is surrendered, lapses or matures and you have not repaid your Policy Debt.	You will be taxed on the amount of the loan that’s considered income, including all previously non-taxed gains.

¹ Income is the difference between the Cash Surrender Value and the cost basis in your Policy. The cost basis in your Policy is generally the premiums you’ve paid plus any taxable distributions less any withdrawals or premiums previously recovered that were taxable.

All Modified Endowment Contracts issued to you in a calendar year by us or our affiliates are treated as a single contract when we calculate whether a distribution amount is subject to tax.

10% penalty tax on Modified Endowment Contracts

If any amount you receive from a Modified Endowment Contract is taxable, you may also have to pay a penalty tax equal to 10% of the taxable amount. A taxpayer will not have to pay the penalty tax if any of the following exceptions apply:

• you’re at least 59¹/2 years old

• you’re receiving an amount because you’ve become disabled

• you’re receiving an amount that’s part of a series of substantially equal periodic payments, paid out at least annually. These payments may be made for your life or life expectancy or for the joint lives or joint life expectancies of you and your Beneficiaries.

Distributions before a Policy Becomes a Modified Endowment Contract

If your Policy fails the seven-pay test and becomes a Modified Endowment Contract, any amount you receive or are deemed to have received during the two years before it became a Modified Endowment Contract may be taxable. The distribution would be treated as having been made in anticipation of the Policy’s failing to meet the seven-pay test under Treasury Department regulations which are yet to be prescribed.

52

Loans and corporate-owned Policies

If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest. If the taxpayer is an entity that’s a direct or indirect beneficiary of certain life insurance, endowment or annuity contracts, a portion of the entity’s deductions for loan interest may be disallowed, even though this interest may relate to debt that’s completely unrelated to the contract. There may be a limited exception that applies to contracts issued on 20% owners, officers, directors or employees of the entity. For more information about this exception, you should consult your tax adviser.

Federal Estate Taxes

The current federal estate tax law provides, among other things, for reductions in federal estate tax rates, increases in the exemption amount, and a “repeal” of the federal estate tax in 2010. However, the legislation provides for full reinstatement of the federal estate tax in the year 2011. In addition, there are legislative proposals that would further affect the estate tax. If you are considering the purchase of the Policy to help pay federal estate taxes at death, consult with your tax advisor.

Policy Riders

Accelerated Living Benefits Rider

If you exercise an Accelerated Living Benefits Rider, the amounts received under this Rider should be generally excluded from taxable income under Section 101(g) of the Tax Code.

However, benefits under the Rider will be taxed, if they are paid to someone other than a person insured by the Policy, and either Insured:

• is a director, officer or employee of the person receiving the benefit, or

• has a financial interest in a business of the person receiving the benefit.

In some cases, there may be a question as to whether a life insurance policy that has an Accelerated Living Benefit Rider can meet technical aspects of the definition of “life insurance contract” under the Tax code. We may reserve the right (but are not obligated) to modify the Rider to conform under Tax Code requirements.

Policy Split Option Rider

This Rider allows a Policy to be split into two individual policies. If the split is not treated as a nontaxable exchange, it could result in the recognition of taxable income up to any gain or income in the Policy at the time of the split.

53

ABOUT PACIFIC LIFE

Pacific Life Insurance Company is a life insurance company domiciled in Nebraska. Along with our subsidiaries and affiliates, our operations include life insurance, annuity, pension and institutional products, broker-dealer operations, and investment and advisory services. At the end of 2007, we had $207.5 billion of individual life insurance in force and total admitted assets of approximately $96.6 billion.

We are authorized to conduct our life and annuity business in the District of Columbia and in all states except New York. Our executive office is at 700 Newport Center Drive, Newport Beach, California 92660.

How Our Accounts Work

We own the assets in our General Account and our Separate Account. We allocate your Net Premiums to these accounts according to the Investment Options you’ve chosen.

General Account

Our General Account includes all of our assets, except for those held in our separate accounts. We guarantee you an interest rate for up to one year on any amount allocated to the Fixed Options. The rate is reset annually. The Fixed Options are part of our General Account, which we may invest as we wish, according to any laws that apply. We’ll credit the guaranteed rate even if the investments we make earn less. Our ability to pay these guarantees is backed by our strength as a company. We can provide you with reports of our ratings as an insurance company and our ability to pay claims with respect to our General Account assets.

The Fixed Options are not securities, so they do not fall under any securities act. For this reason, the SEC has not reviewed the disclosure in this prospectus about the Fixed Options. However, other federal securities laws may apply to the accuracy and completeness of the disclosure about the Fixed Options.

Separate Account

Amounts allocated to the Variable Investment Options are held in our Separate Account. The assets in this account are kept separate from the assets in our General Account and our other separate accounts, and are protected from our general creditors.

The Separate Account is divided into Variable Accounts. Each Variable Account invests in shares of a designated portfolio of the Pacific Select Fund, the BlackRock Variable Series Funds, Inc., the Fidelity Variable Insurance Products Funds (“Fidelity VIP Funds”), the Janus Aspen Series, the Lazard Retirement Series, Inc., the Legg Mason Partners Variable Equity Trust, the MFS Variable Insurance Trust, the Premier VIT, the T. Rowe Price Equity Series, Inc. or the Van Eck World Insurance Trust. We may add Variable Accounts that invest in other portfolios of these Funds or in other securities.

We’re the legal owner of the assets in the Separate Account, and pay its operating expenses. We do not hold ourselves out to be trustees of the Separate Account assets. The Separate Account is operated only for our variable life insurance policies. Pacific Life is obligated to pay all amounts promised to Policy Owners under the terms of the Policy. We must keep enough money in the account to pay anticipated obligations under the insurance policies funded by the account, but we can transfer any amount that’s more than these anticipated obligations to our General Account. Some of the money in the Separate Account may include charges we collect from the account and any investment results on those charges.

We cannot charge the assets in the Separate Account attributable to our reserves and other liabilities under the policies funded by the Separate Account with any liabilities from our other business.

Similarly, the income, gains or losses, realized or unrealized, of the assets of any Variable Account belong to that Variable Account and are credited to or charged against the assets held in that Variable Account without regard to our other income, gains or losses.

Making changes to the Separate Account

We can add, change or remove any securities that the Separate Account or any Variable Account holds or buys, as long as we comply with the laws that apply.

We can substitute shares of one portfolio with shares of another portfolio or Fund if:

• any portfolio is no longer available for investment; or

• our management believes that a portfolio is no longer appropriate in view of the purposes of the Policy.

54

We’ll give you any required notice or receive any required approval from Policy Owners or the SEC before we substitute any shares. We’ll comply with the filing or other procedures established by insurance regulators as required by law.

We can add new Variable Accounts, which may include additional subaccounts of the Separate Account, to serve as Investment Options under the Policies. These may be managed separate accounts or they may invest in a new portfolio of the Funds, or in shares of another investment company or one of its portfolios, or in a suitable investment vehicle with a specified investment objective.

We can add new Variable Accounts when we believe that it’s warranted by marketing needs or investment conditions. We’ll decide on what basis we’ll make new Variable Accounts available to existing Policy Owners.

We can also eliminate any of our Variable Accounts if we believe marketing, tax or investment conditions warrant it. We can terminate and liquidate any Variable Account.

If we make any changes to Variable Accounts or substitution of securities, we can make appropriate changes to this Policy or any of our other policies, by appropriate endorsement, to reflect the change or substitution.

If we believe it’s in the best interests of people holding voting rights under the Policies and we meet any required regulatory approvals we can do the following:

• operate the Separate Account as a management investment company, unit investment trust, or any other form permitted under securities or other laws

• register or deregister the Separate Account under securities law

• combine the Separate Account with one of our other separate accounts or our affiliates’ separate accounts

• combine one or more Variable Accounts

• create a committee, board or other group to manage the Separate Account

• change the classification of any Variable Account.

Taxes we pay

We may be charged for state and local taxes. Currently, we pay these taxes because they are small amounts with respect to the Policy. If these taxes increase significantly, we may deduct them from the Separate Account.

We may charge the Separate Account for any federal, state and local taxes that apply to the Separate Account or to our operations. This could happen if our tax status or the tax treatment of variable life insurance changes.

Voting Rights

We’re the legal owner of the shares of the Funds that are held by the Variable Accounts. We may vote on any matter at shareholder meetings of the Funds. However, we are required by law to vote as you instruct on the shares relating to your allocation in a Variable Investment Option. This is called your voting interest.

Your voting interest is calculated as of a day set by the Board of Trustees or Board of Directors of a Fund, called the record date. Your voting interest equals the Accumulated Value in a Variable Investment Option divided by the net asset value of a share of the corresponding portfolio. Fractional shares are included. If allowed by law, we may change how we calculate your voting interest.

We’ll send you documents from the Fund called proxy materials. They include information about the items you’ll be voting on and forms for you to give us your instructions. We’ll vote shares held in the Separate Account for which we do not receive voting instructions in the same proportion as all other shares in the portfolio held by the Separate Account for which we’ve received timely instructions. If we do not receive any voting instructions for the shares in a separate account, we will vote the shares in the same proportion as the total votes for all of our separate accounts for which we’ve received timely instructions. As a result of proportional voting, the votes cast by a small number of variable contract owners may determine the outcome of a vote.

We’ll vote shares of any portfolio we hold in our General Account in the same proportion as the total votes for all of our separate accounts, including this Separate Account. We’ll vote shares of any portfolio held by any of our non-insurance affiliates in the same proportion as the total votes for all of our separate accounts and those of our insurance affiliates.

If the law changes to allow it, we can vote as we wish on shares of the portfolios held in the Separate Account.

55

ABOUT PACIFIC LIFE

When required by state insurance regulatory authorities, we may disregard voting instructions that:

• would change a portfolio’s investment objective or subclassification

• would approve or disapprove an investment advisory contract.

We may disregard voting instructions on a change initiated by Policy Owners that would change a portfolio’s investment policy, investment adviser or portfolio manager if:

• our disapproval is reasonable

• we determine in good faith that the change would be against state law or otherwise be inappropriate, considering the portfolio’s objectives and purpose, and considering what effect the change would have on us.

If we disregard any voting instructions, we’ll include a summary of the action we took and our reasons for it in the next report to Policy Owners.

Distribution Arrangements

Pacific Select Distributors, Inc. (“PSD”), a broker-dealer and our subsidiary, pays various forms of sales compensation to broker-dealers (including other affiliates) that solicit applications for the Policies. PSD also may reimburse other expenses associated with the promotion and solicitation of applications for the Policies.

We offer the Policies for sale through broker-dealers that have entered into selling agreements with PSD. Broker-dealers sell the Policies through their registered representatives who have been appointed by us to sell our products. PSD pays compensation to broker-dealers for the promotion and sale of the Policies. The individual registered representative who sells you a Policy typically will receive a portion of the compensation, under the representative’s own arrangement with his or her broker-dealer.

We may also provide compensation to broker-dealers for providing ongoing service in relation to Policies that have already been purchased.

Additional Compensation and Revenue Sharing. To the extent permitted by SEC and FINRA rules and other applicable laws and regulations, selling broker dealers may receive additional payments in the form of cash, other special compensation or reimbursement of expenses, sometimes called “revenue sharing”. These additional compensation or reimbursement arrangements may include, for example, payments in connection with the firm’s “due diligence” examination of the Policies, payments for providing conferences or seminars, sales or training programs for invited registered representatives and other employees, payments for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding the Policies, and payments to assist a firm in connection with its administrative systems, operations and marketing expenses and/or other events or activities sponsored by the firms. Subject to applicable FINRA rules and other applicable laws and regulations, PSD and its affiliates may contribute to, as well as sponsor, various educational programs, sales contests and/or promotions in which participating firms and their sales persons may receive prizes such as merchandise, cash, or other awards. Such additional compensation may give us greater access to registered representatives of the broker-dealers that receive such compensation or may otherwise influence the way that a broker-dealer and registered representative market the Policies.

These arrangements may not be applicable to all firms, and the terms of such arrangements may differ between firms. We provide additional information on special compensation or reimbursement arrangements involving selling firms and other financial institutions in the Statement of Additional Information, which is available upon request. Any such compensation, which may be significant at times, will not result in any additional direct charge to you by us.

The compensation and other benefits provided by PSD or its affiliates, may be more or less than the overall compensation on similar or other products. This may influence your registered representative or broker-dealer to present this Policy over other investment options available in the marketplace. You may ask your registered representative about these differing and divergent interests, how he/she is personally compensated and how his/her broker-dealer is compensated for soliciting applications for the Policy.

We may agree to reduce or waive some or all of the Policy charges and/or credit additional amounts under our Policies, for a Policy sold to an eligible person. An eligible person meets criteria established by us, and may include current and retired officers, directors and employees of us and our affiliates, trustees of the Pacific Select Fund, trustees of Pacific Funds, and immediate family members of such persons. We will credit additional amounts to Policies owned by eligible persons if such Policies are purchased directly through PSD. Under such circumstances, eligible persons will not be afforded the benefit of services of any other broker/

56

dealer nor will commissions be payable to any broker/dealer in connection with such purchases. Eligible persons must contact us directly with servicing questions, Policy changes and other matters relating to their Policies. The amount credited to Policies owned by eligible persons will equal the reduction in expenses we enjoy by not incurring brokerage commissions in selling such Policies, with the determination of the expense reduction and of such crediting being made in accordance with our administrative procedures. These credits will be added to an eligible person’s Policy after the Free Look Transfer Date has occurred, or, if premiums are paid using the monthly Electronic Funds Transfer plan, on the first Policy Anniversary.

Portfolio managers of the underlying portfolios available under this Policy may help pay for conferences or meetings sponsored by us or PSD relating to management of the portfolios and our variable life insurance products.

Please refer to the SAI for additional information on distribution arrangements and the conflicts of interest that they may present.

Service Arrangements

We or our affiliates have entered into services agreements in connection with some of the Funds and their investment advisers, subadvisers, distributors and/or their affiliates, and may receive compensation for providing certain services including, but not limited to, customer and support services. Unless otherwise noted, fees for these services are paid monthly and are based on the average daily net assets of shares of each Fund held by the separate accounts and purchased by us at the Policy Owner’s instructions. Because Pacific Life or its affiliates receive the fees described below, Pacific Life or its affiliates may be subject to competing interests in making these Funds available as Investment Options under the contracts.

BlackRock Distributors, Inc., principal underwriter of shares of BlackRock Variable Series Funds, pays us, on a quarterly basis, at the annual rate of 0.25% of the average daily net assets of Class III shares of BlackRock Variable Series Funds held by our separate accounts. Fidelity Distributors Corporation (FDC), principal underwriter of shares of Fidelity VIP Funds, pays us at the annual rate of 0.25% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts. In addition, FDC pays us, on a quarterly basis, at the annual rate of 0.10% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts where the aggregate dollar value of the shares is equal to or less than $350,000,000 during the quarter, plus the annual rate of 0.15% of the average aggregate net assets in excess of $350,000,000 during the quarter. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), transfer agent for Fidelity VIP Funds, pays us, on a quarterly basis, at the annual rate of 0.05% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts. Fees paid to us by FIIOC will not exceed $1,000,000 for any calendar quarter. Janus Capital Management LLC, the investment adviser for Janus Aspen Series, pays us at the annual rate of 0.20% of the average monthly value of the Service Class shares of Janus Aspen Series held by our separate accounts. In addition, Janus Distributors LLC, distributor for Janus Aspen Series, pays us at an annual rate of up to 0.25% of the average aggregate monthly value of the Service Class shares of Janus Aspen Series held in our separate accounts. Lazard Asset Management Securities LLC, principal underwriter for the Lazard Retirement Series, Inc., pays us, on a monthly basis, at the annual rate of 0.35% of the average aggregate daily net value of the first $150,000,000 of shares of the Lazard Retirement Series, Inc. portfolios held in our separate accounts, plus the annual rate of 0.40% of the average aggregate daily net value of shares in excess of $150,000,000 held in our separate accounts. Legg Mason Investor Services, LLC, the distributor for Legg Mason Partners Variable Equity Trust, pays us, on a quarterly basis, at the annual rate of 0.35% of the average daily net value of the first $250,000,000 of shares of each portfolio of the Legg Mason Partners Variable Equity Trust held in our separate accounts, plus the annual rate of 0.40% of the average daily net value of shares of each Legg Mason Partners Variable Equity Trust portfolio in excess of $250,000,000 held in our separate accounts. Massachusetts Financial Services Company, the investment adviser to MFS Variable Insurance Trust, pays us, on a quarterly basis, at the annual rate of 0.25% of the aggregate net assets of the Service Class shares of the MFS Variable Insurance Trust held by our separate accounts. OpCap Advisors LLC, the investment adviser for Premier VIT, pays us a quarterly amount that is equal on an annual basis to 0.25% of the average daily net assets on the first $25,000,000 of shares of the Premier VIT held by our separate accounts, plus 0.35% of the average daily net assets of the Premier VIT in excess of $25,000,000 held by our separate accounts. T. Rowe Price Associates, Inc., the investment adviser for T. Rowe Price Equity Series Inc., pays us each month at the annual rate 0.15% of the average aggregate net assets of Class II shares of T. Rowe Price Equity Series, Inc. held by our separate accounts where the aggregate dollar value of the shares exceeds $25,000,000 at all times during that month, and increases to 0.25% of the average aggregate net assets where the aggregate dollar value of the shares exceeds $250,000,000 at all times during that month. In addition, T. Rowe Price Investment Services, Inc., distributor for T. Rowe Price Equity Series Inc., pays us, on a monthly basis, at the annual rate of 0.25% of the average aggregate net asset value of the T. Rowe Price Equity Series, Inc. Class II shares held by our separate accounts. Van Eck Securities Corporation, distributor for Van Eck Worldwide Insurance Trust, pays us an annual rate of 0.35% of the average daily net assets of Van Eck Worldwide Insurance Trust held by our separate accounts.

57

ABOUT PACIFIC LIFE

PSD shall pay American Funds Distributors, Inc. at a rate of 0.16% of premiums up to $1.5 billion, 0.14% of premiums on next $1.5 billion and 0.10% of premiums made in excess, attributable to the Master Funds for certain marketing assistance.

Illustrations

We will provide you with Illustrations based on different sets of assumptions upon your request.

• Illustrations based on information you give us about the Age of the people to be insured by the Policy, their Risk Class, the Face Amount, the Death Benefit and premium payments.

• Illustrations that show the allocation of premium payments to specified Variable Accounts. These will reflect the expenses of the portfolio of the Fund in which the Variable Account invests.

• Illustrations that use a hypothetical gross rate of return up to 12% are available. Illustrations that use a hypothetical gross rate of return greater than 12% are available only to certain large institutional investors.

You can request such Illustrations at any time. Such Illustrations reflect assumptions about the Policy’s non-guaranteed elements and about how you will use the Policy’s options. Over time the Policy’s actual non-guaranteed elements, and your actual use of the Policy’s options, are likely to vary from the assumptions used in such Illustrations. For these reasons, actual Policy values will likely be more or less favorable than shown in such Illustrations. You can get one Policy Illustration free of charge per Policy Year. We reserve the right to charge $25 for each additional Illustration.

Lost Policy

If you lose your Policy, you may request a Certificate of Coverage free of charge. If you require a duplicate Policy, we may charge a fee of $50 per duplicate. To request a Certificate of Coverage or a duplicate Policy, please contact us for a Certificate of Insurance/Duplicate Policy Request Form.

Audits of Premiums/loans

You may request us to run a report of premium payments you’ve made or loan transactions under your Policy. If you request us to provide information for a period of more than 2 years from date of request, we may charge you an administrative fee of $25 for this service.

Risk Class Change

If you have a change in Risk Class, such as a change in smoking status or health, you can request us to review your Risk Class. Changing your Risk Class may change the rates used for cost of insurance, mortality and expense risk face amount and surrender charge charges, and may also change the rates on any Riders on your Policy which base charges on Risk Class. We may charge you a fee of $100 for each Insured at the time you request us to change your Risk Class. If your Policy was issued on or before April 30, 2004, the maximum fee we may charge you is $50 per Insured at the time you request us to change your Risk Class.

State Regulation

On September 1, 2005, Pacific Life redomesticated to Nebraska. We’re subject to the laws of the state of Nebraska governing insurance companies and to regulations issued by the Commissioner of Insurance of Nebraska. In addition, we’re subject to the insurance laws and regulations of the other states and jurisdictions in which we’re licensed or may become licensed to operate.

An annual statement in a prescribed form must be filed with the Commissioner of Insurance of Nebraska and with regulatory authorities of other states on or before March 1st in each year. This statement covers our operations for the preceding year and our financial condition as of December 31st of that year. Our affairs are subject to review and examination at any time by the Commissioner of Insurance or his agents, and subject to full examination of our operations at periodic intervals.

Legal Proceedings and Legal Matters

Pacific Life, the Separate Account, and PSD are not involved in any legal proceedings that would have a material effect on Policy Owners.

58

Legal matters concerning the issue and sale of the life insurance policies described in this prospectus, our organization and authority to issue the Policies, and matters relating to federal securities laws and federal income tax laws have been passed upon by our counsel.

Registration Statement

We’ve filed a registration statement with the SEC for Pacific Select Estate Preserver II, under the Securities Act of 1933. The SEC’s rules allow us to omit some of the information required by the registration statement from this prospectus. You can ask for it from the SEC’s office in Washington, D.C. They may charge you a fee.

Financial Statements

The statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented are contained in the SAI.

The consolidated statements of financial condition of Pacific Life Insurance Company as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007 are contained in the SAI.

59

APPENDIX A – DEATH BENEFIT CALCULATION TABLES

Guideline Premium Test

Death Benefit Percentages

Age		Percentage		Age		Percentage		Age		Percentage		Age		Percentage
	0-40		250		50		185		60		130		70		115
	41		243		51		178		61		128		71		113
	42		236		52		171		62		126		72		111
	43		229		53		164		63		124		73		109
	44		222		54		157		64		122		74		107
	45		215		55		150		65		120		75-90		105
	46		209		56		146		66		119		91		104
	47		203		57		142		67		118		92		103
	48		197		58		138		68		117		93		102
	49		191		59		134		69		116		>93		101

Option D

Death Benefit Factor Table

Rate per $1.00 of Face Amount

Joint
equal
age	Policy years*
	5	10	15	20	25	30	35	40	45	50	55	60	65	70	75+
15	1.000	1.000	1.000	1.001	1.002	1.005	1.010	1.022	1.048	1.102	1.210	1.415	1.702	1.957	2.000
20	1.000	1.000	1.001	1.002	1.004	1.009	1.021	1.046	1.100	1.207	1.411	1.700	1.957	2.000	2.000
25	1.000	1.000	1.001	1.003	1.008	1.019	1.044	1.097	1.204	1.408	1.697	1.956	2.000	2.000	2.000
30	1.000	1.001	1.003	1.007	1.018	1.042	1.094	1.200	1.404	1.694	1.955	2.000	2.000	2.000	2.000
35	1.000	1.002	1.006	1.016	1.039	1.091	1.197	1.400	1.692	1.954	2.000	2.000	2.000	2.000	2.000
40	1.001	1.005	1.014	1.036	1.087	1.192	1.395	1.688	1.953	2.000	2.000	2.000	2.000	2.000	2.000
45	1.002	1.011	1.032	1.081	1.185	1.388	1.682	1.952	2.000	2.000	2.000	2.000	2.000	2.000	2.000
50	1.006	1.025	1.072	1.174	1.376	1.674	1.949	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
55	1.015	1.058	1.157	1.358	1.660	1.945	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
60	1.035	1.128	1.327	1.636	1.936	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
65	1.079	1.274	1.595	1.920	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
70	1.175	1.519	1.891	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
75	1.357	1.822	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
80	1.620	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
85	1.894	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
90	1.969	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
95	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
99	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000

*  Factors are portrayed for both joint equal ages and policy anniversaries, at five year intervals. See your policy for one year increments in death benefit factors.

A-1

APPENDIX B – PORTFOLIO OPTIMIZATION MODELS UNTIL MAY 2, 2008

If you select a portfolio optimization model, until May 2, 2008, your Net Premium payments or Accumulated Value, as applicable, will be allocated to the Investment Options according to the model you select as indicated in the chart below. On May 2, 2008, we will automatically update your model to the portfolio optimization model allocations shown under How Premiums Work: Allocating Your Premiums in this prospectus.

	Model A Conservative	Model B Moderate-Conservative	Model C Moderate	Model D Moderate-Aggressive	Model E Aggressive
Investor Profile
You are looking for a relatively stable investment and do not tolerate short- term market swings.		Your focus is on keeping pace with inflation and you can tolerate a moderate level of risk.	You want the opportunity for long-term moderate growth.	You want an investment that is geared for growth and are willing to accept above average risk.	You are an aggressive investor and can tolerate short-term market swings.
Shorter Investment Time Horizon  < --------------------------------------------------------------------------------- > Longer Investment Time Horizon Investor Objective
Primarily preservation of capital		Moderate growth	Steady growth in asset values	Moderately high growth in asset values	High growth in asset values
Risk Characteristics
There may be some losses in the values of the investment as asset values fluctuate.		There may be some losses in the values of the investment from year to year.	There will probably be some losses in the values of the underlying investments from year to year.
			Fluctuations in value should be less than those of the overall stock markets.	Some of these might be large, but the overall fluctuations in asset values should be less than those of the U.S. stock market.
Lower Risk  < ------------------------------------------------------------------------------------- > Higher Risk Asset Class Target Exposure

	Model A			Model B			Model C			Model D			Model E
Cash		6	%		3	%		4	%		4	%		4	%
Bonds		71			53			35			17			—
Domestic Stocks		18			32			44			56			66
International Stocks		5			12			17			23			30

Portfolio Optimization Model Target Allocations as of May 4, 2007
		Model A			Model B			Model C			Model D			Model E
	Small-Cap Growth		—			1	%		1	%		2	%		3	%
	International Value		3	%		6			6			9			11
	International Small-Cap		—			2			2			3			4
	Equity Index		—			—			2			2			2
	Small-Cap Index		—			—			2			2			6
	Diversified Research		2			3			3			3			3
	American Funds® Growth-Income		—			—			4			5			7
	American Funds® Growth		—			2			2			4			5
	Large-Cap Value		4			5			6			6			7
	Short Duration Bond		11			8			4			2			—
	Floating Rate Loan		8			5			3			—			—
	Diversified Bond		14			10			6			3			—
	Growth LT		—			—			2			3			3
	Mid-Cap Value		5			6			8			12			11
	Large-Cap Growth		—			—			2			2			2
	International Large-Cap		2			3			5			7			10
	Small-Cap Value		—			2			2			—			—
	Main Street® Core		5			7			5			5			3
	Emerging Markets		—			—			3			4			5
	Managed Bond		19			15			11			4			—
	Inflation Managed		18			14			11			8			—
	Money Market		2			—			—			—			—
	High Yield Bond		4			3			2			—			—
	Comstock		3			6			6			6			8
	Mid-Cap Growth		—			2			2			3			3
	Real Estate		—			—			—			3			5
	Small-Cap Equity		—			—			—			2			2
Less Volatile  < ---------------------------------------------------------------- > More Volatile

B-1

PACIFIC SELECT

ESTATE PRESERVER II

WHERE TO GO FOR MORE INFORMATION

The Pacific Select Estate Preserver II variable life insurance policy is underwritten by Pacific Life Insurance Company.

You’ll find more information about the Policy and Pacific Select Exec Separate Account in the SAI dated May 1, 2008. The SAI has been filed with the SEC and is considered to be part of this prospectus because it’s incorporated by reference.

You can get a copy of the SAI without charge by calling or writing to us, or you can view it online at our website. You can also contact the SEC to get the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC. The SEC may charge you a fee for this information.

If you ask us, we’ll provide you with Illustrations of Policy benefits based on different sets of assumptions. Illustrations may help you understand how your Policy’s Death Benefit, Cash Surrender Value and Accumulated Value would vary over time based on different assumptions. You can get one Policy Illustration free of charge per Policy Year by calling or writing to us. We reserve the right to charge $25 for additional Illustrations.

How to Contact Us

Pacific Life Insurance Company

P.O. Box 2030

Omaha, NE 68103

1-800-800-7681

5 a.m. through 5 p.m. Pacific time

www.Pacificlife.com

We accept faxes for variable transaction requests (transfers, allocation changes, rebalancing and loans) at:

1-866-398-0467

PREMIUM PAYMENTS

Unless you receive premium notices via listbill, send premiums (other than initial premium) to:

Pacific Life Insurance Company

P.O. Box 100957

Pasadena, California 91189-0957

How to Contact the SEC

You can also find reports and other information about the Policy and Separate Account from the SEC. The SEC may charge you a fee for this information.

Public Reference Section of the Commission

100 “F” Street NE

Washington, D.C. 20549

202-551-8090

Internet: www.sec.gov

FINRA Public Disclosure Program

FINRA provides investor protection education through its website and printed materials. The FINRA regulation website address is www.finra.org. An investor brochure that includes information describing the Public Disclosure program may be obtained from FINRA. The FINRA Public Disclosure hotline number is (800) 289-9999. FINRA does not charge a fee for the Public Disclosure program services.

SEC file number 811-05563

333-20355

PACIFIC SELECT

ESTATE PRESERVER IV PROSPECTUS MAY 1, 2008

Pacific Select Estate Preserver IV is a last survivor flexible premium variable life insurance policy issued by Pacific Life Insurance Company.

• Last survivor means the Policy insures the lives of two people and provides a Death Benefit that’s payable after both people have died.

• Flexible premium means you can vary the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing costs of Policy benefits.

• Variable means the Policy’s value depends on the performance of the Investment Options you choose.

• Life insurance means the Policy provides a Death Benefit to the Beneficiary you choose.

This prospectus provides information that you should know before buying a Policy. It’s accompanied by the current prospectuses for the Funds that provide the underlying portfolios for the Variable Investment Options offered under the Policy. The Variable Investment Options are funded by the Pacific Select Exec Separate Account of Pacific Life. Please read these prospectuses carefully and keep them for future reference.

Here’s a list of all of the Investment Options available under your Policy:

VARIABLE INVESTMENT OPTIONS

Pacific Select Fund

Small-Cap Growth
International Value
Long/Short Large-Cap
International Small-Cap
Equity Index
Small-Cap Index
Diversified Research
Equity
American Funds^® Growth- Income American Funds^® Growth
Large-Cap Value
Technology
Short Duration Bond
Floating Rate Loan
Diversified Bond
Growth LT
Focused 30
Health Sciences Mid-Cap Equity
(formerly Mid-Cap Value)
Large-Cap Growth
International Large-Cap
Small-Cap Value
Multi-Strategy
Main Street^® Core
Emerging Markets
Money Market High Yield Bond
Managed Bond
Inflation Managed
Comstock
Mid-Cap Growth
Real Estate
Small-Cap Equity

BlackRock Variable Series Funds, Inc.
BlackRock Basic Value V.I. Fund Class III

BlackRock Global Allocation V.I. Fund Class III

Fidelity^® Variable Insurance Products Funds
Fidelity VIP Contrafund^® Portfolio Service Class 2
Fidelity VIP Freedom Income Class 2
Fidelity VIP Freedom 2010 Class 2
Fidelity VIP Freedom 2015 Class 2
Fidelity VIP Freedom 2020 Class 2
Fidelity VIP Freedom 2025 Class 2
Fidelity VIP Freedom 2030 Class 2
Fidelity VIP Growth Portfolio Service Class 2
Fidelity VIP Mid Cap Portfolio Service Class 2
Fidelity VIP Value Strategies Portfolio Service Class 2

Janus Aspen Series
International Growth Portfolio Service Class
INTECH Risk-Managed Core Portfolio Service Class
Mid Cap Growth Portfolio Service Class Lazard Retirement Series, Inc.
US Strategic Equity

Legg Mason Partners Variable Equity Trust
Legg Mason Partners Variable Aggressive Growth Portfolio – Class II
Legg Mason Partners Variable Mid Cap Core Portfolio – Class II

MFS^® Variable Insurance Trust
MFS New Discovery Series Service Class
MFS Utilities Series Service Class

Premier VIT
OpCap Small Cap Portfolio

T. Rowe Price Equity Series, Inc.
T. Rowe Price Blue Chip Growth Portfolio – II
T. Rowe Price Equity Income Portfolio – II

Van Eck Worldwide Insurance Trust
Van Eck Worldwide Hard Assets Fund

FIXED OPTIONS

Fixed Account

Fixed LT Account

This Policy is not available in all states. This prospectus is not an offer in any state or jurisdiction where we’re not legally permitted to offer the Policy.

The Policy is described in detail in this prospectus and its Statement of Additional Information (SAI). Each Fund is described in its prospectus and in its SAI. No one has the right to describe the Policy or any Fund any differently than they have been described in these documents.

You should be aware that the Securities and Exchange Commission (SEC) has not reviewed the Policy for its investment merit, and does not guarantee that the information in this prospectus is accurate or complete. It’s a criminal offense to say otherwise.

A life insurance policy may be appropriate if you are looking to provide a death benefit for family members or others or to help meet other long-term financial objectives. Discuss with your qualified investment professional whether a variable life insurance policy, optional benefits and underlying Investment Options are appropriate for you, taking into consideration your age, income, net worth, tax status, insurance needs, financial objectives, investment goals, liquidity needs, time horizon, risk tolerance and relevant information. Together you can decide if a variable life insurance policy is right for you.

Pacific Life does not provide legal or tax advice. Any statement contained in this communication is not intended or written to be legal or tax advice, nor may it be used for the purpose of avoiding any tax penalties that may be imposed on the taxpayer. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

YOUR GUIDE TO THIS PROSPECTUS

Benefits and Risks of Pacific Select Estate Preserver IV	3
Fee Tables	6
Terms Used in this Prospectus	9
Pacific Select Estate Preserver IV basics	11
Issuing the Policy	11
Owners, the Insureds and Beneficiaries	11
Your Policy Date	12
Timing of Payments, Forms and Requests	13
Understanding Policy Expenses and Cash Flow	14
Your Free Look Right	15
Statements and reports we’ll send you	16
Telephone and Electronic Transactions	16
The Death Benefit	18
The Face Amount	18
The Death Benefit	18
Choosing Your Death Benefit Option	18
The Guideline Minimum Death Benefit	19
Comparing the Death Benefit Options	19
When We Pay the Death Benefit	20
Changing Your Death Benefit Option	20
Decreasing the Face Amount	21
Optional Riders	21
How Premiums Work	23
Your Initial Premium	23
Planned Periodic Premium Payments	23
Paying Your Premium	24
Deductions From Your Premiums	24
Limits on the Premium Payments You Can Make	25
Allocating Your Premiums	25
Your Policy’s Accumulated Value	30
Calculating Your Policy’s Accumulated Value	30
Monthly Deductions	30
Lapsing and Reinstatement	32
Your Investment Options	34
Variable Investment Options	34
Fixed Options	40
Transferring Among Investment Options and Market-timing Restrictions	41
Transfer Services	43
Withdrawals, Surrenders and Loans	44
Making Withdrawals	44
Taking Out a Loan	45
Ways to Use Your Policy’s Loan and Withdrawal Features	46
Surrendering Your Policy	47
General Information About Your Policy	48
Variable Life Insurance and Your Taxes	50
About Pacific Life	54
Appendices
Appendix A: Death Benefit Calculation Tables	A-1
Appendix B: Portfolio Optimization Models Until May 2, 2008	B-1
Where to Go For More Information	back cover

2

BENEFITS AND RISKS OF PACIFIC SELECT ESTATE PRESERVER IV

This overview tells you some key things you should know about your Policy. It’s designed as a summary only – please read the entire prospectus and your Policy for more detailed information, or contact us or your registered representative for additional information about your Policy.

The Policy is offered for sale in all jurisdictions where we are authorized to do business and where the Policy is approved by the appropriate insurance department or regulatory authorities. Individual Policy features may not be available in all states or may vary by state. The state in which your Policy is issued governs whether or not certain features, Riders, charges and fees are allowed in your Policy. Any significant variations from the information appearing in this prospectus which are required due to individual state requirements are contained in your Policy, or provided by separate endorsement. You should refer to your Policy for these state specific features.

 Benefits of your policy

 Flexibility

The Policy is designed to be flexible to meet your specific life insurance needs. Within certain limits, you can:

• choose the timing, amount and frequency of premium payments

• change the Death Benefit Option

• decrease the Policy’s Face Amount

• change the Beneficiary

• change your investment selections.

 Death Benefit

The Death Benefit will always be the greater of the Death Benefit under the Death Benefit Option you choose or the Guideline Minimum Death Benefit. The Guideline Minimum Death Benefit is the minimum Death Benefit that we must pay to ensure that your Policy qualifies as life insurance.

You may choose one of four Death Benefit Options:

• Option A – your Death Benefit will be the Face Amount of your Policy.

• Option B – your Death Benefit will be the Face Amount of your Policy plus its Accumulated Value.

• Option C – your Death Benefit will be the Face Amount of your Policy plus the total premiums you’ve paid minus any withdrawals or distributions made.

• Option D – your Death Benefit will be the Face Amount of your Policy multiplied by a Death Benefit factor.

 Accumulated Value

Accumulated Value is the value of your Policy on any Business Day. It is not guaranteed – it depends on the performance of the Investment Options you’ve chosen, the timing and amount of premium payments you’ve made, Policy charges, and how much you’ve borrowed or withdrawn from the Policy.

You can access your Accumulated Value in several ways:

• Withdrawals – you can withdraw part of your Policy’s Net Cash Surrender Value.

• Loans – you can take out a loan from us using your Policy’s Accumulated Value as security.

• Surrender – you can surrender or cash in your Policy for its Net Cash Surrender Value while either Insured is alive.

• Income benefits – you can use withdrawal or surrender benefits to buy an income benefit that provides a monthly income. In addition, your Policy’s Beneficiary can use Death Benefit proceeds to buy an income benefit.

3

BENEFITS AND RISKS OF PACIFIC SELECT ESTATE PRESERVER IV

 Investment Options

You can choose to allocate your net premiums and Accumulated Value among a selection of Variable Investment Options, each of which invests in a corresponding portfolio of various underlying Funds. The Policy also offers two Fixed Options, both of which provide a guaranteed minimum rate of interest.

You can transfer among the Investment Options during the life of your Policy without paying any current income tax. There is currently no charge for transfers.

 Tax Benefits

Your Beneficiary generally will not have to pay federal income tax on Death Benefit Proceeds. You’ll also generally not be taxed on any or all of your Policy’s Accumulated Value unless you receive a cash distribution.

Risks of your policy

 Long-term Financial Planning

This Policy is designed to provide a Death Benefit for family members or others or to help meet other long-term financial objectives. It is not suitable as a short-term savings vehicle. It may not be the right kind of policy if you plan to withdraw money or surrender your Policy for short-term needs. Taking a withdrawal or surrendering your Policy may incur charges. See the Fee Tables and your Policy for charges assessed when withdrawing from or surrendering your Policy.

Please discuss your insurance needs and financial objectives with your registered representative.

 Last Survivor Policy

The Pacific Select Estate Preserver IV is a last survivor policy. This means that the Death Benefit will not be paid to your Beneficiary until after the second person Insured under the Policy dies. This may be appropriate for two spouses who want to provide a Death Benefit for their children.

This may not be the right kind of Policy for someone who wants to provide a Death Benefit for his or her spouse. In that case, a policy that insures a single life may be more appropriate.

 Premium Payments

Federal tax law puts limits on the premium payments you can make in relation to your Policy’s Death Benefit. We may refuse all or part of a premium payment you make, or remove all or part of a premium from your Policy and return it to you under certain circumstances.

 Lapse

Your Policy stays In Force as long as you have sufficient Accumulated Value to cover your monthly deductions of Policy charges. Insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest may cause your Policy to lapse – which means you’ll no longer have any insurance coverage. There are costs associated with reinstating a lapsed Policy.

There is no guarantee that your Policy will not lapse even if you pay your planned periodic premium. You should consider a periodic review of your coverage with your registered representative.

 Investment Performance

Each Variable Investment Option invests in a corresponding portfolio of an underlying Fund, as detailed in Your Investment Options. The value of each portfolio fluctuates with the value of the investments it holds. Returns are not guaranteed. You bear the investment risk of any Variable Investment Option you choose.

See each Fund’s prospectus for more information on the underlying portfolios and their individual risks.

4

 Withdrawals and Loans

Making a withdrawal or taking out a loan may:

• change your Policy’s tax status

• reduce your Policy’s Face Amount

• reduce your Policy’s Death Benefit

• reduce the Death Benefit Proceeds paid to your Beneficiary

• make your Policy more susceptible to lapsing.

Be sure to plan carefully before using these Policy benefits.

Your Policy’s withdrawal feature is not available until your first Policy Anniversary.

 Tax Consequences of Withdrawals, Surrenders and Loans

You may be subject to income tax if you take any withdrawals or surrender the Policy, or if your Policy lapses and you have not repaid any outstanding Policy Debt.

If your Policy is a Modified Endowment Contract, all distributions you receive during the life of the Policy may be subject to tax and a 10% penalty.

There are other tax issues to consider when you own a life insurance policy. These are described in more detail in Variable Life Insurance and Your Taxes.

5

FEE TABLES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. Please read the entire prospectus, your Policy and the SAI for more detailed information regarding these fees and expenses.

 Transaction fees

This table describes the fees and expenses that you will pay at the time you buy the Policy, surrender the Policy, or transfer Accumulated Value between Investment Options.

CHARGE	WHEN CHARGE IS DEDUCTED	AMOUNT DEDUCTED
Maximum sales load imposed on premiums	Upon receipt of premium	6.0% of premium1
Premium based tax charges2	Upon receipt of premium	State and local charge:  2.35% of premium Federal charge:  1.50% of premium
Maximum surrender charge	Upon full surrender of Policy	$0
Withdrawal charge	Upon partial withdrawal of Accumulated Value	$25 per withdrawal
Transfer fees	Upon transfer of Accumulated Value between Investment Options	$503
OPTIONAL BENEFITS4
Accelerated Living Benefits Rider	At exercise of benefit	$150
Enhanced Policy Split Option Rider	No charge	$0
Policy Split Option Rider	At exercise of benefit	$200
ADMINISTRATIVE AND UNDERWRITING SERVICE FEES5
Audits of premium/loan	Upon request of audit of over 2 years or more	$25
Duplicate Policy	Upon request of duplicate Policy6	$50
Illustration request	Upon request of Policy Illustration in excess of 1 per year	$25
Death Benefit Option change	Upon request for Death Benefit Option change	$100
Risk Class change	Upon request for Risk Class change	$100 per Insured7
Adding or increasing an optional Rider	Upon approval of specific request	$100

1	Starting in Policy Year 11 and thereafter, the sales load is reduced to 4.0% of premium paid.
2	We do not expect to increase the state and local charge or federal charge unless the rates we pay change or a change in law requires us to do so.
3	There is no charge currently imposed upon a transfer.
4	Riders are briefly described under The Death Benefit: Optional Riders and more information appears in the SAI.
5	We do not currently charge administrative or underwriting service fees.
6	Certificate of Coverage is available without charge.
7	We charge a maximum of $50 for a request for Risk Class change on Policies issued on or before April 30, 2004.

6

 Periodic charges other than Fund operating expenses

This table describes the fees and expenses that you will pay periodically during the time you own the Policy, not including portfolio fees and expenses.

				AMOUNT DEDUCTED—
			WHEN CHARGE IS	MAXIMUM GUARANTEED	AMOUNT DEDUCTED—
CHARGE			DEDUCTED	CHARGE	CURRENT CHARGES
Cost of Insurance1,2 Minimum and maximum			Monthly Payment Date	$0.01–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.00–$34.14 per $1,000 of a discounted Net Amount At Risk
	Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue			$0.01 per $1,000 of a discounted Net Amount At Risk	Same
Administrative charge2			Monthly Payment Date	$16.003	Same
Mortality and expense risk
	Face amount charge Minimum and maximum		Monthly Payment Date	$0.06–$1.81 per $1,000 of initial Face Amount4	Same
	Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue			$0.17 per $1,000 of Coverage Segment	Same
	Asset charge2		Monthly Payment Date	0.30% annually (0.025% monthly) of Accumulated Value in Investment Options5	Same
Loan interest charge			Policy Anniversary	4.5% of Policy’s Loan Account balance annually6	Same
OPTIONAL BENEFITS Minimum and Maximum7
Individual Annual Renewable Term Rider			Monthly Payment Date, beginning on effective date of coverage for each Coverage Segment	$0.09–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.02–$24.02 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a male select non-smoker who is Age 56 at Policy issue		$0.97 per $1,000 of a discounted Net Amount At Risk	$0.11 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a female select non-smoker who is Age 53 at Policy issue		$0.52 per $1,000 of a discounted Net Amount At Risk	$0.06 per $1,000 of a discounted Net Amount At Risk
Last Survivor Added Protection Benefit Rider			Monthly Payment Date, beginning on effective date of coverage for each Coverage Segment	$0.01–$83.34 per $1,000 of a discounted Net Amount At Risk	$0.01–$33.77 per $1,000 of a discounted Net Amount At Risk
		Charge during Policy Year 1 for a male select non-smoker who is Age 56 and a female select non-smoker who is Age 53 at Policy issue		$0.01 per $1,000 of a discounted Net Amount At Risk	$0.01 per $1,000 of a discounted Net Amount At Risk

7

FEE TABLES

1	Cost of insurance rates apply uniformly to all members of the same Class. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your Policy Specifications will indicate the guaranteed cost of insurance charge applicable to your Policy, and more detailed information concerning your cost of insurance charges is available on request from your registered representative or us. Also, before you purchase the Policy, you may request personalized Illustrations of your future benefits under the Policy based upon the Insureds’ Class, the Death Benefit Option, Face Amount, planned periodic premiums, and any Riders requested. Cost of insurance rates for your Policy will be stated in the Policy Specifications and calculated per $1,000 of coverage.
2	When the younger person insured by your Policy reaches Age 100, this charge is reduced $0.
3	The administrative charge is $16.00 per month for the first five Policy Years, and reduces to $6.00 thereafter.
4	The mortality and risk face amount charge rate is based on the Joint Equal Age of the Insureds and the Face Amount on the Policy Date. The charge is calculated and deducted monthly for the first 10 Policy Years, and reduces to $0 thereafter. The mortality and expense risk face amount charges shown in the table may not be typical of the charges you will pay. Ask your registered representative for more information on this charge for your Policy. The mortality and expense risk face amount charge for your Policy will be stated in the Policy Specifications.
5	Starting in Policy Year 21 and continuing thereafter, the charge reduces to 0.10% annually (0.0083% monthly) of Accumulated Value in Investment Options.
6	Starting in Policy Year 11 and continuing thereafter, the charge reduces to 4.25% annually. Interest owing on the amount you borrow accrues daily at the annual rate. Interest accrued during a Policy Year is due on your Policy Anniversary. If you do not pay interest when due, we transfer an amount equal to the interest that was due from your Accumulated Value and add it to your loan. Loan interest not paid begins accruing interest on the day it is due.
7	Riders are briefly described under The Death Benefit: Optional Riders and more detailed information appears in the SAI. The Rider charges are based on the Age and Risk of the person or persons insured under the Rider on the effective date of the Rider. The Rider charges shown in the table may not be typical of the charges you will pay. Ask your registered representative for more information on optional Rider charges for your Policy. The charges for any optional Riders you add to your Policy will be stated in the Policy Specifications.

 Total annual Fund operating expenses¹

This table shows the minimum and maximum total annual operating expenses paid by the portfolios that you pay indirectly during the time you own the Policy. This table shows the range (minimum and maximum) of fees and expenses (including management fees, shareholder servicing or distribution (12b-1) fees, and other expenses) charged by any of the portfolios, expressed as an annual percentage of average daily net assets. The amounts are based on expenses paid in the year ended December 31, 2007, adjusted to reflect anticipated changes in fees and expenses, or, for new portfolios, are based on estimates for the current fiscal year.

Each Variable Account of the Separate Account purchases shares of the corresponding Fund portfolio at net asset value. The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of the portfolio. The advisory fees and other expenses are not fixed or specified under the terms of the Policy, and they may vary from year to year. These fees and expenses are described in each Fund’s prospectus.

	Minimum			Maximum
Range of total annual portfolio operating expenses before any waivers or expense reimbursements		0.25	%		4.21	%

	Minimum			Maximum
Range of total annual portfolio operating expenses after waivers or expense reimbursements		0.25	%		1.54	%

1 Pacific Life Fund Advisors, LLC, adviser to Pacific Select Fund, and other advisers to the Funds and/or other service providers have contractually agreed to reduce investment advisory fees or otherwise reimburse certain portfolios of their respective Funds which may reduce the portfolio’s expenses to the other Funds. The range of expenses in the first row above does not include the effect of any fee reduction or expense reimbursement arrangement. The range of expenses in the second row above shows the effect of contractual fee reduction and expense reimbursement arrangements that will remain in effect at least through December 31, 2008. There can be no assurance that expense waivers or reimbursement contracts will be extended beyond their current terms, and they may not cover certain expenses such as extraordinary expenses. See each Fund’s prospectus for complete information regarding annual operating expenses of that Fund.

8

TERMS USED IN THIS PROSPECTUS

In this prospectus, you and your mean the policyholder or Owner. Pacific Life, we, us and our refer to Pacific Life Insurance Company. Fund, or, collectively, the Funds, refer to one of the funds providing underlying portfolios for the Variable Investment Options offered under the Policy. Policy means a Pacific Select Estate Preserver IV variable life insurance policy, unless we state otherwise.

We’ve tried to make this prospectus easy to read and understand, but you may find some words and terms that are new to you. We’ve identified some of these below.

If you have any questions, please ask your registered representative or call us at 1-800-800-7681.

Accumulated Value – the total amount of your Policy’s value allocated to the Variable Investment Options and the Fixed Options, plus the amount in the Loan Account, on any Business Day.

Age – at issue, an Insured’s Age on his/her birthday nearest the Policy Date. We add one year to this Age on each Policy Anniversary.

Beneficiary – the person, people, entity or entities you name to receive the Death Benefit Proceeds.

Business Day – any day that the New York Stock Exchange and our Life Insurance Operations Center are open. It usually ends at 4:00 p.m. Eastern time. A Business Day is called a valuation date in your Policy.

Cash Surrender Value – the Policy’s Accumulated Value less any surrender charge.

Class – a subgroup of Insureds determined by a number of factors, including the Age, Risk Class, smoking status and gender (unless unisex rates are required) of both Insureds, and the Policy Date and duration.

Death Benefit – the amount which is payable on the date of the Survivor’s death.

Death Benefit Proceeds – the amount which is payable to the Beneficiary on the date of the Survivor’s death, adjusted as provided in the Policy.

Face Amount – the minimum Death Benefit for so long as your Policy remains In Force. The Face Amount may be increased or decreased under certain circumstances.

Fixed Options – the Fixed Account and Fixed LT Account, which are part of our General Account.

Free Look Right – your right to cancel (or refuse) your Policy and return it for a refund.

Free Look Transfer Date – for Policies issued in states that require return of premium if the Free Look Right is exercised, the day we transfer Accumulated Value from the Money Market Investment Option to the Investment Options you chose.

General Account – includes all of our assets, except for those held in the Separate Account, or any of our other separate accounts.

Guideline Minimum Death Benefit – the minimum Death Benefit needed for the Policy to qualify as life insurance under Section 7702 of the Tax Code.

Illustration – a display of Policy benefits based upon the assumed Age and Risk Class of an Insured, Face Amount of the Policy, Death Benefit, premium payments, and historical or hypothetical gross rate of return.

In Force – the status of a Policy when all requirements are met to provide a Death Benefit upon the death of the Survivor.

Investment Option – a Variable Investment Option or Fixed Option.

Insured – a person on whose life the Policy is issued. Collectively referred to as the Insureds.

Joint Equal Age – a calculation that combines the Ages and insurance risks of two people Insured by a Policy. It changes many possible combinations of Ages, Risk Classes, nonstandard ratings and genders for the Insureds into a two life status used in some Policy calculations.

Loan Account – an account which holds amounts transferred from the Investment Options as collateral for Policy loans.

9

TERMS USED IN THIS PROSPECTUS

Modified Endowment Contract – a type of life insurance policy as described in Section 7702A of the Tax Code, which receives less favorable tax treatment on distributions of cash value than conventional life insurance policies. Classification of a Policy as a Modified Endowment Contract is generally dependent on the amount of premium paid during the first seven Policy Years, or after a material change has been made to the Policy.

Monthly Payment Date – the day we deduct monthly charges from your Policy’s Accumulated Value. The first Monthly Payment Date is your Policy Date, and it’s the same day each month thereafter.

Net Amount At Risk – the difference between the Death Benefit payable if both Insureds died and the Accumulated Value of your Policy.

Net Cash Surrender Value – the Cash Surrender Value less any Policy Debt.

Net Premium – premium paid less any premium load deducted.

Owner – the person named on the application who makes the decisions about the Policy and its benefits while it’s In Force. Two or more Owners are called Joint Owners.

Policy Anniversary – the same day as your Policy Date every year after we issue your Policy.

Policy Date – the date used to determine the Monthly Payment Date, Policy months, Policy Years, and Policy monthly, quarterly, semi-annual and annual anniversaries. The term “Issue Date” is substituted for Policy Date for Policies issued in Massachusetts.

Policy Debt – the amount in the Loan Account, plus any interest you owe.

Policy Specifications – summarize information specific to your Policy at the time the Policy is issued. We’ll send you updated Policy Specification pages if you change your Policy’s Face Amount or any of the Policy’s other benefits.

Policy Year – starts on your Policy Date and each Policy Anniversary, and ends on the day before the next Policy Anniversary.

Riders – provide extra benefits, some at additional cost.

Risk Class – is based on an Insured’s gender, health, tobacco use and is used to calculate certain Policy charges.

Separate Account – the Pacific Select Exec Separate Account, a separate account of ours registered as a unit investment trust under the Investment Company Act of 1940.

Survivor – the living Insured after one of the Insureds dies.

Tax Code – the Internal Revenue Code.

Variable Account – a subaccount of the Separate Account which invests in shares of a corresponding portfolio of an underlying Fund.

Variable Investment Option – a Variable Account.

Written Request – your signed request in writing, which may be required on a form we provide, and received by us.

10

PACIFIC SELECT ESTATE PRESERVER IV BASICS

Pacific Select Estate Preserver IV is a last survivor flexible premium variable life insurance policy that insures the lives of two people and pays Death Benefit Proceeds after both people have died.

When you buy a Pacific Select Estate Preserver IV life insurance Policy, you’re entering into a contract with Pacific Life Insurance Company. Your contract with us is made up of your application, your Policy, applications to change or reinstate the Policy, any amendments, Riders or endorsements to your Policy, and Policy Specifications.

Issuing the Policy

Your registered representative will assist you in completing your application for the Policy. Your registered representative’s broker-dealer firm has up to 7 business days to review the application before it is sent to us. When we approve your signed application, we’ll issue your Policy. If your application does not meet our underwriting and administrative requirements, we can reject it or ask you for more information. Your Policy will be sent to your registered representative for delivery to you. You will be asked to sign a policy delivery receipt. For Policy delivery status, check with your registered representative.

Our obligations to you under the Policy begin when it is In Force. We consider your Policy In Force when the following requirements are met:

• all necessary contractual and administrative requirements are met, and

• we receive and apply the initial premium to the Policy.

If there are any outstanding contractual or administrative requirements that prevent your Policy from being placed In Force, your registered representative will review them with you no later than when the Policy is delivered. See How Premiums Work: Your initial premium for more information.

Your Policy will be In Force until one of the following happens:

• the Survivor under the Policy dies

• the grace period expires and your Policy lapses, or

• you surrender your Policy.

If your Policy is not In Force when the Survivor dies, we are not obligated to pay the Death Benefit Proceeds to your Beneficiary.

Owners, the Insureds, and Beneficiaries

Owners

You can own a Policy by yourself or with someone else. You need the signatures of all Owners for all Policy transactions.

If one of the Joint Owners dies, the surviving Owners will hold all rights under the Policy. If the Owner or the last Joint Owner dies, his or her estate will own the Policy unless you’ve given us other instructions.

You can change the Owner of your Policy by completing a Change of Owner Form. Please contact us or your registered representative for a Change of Owner Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Owner Form. You should consult your financial advisor or a lawyer about designating ownership interests.

The Insureds

This Policy insures the lives of two people who are between the Ages of 20 and 85 at the time you apply for your Policy, and who have given us satisfactory evidence of insurability. The Policy pays Death Benefit Proceeds after the Survivor dies.

Each Insured is assigned an underwriting or insurance Risk Class which we use to calculate cost of insurance and other charges. We normally use the medical or paramedical underwriting method to assign underwriting or insurance Risk Classes, which may require a medical examination.

When we use a person’s Age in Policy calculations, we generally use his or her Age as of the nearest Policy Date, and we add one year to this Age on each Policy Anniversary. For example, when we talk about someone “reaching Age 100”, we’re referring to the Policy Anniversary closest to that person’s 100th birthday, not to the day when he or she actually turns 100.

11

PACIFIC SELECT ESTATE PRESERVER IV BASICS

Beneficiaries

Here are some things you need to know about naming Beneficiaries:

• You can name one or more primary Beneficiaries who each receive an equal share of the Death Benefit Proceeds unless you tell us otherwise. If one Beneficiary dies, his or her share will pass to the surviving primary Beneficiaries in proportion to the share of the Death Benefit Proceeds they’re entitled to receive, unless you tell us otherwise.

• You can also name a contingent Beneficiary for each primary Beneficiary you name. The contingent Beneficiary will receive the Death Benefit Proceeds if the primary Beneficiary dies.

• You can choose to make your Beneficiary permanent (sometimes called irrevocable). You cannot change a permanent Beneficiary’s rights under the Policy without his or her permission.

If no Beneficiary is living when the Death Benefit Proceeds are payable, you as the Policy Owner will receive the Death Benefit Proceeds. If you’re no longer living, the Death Benefit Proceeds will go to your estate.

You can change your Beneficiary at any time while either Insured is alive, and while the Policy is In Force. If you would like to change your Policy’s Beneficiary, please contact us or your registered representative for a Change of Beneficiary Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Beneficiary Form.

Your Policy Date

Your Policy Date

This is usually the later of the day we approve your Policy application or when we receive all administrative requirements needed to issue the Policy. It’s also the beginning of your first Policy Year. Your Policy’s monthly, quarterly, semi-annual and annual anniversary dates are based on your Policy Date.

The Policy Date is set so that it never falls on the 29th, 30th or 31st of any month.

You or your registered representative may request that multiple applications have the same Policy Date and be placed In Force on a common date. For multilife or employer sponsored cases, please contact your registered representative for additional details.

Backdating your Policy

You can have your Policy backdated up to six months, as long as we approve it. In Ohio, your Policy can be backdated only three months.

Backdating in some cases may lower your cost of insurance rates since these rates are based on the Ages of the Insureds. Your first premium payment must cover the premium load and monthly charges for the period between the backdated Policy Date and the day your Policy is issued.

Re-dating your Policy

Once your Policy is issued, you may request us to re-date your Policy. This means your Policy will have a new Policy Date. Re-dating will only be allowed back to the date money is received on your Policy, and can be the earlier of:

• the date your Policy is delivered to you and you paid initial premium, or

• the date we received the initial premium, if earlier than the delivery date.

If your delivery date is the 29th, 30th or 31st of any month, the Policy will be dated the 28th of that month.

If the Policy is re-dated, no Policy charges will be deducted for any period during which coverage was not provided under the terms of the Policy and all Policy charges will be calculated from the new Policy Date. There will be no coverage before the new Policy Date.

It may be disadvantageous to request that the Policy be re-dated. A new Policy Date may cause an Insured’s Age for insurance purposes to change and the cost of insurance rates to increase. It will also affect events based on time elapsed since Policy Date, such as suicide and contestable clauses and surrender charge periods.

We will not re-date Policies that are issued with a temporary insurance premium. Policies with the Policy Date pre-determined under an employer or corporate sponsored plan may not be eligible to re-date.

12

Timing of Payments, Forms and Requests

Effective date

Once your Policy is In Force, the effective date of payments, forms and requests you send us is usually determined by the day and time we receive the item in proper form at the appropriate mailing address that appears in Where To Go For More Information: How To Contact Us on the back cover of this prospectus. Any application, premium payment, form, request or any other correspondence sent to any Pacific Life address other than to the mailing address appearing in Where To Go For More Information: How To Contact Us will not be deemed received in proper order and may result in a processing delay.

Premium payments, loan requests, transfer requests, loan payments or withdrawal or surrender requests that we receive in proper form on a Business Day before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, will normally be effective as of the end of that day, unless the transaction is scheduled to occur on another Business Day. If we receive your payment or request at or after the time of the close of the New York Stock Exchange on a Business Day, your payment or request will be effective as of the end of the next Business Day. If a scheduled transaction falls on a day that is not a Business Day, we’ll process it as of the end of the next Business Day.

Other forms, notices and requests are normally effective as of the next Business Day after we receive them in proper form, unless the transaction is scheduled to occur on another Business Day. Change of Owner and Beneficiary Forms are effective as of the day you sign the change form, once we receive them in proper form.

Proper form

We’ll process your requests once we receive all letters, forms or other necessary documents, completed to our satisfaction. Proper form may require, among other things, a signature guarantee or some other proof of authenticity. We do not generally require a signature guarantee, but we may ask for one if it appears that your signature has changed, if the signature does not appear to be yours, if we have not received a properly completed application or confirmation of an application, or for other reasons to protect you and us. Call us or contact your registered representative if you have questions about the proper form required for a request.

When we make payments and transfers

We’ll normally send the proceeds of withdrawals, loans, surrenders, exchanges and Death Benefit payments, and process transfer requests, within seven days after the effective date of the request in proper form. We may delay payments and transfers, or the calculation of payments and transfers based on the value in the Variable Investment Options under unusual circumstances, for example, if:

• the New York Stock Exchange closes on a day other than a regular holiday or weekend

• trading on the New York Stock Exchange is restricted

• an emergency exists as determined by the SEC, as a result of which the sale of securities is not practicable, or it is not practicable to determine the value of a Variable Account’s assets, or

• the SEC permits a delay for the protection of policy owners.

We may delay transfers and payments from the Fixed Options, including the proceeds from withdrawals, surrenders and loans, for up to six months. We’ll pay interest at an annual rate of at least 4% on any withdrawals or surrender proceeds from the Fixed Options that we delay for 30 days or more.

We pay interest at an annual rate of at least 4% on Death Benefit Proceeds, calculated from the day the Survivor dies to the day we pay the Death Benefit Proceeds.

13

PACIFIC SELECT ESTATE PRESERVER IV BASICS

Understanding Policy Expenses and Cash Flow (including fees and charges of fund portfolios)

The chart to the right illustrates how cash normally flows through a Pacific Select Estate Preserver IV Policy.

Under a flexible premium life insurance policy, you have the flexibility to choose the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing cost of Policy benefits.

Investment earnings will increase your Policy’s Accumulated Value, while investment losses will decrease it. The premium payments you’ll be required to make to keep your Policy In Force will be influenced by the investment results of the Investment Options you choose.

The dark shaded boxes show the fees and expenses you pay directly or indirectly under your Policy.

In some states we’ll hold your Net Premium payments in the Money Market Investment Option until the Free Look Transfer Date. Please turn to Your Free Look Right for details.

14

PACIFIC SELECT ESTATE PRESERVER IV BASICS

Your Free Look Right

Your Policy provides a free look period once the Policy is delivered to you and you sign the Policy delivery receipt. During the free look period, you have the Free Look Right to cancel (or refuse) your Policy and return it to us or your registered representative for a refund.

You’ll find a complete description of the free look period that applies to your Policy on the Policy’s cover sheet, or on a notice that accompanied your Policy. Generally, the free look period ends on the latest of the following:

• 10 days after you receive your Policy (20 days for many states if you are replacing another life insurance policy)

• 10 days after we mail or deliver this prospectus which includes a notice of your right of withdrawal

• 45 days after you complete and sign your Policy application.

Some states may have a different free look period if you are replacing another life insurance policy. Please call us or your registered representative if you have questions about your Free Look Right.

The amount of your refund may be more or less than the premium payments you’ve made, depending on the state where you signed your application. We’ll always deduct any Policy Debt from the amount we refund to you.

In most states, your refund will be based on the Accumulated Value of your Policy. In these states, we’ll allocate your Net Premiums to the Investment Options you’ve chosen. If you exercise your Free Look Right, your refund will be:

• any charges or taxes we’ve deducted from your premiums

• the Net Premiums allocated to the Fixed Options

• the Accumulated Value allocated to the Variable Investment Options

• any monthly charges and fees we’ve deducted from your Policy’s Accumulated Value in the Variable Investment Options.

In some states we’re required to refund the premium payments you’ve made. If you sign your application in one of these states, we’ll hold the Net Premiums in the Money Market Investment Option until the Free Look Transfer Date. On that day, we’ll transfer the Accumulated Value in the Money Market Investment Option to the Investment Options you’ve chosen.

The Free Look Transfer Date is the latest of the following:

• 15 days after we issue your Policy

• 45 days after your application is completed

• when we consider your Policy to be In Force.

California insureds age 60 and over

For Policies issued in the state of California, if any Insured is Age 60 or older as of the Policy effective date, the Policy’s free look period is 30 days from date of delivery. During the 30-day free look period, we’ll hold the Net Premiums in the Money Market Investment Option. On the day following the end of the 30-day free look period, we’ll automatically transfer the Accumulated Value in the Money Market Investment Option to the Investment Options you chose. This automatic transfer to your Investment Option allocation choices is excluded from the transfer limitations described later in this prospectus.

If you exercise your Free Look Right during the 30-day free look period, we will refund the premium payments you’ve made, less any Policy Debt.

You may specifically direct that, during the 30-day free look period, all Net Premiums received by us be immediately allocated to the Investment Options according to your most recent allocation instructions. You may do this:

• on your application

• in writing any time prior to the end of the 30-day free look period.

If you specifically request your Net Premiums be immediately allocated to the Investment Options, and you exercise your Free Look Right during the 30-day free look period, the amount of your refund may be more or less than the premium payments you’ve made. Your refund will be calculated as of the day we or your registered representative receive your request and the Policy. The refund will be:

• any charges or taxes we’ve deducted from your premiums

• the Net Premiums allocated to the Fixed Options

• the Accumulated Value allocated to the Variable Investment Options

• any monthly charges and fees we’ve deducted from your Policy’s Accumulated Value in the Variable Investment Options.

15

PACIFIC SELECT ESTATE PRESERVER IV BASICS

Statements and Reports We’ll Send You

We send the following statements and reports to Policy Owners:

• a confirmation for certain financial transactions, usually including premium payments and transfers, loans, loan repayments, withdrawals and surrenders. Monthly deductions and scheduled transactions made under the dollar cost averaging, portfolio rebalancing and first year transfer services are reported on your quarterly Policy statement.

• a quarterly Policy statement. The statement will tell you the Accumulated Value of your Policy by Investment Options, Cash Surrender Value, the amount of the Death Benefit, the Policy’s Face Amount, and any Policy Debt. It will also include a summary of all transactions that have taken place since the last quarterly statement, as well as any other information required by law.

• supplemental schedules of benefits and planned periodic premiums. We’ll send these to you if you change your Policy’s Face Amount or change any of the Policy’s other benefits.

• financial statements, at least annually or as required by law, of the Separate Account and Pacific Select Fund, that include a listing of securities for each portfolio of the Pacific Select Fund. We’ll also send you financial statements that we receive from the other Funds.

If you suspect an error on a confirmation, quarterly or annual statement, you must notify us in writing as soon as possible to ensure proper accounting to your Policy. We assume transactions are accurate unless you notify us otherwise within 90 days after the transaction confirmation date or, if the transaction is first confirmed on the quarterly statement, within 90 days after the quarterly statement date. All transactions are deemed final and may not be changed after the applicable 90 day period. When you write us, include your name, Policy number and a description of the suspected error.

Prospectus and Fund Report Format Authorization

Subject to availability, you may request us to deliver prospectuses, statements, and other information (“Documents”) electronically. You may also elect to receive prospectus and Fund reports on CD-ROM, via US mail service. If you wish to receive Documents electronically or via CD-ROM, you authorize us to do so by indicating this preference on the application, via telephone, or by sending us a Written Request to receive such Documents electronically. We do not charge for this service.

For electronic delivery, you must provide us with a current and active e-mail address and have Internet access to use this service. While we impose no additional charge for this service, there may be potential costs associated with electronic delivery, such as on-line charges. Documents will be available on our Internet website. You may access and print all Documents provided through this service. As Documents become available, we will notify you of this by sending you an e-mail message that will include instructions on how to retrieve the Document. You are responsible for any e-mail filters that may prevent you from receiving e-mail notifications and for notifying us promptly in the event that your e-mail address changes. You may revoke your consent for electronic delivery at any time, provided that we are properly notified, and we will then start providing you with a paper copy of all required Documents. We will provide you with paper copies at any time upon request. Such a request will not constitute revocation of your consent to receive required Documents electronically.

Telephone and Electronic Transactions

You may authorize us to accept telephone or electronic instructions by completing the appropriate section on your application, or later by a Telephone and Electronic Authorization Form. As long as we have your signed authorization on file, you may give us instructions regarding the following Policy transactions by telephone or electronically through our website:

• change your premium allocations

• make transfers between Investment Options

• give us instructions regarding the dollar cost averaging or portfolio rebalancing services

• request a Policy loan (by telephone only).

Certain registered representatives are able to give us instructions electronically if authorized by you. You may appoint your registered representative to give us instructions on your behalf by completing and filing a Telephone and Electronic Authorization Form with us.

16

Here are some things you need to know about telephone and electronic transactions:

• If your Policy is jointly owned, all Joint Owners must sign the telephone and electronic authorization. We’ll take instructions from any Owner or anyone you appoint.

• We may use any reasonable method to confirm that your telephone or electronic instructions are genuine. For example, we may ask you to provide personal identification or we may record all or part of the telephone conversation. We may refuse any transaction request made by telephone or electronically.

We’ll send you a written confirmation of each telephone and electronic transaction.

Sometimes, you may not be able to make loans or transfers by telephone or electronically, for example, if our telephone lines or our website are busy because of unusual market activity or a significant economic or market change, or our telephone lines or the Internet are out of service during severe storms or other emergencies. In these cases, you can send your request to us in writing, or call us the next Business Day or when service has resumed.

When you authorize us to accept your telephone and electronic instructions, you agree that:

• we can accept and act upon instructions you or anyone you appoint give us over the telephone or electronically

• neither we, any of our affiliates, the Pacific Select Fund, or any director, trustee, officer, employee or agent of ours or theirs will be liable for any loss, damages, cost or expenses that result from transactions processed because of a request by telephone or submitted electronically that we believe to be genuine, as long as we have followed our own procedures

• you bear the risk of any loss that arises from your right to make loans or transfers over the telephone or electronically.

17

THE DEATH BENEFIT

We’ll pay Death Benefit Proceeds to your Beneficiary after the Survivor dies while the Policy is still In Force. Your Beneficiary generally will not have to pay federal income tax on Death Benefit Proceeds.

The Face Amount

Your Policy’s initial amount of insurance coverage is its initial Face Amount. We determine the Face Amount based on instructions provided in your application.

The minimum Face Amount when a Policy is issued is usually $100,000, but we may reduce this in some circumstances. You’ll find your Policy’s Face Amount, which includes any increases or decreases, in the Policy Specifications in your Policy.

The Death Benefit

This Policy offers four Death Benefit Options, Options A, B, C and D. The Death Benefit Option you choose will generally depend on which is more important to you: a larger Death Benefit or building the Accumulated Value of your Policy.

Here are some things you need to know about the Death Benefit:

• You choose your Death Benefit Option on your Policy application.

• If you do not choose a Death Benefit Option, we’ll assume you’ve chosen Option A.

• The Death Benefit will always be the greater of the Death Benefit under the Death Benefit Option you choose or the Guideline Minimum Death Benefit.

• The Death Benefit will never be lower than the Face Amount of your Policy if you’ve chosen Option A, B or D. The Death Benefit Proceeds will always be reduced by any Policy Debt.

• We’ll pay the Death Benefit Proceeds to your Beneficiary when we receive proof of the deaths of both Insureds.

Choosing Your Death Benefit Option

You can choose one of the following four options for the Death Benefit on your application. The graphs below help you compare the options using several hypothetical examples.

Option A – the Face Amount of your Policy.	Option B – the Face Amount of your Policy plus its Accumulated Value.
	The Death Benefit changes as your Policy’s Accumulated Value changes. The better your Investment Options perform, the larger the Death Benefit will be.
Option C – the Face Amount of your Policy plus the total premiums you’ve paid minus any withdrawals or distributions made.	Option D – the Face Amount of your Policy multiplied by a Death Benefit Factor.
The more premiums you pay and the less you withdraw, the larger the Death Benefit will be.	The Death Benefit gradually increases over time no matter how your Investment Options perform, as long as there is enough Accumulated Value to keep your Policy in force.

The examples are intended to show how the Death Benefit Options work and are not predictive of investment performance in your Policy.

18

How we calculate the Death Benefit for Option D

If you choose Option D, we’ll calculate the Death Benefit by multiplying the Face Amount by a Death Benefit factor. The Death Benefit factor is a number from 1.0 to 2.0. A factor of 1.0 means the Death Benefit equals the Face Amount. A factor of 2.0 means the Death Benefit is two times the Face Amount.

The factor changes on each Policy Anniversary and is based on the Joint Equal Age of the Insureds and the number of completed Policy Years. Generally, the Death Benefit factor will reach the maximum of 2.0 when Joint Equal Age plus the number of completed Policy Years is between 85 and 90.

You’ll find more information about the Death Benefit factor in Appendix A and in your Policy.

The Guideline Minimum Death Benefit

The Guideline Minimum Death Benefit is the minimum Death Benefit needed for your Policy to qualify as life insurance under Section 7702 of the Internal Revenue Code. If the amount of the Death Benefit under the Death Benefit Option you choose is less than the Guideline Minimum Death Benefit, we’ll adjust your Death Benefit to equal the Guideline Minimum Death Benefit.

We calculate the Guideline Minimum Death Benefit by multiplying the Accumulated Value of your Policy by a Death Benefit Percentage. This percentage is based on the Age of the younger Insured and will decrease over time. You’ll find a table of Guideline Minimum Death Benefit percentages in Appendix A and in your Policy.

If your Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit, and the Net Amount At Risk is more than three times the Death Benefit on the Policy Date, we may reduce the Death Benefit by requiring you to make a withdrawal from your Policy. If we require you to make a withdrawal, we will not charge you our usual $25 withdrawal fee, but the withdrawal may be taxable. Please turn to Withdrawals, Surrenders and Loans for information about making withdrawals.

Comparing the Death Benefit Options

The tables below compare the Death Benefits provided by the Policy’s four Death Benefit Options. The examples are intended only to show differences in Death Benefits and Net Amounts At Risk. Accumulated Value assumptions may not be realistic.

These examples show that each Death Benefit Option provides a different level of protection. Keep in mind that cost of insurance charges, which affect your Policy’s Accumulated Value, increase with the amount of the Death Benefit, as well as over time. The cost of insurance is charged at a rate per $1,000 of the discounted Net Amount At Risk. As the Net Amount At Risk increases, your cost of insurance increases. Accumulated Value also varies depending on the performance of the Investment Options in your Policy.

The example below is based on the following:

• the Insureds are a male non-smoker Age 56 and a female non-smoker Age 53 at the time the Policy was issued

• Face Amount is $1,000,000

• Accumulated Value at year 20 is $600,000

• total premiums paid into the Policy at year 20 is $300,000

• the Death Benefit factor for Death Benefit Option D at year 20 is 123.2%

• the Death Benefit percentage for the Guideline Minimum Death Benefit is 111%

• the Guideline Minimum Death Benefit is $666,000 (Accumulated Value times a Death Benefit percentage factor of 111%)

Example A		The Death Benefit is the
		larger of these two amounts
Death		Death Benefit	Guideline	Net Amount At Risk
Benefit	How it’s	under the	Minimum	used for cost of
Option	calculated	Death Benefit Option	Death Benefit	insurance charge
Option A	Face Amount	$1,000,000	$666,000	$396,736.94
Option B	Face Amount plus Accumulated Value	$1,600,000	$666,000	$994,779.11
Option C	Face Amount plus premiums less distributions	$1,300,000	$666,000	$695,758.03
Option D	Face Amount times Death Benefit factor	$1,232,000	$666,000	$627,979.91

19

THE DEATH BENEFIT

If the Death Benefit equals the Guideline Minimum Death Benefit, any increase in Accumulated Value will cause an automatic increase in the Death Benefit.

Here’s the same example, but with an Accumulated Value of $1,400,000. Because Accumulated Value has increased, the Guideline Minimum Death Benefit is now $1,554,000 ($1,400,000 times a death benefit factor of 111.1%).

Example B		The Death Benefit is the
		larger of these two amounts
Death		Death Benefit	Guideline	Net Amount At Risk
Benefit	How it’s	under the	Minimum	used for cost of
Option	calculated	Death Benefit Option	Death Benefit	insurance charge
Option A	Face Amount	$1,000,000	$1,554,000	$148,929.21
Option B	Face Amount plus Accumulated Value	$2,400,000	$1,554,000	$992,168.66
Option C	Face Amount plus premiums less distributions	$1,300,000	$1,554,000	$148,929.21
Option D	Face Amount times Death Benefit factor	$1,232,000	$1,554,000	$148,929.21

When We Pay the Death Benefit

We calculate the amount of the Death Benefit Proceeds as of the end of the day the Survivor dies. If that person dies on a day that is not a Business Day, we calculate the Death Benefit Proceeds as of the next Business Day.

Your Policy’s Beneficiary must send us proof that both Insureds died while the Policy was In Force, along with payment instructions. If both Insureds die at the same time, or if it’s not clear who died first, we’ll assume the younger Insured died first.

Death Benefit Proceeds equal the total of the Death Benefits provided by your Policy and any Riders you’ve added, minus any Policy Debt, minus any overdue charges.

We’ll pay interest at an annual rate of at least 4% on the Death Benefit Proceeds, calculated from the day the Survivor dies to the day we pay the Death Benefit Proceeds. In some states we may pay a higher rate of interest if required by law.

It is important that we have a current address for your Beneficiary so that we can pay Death Benefit Proceeds promptly. If we cannot pay the Death Benefit Proceeds to your Beneficiary within five years of the death of the Insured, we’ll be required to pay them to the state.

Changing your Death Benefit Option

You can change your Death Benefit Option after your fifth Policy Year. Here’s how it works:

• You can change the Death Benefit Option once in any Policy Year.

• You must send us your Written Request.

• You can change from any Death Benefit Option to Option A or Option B.

• The change will become effective on the first Monthly Payment Date after we receive your request. If we receive your request on a Monthly Payment Date, we’ll process it that day.

• We may charge you a fee of up to $100 each time you request to change your Death Benefit Option.

• The Face Amount of your Policy will change by the amount needed to make the Death Benefit under the new Death Benefit Option equal the Death Benefit under the old Death Benefit Option just before the change. We will not let you change the Death Benefit Option if doing so means the Face Amount of your Policy will become less than $100,000. We may waive this minimum amount under certain circumstances.

• Changing the Death Benefit Option can also affect the monthly cost of insurance charge since this charge varies with the Net Amount At Risk.

• The new Death Benefit Option will be used in all future calculations.

We will not change your Death Benefit Option if it means your Policy will be treated as a Modified Endowment Contract, unless you’ve told us in writing that this would be acceptable to you. Modified Endowment Contracts are discussed in Variable Life Insurance and Your Taxes.

20

Decreasing the Face Amount

You can decrease your Policy’s Face Amount starting on the first Policy Anniversary as long as we approve it. Here’s how it works:

• You can decrease the Face Amount as long as at least one of the Insureds is alive.

• You can only decrease the Face Amount once in any Policy Year.

• You must send us your request in writing while your Policy is In Force.

• The decrease will become effective on the first Monthly Payment Date on or after we receive and approve your request.

• Decreasing the Face Amount can affect the monthly cost of insurance charge since this charge varies with the Net Amount At Risk.

• We can refuse your request to make the Face Amount less than $100,000. We can waive this minimum amount in certain situations, such as group or sponsored arrangements.

Decreasing the Face Amount may affect your Policy’s tax status. To ensure your Policy continues to qualify as life insurance, we might be required to return:

•  part of your premium payments to you, or

•  make distributions from the Accumulated Value, which may be taxable. For more information, please see Variable Life Insurance and Your Taxes.

We will not decrease the Face Amount if it means your Policy will be treated as a Modified Endowment Contract, unless you’ve told us in writing that this would be acceptable to you.

Optional Riders

There are five optional Riders that provide extra benefits, some at additional cost. Not all Riders are available in every state, and some Riders may only be added when you apply for your Policy. Ask your registered representative for more information about the Riders available with the Policy, or about other kinds of life insurance policies offered by Pacific Life.

• Accelerated Living Benefits Rider

Gives the Policy Owner access to a portion of the Policy’s Death Benefit if the Survivor has been diagnosed with a terminal illness resulting in a life expectancy of six months or less (or longer than six months in some states).

• Enhanced Policy Split Option Rider

Available to married couples, it splits the Policy into two policies without evidence of insurability.

• Individual Annual Renewable Term Rider

Provides level or varying term insurance on either or both Insureds.

• Last Survivor Added Protection Benefit Rider

Provides level or varying term insurance on both Insureds.

• Policy Split Option Rider

Splits the Policy into two individual policies with evidence of insurability.

Some broker/dealers may limit their clients from purchasing some optional benefits based on the client’s age or other factors. You should work with your investment professional to decide whether an optional benefit is appropriate for you.

There may be tax consequences if you exercise your rights under the Accelerated Living Benefits Rider or either of the two Policy Split Option Riders. Please see Variable Life Insurance and Your Taxes for more information.

Certain restrictions may apply and are described in the Rider or benefit. We’ll add any Rider charges to the monthly charge we deduct from your Policy’s Accumulated Value.

More detailed information appears in the SAI. To obtain a copy of the SAI, visit our website at www.Pacificlife.com. Samples of the provisions for the extra optional benefits are available from us upon Written Request.

21

THE DEATH BENEFIT

Things to keep in mind

We offer other variable life insurance policies which provide insurance protection on the lives of two people or on the life of one person. The loads and charges on these policies may be different. Combining a Policy and a Rider, however, may be more economical than adding another Policy. It may also be more economical to provide an amount of insurance coverage through a Policy alone.

22

HOW PREMIUMS WORK

Your Policy gives you the flexibility to choose the amount and frequency of your premium payments.

The amount, frequency, and period of time over which you make premium payments may affect whether your Policy will be classified as a Modified Endowment Contract, or no longer qualifies as life insurance for tax purposes. See Variable Life Insurance and Your Taxes for more information.

We usually set the amount of your first premium payment. You can schedule the amount and frequency of remaining premium payments within certain limits. Each premium payment must be at least $50.

We deduct a premium load from each premium payment, and then allocate your Net Premium to the Investment Options you’ve chosen. Depending on the performance of your Investment Options, and on how many withdrawals, loans or other Policy features you’ve taken advantage of, you may need to make additional premium payments to cover monthly deductions for policy charges to keep your Policy In Force. We may accept premium payments in amounts less than $50.

Your Initial Premium

We usually require you to make a minimum initial premium payment that’s equal to at least 25% of the sum of your premium load and your Policy’s monthly charges for the first year.

The amount of the monthly charge and premium load are calculated based on your Policy’s Face Amount and the Age, smoking status, gender (unless unisex cost of insurance rates apply), and Risk Classes of the Insureds. We describe premium load later in this section. You’ll find an explanation of the monthly charge in Your Policy’s Accumulated Value.

We apply your first premium payment to the Policy on the later of the day we receive it or the day we receive all contractual and administrative requirements necessary for your Policy to be In Force. See How Premiums Work: Allocating Your Premiums for more information on when your first Net Premium is allocated to the Investment Options.

If you have outstanding contractual and administrative requirements, your registered representative will notify you of a delivery date when any outstanding requirements are due to us, not to exceed 45 days from the date we issue your Policy. If we do not receive your first premium payment and all contractual and administrative requirements on or before the delivery date, we can cancel the Policy and refund any premium payment you’ve made. We may extend the delivery date in some cases.

Planned Periodic Premium Payments

You can schedule the amount and frequency of your premium payments. We refer to scheduled premium payments as your planned periodic premium. Here’s how it works:

• On your application, you choose a fixed amount of at least $50 for each premium payment.

• You indicate whether you want to make premium payments annually, semi-annually, or quarterly. You can also choose monthly payments using our monthly Electronic Funds Transfer Plan, which is described below.

• We send you a notice to remind you of your scheduled premium payment (except for monthly Electronic Funds Transfer plan payments, which are paid automatically).

• We’ll treat any payment you make during the life of your Policy as a premium, not as a loan repayment, unless you tell us otherwise in writing.

You do not have to make the premium payments you’ve scheduled. However, not making a premium payment may have an impact on any financial objectives you may have set for your Policy’s Accumulated Value and Death Benefit, and could cause your Policy to lapse. Even if you pay all your premiums when they’re scheduled, your Policy could lapse if the Accumulated Value, less any Policy Debt, is not enough to pay your monthly charges. Turn to Your Policy’s Accumulated Value for more information.

23

HOW PREMIUMS WORK

Paying Your Premium

Premium payments must be made in a form acceptable to us before we can process it. You may pay your premium:

• by personal check, drawn on a U.S. bank

• by cashier’s check, if it originates in a U.S. bank

• by money order in a single denomination of more than $10,000, if it originates in a U.S. bank

• by third party payments, when there is a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

• wire transfers that originate in U.S. banks.

We will not accept premium payments in the following forms:

• cash

• credit card or check drawn against a credit card account

• traveler’s checks

• cashier’s check or money order drawn on a non-U.S. bank, even if the payment may be effected through a U.S. bank

• money order in a single denomination of $10,000 or less

• third party payments, if there is not a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

• wires that originate from foreign bank accounts.

All unacceptable forms of premium payments will be returned to the payor along with a letter of explanation. We reserve the right to reject or accept any form of payment. If you make premium payments or loan repayments by Electronic Funds Transfer or by check other than a cashier’s check, your payment of any withdrawal proceeds and any refund during the free look period may be delayed until we receive confirmation in our administrative office that your payment has cleared.

Monthly Electronic Funds Transfer plan

Once you’ve made your first premium payment, you can make monthly premium payments using our Electronic Funds Transfer Plan. Here’s how it works:

• You authorize us to withdraw a specified amount from your checking account, savings account or money market account each month.

• You can choose any day between the 4th and 28th of the month.

• If you do not specify a day for us to make the withdrawal, we’ll withdraw the premium payment on your Policy’s monthly anniversary. If your Policy’s monthly anniversary falls on the 1st, 2nd or 3rd of the month, we’ll withdraw the payment on the 4th of each month.

• If you make monthly payments by the Electronic Funds Transfer Plan, we will apply the payments as premium payments unless we receive a new form requesting that payments be applied as a loan repayment.

Deductions From Your Premiums

We deduct a premium load from each premium payment you make. The load is made up of three charges:

Sales load

During the first 10 years of your Policy, we deduct a 6% sales load from each premium payment you make. The sales load is reduced to 4% in Policy Year 11 and thereafter. This charge helps pay for the cost of distributing our Policies.

Premium based charges

State and local charge

We deduct 2.35% from each premium payment to pay state and local premium and other taxes. The actual taxes we pay vary from state to state, and in some instances, among municipalities. We do not expect to change the rate unless the rate we pay changes.

24

We deduct 1.50% from each premium payment to compensate us for certain costs or lost investment opportunities we incur associated with certain policy acquisition expenses that we are generally required to capitalize and amortize over a 10-year period, rather than deduct them currently for federal income tax purposes, which may result in a higher corporate federal income tax liability for us in the year the expenses were incurred. These consequences are often referred to as the deferred acquisition cost (“DAC tax”).

Effective January 1, 2006, we reduced the total amount of premium based charges we deduct from each premium payment you make by 0.20%. Effective January 1, 2007, we instituted an additional 0.20% reduction, so that the total reduction in charges deducted from each premium payment you make is 0.40%. This reduction in charge is not guaranteed. We may, in our sole discretion, change the amount of or eliminate the reduction.

We reserve the right to increase or decrease these loads and charges. Like other Policy charges, we may profit from the premium load and may use these profits for any lawful purpose, such as the payment of distribution and administrative expenses. We will notify you in advance if we change our current load rate.

Limits on the Premium Payments You Can Make

We will not accept premium payments after the younger Insured reaches Age 100.

Federal tax law puts limits on the amount of premium payments you can make in relation to your Policy’s Death Benefit. These limits apply in the following situations:

• If accepting the premium means your Policy will no longer qualify as life insurance for federal income tax purposes.

• If applying the premium in that Policy Year means your Policy will become a Modified Endowment Contract. You may direct us to accept premium payments or other instructions that will cause your Policy to be treated as a Modified Endowment Contract by signing a Modified Endowment Contract Election Form. You’ll find a detailed discussion of Modified Endowment Contracts in Variable Life Insurance and Your Taxes. You should speak to a qualified tax adviser for complete information regarding Modified Endowment Contracts.

• If applying the premium payment to your Policy will increase the Net Amount At Risk. This will happen if your Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit or would be equal to it once we applied your premium payment.

You’ll find more detailed information regarding these situations in the SAI.

Allocating Your Premiums

We generally allocate your Net Premiums to the Investment Options you’ve chosen on your application on the day we receive them. Please turn to Your Investment Options for more information about the Investment Options.

When we allocate your first premium depends on the state where you signed your Policy application. If you signed your application in a state that requires us to return the premiums you’ve paid if you exercise your Free Look Right, we’ll hold your Net Premiums in the Money Market Investment Option until the Free Look Transfer Date, and then transfer them to the Investment Options you’ve chosen.

If you signed your application in a state that requires refunds to be based on Accumulated Value if you exercise your Free Look Right, we allocate Net Premiums to the Investment Options you’ve chosen on the day we receive them or your Policy Date, if later. If your Policy has outstanding contractual and/or administrative requirements necessary before it can be placed In Force, we will allocate any Net Premiums received to the Money Market Variable Account until the requirements are satisfied and your Policy is placed In Force.

Portfolio optimization

The service. Portfolio optimization is an asset allocation service that is offered at no additional charge for use within your Policy. Asset allocation refers to the manner that investments are distributed among asset classes to help attain an investment goal. For your Policy, portfolio optimization can help with decisions about how you should allocate your Accumulated Value among available Investment Options. The theory behind portfolio optimization is that diversification among asset classes can help reduce volatility over the long term.

25

HOW PREMIUMS WORK

As part of the portfolio optimization service, several asset allocation models have been developed (portfolio optimization models or models), each based on different profiles of an investor’s willingness to accept investment risk. If you decide to subscribe to the portfolio optimization service and select one of the portfolio optimization models, your initial Net Premium (in the case of a new application) or Accumulated Value, as applicable, will be allocated to the Investment Options according to the model you select. Subsequent Net Premium will also be allocated accordingly, unless you instruct us otherwise in writing. If you choose, you can rebalance your Accumulated Value quarterly, semi-annually, or annually, to maintain the current allocations of your portfolio optimization model, since changes in the net asset values of the underlying portfolios in each model will alter your asset allocation over time. If you also allocate part of your Net Premium or Accumulated Value outside the models with our Portfolio Optimization Plus feature, as described below, and you elect periodic rebalancing, such amounts will not be considered when rebalancing. If you subscribe to portfolio optimization and elect periodic rebalancing, only the Investment Options within your model will be rebalanced.

If you subscribe to portfolio optimization, Pacific Life Fund Advisors LLC (the Adviser), a subsidiary of Pacific Life, will serve as your investment adviser for the service solely for purposes of development of the portfolio optimization models and periodic updates of the models.

On a periodic basis (typically annually), the portfolio optimization models are evaluated and the models are updated, as discussed below. If you subscribe to portfolio optimization, your Accumulated Value or Net Premium, as applicable, will be automatically reallocated in accordance with the model you select as it is updated from time to time based on discretionary authority that you grant to the Adviser, unless you instruct us otherwise. For more information on the role of the investment adviser for the portfolio optimization service, please see the brochure from the Adviser’s Form ADV, the SEC investment adviser registration form, which will be delivered to Policy Owners at the time you subscribe to the portfolio optimization service. Please contact us if you would like to receive a copy of this brochure. In developing and periodically updating the portfolio optimization models, the Adviser currently relies on the recommendations of an independent third-party analytical firm. The Adviser may change the firm that it uses from time to time, or, to the extent permissible under applicable law, use no independent firm at all.

The portfolio optimization models. Five asset allocation models are offered, each comprised of a carefully selected combination of Investment Options (reflecting the underlying portfolios of Pacific Select Fund). Development of the portfolio optimization models is a multi-step process. First, an optimization analysis is performed to determine the breakdown of asset classes. Optimization analysis requires forecasting returns, standard deviations and correlation coefficients of asset classes over the desired investing horizon and an analysis using a state-of-the art program and a statistical analytical technique known as “mean-variance optimization.” Next, after the asset class exposures are known, a determination is made of how available Investment Options (underlying portfolios) can be used to implement the asset class level allocations. The Investment Options are selected by evaluating the asset classes represented by the underlying portfolios and combining Investment Options to arrive at the desired asset class exposures. The portfolio-specific analysis uses historical returns-based style analysis and asset performance and regression and attribution analyses. It may also include portfolio manager interviews. Based on this analysis, Investment Options are selected in a way intended to optimize potential returns for each model, given a particular level of risk tolerance. This process could, in some cases, result in the inclusion of an Investment Option in a model based on its specific asset class exposure or other specific optimization factors, even where another Investment Option may have better historical performance.

Periodic updates of the portfolio optimization model and notices of updates. Each of the portfolio optimization models are evaluated periodically (generally, annually) to assess whether the combination of Investment Options within each model should be changed to better seek to optimize the potential return for the level of risk tolerance intended for the model. As a result of the periodic analysis, each model may change and Investment Options may be added to a model (including Investment Options not currently available), or Investment Options may be deleted from a model.

When your portfolio optimization model is updated, your Accumulated Value and any subsequent Net Premium will automatically be reallocated in accordance with any changes to the model you have selected. This means the allocation of your Accumulated Value, and potentially the Investment Options in which you are invested, will automatically change and your Accumulated Value and any subsequent Net Premium will be automatically reallocated among the Investment Options in your updated model (independently of any automatic rebalancing you may have selected). If you participate in the Portfolio Optimization Plus feature, the Accumulated Value and Net Premium amounts allocated outside the portfolio optimization model will not be reallocated. The Adviser requires that you grant it discretionary investment authority to periodically reallocate your Accumulated Value and any subsequent Net Premium in accordance with the updated version of the portfolio optimization model you have selected, if you wish to participate in portfolio optimization.

26

When the Adviser updates the portfolio optimization models, a written notice of the updated models will be sent to participants at least 30 days in advance of the date the Adviser intends the updated version of the model to be effective. You should carefully review these notices. If you wish to accept the changes in your selected model, you will not need to take any action, as your Accumulated Value and any subsequent Net Premium will automatically be reallocated in accordance with the updated model automatically. If you do not wish to accept the changes to your selected model, you can change to a different model or withdraw from the portfolio optimization service.

Selecting a portfolio optimization model. If you choose to subscribe to the portfolio optimization service, you need to determine which portfolio optimization model is best for you. Neither the Adviser nor its affiliates will make this decision. You should consult with your registered representative on this decision. Your registered representative can help you determine which model is best suited to your financial needs, investment time horizon, and willingness to accept investment risk. You should periodically review these factors with your registered representative to determine if you should change models to keep up with changes in your personal circumstances. Your registered representative can assist you in completing the proper forms to subscribe to the portfolio optimization service or to change to a different model. You may, in consultation with your registered representative, utilize analytical tools made available by the Adviser, including an investor profile questionnaire, which asks questions intended to help you or your registered representative assess your financial needs, investment time horizon, and willingness to accept investment risk. Your responses can be analyzed using the service available on our website. While the information from our website may assist you, it is your decision, in consultation with your registered representative, to select a model or to change to a different model, and the Adviser and its affiliates bear no responsibility for this decision.

You may change to a different model at any time by completing an Investment Policy Statement. Please contact us or your registered representative for a copy of this form. You may discontinue the portfolio optimization service for your Policy at any time with a proper Written Request or by telephone or electronic instructions provided we have your completed telephone and electronic authorization on file.

Risks. Although the models are designed to optimize returns given the various levels of risk, there is no assurance that a model portfolio will not lose money or that investment results will not experience volatility. Investment performance of your Accumulated Value could be better or worse by participating in a portfolio optimization model than if you had not participated. A model may perform better or worse than any single Investment Option or asset class or other combinations of Investment Options or asset classes. Model performance is dependent upon the performance of the component Investment Options (and their underlying portfolios). The timing of your investment and the frequency of automatic rebalancing may affect performance. Your Accumulated Value will fluctuate, and when redeemed, may be worth more or less than the original cost.

A portfolio optimization model may not perform as intended. Although the models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the models are based, which could cause the models to be ineffective or less effective in reducing volatility.

Periodic updating of the portfolio optimization models can cause the underlying portfolios to incur transactional expenses to raise cash for money flowing out of the portfolios or to buy securities with money flowing into the portfolios. These expenses can adversely affect performance of the pertinent portfolios and the models.

The Adviser may be subject to competing interests that have the potential to influence its decision making with regard to portfolio optimization. For example, one portfolio may provide a higher advisory fee to the Adviser than another portfolio, and provide the Adviser with incentive to use the portfolio with the higher fee as part of a portfolio optimization model. In addition, the Adviser may believe that certain portfolios may benefit from additional assets or could be harmed by redemptions. As adviser to Pacific Select Fund, the Adviser monitors performance of the portfolios, and may, from time to time, recommend to the Pacific Select Fund’s Board of Trustees a change in portfolio management firm or strategy or the closure or merger of a portfolio, all of which could impact a model. All Pacific Select Fund portfolios, except those expected to be liquidated or merged, are analyzed by the independent third-party analytical firm. The third-party analytical firm determines the number of portfolios in a model, the percent that any portfolio represents in a model, and which portfolios may be selected. The Adviser will work together with the analytical firm to resolve any investment related matters derived from the analytical firm’s recommendations. The Adviser believes that its reliance on the recommendations of an independent third-party analytical firm to develop and update the models (as described above) reduces or eliminates the potential for the Adviser to be influenced by these competing interests, but there can be no assurance of this.

27

HOW PREMIUMS WORK

The Adviser and its affiliates are under no contractual obligation to continue this service and has the right to terminate or change the portfolio optimization service at any time.

Portfolio Optimization Plus. With our Portfolio Optimization Plus feature, you may choose to allocate a portion of your Accumulated Value and/or Net Premiums outside of the portfolio optimization model you selected. You may change these allocations at any time, and make transfers as described later in this prospectus under Your Investment Options: Transferring Among Investment Options and Market-timing Restrictions.

While you participate in Portfolio Optimization Plus, only the Net Premium or Accumulated Value allocated to a portfolio optimization model will be automatically reallocated if the model updates, or rebalanced if you elect to have the Accumulated Value in the model periodically rebalanced as described above. You may not use the dollar cost averaging service, portfolio rebalancing service or first year transfer service while you participate in Portfolio Optimization Plus.

There is no charge for using this feature.

The models. Information concerning the portfolio optimization models is described below. These models are available effective May 2, 2008. For more information regarding the portfolio optimization models available until May 2, 2008, see Appendix B. You should review this information carefully before selecting or changing a model.

28

The current asset class exposure and portfolio optimization model allocations shown in the chart below may change over time, based on the periodic review of the models and reallocations which reflect updated recommendations.

	Model A Conservative	Model B Moderate-Conservative	Model C Moderate	Model D Moderate-Aggressive	Model E Aggressive
Investor Profile
You are looking for a relatively stable investment and do not tolerate short- term market swings.		Your focus is on keeping pace with inflation and you can tolerate a moderate level of risk.	You want the opportunity for long-term moderate growth.	You want an investment that is geared for growth and are willing to accept above average risk.	You are an aggressive investor and can tolerate short-term market swings.
Shorter Investment Time Horizon  < --------------------------------------------------------------------------------- > Longer Investment Time Horizon Investor Objective
Primarily preservation of capital		Moderate growth	Steady growth in asset values	Moderately high growth in asset values	High growth in asset values
Risk Characteristics
There may be some losses in the values of the investment as asset values fluctuate.		There may be some losses in the values of the investment from year to year.	There will probably be some losses in the values of the underlying investments from year to year.
			Fluctuations in value should be less than those of the overall stock markets.	Some of these might be large, but the overall fluctuations in asset values should be less than those of the U.S. stock market.
Lower Risk  < ------------------------------------------------------------------------------------- > Higher Risk Asset Class Target Exposure as of May 2, 2008

	Model A			Model B			Model C			Model D			Model E
Cash		7	%		5	%		2	%		—			—
Bonds		73			55			38			20	%		4	%
Domestic Stocks		15			29			43			55			66
International Stocks		5			11			17			25			30

Portfolio Optimization Model Target Allocations as of May 2, 2008
		Model A			Model B			Model C			Model D			Model E
	Small-Cap Growth		—			—			2	%		2	%		3	%
	International Value		3	%		5	%		6			9			10
	Long/Short Large-Cap		1			2			2			3			4
	International Small-Cap		—			1			2			3			3
	Equity Index		2			3			3			4			4
	Small-Cap Index		—			—			—			—			2
	Diversified Research		1			2			2			2			2
	American Funds® Growth-Income		—			—			3			5			5
	American Funds® Growth		—			4			4			4			5
	Large-Cap Value		4			5			6			6			7
	Short Duration Bond		12			9			4			2			—
	Floating Rate Loan		8			5			3			—			—
	Focused 30		—			—			1			1			2
	Growth LT		—			2			3			3			4
	Diversified Bond		15			10			6			2			—
	Mid-Cap Equity (formerly Mid-Cap Value)		3			6			8			10			11
	Large-Cap Growth		—			—			2			2			2
	International Large-Cap		3			4			4			8			9
	Small-Cap Value		—			1			1			1			1
	Main Street® Core		3			4			4			4			5
	Emerging Markets		—			—			3			4			5
	High Yield Bond		4			3			2			—			—
	Managed Bond		21			16			11			4			—
	Inflation Managed		18			14			11			8			—
	Mid-Cap Growth		—			1			2			2			2
	Comstock		2			3			4			6			6
	Real Estate		—			—			—			2			4
	Small-Cap Equity		—			—			1			3			4
Less Volatile  < ---------------------------------------------------------------- > More Volatile

29

YOUR POLICY’S ACCUMULATED VALUE

Accumulated Value is the value of your Policy on any Business Day. It is used as the basis for determining Policy benefits and charges.

We use it to calculate how much money is available to you for loans and withdrawals, and how much you’ll receive if you surrender your Policy. It also affects the amount of the Death Benefit if you choose a Death Benefit Option that’s calculated using Accumulated Value.

The Accumulated Value of your Policy is not guaranteed – it depends on the performance of the Investment Options you’ve chosen, the premium payments you’ve made, Policy charges and how much you’ve borrowed or withdrawn from the Policy.

Calculating Your Policy’s Accumulated Value

Your Policy’s Accumulated Value is the total amount allocated to the Variable Investment Options and the Fixed Options, plus the amount in the Loan Account. Please see Withdrawals, Surrenders and Loans: Taking Out a Loan for information about loans and the Loan Account.

We determine the value allocated to the Variable Investment Options on any Business Day by multiplying the number of accumulation units for each Variable Investment Option credited to your Policy on that day, by the Variable Investment Option’s unit value at the end of that day. The process we use to calculate unit values for the Variable Investment Options is described in Your Investment Options.

Monthly Deductions

We deduct a monthly charge from your Policy’s Accumulated Value. If there is not enough Accumulated Value to pay the monthly charge, your Policy could lapse. The performance of the Investment Options you choose, not making planned premium payments, or taking out a withdrawal or a loan all affect the Accumulated Value of your Policy. You’ll find a discussion about when your Policy might lapse, and what you can do to reinstate it, later in this section.

Unless you tell us otherwise, we deduct the monthly charge from the Investment Options that make up your Policy’s Accumulated Value, in proportion to the Accumulated Value you have in each Investment Option. This charge is made up of four charges:

• cost of insurance

• administrative charge

• mortality and expense risk charge

• charges for optional Riders.

Cost of insurance

This charge is for providing you with life insurance protection. Like other Policy charges, we may profit from the cost of insurance charge and may use these profits for any lawful purpose such as the payment of distribution and administrative expenses.

There are maximum or guaranteed cost of insurance rates associated with your Policy. These rates are shown in your Policy’s Specifications pages. When the younger Insured reaches Age 100, the guaranteed cost of insurance rate is reduced to $0.

The guaranteed rates include the insurance risks associated with insuring two people. They are calculated using 1980 Commissioners Standard Ordinary Mortality Tables or the 1980 Commissioners Ordinary Mortality Table B, which are used for unisex cost of insurance rates. The rates are also based on the Ages, gender and Risk Classes of the Insureds unless unisex rates are required.

Our current cost of insurance rates are based on the Ages, Risk Classes and genders (unless unisex rates are required) of the two Insureds. These rates generally increase as the Ages of the two people increase, and they vary with the number of years the Policy has been In Force. Our current rates are lower than the guaranteed rates and they will not exceed the guaranteed rates in the future.

30

How we calculate cost of insurance

We calculate cost of insurance by multiplying the current cost of insurance rate by a discounted Net Amount At Risk at the beginning of each Policy month.

The discounted Net Amount At Risk used in the cost of insurance calculation is the difference between a discounted Death Benefit that would be payable if both Insureds died, and the Accumulated Value of your Policy. We calculate it in two steps:

• Step 1: we divide the Death Benefit that would be payable at the beginning of the Policy Month by 1.00327374.

• Step 2: we subtract your Policy’s Accumulated Value at the beginning of the Policy Month from the amount we calculated in step 1.

Premiums, Net Premiums, Policy fees and charges, withdrawals, investment performance and fees and expenses of the underlying portfolios may affect your Net Amount At Risk, depending on the Death Benefit Option you choose or if your Death Benefit under the Policy is the Guideline Minimum Death Benefit.

Administrative charge

We deduct a charge of $16 a month during the first five Policy Years to help cover the costs of administering and maintaining our Policies. After five Policy Years, we reduce this charge to $6 a month. We guarantee that this charge will not increase. However, subject to state approval, for Policies issued in New Jersey, we guarantee that the administrative charge will never exceed $16 per month. When the younger Insured reaches Age 100, the administrative charge is reduced to $0.

If you buy additional Pacific Select Estate Preserver IV Policies that insure the same two people, we will not deduct the administrative charge from the additional Policies. Instead, we’ll deduct $200 from each Policy’s first premium payment to help cover our processing costs.

Mortality and expense risk charge

Mortality risk is the chance that the people insured by policies we’ve issued do not live as long as expected. This means the cost of insurance charges specified in the policies may not be enough to pay out actual claims.

Expense risk is the chance that our actual administrative and operating expenses are more than expenses we expected.

The mortality and expense risk charge helps compensate us for these risks. It has two components, which are described in the box below. We guarantee this charge will not increase.

How we calculate the mortality and expense risk charge

The mortality and expense risk charge has two components: a Face Amount component and an Accumulated Value component.

•  Face Amount component We deduct a Face Amount component every month during the first 10 Policy Years, at a rate that is based on the Joint Equal Age on the Policy Date and each $1,000 of the initial Face Amount of your Policy.

•  Accumulated Value component We deduct an Accumulated Value component every month during the first 20 Policy Years at an annual rate of 0.30% (0.025% monthly) of your Policy’s Accumulated Value in the Investment Options. During Policy Years 21 and thereafter, we reduce the annual rate to 0.10% (0.008333% monthly) of the Accumulated Value in the Investment Options. For the purposes of this charge, the amount of Accumulated Value is calculated on the Monthly Payment Date after we deduct the cost of insurance and charges for any optional Riders.

An example

For a Policy that insures a male non-smoker Age 56 and a female non-smoker Age 53 when the Policy is issued, with:

•  a Face Amount of $2,000,000

•  Accumulated Value of $60,000 after deducting any Policy Debt.

The monthly charge for the Face Amount Component is $322.00 (($2,000,000 ÷ 1,000) × 0.161).

The monthly charge for the Accumulated Value Component is $15 ($60,000 × 0.025%) during Policy Years 1 through 20, and $5 ($60,000 × 0.008333%) during Policy Year 21 and thereafter.

Charges for optional Riders

If you add any Riders to your Policy, we add any charges for them to your monthly charge.

31

YOUR POLICY’S ACCUMULATED VALUE

Lapsing and Reinstatement

There is no guarantee that your Policy will not lapse even if you pay your planned periodic premium. Your Policy will lapse if there is not enough Accumulated Value, after subtracting any Policy Debt, to cover the monthly charge on the day we make the deduction. Your Policy’s Accumulated Value is affected by the following:

• loans or withdrawals you make from your Policy

• not making planned premium payments

• the performance of your Investment Options

• charges under the Policy.

If there is not enough Accumulated Value to pay the total monthly charge, we deduct the amount that’s available and send you, and anyone you’ve assigned your Policy to, a notice telling you the amount to pay to keep your Policy In Force. This amount is based on the sum of the monthly charges not deducted plus three times the monthly charges due when the insufficiency occurred. However, the minimum amount you must pay to keep your Policy In Force is equal to three times the monthly charge that was due on the Monthly Payment Date when there was not enough Accumulated Value to pay the charge.

We’ll give you a grace period of 61 days from the date we send the notice to pay sufficient premium to keep your Policy In Force. Your Policy will remain In Force during the grace period.

If you do not make the minimum payment

If we do not receive your payment within the grace period, your Policy will lapse with no value. This means we’ll end your life insurance coverage.

If you make the minimum payment

If we receive your payment within the grace period, we’ll allocate your Net Premium to the Investment Options you’ve chosen and deduct the monthly charge from your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

If your Policy is in danger of lapsing and you have Policy Debt, you may find that making the minimum payment would cause the total premiums paid to exceed the maximum amount for your Policy’s Face Amount under tax laws. In that situation, we will not accept the portion of your payment that would exceed the maximum amount. To stop your Policy lapsing, you’ll have to repay a portion of your Policy Debt.

Remember to tell us if a payment is a premium payment or a loan payment.

How to avoid future lapsing

To stop your Policy from lapsing in the future, you may want to make larger or more frequent premium payments if tax laws permit it. Or if you have a loan, you may want to repay a portion of it.

Paying Death Benefit Proceeds during the grace period

If the Survivor dies during the grace period, we’ll pay Death Benefit Proceeds to your Beneficiary. We’ll reduce the payment by any unpaid monthly charges and any Policy Debt.

Reinstating a lapsed Policy

If your Policy lapses, you have five years from the end of the grace period to apply for a reinstatement. We’ll reinstate it if you send us the following:

• a written application

• evidence satisfactory to us that both Insureds are still insurable

• a premium payment sufficient to:

• cover all unpaid monthly charges that were due in the grace period, and

• keep your Policy In Force for three months after the day your Policy is reinstated.

We’ll reinstate your Policy as of the first Monthly Payment Date on or after the day we approve the reinstatement. When we reinstate your Policy, its Accumulated Value will be the same as it was on the day your Policy lapsed. We’ll allocate the Accumulated Value according to your most recent premium allocation instructions.

32

Reinstating a lapsed Policy with Policy Debt

If you had Policy Debt when your Policy lapsed, we will not pay or credit interest on it during the period between the lapsing and reinstatement of your Policy. There are special rules that apply to reinstating a Policy with Policy Debt:

• If we reinstate your Policy on the first Monthly Payment Date that immediately follows the lapse, we’ll also reinstate the Policy Debt that was outstanding the day your Policy lapsed.

• If we reinstate your Policy on any Monthly Payment Date other than the Monthly Payment Date that immediately follows the lapse, we’ll deduct the Policy Debt from your Policy’s Accumulated Value. This means you will no longer have Policy Debt when your Policy is reinstated.

33

YOUR INVESTMENT OPTIONS

This section tells you about the Investment Options available under your Policy and how they work.

We put your Net Premium in our General Account and Separate Account. We own the assets in our accounts and allocate your Net Premiums, less any charges, to the Investment Options you’ve chosen. Amounts allocated to the Fixed Options are held in our General Account. Amounts allocated to the Variable Investment Options are held in our Separate Account. You’ll find information about when we allocate Net Premiums to your Investment Options in How Premiums Work.

You choose your initial Investment Options on your application. If you choose more than one Investment Option, you must tell us the dollar amount or percentage you want to allocate to each Investment Option. You can change your premium allocation instructions at any time.

You can change your premium allocation instructions by writing or sending a fax. If we have your completed telephone and electronic authorization on file, you can call us at 1-800-800-7681 or submit a request electronically. Or you can ask your registered representative to contact us. You’ll find more information regarding telephone and electronic instructions in Pacific Select Estate Preserver IV Basics.

The Investment Options you choose, and how they perform, will affect your Policy’s Accumulated Value and may affect the Death Benefit. Please review the Investment Options carefully. You may ask your registered representative to help you choose the right ones for your goals and tolerance for risk. Any financial firm or representative you engage to provide advice and/or make transfers for you is not acting on our behalf. We are not responsible for any investment decisions or allocations you make, recommendations such financial representatives make or any allocations or specific transfers they choose to make on your behalf. Make sure you understand any costs you may pay directly and indirectly on your Investment Options because they will affect the value of your Policy.

Variable Investment Options

You can choose from a selection of Variable Investment Options. Each Variable Investment Option is set up as a Variable Account under our Separate Account and invests in a corresponding portfolio of the Pacific Select Fund, the BlackRock Variable Series Funds, Inc., the Fidelity Variable Insurance Products Funds (“Fidelity VIP Funds”), the Janus Aspen Series, the Lazard Retirement Series, Inc., the Legg Mason Partners Variable Equity Trust, the MFS Variable Insurance Trust, the Premier VIT, the T. Rowe Price Equity Series, Inc. and the Van Eck World Insurance Trust. Each portfolio invests in different securities and has its own investment goals, strategies and risks. The value of each portfolio will fluctuate with the value of the investments it holds, and returns are not guaranteed. Your Policy’s Accumulated Value will fluctuate depending on the Investment Options you’ve chosen. You bear the investment risk of any Variable Investment Options you choose.

Pacific Life Fund Advisors LLC is the investment adviser for the Pacific Select Fund. They oversee the management of all the Pacific Select Fund’s portfolios. Pacific Life Fund Advisors LLC also does business under the name “Pacific Asset Management”, and manages two of the portfolios directly as Pacific Asset Management. They retain other portfolio managers to manage the other portfolios.

BlackRock Advisors, LLC is the investment adviser of the BlackRock Variable Series Funds, Inc. and has retained various sub-advisors for the portfolios available under your Policy.

Fidelity Management & Research Company is the manager of the Fidelity Variable Insurance Products Funds. They retain other portfolio managers to manage the portfolios of the Fidelity VIP Funds available under your Policy.

Janus Capital Management LLC is the investment adviser of the Janus Aspen Series. For the portfolios available under your Policy, they manage two of the portfolios directly, and have retained a sub-adviser for one portfolio.

Lazard Asset Management LLC is the investment manager of the Lazard Retirement Series, Inc. and manages the portfolio available under your Policy directly.

Legg Mason Partners Fund Advisor, LLC is the investment manager of the Legg Mason Partners Variable Equity Trust and has retained a sub-advisor to manage the portfolios available under your Policy.

Massachusetts Financial Services Company is the investment adviser of the MFS Variable Insurance Trust and manages the portfolios available under your Policy directly.

34

OpCap Advisors LLC is the investment adviser of the Premier VIT, and has retained a sub-adviser to manage the portfolio available under your Policy.

T. Rowe Price Associates, Inc. is the investment manager of the T. Rowe Price Equity Series, Inc. and manages the portfolios available under your Policy directly.

Van Eck Associates Corporation is the investment adviser of the Van Eck Worldwide Insurance Trust and manages the portfolio available under your Policy directly.

Pacific Life is not responsible for the operation of the underlying Funds or any of their portfolios. We also are not responsible for ensuring that the underlying Funds and their portfolios comply with any laws that apply.

The following chart is a summary of the Fund portfolios. You’ll find detailed descriptions of the portfolios in each Fund prospectus that accompanies this prospectus. There’s no guarantee that a portfolio will achieve its investment objective. You should read each Fund prospectus carefully before investing.

35

YOUR INVESTMENT OPTIONS

PACIFIC SELECT FUND PORTFOLIO	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Small-Cap Growth	Capital appreciation.	Equity securities of small, fast growing companies.	Fred Alger Management, Inc.
International Value	Long-term capital appreciation.	Equity securities of relatively large non- U.S. companies believed to be undervalued.	AllianceBernstein L.P.
Long/Short Large-Cap	Above-average total returns.	Equity securities of large-capitalization companies including both long and short positions.	Analytic Investors, LLC, J.P. Morgan Investment Management, Inc.
International Small-Cap	Long-term growth of capital.	Equity securities of non-U.S. companies with small market capitalizations.	Batterymarch Financial Management, Inc.
Equity Index	Investment results that correspond to the total return of common stocks publicly traded in the U.S.	Equity securities of companies that are included in or representative of the S&P 500 Index® (including derivatives).	BlackRock Investment Management, LLC
Small-Cap Index	Investment results that correspond to the total return of an index of small-capitalization companies.	Equity securities of small companies that are included in or representative of the Russell 2000 Index (including derivatives).	BlackRock Investment Management, LLC
Diversified Research	Long-term growth of capital.	Equity securities of companies located in the U.S., or whose principal markets are in the U.S.	Capital Guardian Trust Company
Equity	Capital appreciation. (Current income is of secondary importance.)	Equity securities of growth-oriented companies located in the U.S., or whose principal markets are in the U.S.	Capital Guardian Trust Company
American Funds Growth-Income	Long-term growth of capital and income.	A master fund that invests in equity securities of both U.S. and non-U.S. companies of any size and other securities which demonstrate the potential for appreciation and/or dividends.	Capital Research and Management Company   (adviser to the Master Growth- Income Fund)
American Funds Growth	Long-term growth of capital.	A master fund that invests in equity securities of both U.S. and non-U.S. companies of any size that appear to offer superior opportunities for growth of capital.	Capital Research and Management Company   (adviser to the Master Growth Fund)
Large-Cap Value	Long-term growth of capital. (Current income is of secondary importance.)	Equity securities of large U.S. companies.	ClearBridge Advisors, LLC
Technology	Long-term growth of capital.	Equity securities in the technology sector.	Columbia Management Advisors, LLC
Short Duration Bond	Current income. (Capital appreciation is of secondary importance.)	High quality fixed income securities with an average portfolio duration not likely to exceed 3 years.	Goldman Sachs Asset Management, L.P.
Floating Rate Loan	High level of current income.	Interests in floating rate senior loans.	Highland Capital Management, L.P.
Diversified Bond	Maximize total return consistent with prudent investment management.	Fixed income securities of varying qualities and terms to maturity of both U.S. and non-U.S. companies and derivatives relating to such securities or related indexes.	J.P. Morgan Investment Management, Inc.
Growth LT	Long-term growth of capital.	Equity securities of companies of any size.	Janus Capital Management LLC
Focused 30	Long-term growth of capital.	U.S. and foreign equity securities selected for their growth potential.	Janus Capital Management LLC

36

PACIFIC SELECT FUND PORTFOLIO	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Health Sciences	Long-term growth of capital.	Equity securities of companies in the health sciences sector.	Jennison Associates LLC
Mid-Cap Equity
(formerly Mid-Cap Value)	Capital appreciation.	Equity securities of medium-sized U.S. companies believed to be undervalued.	Lazard Asset Management LLC
Large-Cap Growth	Long-term growth of capital. (Current income is of secondary importance.)	Equity securities of large companies with the potential for long-term growth of capital.	Loomis, Sayles & Company, L.P.
International Large-Cap	Long-term growth of capital.	Equity securities of companies with large market capitalizations located outside the U.S.	MFS Investment Management
Small-Cap Value	Long-term growth of capital.	Equity securities of small companies believed to be undervalued.	NFJ Investment Group L.P.
Multi-Strategy	High total return.	A mix of equity and fixed income securities.	OppenheimerFunds, Inc.
Main Street Core	Long-term growth of capital and income.	Equity securities of large U.S. companies.	OppenheimerFunds, Inc.
Emerging Markets	Long-term growth of capital.	Equity securities of companies that are located in countries generally regarded as “emerging market” countries.	OppenheimerFunds, Inc.
Money Market	Current income consistent with preservation of capital.	Highest quality money market instruments believed to have limited credit risk.	Pacific Asset Management
High Yield Bond	High level of current income.	Fixed income securities with lower and medium-quality credit ratings and intermediate to long terms to maturity.	Pacific Asset Management
Managed Bond	Maximize total return consistent with prudent investment management.	Medium and high-quality fixed income securities with varying terms to maturity, and derivatives relating to such securities or related indexes.	Pacific Investment Management Company LLC
Inflation Managed	Maximize total return consistent with prudent investment management.	Fixed income securities of varying maturities with a focus on inflation-indexed bonds, and forward contracts and derivatives relating to such securities.	Pacific Investment Management Company LLC
Comstock	Long-term growth of capital.	Equity securities of companies believed to have the potential for long-term growth of capital and income.	Van Kampen
Mid-Cap Growth	Long-term growth of capital.	Equity securities of medium-sized companies believed to have above-average growth potential.	Van Kampen
Real Estate	Current income and long-term capital appreciation.	Equity securities of companies principally engaged in the U.S. real estate industry, including REITs and real estate operating companies (REOCs).	Van Kampen
Small-Cap Equity	Long-term growth of capital.	Equity securities of small companies believed to be undervalued.	Vaughan Nelson Investment Management, L.P.

37

YOUR INVESTMENT OPTIONS

BLACKROCK VARIABLE SERIES FUNDS, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
BlackRock Basic Value V.I. Fund Class III	Capital appreciation. (Income is of secondary importance.)	Equity securities believed to be undervalued.	BlackRock Advisors, LLC
BlackRock Global Allocation V.I. Fund Class III	High total investment return.	A mix of U.S. and foreign equity, debt and money market securities	BlackRock Advisors, LLC

FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Fidelity VIP Contrafund® Portfolio Service Class 2	Long-term capital appreciation.	Equity securities of companies whose value is believed not fully recognized by the public.	FMR Co., Inc.
Fidelity VIP Freedom Income	High total return. (Principal preservation is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers®, Inc.
Fidelity VIP Freedom 2010	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2015	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2020	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2025	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Freedom 2030	High total return. (Principal preservation as the fund approaches its target date and beyond is of secondary importance.)	Underlying Fidelity VIP equity, fixed-income, and short-term funds.	Strategic Advisers, Inc.
Fidelity VIP Growth Portfolio Service Class 2	Capital appreciation.	Equity securities of companies believed to have above-average growth potential.	FMR Co., Inc.
Fidelity VIP Mid Cap Portfolio Service Class 2	Long-term growth of capital.	Equity securities primarily of companies with medium market capitalization.	FMR Co., Inc.
Fidelity VIP Value Strategies Portfolio Service Class 2	Capital appreciation.	Equity securities of companies believed to be undervalued in the marketplace.	FMR Co., Inc.

38

JANUS ASPEN SERIES	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
International Growth Portfolio Service Class	Long-term growth of capital.	Securities of issuers from countries outside the United States.	Janus Capital Management LLC
INTECH Risk-Managed Core Portfolio Service Class	Long-term growth of capital.	Common stocks from the universe of the Portfolio’s benchmark index, which is the S&P 500® Index.	Janus Capital Management LLC
Mid Cap Growth Portfolio Service Class	Long-term growth of capital.	Equity securities of mid-sized companies.	Janus Capital Management LLC

LAZARD RETIREMENT SERIES, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
US Strategic Equity	Long-term capital appreciation.	Equity securities, principally common stocks.	Lazard Asset Management LLC

LEGG MASON PARTNERS VARIABLE EQUITY TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Legg Mason Partners Variable Aggressive Growth Portfolio – Class II	Capital appreciation.	Common stocks of companies believed to be experiencing, or will experience, above average growth of earnings.	Legg Mason Partners Fund Advisor, LLC
Legg Mason Partners Variable Mid Cap Core Portfolio – Class II	Long-term growth of capital.	Equity securities or investments with similar characteristics of medium sized companies.	Legg Mason Partners Fund Advisor, LLC

MFS VARIABLE INSURANCE TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
MFS New Discovery Series Service Class	Capital appreciation.	Equity securities of companies believed to have above average earnings growth potential.	Massachusetts Financial Services Company
MFS Utilities Series Service Class	Total return.	Securities of issuers in the utilities industry1.	Massachusetts Financial Services Company

PREMIER VIT	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
OpCap Small Cap Portfolio	Capital appreciation.	Equity securities of companies with market capitalization of less than $2.2 billion at time of purchase.	OpCap Advisors LLC

T. ROWE PRICE EQUITY SERIES, INC.	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
T. Rowe Price Blue Chip Growth Portfolio – II	Long-term capital growth. (Current income is a secondary objective.)	Common stocks of well-established large and medium-sized companies with the potential for above-average earnings increases	T. Rowe Price Associates, Inc.
T. Rowe Price Equity Income Portfolio – II	Substantial dividend income and long-term capital growth.	Common stocks of established companies. In selecting such stocks, the Fund emphasizes companies that appear to be temporarily undervalued by various measures, such as price/earnings (P/E) rations.	T. Rowe Price Associates, Inc.

VAN ECK WORLDWIDE INSURANCE TRUST	INVESTMENT GOAL	THE PORTFOLIO’S MAIN INVESTMENTS	PORTFOLIO MANAGER
Van Eck Worldwide Hard Assets Fund	Long-term capital appreciation. (Income is a secondary consideration.)	A mix of U.S. and foreign hard asset2 securities	Van Eck Associates Corporation

39

YOUR INVESTMENT OPTIONS

1

Issuers in the utilities industry include issuers engaged in the manufacture, production, generation, transmission, sale or distribution of electric, gas or other types of energy, water or other sanitary services; and issuers engaged in telecommunications, including telephone, cellular telephone, telegraph, satellite, microwave, cable television, and other communications media (but not engaged in public broadcasting).

2

Hard asset securities are stocks, bonds and other securities of companies that derive at least 50% of their revenues from exploration, development, production, distribution or facilitation of processes relating to: a) precious metals, b) natural resources, c) real estate and d) commodities. In addition, hard asset securities shall include any derivative securities the present value of which are based upon hard asset securities and/or hard asset commodities.

Calculating unit values

When you choose a Variable Investment Option, we credit your Policy with accumulation units. The number of units we credit equals the amount we’ve allocated divided by the unit value of the Variable Account. Similarly, the number of accumulation units in your Policy will be reduced when you make a transfer, withdrawal or loan from a Variable Investment Option, and when your monthly charges are deducted.

An example

You ask us to allocate $6,000 to the Inflation Managed Investment Option on a Business Day. At the end of that day, the unit value of the Variable Account is $15. We’ll credit your Policy with 400 units ($6,000 divided by $15).

The value of an accumulation unit is the basis for all financial transactions relating to the Variable Investment Options. The value of an accumulation unit is not the same as the value of a share in the underlying portfolio. We calculate the unit value for each Variable Account once every Business Day, usually at or about 4:00 p.m. Eastern time.

Generally, for any transaction, we’ll use the next unit value calculated after we receive your Written Request. If we receive your Written Request before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, on a Business Day, we’ll use the unit value calculated as of the end of that Business Day. If we receive your request at or after the time of the close of the New York Stock Exchange on a Business Day, we’ll use the unit value calculated as of the end of the next Business Day.

If a scheduled transaction falls on a day that is not a Business Day, we’ll process it as of the end of the next Business Day. For your monthly charge, we’ll use the unit value calculated on your Monthly Payment Date. If your Monthly Payment Date does not fall on a Business Day, we’ll use the unit value calculated as of the end of the next Business Day. For information about timing of transactions, see Pacific Select Estate Preserver IV Basics.

The unit value calculation is based on the following:

• the investment performance of the underlying portfolio

• any dividends or distributions paid by the underlying portfolio

• any charges for any taxes that are, or may become, associated with the operation of the Variable Account.

The unit value of a Variable Account will change with the value of its corresponding portfolio. Changes in the unit value of a Variable Account will not change the number of accumulation units credited to your Policy.

Fees and expenses paid by the Funds

Each Fund pays advisory fees and other expenses. These are deducted from the assets of the Fund’s portfolios and may vary from year to year. They are not fixed and are not part of the terms of your Policy. You’ll find more about Fund fees and expenses in Fee Tables and in each Fund’s prospectus. If you choose a Variable Investment Option, these fees and expenses affect you indirectly because they reduce portfolio returns. Each Fund is governed by its own Board of Trustees or Board of Directors.

The SEC recently approved a rule change which will require the Boards of Trustees/ Directors of mutual funds to determine whether a redemption fee (not to exceed 2%) or other trading (transfer) restrictions should be imposed. A redemption fee is a fee that would be charged by and paid to the Fund (not to Pacific Life). In the event the Board of Trustees/Directors of any underlying Funds imposes such fees or limitations, we will pass them on to you.

Fixed Options

You can also choose from two Fixed Options: the Fixed Account and the Fixed LT Account. The Fixed Options provide a guaranteed minimum annual rate of interest. The amounts allocated to the Fixed Options are held in our General Account. For more information about the General Account, see About Pacific Life.

Here are some things you need to know about the Fixed Options:

40

• Accumulated Value allocated to the Fixed Options earns interest on a daily basis, using a 365-day year. Our minimum annual interest rate is 4%.

• We may offer a higher annual interest rate on the Fixed Options. If we do, we’ll guarantee the higher rate until your next Policy Anniversary.

• There are no investment risks or direct charges. Policy charges still apply.

• There are limitations on when and how much you can transfer from the Fixed Options. These limitations are described below, in Transferring Among Investment Options. It may take several Policy Years to transfer your Accumulated Value out of either of the Fixed Options.

• We may place a limit of $1,000,000 on amounts allocated to the Fixed LT Account in any 12-month period. This includes allocations of Net Premium, transfers, and loan repayments for all Pacific Life policies you own. Any allocations in excess of $1,000,000 will be allocated to your other Investment Options according to your most recent instructions. We may increase the $1,000,000 limit at any time at our sole discretion. To find out if a higher limit is in effect, ask your registered representative or contact us.

Transferring Among Investment Options and Market-timing Restrictions

Transfers

You can transfer among your Investment Options any time during the life of your Policy without triggering any current income tax. If your state requires us to refund your premiums when you exercise your Free Look Right, you can make transfers and use transfer programs only after the Free Look Transfer Date. Your transfer of Accumulated Value on the Free Look Transfer Date does not count as a transfer for purpose of applying the limitations described in this section. You can make transfers by writing to us, by making a telephone or electronic transfer, or by signing up for one of our automatic transfer services. You’ll find more information about making telephone and electronic transfers in Pacific Select Estate Preserver IV Basics.

Transfers will normally be effective as of the end of the Business Day we receive your written, telephone or electronic request.

Here are some things you need to know about making transfers:

• Transfers are limited to 25 for each calendar year.

• If you have used all 25 transfers available to you in a calendar year, you may no longer make transfers between the Investment Options until the start of the next calendar year. However, you may make one (1) transfer of all or a portion of your Policy’s Accumulated Value remaining in the Variable Investment Options into the Money Market Investment Option prior to the start of the next calendar year.

• You may only make two (2) transfers in any calendar month to or from each of the following Investment Options: American Funds Growth-Income, American Funds Growth, Fidelity VIP Contrafund^® Service Class 2, Fidelity VIP Freedom Income Class 2, Fidelity VIP Freedom 2010, Fidelity VIP Freedom 2015, Fidelity VIP Freedom 2020, Fidelity VIP Freedom 2025, Fidelity VIP Freedom 2030, Fidelity VIP Growth Service Class 2, Fidelity VIP Mid Cap Service Class 2 and Fidelity VIP Value Strategies Service Class 2.

• Additionally, only two (2) transfers in any calendar month may involve any of the following Investment Options: International Value, International Small-Cap, International Large-Cap, Emerging Markets, BlackRock Global Allocation V.I. Fund Class III, International Growth Service Class or Van Eck Worldwide Hard Assets Fund.

• For the purpose of applying the limitations, multiple transfers that occur on the same day are considered one (1) transfer. Transfers into the Loan Account, a transfer of Accumulated Value from the Loan Account into your Investment Options following a loan payment, or transfers that occur as a result of the dollar cost averaging service, the portfolio rebalancing service, approved corporate owned life insurance policy rebalancing programs, the first year transfer service or an approved asset allocation service are excluded from the transfer limitations. Also, allocations of premium payments are not subject to these limitations.

• Transfers to or from a Variable Investment Option cannot be made before the seventh calendar day following the last transfer to or from the same Variable Investment Option. If the seventh calendar day is not a Business Day, then a transfer may not occur until the next Business Day. The day of the last transfer is not considered a calendar day for purposes of meeting this requirement. For example, if you make a transfer into the Diversified Research Variable Investment Option on Monday, you may

41

YOUR INVESTMENT OPTIONS

	not make any transfers to or from that Variable Investment Option before the following Monday. Transfers to or from the Money Market Variable Investment Option are excluded from this limitation.
•	There is no minimum amount required if you’re making transfers between Variable Investment Options.
•	You can make transfers from the Variable Investment Options to the Fixed Options only in the Policy Month right before each Policy Anniversary. However, if your Policy was issued in Connecticut, Georgia, Maryland, North Dakota, or Pennsylvania, you can make transfers to the Fixed Account any time during the first 18 months of your Policy. If you live in North Carolina, you can make transfers to the Fixed Account any time during the first 24 months of your Policy as long as your Policy is not in the grace period.
•	You can make one transfer in any 12-month period from each Fixed Option, except if you’ve signed up for the first year transfer service (see Transfer Services later in this section). Such transfers are limited to:

• $5,000 or 25% of your Policy’s Accumulated Value in the Fixed Account

• $5,000 or 10% of your Policy’s Accumulated Value in the Fixed LT Account

We reserve the right, in our sole discretion, to waive the transfer restrictions on the Fixed Options. Please contact us or your registered representative to find out if a waiver is currently in effect.

• Currently, there is no charge for making a transfer but we may charge you in the future. The maximum fee we will charge for a transfer is $50.

• There is no minimum required value for the Investment Option you’re transferring to or from.

• You cannot make a transfer if your Policy is in the grace period and is in danger of lapsing.

• We can restrict or suspend transfers.

• We will notify you or your representative if we refuse or delay your transfer request.

• We have the right to impose limits on transfer amounts, the value of the Investment Options you’re transferring to or from, or impose further limits on the number and frequency of transfers you can make. Any policy we establish with regard to the exercise of any of these rights will be applied uniformly to all Policy Owners.

There are no exceptions to the above transfer limitations in the absence of an error by us, a substitution of Investment Options, or reorganization of underlying portfolios or other extraordinary circumstances.

Market-timing restrictions

The Policy is not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the market. Accordingly, organizations or individuals that use market-timing investment strategies and make frequent transfers should not purchase the Policy. Such frequent trading can disrupt management of the underlying portfolios and raise expenses. The transfer limitations set forth above are intended to reduce frequent trading. In addition, we monitor certain large transaction activity in an attempt to detect trading that may be disruptive to the portfolios. In the event transfer activity is found to be disruptive, certain future subsequent transfers by such Policy Owners, or by a registered representative or other party acting on behalf of one or more Policy Owners, will require preclearance. Frequent trading and large transactions that are disruptive to portfolio management can have an adverse effect on portfolio performance and therefore your Policy’s performance. Such trading may also cause dilution in the value of the Investment Options held by long-term Policy Owners. While these issues can occur in connection with any of the underlying portfolios, portfolios holding securities that are subject to market pricing inefficiencies are more susceptible to abuse. For example, portfolios holding international securities may be more susceptible to time-zone arbitrage which seeks to take advantage of pricing discrepancies occurring between the time of the closing of the market on which the security is traded and the time of pricing of the portfolios.

Our policies and procedures which limit the number and frequency of transfers and which may impose preclearance requirements on certain large transactions are applied uniformly to all Policy Owners, subject to the transfer restrictions outlined above. However, there is a risk that these policies and procedures will not detect all potentially disruptive activity or will otherwise prove ineffective in whole or in part. Further, we and our affiliates make available to our variable life insurance policy owners and variable annuity contract owners underlying Funds not affiliated with us. We are unable to monitor or restrict the trading activity with respect to shares of such Funds not sold in connection with our contracts. In the event the Board of Trustees/Directors of any underlying Fund imposes a redemption fee or trading (transfers) limitations, we will pass them on to you.

42

We reserve the right to restrict, in our sole discretion and without prior notice, transfers initiated by a market timing organization or individual or other party authorized to give transfer instructions on behalf of multiple Policy Owners. Such restrictions could include:

• not accepting transfer instructions from a representative acting on behalf of more than one Policy Owner, and

• not accepting preauthorized transfer forms from market timers or other entities acting on behalf of more than one Policy Owner at a time.

We further reserve the right to impose, without prior notice, restrictions on transfers that we determine, in our sole discretion, will disadvantage or potentially hurt the rights or interests of other policy owners.

Transfer Services

We offer three services that allow you to make automatic transfers of Accumulated Value from one Investment Option to another. Under the dollar cost averaging and portfolio rebalancing services, you can transfer among the Variable Investment Options. Under the first year transfer service, you can make transfers from the Fixed Account to the Fixed LT Account and the Variable Investment Options.

You may only participate in one transfer service at any time. We have the right to discontinue, modify or suspend any of these transfer services at any time.

Detailed information regarding each transfer service appears in the SAI.

Dollar cost averaging

Our dollar cost averaging service allows you to make scheduled transfers of $50 or more between Variable Investment Options. It does not allow you to make transfers to or from either of the Fixed Options. We process transfers as of the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you choose. You must have at least $5,000 in a Variable Investment Option to start the service.

Since the value of accumulation units can change, more units are credited for a scheduled transfer when unit values are lower, and fewer units when unit values are higher. This allows you to average the cost of investments over time. Investing this way does not guarantee profits or prevent losses.

We will not charge you for the dollar cost averaging service or for transfers made under this service, even if we decide to charge you in the future for transfers outside of the service, except if we have to by law.

Portfolio rebalancing

As the value of the underlying portfolios changes, the value of the allocations to the Variable Investment Options will also change. The portfolio rebalancing service automatically transfers your Policy’s Accumulated Value among the Variable Investment Options according to your original percentage allocations. We process transfers as of the end of the Business Day on your Policy’s next monthly, quarterly, semi-annual or annual anniversary, depending on the interval you choose, unless you specify a different start date.

Because the portfolio rebalancing service matches your original percentage allocations, we may transfer money from an Investment Option with relatively higher returns to one with relatively lower returns.

We do not charge for the portfolio rebalancing service and we do not currently charge for transfers made under this service.

First year transfer

Our first year transfer service allows you to make monthly transfers from the Fixed Account to the Variable Investment Options or the Fixed LT Account during the first year your Policy is In Force. It does not allow you to transfer among Variable Investment Options. You enroll in the service when you apply for your Policy and include specific details on your application.

This service allows you to average the cost of investments over the first 12 months from the date your initial premium is applied to your Policy. Investing this way does not guarantee profits or prevent losses.

We do not charge for the first year transfer service and we do not currently charge for transfers made under this service.

43

WITHDRAWALS, SURRENDERS AND LOANS

You can take out all or part of your Policy’s Accumulated Value while your Policy is In Force by making withdrawals or surrendering your Policy. You can take out a loan from us using your Policy as security. You can also use your Policy’s loan and withdrawal features to supplement your income, for example, during retirement.

Making a withdrawal, taking out a loan or surrendering your Policy can change your Policy’s tax status, generate taxable income, or make your Policy more susceptible to lapsing. Be sure to plan carefully before using these Policy benefits.

If you withdraw a larger amount than you’ve paid into your Policy, your withdrawal may be considered taxable income.

For more information on the tax treatment of withdrawals or loans, or in the event you surrender your Policy, see Variable Life Insurance and Your Taxes.

Making Withdrawals

You can withdraw part of your Policy’s Net Cash Surrender Value starting on your Policy’s first anniversary. Here’s how it works:

• You must send us a Written Request that’s signed by all Owners.

• Each withdrawal must be at least $500, and the Net Cash Surrender Value of your Policy after the withdrawal must be at least $500.

• If your Policy has existing Policy Debt, the maximum withdrawal you can take is the Cash Surrender Value just before the withdrawal, less the Policy Debt divided by 90%.

• We will not accept your request to make a withdrawal if it will cause your Policy to become a Modified Endowment Contract, unless you’ve told us in writing that you want your Policy to become a Modified Endowment Contract.

• We may charge you $25 for each withdrawal you make.

• You can choose to receive your withdrawal in a lump sum or use it to buy an income benefit. Please see the discussion about income benefits in General Information About Your Policy.

• If you do not tell us which Investment Options to take the withdrawal from, we’ll deduct the withdrawal and the withdrawal charge from all of your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

• The Accumulated Value, Cash Surrender Value and Net Cash Surrender Value of your Policy will be reduced by the amount of each withdrawal.

• If the Survivor dies after you’ve sent a withdrawal request to us, but before we’ve made the withdrawal, we’ll deduct the amount of the withdrawal from any Death Benefit Proceeds owing.

How withdrawals affect your Policy’s Death Benefit

Making a withdrawal will affect your Policy’s Death Benefit in the following ways:

• If your Policy’s Death Benefit does not equal the Guideline Minimum Death Benefit, the Death Benefit may decrease by the amount of your withdrawal.

• If your Policy’s Death Benefit equals the Guideline Minimum Death Benefit, the Death Benefit may decrease by more than the amount of your withdrawal.

How withdrawals affect your Policy’s Face Amount

If you’ve chosen Death Benefit Option B or Option C, making a withdrawal does not reduce your Policy’s Face Amount.

If you’ve chosen Death Benefit Option A or Option D, a withdrawal may reduce your Face Amount. You can make one withdrawal during each of the first 15 Policy Years of $10,000 or 10% of your Policy’s Cash Surrender Value, whichever is less, without reducing your Policy’s Face Amount. If you withdraw a larger amount, or make additional withdrawals, the Face Amount will be reduced by the amount if any, by which the Face Amount exceeds the result of the Death Benefit immediately before the withdrawal minus the amount of the withdrawal.

44

Taking Out a Loan

You can borrow money from us any time while your Policy is In Force. The minimum amount you can borrow is $500, unless there are other restrictions in your state. The maximum amount available to borrow is less than 100% of your Accumulated Value.

Taking out a loan will affect the growth of your Policy’s Accumulated Value, and may affect the Death Benefit.

You may request a loan either by sending us a request in writing, over the telephone or electronically. You’ll find more information about requesting a loan by telephone or electronically in Pacific Select Estate Preserver IV Basics.

When you borrow money from us, we use your Policy’s Accumulated Value as security. You pay interest on the amount you borrow. The Accumulated Value set aside to secure your loan also earns interest. Here’s how it works:

• To secure the loan, we transfer an amount equal to the amount you’re borrowing from your Accumulated Value in the Investment Options to the Loan Account. We’ll transfer this amount from your Investment Options in proportion to the Accumulated Value you have in each Investment Option, unless you tell us otherwise.

• Interest owing on the amount you’ve borrowed accrues daily at an annual rate of 4.5% during the first 10 policy years, and 4.25% thereafter. Interest that has accrued during the Policy Year is due on your Policy Anniversary. If you do not pay the interest when it’s due, we’ll add it to the amount of your loan and begin accruing interest on it from the day it was due. We’ll also transfer an amount equal to the interest that was due, from your Policy’s Accumulated Value to the Loan Account. We’ll transfer this amount from your Investment Options in proportion to the Accumulated Value you have in each Investment Option.

• The amount in the Loan Account earns interest daily at an annual rate of at least 4%. On your Policy Anniversary, we transfer the interest that has been credited to the Loan Account proportionately to your Investment Options according to your most recent allocation instructions.

How much you can borrow

You can borrow up to the larger of the following amounts:

• 100% of the Accumulated Value in the Fixed Options, plus 90% of the Accumulated Value in the Variable Investment Options.

• the result of a × (b ÷ c) - d where:

a = the Accumulated Value of your Policy less 12 times the most recent monthly charge

b = 1.04

c = 1.045 during the first 10 Policy Years, and 1.0425 during Policy Year 11 and thereafter

d = any Policy Debt.

An example of how much you can borrow

For a Policy in Policy Year 13 with:

•  Accumulated Value of $100,000

•  Policy Debt of $50,000

•  a most recent monthly charge of $100

The maximum amount you can borrow is $48,563.07:

(a × (b ÷ c)) - d, where:

a = $98,800 ($100,000 - $0 - (12 x $100))

b = 1.04

c = 1.0425

d = $50,000

Paying off your loan

You can pay off all or part of the loan any time while your Policy is In Force. Unless you tell us otherwise, we’ll generally transfer any loan payments you make proportionately to your Investment Options according to your most recent allocation instructions. We may, however, first transfer any loan payments you make to the Fixed Options, up to the amount originally transferred from the Fixed Options to the Loan Account. We’ll then transfer any excess amount to your Variable Investment Options according to your most recent allocation instructions.

Remember to tell us if a payment is a premium payment or a loan payment.

45

WITHDRAWALS, SURRENDERS AND LOANS

You can make monthly loan payments using our Electronic Funds Transfer Plan. Here’s how it works:

• You authorize us to withdraw a specified amount from your checking account, savings account or money market account each month by completing an Electronic Funds Transfer Form. Please contact us or your registered representative for a copy of this form.

• You can choose any day between the 4^th and 28^th of the month for us to make the withdrawal.

• Loan payments made by the Electronic Funds Transfer Plan must be at least $50.

What happens if you do not pay off your loan

If you do not pay off your loan, we’ll deduct the amount in the Loan Account, including any interest you owe, from one of the following:

• the Death Benefit Proceeds before we pay them to your Beneficiary

• the Cash Surrender Value if you surrender your Policy

• the amount we refund if you exercise your Free Look Right.

Taking out a loan, whether or not you repay it, will have a permanent effect on the value of your Policy. For example, while your Policy’s Accumulated Value is held in the Loan Account, it will miss out on the potential earnings available through the Variable Investment Options. The amount of interest you earn on the Loan Account may be less than the amount of interest you would have earned from the Fixed Options. These could lower your Policy’s Accumulated Value, which could reduce the amount of the Death Benefit.

When a loan is outstanding, the amount in the Loan Account is not available to help pay for any Policy charges. If, after deducting your Policy Debt, there is not enough Accumulated Value in your Policy to cover the Policy charges, your Policy could lapse. You may need to make additional premium payments or loan repayments to prevent your Policy from lapsing.

Your Policy Debt could result in taxable income if you surrender your Policy, if your Policy lapses, or if your Policy is a Modified Endowment Contract. You should talk to your tax advisor before taking out a loan under your Policy. See Taxation of distributions in Variable Life Insurance and Your Taxes.

Ways to Use Your Policy’s Loan and Withdrawal Features

You can use your Policy’s loan and withdrawal features to supplement your income, for example, during retirement. If you’re interested in using your life insurance Policy to supplement your retirement income, please contact us for more information.

Setting up an income stream may not be suitable for all Policy Owners.

Here are some things you should consider when setting up an income stream:

• the rate of return you expect to earn on your Investment Options

• how long you would like to receive regular income

• the amount of Accumulated Value you want to maintain in your Policy.

You can ask your registered representative for Illustrations showing how Policy charges may affect existing Accumulated Value and how future withdrawals and loans may affect the Accumulated Value and Death Benefit. You can also ask for accompanying charts and graphs that compare results from various retirement strategies.

Understanding the risks

Using your Policy to supplement your income does not change your rights or our obligations under the Policy. The terms for loans and withdrawals described in this prospectus remain the same. It’s important to understand the risks that are involved in using your Policy’s loan and withdrawal features. Use of these features may increase the chance of your Policy lapsing.

You should consult with your financial adviser and carefully consider how much you can withdraw and borrow from your Policy each year to set up your income stream.

46

Surrendering Your Policy

You can surrender or cash in your Policy at any time while either Insured is still living.

Here are some things you need to know about surrendering your policy:

• You must send us your Policy and a Written Request.

• We’ll send you the Policy’s Net Cash Surrender Value. There’s no surrender charge.

47

GENERAL INFORMATION ABOUT YOUR POLICY

This section tells you some additional things you should know about your Policy.

Income Benefit

If you surrender or make a withdrawal from your Policy, you can use the money to buy an income benefit that provides a monthly income. Your Policy’s Beneficiary can use Death Benefit Proceeds to buy an income benefit. In addition to the income benefit described below, you can choose from other income benefits we may make available from time to time.

The following is one income benefit available under the Pacific Select Estate Preserver IV Policy:

• The income benefit is based on the life of the person receiving the income. If the Policy Owner is buying the income benefit, monthly income will be based on the Owner’s life. If the Policy’s Beneficiary buys the income benefit, monthly income will be based on the Beneficiary’s life.

• We’ll pay a monthly income for at least 10 years regardless of whether the person receiving the income is still alive.

• After 10 years, we’ll only pay the monthly income for as long as the person receiving it is still alive.

• The minimum monthly income benefit calculated must be at least $100.

• For this income benefit, the amount you receive will always be at least as much as the amount guaranteed by your Policy.

Paying the Death Benefit in the Case of Suicide

If either Insured, whether sane or insane, commits suicide within two years of the Policy Date (one year for policies issued in Colorado or North Dakota), Death Benefit Proceeds will be the total of all premiums you’ve paid, less any Policy Debt, any withdrawals you’ve made, and any cash dividends we’ve paid.

If your Policy is issued in Arizona, if either Insured commits suicide within two years of the Policy Date, the Survivor has the option of requesting an individual policy with substantially the same coverage provided by the original Policy.

Replacement of Life Insurance or Annuities

The term replacement has a special meaning in the life insurance industry. Before you make a decision to buy, we want you to understand what impact a replacement may have on your existing insurance policy.

A replacement occurs when you buy a new life insurance policy or annuity contract, and a policy or contract you already own has been or will be:

• lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated

• converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values

• amended to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid

• reissued with any reduction in cash value, or

• pledged as collateral or subject to borrowing, whether in a single loan or under a schedule of borrowing over a period of time.

There are circumstances when replacing your existing life insurance policy or annuity contract can benefit you. As a general rule, however, replacement is not in your best interest.

A replacement may affect your plan of insurance in the following ways:

• You will pay new acquisition costs;

• You may have to submit to new medical examinations;

• You may pay increased premiums because of the increased Age or changed health of the Insureds;

• Claims made in the early policy years may be contested;

• You may have to pay surrender charges and/or income taxes on your current policy or contract values;

• Your new policy or contract values may be subject to surrender charges; and

• If part of a financed purchase, your existing policy or contract values or Death Benefit may be reduced.

You should carefully compare the costs and benefits of your existing policy or contract with those of the new policy or contract to determine whether replacement is in your best interest.

48

Policy Exchange

If your Policy is issued in Connecticut, Georgia, Maryland or North Dakota, you may exchange this Policy for a policy with benefits that do not vary with the investment results of a separate account. You must request this in writing within 18 months of your Policy Date and return the original Policy.

The new policy will have the same Owner, Beneficiary and Cash Surrender Value as those of your original Policy on the date of exchange. It will also have the same issue Age, Policy Date, Face Amount, benefits, Riders and underwriting class as the original Policy. However, if your Risk Class under this Policy is select nonsmoker and you exchange to a policy that does not have the select nonsmoker risk classification available, the new policy will be issued as a nonsmoker risk classification. Any Policy Debt will be carried over to the new policy. Evidence of insurability will not be required.

Errors on Your Application

If the Age or gender of either Insured is stated incorrectly on your application, we’ll adjust the Face Amount to reflect the correct Age or gender. Here’s how we’ll do it:

• Using the monthly cost of insurance rate for the Policy Year in which we discover the mistake, we’ll multiply the Face Amount by the rate based on the incorrect Age or gender. We’ll then divide the result by the monthly cost of insurance rate that’s based on the correct Age or gender.

• We’ll calculate Accumulated Value using cost of insurance, Rider and benefit charges based on the correct Age and gender, for all Policy Months following the month we discover the mistake.

• We will not recalculate Accumulated Value for the Policy Months up to and including the month in which we discover the mistake.

• We will not recalculate mortality and expense risk charges or surrender charges.

Contesting the Validity of Your Policy

We have the right to contest the validity of your Policy for two years from the Policy Date. Once your Policy has been In Force for two years from the Policy Date during the lifetime of the Insureds, we generally lose the right to contest its validity.

We also have the right to contest the validity of a Policy that you reinstate for two years from the day that it was reinstated. Once your reinstated Policy has been In Force for two years from the reinstatement date during the lifetime of the Insureds, we generally lose the right to contest its validity. During this period, we may contest your Policy only if there is a material misrepresentation on your application for reinstatement.

Regardless of the above, we can contest the validity of your Policy for failure to pay premiums at any time. The Policy will terminate upon successful contest with respect to either Insured.

Assigning Your Policy as Collateral

You may assign your Policy as collateral to secure a loan, mortgage, or other kind of debt. An assignment will take place only when we receive and record your signed Collateral Assignment Form. When recorded, the assignment will take effect as of the date the form was signed. Any rights created by the assignment will be subject to any payments made or actions taken by us before we record the change. We will not be responsible for the validity of any assignment. Please contact us for a Collateral Assignment Form if you would like to assign your Policy.

Non-participating

This Policy will share in our surplus earnings. However, the current dividend scale is zero and we do not anticipate that dividends will be paid. Any dividends that do become payable will be paid in cash.

49

VARIABLE LIFE INSURANCE AND YOUR TAXES

The tax consequences of owning a Policy or receiving proceeds from it may vary by jurisdiction and according to the circumstances of each Owner or Beneficiary.

The following is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It’s based on the Internal Revenue Code (the Tax Code) and does not cover any state or local tax laws. More detailed information appears in the SAI.

We do not know whether the current treatment of life insurance policies under current federal income tax or estate or gift tax laws will continue. We also do not know whether the current interpretations of the laws by the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of life insurance policies. This may affect the performance and underlying tax assumptions of this Policy, including any Riders. In some cases, these changes could result in a decrease in Policy values or lapse.

We do not make any guarantees about the tax status of your Policy, and you should not consider the discussion that follows to be tax advice. This is not a complete discussion of all federal income tax questions that may arise under a Policy. There are special rules that we do not include here that may apply in certain situations. Speak to a qualified tax adviser for complete information about federal, state and local taxes that may apply to you.

The Policy as Life Insurance

Death benefits from a life insurance policy may be excluded from income under Section 101(a) of the Tax Code.

We believe that the Policy meets the statutory definition of life insurance for federal income tax purposes. That means it will receive the same tax advantages as a conventional fixed life insurance policy. The two main tax advantages are:

• In general, your Policy’s Beneficiary will not be subject to federal income taxes when he or she receives the Death Benefit Proceeds.

• You will generally not be taxed on your Policy’s Accumulated Value unless you receive a cash distribution by making a withdrawal, surrendering your Policy, or in some instances, taking a loan from your Policy.

Policy Features and Charges

The tax laws defining life insurance, however, do not cover all policy features. Your Policy may have features that could prevent it from qualifying as life insurance. For example, the tax laws have yet to address:

• substandard risk policies

• policies with term insurance on the people insured by the policy

• life insurance policies that continue coverage beyond Age 100 or other advanced ages

• certain tax requirements relating to joint survivorship life insurance policies.

The Tax Code and tax regulations impose limitations on unreasonable mortality and expense charges for purposes of determining whether a policy qualifies as life insurance for federal tax purposes. We can change our mortality charges if we believe the changes are needed to ensure that your Policy qualifies as a life insurance contract.

We believe that last survivor policies meet the statutory definition of life insurance under Section 7702 of the Tax Code. However, the area of tax law relating to the definition of life insurance does not explicitly address all relevant issues relating to last survivor life insurance policies.

We reserve the right to make changes to the Policy if we deem the changes appropriate to continue to qualify your Policy as a life insurance contract. If a Policy were determined not to qualify as life insurance, the Policy would not provide the tax advantages normally provided by life insurance. This includes excluding the Death Benefit from the gross income of the Beneficiary.

50

Diversification Rules and Ownership of the Separate Account

Your Policy will not qualify for the tax benefit of a life insurance contract unless, among other requirements, the Separate Account follows certain rules requiring diversification of investments underlying the Policy. Section 817(h) of the Tax Code and related Treasury Regulations describe the diversification rules.

For a variable life insurance policy to qualify for tax deferral, assets in the separate accounts supporting the contract must be considered to be owned by the insurance company and not by the contract owner. If a contract owner is treated as having control over the underlying assets, the contract owner will be taxed currently on income and gains from the account and in such a case of “investor control” the contract owner would not derive the tax benefits normally associated with variable life insurance.

For more information about diversification rules, please refer to the accompanying prospectus of the Pacific Select Fund prospectus. For more information regarding investor control, please refer to the policy SAI.

Policy Exchanges

Policy exchanges fall under Section 1035(a) of the Tax Code.

If you exchange your policy for another one that insures the same people, it generally will be treated as a tax-free exchange and, if so, will not result in the recognition of gain or loss. If any of the people insured by the policy are changed, the exchange will be treated as a taxable exchange.

Change of Ownership

You may have taxable income if you transfer ownership of your Policy, sell your Policy, or change the ownership of it in any way.

Corporate or Employer Owners

There are special tax issues for corporate Owners:

• Section 101(j) of the Internal Revenue Code generally provides that Death Benefits paid in connection with certain life insurance policies involving an employer will be taxable income. Employer-involved policies issued or materially modified on or after August 18, 2006 may be subject to income tax liability on the Policy’s Death Benefit unless certain requirements and conditions of Internal Revenue Code Section 101(j) are met.

• Using your Policy to fund deferred compensation arrangements for employees has special tax consequences.

• Section 59A of the Tax Code deals with the environmental tax. Corporate ownership of a Policy may affect your liability under the alternative minimum tax and the environmental tax.

Please consult your tax adviser for these and other special rules for employer-involved Policies.

Modified Endowment Contracts

Section 7702A of the Tax Code defines conventional life insurance policies. It also defines a class of life insurance policies known as “Modified Endowment Contracts”. If your Policy is a Modified Endowment Contract, any distributions you receive during the life of the Policy are treated less favorably than under conventional life insurance policies. Withdrawals, loans, pledges, assignments and the surrender of your Policy are all considered distributions and may be subject to tax on an income-first basis and a 10% penalty.

When a Policy becomes a Modified Endowment Contract

A life insurance policy becomes a Modified Endowment Contract if, at any time during the first seven policy years, the sum of actual premiums paid exceeds the seven-pay limit. The seven-pay limit is the cumulative total of the level annual premiums (or seven-pay premiums) required to pay for the policy’s future death and endowment benefits.

51

VARIABLE LIFE INSURANCE AND YOUR TAXES

An example

For a policy with seven-pay premiums of $1,000 a year, the maximum premiums you could pay during the first seven years to avoid modified endowment treatment would be:

•  $1,000 in the first year

•  $2,000 through the first two years

•  $3,000 through the first three years, etc.

If there is a material change to your Policy, like a change in the Death Benefit, we may have to retest your Policy and restart the seven-pay premium period to determine whether the change has caused the Policy to become a Modified Endowment Contract.

Taxation of Distributions

Tax treatment of distributions from your Policy’s Accumulated Value may be treated differently, depending upon whether your Policy is a Modified Endowment Contract.

CONVENTIONAL LIFE INSURANCE POLICY	MODIFIED ENDOWMENT CONTRACT
Surrendering your Policy
Proceeds are taxed to the extent of the income1 in your Policy.	Proceeds are taxed to the extent of the income in your Policy.
Making a withdrawal
If you make a withdrawal after your Policy has been In Force for 15 years, you’ll only be taxed on the amount you withdraw that exceeds the cost basis in the Policy.	You will be taxed on the amount of the withdrawal that’s considered income, including all previously non-taxed gains.
Special rules apply if you make a withdrawal within the first 15 Policy Years. You may be taxed on all or a portion of the withdrawal amount, and there is a reduction in Policy benefits.
Taking out a loan
You will not pay tax on the loan amount unless your Policy is surrendered, lapses or matures and you have not repaid your Policy Debt.	You will be taxed on the amount of the loan that’s considered income, including all previously non-taxed gains.

¹ Income is the difference between the Cash Surrender Value and the cost basis in your Policy. The cost basis in your Policy is generally the premiums you’ve paid plus any taxable distributions less any withdrawals or premiums previously recovered that were taxable.

All Modified Endowment Contracts issued to you in a calendar year by us or our affiliates are treated as a single contract when we calculate whether a distribution amount is subject to tax.

10% penalty tax on Modified Endowment Contracts

If any amount you receive from a Modified Endowment Contract is taxable, you may also have to pay a penalty tax equal to 10% of the taxable amount. A taxpayer will not have to pay the penalty tax if any of the following exceptions apply:

• you’re at least 59¹/2 years old

• you’re receiving an amount because you’ve become disabled

• you’re receiving an amount that’s part of a series of substantially equal periodic payments, paid out at least annually. These payments may be made for your life or life expectancy or for the joint lives or joint life expectancies of you and your Beneficiaries.

Distributions before a Policy Becomes a Modified Endowment Contract

If your Policy fails the seven-pay test and becomes a Modified Endowment Contract, any amount you receive or are deemed to have received during the two years before it became a Modified Endowment Contract may be taxable. The distribution would be treated as having been made in anticipation of the Policy’s failing to meet the seven-pay test under Treasury Department regulations which are yet to be prescribed.

52

Loans and corporate-owned Policies

If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest. If the taxpayer is an entity that’s a direct or indirect beneficiary of certain life insurance, endowment or annuity contracts, a portion of the entity’s deductions for loan interest may be disallowed, even though this interest may relate to debt that’s completely unrelated to the contract. There may be a limited exception that applies to contracts issued on 20% owners, officers, directors or employees of the entity. For more information about this exception, you should consult your tax adviser.

Federal Estate Taxes

The current federal estate tax law provides, among other things, for reductions in federal estate tax rates, increases in the exemption amount, and a “repeal” of the federal estate tax in 2010. However, the legislation provides for full reinstatement of the federal estate tax in the year 2011. In addition, there are legislative proposals that would further affect the estate tax. If you are considering the purchase of the Policy to help pay federal estate taxes at death, consult with your tax advisor.

Policy Riders

Accelerated Living Benefits Rider

If you exercise an Accelerated Living Benefits Rider, the amounts received under this Rider should be generally excluded from taxable income under Section 101(g) of the Tax Code.

However, benefits under the Rider will be taxed, if they are paid to someone other than a person insured by the Policy, and either Insured:

• is a director, officer or employee of the person receiving the benefit, or

• has a financial interest in a business of the person receiving the benefit.

In some cases, there may be a question as to whether a life insurance policy that has an Accelerated Living Benefit Rider can meet technical aspects of the definition of “life insurance contract” under the Tax code. We may reserve the right (but are not obligated) to modify the Rider to conform under Tax Code requirements.

Policy Split Option Rider

This Rider allows a Policy to be split into two individual policies. If the split is not treated as a nontaxable exchange, it could result in the recognition of taxable income up to any gain or income in the Policy at the time of the split.

53

ABOUT PACIFIC LIFE

Pacific Life Insurance Company is a life insurance company domiciled in Nebraska. Along with our subsidiaries and affiliates, our operations include life insurance, annuity, pension and institutional products, broker-dealer operations, and investment and advisory services. At the end of 2007, we had $207.5 billion of individual life insurance in force and total admitted assets of approximately $96.6 billion.

We are authorized to conduct our life and annuity business in the District of Columbia and in all states except New York. Our executive office is at 700 Newport Center Drive, Newport Beach, California 92660.

How Our Accounts Work

We own the assets in our General Account and our Separate Account. We allocate your Net Premiums to these accounts according to the Investment Options you’ve chosen.

General Account

Our General Account includes all of our assets, except for those held in our separate accounts. We guarantee you an interest rate for up to one year on any amount allocated to the Fixed Options. The rate is reset annually. The Fixed Options are part of our General Account, which we may invest as we wish, according to any laws that apply. We’ll credit the guaranteed rate even if the investments we make earn less. Our ability to pay these guarantees is backed by our strength as a company. We can provide you with reports of our ratings as an insurance company and our ability to pay claims with respect to our General Account assets.

The Fixed Options are not securities, so they do not fall under any securities act. For this reason, the SEC has not reviewed the disclosure in this prospectus about the Fixed Options. However, other federal securities laws may apply to the accuracy and completeness of the disclosure about the Fixed Options.

Separate Account

Amounts allocated to the Variable Investment Options are held in our Separate Account. The assets in this account are kept separate from the assets in our General Account and our other separate accounts, and are protected from our general creditors.

The Separate Account is divided into Variable Accounts. Each Variable Account invests in shares of a designated portfolio of the Pacific Select Fund, the BlackRock Variable Series Funds, Inc., the Fidelity Variable Insurance Products Funds (“Fidelity VIP Funds”), the Janus Aspen Series, the Lazard Retirement Series, Inc., the Legg Mason Partners Variable Equity Trust, the MFS Variable Insurance Trust, the Premier VIT, the T. Rowe Price Equity Series, Inc. or the Van Eck World Insurance Trust. We may add Variable Accounts that invest in other portfolios of these Funds or in other securities.

We’re the legal owner of the assets in the Separate Account, and pay its operating expenses. We do not hold ourselves out to be trustees of the Separate Account assets. The Separate Account is operated only for our variable life insurance policies. Pacific Life is obligated to pay all amounts promised to Policy Owners under the terms of the Policy. We must keep enough money in the account to pay anticipated obligations under the insurance policies funded by the account, but we can transfer any amount that’s more than these anticipated obligations to our General Account. Some of the money in the Separate Account may include charges we collect from the account and any investment results on those charges.

We cannot charge the assets in the Separate Account attributable to our reserves and other liabilities under the policies funded by the Separate Account with any liabilities from our other business.

Similarly, the income, gains or losses, realized or unrealized, of the assets of any Variable Account belong to that Variable Account and are credited to or charged against the assets held in that Variable Account without regard to our other income, gains or losses.

Making changes to the Separate Account

We can add, change or remove any securities that the Separate Account or any Variable Account holds or buys, as long as we comply with the laws that apply.

We can substitute shares of one portfolio with shares of another portfolio or Fund if:

• any portfolio is no longer available for investment; or

• our management believes that a portfolio is no longer appropriate in view of the purposes of the Policy.

54

We’ll give you any required notice or receive any required approval from Policy Owners or the SEC before we substitute any shares. We’ll comply with the filing or other procedures established by insurance regulators as required by law.

We can add new Variable Accounts, which may include additional subaccounts of the Separate Account, to serve as Investment Options under the Policies. These may be managed separate accounts or they may invest in a new portfolio of the Funds, or in shares of another investment company or one of its portfolios, or in a suitable investment vehicle with a specified investment objective.

We can add new Variable Accounts when we believe that it’s warranted by marketing needs or investment conditions. We’ll decide on what basis we’ll make new Variable Accounts available to existing Policy Owners.

We can also eliminate any of our Variable Accounts if we believe marketing, tax or investment conditions warrant it. We can terminate and liquidate any Variable Account.

If we make any changes to Variable Accounts or substitution of securities, we can make appropriate changes to this Policy or any of our other policies, by appropriate endorsement, to reflect the change or substitution.

If we believe it’s in the best interests of people holding voting rights under the Policies and we meet any required regulatory approvals we can do the following:

• operate the Separate Account as a management investment company, unit investment trust, or any other form permitted under securities or other laws

• register or deregister the Separate Account under securities law

• combine the Separate Account with one of our other separate accounts or our affiliates’ separate accounts

• combine one or more Variable Accounts

• create a committee, board or other group to manage the Separate Account

• change the classification of any Variable Account.

Taxes we pay

We may be charged for state and local taxes. Currently, we pay these taxes because they are small amounts with respect to the Policy. If these taxes increase significantly, we may deduct them from the Separate Account.

We may charge the Separate Account for any federal, state and local taxes that apply to the Separate Account or to our operations. This could happen if our tax status or the tax treatment of variable life insurance changes.

Voting Rights

We’re the legal owner of the shares of the Funds that are held by the Variable Accounts. We may vote on any matter at shareholder meetings of the Funds. However, we are required by law to vote as you instruct on the shares relating to your allocation in a Variable Investment Option. This is called your voting interest.

Your voting interest is calculated as of a day set by the Board of Trustees or Board of Directors of a Fund, called the record date. Your voting interest equals the Accumulated Value in a Variable Investment Option divided by the net asset value of a share of the corresponding portfolio. Fractional shares are included. If allowed by law, we may change how we calculate your voting interest.

We’ll send you documents from the Fund called proxy materials. They include information about the items you’ll be voting on and forms for you to give us your instructions. We’ll vote shares held in the Separate Account for which we do not receive voting instructions in the same proportion as all other shares in the portfolio held by the Separate Account for which we’ve received timely instructions. If we do not receive any voting instructions for the shares in a separate account, we will vote the shares in the same proportion as the total votes for all of our separate accounts for which we’ve received timely instructions. As a result of proportional voting, the votes cast by a small number of variable contract owners may determine the outcome of a vote.

We’ll vote shares of any portfolio we hold in our General Account in the same proportion as the total votes for all of our separate accounts, including this Separate Account. We’ll vote shares of any portfolio held by any of our non-insurance affiliates in the same proportion as the total votes for all of our separate accounts and those of our insurance affiliates.

If the law changes to allow it, we can vote as we wish on shares of the portfolios held in the Separate Account.

55

ABOUT PACIFIC LIFE

When required by state insurance regulatory authorities, we may disregard voting instructions that:

• would change a portfolio’s investment objective or subclassification

• would approve or disapprove an investment advisory contract.

We may disregard voting instructions on a change initiated by Policy Owners that would change a portfolio’s investment policy, investment adviser or portfolio manager if:

• our disapproval is reasonable

• we determine in good faith that the change would be against state law or otherwise be inappropriate, considering the portfolio’s objectives and purpose, and considering what effect the change would have on us.

If we disregard any voting instructions, we’ll include a summary of the action we took and our reasons for it in the next report to Policy Owners.

Distribution Arrangements

Pacific Select Distributors, Inc. (“PSD”), a broker-dealer and our subsidiary, pays various forms of sales compensation to broker-dealers (including other affiliates) that solicit applications for the Policies. PSD also may reimburse other expenses associated with the promotion and solicitation of applications for the Policies.

We offer the Policies for sale through broker-dealers that have entered into selling agreements with PSD. Broker-dealers sell the Policies through their registered representatives who have been appointed by us to sell our products. PSD pays compensation to broker-dealers for the promotion and sale of the Policies. The individual registered representative who sells you a Policy typically will receive a portion of the compensation, under the representative’s own arrangement with his or her broker-dealer.

We may also provide compensation to broker-dealers for providing ongoing service in relation to Policies that have already been purchased.

Additional Compensation and Revenue Sharing. To the extent permitted by SEC and FINRA rules and other applicable laws and regulations, selling broker dealers may receive additional payments in the form of cash, other special compensation or reimbursement of expenses, sometimes called “revenue sharing”. These additional compensation or reimbursement arrangements may include, for example, payments in connection with the firm’s “due diligence” examination of the Policies, payments for providing conferences or seminars, sales or training programs for invited registered representatives and other employees, payments for travel expenses, including lodging, incurred by registered representatives and other employees for such seminars or training programs, seminars for the public, advertising and sales campaigns regarding the Policies, and payments to assist a firm in connection with its administrative systems, operations and marketing expenses and/or other events or activities sponsored by the firms. Subject to applicable FINRA rules and other applicable laws and regulations, PSD and its affiliates may contribute to, as well as sponsor, various educational programs, sales contests and/or promotions in which participating firms and their sales persons may receive prizes such as merchandise, cash, or other awards. Such additional compensation may give us greater access to registered representatives of the broker-dealers that receive such compensation or may otherwise influence the way that a broker-dealer and registered representative market the Policies.

These arrangements may not be applicable to all firms, and the terms of such arrangements may differ between firms. We provide additional information on special compensation or reimbursement arrangements involving selling firms and other financial institutions in the Statement of Additional Information, which is available upon request. Any such compensation, which may be significant at times, will not result in any additional direct charge to you by us.

The compensation and other benefits provided by PSD or its affiliates, may be more or less than the overall compensation on similar or other products. This may influence your registered representative or broker-dealer to present this Policy over other investment options available in the marketplace. You may ask your registered representative about these differing and divergent interests, how he/she is personally compensated and how his/her broker-dealer is compensated for soliciting applications for the Policy.

We may agree to reduce or waive some or all of the Policy charges and/or credit additional amounts under our Policies, for a Policy sold to an eligible person. An eligible person meets criteria established by us, and may include current and retired officers, directors and employees of us and our affiliates, trustees of the Pacific Select Fund, trustees of Pacific Funds, and immediate family members of such persons. We will credit additional amounts to Policies owned by eligible persons if such Policies are purchased directly through PSD. Under such circumstances, eligible persons will not be afforded the benefit of services of any other broker/

56

dealer nor will commissions be payable to any broker/dealer in connection with such purchases. Eligible persons must contact us directly with servicing questions, Policy changes and other matters relating to their Policies. The amount credited to Policies owned by eligible persons will equal the reduction in expenses we enjoy by not incurring brokerage commissions in selling such Policies, with the determination of the expense reduction and of such crediting being made in accordance with our administrative procedures. These credits will be added to an eligible person’s Policy after the Free Look Transfer Date has occurred, or, if premiums are paid using the monthly Electronic Funds Transfer plan, on the first Policy Anniversary.

Portfolio managers of the underlying portfolios available under this Policy may help pay for conferences or meetings sponsored by us or PSD relating to management of the portfolios and our variable life insurance products.

Please refer to the SAI for additional information on distribution arrangements and the conflicts of interest that they may present.

Service Arrangements

We or our affiliates have entered into services agreements in connection with some of the Funds and their investment advisers, subadvisers, distributors and/or their affiliates, and may receive compensation for providing certain services including, but not limited to, customer and support services. Unless otherwise noted, fees for these services are paid monthly and are based on the average daily net assets of shares of each Fund held by the separate accounts and purchased by us at the Policy Owner’s instructions. Because Pacific Life or its affiliates receive the fees described below, Pacific Life or its affiliates may be subject to competing interests in making these Funds available as Investment Options under the contracts.

BlackRock Distributors, Inc., principal underwriter of shares of BlackRock Variable Series Funds, pays us, on a quarterly basis, at the annual rate of 0.25% of the average daily net assets of Class III shares of BlackRock Variable Series Funds held by our separate accounts. Fidelity Distributors Corporation (FDC), principal underwriter of shares of Fidelity VIP Funds, pays us at the annual rate of 0.25% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts. In addition, FDC pays us, on a quarterly basis, at the annual rate of 0.10% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts where the aggregate dollar value of the shares is equal to or less than $350,000,000 during the quarter, plus the annual rate of 0.15% of the average aggregate net assets in excess of $350,000,000 during the quarter. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), transfer agent for Fidelity VIP Funds, pays us, on a quarterly basis, at the annual rate of 0.05% of the average aggregate net assets of Service Class 2 shares of Fidelity VIP Funds held by our separate accounts. Fees paid to us by FIIOC will not exceed $1,000,000 for any calendar quarter. Janus Capital Management LLC, the investment adviser for Janus Aspen Series, pays us at the annual rate of 0.20% of the average monthly value of the Service Class shares of Janus Aspen Series held by our separate accounts. In addition, Janus Distributors LLC, distributor for Janus Aspen Series, pays us at an annual rate of up to 0.25% of the average aggregate monthly value of the Service Class shares of Janus Aspen Series held in our separate accounts. Lazard Asset Management Securities LLC, principal underwriter for the Lazard Retirement Series, Inc., pays us, on a monthly basis, at the annual rate of 0.35% of the average aggregate daily net value of the first $150,000,000 of shares of the Lazard Retirement Series, Inc. portfolios held in our separate accounts, plus the annual rate of 0.40% of the average aggregate daily net value of shares in excess of $150,000,000 held in our separate accounts. Legg Mason Investor Services, LLC, the distributor for Legg Mason Partners Variable Equity Trust, pays us, on a quarterly basis, at the annual rate of 0.35% of the average daily net value of the first $250,000,000 of shares of each portfolio of the Legg Mason Partners Variable Equity Trust held in our separate accounts, plus the annual rate of 0.40% of the average daily net value of shares of each Legg Mason Partners Variable Equity Trust portfolio in excess of $250,000,000 held in our separate accounts. Massachusetts Financial Services Company, the investment adviser to MFS Variable Insurance Trust, pays us, on a quarterly basis, at the annual rate of 0.25% of the aggregate net assets of the Service Class shares of the MFS Variable Insurance Trust held by our separate accounts. OpCap Advisors LLC, the investment adviser for Premier VIT, pays us a quarterly amount that is equal on an annual basis to 0.25% of the average daily net assets on the first $25,000,000 of shares of the Premier VIT held by our separate accounts, plus 0.35% of the average daily net assets of the Premier VIT in excess of $25,000,000 held by our separate accounts. T. Rowe Price Associates, Inc., the investment adviser for T. Rowe Price Equity Series Inc., pays us each month at the annual rate 0.15% of the average aggregate net assets of Class II shares of T. Rowe Price Equity Series, Inc. held by our separate accounts where the aggregate dollar value of the shares exceeds $25,000,000 at all times during that month, and increases to 0.25% of the average aggregate net assets where the aggregate dollar value of the shares exceeds $250,000,000 at all times during that month. In addition, T. Rowe Price Investment Services, Inc., distributor for T. Rowe Price Equity Series Inc., pays us, on a monthly basis, at the annual rate of 0.25% of the average aggregate net asset value of the T. Rowe Price Equity Series, Inc. Class II shares held by our separate accounts. Van Eck Securities Corporation, distributor for Van Eck Worldwide Insurance Trust, pays us an annual rate of 0.35% of the average daily net assets of Van Eck Worldwide Insurance Trust held by our separate accounts.

57

ABOUT PACIFIC LIFE

PSD shall pay American Funds Distributors, Inc. at a rate of 0.16% of premiums up to $1.5 billion, 0.14% of premiums on next $1.5 billion and 0.10% of premiums made in excess, attributable to the Master Funds for certain marketing assistance.

Illustrations

We will provide you with Illustrations based on different sets of assumptions upon your request.

• Illustrations based on information you give us about the Age of the people to be insured by the Policy, their Risk Class, the Face Amount, the Death Benefit and premium payments.

• Illustrations that show the allocation of premium payments to specified Variable Accounts. These will reflect the expenses of the portfolio of the Fund in which the Variable Account invests.

• Illustrations that use a hypothetical gross rate of return up to 12% are available. Illustrations that use a hypothetical gross rate of return greater than 12% are available only to certain large institutional investors.

You can request such Illustrations at any time. Such Illustrations reflect assumptions about the Policy’s non-guaranteed elements and about how you will use the Policy’s options. Over time the Policy’s actual non-guaranteed elements, and your actual use of the Policy’s options, are likely to vary from the assumptions used in such Illustrations. For these reasons, actual Policy values will likely be more or less favorable than shown in such Illustrations. You can get one Policy Illustration free of charge per Policy Year. We reserve the right to charge $25 for each additional Illustration.

Lost Policy

If you lose your Policy, you may request a Certificate of Coverage free of charge. If you require a duplicate Policy, we may charge a fee of $50 per duplicate. To request a Certificate of Coverage or a duplicate Policy, please contact us for a Certificate of Insurance/Duplicate Policy Request Form.

Audits of Premiums/loans

You may request us to run a report of premium payments you’ve made or loan transactions under your Policy. If you request us to provide information for a period of more than 2 years from date of request, we may charge you an administrative fee of $25 for this service.

Risk Class Change

If you have a change in Risk Class, such as a change in smoking status or health, you can request us to review your Risk Class. Changing your Risk Class may change the rates used for cost of insurance, mortality and expense risk face amount and surrender charge charges, and may also change the rates on any Riders on your Policy which base charges on Risk Class. We may charge you a fee of $100 for each Insured at the time you request us to change your Risk Class. If your Policy was issued on or before April 30, 2004, the maximum fee we may charge you is $50 per Insured at the time you request us to change your Risk Class.

State Regulation

On September 1, 2005, Pacific Life redomesticated to Nebraska. We’re subject to the laws of the state of Nebraska governing insurance companies and to regulations issued by the Commissioner of Insurance of Nebraska. In addition, we’re subject to the insurance laws and regulations of the other states and jurisdictions in which we’re licensed or may become licensed to operate.

An annual statement in a prescribed form must be filed with the Commissioner of Insurance of Nebraska and with regulatory authorities of other states on or before March 1st in each year. This statement covers our operations for the preceding year and our financial condition as of December 31st of that year. Our affairs are subject to review and examination at any time by the Commissioner of Insurance or his agents, and subject to full examination of our operations at periodic intervals.

Legal Proceedings and Legal Matters

Pacific Life, the Separate Account, and PSD are not involved in any legal proceedings that would have a material effect on Policy Owners.

58

Legal matters concerning the issue and sale of the life insurance policies described in this prospectus, our organization and authority to issue the Policies, and matters relating to federal securities laws and federal income tax laws have been passed upon by our counsel.

Registration Statement

We’ve filed a registration statement with the SEC for Pacific Select Estate Preserver IV, under the Securities Act of 1933. The SEC’s rules allow us to omit some of the information required by the registration statement from this prospectus. You can ask for it from the SEC’s office in Washington, D.C. They may charge you a fee.

Financial Statements

The statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented are contained in the SAI.

The consolidated statements of financial condition of Pacific Life Insurance Company as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007 are contained in the SAI.

59

APPENDIX A – DEATH BENEFIT CALCULATION TABLES

Guideline Premium Test

Death Benefit Percentages

Age		Percentage		Age		Percentage		Age		Percentage		Age		Percentage
	0-40		250		50		185		60		130		70		115
	41		243		51		178		61		128		71		113
	42		236		52		171		62		126		72		111
	43		229		53		164		63		124		73		109
	44		222		54		157		64		122		74		107
	45		215		55		150		65		120		75-90		105
	46		209		56		146		66		119		91		104
	47		203		57		142		67		118		92		103
	48		197		58		138		68		117		93		102
	49		191		59		134		69		116		>93		101

Option D

Death Benefit Factor Table

Rate per $1.00 of Face Amount

Joint
equal
age	Policy years*
	5	10	15	20	25	30	35	40	45	50	55	60	65	70	75+
15	1.000	1.000	1.000	1.001	1.002	1.005	1.010	1.022	1.048	1.102	1.210	1.415	1.702	1.957	2.000
20	1.000	1.000	1.001	1.002	1.004	1.009	1.021	1.046	1.100	1.207	1.411	1.700	1.957	2.000	2.000
25	1.000	1.000	1.001	1.003	1.008	1.019	1.044	1.097	1.204	1.408	1.697	1.956	2.000	2.000	2.000
30	1.000	1.001	1.003	1.007	1.018	1.042	1.094	1.200	1.404	1.694	1.955	2.000	2.000	2.000	2.000
35	1.000	1.002	1.006	1.016	1.039	1.091	1.197	1.400	1.692	1.954	2.000	2.000	2.000	2.000	2.000
40	1.001	1.005	1.014	1.036	1.087	1.192	1.395	1.688	1.953	2.000	2.000	2.000	2.000	2.000	2.000
45	1.002	1.011	1.032	1.081	1.185	1.388	1.682	1.952	2.000	2.000	2.000	2.000	2.000	2.000	2.000
50	1.006	1.025	1.072	1.174	1.376	1.674	1.949	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
55	1.015	1.058	1.157	1.358	1.660	1.945	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
60	1.035	1.128	1.327	1.636	1.936	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
65	1.079	1.274	1.595	1.920	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
70	1.175	1.519	1.891	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
75	1.357	1.822	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
80	1.620	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
85	1.894	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
90	1.969	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
95	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000
99	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000	2.000

*  Factors are portrayed for both joint equal ages and policy anniversaries, at five year intervals. See your policy for one year increments in death benefit factors.

A-1

APPENDIX B – PORTFOLIO OPTIMIZATION MODELS UNTIL MAY 2, 2008

If you select a portfolio optimization model, until May 2, 2008, your Net Premium payments or Accumulated Value, as applicable, will be allocated to the Investment Options according to the model you select as indicated in the chart below. On May 2, 2008, we will automatically update your model to the portfolio optimization model allocations shown under How Premiums Work: Allocating Your Premiums in this prospectus.

	Model A Conservative	Model B Moderate-Conservative	Model C Moderate	Model D Moderate-Aggressive	Model E Aggressive
Investor Profile
You are looking for a relatively stable investment and do not tolerate short- term market swings.		Your focus is on keeping pace with inflation and you can tolerate a moderate level of risk.	You want the opportunity for long-term moderate growth.	You want an investment that is geared for growth and are willing to accept above average risk.	You are an aggressive investor and can tolerate short-term market swings.
Shorter Investment Time Horizon  < --------------------------------------------------------------------------------- > Longer Investment Time Horizon Investor Objective
Primarily preservation of capital		Moderate growth	Steady growth in asset values	Moderately high growth in asset values	High growth in asset values
Risk Characteristics
There may be some losses in the values of the investment as asset values fluctuate.		There may be some losses in the values of the investment from year to year.	There will probably be some losses in the values of the underlying investments from year to year.
			Fluctuations in value should be less than those of the overall stock markets.	Some of these might be large, but the overall fluctuations in asset values should be less than those of the U.S. stock market.
Lower Risk  < ------------------------------------------------------------------------------------- > Higher Risk Asset Class Target Exposure

	Model A			Model B			Model C			Model D			Model E
Cash		6	%		3	%		4	%		4	%		4	%
Bonds		71			53			35			17			—
Domestic Stocks		18			32			44			56			66
International Stocks		5			12			17			23			30

Portfolio Optimization Model Target Allocations as of May 4, 2007
		Model A			Model B			Model C			Model D			Model E
	Small-Cap Growth		—			1	%		1	%		2	%		3	%
	International Value		3	%		6			6			9			11
	International Small-Cap		—			2			2			3			4
	Equity Index		—			—			2			2			2
	Small-Cap Index		—			—			2			2			6
	Diversified Research		2			3			3			3			3
	American Funds® Growth-Income		—			—			4			5			7
	American Funds® Growth		—			2			2			4			5
	Large-Cap Value		4			5			6			6			7
	Short Duration Bond		11			8			4			2			—
	Floating Rate Loan		8			5			3			—			—
	Diversified Bond		14			10			6			3			—
	Growth LT		—			—			2			3			3
	Mid-Cap Value		5			6			8			12			11
	Large-Cap Growth		—			—			2			2			2
	International Large-Cap		2			3			5			7			10
	Small-Cap Value		—			2			2			—			—
	Main Street® Core		5			7			5			5			3
	Emerging Markets		—			—			3			4			5
	Managed Bond		19			15			11			4			—
	Inflation Managed		18			14			11			8			—
	Money Market		2			—			—			—			—
	High Yield Bond		4			3			2			—			—
	Comstock		3			6			6			6			8
	Mid-Cap Growth		—			2			2			3			3
	Real Estate		—			—			—			3			5
	Small-Cap Equity		—			—			—			2			2
Less Volatile  < ---------------------------------------------------------------- > More Volatile

B-1

PACIFIC SELECT

ESTATE PRESERVER IV

WHERE TO GO FOR MORE INFORMATION

The Pacific Select Estate Preserver IV variable life insurance policy is underwritten by Pacific Life Insurance Company.

You’ll find more information about the Policy and Pacific Select Exec Separate Account in the SAI dated May 1, 2008. The SAI has been filed with the SEC and is considered to be part of this prospectus because it’s incorporated by reference.

You can get a copy of the SAI without charge by calling or writing to us, or you can view it online at our website. You can also contact the SEC to get the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC. The SEC may charge you a fee for this information.

If you ask us, we’ll provide you with Illustrations of Policy benefits based on different sets of assumptions. Illustrations may help you understand how your Policy’s Death Benefit, Cash Surrender Value and Accumulated Value would vary over time based on different assumptions. You can get one Policy Illustration free of charge per Policy Year by calling or writing to us. We reserve the right to charge $25 for additional Illustrations.

How to Contact Us

Pacific Life Insurance Company

P.O. Box 2030

Omaha, NE 68103

1-800-800-7681

5 a.m. through 5 p.m. Pacific time

www.Pacificlife.com

We accept faxes for variable transaction requests (transfers, allocation changes, rebalancing and loans) at:

1-866-398-0467

PREMIUM PAYMENTS

Unless you receive premium notices via listbill, send premiums (other than initial premium) to:

Pacific Life Insurance Company

P.O. Box 100957

Pasadena, California 91189-0957

How to Contact the SEC

You can also find reports and other information about the Policy and Separate Account from the SEC. The SEC may charge you a fee for this information.

Public Reference Section of the Commission

100 “F” Street NE

Washington, D.C. 20549

202-551-8090

Internet: www.sec.gov

FINRA Public Disclosure Program

FINRA provides investor protection education through its website and printed materials. The FINRA regulation website address is www.finra.org. An investor brochure that includes information describing the Public Disclosure program may be obtained from FINRA. The FINRA Public Disclosure hotline number is (800) 289-9999. FINRA does not charge a fee for the Public Disclosure program services.

SEC file number 811-05563

333-20355

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2008

PACIFIC SELECT ESTATE PRESERVER II

PACIFIC SELECT EXEC SEPARATE ACCOUNT

Pacific Select Estate Preserver II is a last survivor variable life insurance policy offered by Pacific Life Insurance Company.

This Statement of Additional Information (SAI) is not a prospectus and should be read in conjunction with the Policy’s prospectus, dated May 1, 2008, which is available without charge upon written or telephone request to Pacific Life. Terms used in this SAI have the same meanings as in the prospectus, and some additional terms are defined particularly for this SAI. This SAI is incorporated by reference into the Policy’s prospectus.

Pacific Life Insurance Company

P.O. Box 2030

Omaha, NE 68103

1-800-800-7681

TABLE OF CONTENTS

		Page No.
MORE ON THE OPTIONAL RIDERS			1
PREMIUM LIMITATIONS			3
	Guideline Premium Limit		3
	Modified Endowment Contract		3
	Increasing the Net Amount At Risk		4
TRANSFER SERVICES			4
	Dollar Cost Averaging		4
	Portfolio Rebalancing		4
	First Year Transfer		5
MORE ON POLICY CHARGES			5
	Increases in Face Amount		5
MORE ON VARIABLE LIFE INSURANCE AND YOUR TAXES			5
	Mortality and Expense Charges		6
	Investor Control		6
	Comparison to Taxable Investments		7
MORE ON PACIFIC LIFE AND THE POLICIES			7
	How We’re Organized		7
	Distribution Arrangements		7
	The Separate Account		9
	Performance		9
	Yields		10
	Financial Statements		11
	Experts		12
	Financial Statements of Pacific Select Exec Separate Account		SA-1
	Financial Statements of Pacific Life Insurance Company		PL-1

i

MORE ON THE OPTIONAL RIDERS

There are five optional Riders that provide extra benefits. Ask your registered representative for additional information about the Riders available with the Policy. Samples of the provisions for the extra optional benefits are available from us upon Written Request.

Accelerated Living Benefits Rider

Gives the Policy Owner access to a portion of the Policy’s Death Benefit if the Survivor has been diagnosed with a terminal illness resulting in a life expectancy of six months or less (or longer than six months in some states). We refer to this amount as the accelerated benefit. If you have Policy Debt, we will reduce the accelerated benefit proceeds payable to repay a portion of the loan. We may also deduct an administrative fee of $150 from your accelerated benefit.

You may choose to receive the accelerated benefit either in a lump sum or any other payment plan available at the time of payment. We will pay the benefit only once per Insured.

Payment of the accelerated benefit will reduce the Death Benefit under your Policy and any Riders used in calculating the available accelerated benefit. It will also reduce any Policy Debt.

Benefits received under this Rider may be taxable, and may impact your eligibility for Medicaid or other government benefits. Please consult your tax adviser if you want to exercise your rights under this Rider.

You may purchase this Rider at Policy issue or any time while the Policy is In Force. The Rider will terminate on the earliest of your Written Request, on lapse or termination of the Policy, or when an accelerated benefit is paid under this Rider.

Enhanced Policy Split Option Rider

Allows the Policy to be split into two individual policies, without evidence of insurability. This Rider is available only to married couples. This Rider will be included automatically with all Policies where the older Insured is issue Age 79 or less, and where neither Insured has a substandard Risk Class or is uninsurable.

The Rider may only be exercised within 90 days after a change in the Federal Estate Tax Law which results in:

1)	complete removal or material limitation of the Unlimited Marital Deduction, as defined in the Tax Code,
2)	reduction by 50% or more in the dollar amount of the Federal Unified Credit, as defined in the Tax Code, or
3)	subtraction of 25% or more from the percentage Federal Estate Tax rate that would be applicable to the estate of the surviving spouse.

The exchange may be made to any individual flexible premium adjustable life insurance policy that we regularly issue at the time of exchange, subject to our approval. We waive the surrender charge on your original Policy. Although not anticipated, we reserve the right to charge for any state or federal taxes incurred upon exercise of this Rider.

The Rider will terminate on the earliest of your Written Request, the date of the first death of the two Insureds, on lapse or termination of the Policy, when the older of the two Insureds reaches Age 80, or upon exercise of this Rider.

Individual Annual Renewable Term Rider

Provides term insurance on either Insured or individually on both Insureds and is renewable annually until the Policy terminates. The Death Benefit is payable at the death of the Insured covered by the Rider. The Rider is available for Insureds Age 20 through 85 at the time of Rider issue. You may purchase the Rider at Policy issue or any time the Policy is In Force, subject to satisfactory evidence of insurability. The amount of coverage can be level or vary every year and may follow any pattern, subject to underwriting approval, to

1

match your need for insurance. Annual increases are scheduled at issue. You may also request unscheduled increases or decreases in Face Amount of the Rider, subject to certain limitations.

The guaranteed monthly cost of insurance rate will be shown in your Policy Specifications. Our current cost of insurance rates are lower than the guaranteed rates. The current charge for the M&E Risk Face Amount charge is $0.

You may request increases or decreases in Face Amount of the Rider. Each increase will be subject to satisfactory evidence of insurability and will have associated cost of insurance based on the Age and Risk Class of the Insured under this Rider on the effective date of the increase. Unless you request otherwise, the increase will become effective on the first Monthly Payment Date on or following the date we receive and approve your request. We may deduct an administrative charge not to exceed $100 from your Policy’s Accumulated Value on the effective date of any unscheduled increase. You must send a Written Request if you wish to decrease the Face Amount of this Rider. Decreases will be effective on the first Monthly Payment Date on or following the date the Written Request is received at our Life Insurance Operations Center. Decreases will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Individual Annual Renewable Term Rider Face Amount.

The Rider will terminate on the earliest of your Written Request, or on lapse or termination of this Policy. In addition, coverage under this Rider on any individual Insured will terminate on the earlier of the death of that individual Insured, or the date that individual Insured reaches Age 100.

Last Survivor Added Protection Benefit Rider

Provides additional Death Benefit protection on the Insureds in combination with the Face Amount of the Policy. The Rider may be purchased at Policy issue or any time the Policy is In Force, subject to evidence of insurability. The Rider is available for Insureds Age 20 through 85 at the time of Rider issue. The amount of coverage can be level or vary every year and may follow any pattern, subject to underwriting approval, to match your need for insurance. Annual increases are scheduled at issue. You may also request unscheduled increases or decreases in Face Amount of the Rider, subject to certain limitations.

The Rider is payable on the death of the Survivor, and modifies the Death Benefit of the Policy to include the Face Amount of the Rider, so that the Death Benefit equals the greater of the Death Benefit as calculated under 1) the Death Benefit Option you choose on the Policy plus the Face Amount of the Rider, or 2) the Guideline Minimum Death Benefit. If you choose Death Benefit Option D for your base Policy to determine the Death Benefit, the Face Amount under this Rider will be added to the base Policy Face Amount, and the sum of this coverage will be multiplied by the Death Benefit factor for the current Policy Year as shown in the Policy Specifications.

The guaranteed monthly cost of insurance rate will be shown in your Policy Specifications. Our current cost of insurance rates are lower than the guaranteed rates.

You may request increases or decreases in Face Amount of the Rider. Each increase will be subject to satisfactory evidence of insurability and will have associated cost of insurance rates. Unless you request otherwise, the increase will become effective on the first Monthly Payment Date on or following the date we receive and approve your request. We may deduct an administrative charge not to exceed $100 from your Policy’s Accumulated Value on the effective date of any unscheduled increase. Decreases will be effective on the first Monthly Payment Date on or following the date the Written Request is received at our Life Insurance Operations Center. Decreases will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Last Survivor Added Protection Benefit Rider Face Amount.

The Rider will terminate on the earliest of your Written Request, or on lapse or termination of this Policy, or upon the Survivor’s death.

2

Policy Split Option Rider

Allows the Policy to be split into two individual policies subject to satisfactory evidence of insurability on each Insured. The exchange may be made to any individual flexible premium adjustable life insurance policy that we regularly issue at the time of exchange, subject to our approval. A $200 administrative fee may be deducted from the original Policy’s Accumulated Value on the effective date of the exchange. Although not anticipated, we reserve the right to charge for any state or federal taxes incurred upon exercise of this Rider.

The original Policy’s Accumulated Value, Policy Debt and Cash Surrender Value are split in proportion to the Face Amount. We waive the surrender charge on your original Policy.

The Rider will terminate on the earliest of your Written Request, the date of the first death of the two Insureds, on lapse or termination of the Policy, when the older of the two Insureds reaches Age 80, or upon exercise of this Rider.

PREMIUM LIMITATIONS

Federal tax law puts limits on the amount of premium payments you can make in relation to your Policy’s Death Benefit. These limits apply in the following situations.

Guideline Premium Limit

The total amount you can pay in premiums and still have your Policy qualify as life insurance is your Policy’s Guideline Premium Limit. The sum of the premiums paid, less any withdrawals, at any time cannot exceed the Guideline Premium Limit, which is the greater of:

•  the guideline single premium or

•  the sum of the guideline level annual premiums.

We may refuse to accept all or part of a premium payment if, by accepting it, you will exceed your Policy’s Guideline Premium Limit. If we find that you’ve exceeded your Guideline Premium Limit, we may remove all or part of a premium you’ve paid from your Policy as of the day we applied it, and return it to you. We’ll adjust the Death Benefit retroactively to that date to reflect the reduction in premium payments.

Your Policy’s guideline single premium and guideline level annual premiums appear on your Policy Specifications. Before you buy a Policy, you can ask us or your registered representative for a personalized Illustration that will show you the guideline single premium and guideline level annual premiums.

Modified Endowment Contract

A life insurance policy will become a Modified Endowment Contract if the sum of premium payments made during the first seven contract years, less a portion of withdrawals, exceeds the seven-pay limit defined in Section 7702A of the Internal Revenue Code. You’ll find a detailed discussion of Modified Endowment Contracts in Variable Life Insurance and Your Taxes in the prospectus.

Unless you’ve told us in writing that you want your Policy to become a Modified Endowment Contract, we’ll remove all or part of the premium payment from your Policy as of the day we applied it and return it to you. We’ll also adjust the Death Benefit retroactively to that date to reflect the reduction in premium payments. If we receive such a premium within 20 days before your Policy Anniversary, we’ll hold it and apply it to your Policy on the Policy Anniversary.

In both of these situations, if we remove an excess premium from your Policy, we’ll return the premium amount to you no later than 60 days after the end of the Policy Year. We may adjust the amount for interest or for changes in Accumulated Value that relate to the amount of the excess premium we’re returning to you.

If we do not return the premium amount to you within that time, we’ll increase your Policy’s Death Benefit retroactively, to the day we applied the premium, and prospectively so that it’s always the amount necessary to ensure your Policy qualifies as life insurance, or to prevent it from becoming a Modified Endowment Contract.

3

If we increase your Death Benefit, we’ll adjust cost of insurance or Rider charges retroactively and prospectively to reflect the increase.

Increasing the Net Amount At Risk

An increase in the Net Amount At Risk occurs if the Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit, or would be equal to it once we apply your premium payment. We may choose to accept your premium payment in this situation, but before we do so, we may require satisfactory evidence of the insurability of both Insureds.

TRANSFER SERVICES

You may only participate in one transfer service at any time.

Dollar Cost Averaging

Our dollar cost averaging service allows you to make scheduled transfers of $50 or more between Variable Investment Options without paying a transfer fee. Here’s how the service works:

•  You can set up this service at any time while your Policy is In Force.

•  You need to complete a request form to enroll in the service. You may enroll by telephone or electronically if we have your completed telephone and electronic authorization on file.

•  You must have at least $5,000 in a Variable Investment Option to start the service.

•  We’ll automatically transfer Accumulated Value from one Variable Investment Option to one or more of the other Variable Investment Options you’ve selected.

•  We’ll process transfers as of the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you’ve chosen. We will not make the first transfer until after the Free Look Transfer Date in states that require us to return your premiums if you exercise your Free Look Right.

•  We will not charge you for the dollar cost averaging service or for transfers made under this service, even if we decide to charge you in the future for transfers outside of the service, except if we have to by law.

•  We have the right to discontinue, modify or suspend the service at any time.

•  We’ll keep making transfers at the intervals you’ve chosen until one of the following happens:

•  the total amount you’ve asked us to transfer has been transferred

•  there is no more Accumulated Value in the Investment Option you’re transferring from

•  your Policy enters the grace period and is in danger of lapsing

•  we receive your Written Request to cancel the service

•  we discontinue the service.

Portfolio Rebalancing

The portfolio rebalancing service automatically transfers your Policy’s Accumulated Value among the Variable Investment Options according to your original percentage allocations. Here’s how the service works:

•  You can set up this service at any time while your Policy is In Force.

•  You enroll in the service by sending us a Written Request or a completed Automatic Rebalancing Form. You may enroll by telephone or electronically if we have your completed telephone and electronic authorization on file.

•  Unless you choose a different start date, your first rebalancing will take place at the end of the Business Day we receive your request. Subsequent rebalancing will take place at the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you chose.

•  We will not make the first transfer until after the Free Look Transfer Date, if your Policy was issued in a state that requires us to return your premiums if you exercise your Free Look Right.

4

•  If you cancel this service, you must wait 30 days to begin it again.

•  We do not charge for the portfolio rebalancing service, and we do not currently charge for transfers made under this service.

•  We can discontinue, suspend or change the service at any time.

First Year Transfer

Our first year transfer service allows you to make monthly transfers from the Fixed Account to the Variable Investment Options or the Fixed LT Account during the first 12 Policy months from the date your initial premium is applied to your Policy. Here’s how the service works:

•  You enroll in the service when you apply for your Policy and include specific details on your application.

•  You choose a regular amount to be transferred every month for 12 months.

•  Transfers under the first year transfer service take place on your Policy’s Monthly Payment Date, starting on the first Monthly Payment Date following the Free Look Transfer Date.

•  If you sign up for this service, we’ll waive the usual transfer limit for the Fixed Account during the first 12 Policy months from the date your initial premium is applied to your Policy.

•  If we make the last transfer during the second Policy Year, we will not count it toward the usual one transfer per year limit for the Fixed Account.

•  If the Accumulated Value in the Fixed Account is less than the amount to be transferred, we’ll transfer the balance and then cancel the service.

•  If there is Accumulated Value remaining in the Fixed Account at the end of the service, the transfer limitations for the Fixed Account will apply.

•  We do not charge for the first year transfer service, and we do not currently charge for transfers made under this service.

MORE ON POLICY CHARGES

Increases in Face Amount

Net Premiums you pay are allocated to the Accumulated Value in your base Policy and any charges, withdrawals and distributions are subtracted from that Accumulated Value. If you elect Death Benefit Option C, your Death Benefit on the base Policy is your base Policy’s Face Amount plus any premium payments you make and less any withdrawals and distributions.

If you add to your base Policy a Last Survivor Accounting Benefit Rider and/or an Individual Annual Renewable Term Rider, and/or increase the Face Amount of such a Rider, we do not change the above allocations. To determine the cost of insurance (“COI”) charge on each of these coverage components, we divide the Death Benefit for each coverage component that would have been payable at the beginning of the Policy month by 1.00327374 to calculate the discounted Net Amount At Risk for each coverage component. For the base Policy, we subtract the Accumulated Value in the base Policy at the beginning of the month before the monthly charge is due to determine the discounted Net Amount At Risk for that coverage component. For each other coverage component we subtract from its discounted Death Benefit the greater of zero or the result of the Accumulated Value minus the Face Amount of each coverage component for which the COI charge has been already calculated. Each component’s Net Amount At Risk is calculated in the order in which it was added to the Policy, starting with the oldest component. The discounted Net Amount At Risk for each coverage component is multiplied by the current COI rate for that coverage component.

MORE ON VARIABLE LIFE INSURANCE AND YOUR TAXES

This discussion about taxes is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It’s based on the Internal Revenue Code (the Tax Code) and does not cover any state or local tax laws. This is not a complete discussion of all federal

5

income tax questions that may arise under the Policy. There are special rules that we do not include here that may apply in certain situations.

We do not make any guarantees about the tax status of your Policy, and you should not consider the discussion that follows to be tax advice. Speak to a qualified tax adviser for complete information about federal, state and local taxes that may apply to you.

We do not know whether the current treatment of life insurance policies under current federal income tax or estate or gift tax laws will continue. We also do not know whether the current interpretations of the laws by the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of life insurance policies, other tax consequences described in this discussion and in the Policy prospectus section Variable Life Insurance and Your Taxes or tax consequences that relate directly or indirectly to life insurance policies.

Mortality and Expense Charges

The Tax Code and tax regulations impose limitations on unreasonable mortality and expense charges for purposes of determining whether a policy qualifies as life insurance for federal tax purposes. For life insurance policies entered into on or after October 21, 1988, these calculations must be based upon reasonable mortality charges and other charges reasonably expected to be actually paid.

The Treasury Department has issued proposed regulations about reasonable standards for mortality charges. While we believe that our mortality costs and other expenses used in calculating whether the Policy qualifies as life insurance are reasonable under current laws, we cannot be sure that the IRS agrees with us. We can change our mortality charges if we believe the changes are needed to ensure that your Policy qualifies as a life insurance contract.

Investor Control

For a variable life insurance policy to qualify for tax deferral, assets in the separate accounts supporting the contract must be considered to be owned by the insurance company and not by the contract owner. Under current U.S. tax law, if a contract owner has excessive control over the investments made by a separate account, or the underlying fund, the contract owner will be taxed currently on income and gains from the account or fund. In other words, in such a case of “investor control” the contract owner would not derive the tax benefits normally associated with variable life insurance.

The application of the investor control doctrine is subject to some uncertainty. Generally, according to the IRS, there are two ways that impermissible investor control may exist. The first relates to the design of the contract or the relationship between the contract and a separate account or underlying fund. For example, at various times, the IRS has focused on, among other factors, the number and type of investment choices available pursuant to a given variable contract, whether the contract offers access to funds that are available to the general public, the number of transfers that a contract owner may make from one investment option to another, and the degree to which a contract owner may select or control particular investments.

With respect to this first aspect of investor control, we believe that the design of our contracts and the relationship between our contracts and the portfolios satisfy the current view of the IRS on this subject, such that the investor control doctrine should not apply. However, because of some uncertainty with respect to this subject and because the IRS may issue further guidance on this subject, we reserve the right to make such changes as we deem necessary or appropriate to reduce the risk that your Policy might not qualify as a life insurance policy for tax purposes.

The second way that impermissible investor control might exist concerns your actions. Under the IRS pronouncements, you may not select or control particular investments, other than choosing among broad investment choices such as selecting a particular portfolio. You may not select or direct the purchase or sale of a particular investment of a portfolio. All investment decisions concerning the portfolios must be made by the portfolio manager for such portfolio in his or her sole and absolute discretion, and not by the contract owner.

6

Furthermore, under the IRS pronouncements, you may not communicate directly or indirectly with such a portfolio manager or any related investment officers concerning the selection, quality, or rate of return of any specific investment or group of investments held by a portfolio.

Finally, the IRS may issue additional guidance on the investor control doctrine, which might further restrict your actions or features of the variable contract. Such guidance could be applied retroactively. If any of the rules outlined above are not complied with, the IRS may seek to tax you currently on income and gains from a portfolio such that you would not derive the tax benefits normally associated with variable life insurance. Although highly unlikely, such an event may have an adverse impact on the Fund and other variable contracts. We urge you to consult your own tax adviser with respect to the application of the investor control doctrine.

Comparison to Taxable Investments

With respect to taxable investments, current tax law generally provides for a maximum tax rate for individual taxpayers of 15% on long-term capital gains and on certain “qualifying dividends” on corporate stock. These rate reductions do not apply to corporate taxpayers. A taxpayer will also have to satisfy a more than 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower tax rate. Earnings from non-qualifying dividends, interest income, other types of ordinary income and short-term capital gains will be taxed at the ordinary income tax rate applicable to the taxpayer.

These rules mean that for policyholders who are individuals the tax-related advantage of life insurance compared to certain taxable investments is reduced because the tax burden applicable to long-term capital gains and from certain “qualifying dividends” on corporate stock has been reduced.

MORE ON PACIFIC LIFE AND THE POLICIES

How We’re Organized

Pacific Life was established on January 2, 1868 under the name, Pacific Mutual Life Insurance Company of California. It was reincorporated as Pacific Mutual Life Insurance Company on July 22, 1936. On September 1, 1997, Pacific Life converted from a mutual life insurance company to a stock life insurance company. Pacific Life redomesticated to Nebraska on September 1, 2005. Pacific Life is a subsidiary of Pacific LifeCorp, a holding company, which in turn is a subsidiary of Pacific Mutual Holding Company, a mutual holding company.

Under their charters, Pacific Mutual Holding Company must always hold at least 51% of the outstanding voting stock of Pacific LifeCorp. Pacific LifeCorp must always own 100% of the voting stock of Pacific Life. Owners of Pacific Life’s annuity contracts and life insurance policies have certain membership interests in Pacific Mutual Holding Company. They have the right to vote on the election of the Board of Directors of the mutual holding company and on other matters. They also have certain rights if the mutual holding company is liquidated or dissolved.

Distribution Arrangements

Pacific Select Distributors, Inc. (PSD), our subsidiary, acts as the distributor of the Policies and offers the Policies on a continuous basis. PSD is located at 700 Newport Center Drive, Newport Beach, California 92660. PSD is registered as a broker-dealer with the SEC and is a member of NASD. We pay PSD for acting as distributor under a distribution agreement. We and PSD enter into selling agreements with broker-dealers whose registered representatives are authorized by state insurance departments to sell the Policies. The aggregate amount of underwriting commissions paid to PSD with regard to this Policy in 2007, 2006 and 2005 was $257,591.62, $228,610.60 and $353,206.70 respectively of which $0 was retained.

PSD or an affiliate pays various sales compensation to broker-dealers that solicit applications for the Policies. PSD or an affiliate also may provide reimbursement for other expenses associated with the promotion and solicitation of applications for the Policies. Commissions are based on sales surrender “target” premiums we determine. The commissions we pay vary with the agreement, and in some cases commissions on premiums

7

paid up to the first target premium may be up to 37%, but the most common schedule of commissions we pay is:

•  30% of premiums paid up to the first target premium

•  25% of the premiums paid under targets 2 through 5

•  4% of the premiums paid in excess of targets 1 through 5 in Policy Years 1 through 10

•  3% of premiums paid in excess of the 10th target premium.

A target premium is a hypothetical premium that is used only to calculate commissions. It varies with the Death Benefit Option you choose, the Age of the Insureds on the Policy Date, and the gender (unless unisex rates are required) and Risk Class of the Insureds. A Policy’s target premium will usually be less than, but generally does not exceed 135% of, the Policy’s guideline level premiums. Before you buy a Policy, you can ask us or your registered representative for a personalized Illustration that shows you the guideline single premium and guideline level premiums.

Your registered representative typically receives a portion of the compensation that is payable to his or her broker-dealer in connection with the Policy, depending on the agreement between your registered representative and his or her firm. Pacific Life is not involved in determining that compensation arrangement, which may present its own incentives or conflicts. You may ask your registered representative how he/she will personally be compensated for the transaction.

PSD or an affiliate may pay broker-dealers an annual renewal commission of up to 0.20% of a Policy’s Accumulated Value less any Policy Debt. We calculate the renewal amount monthly and it becomes payable on each Policy Anniversary.

In addition to the commissions described above, we and/or an affiliate may pay additional cash compensation from their own resources in connection with the promotion and solicitation of application for the Policies by some, but not all, broker-dealers. The range of additional cash compensation based on premium payments usually ranges from 0% to 15% of premiums paid up to the first target premium, but generally does not exceed 14% of commissions on premiums paid thereafter. Such additional compensation may give Pacific Life greater access to registered representatives of the broker-dealers that receive such compensation. While this greater access provides the opportunity for training and other educational programs so that your registered representative may serve you better, this additional compensation also may afford Pacific Life a “preferred” status at the recipient broker-dealer and provide some other marketing benefit such as website placement, access to registered representative lists, extra marketing assistance, or other heightened visibility and access to the broker-dealer’s sales force that otherwise influences the way that the broker-dealer and the registered representative market the Policies.

As of December 31, 2007, the following firms have arrangements in effect with PSD pursuant to which the firm is entitled to receive a revenue sharing payment: American International Group, Advantage Capital Corporation, American General Securities Inc., Axa Advisors LLC, Associated Securities, Benefit Funding Services, Commonwealth Financial Network, First Heartland Securities, First Financial Planners Securities, Financial Network Investment Corp., Financial Service Corp., Geneos Wealth Management, Linsco Private Ledger, Metropolitan Life, M Financial Holdings Inc., Multi Financial, Mutual Service Corp., Mutual Service Corp. of Texas, National Planning Corp., National Financial Partners & National Financial Partners Insurance Services Inc., Ogilvie Securities, Quantum Alliance Financial Corp., Raymond James & Assoc., Raymond James Financial Services, Inc., Royal Alliance, Securities America, Sentra Securities, Sunamerica Securities, United Planners, Walnut Street Securities, Waterstone Financial Group, Inc., and World Group Securities.

We or our affiliates may also pay other override payments, expense allowances and reimbursements, bonuses, wholesaler fees, and training and marketing allowances. Such payments may offset the broker-dealer’s expenses in connection with activities that it is required to perform, such as educating personnel and maintaining records. Registered representatives may also receive non-cash compensation such as expense-paid educational or training seminars involving travel within and outside the U.S. or promotional merchandise.

8

All of the compensation described in this section, and other compensation or benefits provided by us or our affiliates, may be more or less than the overall compensation on similar or other products and may influence your registered representative or broker-dealer to present this Policy over other investment options. You may ask your registered representative about these differing and divergent interests and how he/she and his/her broker-dealer are compensated for selling the Policy.

Portfolio managers of the underlying portfolios of Pacific Select Fund available under this Policy may from time to time bear all or a portion of the expenses of conferences or meetings sponsored by Pacific Life or PSD that are attended by, among others, registered representatives of PSD, who would receive information and/or training regarding the Fund’s portfolios and their management by the portfolio managers in addition to information respecting the variable annuity and/or life insurance products issued by Pacific Life and its affiliates. Other persons may also attend all or a portion of any such conferences or meetings, including directors, officers and employees of Pacific Life, officers and trustees of Pacific Select Fund, and spouses/guests of the foregoing. The Pacific Select Fund’s Board of Trustees may hold meetings concurrently with such a conference or meeting. The Pacific Select Fund pays for the expenses of the meetings of its Board of Trustees, including the pro rata share of expenses for attendance by the Trustees at the concurrent conferences or meetings sponsored by Pacific Life or PSD. Additional expenses and promotional items may be paid for by Pacific Life and/or portfolio managers. PSD serves as the Pacific Select Fund’s distributor.

The Separate Account

The Separate Account was established on May 12, 1988 under California law under the authority of our Board of Directors, and is now governed by the laws of the State of Nebraska as a result of Pacific Life’s redomestication to Nebraska on September 1, 2005. It’s registered with the SEC as a type of investment company called a unit investment trust. The SEC does not oversee the administration or investment practices or policies of the Separate Account.

The Separate Account is not the only investor in the Funds. Investments in the Funds by other separate accounts for variable annuity contracts and variable life insurance contracts could cause conflicts. For more information, please see the Statement of Additional Information for the Funds.

Performance

Performance information may appear in advertisements, sales literature, or reports to Policy Owners or prospective buyers.

Information about performance of any Variable Account of the Separate Account reflects only the performance of a hypothetical Policy. The calculations are based on allocating the hypothetical Policy’s Accumulated Value to the Variable Account during a particular time period.

Performance information is no guarantee of how a portfolio or Variable Account will perform in the future. You should keep in mind the investment objectives and policies, characteristics and quality of the portfolio of the Fund in which the Variable Account invests, and the market conditions during the period of time that’s shown.

We may show performance information in any way that’s allowed under the law that applies to it. This may include presenting a change in Accumulated Value due to the performance of one or more Variable Accounts, or as a change in a Policy Owner’s Death Benefit.

We may show performance as a change in Accumulated Value over time or in terms of the average annual compounded rate of return on Accumulated Value. This would be based on allocating premium payments for a hypothetical Policy to a particular Variable Account over certain periods of time, including one year, or from the day the Variable Account started operating. If a portfolio has existed for longer than its corresponding Variable Account, we may also show the hypothetical returns that the Variable Account would have achieved had it invested in the portfolio from the day the portfolio started operating.

Performance may reflect the deduction of all Policy charges including premium load, the cost of insurance, the administrative charge, and the mortality and expense risk charge. The different Death Benefit Options will

9

result in different expenses for the cost of insurance, and the varying expenses will result in different Accumulated Values.

Performance may also reflect the deduction of the surrender charge, if it applies, by assuming the hypothetical Policy is surrendered at the end of the particular period. At the same time, we may give other performance figures that do not assume the Policy is surrendered and do not reflect any deduction of the surrender charge.

We may also show performance of the underlying portfolios based on the change in value of a hypothetical investment over time or in terms of the average annual compounded return over time. Performance of the portfolios will not reflect the deduction of Policy charges. If Policy charges were reflected, the performance would be lower.

In our advertisements, sales literature and reports to Policy Owners, we may compare performance information for a Variable Account to:

•  other variable life separate accounts, mutual funds, or investment products tracked by research firms, rating services, companies, publications, or persons who rank separate accounts or investment products on overall performance or other criteria

•  the Consumer Price Index, to assess the real rate of return from buying a Policy by taking inflation into consideration

•  various indices that are unmanaged.

Reports and promotional literature may also contain our rating or a rating of our claims paying ability. These ratings are set by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations.

Yields

The yield or total return of any Variable Account or portfolio does not reflect the deduction of Policy charges.

Money Market Variable Account

The “yield” (also called “current yield”) of the Money Market Variable Account is computed in accordance with a standard method prescribed by the SEC. The net change in the Variable Account’s unit value during a seven-day period is divided by the unit value at the beginning of the period to obtain a base rate of return. The current yield is generated when the base rate is “annualized” by multiplying it by the fraction 365/7; that is, the base rate of return is assumed to be generated each week over a 365-day period and is shown as a percentage of the investment. The “effective yield” of the Money Market Variable Account is calculated similarly but, when annualized, the base rate of return is assumed to be reinvested. The effective yield will be slightly higher than the current yield because of the compounding effect of this assumed reinvestment.

The formula for effective yield is: [(Base Period Return + 1)(To the power of ³⁶⁵/7)] - 1.

Realized capital gains or losses and unrealized appreciation or depreciation of the assets of the underlying Money Market portfolio are not included in the yield calculation.

Other Variable Accounts

“Yield” of the other Variable Accounts is computed in accordance with a different standard method prescribed by the SEC. For each Variable Account, the net investment income (investment income less expenses) per accumulation unit earned during a specified one month or 30-day period is divided by the unit value on the last day of the specified period. This result is then annualized (that is, the yield is assumed to be generated each month or each 30-day period for a year), according to the following formula, which assumes semiannual compounding:

YIELD = 2[( a - b   cd
+ 1)⁶  - 1]

10

where:	a	=	net investment income earned during the period by the underlying portfolio of the Variable Account,
	b	=	expenses accrued for the period (net of reimbursements),
	c	=	the average daily number of accumulation units outstanding during the period that were entitled to receive dividends, and
	d	=	the unit value of the accumulation units on the last day of the period.

The Variable Accounts’ yields will vary from time to time depending upon market conditions, the composition of each portfolio and operating expenses of the Fund allocated to each portfolio. Consequently, any given performance quotation should not be considered representative of the Variable Account’s performance in the future. Yield should also be considered relative to changes in unit values and to the relative risks associated with the investment policies and objectives of the various portfolios. In addition, because performance will fluctuate, it may not provide a basis for comparing the yield of a Variable Account with certain bank deposits or other investments that pay a fixed yield or return for a stated period of time.

Money Market portfolio

Current yield for the Money Market portfolio will be based on the change in the value of a hypothetical investment (exclusive of capital charges) over a particular 7-day period, less a pro-rata share of portfolio expenses accrued over that period (the “base period”), and stated as a percentage of the investment at the start of the base period (the “base period return”). The base period return is then annualized by multiplying by 365/7, with the resulting yield figure carried to at least the nearest hundredth of one percent. “Effective yield” for the Money Market portfolio assumes that all dividends received during an annual period have been reinvested. Calculation of “effective yield” begins with the same “base period return” used in the calculation of yield, which is then annualized to reflect weekly compounding pursuant to the following formula:

Effective Yield: [(Base Period Return + 1)(To the power of ³⁶⁵/7)] - 1.

Other portfolios

Quotations of yield for the remaining portfolios will be based on all investment income per share earned during a particular 30-day period (including dividends and interest), less expenses accrued during the period (“net investment income”), and are computed by dividing net investment income by the maximum offering price per share on the last day of the period, according to the following formula:

YIELD = 2[( a - b   cd
+ 1)⁶  - 1]

where:	a	=	dividends and interest earned during the period,
	b	=	expenses accrued for the period (net of reimbursements),
	c	=	the average daily number of shares outstanding during the period that were entitled to receive dividends, and
	d	=	the maximum offering price per share on the last day of the period.

Quotations of average annual total return for a portfolio will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in the portfolio over certain periods that will include a period of one year (or, if less, up to the life of the portfolio), calculated pursuant to the following formula: P (1 + T)ⁿ = ERV (where P = a hypothetical initial payment of $1,000, T = the average annual total return for the period, n = the number of periods, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). Quotations of total return may also be shown for other periods. All total return figures reflect the deduction of a proportional share of portfolio expenses on an annual basis, and assume that all dividends and distributions are reinvested when paid.

Financial Statements

The next several pages contain the statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of

11

changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented.

These are followed by the consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007, which are included in this SAI so you can assess our ability to meet our obligations under the Policies.

Experts

The consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007 as well as the statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented as included in this SAI have been audited by Deloitte & Touche LLP, 695 Town Center Drive, Suite 1200, Costa Mesa, California 92626, independent auditors and independent registered public accounting firm, respectively, as stated in their reports appearing herein, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Pacific Life Insurance Company:

     We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of Pacific Select Exec Separate Account (the “Separate Account”) comprised of Small-Cap Growth (formerly Fasciano Small Equity), International Value, International Small-Cap, Equity Index, Small-Cap Index, Diversified Research, Equity, American Funds^® Growth-Income, American Funds Growth, Large-Cap Value, Technology, Short Duration Bond, Floating Rate Loan, Diversified Bond, Growth LT, Focused 30, Health Sciences, Mid-Cap Value, Large-Cap Growth, International Large-Cap, Small-Cap Value, Multi-Strategy, Main Street^® Core, Emerging Markets, Managed Bond, Inflation Managed, Money Market, High Yield Bond, Comstock, Mid-Cap Growth, Real Estate, Small-Cap Equity (formerly VN Small-Cap Value), Variable Account I, Variable Account II, Variable Account III, Variable Account V, BlackRock Basic Value V.I. Class III, BlackRock Global Allocation V.I. Class III, Fidelity^® VIP Contrafund^® Service Class 2, Fidelity VIP Freedom Income Service Class 2, Fidelity VIP Freedom 2010 Service Class 2, Fidelity VIP Freedom 2015 Service Class 2, Fidelity VIP Freedom 2020 Service Class 2, Fidelity VIP Freedom 2025 Service Class 2, Fidelity VIP Freedom 2030 Service Class 2, Fidelity VIP Growth Service Class 2, Fidelity VIP Mid Cap Service Class 2, Fidelity VIP Value Strategies Service Class 2, International Growth Service Class, Risk-Managed Core Service Class, Mid Cap Growth Service Class, US Strategic Equity, Legg Mason Partners Variable Aggressive Growth — Class II, Legg Mason Partners Variable Mid Cap Core — Class II, MFS New Discovery Series Service Class, MFS Utilities Series Service Class, OpCap Small Cap, T. Rowe Price Blue Chip Growth — II, T. Rowe Price Equity Income — II, Van Eck Worldwide Hard Assets, ETF 2010, ETF 2015, ETF 2020, ETF 2025, ETF 2030, and ETF 2040+ Variable Accounts (collectively, the “Variable Accounts”) as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Variable Accounts constituting Pacific Select Exec Separate Account as of December 31, 2007, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California
February 29, 2008

SA-1

PACIFIC SELECT EXEC SEPARATE ACCOUNT
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007

Variable Accounts	Underlying Portfolios/Funds	Shares	Cost	Value
	Pacific Select Fund
Small-Cap Growth (1)	Small-Cap Growth (1)	3,802,572	$37,800,821	$50,586,558
International Value	International Value	16,681,167	244,194,753	305,888,298
International Small-Cap	International Small-Cap	2,229,716	23,652,315	23,781,568
Equity Index	Equity Index	16,401,630	458,033,998	551,923,748
Small-Cap Index	Small-Cap Index	19,660,996	261,306,317	268,559,695
Diversified Research	Diversified Research	5,273,696	62,898,189	71,202,853
Equity	Equity	2,227,294	43,020,572	49,367,159
American Funds® Growth-Income	American Funds Growth-Income	5,539,751	67,848,429	69,083,376
American Funds Growth	American Funds Growth	4,391,530	59,658,396	63,232,702
Large-Cap Value	Large-Cap Value	11,166,387	142,421,311	158,713,982
Technology	Technology	2,960,794	19,195,983	22,697,331
Short Duration Bond	Short Duration Bond	4,745,145	45,995,883	45,784,332
Floating Rate Loan (2)	Floating Rate Loan	1,004,302	9,836,961	9,449,518
Diversified Bond	Diversified Bond	2,909,446	29,318,233	28,436,884
Growth LT	Growth LT	12,028,286	224,154,389	313,824,405
Focused 30	Focused 30	3,140,267	37,139,122	50,627,705
Health Sciences	Health Sciences	1,929,921	20,323,865	23,304,452
Mid-Cap Value	Mid-Cap Value	11,875,687	203,824,105	203,798,241
Large-Cap Growth	Large-Cap Growth	6,708,218	51,898,677	62,931,636
International Large-Cap	International Large-Cap	20,292,723	174,115,703	192,663,438
Small-Cap Value	Small-Cap Value	4,229,679	63,283,027	60,911,376
Multi-Strategy	Multi-Strategy	5,509,108	84,013,831	98,642,992
Main Street® Core	Main Street Core	6,870,045	131,751,325	171,459,391
Emerging Markets	Emerging Markets	8,480,767	135,142,425	177,769,592
Managed Bond	Managed Bond	36,504,170	406,507,591	413,635,176
Inflation Managed	Inflation Managed	15,529,645	181,379,579	176,308,963
Money Market	Money Market	23,101,077	233,164,222	232,852,644
High Yield Bond	High Yield Bond	11,678,057	79,763,491	76,816,611
Comstock	Comstock	8,156,511	86,248,219	83,377,630
Mid-Cap Growth	Mid-Cap Growth	6,649,902	59,827,066	70,025,262
Real Estate	Real Estate	4,216,491	89,893,173	91,656,834
Small-Cap Equity (3)	Small-Cap Equity (3)	892,493	11,205,089	11,413,844
	M Fund, Inc.
I	Brandes International Equity	6,431,559	118,383,689	118,662,256
II	Turner Core Growth	1,978,806	31,892,958	38,626,284
III	Frontier Capital Appreciation	2,048,766	51,868,688	50,686,469
V	Business Opportunity Value	2,023,916	25,022,060	24,509,619
	BlackRock Variable Series Funds, Inc.
BlackRock Basic Value V.I. Class III	BlackRock Basic Value V.I. Class III	363,849	5,898,188	5,021,116
BlackRock Global Allocation V.I. Class III	BlackRock Global Allocation V.I. Class III	810,985	11,616,998	11,783,610
	Fidelity® Variable Insurance Products Funds
Fidelity VIP Contrafund® Service Class 2	Fidelity VIP Contrafund® Service Class 2	2,075,247	64,322,234	56,986,283
Fidelity VIP Freedom Income Service Class 2 (2)	Fidelity VIP Freedom Income Service Class 2	1,063	11,997	11,458
Fidelity VIP Freedom 2010 Service Class 2 (2)	Fidelity VIP Freedom 2010 Service Class 2	7,053	87,532	84,073
Fidelity VIP Freedom 2015 Service Class 2 (2)	Fidelity VIP Freedom 2015 Service Class 2	27,534	350,531	337,562
Fidelity VIP Freedom 2020 Service Class 2 (2)	Fidelity VIP Freedom 2020 Service Class 2	7,447	96,093	93,827
Fidelity VIP Freedom 2025 Service Class 2 (2)	Fidelity VIP Freedom 2025 Service Class 2	190,373	2,505,580	2,413,927
Fidelity VIP Freedom 2030 Service Class 2 (2)	Fidelity VIP Freedom 2030 Service Class 2	10,495	145,243	136,332
Fidelity VIP Growth Service Class 2	Fidelity VIP Growth Service Class 2	79,647	3,219,671	3,556,222
Fidelity VIP Mid Cap Service Class 2	Fidelity VIP Mid Cap Service Class 2	882,433	29,429,163	31,441,082
Fidelity VIP Value Strategies Service Class 2	Fidelity VIP Value Strategies Service Class 2	340,527	4,658,964	4,297,447
	Janus Aspen Series
International Growth Service Class (2)	Janus Aspen International Growth Service Class	160,802	9,906,585	10,373,346
Risk-Managed Core Service Class (2)	Janus Aspen INTECH Risk-Managed Core Service Class	11,878	158,883	157,855
Mid Cap Growth Service Class (2)	Janus Aspen Mid Cap Growth Service Class	23,483	873,878	914,666
	Lazard Retirement Series, Inc.
US Strategic Equity (2)	Lazard Retirement U.S. Strategic Equity	3,214	37,081	32,685
	Legg Mason Partners Variable Equity Trust
Legg Mason Partners Variable Aggressive Growth — Class II (2)	Legg Mason Partners Variable Aggressive Growth — Class II	4,856	81,226	79,104
Legg Mason Partners Variable Mid Cap Core — Class II (2)	Legg Mason Partners Variable Mid Cap Core — Class II	9,885	150,199	122,772
	MFS® Variable Insurance Trust
MFS New Discovery Series Service Class (2)	MFS New Discovery Series Service Class	13,113	216,914	213,868
MFS Utilities Series Service Class (2)	MFS Utilities Series Service Class	420,309	13,993,376	14,336,747

See Notes to Financial Statements See explanation of references on SA-3

SA-2

PACIFIC SELECT EXEC SEPARATE ACCOUNT
SCHEDULE OF INVESTMENTS (Continued)
DECEMBER 31, 2007

Variable Accounts	Underlying Portfolios/Funds	Shares	Cost	Value
	Premier VIT
OpCap Small Cap (2)	OpCap Small Cap	4,800	$146,162	$140,107
	T. Rowe Price Equity Series, Inc.
T. Rowe Price Blue Chip Growth — II	T. Rowe Price Blue Chip Growth — II	466,812	5,254,105	5,461,695
T. Rowe Price Equity Income — II	T. Rowe Price Equity Income — II	1,213,561	30,218,554	28,700,719
	Van Eck Worldwide Insurance Trust
Van Eck Worldwide Hard Assets	Worldwide Hard Assets	1,530,013	48,087,787	63,021,216
	XTF Advisors Trust
ETF 2010 (2)	ETF 2010	7,562	75,367	74,938
ETF 2015 (2)	ETF 2015	8,589	88,091	85,629
ETF 2020 (2)	ETF 2020	35,447	354,910	350,566
ETF 2025 (2)	ETF 2025	34,604	343,796	345,351
ETF 2030 (2)	ETF 2030	57,090	581,783	561,770
ETF 2040+ (2)	ETF 2040+	29,044	285,864	282,885

(1)	Formerly named Fasciano Small Equity Variable Account and Fasciano Small Equity Portfolio.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(3)	Formerly named VN Small-Cap Value Variable Account and VN Small-Cap Value Portfolio.

     American Funds is a registered trademark of American Funds Distributors, Inc., Main Street is a registered trademark of OppenheimerFunds, Inc., Fidelity and Contrafund are registered trademarks of FMR Corp., and MFS is a registered trademark of MFS Fund Distributors, Inc.

See Notes to Financial Statements

SA-3

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2007

	Variable Accounts
	Small-Cap		International		International		Equity		Small-Cap		Diversified
	Growth (1)		Value		Small-Cap		Index		Index		Research		Equity
ASSETS
Investments in portfolios, at value		$50,586,558		$305,888,298		$23,781,568		$551,923,748		$268,559,695		$71,202,853		$49,367,159
Receivables:
Due from Pacific Life Insurance Company		50,734		123,590		53,062		271,352		242,726		99,269		54,685
Total Assets		50,637,292		306,011,888		23,834,630		552,195,100		268,802,421		71,302,122		49,421,844
LIABILITIES
Payables:
Fund shares purchased		50,719		123,549		53,054		271,325		242,726		99,256		54,685
Other		—		—		—		—		71		—		11
Total Liabilities		50,719		123,549		53,054		271,325		242,797		99,256		54,696
NET ASSETS		$50,586,573		$305,888,339		$23,781,576		$551,923,775		$268,559,624		$71,202,866		$49,367,148
Units Outstanding		3,236,389		8,793,719		2,202,534		9,701,628		14,234,769		4,824,065		3,445,626
Accumulation Unit Value		$15.63		$34.78		$10.80		$56.89		$18.87		$14.76		$14.33
Cost of Investments		$37,800,821		$244,194,753		$23,652,315		$458,033,998		$261,306,317		$62,898,189		$43,020,572

	American Funds		American Funds		Large-Cap				Short Duration		Floating		Diversified
	Growth-Income		Growth		Value		Technology		Bond		Rate Loan		Bond
ASSETS
Investments in portfolios, at value		$69,083,376		$63,232,702		$158,713,982		$22,697,331		$45,784,332		$9,449,518		$28,436,884
Receivables:
Due from Pacific Life Insurance Company		148,761		108,127		215,389		27,329		50,544		43,913		88,476
Total Assets		69,232,137		63,340,829		158,929,371		22,724,660		45,834,876		9,493,431		28,525,360
LIABILITIES
Payables:
Fund shares purchased		148,761		108,127		215,222		27,329		50,542		43,913		88,466
Other		3,004		74		—		14		—		—		—
Total Liabilities		151,765		108,201		215,222		27,343		50,542		43,913		88,466
NET ASSETS		$69,080,372		$63,232,628		$158,714,149		$22,697,317		$45,784,334		$9,449,518		$28,436,894
Units Outstanding		5,233,800		4,288,451		9,143,314		2,811,966		4,049,884		962,991		2,668,272
Accumulation Unit Value		$13.20		$14.74		$17.36		$8.07		$11.31		$9.81		$10.66
Cost of Investments		$67,848,429		$59,658,396		$142,421,311		$19,195,983		$45,995,883		$9,836,961		$29,318,233

	Growth		Focused		Health		Mid-Cap		Large-Cap		International		Small-Cap
	LT		30		Sciences		Value		Growth		Large-Cap		Value
ASSETS
Investments in portfolios, at value		$313,824,405		$50,627,705		$23,304,452		$203,798,241		$62,931,636		$192,663,438		$60,911,376
Receivables:
Due from Pacific Life Insurance Company		198,018		203,430		8		500,709		50,139		154,548		8
Fund shares redeemed		—		—		34,120		—		—		—		165,152
Total Assets		314,022,423		50,831,135		23,338,580		204,298,950		62,981,775		192,817,986		61,076,536
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		—		34,120		—		—		—		165,152
Fund shares purchased		197,986		203,417		—		500,709		50,085		154,548		—
Other		—		—		—		35		—		110		—
Total Liabilities		197,986		203,417		34,120		500,744		50,085		154,658		165,152
NET ASSETS		$313,824,437		$50,627,718		$23,304,460		$203,798,206		$62,931,690		$192,663,328		$60,911,384
Units Outstanding		6,242,947		3,080,715		1,525,560		8,230,390		6,937,338		15,067,071		2,748,103
Accumulation Unit Value		$50.27		$16.43		$15.28		$24.76		$9.07		$12.79		$22.16
Cost of Investments		$224,154,389		$37,139,122		$20,323,865		$203,824,105		$51,898,677		$174,115,703		$63,283,027

(1) Formerly named Fasciano Small Equity Variable Account.

See Notes to Financial Statements

SA-4

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	Multi-		Main Street		Emerging		Managed		Inflation		Money		High Yield
	Strategy		Core		Markets		Bond		Managed		Market		Bond
ASSETS
Investments in portfolios, at value		$98,642,992		$171,459,391		$177,769,592		$413,635,176		$176,308,963		$232,852,644		$76,816,611
Receivables:
Due from Pacific Life Insurance Company		17		15		—		30,339		54,464		4,492,892		61,544
Fund shares redeemed		13,990		105,514		72,613		—		—		—		—
Total Assets		98,656,999		171,564,920		177,842,205		413,665,515		176,363,427		237,345,536		76,878,155
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		13,990		105,514		72,613		—		—		—		—
Fund shares purchased		—		—		—		30,286		54,464		4,492,892		61,541
Other		—		—		101		—		54		15		—
Total Liabilities		13,990		105,514		72,714		30,286		54,518		4,492,907		61,541
NET ASSETS		$98,643,009		$171,459,406		$177,769,491		$413,635,229		$176,308,909		$232,852,629		$76,816,614
Units Outstanding		1,891,715		3,102,111		5,417,715		9,776,620		4,204,544		10,196,175		1,924,183
Accumulation Unit Value		$52.14		$55.27		$32.81		$42.31		$41.93		$22.84		$39.92
Cost of Investments		$84,013,831		$131,751,325		$135,142,425		$406,507,591		$181,379,579		$233,164,222		$79,763,491

			Mid-Cap		Real		Small-Cap
	Comstock		Growth		Estate		Equity(1)		I		II		III
ASSETS
Investments in portfolios, at value		$83,377,630		$70,025,262		$91,656,834		$11,413,844		$118,662,256		$38,626,284		$50,686,469
Receivables:
Due from Pacific Life Insurance Company		168,401		93,155		273,317		16,260		47,874		2,923		46,889
Total Assets		83,546,031		70,118,417		91,930,151		11,430,104		118,710,130		38,629,207		50,733,358
LIABILITIES
Payables:
Fund shares purchased		168,368		93,155		273,303		16,258		47,874		2,920		46,889
Other		—		26		—		—		2		—		—
Total Liabilities		168,368		93,181		273,303		16,258		47,876		2,920		46,889
NET ASSETS		$83,377,663		$70,025,236		$91,656,848		$11,413,846		$118,662,254		$38,626,287		$50,686,469
Units Outstanding		6,703,119		6,666,596		2,496,462		785,370		3,147,799		1,388,785		1,330,308
Accumulation Unit Value		$12.44		$10.50		$36.71		$14.53		$37.70		$27.81		$38.10
Cost of Investments		$86,248,219		$59,827,066		$89,893,173		$11,205,089		$118,383,689		$31,892,958		$51,868,688

			BlackRock		BlackRock		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP
			Basic Value		Global Allocation		Contrafund®		Freedom Income		Freedom 2010		Freedom 2015
	V		V.I. Class III		V.I. Class III		Service Class 2		Service Class 2		Service Class 2		Service Class 2
ASSETS
Investments in portfolios, at value		$24,509,619		$5,021,116		$11,783,610		$56,986,283		$11,458		$84,073		$337,562
Receivables:
Due from Pacific Life Insurance Company		19,969		—		56,742		208,832		—		—		—
Fund shares redeemed		—		5,927		—		—		—		—		—
Total Assets		24,529,588		5,027,043		11,840,352		57,195,115		11,458		84,073		337,562
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		5,927		—		—		—		—		—
Fund shares purchased		19,959		—		56,741		208,832		—		—		—
Other		—		2		—		33		—		—		—
Total Liabilities		19,959		5,929		56,741		208,865		—		—		—
NET ASSETS		$24,509,629		$5,021,114		$11,783,611		$56,986,250		$11,458		$84,073		$337,562
Units Outstanding		1,446,522		397,583		793,421		3,792,886		1,143		8,484		34,170
Accumulation Unit Value		$16.94		$12.63		$14.85		$15.02		$10.03		$9.91		$9.88
Cost of Investments		$25,022,060		$5,898,188		$11,616,998		$64,322,234		$11,997		$87,532		$350,531

(1) Formerly named VN Small-Cap Equity Variable Account.

See Notes to Financial Statements

SA-5

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP
	Freedom 2020		Freedom 2025		Freedom 2030		Growth		Mid Cap		Value Strategies
	Service Class 2		Service Class 2		Service Class 2		Service Class 2		Service Class 2		Service Class 2
ASSETS
Investments in portfolios, at value		$93,827		$2,413,927		$136,332		$3,556,222		$31,441,082		$4,297,447
Receivables:
Due from Pacific Life Insurance Company		38,933		—		—		125,480		32,866		17,170
Total Assets		132,760		2,413,927		136,332		3,681,702		31,473,948		4,314,617
LIABILITIES
Payables:
Fund shares purchased		38,933		—		—		125,480		32,854		17,170
Other		—		—		—		—		—		4
Total Liabilities		38,933		—		—		125,480		32,854		17,174
NET ASSETS		$93,827		$2,413,927		$136,332		$3,556,222		$31,441,094		$4,297,443
Units Outstanding		9,549		246,074		13,972		247,233		2,090,850		333,286
Accumulation Unit Value		$9.83		$9.81		$9.76		$14.38		$15.04		$12.89
Cost of Investments		$96,093		$2,505,580		$145,243		$3,219,671		$29,429,163		$4,658,964

									Legg Mason		Legg Mason
	International		Risk-Managed		Mid Cap				Partners Variable		Partners Variable
	Growth		Core		Growth		US Strategic		Aggressive		Mid Cap
	Service Class		Service Class		Service Class		Equity		Growth - Class II		Core - Class II
ASSETS
Investments in portfolios, at value		$10,373,346		$157,855		$914,666		$32,685		$79,104		$122,772
Receivables:
Due from Pacific Life Insurance Company		4,461		14		29,367		—		—		—
Total Assets		10,377,807		157,869		944,033		32,685		79,104		122,772
LIABILITIES
Payables:
Fund shares purchased		4,458		14		29,367		—		—		—
Total Liabilities		4,458		14		29,367		—		—		—
NET ASSETS		$10,373,349		$157,855		$914,666		$32,685		$79,104		$122,772
Units Outstanding		866,820		15,705		82,577		3,462		8,141		12,558
Accumulation Unit Value		$11.97		$10.05		$11.08		$9.44		$9.72		$9.78
Cost of Investments		$9,906,585		$158,883		$873,878		$37,081		$81,226		$150,199

	MFS New		MFS				T. Rowe Price		T. Rowe Price		Van Eck
	Discovery Series		Utilities Series		OpCap		Blue Chip		Equity		Worldwide
	Service Class		Service Class		Small Cap		Growth - II		Income - II		Hard Assets
ASSETS
Investments in portfolios, at value		$213,868		$14,336,747		$140,107		$5,461,695		$28,700,719		$63,021,216
Receivables:
Due from Pacific Life Insurance Company		—		—		—		8,853		18,146		268,942
Fund shares redeemed		—		4,231		—		—		—		—
Total Assets		213,868		14,340,978		140,107		5,470,548		28,718,865		63,290,158
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		4,231		—		—		—		—
Fund shares purchased		—		—		—		8,851		18,146		268,942
Other		—		—		—		—		4		5
Total Liabilities		—		4,231		—		8,851		18,150		268,947
NET ASSETS		$213,868		$14,336,747		$140,107		$5,461,697		$28,700,715		$63,021,211
Units Outstanding		22,449		1,287,407		14,693		413,880		2,275,375		2,428,039
Accumulation Unit Value		$9.53		$11.14		$9.54		$13.20		$12.61		$25.96
Cost of Investments		$ 216,914		$13,993,376		$146,162		$5,254,105		$30,218,554		$48,087,787

See Notes to Financial Statements

SA-6

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	ETF 2010		ETF 2015		ETF 2020		ETF 2025		ETF 2030		ETF 2040+
ASSETS
Investments in portfolios, at value		$74,938		$85,629		$350,566		$345,351		$561,770		$282,885
Receivables:
Due from Pacific Life Insurance Company		—		26,680		—		6,954		1,411		—
Total Assets		74,938		112,309		350,566		352,305		563,181		282,885
LIABILITIES
Payables:
Fund shares purchased		—		26,680		—		6,954		1,411		—
Total Liabilities		—		26,680		—		6,954		1,411		—
NET ASSETS		$74,938		$85,629		$350,566		$345,351		$561,770		$282,885
Units Outstanding		7,562		8,589		35,447		34,604		57,090		29,044
Accumulation Unit Value		$9.91		$9.97		$9.89		$9.98		$9.84		$9.74
Cost of Investments		$75,367		$88,091		$354,910		$343,796		$581,783		$285,864

See Notes to Financial Statements

SA-7

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Small-Cap		International			International			Equity			Small-Cap			Diversified
	Growth (1)		Value			Small-Cap			Index			Index			Research			Equity
INVESTMENT INCOME
Dividends		$—		$6,209,919			$263,532			$10,452,919			$3,695,225			$535,376			$113,435
Net Investment Income		—		6,209,919			263,532			10,452,919			3,695,225			535,376			113,435
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		1,787,843		15,803,330			146,954			(5,482,406	)		10,752,479			3,123,255			3,438,684
Capital gain distributions		—		34,234,351			—			—			—			—			—
Realized Gain (Loss)		1,787,843		50,037,681			146,954			(5,482,406	)		10,752,479			3,123,255			3,438,684
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		4,425,086		(39,003,319	)		(379,230	)		24,548,115			(20,045,664	)		(2,619,658	)		(722,184	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$6,212,929		$17,244,281			$31,256			$29,518,628			($5,597,960	)		$1,038,973			$2,829,935

	American			American			Large-					Short			Floating
	Funds			Funds			Cap					Duration			Rate			Diversified
	Growth-Income			Growth			Value			Technology		Bond			Loan (2)			Bond
INVESTMENT INCOME
Dividends		$862,120			$279,627			$1,904,295			$10,228		$1,991,999			$451,942			$1,031,172
Net Investment Income		862,120			279,627			1,904,295			10,228		1,991,999			451,942			1,031,172
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		3,936,906			8,238,466			4,080,175			2,558,874		(291,247	)		(159,034	)		3,344
Capital gain distributions		—			—			—			—		—			—			45,108
Realized Gain (Loss)		3,936,906			8,238,466			4,080,175			2,558,874		(291,247	)		(159,034	)		48,452
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(2,923,413	)		(1,311,233	)		(643,816	)		1,108,005		232,055			(387,444	)		(975,779	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$1,875,613			$7,206,860			$5,340,654			$3,677,107		$1,932,807			($94,536	)		$103,845

	Growth			Focused		Health		Mid-Cap			Large-Cap		International			Small-Cap
	LT			30		Sciences		Value			Growth		Large-Cap			Value
INVESTMENT INCOME
Dividends		$1,349,167			$166,019		$—		$1,608,408			$—		$3,038,271			$1,265,867
Net Investment Income		1,349,167			166,019		—		1,608,408			—		3,038,271			1,265,867
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(609,866	)		2,777,690		586,372		6,556,477			1,998,798		14,034,973			990,482
Capital gain distributions		—			—		—		—			—		30,741,389			—
Realized Gain (Loss)		(609,866	)		2,777,690		586,372		6,556,477			1,998,798		44,776,362			990,482
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		43,992,491			7,493,801		2,611,877		(13,051,615	)		9,992,604		(30,250,943	)		(261,501	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$44,731,792			$10,437,510		$3,198,249		($4,886,730	)		$11,991,402		$17,563,690			$1,994,848

(1)	Formerly named Fasciano Small Equity Variable Account.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-8

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Multi-			Main Street		Emerging		Managed		Inflation			Money			High Yield
	Strategy			Core		Markets		Bond		Managed			Market			Bond
INVESTMENT INCOME
Dividends		$2,922,289			$2,055,949		$1,710,560		$17,044,773		$6,952,321			$10,150,537			$5,686,544
Net Investment Income		2,922,289			2,055,949		1,710,560		17,044,773		6,952,321			10,150,537			5,686,544
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		2,918,889			952,499		12,230,937		264,947		(1,890,644	)		(47,365	)		(940,383	)
Capital gain distributions		—			—		25,044,384		394,022		—			—			—
Realized Gain (Loss)		2,918,889			952,499		37,275,321		658,969		(1,890,644	)		(47,365	)		(940,383	)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,266,678	)		4,047,073		2,772,823		14,366,023		11,150,701			80,479			(3,109,832	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$4,574,500			$7,055,521		$41,758,704		$32,069,765		$16,212,378			$10,183,651			$1,636,329

				Mid-Cap		Real			Small-Cap
	Comstock			Growth		Estate			Equity (1)		I			II		III
INVESTMENT INCOME
Dividends		$1,174,494			$285,678		$1,171,758			$22,441		$2,405,327			$136,338		$—
Net Investment Income		1,174,494			285,678		1,171,758			22,441		2,405,327			136,338		—
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain from security transactions		275,641			4,428,533		12,742,773			171,960		10,949,739			2,705,059		4,567,998
Capital gain distributions		—			—		—			—		16,025,509			2,736,681		4,551,639
Realized Gain		275,641			4,428,533		12,742,773			171,960		26,975,248			5,441,740		9,119,637
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(5,287,597	)		6,671,147		(32,127,891	)		144,195		(21,095,858	)		1,713,196		(3,511,449	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($3,837,462	)		$11,385,358		($18,213,360	)		$338,596		$8,284,717			$7,291,274		$5,608,188

												Fidelity VIP			Fidelity VIP			Fidelity VIP
				BlackRock			BlackRock		Fidelity VIP			Freedom			Freedom			Freedom
				Basic			Global		Contrafund®			Income			2010			2015
				Value			Allocation		Service			Service			Service			Service
	V			V.I. Class III			V.I. Class III		Class 2			Class 2 (2)			Class 2 (2)			Class 2 (2)
INVESTMENT INCOME
Dividends		$158,983			$68,040			$336,886		$395,866			$416			$1,875			$7,488
Net Investment Income		158,983			68,040			336,886		395,866			416			1,875			7,488
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		428,110			69,549			191,896		342,600			—			—			(261	)
Capital gain distributions		2,017,194			657,018			589,801		13,499,438			81			1,490			6,855
Realized Gain		2,445,304			726,567			781,697		13,842,038			81			1,490			6,594
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,303,058	)		(827,602	)		33,281		(7,276,834	)		(539	)		(3,459	)		(12,969	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$1,301,229			($32,995	)		$1,151,864		$6,961,070			($42	)		($94	)		$1,113

(1)	Formerly named VN Small-Cap Value Variable Account.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-9

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Fidelity VIP			Fidelity VIP			Fidelity VIP					Fidelity VIP		Fidelity VIP
	Freedom			Freedom			Freedom			Fidelity VIP		Mid		Value
	2020			2025			2030			Growth		Cap		Strategies
	Service			Service			Service			Service		Service		Service
	Class 2 (1)			Class 2 (1)			Class 2 (1)			Class 2		Class 2		Class 2
INVESTMENT INCOME
Dividends		$1,043			$46,594			$2,546			$3,265		$122,344		$47,305
Net Investment Income		1,043			46,594			2,546			3,265		122,344		47,305
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(2	)		(64	)		(7	)		64,381		10,581		4,368
Capital gain distributions		1,173			51,162			3,708			2,151		1,766,653		1,110,736
Realized Gain		1,171			51,098			3,701			66,532		1,777,234		1,115,104
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(2,266	)		(91,654	)		(8,911	)		312,378		1,478,408		(553,331	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($52	)		$6,038			($2,664	)		$382,175		$3,377,986		$609,078

											Legg Mason			Legg Mason
	International		Risk-Managed			Mid Cap					Partners Variable			Partners Variable
	Growth		Core			Growth					Aggressive			Mid Cap
	Service		Service			Service		US Strategic			Growth -			Core -
	Class (1)		Class (1)			Class (1)		Equity (1)			Class II (1)			Class II (1)
INVESTMENT INCOME
Dividends		$21,910		$524			$275		$229			$—			$72
Net Investment Income		21,910		524			275		229			—			72
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		121,432		216			441		(317	)		(34,248	)		(511	)
Capital gain distributions		—		—			507		4,385			460			23,545
Realized Gain (Loss)		121,432		216			948		4,068			(33,788	)		23,034
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		466,762		(1,028	)		40,788		(4,396	)		(2,122	)		(27,427	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$610,104		($288	)		$42,011		($99	)		($35,910	)		($4,321	)

	MFS New			MFS										Van Eck
	Discovery Series			Utilities Series		OpCap			T. Rowe Price		T. Rowe Price			Worldwide
	Service			Service		Small			Blue Chip		Equity			Hard
	Class (1)			Class (1)		Cap (1)			Growth - II		Income - II			Assets
INVESTMENT INCOME
Dividends		$—			$—		$—			$4,605		$479,630			$53,609
Net Investment Income		—			—		—			4,605		479,630			53,609
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(563	)		2,807		(6,401	)		231,430		1,510,760			3,843,452
Capital gain distributions		—			—		8,480			—		1,791,496			5,229,868
Realized Gain (Loss)		(563	)		2,807		2,079			231,430		3,302,256			9,073,320
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(3,046	)		343,371		(6,055	)		44,227		(2,957,798	)		10,878,379
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($3,609	)		$346,178		($3,976	)		$280,262		$824,088			$20,005,308

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-10

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	ETF 2010 (1)			ETF 2015 (1)			ETF 2020 (1)			ETF 2025 (1)		ETF 2030 (1)			ETF 2040+ (1)
INVESTMENT INCOME
Dividends		$—			$—			$—			$—		$—			$—
Net Investment Income		—			—			—			—		—			—
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		19			9			(1,851	)		144		4,027			(2,029	)
Capital gain distributions		—			—			—			—		—			—
Realized Gain (Loss)		19			9			(1,851	)		144		4,027			(2,029	)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(429	)		(2,462	)		(4,343	)		1,555		(20,013	)		(2,979	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($410	)		($2,453	)		($6,194	)		$1,699		($15,986	)		($5,008	)

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-11

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS

	Variable Accounts
	Small-Cap Growth (1)						International Value						International Small-Cap
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006 (2)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$107,425			$6,209,919			$4,094,626			$263,532			$15,460
Realized gain (loss)		1,787,843			3,291,410			50,037,681			8,278,984			146,954			(32,452	)
Change in unrealized appreciation (depreciation) on investments		4,425,086			(1,024,236	)		(39,003,319	)		44,856,954			(379,230	)		508,483
Net Increase in Net Assets Resulting from Operations		6,212,929			2,374,599			17,244,281			57,230,564			31,256			491,491
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,713,560			4,724,895			25,269,630			21,917,985			3,184,903			1,056,863
Transfers between variable and fixed accounts, net		5,250,043			(3,436,558	)		18,125,526			9,957,367			9,888,824			12,203,591
Transfers—policy charges and deductions		(3,137,582	)		(3,089,730	)		(16,754,961	)		(14,930,929	)		(1,380,037	)		(510,126	)
Transfers—surrenders		(2,299,441	)		(1,970,281	)		(16,659,383	)		(11,886,282	)		(600,745	)		(294,040	)
Transfers—other		(713,226	)		(374,035	)		(4,025,963	)		(2,379,198	)		(217,936	)		(72,468	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		3,813,354			(4,145,709	)		5,954,849			2,678,943			10,875,009			12,383,820
NET INCREASE (DECREASE) IN NET ASSETS		10,026,283			(1,771,110	)		23,199,130			59,909,507			10,906,265			12,875,311
NET ASSETS
Beginning of Year or Period		40,560,290			42,331,400			282,689,209			222,779,702			12,875,311			—
End of Year or Period		$50,586,573			$40,560,290			$305,888,339			$282,689,209			$23,781,576			$12,875,311
	Equity Index						Small-Cap Index						Diversified Research
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$10,452,919			$9,078,433			$3,695,225			$4,444,901			$535,376			$487,192
Realized gain (loss)		(5,482,406	)		4,989,859			10,752,479			57,449,987			3,123,255			3,784,659
Change in unrealized appreciation (depreciation) on investments		24,548,115			60,900,878			(20,045,664	)		(15,238,792	)		(2,619,658	)		3,747,598
Net Increase (Decrease) in Net Assets Resulting from Operations		29,518,628			74,969,170			(5,597,960	)		46,656,096			1,038,973			8,019,449
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		48,359,236			50,879,511			20,648,803			30,075,826			8,697,285			12,006,390
Transfers between variable and fixed accounts, net		(6,104,627	)		(19,863,531	)		(13,575,635	)		(21,811,327	)		(7,530,968	)		(1,662,103	)
Transfers—policy charges and deductions		(32,062,683	)		(32,690,100	)		(15,592,627	)		(16,853,330	)		(4,659,322	)		(4,707,278	)
Transfers—surrenders		(34,524,303	)		(23,618,439	)		(18,711,492	)		(14,777,846	)		(2,679,765	)		(2,764,005	)
Transfers—other		(3,290,598	)		(2,466,333	)		(2,506,029	)		(1,153,975	)		(549,498	)		(560,888	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(27,622,975	)		(27,758,892	)		(29,736,980	)		(24,520,652	)		(6,722,268	)		2,312,116
NET INCREASE (DECREASE) IN NET ASSETS		1,895,653			47,210,278			(35,334,940	)		22,135,444			(5,683,295	)		10,331,565
NET ASSETS
Beginning of Year		550,028,122			502,817,844			303,894,564			281,759,120			76,886,161			66,554,596
End of Year		$551,923,775			$550,028,122			$268,559,624			$303,894,564			$71,202,866			$76,886,161

(1)	Formerly named Fasciano Small Equity Variable Account.
(2)	Operations commenced on May 1, 2006.
	See Notes to Financial Statements

SA-12

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Equity						American Funds Growth-Income						American Funds Growth
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$113,435			$165,903			$862,120			$644,572			$279,627			$254,675
Realized gain		3,438,684			2,805,194			3,936,906			1,669,747			8,238,466			1,317,165
Change in unrealized appreciation (depreciation) on investments		(722,184	)		880,612			(2,923,413	)		3,305,810			(1,311,233	)		2,107,555
Net Increase in Net Assets Resulting from Operations		2,829,935			3,851,709			1,875,613			5,620,129			7,206,860			3,679,395
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,257,902			4,257,547			9,274,083			5,691,503			8,546,445			5,830,180
Transfers between variable and fixed accounts, net		3,907,061			(7,408,294	)		9,212,335			31,454,929			(5,121,714	)		28,122,647
Transfers—policy charges and deductions		(3,526,824	)		(3,336,497	)		(4,959,295	)		(3,183,438	)		(4,546,413	)		(2,956,003	)
Transfers—surrenders		(2,441,955	)		(1,729,045	)		(2,162,295	)		(1,458,711	)		(1,819,827	)		(1,840,466	)
Transfers—other		(666,170	)		(405,365	)		(384,678	)		(381,339	)		171,168			(572,594	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		1,530,014			(8,621,654	)		10,980,150			32,122,944			(2,770,341	)		28,583,764
NET INCREASE (DECREASE) IN NET ASSETS		4,359,949			(4,769,945	)		12,855,763			37,743,073			4,436,519			32,263,159
NET ASSETS
Beginning of Year		45,007,199			49,777,144			56,224,609			18,481,536			58,796,109			26,532,950
End of Year		$49,367,148			$45,007,199			$69,080,372			$56,224,609			$63,232,628			$58,796,109
	Large-Cap Value						Technology						Short Duration Bond
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,904,295			$1,807,964			$10,228			$—			$1,991,999			$1,749,338
Realized gain (loss)		4,080,175			20,744,705			2,558,874			810,405			(291,247	)		(197,359	)
Change in unrealized appreciation (depreciation) on investments		(643,816	)		552,147			1,108,005			133,083			232,055			231,067
Net Increase in Net Assets Resulting from Operations		5,340,654			23,104,816			3,677,107			943,488			1,932,807			1,783,046
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		16,459,987			17,018,881			1,664,304			1,863,002			5,644,721			5,808,015
Transfers between variable and fixed accounts, net		133,111			(2,747,732	)		1,787,482			4,893,986			(1,820,360	)		2,643,755
Transfers—policy charges and deductions		(11,335,442	)		(10,933,769	)		(1,230,313	)		(1,189,826	)		(3,051,745	)		(3,048,767	)
Transfers—surrenders		(5,976,887	)		(5,971,738	)		(603,702	)		(975,798	)		(1,510,952	)		(1,541,303	)
Transfers—other		(2,348,557	)		(1,036,712	)		(140,715	)		(156,426	)		(262,278	)		(433,437	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(3,067,788	)		(3,671,070	)		1,477,056			4,434,938			(1,000,614	)		3,428,263
NET INCREASE IN NET ASSETS		2,272,866			19,433,746			5,154,163			5,378,426			932,193			5,211,309
NET ASSETS
Beginning of Year		156,441,283			137,007,537			17,543,154			12,164,728			44,852,141			39,640,832
End of Year		$158,714,149			$156,441,283			$22,697,317			$17,543,154			$45,784,334			$44,852,141

See Notes to Financial Statements

SA-13

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Floating Rate Loan						Diversified Bond						Growth LT
	Period Ended						Year Ended			Period Ended			Year Ended			Year Ended
	December 31,						December 31,			December 31,			December 31,			December 31,
	2007 (1)						2007			2006 (2)			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$451,942						$1,031,172			$279,242			$1,349,167			$1,781,369
Realized gain (loss)		(159,034	)					48,452			73,815			(609,866	)		(23,159,386	)
Change in unrealized appreciation (depreciation) on investments		(387,444	)					(975,779	)		94,429			43,992,491			49,347,602
Net Increase (Decrease) in Net Assets Resulting from Operations		(94,536	)					103,845			447,486			44,731,792			27,969,585
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		1,333,528						3,079,499			882,467			25,258,099			27,989,407
Transfers between variable and fixed accounts, net		8,965,591						17,333,074			10,007,565			(13,120,991	)		(8,862,832	)
Transfers—policy charges and deductions		(406,484	)					(1,570,883	)		(475,880	)		(20,605,099	)		(21,767,984	)
Transfers—surrenders		(266,762	)					(818,277	)		(289,307	)		(20,518,160	)		(14,794,952	)
Transfers—other		(81,819	)					(178,521	)		(84,174	)		(3,272,320	)		(2,531,885	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		9,544,054						17,844,892			10,040,671			(32,258,471	)		(19,968,246	)
NET INCREASE IN NET ASSETS		9,449,518						17,948,737			10,488,157			12,473,321			8,001,339
NET ASSETS
Beginning of Year or Periods		—						10,488,157			—			301,351,116			293,349,777
End of Year or Periods		$9,449,518						$28,436,894			$10,488,157			$313,824,437			$301,351,116
	Focused 30						Health Sciences						Mid-Cap Value
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$166,019			$16,125			$—			$—			$1,608,408			$1,270,013
Realized gain		2,777,690			1,668,935			586,372			3,362,841			6,556,477			38,295,145
Change in unrealized appreciation (depreciation) on investments		7,493,801			2,979,620			2,611,877			(1,988,005	)		(13,051,615	)		(12,980,142	)
Net Increase (Decrease) in Net Assets Resulting from Operations		10,437,510			4,664,680			3,198,249			1,374,836			(4,886,730	)		26,585,016
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		3,179,178			2,138,455			2,579,856			2,312,267			23,448,928			21,119,872
Transfers between variable and fixed accounts, net		12,901,554			6,089,415			625,690			1,432,748			8,117,285			3,805,348
Transfers—policy charges and deductions		(2,169,823	)		(1,482,703	)		(1,338,772	)		(1,286,192	)		(13,997,843	)		(12,855,103	)
Transfers—surrenders		(2,014,229	)		(904,226	)		(789,127	)		(703,891	)		(9,704,681	)		(8,376,722	)
Transfers—other		(218,095	)		(230,048	)		(3,541	)		(150,448	)		(2,529,552	)		(2,137,792	)
Net Increase in Net Assets Derived from Policy Transactions		11,678,585			5,610,893			1,074,106			1,604,484			5,334,137			1,555,603
NET INCREASE IN NET ASSETS		22,116,095			10,275,573			4,272,355			2,979,320			447,407			28,140,619
NET ASSETS
Beginning of Year		28,511,623			18,236,050			19,032,105			16,052,785			203,350,799			175,210,180
End of Year		$50,627,718			$28,511,623			$23,304,460			$19,032,105			$203,798,206			$203,350,799

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(2)	Operations commenced on May 1, 2006.
	See Notes to Financial Statements

SA-14

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Large-Cap Growth						International Large-Cap						Small-Cap Value
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$115,763			$3,038,271			$4,516,762			$1,265,867			$1,391,025
Realized gain		1,998,798			175,278			44,776,362			10,876,954			990,482			15,164,030
Change in unrealized appreciation (depreciation) on investments		9,992,604			(2,370,143	)		(30,250,943	)		22,299,738			(261,501	)		(6,749,213	)
Net Increase (Decrease) in Net Assets Resulting from Operations		11,991,402			(2,079,102	)		17,563,690			37,693,454			1,994,848			9,805,842
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		8,694,794			9,575,390			20,646,760			19,343,982			7,486,224			9,914,163
Transfers between variable and fixed accounts, net		(8,606,756	)		6,524,016			(10,020,324	)		11,372,990			(6,078,397	)		4,321,884
Transfers—policy charges and deductions		(5,225,444	)		(5,368,237	)		(11,816,427	)		(10,933,643	)		(3,840,838	)		(3,371,879	)
Transfers—surrenders		(3,116,083	)		(2,674,359	)		(6,518,950	)		(5,629,751	)		(2,622,187	)		(1,840,112	)
Transfers—other		(884,437	)		(493,014	)		(1,725,137	)		(1,541,514	)		(379,649	)		(379,600	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(9,137,926	)		7,563,796			(9,434,078	)		12,612,064			(5,434,847	)		8,644,456
NET INCREASE (DECREASE) IN NET ASSETS		2,853,476			5,484,694			8,129,612			50,305,518			(3,439,999	)		18,450,298
NET ASSETS
Beginning of Year		60,078,214			54,593,520			184,533,716			134,228,198			64,351,383			45,901,085
End of Year		$62,931,690			$60,078,214			$192,663,328			$184,533,716			$60,911,384			$64,351,383
	Multi-Strategy						Main Street Core						Emerging Markets
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$2,922,289			$2,653,121			$2,055,949			$1,881,007			$1,710,560			$857,900
Realized gain (loss)		2,918,889			4,047,623			952,499			(2,143,204	)		37,275,321			30,462,095
Change in unrealized appreciation (depreciation) on investments		(1,266,678	)		4,843,958			4,047,073			22,030,678			2,772,823			(6,475,139	)
Net Increase in Net Assets Resulting from Operations		4,574,500			11,544,702			7,055,521			21,768,481			41,758,704			24,844,856
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		7,007,667			8,830,702			14,542,933			14,210,254			12,824,085			10,484,189
Transfers between variable and fixed accounts, net		(5,143,677	)		(10,869,366	)		13,589,235			(9,423,357	)		13,253,054			5,289,763
Transfers—policy charges and deductions		(5,918,815	)		(6,546,365	)		(11,062,848	)		(10,702,529	)		(8,001,708	)		(6,536,226	)
Transfers—surrenders		(6,410,061	)		(5,203,479	)		(9,956,823	)		(9,496,466	)		(6,048,926	)		(4,243,264	)
Transfers—other		(1,070,899	)		(488,451	)		(899,164	)		(694,754	)		(2,455,038	)		(1,190,449	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(11,535,785	)		(14,276,959	)		6,213,333			(16,106,852	)		9,571,467			3,804,013
NET INCREASE (DECREASE) IN NET ASSETS		(6,961,285	)		(2,732,257	)		13,268,854			5,661,629			51,330,171			28,648,869
NET ASSETS
Beginning of Year		105,604,294			108,336,551			158,190,552			152,528,923			126,439,320			97,790,451
End of Year		$98,643,009			$105,604,294			$171,459,406			$158,190,552			$177,769,491			$126,439,320

See Notes to Financial Statements

SA-15

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Managed Bond						Inflation Managed						Money Market
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$17,044,773			$13,487,113			$6,952,321			$6,210,381			$10,150,537			$9,421,222
Realized gain (loss)		658,969			(65,305	)		(1,890,644	)		3,729,209			(47,365	)		93,367
Change in unrealized appreciation (depreciation) on investments		14,366,023			2,348,712			11,150,701			(9,126,937	)		80,479			(159,144	)
Net Increase in Net Assets Resulting from Operations		32,069,765			15,770,520			16,212,378			812,653			10,183,651			9,355,445
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		25,953,261			35,000,285			15,103,679			18,637,190			259,233,274			170,353,386
Transfers between variable and fixed accounts, net		44,769,597			16,490,356			9,508,734			(1,617,742	)		(170,855,028	)		(129,571,545	)
Transfers—policy charges and deductions		(18,648,436	)		(17,592,511	)		(10,075,461	)		(9,746,404	)		(22,425,588	)		(22,527,349	)
Transfers—surrenders		(27,156,576	)		(12,232,229	)		(8,327,609	)		(6,254,365	)		(29,005,989	)		(19,725,233	)
Transfers—other		4,819,341			(1,537,813	)		(1,759,356	)		(584,191	)		(2,585,272	)		(6,809,673	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		29,737,187			20,128,088			4,449,987			434,488			34,361,397			(8,280,414	)
NET INCREASE IN NET ASSETS		61,806,952			35,898,608			20,662,365			1,247,141			44,545,048			1,075,031
NET ASSETS
Beginning of Year		351,828,277			315,929,669			155,646,544			154,399,403			188,307,581			187,232,550
End of Year		$413,635,229			$351,828,277			$176,308,909			$155,646,544			$232,852,629			$188,307,581
	High Yield Bond						Comstock						Mid-Cap Growth
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$5,686,544			$5,249,213			$1,174,494			$846,030			$285,678			$108,938
Realized gain (loss)		(940,383	)		(49,278	)		275,641			5,087,711			4,428,533			5,043,631
Change in unrealized appreciation (depreciation) on investments		(3,109,832	)		1,307,522			(5,287,597	)		1,620,181			6,671,147			(3,166,803	)
Net Increase (Decrease) in Net Assets Resulting from Operations		1,636,329			6,507,457			(3,837,462	)		7,553,922			11,385,358			1,985,766
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		7,523,737			6,823,211			10,014,355			9,209,518			7,413,161			5,953,304
Transfers between variable and fixed accounts, net		1,253,288			(1,545,652	)		25,180,438			9,552,364			7,217,828			12,490,992
Transfers—policy charges and deductions		(4,506,754	)		(4,653,707	)		(4,998,419	)		(3,554,043	)		(4,566,722	)		(3,675,359	)
Transfers—surrenders		(3,262,293	)		(4,003,710	)		(2,428,255	)		(2,032,120	)		(2,542,931	)		(1,648,634	)
Transfers—other		(706,945	)		(1,127,030	)		(1,222,692	)		(558,156	)		(609,782	)		(74,906	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		301,033			(4,506,888	)		26,545,427			12,617,563			6,911,554			13,045,397
NET INCREASE IN NET ASSETS		1,937,362			2,000,569			22,707,965			20,171,485			18,296,912			15,031,163
NET ASSETS
Beginning of Year		74,879,252			72,878,683			60,669,698			40,498,213			51,728,324			36,697,161
End of Year		$76,816,614			$74,879,252			$83,377,663			$60,669,698			$70,025,236			$51,728,324

See Notes to Financial Statements

SA-16

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Real Estate						Small-Cap Equity (1)						I
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,171,758			$3,266,984			$22,441			$37,592			$2,405,327			$1,348,991
Realized gain		12,742,773			25,528,115			171,960			585,776			26,975,248			12,066,894
Change in unrealized appreciation (depreciation) on investments		(32,127,891	)		5,506,440			144,195			20,015			(21,095,858	)		8,248,082
Net Increase (Decrease) in Net Assets Resulting from Operations		(18,213,360	)		34,301,539			338,596			643,383			8,284,717			21,663,967
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		10,380,072			10,102,037			1,301,918			712,544			7,147,952			6,659,741
Transfers between variable and fixed accounts, net		(9,685,613	)		1,578,495			5,230,174			2,374,905			3,950,909			10,361,732
Transfers—policy charges and deductions		(7,024,310	)		(6,845,236	)		(613,905	)		(301,691	)		(5,897,843	)		(5,095,934	)
Transfers—surrenders		(5,735,674	)		(4,733,261	)		(434,043	)		(81,046	)		(5,241,523	)		(2,404,074	)
Transfers—other		(1,834,896	)		(1,155,218	)		(103,927	)		(65,473	)		1,773,518			(997,982	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(13,900,421	)		(1,053,183	)		5,380,217			2,639,239			1,733,013			8,523,483
NET INCREASE (DECREASE) IN NET ASSETS		(32,113,781	)		33,248,356			5,718,813			3,282,622			10,017,730			30,187,450
NET ASSETS
Beginning of Year		123,770,629			90,522,273			5,695,033			2,412,411			108,644,524			78,457,074
End of Year		$91,656,848			$123,770,629			$11,413,846			$5,695,033			$118,662,254			$108,644,524
	II						III						V
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$136,338			$209,719			$—			$—			$158,983			$117,599
Realized gain		5,441,740			3,655,562			9,119,637			7,927,299			2,445,304			2,219,830
Change in unrealized appreciation (depreciation) on investments		1,713,196			(1,035,395	)		(3,511,449	)		(1,508,703	)		(1,303,058	)		556,166
Net Increase in Net Assets Resulting from Operations		7,291,274			2,829,886			5,608,188			6,418,596			1,301,229			2,893,595
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		3,080,981			3,494,413			3,687,792			3,854,683			2,253,653			1,951,214
Transfers between variable and fixed accounts, net		(700,127	)		3,178,025			332,558			2,060,781			(1,417,957	)		3,870,477
Transfers—policy charges and deductions		(2,073,056	)		(2,143,953	)		(2,532,873	)		(2,433,125	)		(1,289,820	)		(1,156,081	)
Transfers—surrenders		(3,737,511	)		(757,979	)		(1,859,089	)		(3,474,871	)		(1,054,083	)		(378,159	)
Transfers—other		(1,281,928	)		(268,206	)		(175,127	)		(792,387	)		(180,107	)		(385,839	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(4,711,641	)		3,502,300			(546,739	)		(784,919	)		(1,688,314	)		3,901,612
NET INCREASE (DECREASE) IN NET ASSETS		2,579,633			6,332,186			5,061,449			5,633,677			(387,085	)		6,795,207
NET ASSETS
Beginning of Year		36,046,654			29,714,468			45,625,020			39,991,343			24,896,714			18,101,507
End of Year		$38,626,287			$36,046,654			$50,686,469			$45,625,020			$24,509,629			$24,896,714

(1)	Formerly named VN Small-Cap Value Variable Account.
	See Notes to Financial Statements

SA-17

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	BlackRock Basic Value						BlackRock Global Allocation						Fidelity VIP Contrafund®
	V.I. Class III (1)						V.I. Class III (2)						Service Class 2
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$68,040			$40,458			$336,886			$119,786			$395,866			$284,992
Realized gain		726,567			280,465			781,697			340,882			13,842,038			3,391,424
Change in unrealized appreciation (depreciation) on investments		(827,602	)		(42,659	)		33,281			33,418			(7,276,834	)		(1,037,935	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(32,995	)		278,264			1,151,864			494,086			6,961,070			2,638,481
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		648,757			132,172			1,279,335			558,679			5,959,709			3,716,147
Transfers between variable and fixed accounts, net		2,025,353			2,464,727			5,963,132			954,895			16,981,156			4,769,802
Transfers—policy charges and deductions		(310,615	)		(66,004	)		(560,780	)		(254,490	)		(2,270,335	)		(1,474,975	)
Transfers—surrenders		(169,869	)		(26,848	)		(361,556	)		(111,455	)		(1,847,832	)		(544,400	)
Transfers—other		(57,333	)		(7,949	)		(135,157	)		(94,518	)		(127,345	)		352,047
Net Increase in Net Assets Derived from Policy Transactions		2,136,293			2,496,098			6,184,974			1,053,111			18,695,353			6,818,621
NET INCREASE IN NET ASSETS		2,103,298			2,774,362			7,336,838			1,547,197			25,656,423			9,457,102
NET ASSETS
Beginning of Year		2,917,816			143,454			4,446,773			2,899,576			31,329,827			21,872,725
End of Year		$5,021,114			$2,917,816			$11,783,611			$4,446,773			$56,986,250			$31,329,827
	Fidelity VIP Freedom Income						Fidelity VIP Freedom 2010						Fidelity VIP Freedom 2015
	Service Class 2						Service Class 2						Service Class 2
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (3)						2007 (3)						2007 (3)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$416						$1,875						$7,488
Realized gain		81						1,490						6,594
Change in unrealized depreciation on investments		(539	)					(3,459	)					(12,969	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(42	)					(94	)					1,113
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		—						—						2,806
Transfers between variable and fixed accounts, net		11,611						84,167						361,539
Transfers—policy charges and deductions		(111	)					(—	)					(2,770	)
Transfers—surrenders		—						—						—
Transfers—other		—						—						(25,126	)
Net Increase in Net Assets Derived from Policy Transactions		11,500						84,167						336,449
NET INCREASE IN NET ASSETS		11,458						84,073						337,562
NET ASSETS
Beginning of Year or Periods		—						—						—
End of Year or Periods		$11,458						$84,073						$337,562

(1)	Formerly named Mercury Basic Value V.I. Class III Variable Account.
(2)	Formerly named Mercury Global Allocation V.I. Class III Variable Account.
(3)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-18

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Fidelity VIP Freedom 2020						Fidelity VIP Freedom 2025						Fidelity VIP Freedom 2030
	Service Class 2						Service Class 2						Service Class 2
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (1)						2007 (1)						2007 (1)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,043						$46,594						$2,546
Realized gain		1,171						51,098						3,701
Change in unrealized depreciation on investments		(2,266	)					(91,654	)					(8,911	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(52	)					6,038						(2,664	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		—						18,188						2,015
Transfers between variable and fixed accounts, net		94,251						2,408,135						138,216
Transfers—policy charges and deductions		(372	)					(18,279	)					(1,235	)
Transfers—surrenders		—						—						—
Transfers—other		—						(155	)					—
Net Increase in Net Assets Derived from Policy Transactions		93,879						2,407,889						138,996
NET INCREASE IN NET ASSETS		93,827						2,413,927						136,332
NET ASSETS
Beginning of Periods		—						—						—
End of Periods		$93,827						$2,413,927						$136,332
	Fidelity VIP Growth						Fidelity VIP Mid Cap						Fidelity VIP Value Strategies
	Service Class 2						Service Class 2						Service Class 2
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment Income		$3,265			$548			$122,344			$32,325			$47,305			$1,345
Realized gain		66,532			7,966			1,777,234			1,154,388			1,115,104			38,733
Change in unrealized appreciation (depreciation) on investments		312,378			18,493			1,478,408			(7,854	)		(553,331	)		182,610
Net Increase in Net Assets Resulting from Operations		382,175			27,007			3,377,986			1,178,859			609,078			222,688
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		179,736			72,885			3,120,404			2,061,569			579,223			174,129
Transfers between variable and fixed accounts, net		2,475,603			333,684			9,841,292			(26,177	)		(6,687,758	)		8,993,291
Transfers—policy charges and deductions		(106,928	)		(40,522	)		(1,299,506	)		(1,012,840	)		(401,624	)		(75,081	)
Transfers—surrenders		(14,585	)		(917	)		(862,084	)		(409,554	)		(149,030	)		(31,051	)
Transfers—other		(18,069	)		(2,085	)		(439,722	)		524,046			615,166			114,040
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		2,515,757			363,045			10,360,384			1,137,044			(6,044,023	)		9,175,328
NET INCREASE (DECREASE) IN NET ASSETS		2,897,932			390,052			13,738,370			2,315,903			(5,434,945	)		9,398,016
NET ASSETS
Beginning of Year		658,290			268,238			17,702,724			15,386,821			9,732,388			334,372
End of Year		$3,556,222			$658,290			$31,441,094			$17,702,724			$4,297,443			$9,732,388

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-19

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts (1)
	International Growth			Risk-Managed Core			Mid Cap Growth
	Service Class			Service Class			Service Class
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$21,910			$524			$275
Realized gain		121,432			216			948
Change in unrealized appreciation (depreciation) on investments		466,762			(1,028	)		40,788
Net Increase (Decrease) in Net Assets Resulting from Operations		610,104			(288	)		42,011
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		268,427			9,822			18,334
Transfers between variable and fixed accounts, net		9,968,378			151,460			860,468
Transfers—policy charges and deductions		(297,506	)		(2,895	)		(8,727	)
Transfers—surrenders		(28,448	)		—			(1,760	)
Transfers—other		(147,606	)		(244	)		4,340
Net Increase in Net Assets Derived from Policy Transactions		9,763,245			158,143			872,655
NET INCREASE IN NET ASSETS		10,373,349			157,855			914,666
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$10,373,349			$157,855			$914,666
				Legg Mason Partners Variable			Legg Mason Partners Variable
	US Strategic Equity			Aggressive Growth - Class II			Mid Cap Core - Class II
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$229			$—			$72
Realized gain (loss)		4,068			(33,788	)		23,034
Change in unrealized depreciation on investments		(4,396	)		(2,122	)		(27,427	)
Net Decrease in Net Assets Resulting from Operations		(99	)		(35,910	)		(4,321	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		130			16,040			2,629
Transfers between variable and fixed accounts, net		33,456			110,091			130,562
Transfers—policy charges and deductions		(802	)		(12,799	)		(3,802	)
Transfers—surrenders		—			(998	)		(1,758	)
Transfers—other		—			2,680			(538	)
Net Increase in Net Assets Derived from Policy Transactions		32,784			115,014			127,093
NET INCREASE IN NET ASSETS		32,685			79,104			122,772
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$32,685			$79,104			$122,772

(1)	Operations commenced during 2007 for all Variable Accounts (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-20

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	MFS New Discovery Series						MFS Utilities Series
	Service Class						Service Class						OpCap Small Cap
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (1)						2007 (1)						2007 (1)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—						$—						$—
Realized gain (loss)		(563	)					2,807						2,079
Change in unrealized appreciation (depreciation) on investments		(3,046	)					343,371						(6,055	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(3,609	)					346,178						(3,976	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		6,123						109,679						10,504
Transfers between variable and fixed accounts, net		212,903						14,008,715						137,173
Transfers—policy charges and deductions		(1,430	)					(75,030	)					(4,875	)
Transfers—surrenders		—						(41,378	)					—
Transfers—other		(119	)					(11,417	)					1,281
Net Increase in Net Assets Derived from Policy Transactions		217,477						13,990,569						144,083
NET INCREASE IN NET ASSETS		213,868						14,336,747						140,107
NET ASSETS
Beginning of Periods		—						—						—
End of Periods		$213,868						$14,336,747						$140,107
	T. Rowe Price						T. Rowe Price						Van Eck
	Blue Chip Growth - II						Equity Income - II						Worldwide Hard Assets
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$4,605			$4,525			$479,630			$258,532			$53,609			$9,968
Realized gain		231,430			27,023			3,302,256			1,718,526			9,073,320			3,389,190
Change in unrealized appreciation (depreciation) on investments		44,227			135,818			(2,957,798	)		1,594,381			10,878,379			1,813,845
Net Increase in Net Assets resulting from Operations		280,262			167,366			824,088			3,571,439			20,005,308			5,213,003
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		661,302			262,035			2,644,557			1,616,732			5,153,750			4,431,425
Transfers between variable and fixed accounts, net		1,211,661			1,469,436			330,961			17,455,450			2,490,507			20,377,573
Transfers—policy charges and deductions		(383,069	)		(135,589	)		(1,614,464	)		(1,032,026	)		(1,875,694	)		(1,255,118	)
Transfers—surrenders		(47,595	)		(51,123	)		(2,122,377	)		(490,751	)		(1,741,303	)		(1,790,274	)
Transfers—other		1,398,283			(22,598	)		(101,800	)		(301,739	)		27,061			(212,950	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		2,840,582			1,522,161			(863,123	)		17,247,666			4,054,321			21,550,656
NET INCREASE (DECREASE) IN NET ASSETS		3,120,844			1,689,527			(39,035	)		20,819,105			24,059,629			26,763,659
NET ASSETS
Beginning of Year		2,340,853			651,326			28,739,750			7,920,645			38,961,582			12,197,923
End of Year		$5,461,697			$2,340,853			$28,700,715			$28,739,750			$63,021,211			$38,961,582

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-21

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts (1)
	ETF 2010			ETF 2015			ETF 2020
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$—			$—
Realized gain (loss)		19			9			(1,851	)
Change in unrealized depreciation on investments		(429	)		(2,462	)		(4,343	)
Net Decrease in Net Assets Resulting from Operations		(410	)		(2,453	)		(6,194	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,257			7,999			4,943
Transfers between variable and fixed accounts, net		73,755			81,516			381,985
Transfers—policy charges and deductions		(2,630	)		(1,433	)		(7,759	)
Transfers—surrenders		—			—			—
Transfers—other		(34	)		—			(22,409	)
Net Increase in Net Assets Derived from Policy Transactions		75,348			88,082			356,760
NET INCREASE IN NET ASSETS		74,938			85,629			350,566
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$74,938			$85,629			$350,566
	ETF 2025			ETF 2030			ETF 2040+
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$—			$—
Realized gain (loss)		144			4,027			(2,029	)
Change in unrealized appreciation (depreciation) on investments		1,555			(20,013	)		(2,979	)
Net Increase (Decrease) in Net Assets Resulting from Operations		1,699			(15,986	)		(5,008	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		28,276			175,868			75,713
Transfers between variable and fixed accounts, net		324,932			425,491			226,319
Transfers—policy charges and deductions		(9,363	)		(21,261	)		(12,703	)
Transfers—surrenders		—			—			—
Transfers—other		(193	)		(2,342	)		(1,436	)
Net Increase in Net Assets Derived from Policy Transactions		343,652			577,756			287,893
NET INCREASE IN NET ASSETS		345,351			561,770			282,885
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$345,351			$561,770			$282,885

(1)	Operations commenced during 2007 for all Variable Accounts (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-22

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS

     A summary of accumulation unit values (“AUV”), total units outstanding, total net assets, ratios of investment income to average daily net assets, and total returns for each year or period ended December 31 are presented in the table below. The ratio of expenses to average daily net assets is 0.00% for all Variable Accounts.

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Small-Cap Growth (3)
2007		$15.63		3,236,389		$50,586,573		0.00	%		15.10	%
2006		13.58		2,986,761		40,560,290		0.26	%		5.07	%
2005		12.93		3,275,109		42,331,400		0.22	%		2.66	%
2004		12.59		2,951,152		37,156,824		0.66	%		18.94	%
2003		10.59		3,398,472		35,974,022		0.53	%		33.14	%
International Value
2007		$34.78		8,793,719		$305,888,339		2.01	%		6.24	%
2006		32.74		8,634,107		282,689,209		1.65	%		25.69	%
2005		26.05		8,552,145		222,779,702		1.97	%		9.43	%
2004		23.80		8,918,003		212,291,147		1.64	%		16.42	%
2003		20.45		8,873,873		181,445,589		1.78	%		27.71	%
International Small-Cap
2007		$10.80		2,202,534		$23,781,576		1.34	%		4.73	%
05/01/2006 - 12/31/2006		10.31		1,248,871		12,875,311		0.23	%		3.10	%
Equity Index
2007		$56.89		9,701,628		$551,923,775		1.84	%		5.23	%
2006		54.06		10,173,850		550,028,122		1.77	%		15.52	%
2005		46.80		10,743,851		502,817,844		1.46	%		4.67	%
2004		44.71		11,113,375		496,919,308		1.78	%		10.58	%
2003		40.43		11,037,075		446,272,511		1.59	%		28.29	%
Small-Cap Index
2007		$18.87		14,234,769		$268,559,624		1.25	%		(2.02	%)
2006		19.25		15,783,089		303,894,564		1.52	%		17.79	%
2005		16.35		17,236,081		281,759,120		0.49	%		4.38	%
2004		15.66		19,260,276		301,640,966		0.84	%		17.76	%
2003		13.30		5,554,119		73,865,812		0.71	%		46.53	%
Diversified Research
2007		$14.76		4,824,065		$71,202,866		0.71	%		1.19	%
2006		14.59		5,271,188		76,886,161		0.67	%		11.97	%
2005		13.03		5,109,087		66,554,596		0.47	%		5.24	%
2004		12.38		4,639,224		57,425,802		0.63	%		11.20	%
2003		11.13		3,940,814		43,865,757		0.48	%		32.63	%
Equity
2007		$14.33		3,445,626		$49,367,148		0.22	%		6.27	%
2006		13.48		3,338,286		45,007,199		0.37	%		8.65	%
2005		12.41		4,011,507		49,777,144		0.26	%		6.53	%
2004		11.65		4,204,821		48,978,168		0.79	%		5.14	%
2003		11.08		4,520,255		50,076,742		0.38	%		24.33	%
American Funds Growth-Income
2007		$13.20		5,233,800		$69,080,372		1.31	%		4.66	%
2006		12.61		4,458,099		56,224,609		1.62	%		14.77	%
05/03/2005 - 12/31/2005		10.99		1,681,919		18,481,536		1.92	%		9.88	%
American Funds Growth
2007		$14.74		4,288,451		$63,232,628		0.42	%		11.93	%
2006		13.17		4,463,397		58,796,109		0.69	%		9.81	%
05/03/2005 - 12/31/2005		12.00		2,211,749		26,532,950		0.78	%		19.96	%
Large-Cap Value
2007		$17.36		9,143,314		$158,714,149		1.18	%		3.54	%
2006		16.77		9,331,394		156,441,283		1.25	%		17.58	%
2005		14.26		9,608,665		137,007,537		1.29	%		6.16	%
2004		13.43		10,752,848		144,430,409		1.39	%		9.93	%
2003		12.22		8,834,486		107,946,997		1.31	%		31.24	%
Technology
2007		$8.07		2,811,966		$22,697,317		0.05	%		23.03	%
2006		6.56		2,674,031		17,543,154		0.00	%		9.34	%
2005		6.00		2,027,444		12,164,728		0.00	%		21.71	%
2004		4.93		1,963,166		9,677,876		0.00	%		3.67	%
2003		4.76		1,902,193		9,045,704		0.00	%		42.58	%
Short Duration Bond
2007		$11.31		4,049,884		$45,784,334		4.52	%		4.47	%
2006		10.82		4,144,613		44,852,141		4.11	%		4.27	%
2005		10.38		3,819,364		39,640,832		3.05	%		1.57	%
2004		10.22		3,222,976		32,932,836		2.57	%		1.21	%
05/01/2003 - 12/31/2003		10.10		1,732,267		17,489,215		2.67	%		0.96	%
Floating Rate Loan (4)
05/04/2007 - 12/31/2007		$9.81		962,991		$9,449,518		7.28	%		(1.89	%)
Diversified Bond
2007		$10.66		2,668,272		$28,436,894		5.09	%		1.32	%
05/01/2006 - 12/31/2006		10.52		997,088		10,488,157		4.65	%		5.19	%

See Notes to Financial Statements See explanation of references on SA-27

SA-23

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Growth LT
2007		$50.27		6,242,947		$313,824,437		0.44	%		15.63	%
2006		43.47		6,931,734		301,351,116		0.60	%		9.72	%
2005		39.62		7,403,306		293,349,777		0.25	%		7.68	%
2004		36.80		8,117,880		298,732,310		0.00	%		10.40	%
2003		33.33		8,820,098		293,996,618		0.00	%		33.98	%
Focused 30
2007		$16.43		3,080,715		$50,627,718		0.43	%		31.84	%
2006		12.46		2,287,373		28,511,623		0.07	%		23.71	%
2005		10.08		1,809,953		18,236,050		1.06	%		22.07	%
2004		8.25		1,076,135		8,882,205		0.06	%		14.85	%
2003		7.19		734,167		5,276,326		0.00	%		42.26	%
Health Sciences
2007		$15.28		1,525,560		$23,304,460		0.00	%		16.47	%
2006		13.12		1,451,105		19,032,105		0.00	%		8.11	%
2005		12.13		1,323,214		16,052,785		0.00	%		15.28	%
2004		10.52		1,164,155		12,250,871		0.00	%		7.54	%
2003		9.79		1,003,438		9,819,112		0.00	%		27.82	%
Mid-Cap Value
2007		$24.76		8,230,390		$203,798,206		0.74	%		(2.15	%)
2006		25.31		8,035,634		203,350,799		0.69	%		14.97	%
2005		22.01		7,960,146		175,210,180		0.54	%		8.87	%
2004		20.22		7,867,057		159,059,494		0.42	%		25.08	%
2003		16.16		6,439,885		104,100,588		0.59	%		29.10	%
Large-Cap Growth (5)
2007		$9.07		6,937,338		$62,931,690		0.00	%		21.63	%
2006		7.46		8,055,216		60,078,214		0.21	%		(3.82	%)
2005		7.75		7,040,498		54,593,520		0.34	%		2.94	%
2004		7.53		8,859,994		66,740,228		0.73	%		4.65	%
2003		7.20		6,371,597		45,861,577		0.27	%		25.36	%
International Large-Cap
2007		$12.79		15,067,071		$192,663,328		1.58	%		9.26	%
2006		11.70		15,768,095		184,533,716		2.89	%		27.00	%
2005		9.21		14,566,843		134,228,198		0.87	%		12.70	%
2004		8.18		10,780,247		88,145,064		1.08	%		18.61	%
2003		6.89		9,224,647		63,593,649		1.31	%		30.52	%
Small-Cap Value
2007		$22.16		2,748,103		$60,911,384		1.85	%		3.14	%
2006		21.49		2,994,334		64,351,383		2.51	%		19.75	%
2005		17.95		2,557,703		45,901,085		1.37	%		13.65	%
2004		15.79		2,058,033		32,498,597		2.28	%		24.41	%
05/01/2003 -12/31/2003		12.69		970,884		12,323,204		1.76	%		26.93	%
Multi-Strategy
2007		$52.14		1,891,715		$98,643,009		2.81	%		4.34	%
2006		49.97		2,113,184		105,604,294		2.53	%		11.68	%
2005		44.75		2,421,143		108,336,551		2.24	%		3.78	%
2004		43.12		2,441,059		105,252,817		1.76	%		9.81	%
2003		39.26		2,453,312		96,327,173		1.47	%		23.28	%
Main Street Core
2007		$55.27		3,102,111		$171,459,406		1.20	%		4.40	%
2006		52.94		2,987,945		158,190,552		1.24	%		15.18	%
2005		45.97		3,318,283		152,528,923		1.11	%		5.99	%
2004		43.37		3,405,144		147,678,818		1.32	%		9.54	%
2003		39.59		3,593,636		142,279,128		1.03	%		26.96	%
Emerging Markets
2007		$32.81		5,417,715		$177,769,491		1.16	%		33.09	%
2006		24.65		5,128,600		126,439,320		0.78	%		24.40	%
2005		19.82		4,934,335		97,790,451		1.09	%		41.47	%
2004		14.01		4,032,143		56,485,350		1.90	%		34.62	%
2003		10.41		3,597,135		37,434,125		1.20	%		68.42	%
Managed Bond
2007		$42.31		9,776,620		$413,635,229		4.47	%		8.53	%
2006		38.98		9,025,168		351,828,277		4.05	%		4.81	%
2005		37.19		8,493,958		315,929,669		3.40	%		2.63	%
2004		36.24		6,211,565		225,105,497		2.96	%		5.38	%
2003		34.39		6,314,379		217,152,849		4.29	%		6.24	%
Inflation Managed
2007		$41.93		4,204,544		$176,308,909		4.27	%		10.14	%
2006		38.07		4,088,136		155,646,544		3.97	%		0.52	%
2005		37.88		4,076,452		154,399,403		3.00	%		2.54	%
2004		36.94		3,319,185		122,599,913		0.83	%		8.90	%
2003		33.92		3,041,925		103,178,081		0.08	%		8.24	%

See Notes to Financial Statements See explanation of references on SA-27

SA-24

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Money Market
2007		$22.84		10,196,175		$232,852,629		4.85	%		4.99	%
2006		21.75		8,657,137		188,307,581		4.64	%		4.69	%
2005		20.78		9,011,395		187,232,550		2.74	%		2.82	%
2004		20.21		13,542,076		273,645,486		1.01	%		1.01	%
2003		20.01		13,892,825		277,926,765		0.80	%		0.79	%
High Yield Bond
2007		$39.92		1,924,183		$76,816,614		7.58	%		2.44	%
2006		38.97		1,921,427		74,879,252		7.33	%		9.42	%
2005		35.61		2,046,323		72,878,683		7.05	%		2.37	%
2004		34.79		2,241,878		77,993,215		7.12	%		9.42	%
2003		31.79		2,290,346		72,817,214		7.37	%		20.29	%
Comstock (6)
2007		$12.44		6,703,119		$83,377,663		1.54	%		(3.01	%)
2006		12.83		4,730,546		60,669,698		1.76	%		16.33	%
2005		11.02		3,673,500		40,498,213		1.39	%		4.36	%
2004		10.56		4,333,807		45,781,297		1.88	%		17.17	%
2003		9.02		1,746,197		15,743,378		1.03	%		31.38	%
Mid-Cap Growth
2007		$10.50		6,666,596		$70,025,236		0.48	%		22.92	%
2006		8.55		6,053,274		51,728,324		0.23	%		8.93	%
2005		7.84		4,677,898		36,697,161		0.00	%		17.90	%
2004		6.65		3,056,878		20,339,747		0.00	%		21.59	%
2003		5.47		2,524,178		13,813,264		0.00	%		30.39	%
Real Estate
2007		$36.71		2,496,462		$91,656,848		1.02	%		(16.16	%)
2006		43.79		2,826,403		123,770,629		3.08	%		38.06	%
2005		31.72		2,853,932		90,522,273		0.89	%		16.79	%
2004		27.16		2,931,932		79,628,507		2.82	%		37.62	%
2003		19.74		2,443,728		48,227,396		3.26	%		37.52	%
Small-Cap Equity (7)
2007		$14.53		785,370		$11,413,846		0.24	%		6.04	%
2006		13.71		415,525		5,695,033		0.89	%		18.68	%
05/03/2005 - 12/31/2005		11.55		208,894		2,412,411		0.86	%		15.48	%
I
2007		$37.70		3,147,799		$118,662,254		2.05	%		8.01	%
2006		34.90		3,112,831		108,644,524		1.50	%		26.78	%
2005		27.53		2,849,925		78,457,074		1.57	%		10.55	%
2004		24.90		2,231,535		55,570,535		1.28	%		24.00	%
2003		20.08		1,975,752		39,679,031		1.27	%		47.43	%
II
2007		$27.81		1,388,785		$38,626,287		0.37	%		22.43	%
2006		22.72		1,586,739		36,046,654		0.63	%		8.52	%
2005		20.93		1,419,434		29,714,468		0.45	%		13.92	%
2004		18.38		1,456,339		26,762,771		0.30	%		11.19	%
2003		16.53		1,190,189		19,670,670		0.28	%		34.58	%
III
2007		$38.10		1,330,308		$50,686,469		0.00	%		11.92	%
2006		34.04		1,340,167		45,625,020		0.00	%		16.35	%
2005		29.26		1,366,693		39,991,343		0.00	%		15.13	%
2004		25.42		1,907,181		48,474,124		0.00	%		9.33	%
2003		23.25		1,680,154		39,059,365		0.00	%		55.89	%
V
2007		$16.94		1,446,522		$24,509,629		0.62	%		5.44	%
2006		16.07		1,549,298		24,896,714		0.55	%		13.89	%
2005		14.11		1,282,886		18,101,507		0.76	%		7.81	%
2004		13.09		696,561		9,116,719		0.81	%		22.60	%
2003		10.68		438,776		4,684,258		0.91	%		29.65	%
BlackRock Basic Value V.I. Class III (8)
2007		$12.63		397,583		$5,021,114		1.64	%		1.53	%
2006		12.44		234,578		2,917,816		4.02	%		21.59	%
02/15/2005 - 12/31/2005		10.23		14,023		143,454		2.48	%		2.30	%
BlackRock Global Allocation V.I. Class III (9)
2007		$14.85		793,421		$11,783,611		4.57	%		16.75	%
2006		12.72		349,576		4,446,773		3.86	%		16.40	%
02/15/2005 - 12/31/2005		10.93		265,340		2,899,576		7.00	%		9.28	%
Fidelity VIP Contrafund ® Service Class 2
2007		$15.02		3,792,886		$56,986,250		0.91	%		17.30	%
2006		12.81		2,446,046		31,329,827		1.02	%		11.43	%
02/15/2005 - 12/31/2005		11.49		1,902,907		21,872,725		0.00	%		14.94	%
Fidelity VIP Freedom Income Service Class 2 (4)
10/29/2007 - 12/31/2007		$10.03		1,143		$11,458	See Note (10)				(0.35	%)

See Notes to Financial Statements See explanation of references on SA-27

SA-25

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
	At the End of Each Year or Period						Investment
					Total		Income to
Variable Accounts			Total Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Fidelity VIP Freedom 2010 Service Class 2 (4)
12/13/2007 - 12/31/2007		$9.91		8,484		$84,073	See Note (10)				(0.11	%)
Fidelity VIP Freedom 2015 Service Class 2 (4)
10/26/2007 - 12/31/2007		$9.88		34,170		$337,562	See Note (10)				(2.12	%)
Fidelity VIP Freedom 2020 Service Class 2 (4)
12/03/2007 - 12/31/2007		$9.83		9,549		$93,827	See Note (10)				(0.02	%)
Fidelity VIP Freedom 2025 Service Class 2 (4)
11/09/2007 - 12/31/2007		$9.81		246,074		$2,413,927	See Note (10)				0.26	%
Fidelity VIP Freedom 2030 Service Class 2 (4)
10/08/2007 - 12/31/2007		$9.76		13,972		$136,332	See Note (10)				(2.98	%)
Fidelity VIP Growth Service Class 2
2007		$14.38		247,233		$3,556,222		0.19	%		26.66	%
2006		11.36		57,966		658,290		0.13	%		6.57	%
02/15/2005 - 12/31/2005		10.66		25,172		268,238		0.00	%		6.56	%
Fidelity VIP Mid Cap Service Class 2
2007		$15.04		2,090,850		$31,441,094		0.48	%		15.34	%
2006		13.04		1,357,809		17,702,724		0.18	%		12.40	%
02/15/2005 - 12/31/2005		11.60		1,326,555		15,386,821		0.00	%		15.99	%
Fidelity VIP Value Strategies Service Class 2
2007		$12.89		333,286		$4,297,443		0.46	%		5.44	%
2006		12.23		795,861		9,732,388		0.09	%		16.01	%
02/15/2005 - 12/31/2005		10.54		31,720		334,372		0.00	%		5.41	%
International Growth Service Class (4)
05/03/2007 - 12/31/2007		$11.97		866,820		$10,373,349		0.69	%		16.76	%
Risk-Managed Core Service Class (4)
06/21/2007 - 12/31/2007		$10.05		15,705		$157,855		2.17	%		0.66	%
Mid Cap Growth Service Class (4)
05/16/2007 - 12/31/2007		$11.08		82,577		$914,666		0.12	%		8.83	%
US Strategic Equity (4)
05/21/2007 - 12/31/2007		$9.44		3,462		$32,685		4.44	%		(8.17	%)
Legg Mason Partners Variable Aggressive Growth Class — II (4)
05/03/2007 - 12/31/2007		$9.72		8,141		$79,104		0.00	%		(4.02	%)
Legg Mason Partners Variable Mid Cap Core Class — II (4)
05/21/2007 - 12/31/2007		$9.78		12,558		$122,772		0.12	%		(5.49	%)
MFS New Discovery Series Service Class (4)
05/14/2007 - 12/31/2007		$9.53		22,449		$213,868		0.00	%		(4.79	%)
MFS Utilities Series Service Class (4)
05/11/2007 - 12/31/2007		$11.14		1,287,407		$14,336,747		0.00	%		9.08	%
OpCap Small Cap (4)
05/24/2007 - 12/31/2007		$9.54		14,693		$140,107		0.00	%		(6.71	%)
T. Rowe Price Blue Chip Growth — II
2007		$13.20		413,880		$5,461,697		0.07	%		12.49	%
2006		11.73		199,541		2,340,853		0.32	%		9.33	%
02/15/2005 - 12/31/2005		10.73		60,700		651,326		0.28	%		7.30	%
T. Rowe Price Equity Income — II
2007		$12.61		2,275,375		$28,700,715		1.49	%		3.03	%
2006		12.24		2,347,503		28,739,750		1.54	%		18.65	%
02/15/2005 - 12/31/2005		10.32		767,607		7,920,645		1.94	%		3.19	%
Van Eck Worldwide Hard Assets
2007		$25.96		2,428,039		$63,021,211		0.10	%		45.36	%
2006		17.86		2,181,931		38,961,582		0.03	%		24.49	%
02/15/2005 - 12/31/2005		14.34		850,416		12,197,923		0.00	%		43.43	%
ETF 2010 (4)
06/26/2007 - 12/31/2007		$9.91		7,562		$74,938		0.00	%		(0.30	%)
ETF 2015 (4)
06/11/2007 - 12/31/2007		$9.97		8,589		$85,629		0.00	%		(1.77	%)
ETF 2020 (4)
05/17/2007 - 12/31/2007		$9.89		35,447		$350,566		0.00	%		(2.37	%)
ETF 2025 (4)
05/29/2007 - 12/31/2007		$9.98		34,604		$345,351		0.00	%		(2.63	%)
ETF 2030 (4)
05/04/2007 - 12/31/2007		$9.84		57,090		$561,770		0.00	%		(3.72	%)
ETF 2040+ (4)
05/17/2007 - 12/31/2007		$9.74		29,044		$282,885		0.00	%		(3.94	%)

See Notes to Financial Statements See explanation of references on SA-27

SA-26

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

Explanation of References for Financial Highlights on SA-23 through SA-26

(1)	The investment income ratios represent the dividends, excluding distributions of capital gains, received by the variable accounts from the underlying portfolios/funds, divided by the average daily net assets. These ratios are before the deduction of mortality and expense risk (“M&E”) fees that are assessed against policyholder accounts. The recognition of investment income by the variable accounts is affected by the timing of the declaration of dividends by the underlying portfolios/funds in which the variable accounts invest. The ratios for periods of less than one full year are annualized.
(2)	Total returns reflect changes in unit value of the underlying portfolios/funds and do not include deductions at the separate account or policy level for any M&E fees, cost of insurance charges, premium loads, administrative charges, maintenance fees, premium tax charges, surrender charges or other charges that may be incurred under a policy which, if incurred, would have resulted in lower returns. Total returns for periods of less than one full year are not annualized.
(3)	Prior to 05/01/07, Small-Cap Growth Variable Account was named Fasciano Small Equity Variable Account. Prior to 05/01/2005, the variable account was named Aggressive Equity Variable Account.
(4)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(5)	Prior to 01/01/2006, Large-Cap Growth Variable Account was named Blue Chip Variable Account.
(6)	Prior to 05/01/2003, Comstock Variable Account was named Strategic Value Variable Account.
(7)	Prior to 05/01/2007, Small-Cap Equity Variable Account was named VN Small-Cap Value Variable Account.
(8)	Prior to 10/01/2006, BlackRock Basic Value V.I. Class III Variable Account was named Mercury Basic Value V.I. Class III Variable Account. Prior to 05/01/2005, the variable account was named Merrill Lynch Basic Value V.I. Class III Variable Account.
(9)	Prior to 10/01/2006, BlackRock Global Allocation V.I. Class III Variable Account was named Mercury Global Allocation V.I. Class III Variable Account. Prior to 05/01/2005, the variable account was named Merrill Lynch Global Allocation V.I. Class III Variable Account.
(10)	The annualized investment income ratios for the periods from inception to December 31, 2007 were 20.70%, 43.03%, 17.79%, 24.07%, 13.39%, and 13.07% for the Fidelity VIP Freedom Income Service Class 2, Fidelity VIP Freedom 2010 Service Class 2, Fidelity VIP Freedom 2015 Service Class 2, Fidelity VIP Freedom 2020 Service Class 2, Fidelity VIP Freedom 2025 Service Class 2, and Fidelity VIP Freedom 2030 Service Class 2 Variable Accounts, respectively. If not annualized, the investment income ratios were 3.63%, 2.24%, 3.27%, 1.91%, 1.94% and 3.04%, respectively.

See Notes to Financial Statements

SA-27

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

     The Pacific Select Exec Separate Account (the “Separate Account”) is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and as of December 31, 2007 is comprised of sixty-six subaccounts called Variable Accounts. The assets in each of the Variable Accounts invest in the corresponding portfolios or funds (each, a “Portfolio” and collectively, the “Portfolios”) of Pacific Select Fund, M Fund, Inc., BlackRock Variable Series Funds, Inc., Fidelity^® Variable Insurance Products Funds, Janus Aspen Series, Lazard Retirement Series, Inc., Legg Mason Partners Variable Equity Trust, MFS^® Variable Insurance Trust, Premier VIT, T. Rowe Price Equity Series, Inc., Van Eck Worldwide Insurance Trust, and XTF Advisors Trust (collectively, the “Funds”) as presented in the Schedule of Investments in Section I of this brochure.

     Each Portfolio pursues different investment objectives and policies. The financial statements of the Funds, including the schedules of investments, are either included in Sections A through H of this brochure or provided separately and should be read in conjunction with the Separate Account’s financial statements.

     The Separate Account organized and registered with the Securities and Exchange Commission (“SEC”) twenty-two new Variable Accounts listed in the following table:

	Commenced
Variable Accounts	Operations on
Floating Rate Loan	May 4, 2007
Fidelity VIP Freedom Income Service Class 2	October 29, 2007
Fidelity VIP Freedom 2010 Service Class 2	December 13, 2007
Fidelity VIP Freedom 2015 Service Class 2	October 26, 2007
Fidelity VIP Freedom 2020 Service Class 2	December 3, 2007
Fidelity VIP Freedom 2025 Service Class 2	November 9, 2007
Fidelity VIP Freedom 2030 Service Class 2	October 8, 2007
International Growth Service Class	May 3, 2007
Risk-Managed Core Service Class	June 21, 2007
Mid Cap Growth Service Class	May 16, 2007
US Strategic Equity	May 21, 2007
Legg Mason Partners Variable Aggressive Growth — Class II	May 3, 2007
Legg Mason Partners Variable Mid Cap Core — Class II	May 21, 2007
MFS New Discovery Series Service Class	May 14, 2007
MFS Utilities Series Service Class	May 11, 2007
OpCap Small Cap	May 24, 2007
ETF 2010	June 26, 2007
ETF 2015	June 11, 2007
ETF 2020	May 17, 2007
ETF 2025	May 29, 2007
ETF 2030	May 4, 2007
ETF 2040+	May 17, 2007

     The net assets of the Pacific Select Fund’s Concentrated Growth and Capital Opportunities Portfolios, the underlying portfolios for the Concentrated Growth and Capital Opportunities Variable Accounts, respectively, were transferred to the Pacific Select Fund’s Equity and Main Street Core Portfolios (the “2007 Surviving Portfolios”), the underlying portfolios for the Equity and Main Street Core Variable Accounts, respectively, in exchange for shares of the 2007 Surviving Portfolios (the “2007 Reorganization”). The 2007 Reorganization took place on April 30, 2007. In connection with the 2007 Reorganization, a total of 1,528,682 outstanding accumulation units (valued at $8,185,234) of the Concentrated Growth Variable Account were exchanged for 575,774 accumulation units with equal value of the Equity Variable Account; and a total of 1,209,146 outstanding accumulation units (valued at $12,366,072) of the Capital Opportunities Variable Account were exchanged for 222,822 accumulation units with equal value of the Main Street Core Variable Account.

     The net assets of the Pacific Select Fund’s Aggressive Growth and Financial Services Portfolios, the underlying portfolios for the Aggressive Growth and Financial Services Variable Accounts, respectively, were transferred to the Pacific Select Fund’s Mid-Cap Growth and Large-Cap Value Portfolios (the “2006 Surviving Portfolios”), the underlying portfolios for the Mid-Cap Growth and Large-Cap Value Variable Accounts, respectively, in exchange for shares of the 2006 Surviving Portfolios (the “2006 Reorganization”). The 2006 Reorganization took place on April 28, 2006. In connection with the 2006 Reorganization, a total of 1,006,002 outstanding accumulation units (valued at $10,233,550) of the Aggressive Growth Variable Account were exchanged for 1,187,650 accumulation units with equal value of the Mid-Cap Growth Variable Account; and a total of 732,657 outstanding accumulation units (valued at $8,957,429) of the Financial Services Variable Account were exchanged for 586,882 accumulation units with equal value of the Large-Cap Value Variable Account.

     The net assets of the Pacific Select Fund’s Equity Income Portfolio, the underlying Portfolio for Equity Income Variable Account, was substituted by Pacific Select Fund’s American Funds Growth-Income Portfolio, the underlying Portfolio of American Funds Growth-Income Variable Account (the “2006 Substitution”). The 2006 Substitution took place on April 28, 2006. In connection with the 2006 Substitution, a total of 1,488,874 outstanding accumulation units (valued at $20,419,717) of the Equity Income Variable Account were substituted by 1,763,883 accumulation units with equal value of the American Funds Growth-Income Variable Account.

     The Separate Account was established by Pacific Life Insurance Company (“Pacific Life”) on May 12, 1988 and commenced operations on November 22, 1988. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of Pacific Life. The assets of the Separate Account will not be charged with any liabilities arising out of any other business conducted by Pacific Life, but the obligations of the Separate Account, including benefits related to variable life insurance, are obligations of Pacific Life.

     The Separate Account funds individual flexible premium variable life insurance policies issued by Pacific Life. The assets of the Separate Account are carried at market value.

2. SIGNIFICANT ACCOUNTING POLICIES

     The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for investment companies which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.

     A. Valuation of Investments

     Investments in shares of the Funds are valued at the reported net asset values of the respective Portfolios. Valuation of securities held by the Funds are discussed in the notes to their financial statements.

SA-28

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

     B. Security Transactions and Investment Income

     Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date and the amounts distributed to the Separate Account for its share of dividends are reinvested in additional full and fractional shares of the related Portfolios.

     C. Federal Income Taxes

     The operations of the Separate Account will be reported on the Federal income tax return of Pacific Life, which is taxed as a life insurance company under the provisions of the Tax Reform Act of 1986. Under current tax law, no Federal income taxes are expected to be paid by Pacific Life with respect to the operations of the Separate Account. Pacific Life will periodically review the status of this policy in the event of changes in the tax law. A charge may be made in future years for any Federal income taxes that would be attributable to the policies.

3. CHARGES AND EXPENSES

     With respect to variable life insurance policies funded by the Separate Account, Pacific Life makes certain deductions from premiums to help pay for costs of distributing the policies and to pay state and local premiums taxes, any other taxes that may be imposed, and to compensate Pacific Life for certain costs or lost investment opportunities resulting from our amortization and delayed recognition of certain policy expenses for Federal income tax purposes. Pacific Life also makes certain deductions from the net assets of each Variable Account for charges for the mortality and expense risks and administrative expenses Pacific Life assumes, cost of insurance, charges for optional benefits and any withdrawal and surrender charges. The operating expenses of the Separate Account are paid by Pacific Life.

4. RELATED PARTY AGREEMENT

     Pacific Select Distributors, Inc., a wholly-owned subsidiary of Pacific Life, services as principal underwriter of variable life insurance policies funded by interests in the Separate Account, without remuneration from the Separate Account.

5. PURCHASES AND SALES OF INVESTMENTS

     The cost of purchases (excluding dividend reinvestments) and proceeds from sales of investments for the year or periods ended December 31, 2007, were as follows:

Variable Accounts	Purchases		Sales
Small-Cap Growth (1)		$7,758,301		$3,944,970
International Value		36,672,000		30,717,163
International Small-Cap		12,658,963		1,783,956
Equity Index		29,890,083		57,513,109
Small-Cap Index		31,289,518		61,026,424
Diversified Research		8,050,309		14,772,585
Equity		12,535,272		11,005,263
American Funds Growth-Income		36,783,794		25,803,521
American Funds Growth		36,145,721		38,916,052
Large-Cap Value		12,045,542		15,113,417
Technology		8,597,388		7,120,327
Short Duration Bond		14,120,394		15,121,006
Floating Rate Loan (2)		14,133,067		4,589,014
Diversified Bond		18,962,255		1,117,374
Growth LT		12,252,156		44,510,634
Focused 30		18,045,454		6,366,885
Health Sciences		4,711,242		3,637,138
Mid-Cap Value		24,269,047		18,934,848
Large-Cap Growth		9,123,878		18,261,838
International Large-Cap		23,798,804		33,232,818
Small-Cap Value		9,493,925		14,928,776
Multi-Strategy		3,549,772		15,085,565
Main Street Core		18,899,893		12,686,567
Emerging Markets		27,653,611		18,082,105
Managed Bond		53,756,845		24,019,731
Inflation Managed		24,550,859		20,100,860
Money Market		333,567,937		299,206,600
High Yield Bond		26,591,939		26,290,912
Comstock		30,280,499		3,735,103
Mid-Cap Growth		19,777,414		12,865,841
Real Estate		11,141,038		25,041,464
Small-Cap Equity (1)		6,894,770		1,514,555
I		25,941,519		24,208,506
II		4,416,704		9,128,344
III		24,841,950		25,388,684
V		3,665,432		5,353,747
BlackRock Basic Value V.I. Class III		4,340,019		2,203,725
BlackRock Global Allocation V.I. Class III		7,197,035		1,012,062
Fidelity VIP Contrafund® Service Class 2		22,736,566		4,041,190
Fidelity VIP Freedom Income Service Class 2 (2)		11,611		111
Fidelity VIP Freedom 2010 Service Class 2 (2)		84,166		—
Fidelity VIP Freedom 2015 Service Class 2 (2)		372,827		36,378
Fidelity VIP Freedom 2020 Service Class 2 (2)		94,251		372
Fidelity VIP Freedom 2025 Service Class 2 (2)		2,419,623		11,735
Fidelity VIP Freedom 2030 Service Class 2 (2)		139,337		341
Fidelity VIP Growth Service Class 2		2,949,538		433,780
Fidelity VIP Mid Cap Service Class 2		13,320,852		2,960,474
Fidelity VIP Value Strategies Service Class 2		10,423,469		16,467,488
International Growth Service Class (2)		10,828,941		1,065,698
Risk-Managed Core Service Class (2)		162,493		4,350
Mid Cap Growth Service Class (2)		921,676		49,020
US Strategic Equity (2)		47,235		14,452
Legg Mason Partners Variable Aggressive Growth Class — II (2)		1,298,710		1,183,696
Legg Mason Partners Variable Mid Cap Core Class — II (2)		151,114		24,022
MFS New Discovery Series Service Class (2)		251,542		34,065
MFS Utilities Series Service Class (2)		14,189,704		199,135
OpCap Small Cap (2)		161,113		17,029
T. Rowe Price Blue Chip Growth — II		27,150,773		24,310,192
T. Rowe Price Equity Income — II		17,541,774		18,404,889
Van Eck Worldwide Hard Assets		20,009,688		15,955,372
ETF 2010 (2)		77,436		2,088
ETF 2015 (2)		89,403		1,320
ETF 2020 (2)		437,656		80,896
ETF 2025 (2)		408,600		64,948
ETF 2030 (2)		740,597		162,842
ETF 2040+ (2)		325,334		37,441

(1)	Prior to May 1, 2007, the Small-Cap Growth and Small-Cap Equity Variable Accounts were named Fasciano Small Equity and VN Small-Cap Value Variable Accounts, respectively.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).

SA-29

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

6. CHANGES IN UNITS OUTSTANDING

     The changes in units outstanding for the years or periods ended December 31, 2007 and 2006, were as follows:

	2007								2006
	Units		Units			Net Increase			Units		Units			Net Increase
Variable Accounts	Issued		Redeemed			(Decrease)			Issued		Redeemed			(Decrease)
Small-Cap Growth (1)		1,328,245		(1,078,617	)		249,628			1,183,129		(1,471,477	)		(288,348	)
International Value		3,613,315		(3,453,703	)		159,612			3,266,578		(3,184,616	)		81,962
International Small-Cap (2)		1,994,399		(1,040,736	)		953,663			1,478,898		(230,027	)		1,248,871
Equity Index		2,346,136		(2,818,358	)		(472,222	)		3,521,144		(4,091,145	)		(570,001	)
Small-Cap Index		5,200,162		(6,748,482	)		(1,548,320	)		6,744,476		(8,197,468	)		(1,452,992	)
Diversified Research		1,834,616		(2,281,739	)		(447,123	)		2,796,641		(2,634,540	)		162,101
Equity		1,562,333		(1,454,993	)		107,340			1,233,520		(1,906,741	)		(673,221	)
American Funds Growth-Income		3,864,346		(3,088,645	)		775,701			4,021,867		(1,245,687	)		2,776,180
American Funds Growth		6,462,193		(6,637,139	)		(174,946	)		3,478,056		(1,226,408	)		2,251,648
Large-Cap Value		3,802,400		(3,990,480	)		(188,080	)		4,789,891		(5,067,162	)		(277,271	)
Technology		2,725,068		(2,587,133	)		137,935			3,018,801		(2,372,214	)		646,587
Short Duration Bond		2,099,182		(2,193,911	)		(94,729	)		2,080,756		(1,755,507	)		325,249
Floating Rate Loan (3)		1,492,611		(529,620	)		962,991
Diversified Bond (2)		2,197,179		(525,995	)		1,671,184			1,251,450		(254,362	)		997,088
Growth LT		1,528,998		(2,217,785	)		(688,787	)		2,369,682		(2,841,254	)		(471,572	)
Focused 30		3,200,064		(2,406,722	)		793,342			5,009,603		(4,532,183	)		477,420
Health Sciences		1,180,515		(1,106,060	)		74,455			1,291,653		(1,163,762	)		127,891
Mid-Cap Value		4,701,984		(4,507,228	)		194,756			6,585,071		(6,509,583	)		75,488
Large-Cap Growth		2,666,940		(3,784,818	)		(1,117,878	)		3,214,242		(2,199,524	)		1,014,718
International Large-Cap		7,575,096		(8,276,120	)		(701,024	)		8,521,982		(7,320,730	)		1,201,252
Small-Cap Value		2,789,105		(3,035,336	)		(246,231	)		2,570,119		(2,133,488	)		436,631
Multi-Strategy		419,934		(641,403	)		(221,469	)		729,984		(1,037,943	)		(307,959	)
Main Street Core		857,901		(743,735	)		114,166			715,908		(1,046,246	)		(330,338	)
Emerging Markets		3,297,383		(3,008,268	)		289,115			4,037,081		(3,842,816	)		194,265
Managed Bond		5,791,955		(5,040,503	)		751,452			6,518,394		(5,987,184	)		531,210
Inflation Managed		1,832,522		(1,716,114	)		116,408			1,917,796		(1,906,112	)		11,684
Money Market		41,973,985		(40,434,947	)		1,539,038			37,259,145		(37,613,403	)		(354,258	)
High Yield Bond		1,358,115		(1,355,359	)		2,756			1,452,013		(1,576,909	)		(124,896	)
Comstock		4,191,474		(2,218,901	)		1,972,573			3,843,463		(2,786,417	)		1,057,046
Mid-Cap Growth		6,065,688		(5,452,366	)		613,322			7,247,004		(5,871,628	)		1,375,376
Real Estate		1,732,006		(2,061,947	)		(329,941	)		2,051,186		(2,078,715	)		(27,529	)
Small-Cap Equity (1)		685,388		(315,543	)		369,845			391,202		(184,571	)		206,631
I		1,471,592		(1,436,624	)		34,968			1,767,747		(1,504,841	)		262,906
II		418,243		(616,197	)		(197,954	)		932,031		(764,726	)		167,305
III		862,656		(872,515	)		(9,859	)		837,305		(863,831	)		(26,526	)
V		396,302		(499,078	)		(102,776	)		975,412		(709,000	)		266,412
BlackRock Basic Value V.I. Class III (4)		534,033		(371,028	)		163,005			385,151		(164,596	)		220,555
BlackRock Global Allocation V.I. Class III (4)		600,505		(156,660	)		443,845			303,941		(219,705	)		84,236
Fidelity VIP Contrafund® Service Class 2		3,054,776		(1,707,936	)		1,346,840			2,709,157		(2,166,018	)		543,139
Fidelity VIP Freedom Income Service Class 2 (3)		1,154		(11	)		1,143
Fidelity VIP Freedom 2010 Service Class 2 (3)		8,484		—			8,484
Fidelity VIP Freedom 2015 Service Class 2 (3)		36,931		(2,761	)		34,170
Fidelity VIP Freedom 2020 Service Class 2 (3)		9,587		(38	)		9,549
Fidelity VIP Freedom 2025 Service Class 2 (3)		247,965		(1,891	)		246,074
Fidelity VIP Freedom 2030 Service Class 2 (3)		14,103		(131	)		13,972
Fidelity VIP Growth Service Class 2		235,682		(46,415	)		189,267			45,200		(12,406	)		32,794
Fidelity VIP Mid Cap Service Class 2		1,410,663		(677,622	)		733,041			1,403,588		(1,372,334	)		31,254
Fidelity VIP Value Strategies Service Class 2		1,006,295		(1,468,870	)		(462,575	)		798,962		(34,821	)		764,141
International Growth Service Class (3)		1,256,974		(390,154	)		866,820
Risk-Managed Core Service Class (3)		16,147		(442	)		15,705
Mid Cap Growth Service Class (3)		87,733		(5,156	)		82,577
US Strategic Equity (3)		4,906		(1,444	)		3,462
Legg Mason Partner Variable Aggressive Growth — Class II (3)		128,796		(120,655	)		8,141
Legg Mason Partner Variable Mid Cap Core — Class II (3)		15,146		(2,588	)		12,558
MFS New Discovery Series Service Class (3)		24,601		(2,152	)		22,449
MFS Utilities Series Service Class (3)		1,315,413		(28,006	)		1,287,407
OpCap Small Cap (3)		16,624		(1,931	)		14,693
T. Rowe Price Blue Chip Growth — II		2,300,538		(2,086,199	)		214,339			185,814		(46,973	)		138,841
T. Rowe Price Equity Income — II		4,939,215		(5,011,343	)		(72,128	)		2,957,440		(1,377,544	)		1,579,896
Van Eck Worldwide Hard Assets		1,998,450		(1,752,342	)		246,108			2,956,922		(1,625,407	)		1,331,515

See explanation of references on SA-31

SA-30

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

	2007							2006
	Units		Units			Net Increase		Units	Units	Net Increase
Variable Accounts	Issued		Redeemed			(Decrease)		Issued	Redeemed	(Decrease)
ETF 2010 (3)		7,853		(291	)		7,562
ETF 2015 (3)		8,730		(141	)		8,589
ETF 2020 (3)		43,682		(8,235	)		35,447
ETF 2025 (3)		41,124		(6,520	)		34,604
ETF 2030 (3)		59,183		(2,093	)		57,090
ETF 2040+ (3)		30,512		(1,468	)		29,044

(1)	Prior to May 1, 2007, the Small-Cap Growth and Small-Cap Equity Variable Accounts were named Fasciano Small Equity and VN Small-Cap Value Variable Accounts, respectively.
(2)	Operations commenced on May 1, 2006.
(3)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(4)	Prior to October 1, 2006, the BlackRock Basic Value V.I. Class III and BlackRock Global Allocation V.I. Class III Variable Accounts were named Mercury Basic Value V.I. Class III and Mercury Global Allocation V.I. Class III Variable Accounts, respectively.

SA-31

INDEPENDENT AUDITORS’ REPORT

Pacific Life Insurance Company and Subsidiaries:

We have audited the accompanying consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed its method of accounting and reporting for deferred acquisition costs in connection with modifications or exchanges of insurance contracts and for defined benefit pension and other postretirement plans.

As discussed in Note 6 to the consolidated financial statements, the accompanying consolidated financial statements have been reclassified to give effect to broker-dealer discontinued operations.

March 7, 2008

PL-1

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2007		2006
	(In Millions)
ASSETS
Investments:
Fixed maturity securities available for sale, at estimated fair value	$	26,854	$	25,783
Equity securities available for sale, at estimated fair value		409		428
Mortgage loans, net		4,585		3,567
Policy loans		6,410		6,068
Other investments		2,156		1,600
TOTAL INVESTMENTS		40,414		37,446
Cash and cash equivalents		521		1,341
Deferred policy acquisition costs		4,481		4,248
Other assets		1,482		1,262
Separate account assets		57,605		48,900
TOTAL ASSETS	$	104,503	$	93,197
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Policyholder account balances	$	32,017	$	30,744
Future policy benefits		6,025		5,341
Short-term and long-term debt		397		187
Other liabilities		1,878		1,748
Separate account liabilities		57,605		48,900
TOTAL LIABILITIES		97,922		86,920
Commitments and contingencies (Note 19)
Stockholder’s Equity:
Common stock — $50 par value; 600,000 shares authorized, issued and outstanding		30		30
Paid-in capital		505		505
Retained earnings		5,814		5,244
Accumulated other comprehensive income		232		498
TOTAL STOCKHOLDER’S EQUITY		6,581		6,277
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	104,503	$	93,197

See Notes to Consolidated Financial Statements

PL-2

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
REVENUES
Policy fees and insurance premiums	$	1,780		$	1,538		$	1,361
Net investment income		2,114			2,042			1,918
Net realized investment gain (loss)		(46	)		62			23
Realized investment gain on interest in PIMCO					32			104
Investment advisory fees		327			319			249
Other income		98			47			23
TOTAL REVENUES		4,273			4,040			3,678
BENEFITS AND EXPENSES
Interest credited to policyholder account balances		1,266			1,219			1,198
Policy benefits paid or provided		855			780			706
Commission expenses		690			606			530
Operating expenses		740			630			642
TOTAL BENEFITS AND EXPENSES		3,551			3,235			3,076
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		722			805			602
Provision for income taxes		98			198			100
INCOME FROM CONTINUING OPERATIONS		624			607			502
Cumulative adjustment due to change in accounting principle								(2	)
Minority interest		(36	)		(13	)		(1	)
Discontinued operations, net of taxes		11			(4	)		43
NET INCOME	$	599		$	590		$	542

See Notes to Consolidated Financial Statements

PL-3

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

											Accumulated Other
											Comprehensive Income (Loss)
											Unrealized
											Gain (Loss) on
											Derivatives
					Unearned						and Securities
	Common		Paid-in		ESOP			Retained			Available for			Other,
	Stock		Capital		Shares			Earnings			Sale, Net			Net			Total
	(In Millions)
BALANCES, JANUARY 1, 2005	$	30	$	497		($17	)	$	4,297		$	909		$	124		$	5,840
Comprehensive income (loss):
Net income									542									542
Other comprehensive loss, net												(227	)		(46	)		(273	)
Total comprehensive income																		269
Other equity adjustments				5		9												14
BALANCES, DECEMBER 31, 2005		30		502		(8	)		4,839			682			78			6,123
Comprehensive income (loss):
Net income									590									590
Other comprehensive loss, net												(246	)		(16	)		(262	)
Total comprehensive income																		328
Dividends paid									(185	)								(185	)
Other equity adjustments				3		8												11
BALANCES, DECEMBER 31, 2006		30		505		0			5,244			436			62			6,277
Comprehensive income (loss):
Net income									599									599
Other comprehensive loss, net												(250	)		(16	)		(266	)
Total comprehensive income																		333
Cumulative effect of adoption of new accounting principle, net of tax									(29	)								(29	)
BALANCES, DECEMBER 31, 2007	$	30	$	505	$	0		$	5,814		$	186		$	46		$	6,581

See Notes to Consolidated Financial Statements

PL-4

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income excluding discontinued operations	$	588		$	594		$	499
Adjustments to reconcile net income excluding discontinued operations    to net cash provided by operating activities:
Net accretion on fixed maturity securities		(150	)		(126	)		(96	)
Depreciation and other amortization		66			63			34
Deferred income taxes		1			49			61
Net realized investment (gain) loss		46			(62	)		(23	)
Realized investment gain on interest in PIMCO					(32	)		(104	)
Net change in deferred policy acquisition costs		(302	)		(496	)		(452	)
Interest credited to policyholder account balances		1,266			1,219			1,198
Change in future policy benefits and other insurance liabilities		666			502			172
Other operating activities, net		(58	)		294			316
NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE DISCONTINUED OPERATIONS		2,123			2,005			1,605
Net cash used in operating activities of discontinued operations		(71	)		(16	)		(75	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,052			1,989			1,530
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed maturity and equity securities available for sale:
Purchases		(5,885	)		(5,037	)		(4,061	)
Sales		2,041			2,039			1,509
Maturities and repayments		2,718			2,937			2,381
Repayments of mortgage loans		439			1,330			423
Purchases of mortgage loans and real estate		(1,658	)		(1,140	)		(1,153	)
Change in policy loans		(342	)		(164	)		(275	)
Interest in PIMCO					88			266
Purchases and terminations of derivative instruments		(58	)		(9	)		105
Change in collateral received or pledged		17			143			(317	)
Other investing activities, net		(222	)		(237	)		(421	)
NET CASH USED IN INVESTING ACTIVITIES BEFORE DISCONTINUED OPERATIONS		(2,950	)		(50	)		(1,543	)
Net cash provided by (used in) investing activities of discontinued operations		76			(9	)		(3	)
NET CASH USED IN INVESTING ACTIVITIES		(2,874	)		(59	)		(1,546	)

(Continued)
See Notes to Consolidated Financial Statements

PL-5

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(Continued)	2007			2006			2005
	(In Millions)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholder account balances:
Deposits	$	6,876		$	4,760		$	5,275
Withdrawals		(7,131	)		(5,940	)		(5,389	)
Net change in short-term debt		100
Issuance of long-term debt		136			9			2
Payments of long-term debt		(33	)		(19	)		(23	)
Dividends paid					(169	)
Other financing activities, net		54			11			10
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2			(1,348	)		(125	)
Net change in cash and cash equivalents		(820	)		582			(141	)
Cash and cash equivalents, beginning of year		1,341			759			900
CASH AND CASH EQUIVALENTS, END OF YEAR	$	521		$	1,341		$	759
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid, net	$	155		$	44		$	231
Interest paid	$	19		$	16		$	16

See Notes to Consolidated Financial Statements

PL-6

Pacific Life Insurance Company and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	ORGANIZATION AND DESCRIPTION OF BUSINESS
	Pacific Life Insurance Company (Pacific Life) was established in 1868 and is domiciled in the State of Nebraska as a stock life insurance company. Pacific Life is an indirect subsidiary of Pacific Mutual Holding Company (PMHC), a Nebraska mutual holding company, and a wholly owned subsidiary of Pacific LifeCorp, an intermediate Delaware stock holding company. PMHC and Pacific LifeCorp were organized pursuant to consent received from the California Department of Insurance and the implementation of a plan of conversion to form a mutual holding company structure in 1997 (the Conversion).
	Pacific Life and its subsidiaries and affiliates have primary business operations consisting of life insurance, individual annuities, mutual funds, and pension and institutional products. Pacific Life’s primary business operations provide life insurance products, individual annuities and mutual funds, and offer to individuals, businesses, and pension plans a variety of investment products and services.
	Pacific Life transferred its legal domicile from the State of California to the State of Nebraska effective September 1, 2005. PMHC transferred its state of legal domicile from the State of California to the State of Nebraska, effective June 29, 2007, to reunite PMHC and Pacific Life under one regulatory authority.
	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
	The accompanying consolidated financial statements of Pacific Life and its subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Pacific Life and its majority owned and controlled subsidiaries and variable interest entities (VIEs) in which the Company was determined to be the primary beneficiary. All significant intercompany transactions and balances have been eliminated. Included in other liabilities is minority interest of $181 million and $92 million as of December 31, 2007 and 2006, respectively.
	Pacific Life prepares its regulatory financial statements in accordance with statutory accounting practices prescribed or permitted by the Nebraska Department of Insurance (NE DOI), which is a comprehensive basis of accounting other than U.S. GAAP (Note 2). These consolidated financial statements materially differ from those filed with regulatory authorities.
	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop. Management has identified the following estimates as significant, as they involve a higher degree of judgment and are subject to a significant degree of variability:

• The fair value of investments in the absence of quoted market values

• Investment impairments

• Application of the consolidation rules to certain investments

• The fair value of and accounting for derivatives

• The capitalization and amortization of deferred policy acquisition costs (DAC)

• The liability for future policyholder benefits

• Accounting for income taxes and the valuation of deferred income tax assets and liabilities and unrecognized tax benefits

• Accounting for reinsurance transactions

• Litigation and other contingencies

PL-7

Certain reclassifications have been made to the 2006 and 2005 consolidated financial statements to conform to the 2007 financial statement presentation. The most significant conforming reclassification was reflecting the Company’s broker-dealer operations as a discontinued operation (Note 6).

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Effective December 31, 2007, the Company adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standard (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial condition and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company’s adoption of SFAS No. 158 resulted in a reduction to other comprehensive income (OCI) of $20 million, net of taxes.

Effective January 1, 2007, the Company adopted FASB Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109. FIN 48 presents a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. There is a two-step evaluation process. The first step is recognition and a company must determine whether it is more likely than not that a tax position will be sustained. The second step is measurement. A tax position that meets the more likely than not recognition threshold should be measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company’s policy is to recognize interest expense and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The adoption of FIN 48 had no impact on the Company’s consolidated financial statements, and therefore, there was no cumulative effect related to the adoption of FIN 48.

Effective May 2, 2007, the Company adopted FASB Staff Position (FSP) No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48. This FSP amends FIN 48 to provide guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. This statement is effective upon the initial adoption of FIN 48 with retrospective application if the provisions of this FSP were not previously applied. The adoption of this FSP had no impact on the Company’s consolidated financial statements, and therefore, there was no retrospective adjustment.

Effective January 1, 2007, the Company adopted SFAS No. 155, Accounting for Certain Hybrid Instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125. SFAS No. 155 (i) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; (ii) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; (iii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iv) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (v) amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity (SPE) from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The adoption of SFAS No. 155 did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2007, the Company adopted American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts. This SOP provides guidance on accounting for DAC on internal replacements on insurance and investment contracts other than those described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the AICPA issued related Technical Practice Aids (TPAs) to provide further clarification of SOP 05-1. The TPAs became effective concurrently with the adoption of SOP 05-1. The adoption of SOP 05-1 and the related TPAs resulted in a

PL-8

reduction to DAC and the Company recorded a cumulative effect adjustment of $29 million, net of taxes, which was recorded as a reduction to retained earnings.

In April 2006, the FASB issued FSP FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R). This FSP addresses how an entity determines the variability to be considered in applying FIN 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (FIN 46(R)). The variability affects the determination of whether an entity is a VIE, which interests are variable interests in an entity, and which party is the primary beneficiary of the VIE. That variability affects any calculation of expected losses and expected residual returns, if such a calculation is necessary. FSP FIN 46(R)-6 was effective for the Company beginning July 1, 2006. Adoption did not impact the Company’s consolidated financial statements.

Effective January 1, 2006, the Company adopted SFAS No. 154, Accounting Changes and Error Corrections. This statement changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle as well as changes required by a new accounting pronouncement. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle.

Effective January 1, 2006, the Company adopted FSP SFAS No. 115-1 and SFAS No. 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. The guidance within this FSP is applicable to debt and equity securities that are within the scope of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. This FSP nullifies certain requirements of Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, regarding the recognition of other than temporary impairments and restores the guidance for determination of other than temporary impairment to SFAS No. 115, EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets, and Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. This FSP adopts the disclosure requirements of EITF Issue No. 03-1. For other than temporarily impaired debt securities, the investor will account for the debt security as if the debt security was purchased on the measurement date of the other than temporary impairment. The discount recorded for the debt security will be amortized over the remaining life of the debt security as a yield adjustment. Adoption did not have a material impact on the Company’s consolidated financial statements.

Under FIN 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, the consolidation requirements for the Company’s VIEs, created prior to December 31, 2003, were applied effective January 1, 2005. The Company determined that it is the primary beneficiary of a Collateralized Debt Obligation (CDO) VIE of high-yield debt securities that it sponsored in 1998 (Note 4). In accordance with the transition provisions of FIN 46(R), the Company increased assets $67 million, liabilities $65 million, including non-recourse debt of $62 million, accumulated other comprehensive income (AOCI) $4 million and decreased net income by $2 million as a cumulative adjustment due to a change in accounting principle upon the adoption of FIN 46(R).

FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. SFAS No. 160 improves the relevance, comparability and transparency of the financial information that a company provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective beginning January 1, 2009. The Company is evaluating the impact of SFAS No. 160 on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective beginning January 1, 2009. The Company is evaluating the impact of SFAS No. 141(R) on its consolidated financial statements.

PL-9

In April 2007, the FASB issued FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39. FSP FIN 39-1 amends FIN No. 39, Offsetting of Amounts Related to Certain Contracts, to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP FIN 39-1 also amends FIN 39 for certain terminology modifications. This statement permits offsetting of fair value amounts recognized for derivative instruments under master netting arrangements. FSP FIN 39-1 is effective beginning January 1, 2008 and adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This statement permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement is effective beginning January 1, 2008. Adoption of SFAS No. 159 is not expected to have any impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement creates a common definition of fair value to be used throughout U.S. GAAP. SFAS No. 157 will apply whenever another standard requires or permits assets or liabilities to be measured at fair value, with certain exceptions. The standard establishes a hierarchy for determining fair value, which emphasizes the use of observable market data whenever available. The statement also requires expanded disclosures, which include the extent to which assets and liabilities are measured at fair value, the methods and assumptions used to measure fair value and the effect of fair value measures on earnings. This statement is effective beginning January 1, 2008. Adoption is not expected to have a material impact on the Company’s consolidated financial statements.

INVESTMENTS

Fixed maturity and equity securities available for sale are reported at estimated fair value, with unrealized gains and losses, net of deferred income taxes and adjustments related to DAC and future policy benefits, recorded as a component of OCI. For mortgage-backed securities and asset-backed securities (ABS) included in fixed maturity securities available for sale, the Company recognizes income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. For fixed rate securities, the net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. These adjustments are reflected in net investment income. Trading securities are reported at estimated fair value with changes in estimated fair value included in net realized investment gain (loss).

Investment income consists primarily of interest and dividends, net investment income from partnership interests, prepayment fees on fixed maturity securities and mortgage loans, and income from certain derivatives. Interest is recognized on an accrual basis and dividends are recorded on the ex-dividend date. Amortization of premium and accretion of discount on fixed maturity securities is recorded using the effective interest method.

The estimated fair value of fixed maturity and equity securities is generally obtained from independent pricing services. For fixed maturity securities not able to be priced by independent services (generally private placement and low volume traded securities), an internally developed matrix is used. The matrix utilizes the fair market yield curves, provided by a major independent data service, which determines the discount yield based upon the security’s weighted-average life, rating, and liquidity spread. The estimated fair value of the security is calculated as the present value of the estimated cash flows discounted at the yield determined above. For those securities not priced externally or by the matrix, the estimated fair value is internally determined, utilizing various techniques in valuing complex investments with variable cash flows. Equity securities available for sale include common stocks that have a readily determinable fair value and perpetual preferred stocks.

PL-10

The following table identifies the estimated fair value of fixed maturity securities by pricing sources:

	December 31, 2007					December 31, 2006
	Fixed Maturities		% of			Fixed Maturities		% of
	at Estimated		Estimated			at Estimated		Estimated
	Fair Value		Fair Value			Fair Value		Fair Value
	(In Millions)
Independent market quotations	$	19,815		73.8	%	$	19,708		76.4	%
Matrix-priced		5,743		21.4	%		5,455		21.2	%
Other methods		1,296		4.8	%		620		2.4	%
	$	26,854		100.0	%	$	25,783		100.0	%

The matrix-priced securities primarily consist of private placements and have an average duration of four and a half years as of December 31, 2007 and 2006.

The Company assesses whether other than temporary impairments have occurred based upon the Company’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value. All securities with a gross unrealized loss at the consolidated statement of financial condition date are subjected to the Company’s process for identifying other than temporary impairments. The Company considers a wide range of factors, as described below, about the security issuer and uses its 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 the Company’s evaluation of each security are assumptions and estimates about the operations of the issuer and its future earnings potential.

Considerations used by the Company in the impairment evaluation process include, but are not limited to, the following:

• The duration and extent that the estimated fair value has been below net carrying amount

• Industry factors or conditions related to a geographic area that are negatively affecting the security

• Underlying valuation of assets specifically pledged to support the credit

• Past due interest or principal payments or other violation of covenants

• Deterioration of the overall financial condition of the specific issuer

• Downgrades by a rating agency

• Ability and intent to hold the investment for a period of time to allow for a recovery of value

• Fundamental analysis of the liquidity and financial condition of the specific issuer

Also, the Company estimates the cash flows over the life of certain purchased beneficial interests in securitized financial assets. Based upon current information and events, if the estimated fair value of its beneficial interests is less than or equal to its net carrying amount and if there has been an adverse change in the estimated cash flows since the last revised estimate, considering both timing and amount, then an other than temporary impairment is recognized.

Securities and purchased beneficial interests that are deemed to be other than temporarily impaired are written down to estimated fair value in the period the securities or purchased beneficial interest are deemed to be impaired.

Realized gains and losses on investment transactions are determined on a specific identification basis and are included in net realized investment gain (loss). The Company also includes other than temporary impairment write-downs in net realized investment gain (loss).

Mortgage loans on real estate are carried at their unpaid principal balance, net of deferred origination fees, valuation allowances and write-downs. Mortgage loans are considered to be impaired when management estimates that based upon current information and events, it is probable that the Company will not be able to collect amounts due according to the contractual terms of the mortgage loan agreement. For mortgage loans deemed to be impaired, a valuation allowance is established for the difference between the carrying amount and the Company’s estimate of the present value of the expected future cash flows discounted at the current market rate. Changes to the valuation allowance are recorded in net realized investment gain (loss). Policy loans are stated at unpaid principal balances.

PL-11

Other investments primarily consist of partnership and joint ventures, real estate investments, derivative instruments, non marketable equity securities, and low income housing related investments qualifying for tax credits (LIHTC). Partnership and joint venture interests where the Company does not have a controlling interest or majority ownership are recorded under the cost or equity method of accounting depending on the equity ownership position. Real estate investments are carried at depreciated cost, net of write-downs, or, for real estate acquired in satisfaction of debt, estimated fair value less estimated selling costs at the date of acquisition, if lower than the related unpaid balance.

All derivatives, whether designated in hedging relationships or not, are required to be recorded at estimated fair value. If the derivative is designated as a cash flow hedge, the effective portion of changes in the estimated fair value of the derivative is recorded in OCI and recognized in earnings when the hedged item affects earnings. If the derivative is designated as a fair value hedge, the changes in the estimated fair value of the derivative and the hedged item are recognized in net realized investment gain (loss). The change in value of the hedged item associated with the risk being hedged is reflected as an adjustment to the carrying amount of the hedged item. For derivative instruments not designated as hedges, the change in estimated fair value of the derivative is recorded in net realized investment gain (loss). Estimated fair value exposure is calculated based on the aggregate estimated fair value of all derivative instruments with each counterparty, net of collateral received, in accordance with legally enforceable counterparty master netting agreements (Note 9).

The periodic cash flows for all hedging derivatives are recorded consistent with the hedged item on an accrual basis. For derivatives that are hedging securities, these amounts are included in net investment income. For derivatives that are hedging liabilities, these amounts are included in interest credited to policyholder account balances. For derivatives not designated as hedging instruments, the periodic cash flows are reflected in net realized investment gain (loss) on an accrual basis. Upon termination of a cash flow hedging relationship, the accumulated amount in OCI is amortized into net investment income or interest credited to policyholder account balances over the remaining life of the hedged item. Upon termination of a fair value hedging relationship, the accumulated cost basis adjustment to the hedged item is amortized into net investment income or interest credited to policyholder account balances over its remaining life.

Investments in LIHTC are recorded under either the effective interest method, if they meet certain requirements, including a projected positive yield based solely on guaranteed credits, or are recorded under the equity method if these certain requirements are not met. For investments in LIHTC recorded under the effective interest method, the amortization of the original investment and the tax credits are recorded in the provision for income taxes. For investments in LIHTC recorded under the equity method, the amortization of the initial investment is included in net investment income, and the related tax credits are recorded in the provision for income taxes. The amortization recorded in net investment income was $20 million, $24 million and $23 million for the years ended December 31, 2007, 2006 and 2005, respectively.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all investments with an original maturity of three months or less.

DEFERRED POLICY ACQUISITION COSTS

The costs of acquiring new insurance business, principally commissions, medical examinations, underwriting, policy issue and other expenses, all of which vary with and are primarily associated with the production of new business, are deferred and recorded as an asset commonly referred to as DAC. DAC related to internally replaced contracts (as defined by SOP 05-1), is immediately written off to expense and any new deferrable expenses associated with the replacement are deferred if the contract modification substantially changes the contract. However, if the contract modification does not substantially change the contract, the existing DAC asset remains in place and any acquisition costs associated with the modification are immediately expensed. As of December 31, 2007 and 2006, the carrying value of DAC was $4.5 billion and $4.2 billion, respectively (Note 7).

For universal life (UL), variable annuities and other investment-type contracts, acquisition costs are amortized through earnings in proportion to the present value of estimated gross profits (EGPs) from projected investment, mortality and expense margins, and surrender charges over the estimated lives of the contracts. Actual gross margins or profits can vary from management’s estimates, which can increase or decrease the rate of DAC amortization. DAC related to traditional policies is amortized through earnings over the premium-paying period of the related policies in proportion to premium revenues recognized, using assumptions and estimates consistent with those used in computing policy

PL-12

reserves. DAC related to certain unrealized components in OCI, primarily unrealized gains and losses on securities available for sale, is recorded directly to equity through OCI.

Significant assumptions in the development of EGPs include investment returns, surrender and lapse rates, rider utilization, interest spreads, and mortality margins. The Company’s long-term assumption for the underlying separate account investment return ranges up to 8.0%.

A change in the assumptions utilized to develop EGPs results in a change to amounts expensed in the reporting period in which the change was made by adjusting the DAC balance to the level DAC would have been had the EGPs been calculated using the new assumptions over the entire amortization period. In general, favorable experience variances result in increased expected future profitability and may lower the rate of DAC amortization, whereas unfavorable experience variances result in decreased expected future profitability and may increase the rate of DAC amortization. All critical assumptions utilized to develop EGPs are evaluated at least annually and necessary revisions are made to future EGPs to the extent that actual or anticipated experience necessitates such a prospective change (Note 7).

The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The Company offers a sales inducement to the policyholder where the policyholder receives a bonus credit, typically ranging from 4.0% to 5.0% of each deposit. The capitalized sales inducement balances included in the DAC asset were $552 million and $538 million as of December 31, 2007 and 2006, respectively.

GOODWILL FROM ACQUISITIONS

The Company’s acquisitions are accounted for under the purchase method of accounting. Goodwill from acquisitions, included in other assets, totaled $15 million and $22 million as of December 31, 2007 and 2006, respectively. There were no goodwill impairment write-downs from continuing operations during the years ended December 31, 2007, 2006 and 2005.

POLICYHOLDER ACCOUNT BALANCES

Policyholder account balances on UL and investment-type contracts, such as funding agreements, fixed account liabilities and guaranteed interest contracts (GICs), are valued using the retrospective deposit method and are equal to accumulated account values, which consist of deposits received, plus interest credited, less withdrawals and assessments. Interest credited to these contracts primarily ranged from 2.0% to 8.0%.

FUTURE POLICY BENEFITS

Annuity reserves, which primarily consist of group retirement and structured settlement annuities, are equal to the present value of estimated future payments using pricing assumptions, as applicable, for interest rates, mortality, morbidity, retirement age and expenses. Interest rates used in establishing such liabilities ranged from 1.6% to 11.0%.

Policy charges assessed against policyholders that represent compensation to the Company for services to be provided in future periods, or unearned revenue reserves, are recognized in income over the expected life of the contract using the same methods and assumptions used to amortize DAC. Unearned revenue related to certain unrealized components in OCI, primarily unrealized gains and losses on securities available for sale, is recorded directly to equity through OCI.

Life insurance reserves are valued using the net level premium method on the basis of actuarial assumptions appropriate at policy issue. Mortality and persistency assumptions are generally based on the Company’s experience, which, together with interest and expense assumptions, include a margin for possible unfavorable deviations. Interest rate assumptions ranged from 4.5% to 9.3%. Future dividends for participating business are provided for in the liability for future policy benefits.

As of December 31, 2007 and 2006, participating experience rated policies paying dividends represent less than 1% of direct life insurance in force.

Estimates of future policy benefit reserves and liabilities are continually reviewed and, as experience develops, are adjusted as necessary. Such changes in estimates are included in earnings for the period in which such changes occur.

PL-13

REVENUES, BENEFITS AND EXPENSES

Insurance premiums, annuity contracts with life contingencies and traditional life and term insurance contracts, are recognized as revenue when due. Benefits and expenses are matched against such revenues to recognize profits over the lives of the contracts. This matching is accomplished by providing for liabilities for future policy benefits, expenses of contract administration and the amortization of DAC.

Receipts for UL and investment-type contracts are reported as deposits to either policyholder account balances or separate account liabilities, and are not included in revenue. Policy fees consist of mortality charges, surrender charges and expense charges that have been earned and assessed against related account values during the period. The timing of policy fee revenue recognition is determined based on the nature of the fees. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in revenue over the periods benefited. Benefits and expenses include policy benefits and claims incurred in the period that are in excess of related policyholder account balances, interest credited to policyholder account balances, expenses of contract administration and the amortization of DAC.

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from their respective revenue and benefit and expense accounts.

Investment advisory fees are primarily fees earned from the Pacific Select Fund, the investment vehicle provided to the Company’s variable universal life (VUL) and variable annuity contract holders. These fees are based upon the net asset value of the underlying portfolios, and are recorded as earned. Related subadvisory expense is included in operating expenses and recorded when incurred.

DEPRECIATION AND AMORTIZATION

Depreciation of investment real estate is computed using the straight-line method over estimated useful lives, which range from 5 to 30 years. Depreciation of investment real estate is included in net investment income. Certain other assets are depreciated or amortized using the straight-line method over estimated useful lives, which range from 3 to 40 years. Depreciation and amortization of certain other assets are included in operating expenses.

INCOME TAXES

Pacific Life and its includable subsidiaries are included in the consolidated Federal income tax return of PMHC. Pacific Life and its wholly owned, Arizona domiciled life insurance subsidiary, Pacific Life & Annuity Company (PL&A), and Pacific Alliance Reinsurance Company of Vermont (PAR Vermont), a Vermont-based life reinsurance company wholly owned by Pacific Life, are taxed as life insurance companies for Federal income tax purposes. Pacific Life’s non-insurance subsidiaries are either included in PMHC’s combined California franchise tax return or, if necessary, file separate state tax returns. Companies included in the consolidated Federal income tax return of PMHC and/or the combined California franchise tax return of PMHC are allocated tax expense or benefit based principally on the effect of including their operations in PMHC’s returns under a tax sharing agreement. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years the differences are expected to be recovered or settled.

SEPARATE ACCOUNTS

Separate accounts primarily include variable annuity and life contracts, as well as other guaranteed and non-guaranteed accounts. Separate account assets and liabilities are recorded at estimated fair value and represent legally segregated contract holder funds. Deposits to separate accounts, investment income and realized and unrealized gains and losses on the separate account assets accrue directly to contract holders and, accordingly, are not reflected in the consolidated statements of operations or cash flows. Amounts charged to the separate account for mortality, surrender and expense charges are included in revenues as policy fees.

In accordance with SOP 03-1, Accounting and Reporting by Insurance Enterprises for Certain Non Traditional Long-Duration Contracts and for Separate Accounts, for separate account funding agreements where the Company provides a

PL-14

guarantee of principal and interest to the contract holder and the Company bears all the risks and rewards of the investments underlying the separate account, the related investments and liabilities are recognized as investments and liabilities in the consolidated statements of financial condition. Revenue and expenses are recognized within the respective revenue, and benefit and expense lines in the consolidated statements of operations.

	FAIR VALUE OF FINANCIAL INSTRUMENTS
	The estimated fair value of financial instruments, disclosed in Notes 8, 9 and 12, has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is often required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.
2.	STATUTORY FINANCIAL INFORMATION AND DIVIDEND RESTRICTIONS
	STATUTORY ACCOUNTING PRACTICES
	Pacific Life prepares its regulatory statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the NE DOI, which is a comprehensive basis of accounting other than U.S. GAAP. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, recognizing certain policy fees as revenue when billed, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt, as well as valuing investments and certain assets and accounting for deferred income taxes on a different basis.
	As a result of Pacific Life’s use of a NE DOI permitted accounting practice and a NE DOI prescribed accounting practice that differs from statutory accounting practices adopted by the National Association of Insurance Commissioners (NAIC), Pacific Life’s statutory capital and surplus as of December 31, 2007 did not reflect a net unrealized loss of $45 million. This net unrealized loss primarily relates to certain statutory separate account assets that are carried at book value instead of estimated fair value. Pacific Life’s statutory capital and surplus as of December 31, 2006 did not reflect a net gain of $5 million related to these practices.
	STATUTORY NET INCOME AND SURPLUS
	Statutory net income of Pacific Life was $362 million, $362 million and $234 million for the years ended December 31, 2007, 2006 and 2005, respectively. Statutory capital and surplus of Pacific Life was $3,708 million and $3,218 million as of December 31, 2007 and 2006, respectively.
	RISK-BASED CAPITAL
	Risk-based capital is a method developed by the NAIC to measure the minimum amount of capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Additionally, certain risks are required to be measured using actuarial cash flow modeling techniques, subject to formulaic minimums. The adequacy of a company’s actual capital is measured by the risk-based capital results, as determined by the formulas. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2007 and 2006, Pacific Life, PL&A and PAR Vermont exceeded the minimum risk-based capital requirements.
	DIVIDEND RESTRICTIONS
	The payment of dividends by Pacific Life to Pacific LifeCorp is subject to restrictions set forth in the State of Nebraska insurance laws. These laws require (i) notification to the NE DOI for the declaration and payment of any dividend and (ii) approval by the NE DOI for accumulated dividends within the preceding twelve months that exceed the greater of 10% of statutory policyholder surplus as of the preceding December 31 or statutory net gain from operations for the preceding twelve months ended December 31. Generally, these restrictions pose no short-term liquidity concerns for

PL-15

Pacific LifeCorp. Based on these restrictions and 2007 statutory results, Pacific Life could pay $350 million in dividends in 2008 to Pacific LifeCorp without prior approval from the NE DOI, subject to the notification requirement.

	During the year ended December 31, 2006, Pacific Life paid two dividends totaling $185 million to Pacific LifeCorp; a $25 million dividend, consisting of $9 million in cash and a real estate investment with an estimated fair value of $16 million, and a $160 million cash dividend. No dividends were paid during 2007 and 2005.
	The maximum amount of ordinary dividends that can be paid by PL&A to Pacific Life without restriction cannot exceed the lesser of 10% of statutory surplus as regards to policyholders, or the statutory net gain from operations. Based on this limitation and 2007 statutory results, PL&A could pay $6 million in dividends to Pacific Life in 2008 without prior regulatory approval. No dividends were paid during 2007, 2006 and 2005.
3.	CLOSED BLOCK
	In connection with the Conversion, an arrangement known as a closed block (the Closed Block) was established, for dividend purposes only, for the exclusive benefit of certain individual life insurance policies that had an experience based dividend scale for 1997. The Closed Block was designed to give reasonable assurance to holders of the Closed Block policies that policy dividends will not change solely as a result of the Conversion.
	Assets that support the Closed Block, which are primarily included in fixed maturity securities and policy loans, amounted to $284 million and $280 million as of December 31, 2007 and 2006, respectively. Liabilities allocated to the Closed Block, which are primarily included in future policy benefits, amounted to $308 million and $306 million as of December 31, 2007 and 2006, respectively. The net contribution to income from the Closed Block was insignificant for the years ended December 31, 2007, 2006 and 2005.
4.	VARIABLE INTEREST ENTITIES
	The following table presents, as of December 31, 2007 and 2006, the total assets and maximum exposure to loss relating to VIEs, which the Company (i) has consolidated because it is the primary beneficiary or (ii) holds a significant variable interest, but has not consolidated because it is not the primary beneficiary:

	Primary Beneficiary				Not Primary Beneficiary
			Maximum				Maximum
	Total		Exposure to		Total		Exposure to
	Assets		Loss		Assets		Loss
	(In Millions)
December 31, 2007:
Private equity fund	$	194	$	25
Warehouse facility		18		5
Collateralized debt obligations		6		3
Asset-backed securities					$	3,816	$	187
Total	$	218	$	33	$	3,816	$	187
December 31, 2006:
Private equity fund	$	98	$	13
Collateralized debt obligations		27		3	$	50	$	1
Asset-backed securities						2,466		266
Asset Management Finance Corp.						128		55
Total	$	125	$	16	$	2,644	$	322

PL-16

PRIVATE EQUITY FUND

Private equity fund is a limited partnership that was established in July 2005 and is the general partner of two funds that invest in private equity funds for outside investors. The Company provides investment management services to the fund for a fee and receives carried interest based upon the performance of the fund. The Company has not guaranteed the performance, liquidity or obligations of the fund, and the Company’s maximum exposure to loss is equal to the carrying amounts. The Company was determined to be the primary beneficiary of this VIE and it is consolidated into the financial statements of the Company.

WAREHOUSE FACILITY

The Company determined that it was the primary beneficiary of a warehouse facility that it sponsored in 2007 for the purpose of issuing a collateralized loan obligation. The Company has not guaranteed the performance, liquidity or obligations of the warehouse facility. The maximum exposure to loss is limited to the carrying amounts of the retained interests, which represent the equity in the facility. This facility was consolidated into the financial statements of the Company. Non-recourse debt consolidated from the facility was $13 million as of December 31, 2007.

COLLATERALIZED DEBT OBLIGATIONS

The Company is the collateral manager and beneficial interest holder of CDOs of high yield debt securities. As the collateral manager, the Company earns management fees on the outstanding asset balance, which are recorded in net investment income as earned. The collateral management fees were insignificant for the years ended December 31, 2007, 2006 and 2005. The Company has not guaranteed the performance, liquidity or obligations of the CDO. The maximum exposure to loss is limited to the carrying amounts of retained interests.

The Company determined that it is the primary beneficiary of a CDO that it sponsored in 1998 and it is consolidated into the financial statements of the Company. Non-recourse debt consolidated from this CDO was $2 million and $22 million as of December 31, 2007 and 2006, respectively. There were two other CDOs not consolidated by the Company as the Company had determined that it was not the primary beneficiary of these entities. These two entities were fully repaid during the year ended December 31, 2007, and the Company is no longer the collateral manager.

ASSET-BACKED SECURITIES

As part of the Company’s investment strategy, the Company purchases primarily investment grade beneficial interests in ABS. These beneficial interests are issued from bankruptcy-remote SPEs, which are collateralized by financial assets including corporate debt. The Company has not guaranteed the performance, liquidity or obligations of the SPEs, and the Company’s maximum exposure to loss is limited to its carrying value of the beneficial interests in the SPEs. The ABS investments are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of these entities.

ASSET MANAGEMENT FINANCE CORP.

On August 1, 2007, Pacific Life sold its 43% common stock ownership in Asset Management Finance Corp. (AMFC), a financial advisor for investment management firms, and recognized a pre-tax gain of $16 million. Pacific Life was determined not to be the primary beneficiary of the VIE and AMFC was not consolidated into the financial statements of the Company. As of December 31, 2007 and 2006, $20 million in subordinated debt that Pacific Life funded to AMFC was outstanding.

5. INTEREST IN PIMCO

The Company owns a beneficial economic interest in Pacific Investment Management Company LLC (PIMCO) through Allianz Global Investors of America LLC (interest in PIMCO). PIMCO offers investment products through managed accounts and institutional, retail and offshore mutual funds. The interest in PIMCO is reported in other investments at estimated fair value, as determined by the put and call option price described below, with changes in estimated fair value reported as a component of OCI, net of taxes. As of December 31, 2007 and 2006, the interest in PIMCO had an estimated fair value of $288 million and $286 million, respectively.

PL-17

In May 2000, Allianz of America, Inc. (Allianz), a subsidiary of Allianz SE, acquired substantially all interests in PIMCO, other than those beneficially owned by the Company. In connection with this transaction, the interest in PIMCO is subject to a Continuing Investment Agreement (Agreement) with Allianz that provides for put options held by the Company, and call options held by Allianz. The per unit value, as determined by a formula in the Agreement, is subject to a cap and a floor of $600,000 and $500,000 per unit, respectively. The per unit value reached the cap of $600,000 as of June 30, 2007 and was $600,000 as of December 31, 2007 and $596,084 as of December 31, 2006. In January 2005, the Company and Allianz reached an agreement whereby Allianz agreed to pay an additional $5,373 per unit for all of the Company’s interest in PIMCO. The higher unit price was applied retroactively to all units previously sold and will be applied prospectively to the sale of all remaining units. The Company recognized a pre-tax gain of $1 million and $17 million during the years ended December 31, 2006 and 2005, respectively, related to this agreement.

During the year ended December 31, 2006, Allianz exercised a call option of $88 million to purchase a portion of the Company’s interest in PIMCO. The pre-tax gain recognized for the year ended December 31, 2006 was $31 million.

During the year ended December 31, 2005, Allianz exercised a call option and bought approximately $250 million of the Company’s interest in PIMCO. The pre-tax gain recognized for the year ended December 31, 2005 was $87 million.

During the first quarter of 2008, the Company exercised a put option and sold all of its remaining interest in PIMCO to Allianz for $288 million.

6. DISCONTINUED OPERATIONS

The Company’s broker-dealer operations and group insurance business have been reflected as discontinued operations in the Company’s consolidated financial statements. Discontinued operations do not include the operations of Pacific Select Distributors, Inc. (PSD), a wholly owned broker-dealer subsidiary of Pacific Life, which primarily serves as the underwriter/distributor of registered investment-related products and services, principally variable life and variable annuity contracts issued by the Company, and mutual funds.

In March 2007, the Company classified its broker-dealer subsidiaries, other than PSD, as held for sale. On June 20, 2007, a transaction closed whereby the Company sold certain of these broker-dealer subsidiaries to an unrelated third-party. Proceeds from the sale included cash of $53 million and a common stock interest in the buyer’s parent of $57 million. A pre-tax gain of $54 million was recognized from this sale. On December 31, 2007, a transaction closed whereby the Company sold another one of its broker-dealer subsidiaries to subsidiary management. The Company incurred a pre-tax loss of $1 million from this transaction. As of December 31, 2007, one broker-dealer subsidiary remained classified as held for sale. On February 1, 2008, the Company signed a definitive agreement to sell this held for sale subsidiary to an unrelated third-party. The Company does not anticipate incurring a significant loss from this transaction. The transaction is expected to close in the first quarter of 2008, subject to regulatory approval.

On April 27, 2005 (Closing Date), the Company sold its group insurance business to an unrelated third-party. The transaction is structured as a coinsurance arrangement whereby the Company cedes to the buyer future premiums received for its existing group insurance business and the buyer assumes future claim liabilities following the Closing Date. Group insurance business liabilities arising prior to the Closing Date will not be reinsured. The buyer also obtained renewal rights for the existing business as of the Closing Date.

PL-18

Operating results of discontinued operations were as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Revenues	$	276		$	395		$	582
Benefits and expenses		300			401			543
Income (loss) from discontinued operations		(24	)		(6	)		39
Provision (benefit) for income taxes		(8	)		(2	)		14
Income (loss) from discontinued operations, net of tax		(16	)		(4	)		25
Net gain on sale of discontinued operations		53						28
Provision for income taxes		26						10
Net gain on sale of discontinued operations, net of taxes		27			—			18
Discontinued operations, net of taxes	$	11			($4	)	$	43

Revenues from the group insurance business were zero, $5 million and $221 million and from the broker-dealer operations were $276 million, $390 million and $361 million for the years ended December 31, 2007, 2006 and 2005, respectively. Benefits and expenses from the group insurance business were zero, $6 million and $185 million and from the broker-dealer operations were $300 million, $395 million and $358 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The following describes the significant accounting policies for the Company’s discontinued operations. Group business insurance premiums are recognized as revenue when due. Commission revenues from the broker-dealer operations are generally recorded on the trade date. Benefits and expenses, including commission expenses are recorded when incurred.

Assets and liabilities from discontinued operations are included in other assets and other liabilities, respectively. Assets and liabilities as of December 31, 2007 are all held for sale except for $4 million of other assets and $24 million of other liabilities related to discontinued operations that have been sold. Assets and liabilities were all held for sale as of December 31, 2006. Major classes of assets and liabilities related to discontinued operations were as follows:

	December 31,
	2007		2006
	(In Millions)
Investments	$	23	$	17
Cash and cash equivalents		1		55
Other assets		20		57
Total assets	$	44	$	129
Short-term debt	$	18	$	12
Other liabilities		38		48
Total liabilities	$	56	$	60

PL-19

7. DEFERRED POLICY ACQUISITION COSTS

Components of DAC are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Balance, January 1	$	4,248		$	3,787		$	3,278
Cumulative pre-tax effect of adoption of new accounting principle (Note 1)		(45	)
Additions:
Capitalized during the year		852			999			906
Amortization:
Allocated to commission expenses		(432	)		(399	)		(355	)
Allocated to operating expenses		(118	)		(104	)		(99	)
Total amortization		(550	)		(503	)		(454	)
Allocated to OCI		(24	)		(35	)		57
Balance, December 31	$	4,481		$	4,248		$	3,787

During the years ended December 31, 2007, 2006 and 2005, the Company revised certain assumptions to develop EGPs for its products subject to DAC amortization (Note 1). This resulted in decreases in DAC amortization expense of $12 million and $16 million for the years ended December 31, 2007 and 2006, respectively, and an increase in DAC amortization expense of $29 million for the year ended December 31, 2005. The revised EGPs also resulted in decreased amortization of unearned revenue of $15 million for the year ended December 31, 2007 and increased amortization of unearned revenue of $4 million and $5 million for the years ended December 31, 2006 and 2005, respectively.

8. INVESTMENTS

The net carrying amount, gross unrealized gains and losses, and estimated fair value of fixed maturity and equity securities available for sale are shown below. The net carrying amount represents amortized cost adjusted for other than temporary declines in value and changes in the estimated fair value of fixed maturity securities attributable to the hedged risk in a fair value hedge. The estimated fair value of publicly traded securities is based on quoted market prices. For securities not actively traded, fair values were estimated based on amounts provided by independent pricing services specializing in matrix pricing and modeling techniques. The Company also estimates certain fair values based on interest rates, credit quality and average maturity utilizing matrix pricing and other modeling techniques.

PL-20

	Net
	Carrying		Gross Unrealized				Estimated
	Amount		Gains		Losses		Fair Value
	(In Millions)
December 31, 2007:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	38	$	5			$	43
Obligations of states and political subdivisions		1,008		160	$	2		1,166
Foreign governments		253		37				290
Corporate securities		16,047		501		203		16,345
Mortgage-backed and asset-backed securities		8,684		180		172		8,692
Redeemable preferred stock		327		10		19		318
Total fixed maturity securities	$	26,357	$	893	$	396	$	26,854
Total equity securities	$	437	$	5	$	33	$	409
December 31, 2006:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	45	$	5			$	50
Obligations of states and political subdivisions		1,220		205	$	4		1,421
Foreign governments		332		32		1		363
Corporate securities		15,455		521		133		15,843
Mortgage-backed and asset-backed securities		7,740		165		102		7,803
Redeemable preferred stock		283		21		1		303
Total fixed maturity securities	$	25,075	$	949	$	241	$	25,783
Total equity securities	$	407	$	27	$	6	$	428

The net carrying amount and estimated fair value of fixed maturity securities available for sale as of December 31, 2007, by contractual repayment date of principal, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Net
	Carrying		Gross Unrealized				Estimated
	Amount		Gains		Losses		Fair Value
	(In Millions)
Due in one year or less	$	1,159	$	20	$	5	$	1,174
Due after one year through five years		5,722		201		30		5,893
Due after five years through ten years		5,833		145		81		5,897
Due after ten years		4,959		347		108		5,198
		17,673		713		224		18,162
Mortgage-backed and asset-backed securities		8,684		180		172		8,692
Total	$	26,357	$	893	$	396	$	26,854

PL-21

The following tables present the number of investments, and the estimated fair value and gross unrealized losses for fixed maturity and other securities, which include equity securities available for sale and other cost method investments, where the estimated fair value has declined and remained below the net carrying amount.

	Total
					Gross
			Estimated		Unrealized
	Number		Fair Value		Losses
			(In Millions)
December 31, 2007:
Obligations of states and political subdivisions		14	$	61		($2	)
Corporate securities		636		6,131		(203	)
Mortgage-backed and asset-backed securities		454		4,731		(172	)
Redeemable preferred stock		16		211		(19	)
Total fixed maturity securities		1,120		11,134		(396	)
Total other securities		57		378		(40	)
Total		1,177	$	11,512		($436	)

	Less than 12 Months							12 Months or Greater
					Gross							Gross
			Estimated		Unrealized					Estimated		Unrealized
	Number		Fair Value		Losses			Number		Fair Value		Losses
			(In Millions)							(In Millions)
December 31, 2007:
Obligations of states and political subdivisions									14	$	61		($2	)
Corporate securities		386	$	3,572		($112	)		250		2,559		(91	)
Mortgage-backed and asset-backed securities		152		2,473		(105	)		302		2,258		(67	)
Redeemable preferred stock		12		190		(17	)		4		21		(2	)
Total fixed maturity securities		550		6,235		(234	)		570		4,899		(162	)
Total other securities		36		263		(27	)		21		115		(13	)
Total		586	$	6,498		($261	)		591	$	5,014		($175	)

PL-22

	Total
					Gross
			Estimated		Unrealized
	Number		Fair Value		Losses
			(In Millions)
December 31, 2006:
Obligations of states and political subdivisions		17	$	78		($4	)
Foreign governments		4		38		(1	)
Corporate securities		596		6,453		(133	)
Mortgage-backed and asset-backed securities		463		4,307		(102	)
Redeemable preferred stock		4		27		(1	)
Total fixed maturity securities		1,084		10,903		(241	)
Total other securities		46		233		(23	)
Total		1,130	$	11,136		($264	)

	Less than 12 Months							12 Months or Greater
					Gross							Gross
			Estimated		Unrealized					Estimated		Unrealized
	Number		Fair Value		Losses			Number		Fair Value		Losses
			(In Millions)							(In Millions)
December 31, 2006:
Obligations of states and political subdivisions									17	$	78		($4	)
Foreign governments									4		38		(1	)
Corporate securities		227	$	2,680		($29	)		369		3,773		(104	)
Mortgage-backed and asset-backed securities		124		1,325		(16	)		339		2,982		(86	)
Redeemable preferred stock									4		27		(1	)
Total fixed maturity securities		351		4,005		(45	)		733		6,898		(196	)
Total other securities		15		74		(5	)		31		159		(18	)
Total		366	$	4,079		($50	)		764	$	7,057		($214	)

The Company has evaluated fixed maturity and other securities with gross unrealized losses and determined that the unrealized losses are temporary and that the Company has the ability and intent to hold the securities until recovery.

Sub-prime mortgage lending is the origination of residential loans to customers with weak credit profiles. Alt-A mortgage lending is the origination of residential mortgage loans to customers who have credit ratings above sub-prime, but do not conform to government-sponsored enterprise standards. The slowing U.S. housing market, greater use of affordability mortgage products and relaxed underwriting standards for some originators for these loans has led to higher delinquency and loss rates, especially within the 2007 and 2006 vintage years.

The Company has exposure to sub-prime and Alt-A residential loans through direct purchases of residential mortgage-backed securities. These securities are included in the table above as mortgage-backed and asset-backed securities. The Company’s net carrying value and estimated fair value of direct investments to sub-prime residential mortgage-backed securities was $532 million and $514 million, respectively, as of December 31, 2007. 79% of these securities are rated Aaa and 19% Aa by an independent rating agency. The vintage year break-down of the underlying collateral for these securities is 2% originated during 2007, 1% during 2006, 22% during 2005, 34% during 2004 and 41% during 2003 and prior. The Company’s net carrying value and estimated fair value of direct investments to Alt-A residential mortgage-backed securities was $991 million and $972 million, respectively, as of December 31, 2007.

PL-23

99% of these securities are rated Aaa by an independent rating agency. The vintage year break-down of the underlying collateral for these securities is 56% originated during 2007, 31% during 2006 and 13% during 2005 and prior.

The Company’s net carrying amount and estimated fair value of investments in CDOs that have exposure to sub-prime residential mortgage loans are both $58 million as of December 31, 2007. The ratings distribution of these holdings as of December 31, 2007 is 16% A, 74% A-, 5% Baa and 5% Baa-, as determined by an independent rating agency. Other than temporary impairments of $73 million were recorded for these investments during the year ended December 31, 2007, based upon projections of estimated future cash flows.

Monoline insurers guarantee the timely payment of principal and interest of certain securities. The Company’s net carrying value and estimated fair value of total monoline insured securities was $1.1 billion and $1.3 billion, respectively, as of December 31, 2007. Included in these amounts are monoline insured municipal securities with a net carrying value and estimated fair value of $877 million and $1.1 billion, respectively, as of December 31, 2007. Municipalities will often purchase monoline insurance to wrap a security issuance in order to benefit from better market execution. 100% of the overall credit quality of the municipal bond portfolio, including the benefits of monoline insurance, was rated AAA by an independent rating agency. The Company’s direct investments in monoline insurers are immaterial.

Assets with an estimated fair value of $1.7 billion as of December 31, 2007 are in a custodial account pledged as collateral to support $1.7 billion in funding agreements issued to the Federal Home Loan Bank (FHLB) of Topeka, which are included in policyholder account balances. Additional assets with an estimated fair value of $2.0 billion are also on deposit at the FHLB of Topeka in the custodian account and could be used for future issuances of funding agreements and other corporate debt. The Company maintains control over these assets.

The Company loans securities in connection with its securities lending program administered by a qualified financial institution. The Company requires an amount equal to 102% of the estimated fair value of the loaned securities to be separately maintained as collateral for the loaned securities. The collateral is restricted and not available for general use. Securities loaned were $2 million and $187 million as of December 31, 2007 and 2006, respectively.

Major categories of investment income and related investment expense are summarized as follows:

	Years Ended December 31,
	2007		2006		2005
	(In Millions)
Fixed maturity securities	$	1,492	$	1,411	$	1,396
Equity securities		26		28		20
Mortgage loans		248		300		219
Real estate		68		58		56
Policy loans		209		193		197
Partnerships/joint ventures		170		133		108
Other		38		42		46
Gross investment income		2,251		2,165		2,042
Investment expense		137		123		124
Net investment income	$	2,114	$	2,042	$	1,918

Net investment income includes prepayment fees on fixed maturity securities and mortgage loans of $43 million, $61 million and $21 million for the years ended December 31, 2007, 2006 and 2005, respectively.

PL-24

The components of net realized investment gain (loss) are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Fixed maturity securities:
Gross gains on sales	$	117		$	39		$	43
Gross losses on sales		(23	)		(37	)		(64	)
Other than temporary impairments		(98	)		(6	)		(32	)
Other		20			12			4
Total fixed maturity securities		16			8			(49	)
Equity securities:
Gross gains on sales		5			14			20
Other than temporary impairments					(3	)
Other					1			1
Total equity securities		5			12			21
Trading securities		(1	)		2			(8	)
Real estate		18			9			8
Mortgage loans								(2	)
Derivatives		(111	)		26			63
Other investments		27			5			(10	)
Total		($46	)	$	62		$	23

The change in unrealized gain (loss) on investments in available for sale and trading securities is as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Available for sale securities:
Fixed maturity		($211	)		($298	)		($473	)
Equity		(49	)		(10	)		(32	)
Total		($260	)		($308	)		($505	)
Trading securities		($2	)		($2	)		($14	)

Trading securities totaled $129 million and $29 million as of December 31, 2007 and 2006, respectively. The cumulative unrealized gains on trading securities held as of December 31, 2007 and 2006 were zero and $2 million, respectively.

Fixed maturity securities, which have been non-income producing for the twelve months preceding December 31, 2007 and 2006, totaled $23 million and $26 million, respectively.

As of December 31, 2007 and 2006, fixed maturity securities of $13 million and $19 million, respectively, were on deposit with state insurance departments to satisfy regulatory requirements. The Company had no investments that exceeded 10% of total stockholder’s equity as of December 31, 2007.

PL-25

Mortgage loans on real estate are collateralized by properties primarily located throughout the U.S. As of December 31, 2007, $1,122 million, $423 million, $361 million, $348 million and $301 million were located in California, Florida, Washington, Texas and Washington D.C., respectively. As of December 31, 2007, $638 million was located in Canada.

The Company had a mortgage loan general valuation allowance of $27 million and $26 million as of December 31, 2007 and 2006, respectively. There were no defaults during the years ended December 31, 2007 and 2006, and one default of $2 million during the year ended December 31, 2005.

The Company did not have mortgage loans with accrued interest more than 180 days past due as of December 31, 2007 or 2006.

Investments in real estate totaled $400 million and $151 million as of December 31, 2007 and 2006, respectively. There were no real estate write-downs during the years ended December 31, 2007, 2006 and 2005.

9. DERIVATIVES AND HEDGING ACTIVITIES

The Company primarily utilizes derivative instruments to manage its exposure to interest rate risk, foreign currency risk, credit risk, and equity risk. Derivative instruments are also used to manage the duration mismatch of assets and liabilities. The Company utilizes a variety of derivative instruments including swaps, foreign exchange forward contracts, caps, floors, and options.

The Company applies hedge accounting by designating derivative instruments as either fair value or cash flow hedges on the date the Company enters into a derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and states how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis in accordance with its risk management policy.

PL-26

The following table summarizes the notional amount and estimated fair value by hedge designation and derivative type. The notional amount of the variable annuity rider reinsurance contracts represents the full protected basis of the underlying embedded derivative and estimated fair value represents the amount recoverable from reinsurers based on the portion of risk ceded. Collateral received from or pledged to counterparties is not included in the amounts below.

	Notional Amount				Estimated Fair Value
	December 31,				December 31,
	2007		2006		2007			2006
	(In Millions)				(In Millions)
Cash flow hedges:
Foreign currency interest rate swaps	$	8,043	$	9,659	$	219		$	301
Forward starting interest rate swap agreements		1,935		1,785		29			(4	)
Interest rate swaps		859		660		(9	)		(4	)
Total cash flow hedges		10,837		12,104		239			293
Fair value hedges:
Interest rate swaps		1,455		856		(33	)		15
Foreign currency interest rate swaps		18		96		2			(2	)
Other				43					(1	)
Total fair value hedges		1,473		995		(31	)		12
Derivatives not designated as hedging instruments:
Variable annuity rider embedded derivatives		27,935		19,090		(161	)		84
Variable annuity derivatives — equity put swaps		2,827		1,950		18			(36	)
Variable annuity derivatives — total return swaps		470		545		26			(2	)
Variable annuity rider reinsurance contracts		7,358				23
Synthetic GICs		11,477		10,361
Floors and options		119		428		5			1
Credit default swaps		128		165		(4	)		2
Other		728		754		(13	)		(13	)
Total derivatives not designated as hedging instruments		51,042		33,293		(106	)		36
Total	$	63,352	$	46,392	$	102		$	341

Notional amount represents a standard of measurement of the volume of derivatives. Notional amount is not a quantification of market risk or credit risk and is not recorded on the consolidated statements of financial condition. Notional amounts generally represent those amounts used to calculate contractual cash flows to be exchanged and are not paid or received, except for certain contracts such as currency swaps.

PL-27

The following table summarizes the asset and liability values of the Company’s derivative instruments and are calculated based on the aggregate estimated fair value of all derivative instruments with each counterparty, net of collateral received or pledged, in accordance with legally enforceable counterparty master netting agreements. Net cash collateral received from counterparties was $270 million and $253 million as of December 31, 2007 and 2006, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is netted against the estimated fair value of derivatives in other investments or other assets. If the net estimated fair value exposure to the counterparty is positive, the amount is reflected in other investments or other assets, whereas, if the net estimated fair value exposure to the counterparty is negative, the estimated fair value is included in future policy benefits or other liabilities, depending on the nature of the derivative.

	Asset Value				Liability Value
	December 31,				December 31,
	2007		2006		2007		2006
	(In Millions)				(In Millions)
Other investments	$	183	$	165
Other assets		23
Future policy benefits					$	161		($84	)
Other liabilities						213		161
Total	$	206	$	165	$	374	$	77

As of December 31, 2007 and 2006, the Company had also accepted collateral consisting of various securities with an estimated fair value of $16 million and zero, respectively, which are held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, and as of December 31, 2007 and 2006, $16 million and none of the collateral had been repledged, respectively.

As of December 31, 2007 and 2006, the Company had pledged cash collateral of zero and $19 million, respectively. This cash collateral is not included in cash and cash equivalents and the right to receive it is netted against the estimated fair value of derivatives recorded in other liabilities. As of December 31, 2007 and 2006, the Company provided collateral in the form of various securities of $14 million and zero, respectively, which are included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral.

CASH FLOW HEDGES

The Company primarily uses foreign currency interest rate swaps, forward starting interest rate swaps and interest rate swaps to manage its exposure to variability in cash flows due to changes in foreign currencies and the benchmark interest rate. These cash flows include those associated with existing assets and liabilities, as well as the forecasted interest cash flows related to anticipated investment purchases and liability issuances. Such anticipated investment purchases and liability issuances are considered probable to occur and are generally completed within 22 years of the inception of the hedge.

Foreign currency interest rate swap agreements are used to convert a fixed or floating rate, foreign-denominated asset or liability to a U.S. dollar fixed rate asset or liability. The foreign currency interest rate swaps involve the exchange of an initial principal amount in two currencies, and the agreement to re-exchange the currencies at a future date, at an agreed exchange rate. There is also periodic exchange of interest payments in the two currencies at specified intervals, calculated using agreed upon rates and the exchanged principal amounts. The main currencies that the Company hedges are the Euro, British Pound, and Canadian Dollar.

Forward starting interest rate swaps are used to hedge the variability in the future interest receipts or payments stemming from the anticipated purchase of fixed rate securities or issuance of fixed rate liabilities due to changes in benchmark interest rates. These derivatives are predominantly used to lock in interest rate levels to match future cash flow characteristics of assets and liabilities. Forward starting interest rate swaps involve the exchange, at specified intervals, of interest payments resulting from the difference between fixed and floating rate interest amounts calculated by reference to an underlying notional amount to begin at a specified date in the future for a specified period of time. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The

PL-28

notional amounts of the contracts do not represent future cash requirements, as the Company intends to close out open positions prior to expiration.

Interest rate swap agreements are used to convert a floating rate asset or liability to a fixed rate to hedge the variability of cash flows of the hedged asset or liability due to changes in benchmark interest rates. These derivatives are predominantly used to better match the cash flow characteristics between assets and liabilities. These agreements involve the exchange, at specified intervals, of interest payments resulting from the difference between fixed rate and floating rate interest amounts calculated by reference to an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party.

When a derivative is designated as a cash flow hedge, the effective portion of changes in the estimated fair value of the derivative is recorded in OCI and recognized in earnings when the hedged item affects earnings, and the ineffective portion of changes in the estimated fair value of the derivative is recorded in net realized investment gain (loss). For the years ended December 31, 2007, 2006 and 2005, the gains and losses related to the ineffective portion of designated cash flow hedges were insignificant. No component of the hedging instrument’s estimated fair value is excluded from the determination of effectiveness. For the years ended December 31, 2007, 2006 and 2005, the Company had net losses of $21 million, $2 million and zero, respectively, reclassified from AOCI to earnings resulting from the discontinuance of cash flow hedges due to forecasted transactions that were no longer probable of occurring. Over the next twelve months, the Company anticipates that $15 million of deferred gains on derivative instruments in AOCI will be reclassified to earnings. For the years ended December 31, 2007, 2006 and 2005, all of the Company’s hedged forecasted transactions were determined to be probable of occurring.

FAIR VALUE HEDGES

The Company primarily uses interest rate swaps to manage its exposure to changes in the estimated fair values of its assets and liabilities due to fluctuations in the benchmark interest rate.

Interest rate swap agreements are used to convert a fixed rate asset or liability to a floating rate to hedge the changes in estimated fair value of the hedged asset or liability due to changes in benchmark interest rates. These derivatives are used primarily to closely match the duration of the assets supporting specific liabilities.

When a derivative is designated as a fair value hedge, the changes in the estimated fair value of the derivative and the hedged item are recognized in net realized investment gain (loss). The change in value of the hedged item associated with the risk being hedged is reflected as an adjustment to the carrying amount of the hedged item. For the years ended December 31, 2007, 2006 and 2005, hedge ineffectiveness related to designated fair value hedges reflected in net realized investment gain (loss) was insignificant. No component of the hedging instrument’s estimated fair value is excluded from the determination of effectiveness.

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The Company has certain insurance and reinsurance contracts that are considered to have embedded derivatives. When it is determined that the embedded derivative possesses economic and risk characteristics that are not clearly and closely related to those of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, it is separated from the host contract and accounted for as a stand-alone derivative.

The Company offers a rider on certain variable annuity contracts that guarantees net principal over a ten-year holding period, as well as riders on certain variable annuity contracts that guarantee a minimum withdrawal benefit over specified periods, subject to certain restrictions. These variable annuity riders (VA Riders) are considered embedded derivatives and are recorded in future policy benefits.

The Company employs hedging strategies designed to mitigate the equity risk associated with the portion of VA Riders not covered by reinsurance. Equity put swaps are utilized to economically hedge against movements in the equity markets. These equity put swaps involve the exchange of periodic fixed rate payments for the return, at the end of the swap agreement, of the equity index below a specified strike price. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. Additionally, the Company utilizes total return swaps based upon the S&P 500 Index (S&P 500) primarily to economically hedge the equity risk of the mortality and expense fees in its variable annuity products. These contracts provide periodic payments to the Company in exchange for the

PL-29

total return of the S&P 500 in the form of a payment or receipt, depending on whether the return relative to the index on trade date is positive or negative, respectively.

VA Riders on new variable annuity contracts issued since January 1, 2007 are partially covered by reinsurance. These reinsurance arrangements are used to offset a portion of the Company’s exposure to the VA Riders for the lives of the host variable annuity contracts issued since January 1, 2007. The ceded portion of the VA Riders is considered an embedded derivative and is recorded in other assets or other liabilities as either a reinsurance recoverable or reinsurance payable.

The decrease in the estimated fair value of the embedded derivatives, net of reinsurance, and net of the results of the variable annuity hedging strategies, which includes periodic derivative settlements, resulted in before DAC and pre-tax unrealized gains (losses) of ($178) million, ($30) million and $11 million for the years ended December 31, 2007, 2006 and 2005, respectively, which were recorded as a component of net realized investment gain (loss).

Additionally, certain policy fee revenue related to the VA Riders of $78 million, $64 million and $29 million is included in net realized investment gain (loss) for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company issues synthetic GICs to Employee Retirement Income Security Act of 1974 (ERISA) qualified defined contribution employee benefit plans (ERISA Plan). The ERISA Plan uses the contracts in its stable value or guaranteed fixed income option. The Company does not manage the assets underlying synthetic GICs; however, the Company pre-approves all investment guidelines to mitigate any investment risk. The Company receives a fee for providing liquidity to the benefit plan sponsor in the event that qualified plan benefit requests exceed plan cash flows. In the event that plan participant elections exceed the fair value of the assets or if the contract is terminated and at the end of the termination period the book value under the contract exceeds the fair value of the assets, then the Company is required to pay the ERISA Plan the difference. The estimated fair value of the assets was greater than the book value under the contracts by $34 million as of December 31, 2007. As of December 31, 2006, the estimated fair value of the assets was below the book value under the contracts by $64 million. As of December 31, 2006, the Company did not record a contingent liability as the probability of making a payment under these provisions was considered remote.

CREDIT EXPOSURE

Credit exposure is measured on a counterparty basis as the net positive aggregate estimated fair value, net of collateral received, if any. The credit exposure for over the counter derivatives as of December 31, 2007 was $196 million.

For all derivative contracts other than VA Riders and synthetic GICs, the Company enters into master agreements that may include a termination event clause associated with the Company’s insurer financial strength rating. If the Company’s insurer financial strength rating falls below a specified level assigned by certain rating agencies or, in most cases, if one of the rating agencies ceases to provide an insurer financial strength rating, the counterparty can terminate the master agreement with payment due based on the estimated fair value of the underlying derivatives. As of December 31, 2007, the Company’s insurer financial strength rating was above the specified level.

The Company attempts to limit its credit exposure by dealing with creditworthy counterparties, establishing risk control limits, executing legally enforceable master netting agreements, and obtaining collateral where appropriate. In addition, each counterparty is reviewed to evaluate its financial stability before entering into each agreement and throughout the period that the financial instrument is owned. All of the Company’s credit exposure from derivative contracts is with investment grade counterparties. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance.

PL-30

10.	POLICYHOLDER LIABILITIES
	POLICYHOLDER ACCOUNT BALANCES
	The detail of the liability for policyholder account balances is as follows:

	December 31,
	2007		2006
	(In Millions)
Universal life	$	17,742	$	17,064
Funding agreements		9,190		8,016
Fixed account liabilities		4,159		4,396
GICs		926		1,268
Total	$	32,017	$	30,744

FUTURE POLICY BENEFITS

The detail of the liability for future policy benefits is as follows:

	December 31,
	2007		2006
	(In Millions)
Annuity reserves	$	4,184	$	3,994
Unearned revenue reserve		726		590
Policy benefits payable		456		154
Life insurance		327		281
Closed Block liabilities		309		308
Other		23		14
Total	$	6,025	$	5,341

11. DEBT

	December 31,
	2007		2006
	(In Millions)
Short-term debt: Commercial paper	$	100
Long-term debt:
Surplus notes		150	$	150
SFAS No. 133 fair value adjustment		13		6
Other non-recourse debt		119		9
VIE debt (Note 4)		15		22
Total long-term debt		297		187
Total short-term and long-term debt	$	397	$	187

PL-31

SHORT-TERM DEBT

Pacific Life maintains a $700 million commercial paper program. The amount outstanding as of December 31, 2007 was $100 million, bearing an average interest rate of 4.4%. There was no commercial paper debt outstanding as of December 31, 2006. In addition, Pacific Life has a bank revolving credit facility of $400 million maturing in 2012 that serves as a back-up line of credit for the commercial paper program. This facility had no debt outstanding as of December 31, 2007 and 2006. As of and during the year ended December 31, 2007, Pacific Life was in compliance with the debt covenants related to this facility.

During a majority of the first nine months of 2006, Pacific Life was a member of the FHLB of San Francisco, which enabled Pacific Life to borrow from the FHLB of San Francisco amounts that were based on a percentage of statutory capital and surplus. During the third quarter of 2006, Pacific Life moved its membership in the FHLB from San Francisco to Topeka. Pacific Life has approval from the FHLB of Topeka to advance amounts up to 40% of Pacific Life’s statutory general account assets provided it has available collateral and is in compliance with debt covenant restrictions and insurance laws and regulations. There was no debt outstanding with the FHLB of Topeka as of December 31, 2007 and 2006.

In December 2006, PL&A became eligible to borrow from the FHLB of San Francisco amounts based on a percentage of statutory capital and surplus and could borrow up to amounts of $102 million. Of this amount, half, or $51 million, can be borrowed for terms other than overnight, out to a maximum term of nine months. These borrowings are at variable rates of interest, collateralized by certain mortgage loan and government securities. As of December 31, 2007 and 2006, PL&A had no debt outstanding with the FHLB of San Francisco.

LONG-TERM DEBT

Pacific Life has $150 million of surplus notes outstanding at an interest rate of 7.9%, maturing on December 30, 2023. Interest is payable semiannually on June 30 and December 30. The surplus notes may not be redeemed at the option of Pacific Life or any holder of the surplus notes. The surplus notes are unsecured and subordinated to all present and future senior indebtedness and policy claims of Pacific Life. All future payments of interest and principal on the surplus notes can be made only with the prior approval of the Director of Insurance of the State of Nebraska.

Pacific Life entered into interest rate swaps converting the fixed interest rate surplus notes to variable rate notes based upon the London Interbank Offered Rate. In accordance with SFAS No. 133, the interest rate swaps were designated as fair value hedges of the surplus notes. The SFAS No. 133 fair value adjustment, which increased long-term debt by $13 million and $6 million as of December 31, 2007 and 2006, respectively, represents the cumulative change in the estimated fair value of the interest rate swaps. An offsetting fair value adjustment has also been recorded for the interest rate swap derivative instruments.

Certain subsidiaries of Pacific Asset Holding LLC (PAH), a wholly owned subsidiary of Pacific Life and formerly known as Pacific Asset Management LLC, entered into various term loans with third parties. Interest on these loans accrues at fixed rates, is payable monthly and range from 5.8% to 6.2% as of December 31, 2007. As of December 31, 2007, there was $87 million outstanding on these loans with maturities ranging from 2010 to 2012. None of these loans were in place at December 31, 2006. All of these loans are secured by real estate properties and are non-recourse to the Company.

Certain subsidiaries of PAH also entered into various property improvement loans with third parties for a maximum loan balance of $43 million. Interest on these loans accrues at variable rates, is payable monthly and range from 6.4% to 7.0% as of December 31, 2007. As of December 31, 2007, there was $32 million outstanding on these loans with maturities ranging from 2009 to 2011. As of December 31, 2006, only one of these loans was in place with a maximum loan balance of $12 million, interest rate of 7.8%, maturity in 2009 and an outstanding loan balance of $9 million. All of these loans are secured by real estate properties and are non-recourse to the Company.

PL-32

12.	FAIR VALUE OF FINANCIAL INSTRUMENTS
	The carrying amount and estimated fair value of the Company’s financial instruments are as follows:

	December 31, 2007						December 31, 2006
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
	(In Millions)
Assets:
Fixed maturity and equity securities (Note 8)	$	27,263		$	27,263		$	26,211		$	26,211
Mortgage loans		4,585			4,800			3,567			3,682
Policy loans		6,410			6,410			6,068			6,068
Interest in PIMCO (Note 5)		288			288			286			286
Other invested assets		621			663			329			346
Derivative instruments (Note 9)		476			476			437			437
Collateral received		(270	)		(270	)		(272	)		(272	)
Cash and cash equivalents		521			521			1,341			1,341
Liabilities:
Funding agreements and GICs		10,116			10,262			9,284			9,262
Fixed account liabilities		4,159			4,159			4,396			4,396
Short-term and long-term debt		397			389			187			196
Derivative instruments (Note 9)		374			374			96			96
Collateral pledged								(19	)		(19	)

The following methods and assumptions were used to estimate the fair value of these financial instruments as of December 31, 2007 and 2006:

MORTGAGE LOANS

The estimated fair value of the mortgage loan portfolio is determined by discounting the estimated future cash flows, using a market rate that is applicable to the yield, credit quality and average maturity of the composite portfolio.

POLICY LOANS

The carrying amounts of policy loans are a reasonable estimate of their fair values because interest rates are generally variable and based on current market rates.

OTHER INVESTED ASSETS

The estimated fair value of private equity investments is based on the ownership percentage of the underlying equity of the investments. The estimated fair value of trading securities is based on quoted market prices, and non marketable equity securities is based on management’s estimate of fair value.

COLLATERAL RECEIVED AND PLEDGED

The carrying values of cash collateral received and pledged approximate fair value due to the short-term maturities of these instruments.

CASH AND CASH EQUIVALENTS

The carrying values approximate fair values due to the short-term maturities of these instruments.

PL-33

FUNDING AGREEMENTS AND GICs

The fair value of funding agreements and GICs is estimated using the rates currently offered for deposits of similar remaining maturities.

FIXED ACCOUNT LIABILITIES

Fixed account liabilities include annuity and deposit liabilities. The estimated fair value of annuity liabilities approximates carrying value and primarily includes policyholder deposits and accumulated credited interest. The estimated fair value of deposit liabilities with no defined maturities is the amount payable on demand.

SHORT-TERM AND LONG-TERM DEBT

The carrying amount of short-term debt is a reasonable estimate of its fair value because the interest rates are variable and based on current market rates. The estimated fair value of long-term debt is based on market quotes, except for VIE debt and non-recourse debt, for which the carrying amounts are reasonable estimates of their fair values because the interest rate approximates current market rates.

PL-34

13.	OTHER COMPREHENSIVE INCOME (LOSS)
	The Company displays comprehensive income (loss) and its components on the accompanying consolidated statements of stockholder’s equity. The disclosure of the gross components of other comprehensive income (loss) and related taxes are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Unrealized gain (loss) on derivatives and securities available for sale, net
Gross holding gain (loss):
Securities available for sale		($239	)		($289	)		($533	)
Derivatives		(68	)		(33	)		125
Income tax benefit		106			114			142
Reclassification adjustment — realized (gain) loss:
Sale of securities available for sale		(21	)		(19	)		28
Derivatives		(15	)		(15	)		(10	)
Income tax expense (benefit)		12			11			(5	)
Allocation of holding (gain) loss to DAC		(24	)		(35	)		57
Allocation of holding (gain) loss to future policy benefits		(15	)		11			(16	)
Income tax expense (benefit)		14			9			(15	)
Unrealized loss on derivatives and securities available for sale, net		(250	)		(246	)		(227	)
Other, net
Holding gain on interest in PIMCO and other security		5			6			29
Income tax on holding gain		(1	)		(2	)		(10	)
Reclassification of realized gain on sale of interest in PIMCO					(32	)		(104	)
Income tax on realized gain					10			36
Net unrealized gain (loss) on interest in PIMCO and other security		4			(18	)		(49	)
Cumulative effect of adoption of new accounting principle, net of tax		(20	)
Other, net of tax					2			3
Other, net		(16	)		(16	)		(46	)
Total other comprehensive loss, net		($266	)		($262	)		($273	)

14.	REINSURANCE
	The Company has reinsurance agreements with other insurance companies to limit potential losses, reduce exposure arising from larger risks, and provide additional capacity for future growth.
	As part of a strategic alliance, the Company also reinsures risks associated with policies written by an independent producer group through modified coinsurance arrangements with this producer group’s reinsurance company.
	All assets associated with business reinsured on a modified coinsurance basis remain with, and under the control of, the Company. As part of its risk management process, the Company routinely evaluates its reinsurance programs and may change retention limits, reinsurers or other features at any time.
	Certain no lapse guarantee rider (NLGR) benefits of Pacific Life’s UL insurance products are subject to Actuarial Guideline 38 (AG 38) statutory reserving requirements. U.S. GAAP benefit reserves for such riders are based on SOP 03-1. AG 38, as revised in October 2005 and in September 2006, results in additional statutory reserves on UL

PL-35

products with NLGRs issued after June 30, 2005. The U.S. GAAP benefit reserves relating to NLGRs issued after June 30, 2005 are ceded from Pacific Life to Pacific Alliance Reinsurance Ltd. (PAR Bermuda), a Bermuda-based life reinsurance company wholly owned by Pacific LifeCorp and PAR Vermont under reinsurance agreements. Funded reserves in a trust account with Pacific Life as beneficiary and irrevocable letters of credit, in which Pacific LifeCorp is the co-applicant with PAR Bermuda and PAR Vermont, provide security for statutory reserve credits taken by Pacific Life.

During 2006, the Company entered into treaties to reinsure a portion of new variable annuity business sold under modified coinsurance arrangements. In 2007, the Company increased the quota-share reinsured on new variable annuity business as well as extended reinsurance coverage under coinsurance agreements to cover portions of variable annuity living and death benefit riders.

Reinsurance receivables and payables generally include amounts related to claims, reserves and reserve related items. Reinsurance receivables were $349 million and $161 million as of December 31, 2007 and 2006, respectively. Reinsurance payables were $54 million and $8 million as of December 31, 2007 and 2006, respectively.

The ceding of risk does not discharge the Company from its primary obligations to contract owners. To the extent that the assuming companies become unable to meet their obligations under reinsurance contracts, the Company remains contingently liable. Each reinsurer is reviewed to evaluate its financial stability before entering into each reinsurance contract and throughout the period that the reinsurance contract is in place.

The components of insurance premiums presented in the consolidated statements of operations are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Direct premiums	$	271		$	249		$	210
Reinsurance ceded		(274	)		(248	)		(208	)
Reinsurance assumed		53			57			53
Insurance premiums	$	50		$	58		$	55

Other revenues and benefit and expense items in the consolidated statements of operations are shown net of the following reinsurance transactions:

	Years Ended December 31,
	2007		2006		2005
	(In Millions)
Reinsurance ceded netted against policy fees	$	161	$	145	$	101
Reinsurance ceded netted against net investment income		298		278		272
Reinsurance ceded netted against net realized investment gain (loss)		19
Reinsurance ceded netted against investment advisory fees		12		2
Reinsurance ceded netted against interest credited		236		208		211
Reinsurance ceded netted against policy benefits		283		198		173
Reinsurance assumed included in policy benefits		38		30		16
Reinsurance ceded netted against commission expense		40		57		21
Reinsurance ceded netted against operating expense		47		39		20

PL-36

15.	EMPLOYEE BENEFIT PLANS
	PENSION PLANS
	Pacific Life provides a defined benefit pension plan covering all eligible employees of the Company. Certain subsidiaries do not participate in this plan. The full-benefit vesting period for all participants is five years. Pacific Life’s funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in ERISA, plus such additional amounts as may be determined appropriate. All such contributions are made to a tax-exempt trust.
	During 2007, the Company amended the defined benefit pension plan to terminate effective December 31, 2007. The net assets of the defined benefit pension plan will be allocated for payment of plan benefits to the participants in an order of priority determined in accordance with ERISA, applicable regulations thereunder and the defined benefit pension plan document. The final termination of the plan and payment of plan benefits to the participants is subject to regulatory approval.
	In 2007, the defined benefit pension plan’s investment strategy was revised and the mutual fund investments were sold, transferred to a separate account of the Company and invested primarily in fixed income investments.
	Effective January 1, 2005, the contribution credits for employees with less than 10 years of service were suspended and replaced by contribution credits into the Retirement Incentive Savings Plan (RISP) provided by Pacific Life pursuant to section 401(k) of the Internal Revenue Code. Effective January 1, 2007, the contribution credits for all other employees were suspended and also replaced by contribution credits into the RISP.
	In addition, Pacific Life maintains supplemental employee retirement plans (SERPs) for certain eligible employees. As of December 31, 2007 and 2006, the projected benefit obligation was $34 million. The fair value of plan assets as of December 31, 2007 and 2006 was zero. The net periodic benefit cost of the SERPs was $6 million, $6 million and $26 million for the years ended December 31, 2007, 2006 and 2005, respectively. New provisions of the Internal Revenue Code allowed vested participants of certain non-qualified plans to receive distributions in 2005. Accordingly, $77 million was distributed to participants electing to receive distributions from the SERPs, which resulted in a settlement expense of $16 million for the year ended December 31, 2005.
	In connection with the sale of the group insurance business (Note 6), and the resulting termination of a large group of the Company’s employees, the Company incurred $8 million in curtailment, settlement and special termination costs for the year ended December 31, 2005, which are included in discontinued operations.
	Components of the net periodic pension expense are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Service cost — benefits earned during the year	$	2		$	8		$	8
Interest cost on projected benefit obligation		16			15			18
Expected return on plan assets		(16	)		(19	)		(18	)
Settlement costs		4						21
Special termination costs								3
Amortization of net obligations and prior service cost		3			4			6
Net periodic pension expense	$	9		$	8		$	38

PL-37

The following tables set forth the changes in benefit obligation, plan assets and funded status reconciliation:

	December 31,
	2007			2006
	(In Millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	280		$	290
Service cost		2			8
Interest cost		15			15
Actuarial gain		(4	)		(6	)
Benefits paid		(45	)		(27	)
Benefit obligation, end of year	$	248		$	280
Change in plan assets:
Fair value of plan assets, beginning of year	$	271		$	260
Actual return on plan assets		16			28
Employer contributions		45			10
Benefits paid		(45	)		(27	)
Fair value of plan assets, end of year	$	287		$	271
Funded status reconciliation:
Funded status	$	39			($9	)
Unrecognized transition obligation					2
Unrecognized prior service cost					2
Unrecognized actuarial loss					46
Net amount recognized	$	39		$	41

PL-38

	December 31,
	2007			2006
	(In Millions)
Amounts recognized in the consolidated statements of financial condition consist of:
Prior to adoption of the funded status provisions of SFAS No. 158:
Prepaid benefit cost	$	104		$	67
Accrued benefit liability		(34	)		(34	)
Intangible asset		3			4
Accumulated other comprehensive loss		3			4
Subsequent to adoption of the funded status provisions of SFAS No. 158:
Assets	$	73
Liabilities		(34	)
Net amount recognized	$	39
Amounts recognized in AOCI consist of:
Initial net obligation		($1	)
Prior service cost		(1	)
Net loss		(34	)
Accumulated other comprehensive loss		(36	)
Accumulated contributions in excess of net periodic benefit cost		75
Net amount recognized	$	39
Changes recognized in OCI:
Changes due to minimum liability and intangible asset recognized prior to adoption of SFAS No. 158:
Decrease in additional minimum liability		($1	)		($3	)
Decrease in intangible asset		1
Other comprehensive loss	$	0			($3	)
Amounts recognized as a component of net periodic benefit cost:
Total recognized in net periodic benefit cost and OCI	$	9
Estimated amounts that will be amortized from AOCI over the next year:
Initial obligation		($1	)
Total		($1	)
Consolidated statement of financial condition adjustment:
Increase in accumulated other comprehensive loss, pre-tax, to reflect the adoption of SFAS No.158	$	33

PL-39

	December 31,
	2007			2006
Weighted-average assumptions used to determine benefit obligations:
Discount rate		6.25	%		5.75	%
Rate of compensation increase		N/A			N/A

Effective January 1, 2007, contribution credits to the defined benefit pension plan were suspended, thus, the rate of compensation increase assumption is no longer applicable.

	Years Ended December 31,
	2007			2006			2005
Weighted-average assumptions used to determine net periodic benefit costs:
Discount rate		5.75	%		5.50	%		5.75	%
Expected long-term return on plan assets		6.13	%		8.00	%		8.00	%
Rate of compensation increase		N/A			4.50	%		4.00	%

In developing the expected long-term rate of return on plan assets, the Company considers many factors. These factors consist of a review of historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the plan’s portfolio. This resulted in the selection of the 8.00% long-term rate of return on asset assumption for the first three months of 2007. In April 2007, the Company changed the asset allocation to fixed income assets in order to better match the expected duration of liabilities. The expected return on asset assumption was then lowered to 5.50% resulting in a weighted-average expected return on asset assumption of 6.13% for 2007.

Benefit payments for the year ended December 31, 2007 amounted to $45 million. Pacific Life expects to contribute $4 million to these plans in 2008. The expected benefit payments are as follows for the years ending December 31 (In Millions):

2008	2009	2010	2011	2012	2013-2017
$19	$21	$18	$19	$17	$81

The Company’s pension plan’s weighted-average asset allocations by asset category are as follows:

	December 31,
	2007			2006
Asset category:
Equity-type investments					69	%
Fixed income investments		99	%		30	%
Other		1	%		1	%
Total		100	%		100	%

Prior to 2007, it was intended that the defined benefit pension plan assets be invested in equity-type and fixed income investments, as long as the investments were consistent with the assumption that more than average risk and appropriate overall diversification was maintained and liquidity was sufficient to meet cash flow requirements. The defined benefit pension plan established and maintained a fundamental and long-term orientation in the determination of asset mix and selection of investment funds. This tolerance for more than average risk and long-term orientation provided the basis for a larger allocation to equities with some additional bias to higher risk investments for higher return. In anticipation of the final settlement of the plan, the asset allocation was changed to fixed income assets in order to better match the expected duration of liabilities.

PL-40

RETIREMENT INCENTIVE SAVINGS PLAN

Pacific Life provides a RISP covering all eligible employees of Pacific LifeCorp and certain of its subsidiaries. The RISP matches 75% of each employee’s contributions, up to a maximum of 6% of eligible employee compensation in cash. Since 1997, the RISP provided the Company match in the form of Pacific LifeCorp common stock. In October 2006, Pacific LifeCorp’s Board of Directors authorized a plan to terminate the Employee Stock Ownership Plan (ESOP) feature of the RISP, replace it with a cash match benefit and repurchase the outstanding allocated and unallocated shares of the ESOP. On October 25, 2006, the outstanding allocated and unallocated shares were repurchased by Pacific LifeCorp in cash for $112 million and an ESOP loan, with an outstanding balance of $2 million, was also repaid to Pacific Life. Contributions made by the Company to the RISP amounted to $24 million, $20 million and $20 million for the years ended December 31, 2007, 2006 and 2005, respectively, and are included in operating expenses.

Amounts loaned to the ESOP by Pacific Life were included in unearned ESOP shares. The unearned ESOP shares account was reduced as ESOP shares were released for allocation to participants through ESOP contributions by Pacific Life. In addition, when the fair value of ESOP shares being released for allocation to participants was different from the original issue price of those shares, the difference was recorded in paid-in capital.

POSTRETIREMENT BENEFITS

Pacific Life provides a defined benefit health care plan and a defined benefit life insurance plan (the Plans) that provide postretirement benefits for all eligible retirees and their dependents. Generally, qualified employees may become eligible for these benefits if they have reached normal retirement age, have been covered under Pacific Life’s policy as an active employee for a minimum continuous period prior to the date retired, and have an employment date before January 1, 1990. The Plans contain cost-sharing features such as deductibles and coinsurance, and require retirees to make contributions, which can be adjusted annually. Pacific Life’s commitment to qualified employees who retire after April 1, 1994 is limited to specific dollar amounts. Pacific Life reserves the right to modify or terminate the Plans at any time. As in the past, the general policy is to fund these benefits on a pay-as-you-go basis.

The net periodic postretirement benefit cost for each of the years ended December 31, 2007, 2006 and 2005 was $1 million. As of December 31, 2007 and 2006, the accumulated benefit obligation was $18 million. The actuarial gain due to the Medicare subsidy was $2 million as of December 31, 2005. The fair value of the plan assets as of December 31, 2007 and 2006 was zero. The amount of accrued benefit cost included in other liabilities prior to the adoption of the funded status provisions of SFAS No. 158 was $20 million as of December 31, 2006. The liabilities recognized after the adoption of the funded status provisions of SFAS No. 158 were $18 million as of December 31, 2007.

The adjustment related to postretirement benefits to reflect the adoption of SFAS No. 158 resulted in an increase in AOCI of $2 million, pre-tax, as of December 31, 2007.

The discount rate used in determining the accumulated postretirement benefit obligation was 6.25% and 5.75% for 2007 and 2006, respectively.

Benefit payments for the year ended December 31, 2007 amounted to $3 million. The expected benefit payments are as follows for the years ending December 31 (In Millions):

2008	2009	2010	2011	2012	2013-2017
$3	$3	$4	$4	$4	$20

PL-41

OTHER PLANS

The Company has deferred compensation plans that permit eligible employees to defer portions of their compensation and earn interest on the deferred amounts. The interest rate is determined annually. The compensation that has been deferred has been accrued and the primary expense related to this plan, other than compensation, is interest on the deferred amounts. The Company also has performance-based incentive compensation plans for its employees.

16.	INCOME TAXES
	The provision for income taxes (benefit) is as follows:

	Years Ended December 31,
	2007		2006			2005
	(In Millions)
Current	$	97	$	149		$	39
Deferred		1		49			61
Provision for income taxes from continuing operations		98		198			100
Provision (benefit) for income taxes on discontinued operations		18		(2	)		24
Total	$	116	$	196		$	124

A reconciliation of the provision for income taxes from continuing operations based on the prevailing corporate statutory tax rate of 35% to the provision for income taxes from continuing operations reflected in the consolidated financial statements is as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Provision for income taxes at the statutory rate	$	253		$	282		$	211
Separate account dividends received deduction		(103	)		(43	)		(33	)
Low income housing and foreign tax credits		(33	)		(34	)		(33	)
Nontaxable investment income		(4	)		(5	)		6
Amounts related to prior periods		(6	)		1			(51	)
Other		(9	)		(3	)
Provision for income taxes from continuing operations	$	98		$	198		$	100

Upon adoption of FIN 48 on January 1, 2007 (Note 1), the Company had unrecognized tax benefits of $32 million, which relate entirely to an uncertain tax position regarding refund claims for the impact of short-term capital gains on computing dividends received deductions relating to the Company’s separate accounts (DRD). A reconciliation of the changes in the unrecognized tax benefits from January 1, 2007 to December 31, 2007 is as follows (In Millions):

Balance at January 1, 2007	$	32
Additions and deletions		—
Balance at December 31, 2007	$	32

Depending on the outcome of Internal Revenue Service (IRS) appeals proceedings, approximately $7 million of the unrecognized DRD tax benefits may be realized during the next twelve months. All realized tax benefits and related interest will be recorded as a discrete item that will impact the effective tax rate in the accounting period in which the uncertain DRD tax position is ultimately settled.

During the year ended December 31, 2007, the Company paid an immaterial amount of interest and penalties to state tax authorities.

PL-42

The net deferred tax liability, included in other liabilities as of December 31, 2007 and 2006, is comprised of the following tax effected temporary differences:

	December 31,
	2007			2006
	(In Millions)
Deferred tax assets:
Policyholder reserves	$	894		$	825
Investment valuation		133			42
Deferred compensation		49			43
Interest in PIMCO		41			40
Dividends to policyholders		7			7
Total deferred tax assets		1,124			957
Deferred tax liabilities:
DAC		(1,187	)		(1,108	)
Hedging		(65	)		(53	)
Partnership income		(53	)		(35	)
Reinsurance		(51	)		(12	)
Retirement benefits		(19	)		(13	)
Depreciation		(9	)		(7	)
Other		(16	)		(4	)
Total deferred tax liabilities		(1,400	)		(1,232	)
Net deferred tax liability from continuing operations		(276	)		(275	)
Unrealized gain on derivatives and securities available for sale		(102	)		(234	)
Unrealized gain on interest in PIMCO and other security		(43	)		(42	)
Deferred taxes on cumulative changes in accounting principles		27
Minimum pension liability and other adjustments		1			1
Net deferred tax liability		($393	)		($550	)

SFAS No. 109, Accounting for Income Taxes requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that a portion or all of the deferred tax assets will not be realized. Based on management’s assessment, it is more likely than not that deferred tax assets will be realized through future taxable earnings.

The Company files income tax returns in U.S. Federal and various state jurisdictions and have tax years open by statute, or valid extension thereof, for tax years after 1997. The Company is under continuous audit by the IRS and is audited periodically by some state taxing authorities. The IRS and state taxing authorities have completed audits of the Company’s tax returns through the tax years ended December 31, 2003 and are currently auditing the tax years ended December 31, 2005 and 2004. The Company does not expect the Federal and state audits to result in any material assessments.

PL-43

17.	SEGMENT INFORMATION
	The Company has three operating segments: Life Insurance, Investment Management, and Annuities & Mutual Funds. These segments are managed separately and have been identified based on differences in products and services offered. All other activity is included in Corporate and Other segment.
	The Life Insurance segment offers UL, VUL and other life insurance products to individuals, small businesses and corporations through a network of distribution channels that include regional life offices, sales centers, marketing organizations, wirehouse broker-dealer firms and a national producer group that has produced over 10% of the segment’s in force business.
	The Investment Management segment offers investment and annuity products to pension fund sponsors and other institutional investors primarily through its home office marketing team and other intermediaries.
	The Annuities & Mutual Funds segment offers variable annuities, fixed annuities and mutual funds to individuals and small businesses through Financial Industry Regulatory Authority (FINRA) firms, regional and national wirehouses, and financial institutions. FINRA was created in July 2007 through the consolidation of the National Association of Securities Dealers and the member regulation, enforcement and arbitration functions of the New York Stock Exchange.
	The Corporate and Other segment primarily includes investment income, expenses and assets not attributable to the operating segments, and the operations of certain subsidiaries that do not qualify as operating segments. The Corporate and Other segment also includes the interest in PIMCO and the elimination of intersegment transactions. Discontinued operations (Note 6) are also included in Corporate and Other segment.
	The Company uses the same accounting policies and procedures to measure segment net income and assets as it uses to measure its consolidated net income and assets. Net investment income and net realized investment gain (loss) are allocated based on invested assets purchased and held as is required for transacting the business of that segment. Overhead expenses are allocated based on services provided. Interest expense is allocated based on the short-term borrowing needs of the segment and is included in net investment income. The provision for income taxes is allocated based on each segment’s actual tax provision.
	The operating segments are allocated equity based on formulas determined by management and receive a fixed interest rate of return on interdivision debentures supporting the allocated equity. The debenture amount is reflected as investment expense in net investment income in the Corporate and Other segment and as investment income in the operating segments.
	The Company generates substantially all of its revenues and net income from customers located in the U.S. As of December 31, 2007 and 2006, the Company had foreign investments with an estimated fair value of $6.8 billion and $6.4 billion, respectively.

PL-44

The following is segment information as of and for the year ended December 31, 2007:

					Annuities
	Life		Investment		& Mutual			Corporate
	Insurance		Management		Funds			and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	777	$	224	$	779					$	1,780
Net investment income		803		905		186		$	220			2,114
Net realized investment gain (loss)		1		20		(99	)		32			(46	)
Investment advisory fees		29				298						327
Other income		9				84			5			98
Total revenues		1,619		1,149		1,248			257			4,273
BENEFITS AND EXPENSES
Interest credited		618		504		144						1,266
Policy benefits		308		535		12						855
Commission expenses		209		11		470						690
Operating expenses		252		34		346			108			740
Total benefits and expenses		1,387		1,084		972			108			3,551
Income from continuing operations before provision for income taxes		232		65		276			149			722
Provision (benefit) for income taxes		58		12		(6	)		34			98
Income from continuing operations		174		53		282			115			624
Minority interest									(36	)		(36	)
Discontinued operations, net of taxes									11			11
Net income	$	174	$	53	$	282		$	90		$	599
Total assets	$	27,969	$	16,163	$	57,322		$	3,049		$	104,503
DAC		1,813		70		2,598						4,481
Separate account assets		6,529		333		50,743						57,605
Policyholder and contract liabilities		19,535		14,574		3,933						38,042
Separate account liabilities		6,529		333		50,743						57,605

PL-45

The following is segment information as of and for the year ended December 31, 2006:

						Annuities
	Life			Investment		& Mutual		Corporate
	Insurance			Management		Funds		and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	722		$	206	$	610				$	1,538
Net investment income		777			861		204	$	200			2,042
Net realized investment gain (loss)		(6	)		23		29		16			62
Realized investment gain on interest in PIMCO									32			32
Investment advisory fees		32					287					319
Other income		4			16		15		12			47
Total revenues		1,529			1,106		1,145		260			4,040
BENEFITS AND EXPENSES
Interest credited		588			478		153					1,219
Policy benefits		280			468		32					780
Commission expenses		189			11		406					606
Operating expenses		234			25		261		110			630
Total benefits and expenses		1,291			982		852		110			3,235
Income from continuing operations before provision for income taxes		238			124		293		150			805
Provision for income taxes		60			32		58		48			198
Income from continuing operations		178			92		235		102			607
Minority interest									(13	)		(13	)
Discontinued operations, net of taxes									(4	)		(4	)
Net income	$	178		$	92	$	235	$	85		$	590
Total assets	$	26,241		$	15,118	$	49,122	$	2,716		$	93,197
DAC		1,700			74		2,474					4,248
Separate account assets		5,838			52		43,010					48,900
Policyholder and contract liabilities		18,604			13,483		3,998					36,085
Separate account liabilities		5,838			52		43,010					48,900

PL-46

The following is segment information for the year ended December 31, 2005:

						Annuities
	Life			Investment		& Mutual		Corporate
	Insurance			Management		Funds		and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	708		$	168	$	485				$	1,361
Net investment income		752			828		225	$	113			1,918
Net realized investment gain (loss)		(14	)		7		26		4			23
Realized investment gain on interest in PIMCO									104			104
Investment advisory fees		28					220		1			249
Other income		1			10		8		4			23
Total revenues		1,475			1,013		964		226			3,678
BENEFITS AND EXPENSES
Interest credited		577			455		166					1,198
Policy benefits		275			415		16					706
Commission expenses		181			7		342					530
Operating expenses		236			26		247		133			642
Total benefits and expenses		1,269			903		771		133			3,076
Income from continuing operations before provision for income taxes		206			110		193		93			602
Provision for income taxes		44			25		13		18			100
Income from continuing operations		162			85		180		75			502
Cumulative adjustment due to change in accounting principle									(2	)		(2	)
Minority interest									(1	)		(1	)
Discontinued operations, net of taxes									43			43
Net income	$	162		$	85	$	180	$	115		$	542

18.	TRANSACTIONS WITH AFFILIATES
	Pacific Life Fund Advisors LLC, a wholly owned subsidiary of Pacific Life formed in 2007, serves as the investment adviser for the Pacific Select Fund, an investment vehicle provided to the Company’s variable life insurance policyholders and variable annuity contract owners, and the Pacific Life Funds, the investment vehicle for the Company’s mutual fund products. Prior to May 1, 2007, Pacific Life served in this capacity. Investment advisory and other fees are based primarily upon the net asset value of the underlying portfolios. These fees amounted to $326 million, $316 million and $246 million for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, Pacific Life provides certain support services to the Pacific Select Fund, the Pacific Life Funds and other affiliates based on an allocation of actual costs. These fees amounted to $8 million, $7 million and $5 million for the years ended December 31, 2007, 2006 and 2005, respectively.
	In addition, effective May 1, 2007, a service plan adopted by the Pacific Select Fund went into effect whereby the fund pays PSD, as distributor of the fund, a service fee in connection with services rendered or procured to or for shareholders of the fund or their variable contract owners. These services may include, but are not limited to, payment of compensation to broker-dealers, including PSD itself, and other financial institutions and organizations which assist in providing any of the services. For the period May 1, 2007 through December 31, 2007, PSD received $74 million in

PL-47

service fees from the Pacific Select Fund, which is recorded in other income. The service fees were allocated to the operating segments, primarily the Annuities & Mutual Funds segment (Note 17).

	In April 2006, Pacific Life made a $16 million non-cash dividend to Pacific LifeCorp, consisting of a real estate investment, which resulted in a gain of $9 million for Pacific Life.
	As discussed in Note 14, no lapse guarantee benefit riders are coinsured with PAR Bermuda.
19.	COMMITMENTS AND CONTINGENCIES
	COMMITMENTS
	The Company has outstanding commitments to make investments primarily in fixed maturity securities, mortgage loans, limited partnerships and other investments, as follows (In Millions):

Years Ending December 31:
2008	$	1,144
2009 through 2012		929
2013 and thereafter		73
Total	$	2,146

The Company leases office facilities under various noncancelable operating leases. Rent expense, which is included in operating expenses, in connection with these leases was $12 million, $11 million and $10 million for the years ended December 31, 2007, 2006 and 2005, respectively. In connection with the group insurance transaction (Note 6), PL&A is contingently liable for certain future rent and expense obligations, not to exceed $16 million, related to an office lease that was assigned to the buyer. Aggregate minimum future commitments are as follows (In Millions):

Years Ending December 31:
2008	$	5
2009 through 2012		8
2013 and thereafter		1
Total	$	14

In March 2007, the Company began construction of a new office building in Aliso Viejo, California that was completed in February 2008. The Company will retain its corporate headquarters in Newport Beach, California.

CONTINGENCIES — LITIGATION

During the year ended December 31, 2007, Pacific Life settled a national class action lawsuit, Cooper v. Pacific Life, for a combination of cash distributions and contract credits to owners of qualified annuity contracts who purchased their contracts between August 19, 1998, and April 30, 2002, or paid premium payments during that time period. Pacific Life strongly disagreed with the claims in the lawsuit. The settlement is not considered an admission or concession with respect to any claims made in the lawsuit and did not have a material adverse effect on the Company’s consolidated financial position. Distributions will be made to eligible class members beginning in the first quarter of 2008 and in accordance with the terms of the settlement agreement.

The Company is a respondent in a number of other legal proceedings, some of which involve allegations for extra-contractual damages. Although the Company is confident of its position in these matters, success is not a certainty and it is possible that in any case a judge or jury could rule against the Company. In the opinion of management, the outcome of such proceedings is not likely to have a material adverse effect on the Company’s consolidated financial position. The Company believes adequate provision has been made in its consolidated financial statements for all probable and estimable losses for litigation claims against the Company.

PL-48

CONTINGENCIES — IRS REVENUE RULING

On August 16, 2007, the IRS issued Revenue Ruling 2007-54, which provided the IRS’ interpretation of tax law regarding the computation of the Company’s DRD. On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which suspended Revenue Ruling 2007-54 and indicated the IRS would address the proper interpretation of tax law in a regulation project that has been added to the IRS’ 2007/2008 priority guidance plan. If, after public notice and comment, the IRS regulation project ultimately adopts the IRS’ interpretation contained in Revenue Ruling 2007-54, the Company could lose a substantial amount of DRD tax benefits, which could have a material adverse effect on the Company’s consolidated financial statements.

CONTINGENCIES — OTHER

In connection with the sale of certain broker-dealer subsidiaries (Note 6), certain indemnifications triggered by breaches of representations, warranties or covenants were provided by the Company. Also, included in the indemnifications is indemnification for certain third-party claims arising from the normal operation of these broker-dealers prior to the closing and within the nine month period following the sale. Management believes that its exposure to loss, if any, is not likely to have a material adverse effect on the Company’s consolidated financial statements.

In the course of its business, the Company provides certain indemnifications related to other dispositions, acquisitions, investments, lease agreements or other transactions that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. These obligations are typically subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. Because the amounts of these types of indemnifications often are not explicitly stated, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. The Company has not historically made material payments for these types of indemnifications. The estimated maximum potential amount of future payments under these obligations is not determinable due to the lack of a stated maximum liability for certain matters, and therefore, no related liability has been recorded. Management believes that judgments, if any, against the Company related to such matters are not likely to have a material adverse effect on the Company’s consolidated financial statements.

Most of the jurisdictions in which the Company is admitted to transact business require life insurance companies to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by insolvent life insurance companies. These associations levy assessments, up to prescribed limits, on all member companies in a particular state based on the proportionate share of premiums written by member companies in the lines of business in which the insolvent insurer operated. The Company has not received notification of any insolvency that is expected to result in a material guaranty fund assessment.

In relation to an asset securitization sponsored by Aviation Capital Group Corp., a wholly owned subsidiary of Pacific LifeCorp, Pacific Life is contingently obligated to purchase certain notes from the asset securitization trust to cover shortfalls in amounts due to the holders of the notes, up to certain levels as specified under the related agreements. As of December 31, 2007, the maximum potential amount of this future investment commitment was $50 million.

In connection with the operations of PSD, Pacific Life has made commitments to provide for additional capital funding as may be required.

See Note 9 for discussion of contingencies related to derivative instruments.

See Note 16 for discussion of other contingencies related to income taxes.

PL-49

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2008

PACIFIC SELECT ESTATE PRESERVER IV

PACIFIC SELECT EXEC SEPARATE ACCOUNT

Pacific Select Estate Preserver IV is a last survivor variable life insurance policy offered by Pacific Life Insurance Company.

This Statement of Additional Information (SAI) is not a prospectus and should be read in conjunction with the Policy’s prospectus, dated May 1, 2008, which is available without charge upon written or telephone request to Pacific Life. Terms used in this SAI have the same meanings as in the prospectus, and some additional terms are defined particularly for this SAI. This SAI is incorporated by reference into the Policy’s prospectus.

Pacific Life Insurance Company

P.O. Box 2030

Omaha, NE 68103

1-800-800-7681

TABLE OF CONTENTS

		Page No.
MORE ON THE OPTIONAL RIDERS			1
PREMIUM LIMITATIONS			3
	Guideline Premium Limit		3
	Modified Endowment Contract		3
	Increasing the Net Amount At Risk		4
TRANSFER SERVICES			4
	Dollar Cost Averaging		4
	Portfolio Rebalancing		4
	First Year Transfer		5
MORE ON POLICY CHARGES			5
	Increases in Face Amount		5
MORE ON VARIABLE LIFE INSURANCE AND YOUR TAXES			6
	Mortality and Expense Charges		6
	Investor Control		6
	Comparison to Taxable Investments		7
MORE ON PACIFIC LIFE AND THE POLICIES			7
	How We’re Organized		7
	Distribution Arrangements		7
	The Separate Account		9
	Performance		9
	Yields		10
	Financial Statements		12
	Experts		12
	Financial Statements of Pacific Select Exec Separate Account		SA-1
	Financial Statements of Pacific Life Insurance Company		PL-1

i

MORE ON THE OPTIONAL RIDERS

There are five optional Riders that provide extra benefits. Ask your registered representative for additional information about the Riders available with the Policy. Samples of the provisions for the extra optional benefits are available from us upon Written Request.

Accelerated Living Benefits Rider

Gives the Policy Owner access to a portion of the Policy’s Death Benefit if the Survivor has been diagnosed with a terminal illness resulting in a life expectancy of six months or less (or longer than six months in some states). We refer to this amount as the accelerated benefit. If you have Policy Debt, we will reduce the accelerated benefit proceeds payable to repay a portion of the loan. We may also deduct an administrative fee of $150 from your accelerated benefit.

You may choose to receive the accelerated benefit either in a lump sum or any other payment plan available at the time of payment. We will pay the benefit only once per Insured.

Payment of the accelerated benefit will reduce the Death Benefit under your Policy and any Riders used in calculating the available accelerated benefit. It will also reduce any Policy Debt.

Benefits received under this Rider may be taxable, and may impact your eligibility for Medicaid or other government benefits. Please consult your tax adviser if you want to exercise your rights under this Rider.

You may purchase this Rider at Policy issue or any time while the Policy is In Force. The Rider will terminate on the earliest of your Written Request, on lapse or termination of the Policy, or when an accelerated benefit is paid under this Rider.

Enhanced Policy Split Option Rider

Allows the Policy to be split into two individual policies, without evidence of insurability. This Rider is available only to married couples. This Rider will be included automatically with all Policies where the older Insured is issue Age 79 or less, and where neither Insured has a substandard Risk Class or is uninsurable.

The Rider may only be exercised within 90 days after a change in the Federal Estate Tax Law which results in:

1)	complete removal or material limitation of the Unlimited Marital Deduction, as defined in the Tax Code,
2)	reduction by 50% or more in the dollar amount of the Federal Unified Credit, as defined in the Tax Code, or
3)	subtraction of 25% or more from the percentage Federal Estate Tax rate that would be applicable to the estate of the surviving spouse.

The exchange may be made to any individual flexible premium adjustable life insurance policy that we regularly issue at the time of exchange, subject to our approval. We waive the surrender charge on your original Policy. Although not anticipated, we reserve the right to charge for any state or federal taxes incurred upon exercise of this Rider.

The Rider will terminate on the earliest of your Written Request, the date of the first death of the two Insureds, on lapse or termination of the Policy, when the older of the two Insureds reaches Age 80, or upon exercise of this Rider.

Individual Annual Renewable Term Rider

Provides term insurance on either Insured or individually on both Insureds and is renewable annually until the Policy terminates. The Death Benefit is payable at the death of the Insured covered by the Rider. The Rider is available for Insureds Age 20 through 85 at the time of Rider issue. You may purchase the Rider at Policy issue or any time the Policy is In Force, subject to satisfactory evidence of insurability. The amount of coverage can be level or vary every year and may follow any pattern, subject to underwriting approval, to

1

match your need for insurance. Annual increases are scheduled at issue. You may also request unscheduled increases or decreases in Face Amount of the Rider, subject to certain limitations.

The guaranteed monthly cost of insurance rate will be shown in your Policy Specifications. Our current cost of insurance rates are lower than the guaranteed rates. The current charge for the M&E Risk Face Amount charge is $0.

You may request increases or decreases in Face Amount of the Rider. Each increase will be subject to satisfactory evidence of insurability and will have associated cost of insurance based on the Age and Risk Class of the Insured under this Rider on the effective date of the increase. Unless you request otherwise, the increase will become effective on the first Monthly Payment Date on or following the date we receive and approve your request. We may deduct an administrative charge not to exceed $100 from your Policy’s Accumulated Value on the effective date of any unscheduled increase. You must send a Written Request if you wish to decrease the Face Amount of this Rider. Decreases will be effective on the first Monthly Payment Date on or following the date the Written Request is received at our Life Insurance Operations Center. Decreases will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Individual Annual Renewable Term Rider Face Amount.

The Rider will terminate on the earliest of your Written Request, or on lapse or termination of this Policy. In addition, coverage under this Rider on any individual Insured will terminate on the earlier of the death of that individual Insured, or the date that individual Insured reaches Age 100.

Last Survivor Added Protection Benefit Rider

Provides additional Death Benefit protection on the Insureds in combination with the Face Amount of the Policy. The Rider may be purchased at Policy issue or any time the Policy is In Force, subject to evidence of insurability. The Rider is available for Insureds Age 20 through 85 at the time of Rider issue. The amount of coverage can be level or vary every year and may follow any pattern, subject to underwriting approval, to match your need for insurance. Annual increases are scheduled at issue. You may also request unscheduled increases or decreases in Face Amount of the Rider, subject to certain limitations.

The Rider is payable on the death of the Survivor, and modifies the Death Benefit of the Policy to include the Face Amount of the Rider, so that the Death Benefit equals the greater of the Death Benefit as calculated under 1) the Death Benefit Option you choose on the Policy plus the Face Amount of the Rider, or 2) the Guideline Minimum Death Benefit. If you choose Death Benefit Option D for your base Policy to determine the Death Benefit, the Face Amount under this Rider will be added to the base Policy Face Amount, and the sum of this coverage will be multiplied by the Death Benefit factor for the current Policy Year as shown in the Policy Specifications.

The guaranteed monthly cost of insurance rate will be shown in your Policy Specifications. Our current cost of insurance rates are lower than the guaranteed rates.

You may request increases or decreases in Face Amount of the Rider. Each increase will be subject to satisfactory evidence of insurability and will have associated cost of insurance rates. Unless you request otherwise, the increase will become effective on the first Monthly Payment Date on or following the date we receive and approve your request. We may deduct an administrative charge not to exceed $100 from your Policy’s Accumulated Value on the effective date of any unscheduled increase. Decreases will be effective on the first Monthly Payment Date on or following the date the Written Request is received at our Life Insurance Operations Center. Decreases will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Last Survivor Added Protection Benefit Rider Face Amount.

The Rider will terminate on the earliest of your Written Request, or on lapse or termination of this Policy, or upon the Survivor’s death.

2

Policy Split Option Rider

Allows the Policy to be split into two individual policies subject to satisfactory evidence of insurability on each Insured. The exchange may be made to any individual flexible premium adjustable life insurance policy that we regularly issue at the time of exchange, subject to our approval. A $200 administrative fee may be deducted from the original Policy’s Accumulated Value on the effective date of the exchange. Although not anticipated, we reserve the right to charge for any state or federal taxes incurred upon exercise of this Rider.

The original Policy’s Accumulated Value, Policy Debt and Cash Surrender Value are split in proportion to the Face Amount. We waive the surrender charge on your original Policy.

The Rider will terminate on the earliest of your Written Request, the date of the first death of the two Insureds, on lapse or termination of the Policy, when the older of the two Insureds reaches Age 80, or upon exercise of this Rider.

PREMIUM LIMITATIONS

Federal tax law puts limits on the amount of premium payments you can make in relation to your Policy’s Death Benefit. These limits apply in the following situations.

Guideline Premium Limit

If you’ve chosen the Guideline Premium Test as your Death Benefit Qualification Test, the total amount you can pay in premiums and still have your Policy qualify as life insurance is your Policy’s Guideline Premium Limit. The sum of the premiums paid, less any withdrawals, at any time cannot exceed the Guideline Premium Limit, which is the greater of:

•  the guideline single premium or

•  the sum of the guideline level annual premiums.

We may refuse to accept all or part of a premium payment if, by accepting it, you will exceed your Policy’s Guideline Premium Limit. If we find that you’ve exceeded your Guideline Premium Limit, we may remove all or part of a premium you’ve paid from your Policy as of the day we applied it, and return it to you. We’ll adjust the Death Benefit retroactively to that date to reflect the reduction in premium payments.

Your Policy’s guideline single premium and guideline level annual premiums appear on your Policy Specifications. Before you buy a Policy, you can ask us or your registered representative for a personalized Illustration that will show you the guideline single premium and guideline level annual premiums.

Modified Endowment Contract

A life insurance policy will become a Modified Endowment Contract if the sum of premium payments made during the first seven contract years, less a portion of withdrawals, exceeds the seven-pay limit defined in Section 7702A of the Internal Revenue Code. You’ll find a detailed discussion of Modified Endowment Contracts in Variable Life Insurance and Your Taxes in the prospectus.

Unless you’ve told us in writing that you want your Policy to become a Modified Endowment Contract, we’ll remove all or part of the premium payment from your Policy as of the day we applied it and return it to you. We’ll also adjust the Death Benefit retroactively to that date to reflect the reduction in premium payments. If we receive such a premium within 20 days before your Policy Anniversary, we’ll hold it and apply it to your Policy on the Policy Anniversary.

In both of these situations, if we remove an excess premium from your Policy, we’ll return the premium amount to you no later than 60 days after the end of the Policy Year. We may adjust the amount for interest or for changes in Accumulated Value that relate to the amount of the excess premium we’re returning to you.

If we do not return the premium amount to you within that time, we’ll increase your Policy’s Death Benefit retroactively, to the day we applied the premium, and prospectively so that it’s always the amount necessary to

3

ensure your Policy qualifies as life insurance, or to prevent it from becoming a Modified Endowment Contract. If we increase your Death Benefit, we’ll adjust cost of insurance or Rider charges retroactively and prospectively to reflect the increase.

Increasing the Net Amount At Risk

An increase in the Net Amount At Risk occurs if the Policy’s Death Benefit is equal to the Guideline Minimum Death Benefit, or would be equal to it once we apply your premium payment. We may choose to accept your premium payment in this situation, but before we do so, we may require satisfactory evidence of the insurability of the Insured.

TRANSFER SERVICES

You may only participate in one transfer service at any time.

Dollar Cost Averaging

Our dollar cost averaging service allows you to make scheduled transfers of $50 or more between Variable Investment Options without paying a transfer fee. Here’s how the service works:

•  You can set up this service at any time while your Policy is In Force.

•  You need to complete a request form to enroll in the service. You may enroll by telephone or electronically if we have your completed telephone and electronic authorization on file.

•  You must have at least $5,000 in a Variable Investment Option to start the service.

•  We’ll automatically transfer Accumulated Value from one Variable Investment Option to one or more of the other Variable Investment Options you’ve selected.

•  We’ll process transfers as of the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you’ve chosen. We will not make the first transfer until after the Free Look Transfer Date in states that require us to return your premiums if you exercise your Free Look Right.

•  We will not charge you for the dollar cost averaging service or for transfers made under this service, even if we decide to charge you in the future for transfers outside of the service, except if we have to by law.

•  We have the right to discontinue, modify or suspend the service at any time.

•  We’ll keep making transfers at the intervals you’ve chosen until one of the following happens:

•  the total amount you’ve asked us to transfer has been transferred

•  there is no more Accumulated Value in the Investment Option you’re transferring from

•  your Policy enters the grace period and is in danger of lapsing

•  we receive your Written Request to cancel the service

•  we discontinue the service.

Portfolio Rebalancing

The portfolio rebalancing service automatically transfers your Policy’s Accumulated Value among the Variable Investment Options according to your original percentage allocations. Here’s how the service works:

•  You can set up this service at any time while your Policy is In Force.

•  You enroll in the service by sending us a Written Request or a completed Automatic Rebalancing Form. You may enroll by telephone or electronically if we have your completed telephone and electronic authorization on file.

•  Unless you choose a different start date, your first rebalancing will take place at the end of the Business Day we receive your request. Subsequent rebalancing will take place at the end of the Business Day on your Policy’s monthly, quarterly, semi-annual or annual anniversary, depending on the interval you chose.

4

•  We will not make the first transfer until after the Free Look Transfer Date, if your Policy was issued in a state that requires us to return your premiums if you exercise your Free Look Right.

•  If you cancel this service, you must wait 30 days to begin it again.

•  We do not charge for the portfolio rebalancing service, and we do not currently charge for transfers made under this service.

•  We can discontinue, suspend or change the service at any time.

First Year Transfer

Our first year transfer service allows you to make monthly transfers from the Fixed Account to the Variable Investment Options or the Fixed LT Account during the first 12 Policy months from the date your initial premium is applied to your Policy. Here’s how the service works:

•  You enroll in the service when you apply for your Policy and include specific details on your application.

•  You choose a regular amount to be transferred every month for 12 months.

•  Transfers under the first year transfer service take place on your Policy’s Monthly Payment Date, starting on the first Monthly Payment Date following the Free Look Transfer Date.

•  If you sign up for this service, we’ll waive the usual transfer limit for the Fixed Account during the first 12 Policy months from the date your initial premium is applied to your Policy.

•  If we make the last transfer during the second Policy Year, we will not count it toward the usual one transfer per year limit for the Fixed Account.

•  If the Accumulated Value in the Fixed Account is less than the amount to be transferred, we’ll transfer the balance and then cancel the service.

•  If there is Accumulated Value remaining in the Fixed Account at the end of the service, the transfer limitations for the Fixed Account will apply.

•  We do not charge for the first year transfer service, and we do not currently charge for transfers made under this service.

MORE ON POLICY CHARGES

Increases in Face Amount

Net Premiums you pay are allocated to the Accumulated Value in your base Policy and any charges, withdrawals and distributions are subtracted from that Accumulated Value. If you elect Death Benefit Option C, your Death Benefit on the base Policy is your base Policy’s Face Amount plus any premium payments you make and less any withdrawals and distributions.

If you add to your base Policy a Last Survivor Accounting Benefit Rider and/or an Individual Annual Renewable Term Rider, and/or increase the Face Amount of such a Rider, we do not change the above allocations. To determine the cost of insurance (“COI”) charge on each of these coverage components, we divide the Death Benefit for each coverage component that would have been payable at the beginning of the Policy month by 1.00327374 to calculate the discounted Net Amount At Risk for each coverage component. For the base Policy, we subtract the Accumulated Value in the base Policy at the beginning of the month before the monthly charge is due to determine the discounted Net Amount At Risk for that coverage component. For each other coverage component we subtract from its discounted Death Benefit the greater of zero or the result of the Accumulated Value minus the Face Amount of each coverage component for which the COI charge has been already calculated. Each component’s Net Amount At Risk is calculated in the order in which it was added to the Policy, starting with the oldest component. The discounted Net Amount At Risk for each coverage component is multiplied by the current COI rate for that coverage component.

5

MORE ON VARIABLE LIFE INSURANCE AND YOUR TAXES

This discussion about taxes is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It’s based on the Internal Revenue Code (the Tax Code) and does not cover any state or local tax laws. This is not a complete discussion of all federal income tax questions that may arise under the Policy. There are special rules that we do not include here that may apply in certain situations.

We do not make any guarantees about the tax status of your Policy, and you should not consider the discussion that follows to be tax advice. Speak to a qualified tax adviser for complete information about federal, state and local taxes that may apply to you.

We do not know whether the current treatment of life insurance policies under current federal income tax or estate or gift tax laws will continue. We also do not know whether the current interpretations of the laws by the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of life insurance policies, other tax consequences described in this discussion and in the Policy prospectus section Variable Life Insurance and Your Taxes or tax consequences that relate directly or indirectly to life insurance policies.

Mortality and Expense Charges

The Tax Code and tax regulations impose limitations on unreasonable mortality and expense charges for purposes of determining whether a policy qualifies as life insurance for federal tax purposes. For life insurance policies entered into on or after October 21, 1988, these calculations must be based upon reasonable mortality charges and other charges reasonably expected to be actually paid.

The Treasury Department has issued proposed regulations about reasonable standards for mortality charges. While we believe that our mortality costs and other expenses used in calculating whether the Policy qualifies as life insurance are reasonable under current laws, we cannot be sure that the IRS agrees with us. We can change our mortality charges if we believe the changes are needed to ensure that your Policy qualifies as a life insurance contract.

Investor Control

For a variable life insurance policy to qualify for tax deferral, assets in the separate accounts supporting the contract must be considered to be owned by the insurance company and not by the contract owner. Under current U.S. tax law, if a contract owner has excessive control over the investments made by a separate account, or the underlying fund, the contract owner will be taxed currently on income and gains from the account or fund. In other words, in such a case of “investor control” the contract owner would not derive the tax benefits normally associated with variable life insurance.

The application of the investor control doctrine is subject to some uncertainty. Generally, according to the IRS, there are two ways that impermissible investor control may exist. The first relates to the design of the contract or the relationship between the contract and a separate account or underlying fund. For example, at various times, the IRS has focused on, among other factors, the number and type of investment choices available pursuant to a given variable contract, whether the contract offers access to funds that are available to the general public, the number of transfers that a contract owner may make from one investment option to another, and the degree to which a contract owner may select or control particular investments.

With respect to this first aspect of investor control, we believe that the design of our contracts and the relationship between our contracts and the portfolios satisfy the current view of the IRS on this subject, such that the investor control doctrine should not apply. However, because of some uncertainty with respect to this subject and because the IRS may issue further guidance on this subject, we reserve the right to make such changes as we deem necessary or appropriate to reduce the risk that your Policy might not qualify as a life insurance policy for tax purposes.

6

The second way that impermissible investor control might exist concerns your actions. Under the IRS pronouncements, you may not select or control particular investments, other than choosing among broad investment choices such as selecting a particular portfolio. You may not select or direct the purchase or sale of a particular investment of a portfolio. All investment decisions concerning the portfolios must be made by the portfolio manager for such portfolio in his or her sole and absolute discretion, and not by the contract owner.

Furthermore, under the IRS pronouncements, you may not communicate directly or indirectly with such a portfolio manager or any related investment officers concerning the selection, quality, or rate of return of any specific investment or group of investments held by a portfolio.

Finally, the IRS may issue additional guidance on the investor control doctrine, which might further restrict your actions or features of the variable contract. Such guidance could be applied retroactively. If any of the rules outlined above are not complied with, the IRS may seek to tax you currently on income and gains from a portfolio such that you would not derive the tax benefits normally associated with variable life insurance. Although highly unlikely, such an event may have an adverse impact on the Fund and other variable contracts. We urge you to consult your own tax adviser with respect to the application of the investor control doctrine.

Comparison to Taxable Investments

With respect to taxable investments, current tax law generally provides for a maximum tax rate for individual taxpayers of 15% on long-term capital gains and on certain “qualifying dividends” on corporate stock. These rate reductions do not apply to corporate taxpayers. A taxpayer will also have to satisfy a more than 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower tax rate. Earnings from non-qualifying dividends, interest income, other types of ordinary income and short-term capital gains will be taxed at the ordinary income tax rate applicable to the taxpayer.

These rules mean that for policyholders who are individuals the tax-related advantage of life insurance compared to certain taxable investments is reduced because the tax burden applicable to long-term capital gains and from certain “qualifying dividends” on corporate stock has been reduced.

MORE ON PACIFIC LIFE AND THE POLICIES

How We’re Organized

Pacific Life was established on January 2, 1868 under the name, Pacific Mutual Life Insurance Company of California. It was reincorporated as Pacific Mutual Life Insurance Company on July 22, 1936. On September 1, 1997, Pacific Life converted from a mutual life insurance company to a stock life insurance company. Pacific Life redomesticated to Nebraska on September 1, 2005. Pacific Life is a subsidiary of Pacific LifeCorp, a holding company, which in turn is a subsidiary of Pacific Mutual Holding Company, a mutual holding company.

Under their charters, Pacific Mutual Holding Company must always hold at least 51% of the outstanding voting stock of Pacific LifeCorp. Pacific LifeCorp must always own 100% of the voting stock of Pacific Life. Owners of Pacific Life’s annuity contracts and life insurance policies have certain membership interests in Pacific Mutual Holding Company. They have the right to vote on the election of the Board of Directors of the mutual holding company and on other matters. They also have certain rights if the mutual holding company is liquidated or dissolved.

Distribution Arrangements

Pacific Select Distributors, Inc. (PSD), our subsidiary, acts as the distributor of the Policies and offers the Policies on a continuous basis. PSD is located at 700 Newport Center Drive, Newport Beach, California 92660. PSD is registered as a broker-dealer with the SEC and is a member of FINRA. We pay PSD for acting as distributor under a distribution agreement. We and PSD enter into selling agreements with broker-dealers whose registered representatives are authorized by state insurance departments to sell the Policies. The

7

aggregate amount of underwriting commissions paid to PSD with regard to this Policy in 2007, 2006 and 2005 was $55,112.12, $82,373.37 and $239,856.85 respectively, of which $0 was retained.

PSD or an affiliate pays various sales compensation to broker-dealers that solicit applications for the Policies. PSD or an affiliate also may provide reimbursement for other expenses associated with the promotion and solicitation of applications for the Policies. Commissions are based on “target” premiums we determine. The commissions we pay vary with the agreement, and in some cases commissions on premiums paid 37%, but the most common schedule of commissions we pay is:

•  30% of premiums paid up to the first target premium

•  25% of the premiums paid under targets 2 through 5

•  4% of the premiums paid in excess of targets 1 through 5 in Policy Years 1 through 10

•  3% of premiums paid in excess of the 10th target premium.

A target premium is a hypothetical premium that is used only to calculate commissions. It varies with the Death Benefit Option you choose, the Age of the Insureds on the Policy Date, and the gender (unless unisex rates are required) and Risk Class of the Insureds. A Policy’s target premium will usually be less than, but generally does not exceed 135% of, the Policy’s guideline level premiums. Before you buy a Policy, you can ask us or your registered representative for a personalized Illustration that shows you the guideline single premium and guideline level premiums.

Your registered representative typically receives a portion of the compensation that is payable to his or her broker-dealer in connection with the Policy, depending on the agreement between your registered representative and his or her firm. Pacific Life is not involved in determining that compensation arrangement, which may present its own incentives or conflicts. You may ask your registered representative how he/she will personally be compensated for the transaction.

PSD or an affiliate may pay broker-dealers an annual renewal commission of up to 0.20% of a Policy’s Accumulated Value less any Policy Debt. We calculate the renewal amount monthly and it becomes payable on each Policy Anniversary.

In addition to the commissions described above, we and/or an affiliate may pay additional cash compensation from their own resources in connection with the promotion and solicitation of application for the Policies by some, but not all, broker-dealers. The range of additional cash compensation based on premium payments usually ranges from 0% to 15% of premium paid up to the first target premium, but generally does not exceed 14% of commissions on premiums paid thereafter. Such additional compensation may give Pacific Life greater access to registered representatives of the broker-dealers that receive such compensation. While this greater access provides the opportunity for training and other educational programs so that your registered representative may serve you better, this additional compensation also may afford Pacific Life a “preferred” status at the recipient broker-dealer and provide some other marketing benefit such as website placement, access to registered representative lists, extra marketing assistance, or other heightened visibility and access to the broker-dealer’s sales force that otherwise influences the way that the broker-dealer and the registered representative market the Policies.

As of December 31, 2007, the following firms have arrangements in effect with PSD pursuant to which the firm is entitled to receive a revenue sharing payment: American International Group, Advantage Capital Corporation, American General Securities Inc., Axa Advisors LLC, Associated Securities, Benefit Funding Services, Commonwealth Financial Network, First Heartland Securities, First Financial Planners Securities, Financial Network Investment Corp., Financial Service Corp., Geneos Wealth Management, Linsco Private Ledger, Metropolitan Life, M Financial Holdings Inc., Multi Financial, Mutual Service Corp., Mutual Service Corp. of Texas, National Planning Corp., National Financial Partners & National Financial Partners Insurance Services Inc., Ogilvie Securities, Quantum Alliance Financial Corp., Raymond James & Assoc., Raymond James Financial Services, Inc., Royal Alliance, Securities America, Sentra Securities, Sunamerica Securities, United Planners, Walnut Street Securities, Waterstone Financial Group, Inc., and World Group Securities.

8

We or our affiliates may also pay other override payments, expense allowances and reimbursements, bonuses, wholesaler fees, and training and marketing allowances. Such payments may offset the broker-dealer’s expenses in connection with activities that it is required to perform, such as educating personnel and maintaining records. Registered representatives may also receive non-cash compensation such as expense-paid educational or training seminars involving travel within and outside the U.S. or promotional merchandise.

All of the compensation described in this section, and other compensation or benefits provided by us or our affiliates, may be more or less than the overall compensation on similar or other products and may influence your registered representative or broker-dealer to present this Policy over other investment options. You may ask your registered representative about these differing and divergent interests and how he/she and his/her broker-dealer are compensated for selling the Policy.

Portfolio managers of the underlying portfolios of Pacific Select Fund available under this Policy may from time to time bear all or a portion of the expenses of conferences or meetings sponsored by Pacific Life or PSD that are attended by, among others, registered representatives of PSD, who would receive information and/or training regarding the Fund’s portfolios and their management by the portfolio managers in addition to information respecting the variable annuity and/or life insurance products issued by Pacific Life and its affiliates. Other persons may also attend all or a portion of any such conferences or meetings, including directors, officers and employees of Pacific Life, officers and trustees of Pacific Select Fund, and spouses/guests of the foregoing. The Pacific Select Fund’s Board of Trustees may hold meetings concurrently with such a conference or meeting. The Pacific Select Fund pays for the expenses of the meetings of its Board of Trustees, including the pro rata share of expenses for attendance by the Trustees at the concurrent conferences or meetings sponsored by Pacific Life or PSD. Additional expenses and promotional items may be paid for by Pacific Life and/or portfolio managers. PSD serves as the Pacific Select Fund’s distributor.

The Separate Account

The Separate Account was established on May 12, 1988 under California law under the authority of our Board of Directors, and is now governed by the laws of the State of Nebraska as a result of Pacific Life’s redomestication to Nebraska on September 1, 2005. It’s registered with the SEC as a type of investment company called a unit investment trust. The SEC does not oversee the administration or investment practices or policies of the Separate Account.

The Separate Account is not the only investor in the Funds. Investments in the Funds by other separate accounts for variable annuity contracts and variable life insurance contracts could cause conflicts. For more information, please see the Statement of Additional Information for the Funds.

Performance

Performance information may appear in advertisements, sales literature, or reports to Policy Owners or prospective buyers.

Information about performance of any Variable Account of the Separate Account reflects only the performance of a hypothetical Policy. The calculations are based on allocating the hypothetical Policy’s Accumulated Value to the Variable Account during a particular time period.

Performance information is no guarantee of how a portfolio or Variable Account will perform in the future. You should keep in mind the investment objectives and policies, characteristics and quality of the portfolio of the Fund in which the Variable Account invests, and the market conditions during the period of time that’s shown.

We may show performance information in any way that’s allowed under the law that applies to it. This may include presenting a change in Accumulated Value due to the performance of one or more Variable Accounts, or as a change in a Policy Owner’s Death Benefit.

We may show performance as a change in Accumulated Value over time or in terms of the average annual compounded rate of return on Accumulated Value. This would be based on allocating premium payments for a hypothetical Policy to a particular Variable Account over certain periods of time, including one year, or from

9

the day the Variable Account started operating. If a portfolio has existed for longer than its corresponding Variable Account, we may also show the hypothetical returns that the Variable Account would have achieved had it invested in the portfolio from the day the portfolio started operating.

Performance may reflect the deduction of all Policy charges including premium load, the cost of insurance, the administrative charge, and the mortality and expense risk charge. The different Death Benefit Options will result in different expenses for the cost of insurance, and the varying expenses will result in different Accumulated Values.

Performance may also reflect the deduction of the surrender charge, if it applies, by assuming the hypothetical Policy is surrendered at the end of the particular period. At the same time, we may give other performance figures that do not assume the Policy is surrendered and do not reflect any deduction of the surrender charge.

We may also show performance of the underlying portfolios based on the change in value of a hypothetical investment over time or in terms of the average annual compounded return over time. Performance of the portfolios will not reflect the deduction of Policy charges. If Policy charges were reflected, the performance would be lower.

In our advertisements, sales literature and reports to Policy Owners, we may compare performance information for a Variable Account to:

•  other variable life separate accounts, mutual funds, or investment products tracked by research firms, rating services, companies, publications, or persons who rank separate accounts or investment products on overall performance or other criteria

•  the Consumer Price Index, to assess the real rate of return from buying a Policy by taking inflation into consideration

•  various indices that are unmanaged.

Reports and promotional literature may also contain our rating or a rating of our claims paying ability. These ratings are set by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations.

Yields

The yield or total return of any Variable Account or portfolio does not reflect the deduction of Policy charges.

Money Market Variable Account

The “yield” (also called “current yield”) of the Money Market Variable Account is computed in accordance with a standard method prescribed by the SEC. The net change in the Variable Account’s unit value during a seven-day period is divided by the unit value at the beginning of the period to obtain a base rate of return. The current yield is generated when the base rate is “annualized” by multiplying it by the fraction 365/7; that is, the base rate of return is assumed to be generated each week over a 365-day period and is shown as a percentage of the investment. The “effective yield” of the Money Market Variable Account is calculated similarly but, when annualized, the base rate of return is assumed to be reinvested. The effective yield will be slightly higher than the current yield because of the compounding effect of this assumed reinvestment.

The formula for effective yield is: [(Base Period Return + 1)(To the power of ³⁶⁵/7)] - 1.

Realized capital gains or losses and unrealized appreciation or depreciation of the assets of the underlying Money Market portfolio are not included in the yield calculation.

Other Variable Accounts

“Yield” of the other Variable Accounts is computed in accordance with a different standard method prescribed by the SEC. For each Variable Account, the net investment income (investment income less expenses) per accumulation unit earned during a specified one month or 30-day period is divided by the unit value on the last day of the specified period. This result is then annualized (that is, the yield is assumed to be

10

generated each month or each 30-day period for a year), according to the following formula, which assumes semiannual compounding:

YIELD = 2[( a - b   cd
+ 1)⁶  - 1]

where:	a	=	net investment income earned during the period by the underlying portfolio of the Variable Account,
	b	=	expenses accrued for the period (net of reimbursements),
	c	=	the average daily number of accumulation units outstanding during the period that were entitled to receive dividends, and
	d	=	the unit value of the accumulation units on the last day of the period.

The Variable Accounts’ yields will vary from time to time depending upon market conditions, the composition of each portfolio and operating expenses of the Fund allocated to each portfolio. Consequently, any given performance quotation should not be considered representative of the Variable Account’s performance in the future. Yield should also be considered relative to changes in unit values and to the relative risks associated with the investment policies and objectives of the various portfolios. In addition, because performance will fluctuate, it may not provide a basis for comparing the yield of a Variable Account with certain bank deposits or other investments that pay a fixed yield or return for a stated period of time.

Money Market portfolio

Current yield for the Money Market portfolio will be based on the change in the value of a hypothetical investment (exclusive of capital charges) over a particular 7-day period, less a pro-rata share of portfolio expenses accrued over that period (the “base period”), and stated as a percentage of the investment at the start of the base period (the “base period return”). The base period return is then annualized by multiplying by 365/7, with the resulting yield figure carried to at least the nearest hundredth of one percent. “Effective yield” for the Money Market portfolio assumes that all dividends received during an annual period have been reinvested. Calculation of “effective yield” begins with the same “base period return” used in the calculation of yield, which is then annualized to reflect weekly compounding pursuant to the following formula:

Effective Yield: [(Base Period Return + 1)(To the power of ³⁶⁵/7)] - 1.

Other portfolios

Quotations of yield for the remaining portfolios will be based on all investment income per share earned during a particular 30-day period (including dividends and interest), less expenses accrued during the period (“net investment income”), and are computed by dividing net investment income by the maximum offering price per share on the last day of the period, according to the following formula:

YIELD = 2[( a - b   cd
+ 1)⁶  - 1]

where:	a	=	dividends and interest earned during the period,
	b	=	expenses accrued for the period (net of reimbursements),
	c	=	the average daily number of shares outstanding during the period that were entitled to receive dividends, and
	d	=	the maximum offering price per share on the last day of the period.

Quotations of average annual total return for a portfolio will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in the portfolio over certain periods that will include a period of one year (or, if less, up to the life of the portfolio), calculated pursuant to the following formula: P (1 + T)ⁿ = ERV (where P = a hypothetical initial payment of $1,000, T = the average annual total return for the period, n = the number of periods, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). Quotations of total return may also be shown for other periods.

11

All total return figures reflect the deduction of a proportional share of portfolio expenses on an annual basis, and assume that all dividends and distributions are reinvested when paid.

Financial Statements

The next several pages contain the statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented.

These are followed by the consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007, which are included in this SAI so you can assess our ability to meet our obligations under the Policies.

Experts

The consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007 as well as the statements of assets and liabilities of Pacific Select Exec Separate Account as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented as included in this SAI have been audited by Deloitte & Touche LLP, 695 Town Center Drive, Suite 1200, Costa Mesa, California 92626, independent auditors and independent registered public accounting firm, respectively, as stated in their reports appearing herein, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Pacific Life Insurance Company:

     We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of Pacific Select Exec Separate Account (the “Separate Account”) comprised of Small-Cap Growth (formerly Fasciano Small Equity), International Value, International Small-Cap, Equity Index, Small-Cap Index, Diversified Research, Equity, American Funds^® Growth-Income, American Funds Growth, Large-Cap Value, Technology, Short Duration Bond, Floating Rate Loan, Diversified Bond, Growth LT, Focused 30, Health Sciences, Mid-Cap Value, Large-Cap Growth, International Large-Cap, Small-Cap Value, Multi-Strategy, Main Street^® Core, Emerging Markets, Managed Bond, Inflation Managed, Money Market, High Yield Bond, Comstock, Mid-Cap Growth, Real Estate, Small-Cap Equity (formerly VN Small-Cap Value), Variable Account I, Variable Account II, Variable Account III, Variable Account V, BlackRock Basic Value V.I. Class III, BlackRock Global Allocation V.I. Class III, Fidelity^® VIP Contrafund^® Service Class 2, Fidelity VIP Freedom Income Service Class 2, Fidelity VIP Freedom 2010 Service Class 2, Fidelity VIP Freedom 2015 Service Class 2, Fidelity VIP Freedom 2020 Service Class 2, Fidelity VIP Freedom 2025 Service Class 2, Fidelity VIP Freedom 2030 Service Class 2, Fidelity VIP Growth Service Class 2, Fidelity VIP Mid Cap Service Class 2, Fidelity VIP Value Strategies Service Class 2, International Growth Service Class, Risk-Managed Core Service Class, Mid Cap Growth Service Class, US Strategic Equity, Legg Mason Partners Variable Aggressive Growth — Class II, Legg Mason Partners Variable Mid Cap Core — Class II, MFS New Discovery Series Service Class, MFS Utilities Series Service Class, OpCap Small Cap, T. Rowe Price Blue Chip Growth — II, T. Rowe Price Equity Income — II, Van Eck Worldwide Hard Assets, ETF 2010, ETF 2015, ETF 2020, ETF 2025, ETF 2030, and ETF 2040+ Variable Accounts (collectively, the “Variable Accounts”) as of December 31, 2007, the related statements of operations for the periods presented, the statements of changes in net assets for each of the periods presented, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our 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 audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Variable Accounts constituting Pacific Select Exec Separate Account as of December 31, 2007, the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California
February 29, 2008

SA-1

PACIFIC SELECT EXEC SEPARATE ACCOUNT
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2007

Variable Accounts	Underlying Portfolios/Funds	Shares	Cost	Value
	Pacific Select Fund
Small-Cap Growth (1)	Small-Cap Growth (1)	3,802,572	$37,800,821	$50,586,558
International Value	International Value	16,681,167	244,194,753	305,888,298
International Small-Cap	International Small-Cap	2,229,716	23,652,315	23,781,568
Equity Index	Equity Index	16,401,630	458,033,998	551,923,748
Small-Cap Index	Small-Cap Index	19,660,996	261,306,317	268,559,695
Diversified Research	Diversified Research	5,273,696	62,898,189	71,202,853
Equity	Equity	2,227,294	43,020,572	49,367,159
American Funds® Growth-Income	American Funds Growth-Income	5,539,751	67,848,429	69,083,376
American Funds Growth	American Funds Growth	4,391,530	59,658,396	63,232,702
Large-Cap Value	Large-Cap Value	11,166,387	142,421,311	158,713,982
Technology	Technology	2,960,794	19,195,983	22,697,331
Short Duration Bond	Short Duration Bond	4,745,145	45,995,883	45,784,332
Floating Rate Loan (2)	Floating Rate Loan	1,004,302	9,836,961	9,449,518
Diversified Bond	Diversified Bond	2,909,446	29,318,233	28,436,884
Growth LT	Growth LT	12,028,286	224,154,389	313,824,405
Focused 30	Focused 30	3,140,267	37,139,122	50,627,705
Health Sciences	Health Sciences	1,929,921	20,323,865	23,304,452
Mid-Cap Value	Mid-Cap Value	11,875,687	203,824,105	203,798,241
Large-Cap Growth	Large-Cap Growth	6,708,218	51,898,677	62,931,636
International Large-Cap	International Large-Cap	20,292,723	174,115,703	192,663,438
Small-Cap Value	Small-Cap Value	4,229,679	63,283,027	60,911,376
Multi-Strategy	Multi-Strategy	5,509,108	84,013,831	98,642,992
Main Street® Core	Main Street Core	6,870,045	131,751,325	171,459,391
Emerging Markets	Emerging Markets	8,480,767	135,142,425	177,769,592
Managed Bond	Managed Bond	36,504,170	406,507,591	413,635,176
Inflation Managed	Inflation Managed	15,529,645	181,379,579	176,308,963
Money Market	Money Market	23,101,077	233,164,222	232,852,644
High Yield Bond	High Yield Bond	11,678,057	79,763,491	76,816,611
Comstock	Comstock	8,156,511	86,248,219	83,377,630
Mid-Cap Growth	Mid-Cap Growth	6,649,902	59,827,066	70,025,262
Real Estate	Real Estate	4,216,491	89,893,173	91,656,834
Small-Cap Equity (3)	Small-Cap Equity (3)	892,493	11,205,089	11,413,844
	M Fund, Inc.
I	Brandes International Equity	6,431,559	118,383,689	118,662,256
II	Turner Core Growth	1,978,806	31,892,958	38,626,284
III	Frontier Capital Appreciation	2,048,766	51,868,688	50,686,469
V	Business Opportunity Value	2,023,916	25,022,060	24,509,619
	BlackRock Variable Series Funds, Inc.
BlackRock Basic Value V.I. Class III	BlackRock Basic Value V.I. Class III	363,849	5,898,188	5,021,116
BlackRock Global Allocation V.I. Class III	BlackRock Global Allocation V.I. Class III	810,985	11,616,998	11,783,610
	Fidelity® Variable Insurance Products Funds
Fidelity VIP Contrafund® Service Class 2	Fidelity VIP Contrafund® Service Class 2	2,075,247	64,322,234	56,986,283
Fidelity VIP Freedom Income Service Class 2 (2)	Fidelity VIP Freedom Income Service Class 2	1,063	11,997	11,458
Fidelity VIP Freedom 2010 Service Class 2 (2)	Fidelity VIP Freedom 2010 Service Class 2	7,053	87,532	84,073
Fidelity VIP Freedom 2015 Service Class 2 (2)	Fidelity VIP Freedom 2015 Service Class 2	27,534	350,531	337,562
Fidelity VIP Freedom 2020 Service Class 2 (2)	Fidelity VIP Freedom 2020 Service Class 2	7,447	96,093	93,827
Fidelity VIP Freedom 2025 Service Class 2 (2)	Fidelity VIP Freedom 2025 Service Class 2	190,373	2,505,580	2,413,927
Fidelity VIP Freedom 2030 Service Class 2 (2)	Fidelity VIP Freedom 2030 Service Class 2	10,495	145,243	136,332
Fidelity VIP Growth Service Class 2	Fidelity VIP Growth Service Class 2	79,647	3,219,671	3,556,222
Fidelity VIP Mid Cap Service Class 2	Fidelity VIP Mid Cap Service Class 2	882,433	29,429,163	31,441,082
Fidelity VIP Value Strategies Service Class 2	Fidelity VIP Value Strategies Service Class 2	340,527	4,658,964	4,297,447
	Janus Aspen Series
International Growth Service Class (2)	Janus Aspen International Growth Service Class	160,802	9,906,585	10,373,346
Risk-Managed Core Service Class (2)	Janus Aspen INTECH Risk-Managed Core Service Class	11,878	158,883	157,855
Mid Cap Growth Service Class (2)	Janus Aspen Mid Cap Growth Service Class	23,483	873,878	914,666
	Lazard Retirement Series, Inc.
US Strategic Equity (2)	Lazard Retirement U.S. Strategic Equity	3,214	37,081	32,685
	Legg Mason Partners Variable Equity Trust
Legg Mason Partners Variable Aggressive Growth — Class II (2)	Legg Mason Partners Variable Aggressive Growth — Class II	4,856	81,226	79,104
Legg Mason Partners Variable Mid Cap Core — Class II (2)	Legg Mason Partners Variable Mid Cap Core — Class II	9,885	150,199	122,772
	MFS® Variable Insurance Trust
MFS New Discovery Series Service Class (2)	MFS New Discovery Series Service Class	13,113	216,914	213,868
MFS Utilities Series Service Class (2)	MFS Utilities Series Service Class	420,309	13,993,376	14,336,747

See Notes to Financial Statements See explanation of references on SA-3

SA-2

PACIFIC SELECT EXEC SEPARATE ACCOUNT
SCHEDULE OF INVESTMENTS (Continued)
DECEMBER 31, 2007

Variable Accounts	Underlying Portfolios/Funds	Shares	Cost	Value
	Premier VIT
OpCap Small Cap (2)	OpCap Small Cap	4,800	$146,162	$140,107
	T. Rowe Price Equity Series, Inc.
T. Rowe Price Blue Chip Growth — II	T. Rowe Price Blue Chip Growth — II	466,812	5,254,105	5,461,695
T. Rowe Price Equity Income — II	T. Rowe Price Equity Income — II	1,213,561	30,218,554	28,700,719
	Van Eck Worldwide Insurance Trust
Van Eck Worldwide Hard Assets	Worldwide Hard Assets	1,530,013	48,087,787	63,021,216
	XTF Advisors Trust
ETF 2010 (2)	ETF 2010	7,562	75,367	74,938
ETF 2015 (2)	ETF 2015	8,589	88,091	85,629
ETF 2020 (2)	ETF 2020	35,447	354,910	350,566
ETF 2025 (2)	ETF 2025	34,604	343,796	345,351
ETF 2030 (2)	ETF 2030	57,090	581,783	561,770
ETF 2040+ (2)	ETF 2040+	29,044	285,864	282,885

(1)	Formerly named Fasciano Small Equity Variable Account and Fasciano Small Equity Portfolio.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(3)	Formerly named VN Small-Cap Value Variable Account and VN Small-Cap Value Portfolio.

     American Funds is a registered trademark of American Funds Distributors, Inc., Main Street is a registered trademark of OppenheimerFunds, Inc., Fidelity and Contrafund are registered trademarks of FMR Corp., and MFS is a registered trademark of MFS Fund Distributors, Inc.

See Notes to Financial Statements

SA-3

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2007

	Variable Accounts
	Small-Cap		International		International		Equity		Small-Cap		Diversified
	Growth (1)		Value		Small-Cap		Index		Index		Research		Equity
ASSETS
Investments in portfolios, at value		$50,586,558		$305,888,298		$23,781,568		$551,923,748		$268,559,695		$71,202,853		$49,367,159
Receivables:
Due from Pacific Life Insurance Company		50,734		123,590		53,062		271,352		242,726		99,269		54,685
Total Assets		50,637,292		306,011,888		23,834,630		552,195,100		268,802,421		71,302,122		49,421,844
LIABILITIES
Payables:
Fund shares purchased		50,719		123,549		53,054		271,325		242,726		99,256		54,685
Other		—		—		—		—		71		—		11
Total Liabilities		50,719		123,549		53,054		271,325		242,797		99,256		54,696
NET ASSETS		$50,586,573		$305,888,339		$23,781,576		$551,923,775		$268,559,624		$71,202,866		$49,367,148
Units Outstanding		3,236,389		8,793,719		2,202,534		9,701,628		14,234,769		4,824,065		3,445,626
Accumulation Unit Value		$15.63		$34.78		$10.80		$56.89		$18.87		$14.76		$14.33
Cost of Investments		$37,800,821		$244,194,753		$23,652,315		$458,033,998		$261,306,317		$62,898,189		$43,020,572

	American Funds		American Funds		Large-Cap				Short Duration		Floating		Diversified
	Growth-Income		Growth		Value		Technology		Bond		Rate Loan		Bond
ASSETS
Investments in portfolios, at value		$69,083,376		$63,232,702		$158,713,982		$22,697,331		$45,784,332		$9,449,518		$28,436,884
Receivables:
Due from Pacific Life Insurance Company		148,761		108,127		215,389		27,329		50,544		43,913		88,476
Total Assets		69,232,137		63,340,829		158,929,371		22,724,660		45,834,876		9,493,431		28,525,360
LIABILITIES
Payables:
Fund shares purchased		148,761		108,127		215,222		27,329		50,542		43,913		88,466
Other		3,004		74		—		14		—		—		—
Total Liabilities		151,765		108,201		215,222		27,343		50,542		43,913		88,466
NET ASSETS		$69,080,372		$63,232,628		$158,714,149		$22,697,317		$45,784,334		$9,449,518		$28,436,894
Units Outstanding		5,233,800		4,288,451		9,143,314		2,811,966		4,049,884		962,991		2,668,272
Accumulation Unit Value		$13.20		$14.74		$17.36		$8.07		$11.31		$9.81		$10.66
Cost of Investments		$67,848,429		$59,658,396		$142,421,311		$19,195,983		$45,995,883		$9,836,961		$29,318,233

	Growth		Focused		Health		Mid-Cap		Large-Cap		International		Small-Cap
	LT		30		Sciences		Value		Growth		Large-Cap		Value
ASSETS
Investments in portfolios, at value		$313,824,405		$50,627,705		$23,304,452		$203,798,241		$62,931,636		$192,663,438		$60,911,376
Receivables:
Due from Pacific Life Insurance Company		198,018		203,430		8		500,709		50,139		154,548		8
Fund shares redeemed		—		—		34,120		—		—		—		165,152
Total Assets		314,022,423		50,831,135		23,338,580		204,298,950		62,981,775		192,817,986		61,076,536
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		—		34,120		—		—		—		165,152
Fund shares purchased		197,986		203,417		—		500,709		50,085		154,548		—
Other		—		—		—		35		—		110		—
Total Liabilities		197,986		203,417		34,120		500,744		50,085		154,658		165,152
NET ASSETS		$313,824,437		$50,627,718		$23,304,460		$203,798,206		$62,931,690		$192,663,328		$60,911,384
Units Outstanding		6,242,947		3,080,715		1,525,560		8,230,390		6,937,338		15,067,071		2,748,103
Accumulation Unit Value		$50.27		$16.43		$15.28		$24.76		$9.07		$12.79		$22.16
Cost of Investments		$224,154,389		$37,139,122		$20,323,865		$203,824,105		$51,898,677		$174,115,703		$63,283,027

(1) Formerly named Fasciano Small Equity Variable Account.

See Notes to Financial Statements

SA-4

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	Multi-		Main Street		Emerging		Managed		Inflation		Money		High Yield
	Strategy		Core		Markets		Bond		Managed		Market		Bond
ASSETS
Investments in portfolios, at value		$98,642,992		$171,459,391		$177,769,592		$413,635,176		$176,308,963		$232,852,644		$76,816,611
Receivables:
Due from Pacific Life Insurance Company		17		15		—		30,339		54,464		4,492,892		61,544
Fund shares redeemed		13,990		105,514		72,613		—		—		—		—
Total Assets		98,656,999		171,564,920		177,842,205		413,665,515		176,363,427		237,345,536		76,878,155
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		13,990		105,514		72,613		—		—		—		—
Fund shares purchased		—		—		—		30,286		54,464		4,492,892		61,541
Other		—		—		101		—		54		15		—
Total Liabilities		13,990		105,514		72,714		30,286		54,518		4,492,907		61,541
NET ASSETS		$98,643,009		$171,459,406		$177,769,491		$413,635,229		$176,308,909		$232,852,629		$76,816,614
Units Outstanding		1,891,715		3,102,111		5,417,715		9,776,620		4,204,544		10,196,175		1,924,183
Accumulation Unit Value		$52.14		$55.27		$32.81		$42.31		$41.93		$22.84		$39.92
Cost of Investments		$84,013,831		$131,751,325		$135,142,425		$406,507,591		$181,379,579		$233,164,222		$79,763,491

			Mid-Cap		Real		Small-Cap
	Comstock		Growth		Estate		Equity(1)		I		II		III
ASSETS
Investments in portfolios, at value		$83,377,630		$70,025,262		$91,656,834		$11,413,844		$118,662,256		$38,626,284		$50,686,469
Receivables:
Due from Pacific Life Insurance Company		168,401		93,155		273,317		16,260		47,874		2,923		46,889
Total Assets		83,546,031		70,118,417		91,930,151		11,430,104		118,710,130		38,629,207		50,733,358
LIABILITIES
Payables:
Fund shares purchased		168,368		93,155		273,303		16,258		47,874		2,920		46,889
Other		—		26		—		—		2		—		—
Total Liabilities		168,368		93,181		273,303		16,258		47,876		2,920		46,889
NET ASSETS		$83,377,663		$70,025,236		$91,656,848		$11,413,846		$118,662,254		$38,626,287		$50,686,469
Units Outstanding		6,703,119		6,666,596		2,496,462		785,370		3,147,799		1,388,785		1,330,308
Accumulation Unit Value		$12.44		$10.50		$36.71		$14.53		$37.70		$27.81		$38.10
Cost of Investments		$86,248,219		$59,827,066		$89,893,173		$11,205,089		$118,383,689		$31,892,958		$51,868,688

			BlackRock		BlackRock		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP
			Basic Value		Global Allocation		Contrafund®		Freedom Income		Freedom 2010		Freedom 2015
	V		V.I. Class III		V.I. Class III		Service Class 2		Service Class 2		Service Class 2		Service Class 2
ASSETS
Investments in portfolios, at value		$24,509,619		$5,021,116		$11,783,610		$56,986,283		$11,458		$84,073		$337,562
Receivables:
Due from Pacific Life Insurance Company		19,969		—		56,742		208,832		—		—		—
Fund shares redeemed		—		5,927		—		—		—		—		—
Total Assets		24,529,588		5,027,043		11,840,352		57,195,115		11,458		84,073		337,562
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		5,927		—		—		—		—		—
Fund shares purchased		19,959		—		56,741		208,832		—		—		—
Other		—		2		—		33		—		—		—
Total Liabilities		19,959		5,929		56,741		208,865		—		—		—
NET ASSETS		$24,509,629		$5,021,114		$11,783,611		$56,986,250		$11,458		$84,073		$337,562
Units Outstanding		1,446,522		397,583		793,421		3,792,886		1,143		8,484		34,170
Accumulation Unit Value		$16.94		$12.63		$14.85		$15.02		$10.03		$9.91		$9.88
Cost of Investments		$25,022,060		$5,898,188		$11,616,998		$64,322,234		$11,997		$87,532		$350,531

(1) Formerly named VN Small-Cap Equity Variable Account.

See Notes to Financial Statements

SA-5

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP		Fidelity VIP
	Freedom 2020		Freedom 2025		Freedom 2030		Growth		Mid Cap		Value Strategies
	Service Class 2		Service Class 2		Service Class 2		Service Class 2		Service Class 2		Service Class 2
ASSETS
Investments in portfolios, at value		$93,827		$2,413,927		$136,332		$3,556,222		$31,441,082		$4,297,447
Receivables:
Due from Pacific Life Insurance Company		38,933		—		—		125,480		32,866		17,170
Total Assets		132,760		2,413,927		136,332		3,681,702		31,473,948		4,314,617
LIABILITIES
Payables:
Fund shares purchased		38,933		—		—		125,480		32,854		17,170
Other		—		—		—		—		—		4
Total Liabilities		38,933		—		—		125,480		32,854		17,174
NET ASSETS		$93,827		$2,413,927		$136,332		$3,556,222		$31,441,094		$4,297,443
Units Outstanding		9,549		246,074		13,972		247,233		2,090,850		333,286
Accumulation Unit Value		$9.83		$9.81		$9.76		$14.38		$15.04		$12.89
Cost of Investments		$96,093		$2,505,580		$145,243		$3,219,671		$29,429,163		$4,658,964

									Legg Mason		Legg Mason
	International		Risk-Managed		Mid Cap				Partners Variable		Partners Variable
	Growth		Core		Growth		US Strategic		Aggressive		Mid Cap
	Service Class		Service Class		Service Class		Equity		Growth - Class II		Core - Class II
ASSETS
Investments in portfolios, at value		$10,373,346		$157,855		$914,666		$32,685		$79,104		$122,772
Receivables:
Due from Pacific Life Insurance Company		4,461		14		29,367		—		—		—
Total Assets		10,377,807		157,869		944,033		32,685		79,104		122,772
LIABILITIES
Payables:
Fund shares purchased		4,458		14		29,367		—		—		—
Total Liabilities		4,458		14		29,367		—		—		—
NET ASSETS		$10,373,349		$157,855		$914,666		$32,685		$79,104		$122,772
Units Outstanding		866,820		15,705		82,577		3,462		8,141		12,558
Accumulation Unit Value		$11.97		$10.05		$11.08		$9.44		$9.72		$9.78
Cost of Investments		$9,906,585		$158,883		$873,878		$37,081		$81,226		$150,199

	MFS New		MFS				T. Rowe Price		T. Rowe Price		Van Eck
	Discovery Series		Utilities Series		OpCap		Blue Chip		Equity		Worldwide
	Service Class		Service Class		Small Cap		Growth - II		Income - II		Hard Assets
ASSETS
Investments in portfolios, at value		$213,868		$14,336,747		$140,107		$5,461,695		$28,700,719		$63,021,216
Receivables:
Due from Pacific Life Insurance Company		—		—		—		8,853		18,146		268,942
Fund shares redeemed		—		4,231		—		—		—		—
Total Assets		213,868		14,340,978		140,107		5,470,548		28,718,865		63,290,158
LIABILITIES
Payables:
Due to Pacific Life Insurance Company		—		4,231		—		—		—		—
Fund shares purchased		—		—		—		8,851		18,146		268,942
Other		—		—		—		—		4		5
Total Liabilities		—		4,231		—		8,851		18,150		268,947
NET ASSETS		$213,868		$14,336,747		$140,107		$5,461,697		$28,700,715		$63,021,211
Units Outstanding		22,449		1,287,407		14,693		413,880		2,275,375		2,428,039
Accumulation Unit Value		$9.53		$11.14		$9.54		$13.20		$12.61		$25.96
Cost of Investments		$ 216,914		$13,993,376		$146,162		$5,254,105		$30,218,554		$48,087,787

See Notes to Financial Statements

SA-6

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 2007

	Variable Accounts
	ETF 2010		ETF 2015		ETF 2020		ETF 2025		ETF 2030		ETF 2040+
ASSETS
Investments in portfolios, at value		$74,938		$85,629		$350,566		$345,351		$561,770		$282,885
Receivables:
Due from Pacific Life Insurance Company		—		26,680		—		6,954		1,411		—
Total Assets		74,938		112,309		350,566		352,305		563,181		282,885
LIABILITIES
Payables:
Fund shares purchased		—		26,680		—		6,954		1,411		—
Total Liabilities		—		26,680		—		6,954		1,411		—
NET ASSETS		$74,938		$85,629		$350,566		$345,351		$561,770		$282,885
Units Outstanding		7,562		8,589		35,447		34,604		57,090		29,044
Accumulation Unit Value		$9.91		$9.97		$9.89		$9.98		$9.84		$9.74
Cost of Investments		$75,367		$88,091		$354,910		$343,796		$581,783		$285,864

See Notes to Financial Statements

SA-7

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Small-Cap		International			International			Equity			Small-Cap			Diversified
	Growth (1)		Value			Small-Cap			Index			Index			Research			Equity
INVESTMENT INCOME
Dividends		$—		$6,209,919			$263,532			$10,452,919			$3,695,225			$535,376			$113,435
Net Investment Income		—		6,209,919			263,532			10,452,919			3,695,225			535,376			113,435
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		1,787,843		15,803,330			146,954			(5,482,406	)		10,752,479			3,123,255			3,438,684
Capital gain distributions		—		34,234,351			—			—			—			—			—
Realized Gain (Loss)		1,787,843		50,037,681			146,954			(5,482,406	)		10,752,479			3,123,255			3,438,684
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		4,425,086		(39,003,319	)		(379,230	)		24,548,115			(20,045,664	)		(2,619,658	)		(722,184	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$6,212,929		$17,244,281			$31,256			$29,518,628			($5,597,960	)		$1,038,973			$2,829,935

	American			American			Large-					Short			Floating
	Funds			Funds			Cap					Duration			Rate			Diversified
	Growth-Income			Growth			Value			Technology		Bond			Loan (2)			Bond
INVESTMENT INCOME
Dividends		$862,120			$279,627			$1,904,295			$10,228		$1,991,999			$451,942			$1,031,172
Net Investment Income		862,120			279,627			1,904,295			10,228		1,991,999			451,942			1,031,172
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		3,936,906			8,238,466			4,080,175			2,558,874		(291,247	)		(159,034	)		3,344
Capital gain distributions		—			—			—			—		—			—			45,108
Realized Gain (Loss)		3,936,906			8,238,466			4,080,175			2,558,874		(291,247	)		(159,034	)		48,452
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(2,923,413	)		(1,311,233	)		(643,816	)		1,108,005		232,055			(387,444	)		(975,779	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$1,875,613			$7,206,860			$5,340,654			$3,677,107		$1,932,807			($94,536	)		$103,845

	Growth			Focused		Health		Mid-Cap			Large-Cap		International			Small-Cap
	LT			30		Sciences		Value			Growth		Large-Cap			Value
INVESTMENT INCOME
Dividends		$1,349,167			$166,019		$—		$1,608,408			$—		$3,038,271			$1,265,867
Net Investment Income		1,349,167			166,019		—		1,608,408			—		3,038,271			1,265,867
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(609,866	)		2,777,690		586,372		6,556,477			1,998,798		14,034,973			990,482
Capital gain distributions		—			—		—		—			—		30,741,389			—
Realized Gain (Loss)		(609,866	)		2,777,690		586,372		6,556,477			1,998,798		44,776,362			990,482
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		43,992,491			7,493,801		2,611,877		(13,051,615	)		9,992,604		(30,250,943	)		(261,501	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$44,731,792			$10,437,510		$3,198,249		($4,886,730	)		$11,991,402		$17,563,690			$1,994,848

(1)	Formerly named Fasciano Small Equity Variable Account.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-8

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Multi-			Main Street		Emerging		Managed		Inflation			Money			High Yield
	Strategy			Core		Markets		Bond		Managed			Market			Bond
INVESTMENT INCOME
Dividends		$2,922,289			$2,055,949		$1,710,560		$17,044,773		$6,952,321			$10,150,537			$5,686,544
Net Investment Income		2,922,289			2,055,949		1,710,560		17,044,773		6,952,321			10,150,537			5,686,544
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		2,918,889			952,499		12,230,937		264,947		(1,890,644	)		(47,365	)		(940,383	)
Capital gain distributions		—			—		25,044,384		394,022		—			—			—
Realized Gain (Loss)		2,918,889			952,499		37,275,321		658,969		(1,890,644	)		(47,365	)		(940,383	)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,266,678	)		4,047,073		2,772,823		14,366,023		11,150,701			80,479			(3,109,832	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$4,574,500			$7,055,521		$41,758,704		$32,069,765		$16,212,378			$10,183,651			$1,636,329

				Mid-Cap		Real			Small-Cap
	Comstock			Growth		Estate			Equity (1)		I			II		III
INVESTMENT INCOME
Dividends		$1,174,494			$285,678		$1,171,758			$22,441		$2,405,327			$136,338		$—
Net Investment Income		1,174,494			285,678		1,171,758			22,441		2,405,327			136,338		—
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain from security transactions		275,641			4,428,533		12,742,773			171,960		10,949,739			2,705,059		4,567,998
Capital gain distributions		—			—		—			—		16,025,509			2,736,681		4,551,639
Realized Gain		275,641			4,428,533		12,742,773			171,960		26,975,248			5,441,740		9,119,637
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(5,287,597	)		6,671,147		(32,127,891	)		144,195		(21,095,858	)		1,713,196		(3,511,449	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($3,837,462	)		$11,385,358		($18,213,360	)		$338,596		$8,284,717			$7,291,274		$5,608,188

												Fidelity VIP			Fidelity VIP			Fidelity VIP
				BlackRock			BlackRock		Fidelity VIP			Freedom			Freedom			Freedom
				Basic			Global		Contrafund®			Income			2010			2015
				Value			Allocation		Service			Service			Service			Service
	V			V.I. Class III			V.I. Class III		Class 2			Class 2 (2)			Class 2 (2)			Class 2 (2)
INVESTMENT INCOME
Dividends		$158,983			$68,040			$336,886		$395,866			$416			$1,875			$7,488
Net Investment Income		158,983			68,040			336,886		395,866			416			1,875			7,488
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		428,110			69,549			191,896		342,600			—			—			(261	)
Capital gain distributions		2,017,194			657,018			589,801		13,499,438			81			1,490			6,855
Realized Gain		2,445,304			726,567			781,697		13,842,038			81			1,490			6,594
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,303,058	)		(827,602	)		33,281		(7,276,834	)		(539	)		(3,459	)		(12,969	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$1,301,229			($32,995	)		$1,151,864		$6,961,070			($42	)		($94	)		$1,113

(1)	Formerly named VN Small-Cap Value Variable Account.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-9

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	Fidelity VIP			Fidelity VIP			Fidelity VIP					Fidelity VIP		Fidelity VIP
	Freedom			Freedom			Freedom			Fidelity VIP		Mid		Value
	2020			2025			2030			Growth		Cap		Strategies
	Service			Service			Service			Service		Service		Service
	Class 2 (1)			Class 2 (1)			Class 2 (1)			Class 2		Class 2		Class 2
INVESTMENT INCOME
Dividends		$1,043			$46,594			$2,546			$3,265		$122,344		$47,305
Net Investment Income		1,043			46,594			2,546			3,265		122,344		47,305
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(2	)		(64	)		(7	)		64,381		10,581		4,368
Capital gain distributions		1,173			51,162			3,708			2,151		1,766,653		1,110,736
Realized Gain		1,171			51,098			3,701			66,532		1,777,234		1,115,104
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(2,266	)		(91,654	)		(8,911	)		312,378		1,478,408		(553,331	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($52	)		$6,038			($2,664	)		$382,175		$3,377,986		$609,078

											Legg Mason			Legg Mason
	International		Risk-Managed			Mid Cap					Partners Variable			Partners Variable
	Growth		Core			Growth					Aggressive			Mid Cap
	Service		Service			Service		US Strategic			Growth -			Core -
	Class (1)		Class (1)			Class (1)		Equity (1)			Class II (1)			Class II (1)
INVESTMENT INCOME
Dividends		$21,910		$524			$275		$229			$—			$72
Net Investment Income		21,910		524			275		229			—			72
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		121,432		216			441		(317	)		(34,248	)		(511	)
Capital gain distributions		—		—			507		4,385			460			23,545
Realized Gain (Loss)		121,432		216			948		4,068			(33,788	)		23,034
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		466,762		(1,028	)		40,788		(4,396	)		(2,122	)		(27,427	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$610,104		($288	)		$42,011		($99	)		($35,910	)		($4,321	)

	MFS New			MFS										Van Eck
	Discovery Series			Utilities Series		OpCap			T. Rowe Price		T. Rowe Price			Worldwide
	Service			Service		Small			Blue Chip		Equity			Hard
	Class (1)			Class (1)		Cap (1)			Growth - II		Income - II			Assets
INVESTMENT INCOME
Dividends		$—			$—		$—			$4,605		$479,630			$53,609
Net Investment Income		—			—		—			4,605		479,630			53,609
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		(563	)		2,807		(6,401	)		231,430		1,510,760			3,843,452
Capital gain distributions		—			—		8,480			—		1,791,496			5,229,868
Realized Gain (Loss)		(563	)		2,807		2,079			231,430		3,302,256			9,073,320
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(3,046	)		343,371		(6,055	)		44,227		(2,957,798	)		10,878,379
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($3,609	)		$346,178		($3,976	)		$280,262		$824,088			$20,005,308

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-10

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2007

	Variable Accounts
	ETF 2010 (1)			ETF 2015 (1)			ETF 2020 (1)			ETF 2025 (1)		ETF 2030 (1)			ETF 2040+ (1)
INVESTMENT INCOME
Dividends		$—			$—			$—			$—		$—			$—
Net Investment Income		—			—			—			—		—			—
REALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions		19			9			(1,851	)		144		4,027			(2,029	)
Capital gain distributions		—			—			—			—		—			—
Realized Gain (Loss)		19			9			(1,851	)		144		4,027			(2,029	)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(429	)		(2,462	)		(4,343	)		1,555		(20,013	)		(2,979	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		($410	)		($2,453	)		($6,194	)		$1,699		($15,986	)		($5,008	)

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-11

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS

	Variable Accounts
	Small-Cap Growth (1)						International Value						International Small-Cap
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006 (2)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$107,425			$6,209,919			$4,094,626			$263,532			$15,460
Realized gain (loss)		1,787,843			3,291,410			50,037,681			8,278,984			146,954			(32,452	)
Change in unrealized appreciation (depreciation) on investments		4,425,086			(1,024,236	)		(39,003,319	)		44,856,954			(379,230	)		508,483
Net Increase in Net Assets Resulting from Operations		6,212,929			2,374,599			17,244,281			57,230,564			31,256			491,491
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,713,560			4,724,895			25,269,630			21,917,985			3,184,903			1,056,863
Transfers between variable and fixed accounts, net		5,250,043			(3,436,558	)		18,125,526			9,957,367			9,888,824			12,203,591
Transfers—policy charges and deductions		(3,137,582	)		(3,089,730	)		(16,754,961	)		(14,930,929	)		(1,380,037	)		(510,126	)
Transfers—surrenders		(2,299,441	)		(1,970,281	)		(16,659,383	)		(11,886,282	)		(600,745	)		(294,040	)
Transfers—other		(713,226	)		(374,035	)		(4,025,963	)		(2,379,198	)		(217,936	)		(72,468	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		3,813,354			(4,145,709	)		5,954,849			2,678,943			10,875,009			12,383,820
NET INCREASE (DECREASE) IN NET ASSETS		10,026,283			(1,771,110	)		23,199,130			59,909,507			10,906,265			12,875,311
NET ASSETS
Beginning of Year or Period		40,560,290			42,331,400			282,689,209			222,779,702			12,875,311			—
End of Year or Period		$50,586,573			$40,560,290			$305,888,339			$282,689,209			$23,781,576			$12,875,311
	Equity Index						Small-Cap Index						Diversified Research
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$10,452,919			$9,078,433			$3,695,225			$4,444,901			$535,376			$487,192
Realized gain (loss)		(5,482,406	)		4,989,859			10,752,479			57,449,987			3,123,255			3,784,659
Change in unrealized appreciation (depreciation) on investments		24,548,115			60,900,878			(20,045,664	)		(15,238,792	)		(2,619,658	)		3,747,598
Net Increase (Decrease) in Net Assets Resulting from Operations		29,518,628			74,969,170			(5,597,960	)		46,656,096			1,038,973			8,019,449
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		48,359,236			50,879,511			20,648,803			30,075,826			8,697,285			12,006,390
Transfers between variable and fixed accounts, net		(6,104,627	)		(19,863,531	)		(13,575,635	)		(21,811,327	)		(7,530,968	)		(1,662,103	)
Transfers—policy charges and deductions		(32,062,683	)		(32,690,100	)		(15,592,627	)		(16,853,330	)		(4,659,322	)		(4,707,278	)
Transfers—surrenders		(34,524,303	)		(23,618,439	)		(18,711,492	)		(14,777,846	)		(2,679,765	)		(2,764,005	)
Transfers—other		(3,290,598	)		(2,466,333	)		(2,506,029	)		(1,153,975	)		(549,498	)		(560,888	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(27,622,975	)		(27,758,892	)		(29,736,980	)		(24,520,652	)		(6,722,268	)		2,312,116
NET INCREASE (DECREASE) IN NET ASSETS		1,895,653			47,210,278			(35,334,940	)		22,135,444			(5,683,295	)		10,331,565
NET ASSETS
Beginning of Year		550,028,122			502,817,844			303,894,564			281,759,120			76,886,161			66,554,596
End of Year		$551,923,775			$550,028,122			$268,559,624			$303,894,564			$71,202,866			$76,886,161

(1)	Formerly named Fasciano Small Equity Variable Account.
(2)	Operations commenced on May 1, 2006.
	See Notes to Financial Statements

SA-12

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Equity						American Funds Growth-Income						American Funds Growth
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$113,435			$165,903			$862,120			$644,572			$279,627			$254,675
Realized gain		3,438,684			2,805,194			3,936,906			1,669,747			8,238,466			1,317,165
Change in unrealized appreciation (depreciation) on investments		(722,184	)		880,612			(2,923,413	)		3,305,810			(1,311,233	)		2,107,555
Net Increase in Net Assets Resulting from Operations		2,829,935			3,851,709			1,875,613			5,620,129			7,206,860			3,679,395
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,257,902			4,257,547			9,274,083			5,691,503			8,546,445			5,830,180
Transfers between variable and fixed accounts, net		3,907,061			(7,408,294	)		9,212,335			31,454,929			(5,121,714	)		28,122,647
Transfers—policy charges and deductions		(3,526,824	)		(3,336,497	)		(4,959,295	)		(3,183,438	)		(4,546,413	)		(2,956,003	)
Transfers—surrenders		(2,441,955	)		(1,729,045	)		(2,162,295	)		(1,458,711	)		(1,819,827	)		(1,840,466	)
Transfers—other		(666,170	)		(405,365	)		(384,678	)		(381,339	)		171,168			(572,594	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		1,530,014			(8,621,654	)		10,980,150			32,122,944			(2,770,341	)		28,583,764
NET INCREASE (DECREASE) IN NET ASSETS		4,359,949			(4,769,945	)		12,855,763			37,743,073			4,436,519			32,263,159
NET ASSETS
Beginning of Year		45,007,199			49,777,144			56,224,609			18,481,536			58,796,109			26,532,950
End of Year		$49,367,148			$45,007,199			$69,080,372			$56,224,609			$63,232,628			$58,796,109
	Large-Cap Value						Technology						Short Duration Bond
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,904,295			$1,807,964			$10,228			$—			$1,991,999			$1,749,338
Realized gain (loss)		4,080,175			20,744,705			2,558,874			810,405			(291,247	)		(197,359	)
Change in unrealized appreciation (depreciation) on investments		(643,816	)		552,147			1,108,005			133,083			232,055			231,067
Net Increase in Net Assets Resulting from Operations		5,340,654			23,104,816			3,677,107			943,488			1,932,807			1,783,046
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		16,459,987			17,018,881			1,664,304			1,863,002			5,644,721			5,808,015
Transfers between variable and fixed accounts, net		133,111			(2,747,732	)		1,787,482			4,893,986			(1,820,360	)		2,643,755
Transfers—policy charges and deductions		(11,335,442	)		(10,933,769	)		(1,230,313	)		(1,189,826	)		(3,051,745	)		(3,048,767	)
Transfers—surrenders		(5,976,887	)		(5,971,738	)		(603,702	)		(975,798	)		(1,510,952	)		(1,541,303	)
Transfers—other		(2,348,557	)		(1,036,712	)		(140,715	)		(156,426	)		(262,278	)		(433,437	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(3,067,788	)		(3,671,070	)		1,477,056			4,434,938			(1,000,614	)		3,428,263
NET INCREASE IN NET ASSETS		2,272,866			19,433,746			5,154,163			5,378,426			932,193			5,211,309
NET ASSETS
Beginning of Year		156,441,283			137,007,537			17,543,154			12,164,728			44,852,141			39,640,832
End of Year		$158,714,149			$156,441,283			$22,697,317			$17,543,154			$45,784,334			$44,852,141

See Notes to Financial Statements

SA-13

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Floating Rate Loan						Diversified Bond						Growth LT
	Period Ended						Year Ended			Period Ended			Year Ended			Year Ended
	December 31,						December 31,			December 31,			December 31,			December 31,
	2007 (1)						2007			2006 (2)			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$451,942						$1,031,172			$279,242			$1,349,167			$1,781,369
Realized gain (loss)		(159,034	)					48,452			73,815			(609,866	)		(23,159,386	)
Change in unrealized appreciation (depreciation) on investments		(387,444	)					(975,779	)		94,429			43,992,491			49,347,602
Net Increase (Decrease) in Net Assets Resulting from Operations		(94,536	)					103,845			447,486			44,731,792			27,969,585
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		1,333,528						3,079,499			882,467			25,258,099			27,989,407
Transfers between variable and fixed accounts, net		8,965,591						17,333,074			10,007,565			(13,120,991	)		(8,862,832	)
Transfers—policy charges and deductions		(406,484	)					(1,570,883	)		(475,880	)		(20,605,099	)		(21,767,984	)
Transfers—surrenders		(266,762	)					(818,277	)		(289,307	)		(20,518,160	)		(14,794,952	)
Transfers—other		(81,819	)					(178,521	)		(84,174	)		(3,272,320	)		(2,531,885	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		9,544,054						17,844,892			10,040,671			(32,258,471	)		(19,968,246	)
NET INCREASE IN NET ASSETS		9,449,518						17,948,737			10,488,157			12,473,321			8,001,339
NET ASSETS
Beginning of Year or Periods		—						10,488,157			—			301,351,116			293,349,777
End of Year or Periods		$9,449,518						$28,436,894			$10,488,157			$313,824,437			$301,351,116
	Focused 30						Health Sciences						Mid-Cap Value
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$166,019			$16,125			$—			$—			$1,608,408			$1,270,013
Realized gain		2,777,690			1,668,935			586,372			3,362,841			6,556,477			38,295,145
Change in unrealized appreciation (depreciation) on investments		7,493,801			2,979,620			2,611,877			(1,988,005	)		(13,051,615	)		(12,980,142	)
Net Increase (Decrease) in Net Assets Resulting from Operations		10,437,510			4,664,680			3,198,249			1,374,836			(4,886,730	)		26,585,016
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		3,179,178			2,138,455			2,579,856			2,312,267			23,448,928			21,119,872
Transfers between variable and fixed accounts, net		12,901,554			6,089,415			625,690			1,432,748			8,117,285			3,805,348
Transfers—policy charges and deductions		(2,169,823	)		(1,482,703	)		(1,338,772	)		(1,286,192	)		(13,997,843	)		(12,855,103	)
Transfers—surrenders		(2,014,229	)		(904,226	)		(789,127	)		(703,891	)		(9,704,681	)		(8,376,722	)
Transfers—other		(218,095	)		(230,048	)		(3,541	)		(150,448	)		(2,529,552	)		(2,137,792	)
Net Increase in Net Assets Derived from Policy Transactions		11,678,585			5,610,893			1,074,106			1,604,484			5,334,137			1,555,603
NET INCREASE IN NET ASSETS		22,116,095			10,275,573			4,272,355			2,979,320			447,407			28,140,619
NET ASSETS
Beginning of Year		28,511,623			18,236,050			19,032,105			16,052,785			203,350,799			175,210,180
End of Year		$50,627,718			$28,511,623			$23,304,460			$19,032,105			$203,798,206			$203,350,799

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(2)	Operations commenced on May 1, 2006.
	See Notes to Financial Statements

SA-14

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Large-Cap Growth						International Large-Cap						Small-Cap Value
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$115,763			$3,038,271			$4,516,762			$1,265,867			$1,391,025
Realized gain		1,998,798			175,278			44,776,362			10,876,954			990,482			15,164,030
Change in unrealized appreciation (depreciation) on investments		9,992,604			(2,370,143	)		(30,250,943	)		22,299,738			(261,501	)		(6,749,213	)
Net Increase (Decrease) in Net Assets Resulting from Operations		11,991,402			(2,079,102	)		17,563,690			37,693,454			1,994,848			9,805,842
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		8,694,794			9,575,390			20,646,760			19,343,982			7,486,224			9,914,163
Transfers between variable and fixed accounts, net		(8,606,756	)		6,524,016			(10,020,324	)		11,372,990			(6,078,397	)		4,321,884
Transfers—policy charges and deductions		(5,225,444	)		(5,368,237	)		(11,816,427	)		(10,933,643	)		(3,840,838	)		(3,371,879	)
Transfers—surrenders		(3,116,083	)		(2,674,359	)		(6,518,950	)		(5,629,751	)		(2,622,187	)		(1,840,112	)
Transfers—other		(884,437	)		(493,014	)		(1,725,137	)		(1,541,514	)		(379,649	)		(379,600	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(9,137,926	)		7,563,796			(9,434,078	)		12,612,064			(5,434,847	)		8,644,456
NET INCREASE (DECREASE) IN NET ASSETS		2,853,476			5,484,694			8,129,612			50,305,518			(3,439,999	)		18,450,298
NET ASSETS
Beginning of Year		60,078,214			54,593,520			184,533,716			134,228,198			64,351,383			45,901,085
End of Year		$62,931,690			$60,078,214			$192,663,328			$184,533,716			$60,911,384			$64,351,383
	Multi-Strategy						Main Street Core						Emerging Markets
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$2,922,289			$2,653,121			$2,055,949			$1,881,007			$1,710,560			$857,900
Realized gain (loss)		2,918,889			4,047,623			952,499			(2,143,204	)		37,275,321			30,462,095
Change in unrealized appreciation (depreciation) on investments		(1,266,678	)		4,843,958			4,047,073			22,030,678			2,772,823			(6,475,139	)
Net Increase in Net Assets Resulting from Operations		4,574,500			11,544,702			7,055,521			21,768,481			41,758,704			24,844,856
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		7,007,667			8,830,702			14,542,933			14,210,254			12,824,085			10,484,189
Transfers between variable and fixed accounts, net		(5,143,677	)		(10,869,366	)		13,589,235			(9,423,357	)		13,253,054			5,289,763
Transfers—policy charges and deductions		(5,918,815	)		(6,546,365	)		(11,062,848	)		(10,702,529	)		(8,001,708	)		(6,536,226	)
Transfers—surrenders		(6,410,061	)		(5,203,479	)		(9,956,823	)		(9,496,466	)		(6,048,926	)		(4,243,264	)
Transfers—other		(1,070,899	)		(488,451	)		(899,164	)		(694,754	)		(2,455,038	)		(1,190,449	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(11,535,785	)		(14,276,959	)		6,213,333			(16,106,852	)		9,571,467			3,804,013
NET INCREASE (DECREASE) IN NET ASSETS		(6,961,285	)		(2,732,257	)		13,268,854			5,661,629			51,330,171			28,648,869
NET ASSETS
Beginning of Year		105,604,294			108,336,551			158,190,552			152,528,923			126,439,320			97,790,451
End of Year		$98,643,009			$105,604,294			$171,459,406			$158,190,552			$177,769,491			$126,439,320

See Notes to Financial Statements

SA-15

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Managed Bond						Inflation Managed						Money Market
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$17,044,773			$13,487,113			$6,952,321			$6,210,381			$10,150,537			$9,421,222
Realized gain (loss)		658,969			(65,305	)		(1,890,644	)		3,729,209			(47,365	)		93,367
Change in unrealized appreciation (depreciation) on investments		14,366,023			2,348,712			11,150,701			(9,126,937	)		80,479			(159,144	)
Net Increase in Net Assets Resulting from Operations		32,069,765			15,770,520			16,212,378			812,653			10,183,651			9,355,445
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		25,953,261			35,000,285			15,103,679			18,637,190			259,233,274			170,353,386
Transfers between variable and fixed accounts, net		44,769,597			16,490,356			9,508,734			(1,617,742	)		(170,855,028	)		(129,571,545	)
Transfers—policy charges and deductions		(18,648,436	)		(17,592,511	)		(10,075,461	)		(9,746,404	)		(22,425,588	)		(22,527,349	)
Transfers—surrenders		(27,156,576	)		(12,232,229	)		(8,327,609	)		(6,254,365	)		(29,005,989	)		(19,725,233	)
Transfers—other		4,819,341			(1,537,813	)		(1,759,356	)		(584,191	)		(2,585,272	)		(6,809,673	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		29,737,187			20,128,088			4,449,987			434,488			34,361,397			(8,280,414	)
NET INCREASE IN NET ASSETS		61,806,952			35,898,608			20,662,365			1,247,141			44,545,048			1,075,031
NET ASSETS
Beginning of Year		351,828,277			315,929,669			155,646,544			154,399,403			188,307,581			187,232,550
End of Year		$413,635,229			$351,828,277			$176,308,909			$155,646,544			$232,852,629			$188,307,581
	High Yield Bond						Comstock						Mid-Cap Growth
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$5,686,544			$5,249,213			$1,174,494			$846,030			$285,678			$108,938
Realized gain (loss)		(940,383	)		(49,278	)		275,641			5,087,711			4,428,533			5,043,631
Change in unrealized appreciation (depreciation) on investments		(3,109,832	)		1,307,522			(5,287,597	)		1,620,181			6,671,147			(3,166,803	)
Net Increase (Decrease) in Net Assets Resulting from Operations		1,636,329			6,507,457			(3,837,462	)		7,553,922			11,385,358			1,985,766
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		7,523,737			6,823,211			10,014,355			9,209,518			7,413,161			5,953,304
Transfers between variable and fixed accounts, net		1,253,288			(1,545,652	)		25,180,438			9,552,364			7,217,828			12,490,992
Transfers—policy charges and deductions		(4,506,754	)		(4,653,707	)		(4,998,419	)		(3,554,043	)		(4,566,722	)		(3,675,359	)
Transfers—surrenders		(3,262,293	)		(4,003,710	)		(2,428,255	)		(2,032,120	)		(2,542,931	)		(1,648,634	)
Transfers—other		(706,945	)		(1,127,030	)		(1,222,692	)		(558,156	)		(609,782	)		(74,906	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		301,033			(4,506,888	)		26,545,427			12,617,563			6,911,554			13,045,397
NET INCREASE IN NET ASSETS		1,937,362			2,000,569			22,707,965			20,171,485			18,296,912			15,031,163
NET ASSETS
Beginning of Year		74,879,252			72,878,683			60,669,698			40,498,213			51,728,324			36,697,161
End of Year		$76,816,614			$74,879,252			$83,377,663			$60,669,698			$70,025,236			$51,728,324

See Notes to Financial Statements

SA-16

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Real Estate						Small-Cap Equity (1)						I
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,171,758			$3,266,984			$22,441			$37,592			$2,405,327			$1,348,991
Realized gain		12,742,773			25,528,115			171,960			585,776			26,975,248			12,066,894
Change in unrealized appreciation (depreciation) on investments		(32,127,891	)		5,506,440			144,195			20,015			(21,095,858	)		8,248,082
Net Increase (Decrease) in Net Assets Resulting from Operations		(18,213,360	)		34,301,539			338,596			643,383			8,284,717			21,663,967
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		10,380,072			10,102,037			1,301,918			712,544			7,147,952			6,659,741
Transfers between variable and fixed accounts, net		(9,685,613	)		1,578,495			5,230,174			2,374,905			3,950,909			10,361,732
Transfers—policy charges and deductions		(7,024,310	)		(6,845,236	)		(613,905	)		(301,691	)		(5,897,843	)		(5,095,934	)
Transfers—surrenders		(5,735,674	)		(4,733,261	)		(434,043	)		(81,046	)		(5,241,523	)		(2,404,074	)
Transfers—other		(1,834,896	)		(1,155,218	)		(103,927	)		(65,473	)		1,773,518			(997,982	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(13,900,421	)		(1,053,183	)		5,380,217			2,639,239			1,733,013			8,523,483
NET INCREASE (DECREASE) IN NET ASSETS		(32,113,781	)		33,248,356			5,718,813			3,282,622			10,017,730			30,187,450
NET ASSETS
Beginning of Year		123,770,629			90,522,273			5,695,033			2,412,411			108,644,524			78,457,074
End of Year		$91,656,848			$123,770,629			$11,413,846			$5,695,033			$118,662,254			$108,644,524
	II						III						V
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$136,338			$209,719			$—			$—			$158,983			$117,599
Realized gain		5,441,740			3,655,562			9,119,637			7,927,299			2,445,304			2,219,830
Change in unrealized appreciation (depreciation) on investments		1,713,196			(1,035,395	)		(3,511,449	)		(1,508,703	)		(1,303,058	)		556,166
Net Increase in Net Assets Resulting from Operations		7,291,274			2,829,886			5,608,188			6,418,596			1,301,229			2,893,595
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		3,080,981			3,494,413			3,687,792			3,854,683			2,253,653			1,951,214
Transfers between variable and fixed accounts, net		(700,127	)		3,178,025			332,558			2,060,781			(1,417,957	)		3,870,477
Transfers—policy charges and deductions		(2,073,056	)		(2,143,953	)		(2,532,873	)		(2,433,125	)		(1,289,820	)		(1,156,081	)
Transfers—surrenders		(3,737,511	)		(757,979	)		(1,859,089	)		(3,474,871	)		(1,054,083	)		(378,159	)
Transfers—other		(1,281,928	)		(268,206	)		(175,127	)		(792,387	)		(180,107	)		(385,839	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		(4,711,641	)		3,502,300			(546,739	)		(784,919	)		(1,688,314	)		3,901,612
NET INCREASE (DECREASE) IN NET ASSETS		2,579,633			6,332,186			5,061,449			5,633,677			(387,085	)		6,795,207
NET ASSETS
Beginning of Year		36,046,654			29,714,468			45,625,020			39,991,343			24,896,714			18,101,507
End of Year		$38,626,287			$36,046,654			$50,686,469			$45,625,020			$24,509,629			$24,896,714

(1)	Formerly named VN Small-Cap Value Variable Account.
	See Notes to Financial Statements

SA-17

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	BlackRock Basic Value						BlackRock Global Allocation						Fidelity VIP Contrafund®
	V.I. Class III (1)						V.I. Class III (2)						Service Class 2
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$68,040			$40,458			$336,886			$119,786			$395,866			$284,992
Realized gain		726,567			280,465			781,697			340,882			13,842,038			3,391,424
Change in unrealized appreciation (depreciation) on investments		(827,602	)		(42,659	)		33,281			33,418			(7,276,834	)		(1,037,935	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(32,995	)		278,264			1,151,864			494,086			6,961,070			2,638,481
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		648,757			132,172			1,279,335			558,679			5,959,709			3,716,147
Transfers between variable and fixed accounts, net		2,025,353			2,464,727			5,963,132			954,895			16,981,156			4,769,802
Transfers—policy charges and deductions		(310,615	)		(66,004	)		(560,780	)		(254,490	)		(2,270,335	)		(1,474,975	)
Transfers—surrenders		(169,869	)		(26,848	)		(361,556	)		(111,455	)		(1,847,832	)		(544,400	)
Transfers—other		(57,333	)		(7,949	)		(135,157	)		(94,518	)		(127,345	)		352,047
Net Increase in Net Assets Derived from Policy Transactions		2,136,293			2,496,098			6,184,974			1,053,111			18,695,353			6,818,621
NET INCREASE IN NET ASSETS		2,103,298			2,774,362			7,336,838			1,547,197			25,656,423			9,457,102
NET ASSETS
Beginning of Year		2,917,816			143,454			4,446,773			2,899,576			31,329,827			21,872,725
End of Year		$5,021,114			$2,917,816			$11,783,611			$4,446,773			$56,986,250			$31,329,827
	Fidelity VIP Freedom Income						Fidelity VIP Freedom 2010						Fidelity VIP Freedom 2015
	Service Class 2						Service Class 2						Service Class 2
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (3)						2007 (3)						2007 (3)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$416						$1,875						$7,488
Realized gain		81						1,490						6,594
Change in unrealized depreciation on investments		(539	)					(3,459	)					(12,969	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(42	)					(94	)					1,113
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		—						—						2,806
Transfers between variable and fixed accounts, net		11,611						84,167						361,539
Transfers—policy charges and deductions		(111	)					(—	)					(2,770	)
Transfers—surrenders		—						—						—
Transfers—other		—						—						(25,126	)
Net Increase in Net Assets Derived from Policy Transactions		11,500						84,167						336,449
NET INCREASE IN NET ASSETS		11,458						84,073						337,562
NET ASSETS
Beginning of Year or Periods		—						—						—
End of Year or Periods		$11,458						$84,073						$337,562

(1)	Formerly named Mercury Basic Value V.I. Class III Variable Account.
(2)	Formerly named Mercury Global Allocation V.I. Class III Variable Account.
(3)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-18

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	Fidelity VIP Freedom 2020						Fidelity VIP Freedom 2025						Fidelity VIP Freedom 2030
	Service Class 2						Service Class 2						Service Class 2
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (1)						2007 (1)						2007 (1)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$1,043						$46,594						$2,546
Realized gain		1,171						51,098						3,701
Change in unrealized depreciation on investments		(2,266	)					(91,654	)					(8,911	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(52	)					6,038						(2,664	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		—						18,188						2,015
Transfers between variable and fixed accounts, net		94,251						2,408,135						138,216
Transfers—policy charges and deductions		(372	)					(18,279	)					(1,235	)
Transfers—surrenders		—						—						—
Transfers—other		—						(155	)					—
Net Increase in Net Assets Derived from Policy Transactions		93,879						2,407,889						138,996
NET INCREASE IN NET ASSETS		93,827						2,413,927						136,332
NET ASSETS
Beginning of Periods		—						—						—
End of Periods		$93,827						$2,413,927						$136,332
	Fidelity VIP Growth						Fidelity VIP Mid Cap						Fidelity VIP Value Strategies
	Service Class 2						Service Class 2						Service Class 2
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment Income		$3,265			$548			$122,344			$32,325			$47,305			$1,345
Realized gain		66,532			7,966			1,777,234			1,154,388			1,115,104			38,733
Change in unrealized appreciation (depreciation) on investments		312,378			18,493			1,478,408			(7,854	)		(553,331	)		182,610
Net Increase in Net Assets Resulting from Operations		382,175			27,007			3,377,986			1,178,859			609,078			222,688
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		179,736			72,885			3,120,404			2,061,569			579,223			174,129
Transfers between variable and fixed accounts, net		2,475,603			333,684			9,841,292			(26,177	)		(6,687,758	)		8,993,291
Transfers—policy charges and deductions		(106,928	)		(40,522	)		(1,299,506	)		(1,012,840	)		(401,624	)		(75,081	)
Transfers—surrenders		(14,585	)		(917	)		(862,084	)		(409,554	)		(149,030	)		(31,051	)
Transfers—other		(18,069	)		(2,085	)		(439,722	)		524,046			615,166			114,040
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		2,515,757			363,045			10,360,384			1,137,044			(6,044,023	)		9,175,328
NET INCREASE (DECREASE) IN NET ASSETS		2,897,932			390,052			13,738,370			2,315,903			(5,434,945	)		9,398,016
NET ASSETS
Beginning of Year		658,290			268,238			17,702,724			15,386,821			9,732,388			334,372
End of Year		$3,556,222			$658,290			$31,441,094			$17,702,724			$4,297,443			$9,732,388

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-19

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts (1)
	International Growth			Risk-Managed Core			Mid Cap Growth
	Service Class			Service Class			Service Class
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$21,910			$524			$275
Realized gain		121,432			216			948
Change in unrealized appreciation (depreciation) on investments		466,762			(1,028	)		40,788
Net Increase (Decrease) in Net Assets Resulting from Operations		610,104			(288	)		42,011
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		268,427			9,822			18,334
Transfers between variable and fixed accounts, net		9,968,378			151,460			860,468
Transfers—policy charges and deductions		(297,506	)		(2,895	)		(8,727	)
Transfers—surrenders		(28,448	)		—			(1,760	)
Transfers—other		(147,606	)		(244	)		4,340
Net Increase in Net Assets Derived from Policy Transactions		9,763,245			158,143			872,655
NET INCREASE IN NET ASSETS		10,373,349			157,855			914,666
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$10,373,349			$157,855			$914,666
				Legg Mason Partners Variable			Legg Mason Partners Variable
	US Strategic Equity			Aggressive Growth - Class II			Mid Cap Core - Class II
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$229			$—			$72
Realized gain (loss)		4,068			(33,788	)		23,034
Change in unrealized depreciation on investments		(4,396	)		(2,122	)		(27,427	)
Net Decrease in Net Assets Resulting from Operations		(99	)		(35,910	)		(4,321	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		130			16,040			2,629
Transfers between variable and fixed accounts, net		33,456			110,091			130,562
Transfers—policy charges and deductions		(802	)		(12,799	)		(3,802	)
Transfers—surrenders		—			(998	)		(1,758	)
Transfers—other		—			2,680			(538	)
Net Increase in Net Assets Derived from Policy Transactions		32,784			115,014			127,093
NET INCREASE IN NET ASSETS		32,685			79,104			122,772
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$32,685			$79,104			$122,772

(1)	Operations commenced during 2007 for all Variable Accounts (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-20

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts
	MFS New Discovery Series						MFS Utilities Series
	Service Class						Service Class						OpCap Small Cap
	Period Ended						Period Ended						Period Ended
	December 31,						December 31,						December 31,
	2007 (1)						2007 (1)						2007 (1)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—						$—						$—
Realized gain (loss)		(563	)					2,807						2,079
Change in unrealized appreciation (depreciation) on investments		(3,046	)					343,371						(6,055	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(3,609	)					346,178						(3,976	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		6,123						109,679						10,504
Transfers between variable and fixed accounts, net		212,903						14,008,715						137,173
Transfers—policy charges and deductions		(1,430	)					(75,030	)					(4,875	)
Transfers—surrenders		—						(41,378	)					—
Transfers—other		(119	)					(11,417	)					1,281
Net Increase in Net Assets Derived from Policy Transactions		217,477						13,990,569						144,083
NET INCREASE IN NET ASSETS		213,868						14,336,747						140,107
NET ASSETS
Beginning of Periods		—						—						—
End of Periods		$213,868						$14,336,747						$140,107
	T. Rowe Price						T. Rowe Price						Van Eck
	Blue Chip Growth - II						Equity Income - II						Worldwide Hard Assets
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2006			2007			2006			2007			2006
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$4,605			$4,525			$479,630			$258,532			$53,609			$9,968
Realized gain		231,430			27,023			3,302,256			1,718,526			9,073,320			3,389,190
Change in unrealized appreciation (depreciation) on investments		44,227			135,818			(2,957,798	)		1,594,381			10,878,379			1,813,845
Net Increase in Net Assets resulting from Operations		280,262			167,366			824,088			3,571,439			20,005,308			5,213,003
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		661,302			262,035			2,644,557			1,616,732			5,153,750			4,431,425
Transfers between variable and fixed accounts, net		1,211,661			1,469,436			330,961			17,455,450			2,490,507			20,377,573
Transfers—policy charges and deductions		(383,069	)		(135,589	)		(1,614,464	)		(1,032,026	)		(1,875,694	)		(1,255,118	)
Transfers—surrenders		(47,595	)		(51,123	)		(2,122,377	)		(490,751	)		(1,741,303	)		(1,790,274	)
Transfers—other		1,398,283			(22,598	)		(101,800	)		(301,739	)		27,061			(212,950	)
Net Increase (Decrease) in Net Assets Derived from Policy Transactions		2,840,582			1,522,161			(863,123	)		17,247,666			4,054,321			21,550,656
NET INCREASE (DECREASE) IN NET ASSETS		3,120,844			1,689,527			(39,035	)		20,819,105			24,059,629			26,763,659
NET ASSETS
Beginning of Year		2,340,853			651,326			28,739,750			7,920,645			38,961,582			12,197,923
End of Year		$5,461,697			$2,340,853			$28,700,715			$28,739,750			$63,021,211			$38,961,582

(1)	Operations commenced during 2007 (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-21

PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)

	Variable Accounts (1)
	ETF 2010			ETF 2015			ETF 2020
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$—			$—
Realized gain (loss)		19			9			(1,851	)
Change in unrealized depreciation on investments		(429	)		(2,462	)		(4,343	)
Net Decrease in Net Assets Resulting from Operations		(410	)		(2,453	)		(6,194	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		4,257			7,999			4,943
Transfers between variable and fixed accounts, net		73,755			81,516			381,985
Transfers—policy charges and deductions		(2,630	)		(1,433	)		(7,759	)
Transfers—surrenders		—			—			—
Transfers—other		(34	)		—			(22,409	)
Net Increase in Net Assets Derived from Policy Transactions		75,348			88,082			356,760
NET INCREASE IN NET ASSETS		74,938			85,629			350,566
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$74,938			$85,629			$350,566
	ETF 2025			ETF 2030			ETF 2040+
	Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,
	2007			2007			2007
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income		$—			$—			$—
Realized gain (loss)		144			4,027			(2,029	)
Change in unrealized appreciation (depreciation) on investments		1,555			(20,013	)		(2,979	)
Net Increase (Decrease) in Net Assets Resulting from Operations		1,699			(15,986	)		(5,008	)
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums		28,276			175,868			75,713
Transfers between variable and fixed accounts, net		324,932			425,491			226,319
Transfers—policy charges and deductions		(9,363	)		(21,261	)		(12,703	)
Transfers—surrenders		—			—			—
Transfers—other		(193	)		(2,342	)		(1,436	)
Net Increase in Net Assets Derived from Policy Transactions		343,652			577,756			287,893
NET INCREASE IN NET ASSETS		345,351			561,770			282,885
NET ASSETS
Beginning of Periods		—			—			—
End of Periods		$345,351			$561,770			$282,885

(1)	Operations commenced during 2007 for all Variable Accounts (See Note 1 to Financial Statements).
	See Notes to Financial Statements

SA-22

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS

     A summary of accumulation unit values (“AUV”), total units outstanding, total net assets, ratios of investment income to average daily net assets, and total returns for each year or period ended December 31 are presented in the table below. The ratio of expenses to average daily net assets is 0.00% for all Variable Accounts.

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Small-Cap Growth (3)
2007		$15.63		3,236,389		$50,586,573		0.00	%		15.10	%
2006		13.58		2,986,761		40,560,290		0.26	%		5.07	%
2005		12.93		3,275,109		42,331,400		0.22	%		2.66	%
2004		12.59		2,951,152		37,156,824		0.66	%		18.94	%
2003		10.59		3,398,472		35,974,022		0.53	%		33.14	%
International Value
2007		$34.78		8,793,719		$305,888,339		2.01	%		6.24	%
2006		32.74		8,634,107		282,689,209		1.65	%		25.69	%
2005		26.05		8,552,145		222,779,702		1.97	%		9.43	%
2004		23.80		8,918,003		212,291,147		1.64	%		16.42	%
2003		20.45		8,873,873		181,445,589		1.78	%		27.71	%
International Small-Cap
2007		$10.80		2,202,534		$23,781,576		1.34	%		4.73	%
05/01/2006 - 12/31/2006		10.31		1,248,871		12,875,311		0.23	%		3.10	%
Equity Index
2007		$56.89		9,701,628		$551,923,775		1.84	%		5.23	%
2006		54.06		10,173,850		550,028,122		1.77	%		15.52	%
2005		46.80		10,743,851		502,817,844		1.46	%		4.67	%
2004		44.71		11,113,375		496,919,308		1.78	%		10.58	%
2003		40.43		11,037,075		446,272,511		1.59	%		28.29	%
Small-Cap Index
2007		$18.87		14,234,769		$268,559,624		1.25	%		(2.02	%)
2006		19.25		15,783,089		303,894,564		1.52	%		17.79	%
2005		16.35		17,236,081		281,759,120		0.49	%		4.38	%
2004		15.66		19,260,276		301,640,966		0.84	%		17.76	%
2003		13.30		5,554,119		73,865,812		0.71	%		46.53	%
Diversified Research
2007		$14.76		4,824,065		$71,202,866		0.71	%		1.19	%
2006		14.59		5,271,188		76,886,161		0.67	%		11.97	%
2005		13.03		5,109,087		66,554,596		0.47	%		5.24	%
2004		12.38		4,639,224		57,425,802		0.63	%		11.20	%
2003		11.13		3,940,814		43,865,757		0.48	%		32.63	%
Equity
2007		$14.33		3,445,626		$49,367,148		0.22	%		6.27	%
2006		13.48		3,338,286		45,007,199		0.37	%		8.65	%
2005		12.41		4,011,507		49,777,144		0.26	%		6.53	%
2004		11.65		4,204,821		48,978,168		0.79	%		5.14	%
2003		11.08		4,520,255		50,076,742		0.38	%		24.33	%
American Funds Growth-Income
2007		$13.20		5,233,800		$69,080,372		1.31	%		4.66	%
2006		12.61		4,458,099		56,224,609		1.62	%		14.77	%
05/03/2005 - 12/31/2005		10.99		1,681,919		18,481,536		1.92	%		9.88	%
American Funds Growth
2007		$14.74		4,288,451		$63,232,628		0.42	%		11.93	%
2006		13.17		4,463,397		58,796,109		0.69	%		9.81	%
05/03/2005 - 12/31/2005		12.00		2,211,749		26,532,950		0.78	%		19.96	%
Large-Cap Value
2007		$17.36		9,143,314		$158,714,149		1.18	%		3.54	%
2006		16.77		9,331,394		156,441,283		1.25	%		17.58	%
2005		14.26		9,608,665		137,007,537		1.29	%		6.16	%
2004		13.43		10,752,848		144,430,409		1.39	%		9.93	%
2003		12.22		8,834,486		107,946,997		1.31	%		31.24	%
Technology
2007		$8.07		2,811,966		$22,697,317		0.05	%		23.03	%
2006		6.56		2,674,031		17,543,154		0.00	%		9.34	%
2005		6.00		2,027,444		12,164,728		0.00	%		21.71	%
2004		4.93		1,963,166		9,677,876		0.00	%		3.67	%
2003		4.76		1,902,193		9,045,704		0.00	%		42.58	%
Short Duration Bond
2007		$11.31		4,049,884		$45,784,334		4.52	%		4.47	%
2006		10.82		4,144,613		44,852,141		4.11	%		4.27	%
2005		10.38		3,819,364		39,640,832		3.05	%		1.57	%
2004		10.22		3,222,976		32,932,836		2.57	%		1.21	%
05/01/2003 - 12/31/2003		10.10		1,732,267		17,489,215		2.67	%		0.96	%
Floating Rate Loan (4)
05/04/2007 - 12/31/2007		$9.81		962,991		$9,449,518		7.28	%		(1.89	%)
Diversified Bond
2007		$10.66		2,668,272		$28,436,894		5.09	%		1.32	%
05/01/2006 - 12/31/2006		10.52		997,088		10,488,157		4.65	%		5.19	%

See Notes to Financial Statements See explanation of references on SA-27

SA-23

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Growth LT
2007		$50.27		6,242,947		$313,824,437		0.44	%		15.63	%
2006		43.47		6,931,734		301,351,116		0.60	%		9.72	%
2005		39.62		7,403,306		293,349,777		0.25	%		7.68	%
2004		36.80		8,117,880		298,732,310		0.00	%		10.40	%
2003		33.33		8,820,098		293,996,618		0.00	%		33.98	%
Focused 30
2007		$16.43		3,080,715		$50,627,718		0.43	%		31.84	%
2006		12.46		2,287,373		28,511,623		0.07	%		23.71	%
2005		10.08		1,809,953		18,236,050		1.06	%		22.07	%
2004		8.25		1,076,135		8,882,205		0.06	%		14.85	%
2003		7.19		734,167		5,276,326		0.00	%		42.26	%
Health Sciences
2007		$15.28		1,525,560		$23,304,460		0.00	%		16.47	%
2006		13.12		1,451,105		19,032,105		0.00	%		8.11	%
2005		12.13		1,323,214		16,052,785		0.00	%		15.28	%
2004		10.52		1,164,155		12,250,871		0.00	%		7.54	%
2003		9.79		1,003,438		9,819,112		0.00	%		27.82	%
Mid-Cap Value
2007		$24.76		8,230,390		$203,798,206		0.74	%		(2.15	%)
2006		25.31		8,035,634		203,350,799		0.69	%		14.97	%
2005		22.01		7,960,146		175,210,180		0.54	%		8.87	%
2004		20.22		7,867,057		159,059,494		0.42	%		25.08	%
2003		16.16		6,439,885		104,100,588		0.59	%		29.10	%
Large-Cap Growth (5)
2007		$9.07		6,937,338		$62,931,690		0.00	%		21.63	%
2006		7.46		8,055,216		60,078,214		0.21	%		(3.82	%)
2005		7.75		7,040,498		54,593,520		0.34	%		2.94	%
2004		7.53		8,859,994		66,740,228		0.73	%		4.65	%
2003		7.20		6,371,597		45,861,577		0.27	%		25.36	%
International Large-Cap
2007		$12.79		15,067,071		$192,663,328		1.58	%		9.26	%
2006		11.70		15,768,095		184,533,716		2.89	%		27.00	%
2005		9.21		14,566,843		134,228,198		0.87	%		12.70	%
2004		8.18		10,780,247		88,145,064		1.08	%		18.61	%
2003		6.89		9,224,647		63,593,649		1.31	%		30.52	%
Small-Cap Value
2007		$22.16		2,748,103		$60,911,384		1.85	%		3.14	%
2006		21.49		2,994,334		64,351,383		2.51	%		19.75	%
2005		17.95		2,557,703		45,901,085		1.37	%		13.65	%
2004		15.79		2,058,033		32,498,597		2.28	%		24.41	%
05/01/2003 -12/31/2003		12.69		970,884		12,323,204		1.76	%		26.93	%
Multi-Strategy
2007		$52.14		1,891,715		$98,643,009		2.81	%		4.34	%
2006		49.97		2,113,184		105,604,294		2.53	%		11.68	%
2005		44.75		2,421,143		108,336,551		2.24	%		3.78	%
2004		43.12		2,441,059		105,252,817		1.76	%		9.81	%
2003		39.26		2,453,312		96,327,173		1.47	%		23.28	%
Main Street Core
2007		$55.27		3,102,111		$171,459,406		1.20	%		4.40	%
2006		52.94		2,987,945		158,190,552		1.24	%		15.18	%
2005		45.97		3,318,283		152,528,923		1.11	%		5.99	%
2004		43.37		3,405,144		147,678,818		1.32	%		9.54	%
2003		39.59		3,593,636		142,279,128		1.03	%		26.96	%
Emerging Markets
2007		$32.81		5,417,715		$177,769,491		1.16	%		33.09	%
2006		24.65		5,128,600		126,439,320		0.78	%		24.40	%
2005		19.82		4,934,335		97,790,451		1.09	%		41.47	%
2004		14.01		4,032,143		56,485,350		1.90	%		34.62	%
2003		10.41		3,597,135		37,434,125		1.20	%		68.42	%
Managed Bond
2007		$42.31		9,776,620		$413,635,229		4.47	%		8.53	%
2006		38.98		9,025,168		351,828,277		4.05	%		4.81	%
2005		37.19		8,493,958		315,929,669		3.40	%		2.63	%
2004		36.24		6,211,565		225,105,497		2.96	%		5.38	%
2003		34.39		6,314,379		217,152,849		4.29	%		6.24	%
Inflation Managed
2007		$41.93		4,204,544		$176,308,909		4.27	%		10.14	%
2006		38.07		4,088,136		155,646,544		3.97	%		0.52	%
2005		37.88		4,076,452		154,399,403		3.00	%		2.54	%
2004		36.94		3,319,185		122,599,913		0.83	%		8.90	%
2003		33.92		3,041,925		103,178,081		0.08	%		8.24	%

See Notes to Financial Statements See explanation of references on SA-27

SA-24

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
		At the End of Each Year or Period					Investment
			Total		Total		Income to
Variable Accounts			Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Money Market
2007		$22.84		10,196,175		$232,852,629		4.85	%		4.99	%
2006		21.75		8,657,137		188,307,581		4.64	%		4.69	%
2005		20.78		9,011,395		187,232,550		2.74	%		2.82	%
2004		20.21		13,542,076		273,645,486		1.01	%		1.01	%
2003		20.01		13,892,825		277,926,765		0.80	%		0.79	%
High Yield Bond
2007		$39.92		1,924,183		$76,816,614		7.58	%		2.44	%
2006		38.97		1,921,427		74,879,252		7.33	%		9.42	%
2005		35.61		2,046,323		72,878,683		7.05	%		2.37	%
2004		34.79		2,241,878		77,993,215		7.12	%		9.42	%
2003		31.79		2,290,346		72,817,214		7.37	%		20.29	%
Comstock (6)
2007		$12.44		6,703,119		$83,377,663		1.54	%		(3.01	%)
2006		12.83		4,730,546		60,669,698		1.76	%		16.33	%
2005		11.02		3,673,500		40,498,213		1.39	%		4.36	%
2004		10.56		4,333,807		45,781,297		1.88	%		17.17	%
2003		9.02		1,746,197		15,743,378		1.03	%		31.38	%
Mid-Cap Growth
2007		$10.50		6,666,596		$70,025,236		0.48	%		22.92	%
2006		8.55		6,053,274		51,728,324		0.23	%		8.93	%
2005		7.84		4,677,898		36,697,161		0.00	%		17.90	%
2004		6.65		3,056,878		20,339,747		0.00	%		21.59	%
2003		5.47		2,524,178		13,813,264		0.00	%		30.39	%
Real Estate
2007		$36.71		2,496,462		$91,656,848		1.02	%		(16.16	%)
2006		43.79		2,826,403		123,770,629		3.08	%		38.06	%
2005		31.72		2,853,932		90,522,273		0.89	%		16.79	%
2004		27.16		2,931,932		79,628,507		2.82	%		37.62	%
2003		19.74		2,443,728		48,227,396		3.26	%		37.52	%
Small-Cap Equity (7)
2007		$14.53		785,370		$11,413,846		0.24	%		6.04	%
2006		13.71		415,525		5,695,033		0.89	%		18.68	%
05/03/2005 - 12/31/2005		11.55		208,894		2,412,411		0.86	%		15.48	%
I
2007		$37.70		3,147,799		$118,662,254		2.05	%		8.01	%
2006		34.90		3,112,831		108,644,524		1.50	%		26.78	%
2005		27.53		2,849,925		78,457,074		1.57	%		10.55	%
2004		24.90		2,231,535		55,570,535		1.28	%		24.00	%
2003		20.08		1,975,752		39,679,031		1.27	%		47.43	%
II
2007		$27.81		1,388,785		$38,626,287		0.37	%		22.43	%
2006		22.72		1,586,739		36,046,654		0.63	%		8.52	%
2005		20.93		1,419,434		29,714,468		0.45	%		13.92	%
2004		18.38		1,456,339		26,762,771		0.30	%		11.19	%
2003		16.53		1,190,189		19,670,670		0.28	%		34.58	%
III
2007		$38.10		1,330,308		$50,686,469		0.00	%		11.92	%
2006		34.04		1,340,167		45,625,020		0.00	%		16.35	%
2005		29.26		1,366,693		39,991,343		0.00	%		15.13	%
2004		25.42		1,907,181		48,474,124		0.00	%		9.33	%
2003		23.25		1,680,154		39,059,365		0.00	%		55.89	%
V
2007		$16.94		1,446,522		$24,509,629		0.62	%		5.44	%
2006		16.07		1,549,298		24,896,714		0.55	%		13.89	%
2005		14.11		1,282,886		18,101,507		0.76	%		7.81	%
2004		13.09		696,561		9,116,719		0.81	%		22.60	%
2003		10.68		438,776		4,684,258		0.91	%		29.65	%
BlackRock Basic Value V.I. Class III (8)
2007		$12.63		397,583		$5,021,114		1.64	%		1.53	%
2006		12.44		234,578		2,917,816		4.02	%		21.59	%
02/15/2005 - 12/31/2005		10.23		14,023		143,454		2.48	%		2.30	%
BlackRock Global Allocation V.I. Class III (9)
2007		$14.85		793,421		$11,783,611		4.57	%		16.75	%
2006		12.72		349,576		4,446,773		3.86	%		16.40	%
02/15/2005 - 12/31/2005		10.93		265,340		2,899,576		7.00	%		9.28	%
Fidelity VIP Contrafund ® Service Class 2
2007		$15.02		3,792,886		$56,986,250		0.91	%		17.30	%
2006		12.81		2,446,046		31,329,827		1.02	%		11.43	%
02/15/2005 - 12/31/2005		11.49		1,902,907		21,872,725		0.00	%		14.94	%
Fidelity VIP Freedom Income Service Class 2 (4)
10/29/2007 - 12/31/2007		$10.03		1,143		$11,458	See Note (10)				(0.35	%)

See Notes to Financial Statements See explanation of references on SA-27

SA-25

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

							Ratios of
	At the End of Each Year or Period						Investment
					Total		Income to
Variable Accounts			Total Units		Net		Average Net			Total
For Each Year or Period Ended	AUV		Outstanding		Assets		Assets (1)			Returns (2)
Fidelity VIP Freedom 2010 Service Class 2 (4)
12/13/2007 - 12/31/2007		$9.91		8,484		$84,073	See Note (10)				(0.11	%)
Fidelity VIP Freedom 2015 Service Class 2 (4)
10/26/2007 - 12/31/2007		$9.88		34,170		$337,562	See Note (10)				(2.12	%)
Fidelity VIP Freedom 2020 Service Class 2 (4)
12/03/2007 - 12/31/2007		$9.83		9,549		$93,827	See Note (10)				(0.02	%)
Fidelity VIP Freedom 2025 Service Class 2 (4)
11/09/2007 - 12/31/2007		$9.81		246,074		$2,413,927	See Note (10)				0.26	%
Fidelity VIP Freedom 2030 Service Class 2 (4)
10/08/2007 - 12/31/2007		$9.76		13,972		$136,332	See Note (10)				(2.98	%)
Fidelity VIP Growth Service Class 2
2007		$14.38		247,233		$3,556,222		0.19	%		26.66	%
2006		11.36		57,966		658,290		0.13	%		6.57	%
02/15/2005 - 12/31/2005		10.66		25,172		268,238		0.00	%		6.56	%
Fidelity VIP Mid Cap Service Class 2
2007		$15.04		2,090,850		$31,441,094		0.48	%		15.34	%
2006		13.04		1,357,809		17,702,724		0.18	%		12.40	%
02/15/2005 - 12/31/2005		11.60		1,326,555		15,386,821		0.00	%		15.99	%
Fidelity VIP Value Strategies Service Class 2
2007		$12.89		333,286		$4,297,443		0.46	%		5.44	%
2006		12.23		795,861		9,732,388		0.09	%		16.01	%
02/15/2005 - 12/31/2005		10.54		31,720		334,372		0.00	%		5.41	%
International Growth Service Class (4)
05/03/2007 - 12/31/2007		$11.97		866,820		$10,373,349		0.69	%		16.76	%
Risk-Managed Core Service Class (4)
06/21/2007 - 12/31/2007		$10.05		15,705		$157,855		2.17	%		0.66	%
Mid Cap Growth Service Class (4)
05/16/2007 - 12/31/2007		$11.08		82,577		$914,666		0.12	%		8.83	%
US Strategic Equity (4)
05/21/2007 - 12/31/2007		$9.44		3,462		$32,685		4.44	%		(8.17	%)
Legg Mason Partners Variable Aggressive Growth Class — II (4)
05/03/2007 - 12/31/2007		$9.72		8,141		$79,104		0.00	%		(4.02	%)
Legg Mason Partners Variable Mid Cap Core Class — II (4)
05/21/2007 - 12/31/2007		$9.78		12,558		$122,772		0.12	%		(5.49	%)
MFS New Discovery Series Service Class (4)
05/14/2007 - 12/31/2007		$9.53		22,449		$213,868		0.00	%		(4.79	%)
MFS Utilities Series Service Class (4)
05/11/2007 - 12/31/2007		$11.14		1,287,407		$14,336,747		0.00	%		9.08	%
OpCap Small Cap (4)
05/24/2007 - 12/31/2007		$9.54		14,693		$140,107		0.00	%		(6.71	%)
T. Rowe Price Blue Chip Growth — II
2007		$13.20		413,880		$5,461,697		0.07	%		12.49	%
2006		11.73		199,541		2,340,853		0.32	%		9.33	%
02/15/2005 - 12/31/2005		10.73		60,700		651,326		0.28	%		7.30	%
T. Rowe Price Equity Income — II
2007		$12.61		2,275,375		$28,700,715		1.49	%		3.03	%
2006		12.24		2,347,503		28,739,750		1.54	%		18.65	%
02/15/2005 - 12/31/2005		10.32		767,607		7,920,645		1.94	%		3.19	%
Van Eck Worldwide Hard Assets
2007		$25.96		2,428,039		$63,021,211		0.10	%		45.36	%
2006		17.86		2,181,931		38,961,582		0.03	%		24.49	%
02/15/2005 - 12/31/2005		14.34		850,416		12,197,923		0.00	%		43.43	%
ETF 2010 (4)
06/26/2007 - 12/31/2007		$9.91		7,562		$74,938		0.00	%		(0.30	%)
ETF 2015 (4)
06/11/2007 - 12/31/2007		$9.97		8,589		$85,629		0.00	%		(1.77	%)
ETF 2020 (4)
05/17/2007 - 12/31/2007		$9.89		35,447		$350,566		0.00	%		(2.37	%)
ETF 2025 (4)
05/29/2007 - 12/31/2007		$9.98		34,604		$345,351		0.00	%		(2.63	%)
ETF 2030 (4)
05/04/2007 - 12/31/2007		$9.84		57,090		$561,770		0.00	%		(3.72	%)
ETF 2040+ (4)
05/17/2007 - 12/31/2007		$9.74		29,044		$282,885		0.00	%		(3.94	%)

See Notes to Financial Statements See explanation of references on SA-27

SA-26

PACIFIC SELECT EXEC SEPARATE ACCOUNT
FINANCIAL HIGHLIGHTS (Continued)

Explanation of References for Financial Highlights on SA-23 through SA-26

(1)	The investment income ratios represent the dividends, excluding distributions of capital gains, received by the variable accounts from the underlying portfolios/funds, divided by the average daily net assets. These ratios are before the deduction of mortality and expense risk (“M&E”) fees that are assessed against policyholder accounts. The recognition of investment income by the variable accounts is affected by the timing of the declaration of dividends by the underlying portfolios/funds in which the variable accounts invest. The ratios for periods of less than one full year are annualized.
(2)	Total returns reflect changes in unit value of the underlying portfolios/funds and do not include deductions at the separate account or policy level for any M&E fees, cost of insurance charges, premium loads, administrative charges, maintenance fees, premium tax charges, surrender charges or other charges that may be incurred under a policy which, if incurred, would have resulted in lower returns. Total returns for periods of less than one full year are not annualized.
(3)	Prior to 05/01/07, Small-Cap Growth Variable Account was named Fasciano Small Equity Variable Account. Prior to 05/01/2005, the variable account was named Aggressive Equity Variable Account.
(4)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(5)	Prior to 01/01/2006, Large-Cap Growth Variable Account was named Blue Chip Variable Account.
(6)	Prior to 05/01/2003, Comstock Variable Account was named Strategic Value Variable Account.
(7)	Prior to 05/01/2007, Small-Cap Equity Variable Account was named VN Small-Cap Value Variable Account.
(8)	Prior to 10/01/2006, BlackRock Basic Value V.I. Class III Variable Account was named Mercury Basic Value V.I. Class III Variable Account. Prior to 05/01/2005, the variable account was named Merrill Lynch Basic Value V.I. Class III Variable Account.
(9)	Prior to 10/01/2006, BlackRock Global Allocation V.I. Class III Variable Account was named Mercury Global Allocation V.I. Class III Variable Account. Prior to 05/01/2005, the variable account was named Merrill Lynch Global Allocation V.I. Class III Variable Account.
(10)	The annualized investment income ratios for the periods from inception to December 31, 2007 were 20.70%, 43.03%, 17.79%, 24.07%, 13.39%, and 13.07% for the Fidelity VIP Freedom Income Service Class 2, Fidelity VIP Freedom 2010 Service Class 2, Fidelity VIP Freedom 2015 Service Class 2, Fidelity VIP Freedom 2020 Service Class 2, Fidelity VIP Freedom 2025 Service Class 2, and Fidelity VIP Freedom 2030 Service Class 2 Variable Accounts, respectively. If not annualized, the investment income ratios were 3.63%, 2.24%, 3.27%, 1.91%, 1.94% and 3.04%, respectively.

See Notes to Financial Statements

SA-27

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

     The Pacific Select Exec Separate Account (the “Separate Account”) is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and as of December 31, 2007 is comprised of sixty-six subaccounts called Variable Accounts. The assets in each of the Variable Accounts invest in the corresponding portfolios or funds (each, a “Portfolio” and collectively, the “Portfolios”) of Pacific Select Fund, M Fund, Inc., BlackRock Variable Series Funds, Inc., Fidelity^® Variable Insurance Products Funds, Janus Aspen Series, Lazard Retirement Series, Inc., Legg Mason Partners Variable Equity Trust, MFS^® Variable Insurance Trust, Premier VIT, T. Rowe Price Equity Series, Inc., Van Eck Worldwide Insurance Trust, and XTF Advisors Trust (collectively, the “Funds”) as presented in the Schedule of Investments in Section I of this brochure.

     Each Portfolio pursues different investment objectives and policies. The financial statements of the Funds, including the schedules of investments, are either included in Sections A through H of this brochure or provided separately and should be read in conjunction with the Separate Account’s financial statements.

     The Separate Account organized and registered with the Securities and Exchange Commission (“SEC”) twenty-two new Variable Accounts listed in the following table:

	Commenced
Variable Accounts	Operations on
Floating Rate Loan	May 4, 2007
Fidelity VIP Freedom Income Service Class 2	October 29, 2007
Fidelity VIP Freedom 2010 Service Class 2	December 13, 2007
Fidelity VIP Freedom 2015 Service Class 2	October 26, 2007
Fidelity VIP Freedom 2020 Service Class 2	December 3, 2007
Fidelity VIP Freedom 2025 Service Class 2	November 9, 2007
Fidelity VIP Freedom 2030 Service Class 2	October 8, 2007
International Growth Service Class	May 3, 2007
Risk-Managed Core Service Class	June 21, 2007
Mid Cap Growth Service Class	May 16, 2007
US Strategic Equity	May 21, 2007
Legg Mason Partners Variable Aggressive Growth — Class II	May 3, 2007
Legg Mason Partners Variable Mid Cap Core — Class II	May 21, 2007
MFS New Discovery Series Service Class	May 14, 2007
MFS Utilities Series Service Class	May 11, 2007
OpCap Small Cap	May 24, 2007
ETF 2010	June 26, 2007
ETF 2015	June 11, 2007
ETF 2020	May 17, 2007
ETF 2025	May 29, 2007
ETF 2030	May 4, 2007
ETF 2040+	May 17, 2007

     The net assets of the Pacific Select Fund’s Concentrated Growth and Capital Opportunities Portfolios, the underlying portfolios for the Concentrated Growth and Capital Opportunities Variable Accounts, respectively, were transferred to the Pacific Select Fund’s Equity and Main Street Core Portfolios (the “2007 Surviving Portfolios”), the underlying portfolios for the Equity and Main Street Core Variable Accounts, respectively, in exchange for shares of the 2007 Surviving Portfolios (the “2007 Reorganization”). The 2007 Reorganization took place on April 30, 2007. In connection with the 2007 Reorganization, a total of 1,528,682 outstanding accumulation units (valued at $8,185,234) of the Concentrated Growth Variable Account were exchanged for 575,774 accumulation units with equal value of the Equity Variable Account; and a total of 1,209,146 outstanding accumulation units (valued at $12,366,072) of the Capital Opportunities Variable Account were exchanged for 222,822 accumulation units with equal value of the Main Street Core Variable Account.

     The net assets of the Pacific Select Fund’s Aggressive Growth and Financial Services Portfolios, the underlying portfolios for the Aggressive Growth and Financial Services Variable Accounts, respectively, were transferred to the Pacific Select Fund’s Mid-Cap Growth and Large-Cap Value Portfolios (the “2006 Surviving Portfolios”), the underlying portfolios for the Mid-Cap Growth and Large-Cap Value Variable Accounts, respectively, in exchange for shares of the 2006 Surviving Portfolios (the “2006 Reorganization”). The 2006 Reorganization took place on April 28, 2006. In connection with the 2006 Reorganization, a total of 1,006,002 outstanding accumulation units (valued at $10,233,550) of the Aggressive Growth Variable Account were exchanged for 1,187,650 accumulation units with equal value of the Mid-Cap Growth Variable Account; and a total of 732,657 outstanding accumulation units (valued at $8,957,429) of the Financial Services Variable Account were exchanged for 586,882 accumulation units with equal value of the Large-Cap Value Variable Account.

     The net assets of the Pacific Select Fund’s Equity Income Portfolio, the underlying Portfolio for Equity Income Variable Account, was substituted by Pacific Select Fund’s American Funds Growth-Income Portfolio, the underlying Portfolio of American Funds Growth-Income Variable Account (the “2006 Substitution”). The 2006 Substitution took place on April 28, 2006. In connection with the 2006 Substitution, a total of 1,488,874 outstanding accumulation units (valued at $20,419,717) of the Equity Income Variable Account were substituted by 1,763,883 accumulation units with equal value of the American Funds Growth-Income Variable Account.

     The Separate Account was established by Pacific Life Insurance Company (“Pacific Life”) on May 12, 1988 and commenced operations on November 22, 1988. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of Pacific Life. The assets of the Separate Account will not be charged with any liabilities arising out of any other business conducted by Pacific Life, but the obligations of the Separate Account, including benefits related to variable life insurance, are obligations of Pacific Life.

     The Separate Account funds individual flexible premium variable life insurance policies issued by Pacific Life. The assets of the Separate Account are carried at market value.

2. SIGNIFICANT ACCOUNTING POLICIES

     The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for investment companies which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.

     A. Valuation of Investments

     Investments in shares of the Funds are valued at the reported net asset values of the respective Portfolios. Valuation of securities held by the Funds are discussed in the notes to their financial statements.

SA-28

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

     B. Security Transactions and Investment Income

     Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date and the amounts distributed to the Separate Account for its share of dividends are reinvested in additional full and fractional shares of the related Portfolios.

     C. Federal Income Taxes

     The operations of the Separate Account will be reported on the Federal income tax return of Pacific Life, which is taxed as a life insurance company under the provisions of the Tax Reform Act of 1986. Under current tax law, no Federal income taxes are expected to be paid by Pacific Life with respect to the operations of the Separate Account. Pacific Life will periodically review the status of this policy in the event of changes in the tax law. A charge may be made in future years for any Federal income taxes that would be attributable to the policies.

3. CHARGES AND EXPENSES

     With respect to variable life insurance policies funded by the Separate Account, Pacific Life makes certain deductions from premiums to help pay for costs of distributing the policies and to pay state and local premiums taxes, any other taxes that may be imposed, and to compensate Pacific Life for certain costs or lost investment opportunities resulting from our amortization and delayed recognition of certain policy expenses for Federal income tax purposes. Pacific Life also makes certain deductions from the net assets of each Variable Account for charges for the mortality and expense risks and administrative expenses Pacific Life assumes, cost of insurance, charges for optional benefits and any withdrawal and surrender charges. The operating expenses of the Separate Account are paid by Pacific Life.

4. RELATED PARTY AGREEMENT

     Pacific Select Distributors, Inc., a wholly-owned subsidiary of Pacific Life, services as principal underwriter of variable life insurance policies funded by interests in the Separate Account, without remuneration from the Separate Account.

5. PURCHASES AND SALES OF INVESTMENTS

     The cost of purchases (excluding dividend reinvestments) and proceeds from sales of investments for the year or periods ended December 31, 2007, were as follows:

Variable Accounts	Purchases		Sales
Small-Cap Growth (1)		$7,758,301		$3,944,970
International Value		36,672,000		30,717,163
International Small-Cap		12,658,963		1,783,956
Equity Index		29,890,083		57,513,109
Small-Cap Index		31,289,518		61,026,424
Diversified Research		8,050,309		14,772,585
Equity		12,535,272		11,005,263
American Funds Growth-Income		36,783,794		25,803,521
American Funds Growth		36,145,721		38,916,052
Large-Cap Value		12,045,542		15,113,417
Technology		8,597,388		7,120,327
Short Duration Bond		14,120,394		15,121,006
Floating Rate Loan (2)		14,133,067		4,589,014
Diversified Bond		18,962,255		1,117,374
Growth LT		12,252,156		44,510,634
Focused 30		18,045,454		6,366,885
Health Sciences		4,711,242		3,637,138
Mid-Cap Value		24,269,047		18,934,848
Large-Cap Growth		9,123,878		18,261,838
International Large-Cap		23,798,804		33,232,818
Small-Cap Value		9,493,925		14,928,776
Multi-Strategy		3,549,772		15,085,565
Main Street Core		18,899,893		12,686,567
Emerging Markets		27,653,611		18,082,105
Managed Bond		53,756,845		24,019,731
Inflation Managed		24,550,859		20,100,860
Money Market		333,567,937		299,206,600
High Yield Bond		26,591,939		26,290,912
Comstock		30,280,499		3,735,103
Mid-Cap Growth		19,777,414		12,865,841
Real Estate		11,141,038		25,041,464
Small-Cap Equity (1)		6,894,770		1,514,555
I		25,941,519		24,208,506
II		4,416,704		9,128,344
III		24,841,950		25,388,684
V		3,665,432		5,353,747
BlackRock Basic Value V.I. Class III		4,340,019		2,203,725
BlackRock Global Allocation V.I. Class III		7,197,035		1,012,062
Fidelity VIP Contrafund® Service Class 2		22,736,566		4,041,190
Fidelity VIP Freedom Income Service Class 2 (2)		11,611		111
Fidelity VIP Freedom 2010 Service Class 2 (2)		84,166		—
Fidelity VIP Freedom 2015 Service Class 2 (2)		372,827		36,378
Fidelity VIP Freedom 2020 Service Class 2 (2)		94,251		372
Fidelity VIP Freedom 2025 Service Class 2 (2)		2,419,623		11,735
Fidelity VIP Freedom 2030 Service Class 2 (2)		139,337		341
Fidelity VIP Growth Service Class 2		2,949,538		433,780
Fidelity VIP Mid Cap Service Class 2		13,320,852		2,960,474
Fidelity VIP Value Strategies Service Class 2		10,423,469		16,467,488
International Growth Service Class (2)		10,828,941		1,065,698
Risk-Managed Core Service Class (2)		162,493		4,350
Mid Cap Growth Service Class (2)		921,676		49,020
US Strategic Equity (2)		47,235		14,452
Legg Mason Partners Variable Aggressive Growth Class — II (2)		1,298,710		1,183,696
Legg Mason Partners Variable Mid Cap Core Class — II (2)		151,114		24,022
MFS New Discovery Series Service Class (2)		251,542		34,065
MFS Utilities Series Service Class (2)		14,189,704		199,135
OpCap Small Cap (2)		161,113		17,029
T. Rowe Price Blue Chip Growth — II		27,150,773		24,310,192
T. Rowe Price Equity Income — II		17,541,774		18,404,889
Van Eck Worldwide Hard Assets		20,009,688		15,955,372
ETF 2010 (2)		77,436		2,088
ETF 2015 (2)		89,403		1,320
ETF 2020 (2)		437,656		80,896
ETF 2025 (2)		408,600		64,948
ETF 2030 (2)		740,597		162,842
ETF 2040+ (2)		325,334		37,441

(1)	Prior to May 1, 2007, the Small-Cap Growth and Small-Cap Equity Variable Accounts were named Fasciano Small Equity and VN Small-Cap Value Variable Accounts, respectively.
(2)	Operations commenced during 2007 (See Note 1 to Financial Statements).

SA-29

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

6. CHANGES IN UNITS OUTSTANDING

     The changes in units outstanding for the years or periods ended December 31, 2007 and 2006, were as follows:

	2007								2006
	Units		Units			Net Increase			Units		Units			Net Increase
Variable Accounts	Issued		Redeemed			(Decrease)			Issued		Redeemed			(Decrease)
Small-Cap Growth (1)		1,328,245		(1,078,617	)		249,628			1,183,129		(1,471,477	)		(288,348	)
International Value		3,613,315		(3,453,703	)		159,612			3,266,578		(3,184,616	)		81,962
International Small-Cap (2)		1,994,399		(1,040,736	)		953,663			1,478,898		(230,027	)		1,248,871
Equity Index		2,346,136		(2,818,358	)		(472,222	)		3,521,144		(4,091,145	)		(570,001	)
Small-Cap Index		5,200,162		(6,748,482	)		(1,548,320	)		6,744,476		(8,197,468	)		(1,452,992	)
Diversified Research		1,834,616		(2,281,739	)		(447,123	)		2,796,641		(2,634,540	)		162,101
Equity		1,562,333		(1,454,993	)		107,340			1,233,520		(1,906,741	)		(673,221	)
American Funds Growth-Income		3,864,346		(3,088,645	)		775,701			4,021,867		(1,245,687	)		2,776,180
American Funds Growth		6,462,193		(6,637,139	)		(174,946	)		3,478,056		(1,226,408	)		2,251,648
Large-Cap Value		3,802,400		(3,990,480	)		(188,080	)		4,789,891		(5,067,162	)		(277,271	)
Technology		2,725,068		(2,587,133	)		137,935			3,018,801		(2,372,214	)		646,587
Short Duration Bond		2,099,182		(2,193,911	)		(94,729	)		2,080,756		(1,755,507	)		325,249
Floating Rate Loan (3)		1,492,611		(529,620	)		962,991
Diversified Bond (2)		2,197,179		(525,995	)		1,671,184			1,251,450		(254,362	)		997,088
Growth LT		1,528,998		(2,217,785	)		(688,787	)		2,369,682		(2,841,254	)		(471,572	)
Focused 30		3,200,064		(2,406,722	)		793,342			5,009,603		(4,532,183	)		477,420
Health Sciences		1,180,515		(1,106,060	)		74,455			1,291,653		(1,163,762	)		127,891
Mid-Cap Value		4,701,984		(4,507,228	)		194,756			6,585,071		(6,509,583	)		75,488
Large-Cap Growth		2,666,940		(3,784,818	)		(1,117,878	)		3,214,242		(2,199,524	)		1,014,718
International Large-Cap		7,575,096		(8,276,120	)		(701,024	)		8,521,982		(7,320,730	)		1,201,252
Small-Cap Value		2,789,105		(3,035,336	)		(246,231	)		2,570,119		(2,133,488	)		436,631
Multi-Strategy		419,934		(641,403	)		(221,469	)		729,984		(1,037,943	)		(307,959	)
Main Street Core		857,901		(743,735	)		114,166			715,908		(1,046,246	)		(330,338	)
Emerging Markets		3,297,383		(3,008,268	)		289,115			4,037,081		(3,842,816	)		194,265
Managed Bond		5,791,955		(5,040,503	)		751,452			6,518,394		(5,987,184	)		531,210
Inflation Managed		1,832,522		(1,716,114	)		116,408			1,917,796		(1,906,112	)		11,684
Money Market		41,973,985		(40,434,947	)		1,539,038			37,259,145		(37,613,403	)		(354,258	)
High Yield Bond		1,358,115		(1,355,359	)		2,756			1,452,013		(1,576,909	)		(124,896	)
Comstock		4,191,474		(2,218,901	)		1,972,573			3,843,463		(2,786,417	)		1,057,046
Mid-Cap Growth		6,065,688		(5,452,366	)		613,322			7,247,004		(5,871,628	)		1,375,376
Real Estate		1,732,006		(2,061,947	)		(329,941	)		2,051,186		(2,078,715	)		(27,529	)
Small-Cap Equity (1)		685,388		(315,543	)		369,845			391,202		(184,571	)		206,631
I		1,471,592		(1,436,624	)		34,968			1,767,747		(1,504,841	)		262,906
II		418,243		(616,197	)		(197,954	)		932,031		(764,726	)		167,305
III		862,656		(872,515	)		(9,859	)		837,305		(863,831	)		(26,526	)
V		396,302		(499,078	)		(102,776	)		975,412		(709,000	)		266,412
BlackRock Basic Value V.I. Class III (4)		534,033		(371,028	)		163,005			385,151		(164,596	)		220,555
BlackRock Global Allocation V.I. Class III (4)		600,505		(156,660	)		443,845			303,941		(219,705	)		84,236
Fidelity VIP Contrafund® Service Class 2		3,054,776		(1,707,936	)		1,346,840			2,709,157		(2,166,018	)		543,139
Fidelity VIP Freedom Income Service Class 2 (3)		1,154		(11	)		1,143
Fidelity VIP Freedom 2010 Service Class 2 (3)		8,484		—			8,484
Fidelity VIP Freedom 2015 Service Class 2 (3)		36,931		(2,761	)		34,170
Fidelity VIP Freedom 2020 Service Class 2 (3)		9,587		(38	)		9,549
Fidelity VIP Freedom 2025 Service Class 2 (3)		247,965		(1,891	)		246,074
Fidelity VIP Freedom 2030 Service Class 2 (3)		14,103		(131	)		13,972
Fidelity VIP Growth Service Class 2		235,682		(46,415	)		189,267			45,200		(12,406	)		32,794
Fidelity VIP Mid Cap Service Class 2		1,410,663		(677,622	)		733,041			1,403,588		(1,372,334	)		31,254
Fidelity VIP Value Strategies Service Class 2		1,006,295		(1,468,870	)		(462,575	)		798,962		(34,821	)		764,141
International Growth Service Class (3)		1,256,974		(390,154	)		866,820
Risk-Managed Core Service Class (3)		16,147		(442	)		15,705
Mid Cap Growth Service Class (3)		87,733		(5,156	)		82,577
US Strategic Equity (3)		4,906		(1,444	)		3,462
Legg Mason Partner Variable Aggressive Growth — Class II (3)		128,796		(120,655	)		8,141
Legg Mason Partner Variable Mid Cap Core — Class II (3)		15,146		(2,588	)		12,558
MFS New Discovery Series Service Class (3)		24,601		(2,152	)		22,449
MFS Utilities Series Service Class (3)		1,315,413		(28,006	)		1,287,407
OpCap Small Cap (3)		16,624		(1,931	)		14,693
T. Rowe Price Blue Chip Growth — II		2,300,538		(2,086,199	)		214,339			185,814		(46,973	)		138,841
T. Rowe Price Equity Income — II		4,939,215		(5,011,343	)		(72,128	)		2,957,440		(1,377,544	)		1,579,896
Van Eck Worldwide Hard Assets		1,998,450		(1,752,342	)		246,108			2,956,922		(1,625,407	)		1,331,515

See explanation of references on SA-31

SA-30

PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)

	2007							2006
	Units		Units			Net Increase		Units	Units	Net Increase
Variable Accounts	Issued		Redeemed			(Decrease)		Issued	Redeemed	(Decrease)
ETF 2010 (3)		7,853		(291	)		7,562
ETF 2015 (3)		8,730		(141	)		8,589
ETF 2020 (3)		43,682		(8,235	)		35,447
ETF 2025 (3)		41,124		(6,520	)		34,604
ETF 2030 (3)		59,183		(2,093	)		57,090
ETF 2040+ (3)		30,512		(1,468	)		29,044

(1)	Prior to May 1, 2007, the Small-Cap Growth and Small-Cap Equity Variable Accounts were named Fasciano Small Equity and VN Small-Cap Value Variable Accounts, respectively.
(2)	Operations commenced on May 1, 2006.
(3)	Operations commenced during 2007 (See Note 1 to Financial Statements).
(4)	Prior to October 1, 2006, the BlackRock Basic Value V.I. Class III and BlackRock Global Allocation V.I. Class III Variable Accounts were named Mercury Basic Value V.I. Class III and Mercury Global Allocation V.I. Class III Variable Accounts, respectively.

SA-31

INDEPENDENT AUDITORS’ REPORT

Pacific Life Insurance Company and Subsidiaries:

We have audited the accompanying consolidated statements of financial condition of Pacific Life Insurance Company and Subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Pacific Life Insurance Company and Subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed its method of accounting and reporting for deferred acquisition costs in connection with modifications or exchanges of insurance contracts and for defined benefit pension and other postretirement plans.

As discussed in Note 6 to the consolidated financial statements, the accompanying consolidated financial statements have been reclassified to give effect to broker-dealer discontinued operations.

March 7, 2008

PL-1

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31,
	2007		2006
	(In Millions)
ASSETS
Investments:
Fixed maturity securities available for sale, at estimated fair value	$	26,854	$	25,783
Equity securities available for sale, at estimated fair value		409		428
Mortgage loans, net		4,585		3,567
Policy loans		6,410		6,068
Other investments		2,156		1,600
TOTAL INVESTMENTS		40,414		37,446
Cash and cash equivalents		521		1,341
Deferred policy acquisition costs		4,481		4,248
Other assets		1,482		1,262
Separate account assets		57,605		48,900
TOTAL ASSETS	$	104,503	$	93,197
LIABILITIES AND STOCKHOLDER’S EQUITY
Liabilities:
Policyholder account balances	$	32,017	$	30,744
Future policy benefits		6,025		5,341
Short-term and long-term debt		397		187
Other liabilities		1,878		1,748
Separate account liabilities		57,605		48,900
TOTAL LIABILITIES		97,922		86,920
Commitments and contingencies (Note 19)
Stockholder’s Equity:
Common stock — $50 par value; 600,000 shares authorized, issued and outstanding		30		30
Paid-in capital		505		505
Retained earnings		5,814		5,244
Accumulated other comprehensive income		232		498
TOTAL STOCKHOLDER’S EQUITY		6,581		6,277
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	104,503	$	93,197

See Notes to Consolidated Financial Statements

PL-2

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
REVENUES
Policy fees and insurance premiums	$	1,780		$	1,538		$	1,361
Net investment income		2,114			2,042			1,918
Net realized investment gain (loss)		(46	)		62			23
Realized investment gain on interest in PIMCO					32			104
Investment advisory fees		327			319			249
Other income		98			47			23
TOTAL REVENUES		4,273			4,040			3,678
BENEFITS AND EXPENSES
Interest credited to policyholder account balances		1,266			1,219			1,198
Policy benefits paid or provided		855			780			706
Commission expenses		690			606			530
Operating expenses		740			630			642
TOTAL BENEFITS AND EXPENSES		3,551			3,235			3,076
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES		722			805			602
Provision for income taxes		98			198			100
INCOME FROM CONTINUING OPERATIONS		624			607			502
Cumulative adjustment due to change in accounting principle								(2	)
Minority interest		(36	)		(13	)		(1	)
Discontinued operations, net of taxes		11			(4	)		43
NET INCOME	$	599		$	590		$	542

See Notes to Consolidated Financial Statements

PL-3

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

											Accumulated Other
											Comprehensive Income (Loss)
											Unrealized
											Gain (Loss) on
											Derivatives
					Unearned						and Securities
	Common		Paid-in		ESOP			Retained			Available for			Other,
	Stock		Capital		Shares			Earnings			Sale, Net			Net			Total
	(In Millions)
BALANCES, JANUARY 1, 2005	$	30	$	497		($17	)	$	4,297		$	909		$	124		$	5,840
Comprehensive income (loss):
Net income									542									542
Other comprehensive loss, net												(227	)		(46	)		(273	)
Total comprehensive income																		269
Other equity adjustments				5		9												14
BALANCES, DECEMBER 31, 2005		30		502		(8	)		4,839			682			78			6,123
Comprehensive income (loss):
Net income									590									590
Other comprehensive loss, net												(246	)		(16	)		(262	)
Total comprehensive income																		328
Dividends paid									(185	)								(185	)
Other equity adjustments				3		8												11
BALANCES, DECEMBER 31, 2006		30		505		0			5,244			436			62			6,277
Comprehensive income (loss):
Net income									599									599
Other comprehensive loss, net												(250	)		(16	)		(266	)
Total comprehensive income																		333
Cumulative effect of adoption of new accounting principle, net of tax									(29	)								(29	)
BALANCES, DECEMBER 31, 2007	$	30	$	505	$	0		$	5,814		$	186		$	46		$	6,581

See Notes to Consolidated Financial Statements

PL-4

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income excluding discontinued operations	$	588		$	594		$	499
Adjustments to reconcile net income excluding discontinued operations    to net cash provided by operating activities:
Net accretion on fixed maturity securities		(150	)		(126	)		(96	)
Depreciation and other amortization		66			63			34
Deferred income taxes		1			49			61
Net realized investment (gain) loss		46			(62	)		(23	)
Realized investment gain on interest in PIMCO					(32	)		(104	)
Net change in deferred policy acquisition costs		(302	)		(496	)		(452	)
Interest credited to policyholder account balances		1,266			1,219			1,198
Change in future policy benefits and other insurance liabilities		666			502			172
Other operating activities, net		(58	)		294			316
NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE DISCONTINUED OPERATIONS		2,123			2,005			1,605
Net cash used in operating activities of discontinued operations		(71	)		(16	)		(75	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,052			1,989			1,530
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed maturity and equity securities available for sale:
Purchases		(5,885	)		(5,037	)		(4,061	)
Sales		2,041			2,039			1,509
Maturities and repayments		2,718			2,937			2,381
Repayments of mortgage loans		439			1,330			423
Purchases of mortgage loans and real estate		(1,658	)		(1,140	)		(1,153	)
Change in policy loans		(342	)		(164	)		(275	)
Interest in PIMCO					88			266
Purchases and terminations of derivative instruments		(58	)		(9	)		105
Change in collateral received or pledged		17			143			(317	)
Other investing activities, net		(222	)		(237	)		(421	)
NET CASH USED IN INVESTING ACTIVITIES BEFORE DISCONTINUED OPERATIONS		(2,950	)		(50	)		(1,543	)
Net cash provided by (used in) investing activities of discontinued operations		76			(9	)		(3	)
NET CASH USED IN INVESTING ACTIVITIES		(2,874	)		(59	)		(1,546	)

(Continued)
See Notes to Consolidated Financial Statements

PL-5

Pacific Life Insurance Company and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
(Continued)	2007			2006			2005
	(In Millions)
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholder account balances:
Deposits	$	6,876		$	4,760		$	5,275
Withdrawals		(7,131	)		(5,940	)		(5,389	)
Net change in short-term debt		100
Issuance of long-term debt		136			9			2
Payments of long-term debt		(33	)		(19	)		(23	)
Dividends paid					(169	)
Other financing activities, net		54			11			10
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2			(1,348	)		(125	)
Net change in cash and cash equivalents		(820	)		582			(141	)
Cash and cash equivalents, beginning of year		1,341			759			900
CASH AND CASH EQUIVALENTS, END OF YEAR	$	521		$	1,341		$	759
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid, net	$	155		$	44		$	231
Interest paid	$	19		$	16		$	16

See Notes to Consolidated Financial Statements

PL-6

Pacific Life Insurance Company and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	ORGANIZATION AND DESCRIPTION OF BUSINESS
	Pacific Life Insurance Company (Pacific Life) was established in 1868 and is domiciled in the State of Nebraska as a stock life insurance company. Pacific Life is an indirect subsidiary of Pacific Mutual Holding Company (PMHC), a Nebraska mutual holding company, and a wholly owned subsidiary of Pacific LifeCorp, an intermediate Delaware stock holding company. PMHC and Pacific LifeCorp were organized pursuant to consent received from the California Department of Insurance and the implementation of a plan of conversion to form a mutual holding company structure in 1997 (the Conversion).
	Pacific Life and its subsidiaries and affiliates have primary business operations consisting of life insurance, individual annuities, mutual funds, and pension and institutional products. Pacific Life’s primary business operations provide life insurance products, individual annuities and mutual funds, and offer to individuals, businesses, and pension plans a variety of investment products and services.
	Pacific Life transferred its legal domicile from the State of California to the State of Nebraska effective September 1, 2005. PMHC transferred its state of legal domicile from the State of California to the State of Nebraska, effective June 29, 2007, to reunite PMHC and Pacific Life under one regulatory authority.
	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
	The accompanying consolidated financial statements of Pacific Life and its subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Pacific Life and its majority owned and controlled subsidiaries and variable interest entities (VIEs) in which the Company was determined to be the primary beneficiary. All significant intercompany transactions and balances have been eliminated. Included in other liabilities is minority interest of $181 million and $92 million as of December 31, 2007 and 2006, respectively.
	Pacific Life prepares its regulatory financial statements in accordance with statutory accounting practices prescribed or permitted by the Nebraska Department of Insurance (NE DOI), which is a comprehensive basis of accounting other than U.S. GAAP (Note 2). These consolidated financial statements materially differ from those filed with regulatory authorities.
	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop. Management has identified the following estimates as significant, as they involve a higher degree of judgment and are subject to a significant degree of variability:

• The fair value of investments in the absence of quoted market values

• Investment impairments

• Application of the consolidation rules to certain investments

• The fair value of and accounting for derivatives

• The capitalization and amortization of deferred policy acquisition costs (DAC)

• The liability for future policyholder benefits

• Accounting for income taxes and the valuation of deferred income tax assets and liabilities and unrecognized tax benefits

• Accounting for reinsurance transactions

• Litigation and other contingencies

PL-7

Certain reclassifications have been made to the 2006 and 2005 consolidated financial statements to conform to the 2007 financial statement presentation. The most significant conforming reclassification was reflecting the Company’s broker-dealer operations as a discontinued operation (Note 6).

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Effective December 31, 2007, the Company adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standard (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial condition and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company’s adoption of SFAS No. 158 resulted in a reduction to other comprehensive income (OCI) of $20 million, net of taxes.

Effective January 1, 2007, the Company adopted FASB Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109. FIN 48 presents a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. There is a two-step evaluation process. The first step is recognition and a company must determine whether it is more likely than not that a tax position will be sustained. The second step is measurement. A tax position that meets the more likely than not recognition threshold should be measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company’s policy is to recognize interest expense and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The adoption of FIN 48 had no impact on the Company’s consolidated financial statements, and therefore, there was no cumulative effect related to the adoption of FIN 48.

Effective May 2, 2007, the Company adopted FASB Staff Position (FSP) No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48. This FSP amends FIN 48 to provide guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. This statement is effective upon the initial adoption of FIN 48 with retrospective application if the provisions of this FSP were not previously applied. The adoption of this FSP had no impact on the Company’s consolidated financial statements, and therefore, there was no retrospective adjustment.

Effective January 1, 2007, the Company adopted SFAS No. 155, Accounting for Certain Hybrid Instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125. SFAS No. 155 (i) permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; (ii) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; (iii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iv) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (v) amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity (SPE) from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The adoption of SFAS No. 155 did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2007, the Company adopted American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts. This SOP provides guidance on accounting for DAC on internal replacements on insurance and investment contracts other than those described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the AICPA issued related Technical Practice Aids (TPAs) to provide further clarification of SOP 05-1. The TPAs became effective concurrently with the adoption of SOP 05-1. The adoption of SOP 05-1 and the related TPAs resulted in a

PL-8

reduction to DAC and the Company recorded a cumulative effect adjustment of $29 million, net of taxes, which was recorded as a reduction to retained earnings.

In April 2006, the FASB issued FSP FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R). This FSP addresses how an entity determines the variability to be considered in applying FIN 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 (FIN 46(R)). The variability affects the determination of whether an entity is a VIE, which interests are variable interests in an entity, and which party is the primary beneficiary of the VIE. That variability affects any calculation of expected losses and expected residual returns, if such a calculation is necessary. FSP FIN 46(R)-6 was effective for the Company beginning July 1, 2006. Adoption did not impact the Company’s consolidated financial statements.

Effective January 1, 2006, the Company adopted SFAS No. 154, Accounting Changes and Error Corrections. This statement changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle as well as changes required by a new accounting pronouncement. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle.

Effective January 1, 2006, the Company adopted FSP SFAS No. 115-1 and SFAS No. 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. The guidance within this FSP is applicable to debt and equity securities that are within the scope of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. This FSP nullifies certain requirements of Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, regarding the recognition of other than temporary impairments and restores the guidance for determination of other than temporary impairment to SFAS No. 115, EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets, and Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. This FSP adopts the disclosure requirements of EITF Issue No. 03-1. For other than temporarily impaired debt securities, the investor will account for the debt security as if the debt security was purchased on the measurement date of the other than temporary impairment. The discount recorded for the debt security will be amortized over the remaining life of the debt security as a yield adjustment. Adoption did not have a material impact on the Company’s consolidated financial statements.

Under FIN 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, the consolidation requirements for the Company’s VIEs, created prior to December 31, 2003, were applied effective January 1, 2005. The Company determined that it is the primary beneficiary of a Collateralized Debt Obligation (CDO) VIE of high-yield debt securities that it sponsored in 1998 (Note 4). In accordance with the transition provisions of FIN 46(R), the Company increased assets $67 million, liabilities $65 million, including non-recourse debt of $62 million, accumulated other comprehensive income (AOCI) $4 million and decreased net income by $2 million as a cumulative adjustment due to a change in accounting principle upon the adoption of FIN 46(R).

FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. SFAS No. 160 improves the relevance, comparability and transparency of the financial information that a company provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective beginning January 1, 2009. The Company is evaluating the impact of SFAS No. 160 on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective beginning January 1, 2009. The Company is evaluating the impact of SFAS No. 141(R) on its consolidated financial statements.

PL-9

In April 2007, the FASB issued FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39. FSP FIN 39-1 amends FIN No. 39, Offsetting of Amounts Related to Certain Contracts, to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP FIN 39-1 also amends FIN 39 for certain terminology modifications. This statement permits offsetting of fair value amounts recognized for derivative instruments under master netting arrangements. FSP FIN 39-1 is effective beginning January 1, 2008 and adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This statement permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement is effective beginning January 1, 2008. Adoption of SFAS No. 159 is not expected to have any impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement creates a common definition of fair value to be used throughout U.S. GAAP. SFAS No. 157 will apply whenever another standard requires or permits assets or liabilities to be measured at fair value, with certain exceptions. The standard establishes a hierarchy for determining fair value, which emphasizes the use of observable market data whenever available. The statement also requires expanded disclosures, which include the extent to which assets and liabilities are measured at fair value, the methods and assumptions used to measure fair value and the effect of fair value measures on earnings. This statement is effective beginning January 1, 2008. Adoption is not expected to have a material impact on the Company’s consolidated financial statements.

INVESTMENTS

Fixed maturity and equity securities available for sale are reported at estimated fair value, with unrealized gains and losses, net of deferred income taxes and adjustments related to DAC and future policy benefits, recorded as a component of OCI. For mortgage-backed securities and asset-backed securities (ABS) included in fixed maturity securities available for sale, the Company recognizes income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. For fixed rate securities, the net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. These adjustments are reflected in net investment income. Trading securities are reported at estimated fair value with changes in estimated fair value included in net realized investment gain (loss).

Investment income consists primarily of interest and dividends, net investment income from partnership interests, prepayment fees on fixed maturity securities and mortgage loans, and income from certain derivatives. Interest is recognized on an accrual basis and dividends are recorded on the ex-dividend date. Amortization of premium and accretion of discount on fixed maturity securities is recorded using the effective interest method.

The estimated fair value of fixed maturity and equity securities is generally obtained from independent pricing services. For fixed maturity securities not able to be priced by independent services (generally private placement and low volume traded securities), an internally developed matrix is used. The matrix utilizes the fair market yield curves, provided by a major independent data service, which determines the discount yield based upon the security’s weighted-average life, rating, and liquidity spread. The estimated fair value of the security is calculated as the present value of the estimated cash flows discounted at the yield determined above. For those securities not priced externally or by the matrix, the estimated fair value is internally determined, utilizing various techniques in valuing complex investments with variable cash flows. Equity securities available for sale include common stocks that have a readily determinable fair value and perpetual preferred stocks.

PL-10

The following table identifies the estimated fair value of fixed maturity securities by pricing sources:

	December 31, 2007					December 31, 2006
	Fixed Maturities		% of			Fixed Maturities		% of
	at Estimated		Estimated			at Estimated		Estimated
	Fair Value		Fair Value			Fair Value		Fair Value
	(In Millions)
Independent market quotations	$	19,815		73.8	%	$	19,708		76.4	%
Matrix-priced		5,743		21.4	%		5,455		21.2	%
Other methods		1,296		4.8	%		620		2.4	%
	$	26,854		100.0	%	$	25,783		100.0	%

The matrix-priced securities primarily consist of private placements and have an average duration of four and a half years as of December 31, 2007 and 2006.

The Company assesses whether other than temporary impairments have occurred based upon the Company’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value. All securities with a gross unrealized loss at the consolidated statement of financial condition date are subjected to the Company’s process for identifying other than temporary impairments. The Company considers a wide range of factors, as described below, about the security issuer and uses its 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 the Company’s evaluation of each security are assumptions and estimates about the operations of the issuer and its future earnings potential.

Considerations used by the Company in the impairment evaluation process include, but are not limited to, the following:

• The duration and extent that the estimated fair value has been below net carrying amount

• Industry factors or conditions related to a geographic area that are negatively affecting the security

• Underlying valuation of assets specifically pledged to support the credit

• Past due interest or principal payments or other violation of covenants

• Deterioration of the overall financial condition of the specific issuer

• Downgrades by a rating agency

• Ability and intent to hold the investment for a period of time to allow for a recovery of value

• Fundamental analysis of the liquidity and financial condition of the specific issuer

Also, the Company estimates the cash flows over the life of certain purchased beneficial interests in securitized financial assets. Based upon current information and events, if the estimated fair value of its beneficial interests is less than or equal to its net carrying amount and if there has been an adverse change in the estimated cash flows since the last revised estimate, considering both timing and amount, then an other than temporary impairment is recognized.

Securities and purchased beneficial interests that are deemed to be other than temporarily impaired are written down to estimated fair value in the period the securities or purchased beneficial interest are deemed to be impaired.

Realized gains and losses on investment transactions are determined on a specific identification basis and are included in net realized investment gain (loss). The Company also includes other than temporary impairment write-downs in net realized investment gain (loss).

Mortgage loans on real estate are carried at their unpaid principal balance, net of deferred origination fees, valuation allowances and write-downs. Mortgage loans are considered to be impaired when management estimates that based upon current information and events, it is probable that the Company will not be able to collect amounts due according to the contractual terms of the mortgage loan agreement. For mortgage loans deemed to be impaired, a valuation allowance is established for the difference between the carrying amount and the Company’s estimate of the present value of the expected future cash flows discounted at the current market rate. Changes to the valuation allowance are recorded in net realized investment gain (loss). Policy loans are stated at unpaid principal balances.

PL-11

Other investments primarily consist of partnership and joint ventures, real estate investments, derivative instruments, non marketable equity securities, and low income housing related investments qualifying for tax credits (LIHTC). Partnership and joint venture interests where the Company does not have a controlling interest or majority ownership are recorded under the cost or equity method of accounting depending on the equity ownership position. Real estate investments are carried at depreciated cost, net of write-downs, or, for real estate acquired in satisfaction of debt, estimated fair value less estimated selling costs at the date of acquisition, if lower than the related unpaid balance.

All derivatives, whether designated in hedging relationships or not, are required to be recorded at estimated fair value. If the derivative is designated as a cash flow hedge, the effective portion of changes in the estimated fair value of the derivative is recorded in OCI and recognized in earnings when the hedged item affects earnings. If the derivative is designated as a fair value hedge, the changes in the estimated fair value of the derivative and the hedged item are recognized in net realized investment gain (loss). The change in value of the hedged item associated with the risk being hedged is reflected as an adjustment to the carrying amount of the hedged item. For derivative instruments not designated as hedges, the change in estimated fair value of the derivative is recorded in net realized investment gain (loss). Estimated fair value exposure is calculated based on the aggregate estimated fair value of all derivative instruments with each counterparty, net of collateral received, in accordance with legally enforceable counterparty master netting agreements (Note 9).

The periodic cash flows for all hedging derivatives are recorded consistent with the hedged item on an accrual basis. For derivatives that are hedging securities, these amounts are included in net investment income. For derivatives that are hedging liabilities, these amounts are included in interest credited to policyholder account balances. For derivatives not designated as hedging instruments, the periodic cash flows are reflected in net realized investment gain (loss) on an accrual basis. Upon termination of a cash flow hedging relationship, the accumulated amount in OCI is amortized into net investment income or interest credited to policyholder account balances over the remaining life of the hedged item. Upon termination of a fair value hedging relationship, the accumulated cost basis adjustment to the hedged item is amortized into net investment income or interest credited to policyholder account balances over its remaining life.

Investments in LIHTC are recorded under either the effective interest method, if they meet certain requirements, including a projected positive yield based solely on guaranteed credits, or are recorded under the equity method if these certain requirements are not met. For investments in LIHTC recorded under the effective interest method, the amortization of the original investment and the tax credits are recorded in the provision for income taxes. For investments in LIHTC recorded under the equity method, the amortization of the initial investment is included in net investment income, and the related tax credits are recorded in the provision for income taxes. The amortization recorded in net investment income was $20 million, $24 million and $23 million for the years ended December 31, 2007, 2006 and 2005, respectively.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all investments with an original maturity of three months or less.

DEFERRED POLICY ACQUISITION COSTS

The costs of acquiring new insurance business, principally commissions, medical examinations, underwriting, policy issue and other expenses, all of which vary with and are primarily associated with the production of new business, are deferred and recorded as an asset commonly referred to as DAC. DAC related to internally replaced contracts (as defined by SOP 05-1), is immediately written off to expense and any new deferrable expenses associated with the replacement are deferred if the contract modification substantially changes the contract. However, if the contract modification does not substantially change the contract, the existing DAC asset remains in place and any acquisition costs associated with the modification are immediately expensed. As of December 31, 2007 and 2006, the carrying value of DAC was $4.5 billion and $4.2 billion, respectively (Note 7).

For universal life (UL), variable annuities and other investment-type contracts, acquisition costs are amortized through earnings in proportion to the present value of estimated gross profits (EGPs) from projected investment, mortality and expense margins, and surrender charges over the estimated lives of the contracts. Actual gross margins or profits can vary from management’s estimates, which can increase or decrease the rate of DAC amortization. DAC related to traditional policies is amortized through earnings over the premium-paying period of the related policies in proportion to premium revenues recognized, using assumptions and estimates consistent with those used in computing policy

PL-12

reserves. DAC related to certain unrealized components in OCI, primarily unrealized gains and losses on securities available for sale, is recorded directly to equity through OCI.

Significant assumptions in the development of EGPs include investment returns, surrender and lapse rates, rider utilization, interest spreads, and mortality margins. The Company’s long-term assumption for the underlying separate account investment return ranges up to 8.0%.

A change in the assumptions utilized to develop EGPs results in a change to amounts expensed in the reporting period in which the change was made by adjusting the DAC balance to the level DAC would have been had the EGPs been calculated using the new assumptions over the entire amortization period. In general, favorable experience variances result in increased expected future profitability and may lower the rate of DAC amortization, whereas unfavorable experience variances result in decreased expected future profitability and may increase the rate of DAC amortization. All critical assumptions utilized to develop EGPs are evaluated at least annually and necessary revisions are made to future EGPs to the extent that actual or anticipated experience necessitates such a prospective change (Note 7).

The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The Company offers a sales inducement to the policyholder where the policyholder receives a bonus credit, typically ranging from 4.0% to 5.0% of each deposit. The capitalized sales inducement balances included in the DAC asset were $552 million and $538 million as of December 31, 2007 and 2006, respectively.

GOODWILL FROM ACQUISITIONS

The Company’s acquisitions are accounted for under the purchase method of accounting. Goodwill from acquisitions, included in other assets, totaled $15 million and $22 million as of December 31, 2007 and 2006, respectively. There were no goodwill impairment write-downs from continuing operations during the years ended December 31, 2007, 2006 and 2005.

POLICYHOLDER ACCOUNT BALANCES

Policyholder account balances on UL and investment-type contracts, such as funding agreements, fixed account liabilities and guaranteed interest contracts (GICs), are valued using the retrospective deposit method and are equal to accumulated account values, which consist of deposits received, plus interest credited, less withdrawals and assessments. Interest credited to these contracts primarily ranged from 2.0% to 8.0%.

FUTURE POLICY BENEFITS

Annuity reserves, which primarily consist of group retirement and structured settlement annuities, are equal to the present value of estimated future payments using pricing assumptions, as applicable, for interest rates, mortality, morbidity, retirement age and expenses. Interest rates used in establishing such liabilities ranged from 1.6% to 11.0%.

Policy charges assessed against policyholders that represent compensation to the Company for services to be provided in future periods, or unearned revenue reserves, are recognized in income over the expected life of the contract using the same methods and assumptions used to amortize DAC. Unearned revenue related to certain unrealized components in OCI, primarily unrealized gains and losses on securities available for sale, is recorded directly to equity through OCI.

Life insurance reserves are valued using the net level premium method on the basis of actuarial assumptions appropriate at policy issue. Mortality and persistency assumptions are generally based on the Company’s experience, which, together with interest and expense assumptions, include a margin for possible unfavorable deviations. Interest rate assumptions ranged from 4.5% to 9.3%. Future dividends for participating business are provided for in the liability for future policy benefits.

As of December 31, 2007 and 2006, participating experience rated policies paying dividends represent less than 1% of direct life insurance in force.

Estimates of future policy benefit reserves and liabilities are continually reviewed and, as experience develops, are adjusted as necessary. Such changes in estimates are included in earnings for the period in which such changes occur.

PL-13

REVENUES, BENEFITS AND EXPENSES

Insurance premiums, annuity contracts with life contingencies and traditional life and term insurance contracts, are recognized as revenue when due. Benefits and expenses are matched against such revenues to recognize profits over the lives of the contracts. This matching is accomplished by providing for liabilities for future policy benefits, expenses of contract administration and the amortization of DAC.

Receipts for UL and investment-type contracts are reported as deposits to either policyholder account balances or separate account liabilities, and are not included in revenue. Policy fees consist of mortality charges, surrender charges and expense charges that have been earned and assessed against related account values during the period. The timing of policy fee revenue recognition is determined based on the nature of the fees. Certain amounts assessed that represent compensation for services to be provided in future periods are reported as unearned revenue and recognized in revenue over the periods benefited. Benefits and expenses include policy benefits and claims incurred in the period that are in excess of related policyholder account balances, interest credited to policyholder account balances, expenses of contract administration and the amortization of DAC.

Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from their respective revenue and benefit and expense accounts.

Investment advisory fees are primarily fees earned from the Pacific Select Fund, the investment vehicle provided to the Company’s variable universal life (VUL) and variable annuity contract holders. These fees are based upon the net asset value of the underlying portfolios, and are recorded as earned. Related subadvisory expense is included in operating expenses and recorded when incurred.

DEPRECIATION AND AMORTIZATION

Depreciation of investment real estate is computed using the straight-line method over estimated useful lives, which range from 5 to 30 years. Depreciation of investment real estate is included in net investment income. Certain other assets are depreciated or amortized using the straight-line method over estimated useful lives, which range from 3 to 40 years. Depreciation and amortization of certain other assets are included in operating expenses.

INCOME TAXES

Pacific Life and its includable subsidiaries are included in the consolidated Federal income tax return of PMHC. Pacific Life and its wholly owned, Arizona domiciled life insurance subsidiary, Pacific Life & Annuity Company (PL&A), and Pacific Alliance Reinsurance Company of Vermont (PAR Vermont), a Vermont-based life reinsurance company wholly owned by Pacific Life, are taxed as life insurance companies for Federal income tax purposes. Pacific Life’s non-insurance subsidiaries are either included in PMHC’s combined California franchise tax return or, if necessary, file separate state tax returns. Companies included in the consolidated Federal income tax return of PMHC and/or the combined California franchise tax return of PMHC are allocated tax expense or benefit based principally on the effect of including their operations in PMHC’s returns under a tax sharing agreement. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years the differences are expected to be recovered or settled.

SEPARATE ACCOUNTS

Separate accounts primarily include variable annuity and life contracts, as well as other guaranteed and non-guaranteed accounts. Separate account assets and liabilities are recorded at estimated fair value and represent legally segregated contract holder funds. Deposits to separate accounts, investment income and realized and unrealized gains and losses on the separate account assets accrue directly to contract holders and, accordingly, are not reflected in the consolidated statements of operations or cash flows. Amounts charged to the separate account for mortality, surrender and expense charges are included in revenues as policy fees.

In accordance with SOP 03-1, Accounting and Reporting by Insurance Enterprises for Certain Non Traditional Long-Duration Contracts and for Separate Accounts, for separate account funding agreements where the Company provides a

PL-14

guarantee of principal and interest to the contract holder and the Company bears all the risks and rewards of the investments underlying the separate account, the related investments and liabilities are recognized as investments and liabilities in the consolidated statements of financial condition. Revenue and expenses are recognized within the respective revenue, and benefit and expense lines in the consolidated statements of operations.

	FAIR VALUE OF FINANCIAL INSTRUMENTS
	The estimated fair value of financial instruments, disclosed in Notes 8, 9 and 12, has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is often required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.
2.	STATUTORY FINANCIAL INFORMATION AND DIVIDEND RESTRICTIONS
	STATUTORY ACCOUNTING PRACTICES
	Pacific Life prepares its regulatory statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the NE DOI, which is a comprehensive basis of accounting other than U.S. GAAP. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, recognizing certain policy fees as revenue when billed, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt, as well as valuing investments and certain assets and accounting for deferred income taxes on a different basis.
	As a result of Pacific Life’s use of a NE DOI permitted accounting practice and a NE DOI prescribed accounting practice that differs from statutory accounting practices adopted by the National Association of Insurance Commissioners (NAIC), Pacific Life’s statutory capital and surplus as of December 31, 2007 did not reflect a net unrealized loss of $45 million. This net unrealized loss primarily relates to certain statutory separate account assets that are carried at book value instead of estimated fair value. Pacific Life’s statutory capital and surplus as of December 31, 2006 did not reflect a net gain of $5 million related to these practices.
	STATUTORY NET INCOME AND SURPLUS
	Statutory net income of Pacific Life was $362 million, $362 million and $234 million for the years ended December 31, 2007, 2006 and 2005, respectively. Statutory capital and surplus of Pacific Life was $3,708 million and $3,218 million as of December 31, 2007 and 2006, respectively.
	RISK-BASED CAPITAL
	Risk-based capital is a method developed by the NAIC to measure the minimum amount of capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Additionally, certain risks are required to be measured using actuarial cash flow modeling techniques, subject to formulaic minimums. The adequacy of a company’s actual capital is measured by the risk-based capital results, as determined by the formulas. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2007 and 2006, Pacific Life, PL&A and PAR Vermont exceeded the minimum risk-based capital requirements.
	DIVIDEND RESTRICTIONS
	The payment of dividends by Pacific Life to Pacific LifeCorp is subject to restrictions set forth in the State of Nebraska insurance laws. These laws require (i) notification to the NE DOI for the declaration and payment of any dividend and (ii) approval by the NE DOI for accumulated dividends within the preceding twelve months that exceed the greater of 10% of statutory policyholder surplus as of the preceding December 31 or statutory net gain from operations for the preceding twelve months ended December 31. Generally, these restrictions pose no short-term liquidity concerns for

PL-15

Pacific LifeCorp. Based on these restrictions and 2007 statutory results, Pacific Life could pay $350 million in dividends in 2008 to Pacific LifeCorp without prior approval from the NE DOI, subject to the notification requirement.

	During the year ended December 31, 2006, Pacific Life paid two dividends totaling $185 million to Pacific LifeCorp; a $25 million dividend, consisting of $9 million in cash and a real estate investment with an estimated fair value of $16 million, and a $160 million cash dividend. No dividends were paid during 2007 and 2005.
	The maximum amount of ordinary dividends that can be paid by PL&A to Pacific Life without restriction cannot exceed the lesser of 10% of statutory surplus as regards to policyholders, or the statutory net gain from operations. Based on this limitation and 2007 statutory results, PL&A could pay $6 million in dividends to Pacific Life in 2008 without prior regulatory approval. No dividends were paid during 2007, 2006 and 2005.
3.	CLOSED BLOCK
	In connection with the Conversion, an arrangement known as a closed block (the Closed Block) was established, for dividend purposes only, for the exclusive benefit of certain individual life insurance policies that had an experience based dividend scale for 1997. The Closed Block was designed to give reasonable assurance to holders of the Closed Block policies that policy dividends will not change solely as a result of the Conversion.
	Assets that support the Closed Block, which are primarily included in fixed maturity securities and policy loans, amounted to $284 million and $280 million as of December 31, 2007 and 2006, respectively. Liabilities allocated to the Closed Block, which are primarily included in future policy benefits, amounted to $308 million and $306 million as of December 31, 2007 and 2006, respectively. The net contribution to income from the Closed Block was insignificant for the years ended December 31, 2007, 2006 and 2005.
4.	VARIABLE INTEREST ENTITIES
	The following table presents, as of December 31, 2007 and 2006, the total assets and maximum exposure to loss relating to VIEs, which the Company (i) has consolidated because it is the primary beneficiary or (ii) holds a significant variable interest, but has not consolidated because it is not the primary beneficiary:

	Primary Beneficiary				Not Primary Beneficiary
			Maximum				Maximum
	Total		Exposure to		Total		Exposure to
	Assets		Loss		Assets		Loss
	(In Millions)
December 31, 2007:
Private equity fund	$	194	$	25
Warehouse facility		18		5
Collateralized debt obligations		6		3
Asset-backed securities					$	3,816	$	187
Total	$	218	$	33	$	3,816	$	187
December 31, 2006:
Private equity fund	$	98	$	13
Collateralized debt obligations		27		3	$	50	$	1
Asset-backed securities						2,466		266
Asset Management Finance Corp.						128		55
Total	$	125	$	16	$	2,644	$	322

PL-16

PRIVATE EQUITY FUND

Private equity fund is a limited partnership that was established in July 2005 and is the general partner of two funds that invest in private equity funds for outside investors. The Company provides investment management services to the fund for a fee and receives carried interest based upon the performance of the fund. The Company has not guaranteed the performance, liquidity or obligations of the fund, and the Company’s maximum exposure to loss is equal to the carrying amounts. The Company was determined to be the primary beneficiary of this VIE and it is consolidated into the financial statements of the Company.

WAREHOUSE FACILITY

The Company determined that it was the primary beneficiary of a warehouse facility that it sponsored in 2007 for the purpose of issuing a collateralized loan obligation. The Company has not guaranteed the performance, liquidity or obligations of the warehouse facility. The maximum exposure to loss is limited to the carrying amounts of the retained interests, which represent the equity in the facility. This facility was consolidated into the financial statements of the Company. Non-recourse debt consolidated from the facility was $13 million as of December 31, 2007.

COLLATERALIZED DEBT OBLIGATIONS

The Company is the collateral manager and beneficial interest holder of CDOs of high yield debt securities. As the collateral manager, the Company earns management fees on the outstanding asset balance, which are recorded in net investment income as earned. The collateral management fees were insignificant for the years ended December 31, 2007, 2006 and 2005. The Company has not guaranteed the performance, liquidity or obligations of the CDO. The maximum exposure to loss is limited to the carrying amounts of retained interests.

The Company determined that it is the primary beneficiary of a CDO that it sponsored in 1998 and it is consolidated into the financial statements of the Company. Non-recourse debt consolidated from this CDO was $2 million and $22 million as of December 31, 2007 and 2006, respectively. There were two other CDOs not consolidated by the Company as the Company had determined that it was not the primary beneficiary of these entities. These two entities were fully repaid during the year ended December 31, 2007, and the Company is no longer the collateral manager.

ASSET-BACKED SECURITIES

As part of the Company’s investment strategy, the Company purchases primarily investment grade beneficial interests in ABS. These beneficial interests are issued from bankruptcy-remote SPEs, which are collateralized by financial assets including corporate debt. The Company has not guaranteed the performance, liquidity or obligations of the SPEs, and the Company’s maximum exposure to loss is limited to its carrying value of the beneficial interests in the SPEs. The ABS investments are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of these entities.

ASSET MANAGEMENT FINANCE CORP.

On August 1, 2007, Pacific Life sold its 43% common stock ownership in Asset Management Finance Corp. (AMFC), a financial advisor for investment management firms, and recognized a pre-tax gain of $16 million. Pacific Life was determined not to be the primary beneficiary of the VIE and AMFC was not consolidated into the financial statements of the Company. As of December 31, 2007 and 2006, $20 million in subordinated debt that Pacific Life funded to AMFC was outstanding.

5. INTEREST IN PIMCO

The Company owns a beneficial economic interest in Pacific Investment Management Company LLC (PIMCO) through Allianz Global Investors of America LLC (interest in PIMCO). PIMCO offers investment products through managed accounts and institutional, retail and offshore mutual funds. The interest in PIMCO is reported in other investments at estimated fair value, as determined by the put and call option price described below, with changes in estimated fair value reported as a component of OCI, net of taxes. As of December 31, 2007 and 2006, the interest in PIMCO had an estimated fair value of $288 million and $286 million, respectively.

PL-17

In May 2000, Allianz of America, Inc. (Allianz), a subsidiary of Allianz SE, acquired substantially all interests in PIMCO, other than those beneficially owned by the Company. In connection with this transaction, the interest in PIMCO is subject to a Continuing Investment Agreement (Agreement) with Allianz that provides for put options held by the Company, and call options held by Allianz. The per unit value, as determined by a formula in the Agreement, is subject to a cap and a floor of $600,000 and $500,000 per unit, respectively. The per unit value reached the cap of $600,000 as of June 30, 2007 and was $600,000 as of December 31, 2007 and $596,084 as of December 31, 2006. In January 2005, the Company and Allianz reached an agreement whereby Allianz agreed to pay an additional $5,373 per unit for all of the Company’s interest in PIMCO. The higher unit price was applied retroactively to all units previously sold and will be applied prospectively to the sale of all remaining units. The Company recognized a pre-tax gain of $1 million and $17 million during the years ended December 31, 2006 and 2005, respectively, related to this agreement.

During the year ended December 31, 2006, Allianz exercised a call option of $88 million to purchase a portion of the Company’s interest in PIMCO. The pre-tax gain recognized for the year ended December 31, 2006 was $31 million.

During the year ended December 31, 2005, Allianz exercised a call option and bought approximately $250 million of the Company’s interest in PIMCO. The pre-tax gain recognized for the year ended December 31, 2005 was $87 million.

During the first quarter of 2008, the Company exercised a put option and sold all of its remaining interest in PIMCO to Allianz for $288 million.

6. DISCONTINUED OPERATIONS

The Company’s broker-dealer operations and group insurance business have been reflected as discontinued operations in the Company’s consolidated financial statements. Discontinued operations do not include the operations of Pacific Select Distributors, Inc. (PSD), a wholly owned broker-dealer subsidiary of Pacific Life, which primarily serves as the underwriter/distributor of registered investment-related products and services, principally variable life and variable annuity contracts issued by the Company, and mutual funds.

In March 2007, the Company classified its broker-dealer subsidiaries, other than PSD, as held for sale. On June 20, 2007, a transaction closed whereby the Company sold certain of these broker-dealer subsidiaries to an unrelated third-party. Proceeds from the sale included cash of $53 million and a common stock interest in the buyer’s parent of $57 million. A pre-tax gain of $54 million was recognized from this sale. On December 31, 2007, a transaction closed whereby the Company sold another one of its broker-dealer subsidiaries to subsidiary management. The Company incurred a pre-tax loss of $1 million from this transaction. As of December 31, 2007, one broker-dealer subsidiary remained classified as held for sale. On February 1, 2008, the Company signed a definitive agreement to sell this held for sale subsidiary to an unrelated third-party. The Company does not anticipate incurring a significant loss from this transaction. The transaction is expected to close in the first quarter of 2008, subject to regulatory approval.

On April 27, 2005 (Closing Date), the Company sold its group insurance business to an unrelated third-party. The transaction is structured as a coinsurance arrangement whereby the Company cedes to the buyer future premiums received for its existing group insurance business and the buyer assumes future claim liabilities following the Closing Date. Group insurance business liabilities arising prior to the Closing Date will not be reinsured. The buyer also obtained renewal rights for the existing business as of the Closing Date.

PL-18

Operating results of discontinued operations were as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Revenues	$	276		$	395		$	582
Benefits and expenses		300			401			543
Income (loss) from discontinued operations		(24	)		(6	)		39
Provision (benefit) for income taxes		(8	)		(2	)		14
Income (loss) from discontinued operations, net of tax		(16	)		(4	)		25
Net gain on sale of discontinued operations		53						28
Provision for income taxes		26						10
Net gain on sale of discontinued operations, net of taxes		27			—			18
Discontinued operations, net of taxes	$	11			($4	)	$	43

Revenues from the group insurance business were zero, $5 million and $221 million and from the broker-dealer operations were $276 million, $390 million and $361 million for the years ended December 31, 2007, 2006 and 2005, respectively. Benefits and expenses from the group insurance business were zero, $6 million and $185 million and from the broker-dealer operations were $300 million, $395 million and $358 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The following describes the significant accounting policies for the Company’s discontinued operations. Group business insurance premiums are recognized as revenue when due. Commission revenues from the broker-dealer operations are generally recorded on the trade date. Benefits and expenses, including commission expenses are recorded when incurred.

Assets and liabilities from discontinued operations are included in other assets and other liabilities, respectively. Assets and liabilities as of December 31, 2007 are all held for sale except for $4 million of other assets and $24 million of other liabilities related to discontinued operations that have been sold. Assets and liabilities were all held for sale as of December 31, 2006. Major classes of assets and liabilities related to discontinued operations were as follows:

	December 31,
	2007		2006
	(In Millions)
Investments	$	23	$	17
Cash and cash equivalents		1		55
Other assets		20		57
Total assets	$	44	$	129
Short-term debt	$	18	$	12
Other liabilities		38		48
Total liabilities	$	56	$	60

PL-19

7. DEFERRED POLICY ACQUISITION COSTS

Components of DAC are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Balance, January 1	$	4,248		$	3,787		$	3,278
Cumulative pre-tax effect of adoption of new accounting principle (Note 1)		(45	)
Additions:
Capitalized during the year		852			999			906
Amortization:
Allocated to commission expenses		(432	)		(399	)		(355	)
Allocated to operating expenses		(118	)		(104	)		(99	)
Total amortization		(550	)		(503	)		(454	)
Allocated to OCI		(24	)		(35	)		57
Balance, December 31	$	4,481		$	4,248		$	3,787

During the years ended December 31, 2007, 2006 and 2005, the Company revised certain assumptions to develop EGPs for its products subject to DAC amortization (Note 1). This resulted in decreases in DAC amortization expense of $12 million and $16 million for the years ended December 31, 2007 and 2006, respectively, and an increase in DAC amortization expense of $29 million for the year ended December 31, 2005. The revised EGPs also resulted in decreased amortization of unearned revenue of $15 million for the year ended December 31, 2007 and increased amortization of unearned revenue of $4 million and $5 million for the years ended December 31, 2006 and 2005, respectively.

8. INVESTMENTS

The net carrying amount, gross unrealized gains and losses, and estimated fair value of fixed maturity and equity securities available for sale are shown below. The net carrying amount represents amortized cost adjusted for other than temporary declines in value and changes in the estimated fair value of fixed maturity securities attributable to the hedged risk in a fair value hedge. The estimated fair value of publicly traded securities is based on quoted market prices. For securities not actively traded, fair values were estimated based on amounts provided by independent pricing services specializing in matrix pricing and modeling techniques. The Company also estimates certain fair values based on interest rates, credit quality and average maturity utilizing matrix pricing and other modeling techniques.

PL-20

	Net
	Carrying		Gross Unrealized				Estimated
	Amount		Gains		Losses		Fair Value
	(In Millions)
December 31, 2007:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	38	$	5			$	43
Obligations of states and political subdivisions		1,008		160	$	2		1,166
Foreign governments		253		37				290
Corporate securities		16,047		501		203		16,345
Mortgage-backed and asset-backed securities		8,684		180		172		8,692
Redeemable preferred stock		327		10		19		318
Total fixed maturity securities	$	26,357	$	893	$	396	$	26,854
Total equity securities	$	437	$	5	$	33	$	409
December 31, 2006:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	45	$	5			$	50
Obligations of states and political subdivisions		1,220		205	$	4		1,421
Foreign governments		332		32		1		363
Corporate securities		15,455		521		133		15,843
Mortgage-backed and asset-backed securities		7,740		165		102		7,803
Redeemable preferred stock		283		21		1		303
Total fixed maturity securities	$	25,075	$	949	$	241	$	25,783
Total equity securities	$	407	$	27	$	6	$	428

The net carrying amount and estimated fair value of fixed maturity securities available for sale as of December 31, 2007, by contractual repayment date of principal, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Net
	Carrying		Gross Unrealized				Estimated
	Amount		Gains		Losses		Fair Value
	(In Millions)
Due in one year or less	$	1,159	$	20	$	5	$	1,174
Due after one year through five years		5,722		201		30		5,893
Due after five years through ten years		5,833		145		81		5,897
Due after ten years		4,959		347		108		5,198
		17,673		713		224		18,162
Mortgage-backed and asset-backed securities		8,684		180		172		8,692
Total	$	26,357	$	893	$	396	$	26,854

PL-21

The following tables present the number of investments, and the estimated fair value and gross unrealized losses for fixed maturity and other securities, which include equity securities available for sale and other cost method investments, where the estimated fair value has declined and remained below the net carrying amount.

	Total
					Gross
			Estimated		Unrealized
	Number		Fair Value		Losses
			(In Millions)
December 31, 2007:
Obligations of states and political subdivisions		14	$	61		($2	)
Corporate securities		636		6,131		(203	)
Mortgage-backed and asset-backed securities		454		4,731		(172	)
Redeemable preferred stock		16		211		(19	)
Total fixed maturity securities		1,120		11,134		(396	)
Total other securities		57		378		(40	)
Total		1,177	$	11,512		($436	)

	Less than 12 Months							12 Months or Greater
					Gross							Gross
			Estimated		Unrealized					Estimated		Unrealized
	Number		Fair Value		Losses			Number		Fair Value		Losses
			(In Millions)							(In Millions)
December 31, 2007:
Obligations of states and political subdivisions									14	$	61		($2	)
Corporate securities		386	$	3,572		($112	)		250		2,559		(91	)
Mortgage-backed and asset-backed securities		152		2,473		(105	)		302		2,258		(67	)
Redeemable preferred stock		12		190		(17	)		4		21		(2	)
Total fixed maturity securities		550		6,235		(234	)		570		4,899		(162	)
Total other securities		36		263		(27	)		21		115		(13	)
Total		586	$	6,498		($261	)		591	$	5,014		($175	)

PL-22

	Total
					Gross
			Estimated		Unrealized
	Number		Fair Value		Losses
			(In Millions)
December 31, 2006:
Obligations of states and political subdivisions		17	$	78		($4	)
Foreign governments		4		38		(1	)
Corporate securities		596		6,453		(133	)
Mortgage-backed and asset-backed securities		463		4,307		(102	)
Redeemable preferred stock		4		27		(1	)
Total fixed maturity securities		1,084		10,903		(241	)
Total other securities		46		233		(23	)
Total		1,130	$	11,136		($264	)

	Less than 12 Months							12 Months or Greater
					Gross							Gross
			Estimated		Unrealized					Estimated		Unrealized
	Number		Fair Value		Losses			Number		Fair Value		Losses
			(In Millions)							(In Millions)
December 31, 2006:
Obligations of states and political subdivisions									17	$	78		($4	)
Foreign governments									4		38		(1	)
Corporate securities		227	$	2,680		($29	)		369		3,773		(104	)
Mortgage-backed and asset-backed securities		124		1,325		(16	)		339		2,982		(86	)
Redeemable preferred stock									4		27		(1	)
Total fixed maturity securities		351		4,005		(45	)		733		6,898		(196	)
Total other securities		15		74		(5	)		31		159		(18	)
Total		366	$	4,079		($50	)		764	$	7,057		($214	)

The Company has evaluated fixed maturity and other securities with gross unrealized losses and determined that the unrealized losses are temporary and that the Company has the ability and intent to hold the securities until recovery.

Sub-prime mortgage lending is the origination of residential loans to customers with weak credit profiles. Alt-A mortgage lending is the origination of residential mortgage loans to customers who have credit ratings above sub-prime, but do not conform to government-sponsored enterprise standards. The slowing U.S. housing market, greater use of affordability mortgage products and relaxed underwriting standards for some originators for these loans has led to higher delinquency and loss rates, especially within the 2007 and 2006 vintage years.

The Company has exposure to sub-prime and Alt-A residential loans through direct purchases of residential mortgage-backed securities. These securities are included in the table above as mortgage-backed and asset-backed securities. The Company’s net carrying value and estimated fair value of direct investments to sub-prime residential mortgage-backed securities was $532 million and $514 million, respectively, as of December 31, 2007. 79% of these securities are rated Aaa and 19% Aa by an independent rating agency. The vintage year break-down of the underlying collateral for these securities is 2% originated during 2007, 1% during 2006, 22% during 2005, 34% during 2004 and 41% during 2003 and prior. The Company’s net carrying value and estimated fair value of direct investments to Alt-A residential mortgage-backed securities was $991 million and $972 million, respectively, as of December 31, 2007.

PL-23

99% of these securities are rated Aaa by an independent rating agency. The vintage year break-down of the underlying collateral for these securities is 56% originated during 2007, 31% during 2006 and 13% during 2005 and prior.

The Company’s net carrying amount and estimated fair value of investments in CDOs that have exposure to sub-prime residential mortgage loans are both $58 million as of December 31, 2007. The ratings distribution of these holdings as of December 31, 2007 is 16% A, 74% A-, 5% Baa and 5% Baa-, as determined by an independent rating agency. Other than temporary impairments of $73 million were recorded for these investments during the year ended December 31, 2007, based upon projections of estimated future cash flows.

Monoline insurers guarantee the timely payment of principal and interest of certain securities. The Company’s net carrying value and estimated fair value of total monoline insured securities was $1.1 billion and $1.3 billion, respectively, as of December 31, 2007. Included in these amounts are monoline insured municipal securities with a net carrying value and estimated fair value of $877 million and $1.1 billion, respectively, as of December 31, 2007. Municipalities will often purchase monoline insurance to wrap a security issuance in order to benefit from better market execution. 100% of the overall credit quality of the municipal bond portfolio, including the benefits of monoline insurance, was rated AAA by an independent rating agency. The Company’s direct investments in monoline insurers are immaterial.

Assets with an estimated fair value of $1.7 billion as of December 31, 2007 are in a custodial account pledged as collateral to support $1.7 billion in funding agreements issued to the Federal Home Loan Bank (FHLB) of Topeka, which are included in policyholder account balances. Additional assets with an estimated fair value of $2.0 billion are also on deposit at the FHLB of Topeka in the custodian account and could be used for future issuances of funding agreements and other corporate debt. The Company maintains control over these assets.

The Company loans securities in connection with its securities lending program administered by a qualified financial institution. The Company requires an amount equal to 102% of the estimated fair value of the loaned securities to be separately maintained as collateral for the loaned securities. The collateral is restricted and not available for general use. Securities loaned were $2 million and $187 million as of December 31, 2007 and 2006, respectively.

Major categories of investment income and related investment expense are summarized as follows:

	Years Ended December 31,
	2007		2006		2005
	(In Millions)
Fixed maturity securities	$	1,492	$	1,411	$	1,396
Equity securities		26		28		20
Mortgage loans		248		300		219
Real estate		68		58		56
Policy loans		209		193		197
Partnerships/joint ventures		170		133		108
Other		38		42		46
Gross investment income		2,251		2,165		2,042
Investment expense		137		123		124
Net investment income	$	2,114	$	2,042	$	1,918

Net investment income includes prepayment fees on fixed maturity securities and mortgage loans of $43 million, $61 million and $21 million for the years ended December 31, 2007, 2006 and 2005, respectively.

PL-24

The components of net realized investment gain (loss) are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Fixed maturity securities:
Gross gains on sales	$	117		$	39		$	43
Gross losses on sales		(23	)		(37	)		(64	)
Other than temporary impairments		(98	)		(6	)		(32	)
Other		20			12			4
Total fixed maturity securities		16			8			(49	)
Equity securities:
Gross gains on sales		5			14			20
Other than temporary impairments					(3	)
Other					1			1
Total equity securities		5			12			21
Trading securities		(1	)		2			(8	)
Real estate		18			9			8
Mortgage loans								(2	)
Derivatives		(111	)		26			63
Other investments		27			5			(10	)
Total		($46	)	$	62		$	23

The change in unrealized gain (loss) on investments in available for sale and trading securities is as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Available for sale securities:
Fixed maturity		($211	)		($298	)		($473	)
Equity		(49	)		(10	)		(32	)
Total		($260	)		($308	)		($505	)
Trading securities		($2	)		($2	)		($14	)

Trading securities totaled $129 million and $29 million as of December 31, 2007 and 2006, respectively. The cumulative unrealized gains on trading securities held as of December 31, 2007 and 2006 were zero and $2 million, respectively.

Fixed maturity securities, which have been non-income producing for the twelve months preceding December 31, 2007 and 2006, totaled $23 million and $26 million, respectively.

As of December 31, 2007 and 2006, fixed maturity securities of $13 million and $19 million, respectively, were on deposit with state insurance departments to satisfy regulatory requirements. The Company had no investments that exceeded 10% of total stockholder’s equity as of December 31, 2007.

PL-25

Mortgage loans on real estate are collateralized by properties primarily located throughout the U.S. As of December 31, 2007, $1,122 million, $423 million, $361 million, $348 million and $301 million were located in California, Florida, Washington, Texas and Washington D.C., respectively. As of December 31, 2007, $638 million was located in Canada.

The Company had a mortgage loan general valuation allowance of $27 million and $26 million as of December 31, 2007 and 2006, respectively. There were no defaults during the years ended December 31, 2007 and 2006, and one default of $2 million during the year ended December 31, 2005.

The Company did not have mortgage loans with accrued interest more than 180 days past due as of December 31, 2007 or 2006.

Investments in real estate totaled $400 million and $151 million as of December 31, 2007 and 2006, respectively. There were no real estate write-downs during the years ended December 31, 2007, 2006 and 2005.

9. DERIVATIVES AND HEDGING ACTIVITIES

The Company primarily utilizes derivative instruments to manage its exposure to interest rate risk, foreign currency risk, credit risk, and equity risk. Derivative instruments are also used to manage the duration mismatch of assets and liabilities. The Company utilizes a variety of derivative instruments including swaps, foreign exchange forward contracts, caps, floors, and options.

The Company applies hedge accounting by designating derivative instruments as either fair value or cash flow hedges on the date the Company enters into a derivative contract. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and states how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis in accordance with its risk management policy.

PL-26

The following table summarizes the notional amount and estimated fair value by hedge designation and derivative type. The notional amount of the variable annuity rider reinsurance contracts represents the full protected basis of the underlying embedded derivative and estimated fair value represents the amount recoverable from reinsurers based on the portion of risk ceded. Collateral received from or pledged to counterparties is not included in the amounts below.

	Notional Amount				Estimated Fair Value
	December 31,				December 31,
	2007		2006		2007			2006
	(In Millions)				(In Millions)
Cash flow hedges:
Foreign currency interest rate swaps	$	8,043	$	9,659	$	219		$	301
Forward starting interest rate swap agreements		1,935		1,785		29			(4	)
Interest rate swaps		859		660		(9	)		(4	)
Total cash flow hedges		10,837		12,104		239			293
Fair value hedges:
Interest rate swaps		1,455		856		(33	)		15
Foreign currency interest rate swaps		18		96		2			(2	)
Other				43					(1	)
Total fair value hedges		1,473		995		(31	)		12
Derivatives not designated as hedging instruments:
Variable annuity rider embedded derivatives		27,935		19,090		(161	)		84
Variable annuity derivatives — equity put swaps		2,827		1,950		18			(36	)
Variable annuity derivatives — total return swaps		470		545		26			(2	)
Variable annuity rider reinsurance contracts		7,358				23
Synthetic GICs		11,477		10,361
Floors and options		119		428		5			1
Credit default swaps		128		165		(4	)		2
Other		728		754		(13	)		(13	)
Total derivatives not designated as hedging instruments		51,042		33,293		(106	)		36
Total	$	63,352	$	46,392	$	102		$	341

Notional amount represents a standard of measurement of the volume of derivatives. Notional amount is not a quantification of market risk or credit risk and is not recorded on the consolidated statements of financial condition. Notional amounts generally represent those amounts used to calculate contractual cash flows to be exchanged and are not paid or received, except for certain contracts such as currency swaps.

PL-27

The following table summarizes the asset and liability values of the Company’s derivative instruments and are calculated based on the aggregate estimated fair value of all derivative instruments with each counterparty, net of collateral received or pledged, in accordance with legally enforceable counterparty master netting agreements. Net cash collateral received from counterparties was $270 million and $253 million as of December 31, 2007 and 2006, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is netted against the estimated fair value of derivatives in other investments or other assets. If the net estimated fair value exposure to the counterparty is positive, the amount is reflected in other investments or other assets, whereas, if the net estimated fair value exposure to the counterparty is negative, the estimated fair value is included in future policy benefits or other liabilities, depending on the nature of the derivative.

	Asset Value				Liability Value
	December 31,				December 31,
	2007		2006		2007		2006
	(In Millions)				(In Millions)
Other investments	$	183	$	165
Other assets		23
Future policy benefits					$	161		($84	)
Other liabilities						213		161
Total	$	206	$	165	$	374	$	77

As of December 31, 2007 and 2006, the Company had also accepted collateral consisting of various securities with an estimated fair value of $16 million and zero, respectively, which are held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, and as of December 31, 2007 and 2006, $16 million and none of the collateral had been repledged, respectively.

As of December 31, 2007 and 2006, the Company had pledged cash collateral of zero and $19 million, respectively. This cash collateral is not included in cash and cash equivalents and the right to receive it is netted against the estimated fair value of derivatives recorded in other liabilities. As of December 31, 2007 and 2006, the Company provided collateral in the form of various securities of $14 million and zero, respectively, which are included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral.

CASH FLOW HEDGES

The Company primarily uses foreign currency interest rate swaps, forward starting interest rate swaps and interest rate swaps to manage its exposure to variability in cash flows due to changes in foreign currencies and the benchmark interest rate. These cash flows include those associated with existing assets and liabilities, as well as the forecasted interest cash flows related to anticipated investment purchases and liability issuances. Such anticipated investment purchases and liability issuances are considered probable to occur and are generally completed within 22 years of the inception of the hedge.

Foreign currency interest rate swap agreements are used to convert a fixed or floating rate, foreign-denominated asset or liability to a U.S. dollar fixed rate asset or liability. The foreign currency interest rate swaps involve the exchange of an initial principal amount in two currencies, and the agreement to re-exchange the currencies at a future date, at an agreed exchange rate. There is also periodic exchange of interest payments in the two currencies at specified intervals, calculated using agreed upon rates and the exchanged principal amounts. The main currencies that the Company hedges are the Euro, British Pound, and Canadian Dollar.

Forward starting interest rate swaps are used to hedge the variability in the future interest receipts or payments stemming from the anticipated purchase of fixed rate securities or issuance of fixed rate liabilities due to changes in benchmark interest rates. These derivatives are predominantly used to lock in interest rate levels to match future cash flow characteristics of assets and liabilities. Forward starting interest rate swaps involve the exchange, at specified intervals, of interest payments resulting from the difference between fixed and floating rate interest amounts calculated by reference to an underlying notional amount to begin at a specified date in the future for a specified period of time. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The

PL-28

notional amounts of the contracts do not represent future cash requirements, as the Company intends to close out open positions prior to expiration.

Interest rate swap agreements are used to convert a floating rate asset or liability to a fixed rate to hedge the variability of cash flows of the hedged asset or liability due to changes in benchmark interest rates. These derivatives are predominantly used to better match the cash flow characteristics between assets and liabilities. These agreements involve the exchange, at specified intervals, of interest payments resulting from the difference between fixed rate and floating rate interest amounts calculated by reference to an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party.

When a derivative is designated as a cash flow hedge, the effective portion of changes in the estimated fair value of the derivative is recorded in OCI and recognized in earnings when the hedged item affects earnings, and the ineffective portion of changes in the estimated fair value of the derivative is recorded in net realized investment gain (loss). For the years ended December 31, 2007, 2006 and 2005, the gains and losses related to the ineffective portion of designated cash flow hedges were insignificant. No component of the hedging instrument’s estimated fair value is excluded from the determination of effectiveness. For the years ended December 31, 2007, 2006 and 2005, the Company had net losses of $21 million, $2 million and zero, respectively, reclassified from AOCI to earnings resulting from the discontinuance of cash flow hedges due to forecasted transactions that were no longer probable of occurring. Over the next twelve months, the Company anticipates that $15 million of deferred gains on derivative instruments in AOCI will be reclassified to earnings. For the years ended December 31, 2007, 2006 and 2005, all of the Company’s hedged forecasted transactions were determined to be probable of occurring.

FAIR VALUE HEDGES

The Company primarily uses interest rate swaps to manage its exposure to changes in the estimated fair values of its assets and liabilities due to fluctuations in the benchmark interest rate.

Interest rate swap agreements are used to convert a fixed rate asset or liability to a floating rate to hedge the changes in estimated fair value of the hedged asset or liability due to changes in benchmark interest rates. These derivatives are used primarily to closely match the duration of the assets supporting specific liabilities.

When a derivative is designated as a fair value hedge, the changes in the estimated fair value of the derivative and the hedged item are recognized in net realized investment gain (loss). The change in value of the hedged item associated with the risk being hedged is reflected as an adjustment to the carrying amount of the hedged item. For the years ended December 31, 2007, 2006 and 2005, hedge ineffectiveness related to designated fair value hedges reflected in net realized investment gain (loss) was insignificant. No component of the hedging instrument’s estimated fair value is excluded from the determination of effectiveness.

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The Company has certain insurance and reinsurance contracts that are considered to have embedded derivatives. When it is determined that the embedded derivative possesses economic and risk characteristics that are not clearly and closely related to those of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, it is separated from the host contract and accounted for as a stand-alone derivative.

The Company offers a rider on certain variable annuity contracts that guarantees net principal over a ten-year holding period, as well as riders on certain variable annuity contracts that guarantee a minimum withdrawal benefit over specified periods, subject to certain restrictions. These variable annuity riders (VA Riders) are considered embedded derivatives and are recorded in future policy benefits.

The Company employs hedging strategies designed to mitigate the equity risk associated with the portion of VA Riders not covered by reinsurance. Equity put swaps are utilized to economically hedge against movements in the equity markets. These equity put swaps involve the exchange of periodic fixed rate payments for the return, at the end of the swap agreement, of the equity index below a specified strike price. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. Additionally, the Company utilizes total return swaps based upon the S&P 500 Index (S&P 500) primarily to economically hedge the equity risk of the mortality and expense fees in its variable annuity products. These contracts provide periodic payments to the Company in exchange for the

PL-29

total return of the S&P 500 in the form of a payment or receipt, depending on whether the return relative to the index on trade date is positive or negative, respectively.

VA Riders on new variable annuity contracts issued since January 1, 2007 are partially covered by reinsurance. These reinsurance arrangements are used to offset a portion of the Company’s exposure to the VA Riders for the lives of the host variable annuity contracts issued since January 1, 2007. The ceded portion of the VA Riders is considered an embedded derivative and is recorded in other assets or other liabilities as either a reinsurance recoverable or reinsurance payable.

The decrease in the estimated fair value of the embedded derivatives, net of reinsurance, and net of the results of the variable annuity hedging strategies, which includes periodic derivative settlements, resulted in before DAC and pre-tax unrealized gains (losses) of ($178) million, ($30) million and $11 million for the years ended December 31, 2007, 2006 and 2005, respectively, which were recorded as a component of net realized investment gain (loss).

Additionally, certain policy fee revenue related to the VA Riders of $78 million, $64 million and $29 million is included in net realized investment gain (loss) for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company issues synthetic GICs to Employee Retirement Income Security Act of 1974 (ERISA) qualified defined contribution employee benefit plans (ERISA Plan). The ERISA Plan uses the contracts in its stable value or guaranteed fixed income option. The Company does not manage the assets underlying synthetic GICs; however, the Company pre-approves all investment guidelines to mitigate any investment risk. The Company receives a fee for providing liquidity to the benefit plan sponsor in the event that qualified plan benefit requests exceed plan cash flows. In the event that plan participant elections exceed the fair value of the assets or if the contract is terminated and at the end of the termination period the book value under the contract exceeds the fair value of the assets, then the Company is required to pay the ERISA Plan the difference. The estimated fair value of the assets was greater than the book value under the contracts by $34 million as of December 31, 2007. As of December 31, 2006, the estimated fair value of the assets was below the book value under the contracts by $64 million. As of December 31, 2006, the Company did not record a contingent liability as the probability of making a payment under these provisions was considered remote.

CREDIT EXPOSURE

Credit exposure is measured on a counterparty basis as the net positive aggregate estimated fair value, net of collateral received, if any. The credit exposure for over the counter derivatives as of December 31, 2007 was $196 million.

For all derivative contracts other than VA Riders and synthetic GICs, the Company enters into master agreements that may include a termination event clause associated with the Company’s insurer financial strength rating. If the Company’s insurer financial strength rating falls below a specified level assigned by certain rating agencies or, in most cases, if one of the rating agencies ceases to provide an insurer financial strength rating, the counterparty can terminate the master agreement with payment due based on the estimated fair value of the underlying derivatives. As of December 31, 2007, the Company’s insurer financial strength rating was above the specified level.

The Company attempts to limit its credit exposure by dealing with creditworthy counterparties, establishing risk control limits, executing legally enforceable master netting agreements, and obtaining collateral where appropriate. In addition, each counterparty is reviewed to evaluate its financial stability before entering into each agreement and throughout the period that the financial instrument is owned. All of the Company’s credit exposure from derivative contracts is with investment grade counterparties. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance.

PL-30

10.	POLICYHOLDER LIABILITIES
	POLICYHOLDER ACCOUNT BALANCES
	The detail of the liability for policyholder account balances is as follows:

	December 31,
	2007		2006
	(In Millions)
Universal life	$	17,742	$	17,064
Funding agreements		9,190		8,016
Fixed account liabilities		4,159		4,396
GICs		926		1,268
Total	$	32,017	$	30,744

FUTURE POLICY BENEFITS

The detail of the liability for future policy benefits is as follows:

	December 31,
	2007		2006
	(In Millions)
Annuity reserves	$	4,184	$	3,994
Unearned revenue reserve		726		590
Policy benefits payable		456		154
Life insurance		327		281
Closed Block liabilities		309		308
Other		23		14
Total	$	6,025	$	5,341

11. DEBT

	December 31,
	2007		2006
	(In Millions)
Short-term debt: Commercial paper	$	100
Long-term debt:
Surplus notes		150	$	150
SFAS No. 133 fair value adjustment		13		6
Other non-recourse debt		119		9
VIE debt (Note 4)		15		22
Total long-term debt		297		187
Total short-term and long-term debt	$	397	$	187

PL-31

SHORT-TERM DEBT

Pacific Life maintains a $700 million commercial paper program. The amount outstanding as of December 31, 2007 was $100 million, bearing an average interest rate of 4.4%. There was no commercial paper debt outstanding as of December 31, 2006. In addition, Pacific Life has a bank revolving credit facility of $400 million maturing in 2012 that serves as a back-up line of credit for the commercial paper program. This facility had no debt outstanding as of December 31, 2007 and 2006. As of and during the year ended December 31, 2007, Pacific Life was in compliance with the debt covenants related to this facility.

During a majority of the first nine months of 2006, Pacific Life was a member of the FHLB of San Francisco, which enabled Pacific Life to borrow from the FHLB of San Francisco amounts that were based on a percentage of statutory capital and surplus. During the third quarter of 2006, Pacific Life moved its membership in the FHLB from San Francisco to Topeka. Pacific Life has approval from the FHLB of Topeka to advance amounts up to 40% of Pacific Life’s statutory general account assets provided it has available collateral and is in compliance with debt covenant restrictions and insurance laws and regulations. There was no debt outstanding with the FHLB of Topeka as of December 31, 2007 and 2006.

In December 2006, PL&A became eligible to borrow from the FHLB of San Francisco amounts based on a percentage of statutory capital and surplus and could borrow up to amounts of $102 million. Of this amount, half, or $51 million, can be borrowed for terms other than overnight, out to a maximum term of nine months. These borrowings are at variable rates of interest, collateralized by certain mortgage loan and government securities. As of December 31, 2007 and 2006, PL&A had no debt outstanding with the FHLB of San Francisco.

LONG-TERM DEBT

Pacific Life has $150 million of surplus notes outstanding at an interest rate of 7.9%, maturing on December 30, 2023. Interest is payable semiannually on June 30 and December 30. The surplus notes may not be redeemed at the option of Pacific Life or any holder of the surplus notes. The surplus notes are unsecured and subordinated to all present and future senior indebtedness and policy claims of Pacific Life. All future payments of interest and principal on the surplus notes can be made only with the prior approval of the Director of Insurance of the State of Nebraska.

Pacific Life entered into interest rate swaps converting the fixed interest rate surplus notes to variable rate notes based upon the London Interbank Offered Rate. In accordance with SFAS No. 133, the interest rate swaps were designated as fair value hedges of the surplus notes. The SFAS No. 133 fair value adjustment, which increased long-term debt by $13 million and $6 million as of December 31, 2007 and 2006, respectively, represents the cumulative change in the estimated fair value of the interest rate swaps. An offsetting fair value adjustment has also been recorded for the interest rate swap derivative instruments.

Certain subsidiaries of Pacific Asset Holding LLC (PAH), a wholly owned subsidiary of Pacific Life and formerly known as Pacific Asset Management LLC, entered into various term loans with third parties. Interest on these loans accrues at fixed rates, is payable monthly and range from 5.8% to 6.2% as of December 31, 2007. As of December 31, 2007, there was $87 million outstanding on these loans with maturities ranging from 2010 to 2012. None of these loans were in place at December 31, 2006. All of these loans are secured by real estate properties and are non-recourse to the Company.

Certain subsidiaries of PAH also entered into various property improvement loans with third parties for a maximum loan balance of $43 million. Interest on these loans accrues at variable rates, is payable monthly and range from 6.4% to 7.0% as of December 31, 2007. As of December 31, 2007, there was $32 million outstanding on these loans with maturities ranging from 2009 to 2011. As of December 31, 2006, only one of these loans was in place with a maximum loan balance of $12 million, interest rate of 7.8%, maturity in 2009 and an outstanding loan balance of $9 million. All of these loans are secured by real estate properties and are non-recourse to the Company.

PL-32

12.	FAIR VALUE OF FINANCIAL INSTRUMENTS
	The carrying amount and estimated fair value of the Company’s financial instruments are as follows:

	December 31, 2007						December 31, 2006
	Carrying			Estimated			Carrying			Estimated
	Amount			Fair Value			Amount			Fair Value
	(In Millions)
Assets:
Fixed maturity and equity securities (Note 8)	$	27,263		$	27,263		$	26,211		$	26,211
Mortgage loans		4,585			4,800			3,567			3,682
Policy loans		6,410			6,410			6,068			6,068
Interest in PIMCO (Note 5)		288			288			286			286
Other invested assets		621			663			329			346
Derivative instruments (Note 9)		476			476			437			437
Collateral received		(270	)		(270	)		(272	)		(272	)
Cash and cash equivalents		521			521			1,341			1,341
Liabilities:
Funding agreements and GICs		10,116			10,262			9,284			9,262
Fixed account liabilities		4,159			4,159			4,396			4,396
Short-term and long-term debt		397			389			187			196
Derivative instruments (Note 9)		374			374			96			96
Collateral pledged								(19	)		(19	)

The following methods and assumptions were used to estimate the fair value of these financial instruments as of December 31, 2007 and 2006:

MORTGAGE LOANS

The estimated fair value of the mortgage loan portfolio is determined by discounting the estimated future cash flows, using a market rate that is applicable to the yield, credit quality and average maturity of the composite portfolio.

POLICY LOANS

The carrying amounts of policy loans are a reasonable estimate of their fair values because interest rates are generally variable and based on current market rates.

OTHER INVESTED ASSETS

The estimated fair value of private equity investments is based on the ownership percentage of the underlying equity of the investments. The estimated fair value of trading securities is based on quoted market prices, and non marketable equity securities is based on management’s estimate of fair value.

COLLATERAL RECEIVED AND PLEDGED

The carrying values of cash collateral received and pledged approximate fair value due to the short-term maturities of these instruments.

CASH AND CASH EQUIVALENTS

The carrying values approximate fair values due to the short-term maturities of these instruments.

PL-33

FUNDING AGREEMENTS AND GICs

The fair value of funding agreements and GICs is estimated using the rates currently offered for deposits of similar remaining maturities.

FIXED ACCOUNT LIABILITIES

Fixed account liabilities include annuity and deposit liabilities. The estimated fair value of annuity liabilities approximates carrying value and primarily includes policyholder deposits and accumulated credited interest. The estimated fair value of deposit liabilities with no defined maturities is the amount payable on demand.

SHORT-TERM AND LONG-TERM DEBT

The carrying amount of short-term debt is a reasonable estimate of its fair value because the interest rates are variable and based on current market rates. The estimated fair value of long-term debt is based on market quotes, except for VIE debt and non-recourse debt, for which the carrying amounts are reasonable estimates of their fair values because the interest rate approximates current market rates.

PL-34

13.	OTHER COMPREHENSIVE INCOME (LOSS)
	The Company displays comprehensive income (loss) and its components on the accompanying consolidated statements of stockholder’s equity. The disclosure of the gross components of other comprehensive income (loss) and related taxes are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Unrealized gain (loss) on derivatives and securities available for sale, net
Gross holding gain (loss):
Securities available for sale		($239	)		($289	)		($533	)
Derivatives		(68	)		(33	)		125
Income tax benefit		106			114			142
Reclassification adjustment — realized (gain) loss:
Sale of securities available for sale		(21	)		(19	)		28
Derivatives		(15	)		(15	)		(10	)
Income tax expense (benefit)		12			11			(5	)
Allocation of holding (gain) loss to DAC		(24	)		(35	)		57
Allocation of holding (gain) loss to future policy benefits		(15	)		11			(16	)
Income tax expense (benefit)		14			9			(15	)
Unrealized loss on derivatives and securities available for sale, net		(250	)		(246	)		(227	)
Other, net
Holding gain on interest in PIMCO and other security		5			6			29
Income tax on holding gain		(1	)		(2	)		(10	)
Reclassification of realized gain on sale of interest in PIMCO					(32	)		(104	)
Income tax on realized gain					10			36
Net unrealized gain (loss) on interest in PIMCO and other security		4			(18	)		(49	)
Cumulative effect of adoption of new accounting principle, net of tax		(20	)
Other, net of tax					2			3
Other, net		(16	)		(16	)		(46	)
Total other comprehensive loss, net		($266	)		($262	)		($273	)

14.	REINSURANCE
	The Company has reinsurance agreements with other insurance companies to limit potential losses, reduce exposure arising from larger risks, and provide additional capacity for future growth.
	As part of a strategic alliance, the Company also reinsures risks associated with policies written by an independent producer group through modified coinsurance arrangements with this producer group’s reinsurance company.
	All assets associated with business reinsured on a modified coinsurance basis remain with, and under the control of, the Company. As part of its risk management process, the Company routinely evaluates its reinsurance programs and may change retention limits, reinsurers or other features at any time.
	Certain no lapse guarantee rider (NLGR) benefits of Pacific Life’s UL insurance products are subject to Actuarial Guideline 38 (AG 38) statutory reserving requirements. U.S. GAAP benefit reserves for such riders are based on SOP 03-1. AG 38, as revised in October 2005 and in September 2006, results in additional statutory reserves on UL

PL-35

products with NLGRs issued after June 30, 2005. The U.S. GAAP benefit reserves relating to NLGRs issued after June 30, 2005 are ceded from Pacific Life to Pacific Alliance Reinsurance Ltd. (PAR Bermuda), a Bermuda-based life reinsurance company wholly owned by Pacific LifeCorp and PAR Vermont under reinsurance agreements. Funded reserves in a trust account with Pacific Life as beneficiary and irrevocable letters of credit, in which Pacific LifeCorp is the co-applicant with PAR Bermuda and PAR Vermont, provide security for statutory reserve credits taken by Pacific Life.

During 2006, the Company entered into treaties to reinsure a portion of new variable annuity business sold under modified coinsurance arrangements. In 2007, the Company increased the quota-share reinsured on new variable annuity business as well as extended reinsurance coverage under coinsurance agreements to cover portions of variable annuity living and death benefit riders.

Reinsurance receivables and payables generally include amounts related to claims, reserves and reserve related items. Reinsurance receivables were $349 million and $161 million as of December 31, 2007 and 2006, respectively. Reinsurance payables were $54 million and $8 million as of December 31, 2007 and 2006, respectively.

The ceding of risk does not discharge the Company from its primary obligations to contract owners. To the extent that the assuming companies become unable to meet their obligations under reinsurance contracts, the Company remains contingently liable. Each reinsurer is reviewed to evaluate its financial stability before entering into each reinsurance contract and throughout the period that the reinsurance contract is in place.

The components of insurance premiums presented in the consolidated statements of operations are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Direct premiums	$	271		$	249		$	210
Reinsurance ceded		(274	)		(248	)		(208	)
Reinsurance assumed		53			57			53
Insurance premiums	$	50		$	58		$	55

Other revenues and benefit and expense items in the consolidated statements of operations are shown net of the following reinsurance transactions:

	Years Ended December 31,
	2007		2006		2005
	(In Millions)
Reinsurance ceded netted against policy fees	$	161	$	145	$	101
Reinsurance ceded netted against net investment income		298		278		272
Reinsurance ceded netted against net realized investment gain (loss)		19
Reinsurance ceded netted against investment advisory fees		12		2
Reinsurance ceded netted against interest credited		236		208		211
Reinsurance ceded netted against policy benefits		283		198		173
Reinsurance assumed included in policy benefits		38		30		16
Reinsurance ceded netted against commission expense		40		57		21
Reinsurance ceded netted against operating expense		47		39		20

PL-36

15.	EMPLOYEE BENEFIT PLANS
	PENSION PLANS
	Pacific Life provides a defined benefit pension plan covering all eligible employees of the Company. Certain subsidiaries do not participate in this plan. The full-benefit vesting period for all participants is five years. Pacific Life’s funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in ERISA, plus such additional amounts as may be determined appropriate. All such contributions are made to a tax-exempt trust.
	During 2007, the Company amended the defined benefit pension plan to terminate effective December 31, 2007. The net assets of the defined benefit pension plan will be allocated for payment of plan benefits to the participants in an order of priority determined in accordance with ERISA, applicable regulations thereunder and the defined benefit pension plan document. The final termination of the plan and payment of plan benefits to the participants is subject to regulatory approval.
	In 2007, the defined benefit pension plan’s investment strategy was revised and the mutual fund investments were sold, transferred to a separate account of the Company and invested primarily in fixed income investments.
	Effective January 1, 2005, the contribution credits for employees with less than 10 years of service were suspended and replaced by contribution credits into the Retirement Incentive Savings Plan (RISP) provided by Pacific Life pursuant to section 401(k) of the Internal Revenue Code. Effective January 1, 2007, the contribution credits for all other employees were suspended and also replaced by contribution credits into the RISP.
	In addition, Pacific Life maintains supplemental employee retirement plans (SERPs) for certain eligible employees. As of December 31, 2007 and 2006, the projected benefit obligation was $34 million. The fair value of plan assets as of December 31, 2007 and 2006 was zero. The net periodic benefit cost of the SERPs was $6 million, $6 million and $26 million for the years ended December 31, 2007, 2006 and 2005, respectively. New provisions of the Internal Revenue Code allowed vested participants of certain non-qualified plans to receive distributions in 2005. Accordingly, $77 million was distributed to participants electing to receive distributions from the SERPs, which resulted in a settlement expense of $16 million for the year ended December 31, 2005.
	In connection with the sale of the group insurance business (Note 6), and the resulting termination of a large group of the Company’s employees, the Company incurred $8 million in curtailment, settlement and special termination costs for the year ended December 31, 2005, which are included in discontinued operations.
	Components of the net periodic pension expense are as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Service cost — benefits earned during the year	$	2		$	8		$	8
Interest cost on projected benefit obligation		16			15			18
Expected return on plan assets		(16	)		(19	)		(18	)
Settlement costs		4						21
Special termination costs								3
Amortization of net obligations and prior service cost		3			4			6
Net periodic pension expense	$	9		$	8		$	38

PL-37

The following tables set forth the changes in benefit obligation, plan assets and funded status reconciliation:

	December 31,
	2007			2006
	(In Millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	280		$	290
Service cost		2			8
Interest cost		15			15
Actuarial gain		(4	)		(6	)
Benefits paid		(45	)		(27	)
Benefit obligation, end of year	$	248		$	280
Change in plan assets:
Fair value of plan assets, beginning of year	$	271		$	260
Actual return on plan assets		16			28
Employer contributions		45			10
Benefits paid		(45	)		(27	)
Fair value of plan assets, end of year	$	287		$	271
Funded status reconciliation:
Funded status	$	39			($9	)
Unrecognized transition obligation					2
Unrecognized prior service cost					2
Unrecognized actuarial loss					46
Net amount recognized	$	39		$	41

PL-38

	December 31,
	2007			2006
	(In Millions)
Amounts recognized in the consolidated statements of financial condition consist of:
Prior to adoption of the funded status provisions of SFAS No. 158:
Prepaid benefit cost	$	104		$	67
Accrued benefit liability		(34	)		(34	)
Intangible asset		3			4
Accumulated other comprehensive loss		3			4
Subsequent to adoption of the funded status provisions of SFAS No. 158:
Assets	$	73
Liabilities		(34	)
Net amount recognized	$	39
Amounts recognized in AOCI consist of:
Initial net obligation		($1	)
Prior service cost		(1	)
Net loss		(34	)
Accumulated other comprehensive loss		(36	)
Accumulated contributions in excess of net periodic benefit cost		75
Net amount recognized	$	39
Changes recognized in OCI:
Changes due to minimum liability and intangible asset recognized prior to adoption of SFAS No. 158:
Decrease in additional minimum liability		($1	)		($3	)
Decrease in intangible asset		1
Other comprehensive loss	$	0			($3	)
Amounts recognized as a component of net periodic benefit cost:
Total recognized in net periodic benefit cost and OCI	$	9
Estimated amounts that will be amortized from AOCI over the next year:
Initial obligation		($1	)
Total		($1	)
Consolidated statement of financial condition adjustment:
Increase in accumulated other comprehensive loss, pre-tax, to reflect the adoption of SFAS No.158	$	33

PL-39

	December 31,
	2007			2006
Weighted-average assumptions used to determine benefit obligations:
Discount rate		6.25	%		5.75	%
Rate of compensation increase		N/A			N/A

Effective January 1, 2007, contribution credits to the defined benefit pension plan were suspended, thus, the rate of compensation increase assumption is no longer applicable.

	Years Ended December 31,
	2007			2006			2005
Weighted-average assumptions used to determine net periodic benefit costs:
Discount rate		5.75	%		5.50	%		5.75	%
Expected long-term return on plan assets		6.13	%		8.00	%		8.00	%
Rate of compensation increase		N/A			4.50	%		4.00	%

In developing the expected long-term rate of return on plan assets, the Company considers many factors. These factors consist of a review of historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the plan’s portfolio. This resulted in the selection of the 8.00% long-term rate of return on asset assumption for the first three months of 2007. In April 2007, the Company changed the asset allocation to fixed income assets in order to better match the expected duration of liabilities. The expected return on asset assumption was then lowered to 5.50% resulting in a weighted-average expected return on asset assumption of 6.13% for 2007.

Benefit payments for the year ended December 31, 2007 amounted to $45 million. Pacific Life expects to contribute $4 million to these plans in 2008. The expected benefit payments are as follows for the years ending December 31 (In Millions):

2008	2009	2010	2011	2012	2013-2017
$19	$21	$18	$19	$17	$81

The Company’s pension plan’s weighted-average asset allocations by asset category are as follows:

	December 31,
	2007			2006
Asset category:
Equity-type investments					69	%
Fixed income investments		99	%		30	%
Other		1	%		1	%
Total		100	%		100	%

Prior to 2007, it was intended that the defined benefit pension plan assets be invested in equity-type and fixed income investments, as long as the investments were consistent with the assumption that more than average risk and appropriate overall diversification was maintained and liquidity was sufficient to meet cash flow requirements. The defined benefit pension plan established and maintained a fundamental and long-term orientation in the determination of asset mix and selection of investment funds. This tolerance for more than average risk and long-term orientation provided the basis for a larger allocation to equities with some additional bias to higher risk investments for higher return. In anticipation of the final settlement of the plan, the asset allocation was changed to fixed income assets in order to better match the expected duration of liabilities.

PL-40

RETIREMENT INCENTIVE SAVINGS PLAN

Pacific Life provides a RISP covering all eligible employees of Pacific LifeCorp and certain of its subsidiaries. The RISP matches 75% of each employee’s contributions, up to a maximum of 6% of eligible employee compensation in cash. Since 1997, the RISP provided the Company match in the form of Pacific LifeCorp common stock. In October 2006, Pacific LifeCorp’s Board of Directors authorized a plan to terminate the Employee Stock Ownership Plan (ESOP) feature of the RISP, replace it with a cash match benefit and repurchase the outstanding allocated and unallocated shares of the ESOP. On October 25, 2006, the outstanding allocated and unallocated shares were repurchased by Pacific LifeCorp in cash for $112 million and an ESOP loan, with an outstanding balance of $2 million, was also repaid to Pacific Life. Contributions made by the Company to the RISP amounted to $24 million, $20 million and $20 million for the years ended December 31, 2007, 2006 and 2005, respectively, and are included in operating expenses.

Amounts loaned to the ESOP by Pacific Life were included in unearned ESOP shares. The unearned ESOP shares account was reduced as ESOP shares were released for allocation to participants through ESOP contributions by Pacific Life. In addition, when the fair value of ESOP shares being released for allocation to participants was different from the original issue price of those shares, the difference was recorded in paid-in capital.

POSTRETIREMENT BENEFITS

Pacific Life provides a defined benefit health care plan and a defined benefit life insurance plan (the Plans) that provide postretirement benefits for all eligible retirees and their dependents. Generally, qualified employees may become eligible for these benefits if they have reached normal retirement age, have been covered under Pacific Life’s policy as an active employee for a minimum continuous period prior to the date retired, and have an employment date before January 1, 1990. The Plans contain cost-sharing features such as deductibles and coinsurance, and require retirees to make contributions, which can be adjusted annually. Pacific Life’s commitment to qualified employees who retire after April 1, 1994 is limited to specific dollar amounts. Pacific Life reserves the right to modify or terminate the Plans at any time. As in the past, the general policy is to fund these benefits on a pay-as-you-go basis.

The net periodic postretirement benefit cost for each of the years ended December 31, 2007, 2006 and 2005 was $1 million. As of December 31, 2007 and 2006, the accumulated benefit obligation was $18 million. The actuarial gain due to the Medicare subsidy was $2 million as of December 31, 2005. The fair value of the plan assets as of December 31, 2007 and 2006 was zero. The amount of accrued benefit cost included in other liabilities prior to the adoption of the funded status provisions of SFAS No. 158 was $20 million as of December 31, 2006. The liabilities recognized after the adoption of the funded status provisions of SFAS No. 158 were $18 million as of December 31, 2007.

The adjustment related to postretirement benefits to reflect the adoption of SFAS No. 158 resulted in an increase in AOCI of $2 million, pre-tax, as of December 31, 2007.

The discount rate used in determining the accumulated postretirement benefit obligation was 6.25% and 5.75% for 2007 and 2006, respectively.

Benefit payments for the year ended December 31, 2007 amounted to $3 million. The expected benefit payments are as follows for the years ending December 31 (In Millions):

2008	2009	2010	2011	2012	2013-2017
$3	$3	$4	$4	$4	$20

PL-41

OTHER PLANS

The Company has deferred compensation plans that permit eligible employees to defer portions of their compensation and earn interest on the deferred amounts. The interest rate is determined annually. The compensation that has been deferred has been accrued and the primary expense related to this plan, other than compensation, is interest on the deferred amounts. The Company also has performance-based incentive compensation plans for its employees.

16.	INCOME TAXES
	The provision for income taxes (benefit) is as follows:

	Years Ended December 31,
	2007		2006			2005
	(In Millions)
Current	$	97	$	149		$	39
Deferred		1		49			61
Provision for income taxes from continuing operations		98		198			100
Provision (benefit) for income taxes on discontinued operations		18		(2	)		24
Total	$	116	$	196		$	124

A reconciliation of the provision for income taxes from continuing operations based on the prevailing corporate statutory tax rate of 35% to the provision for income taxes from continuing operations reflected in the consolidated financial statements is as follows:

	Years Ended December 31,
	2007			2006			2005
	(In Millions)
Provision for income taxes at the statutory rate	$	253		$	282		$	211
Separate account dividends received deduction		(103	)		(43	)		(33	)
Low income housing and foreign tax credits		(33	)		(34	)		(33	)
Nontaxable investment income		(4	)		(5	)		6
Amounts related to prior periods		(6	)		1			(51	)
Other		(9	)		(3	)
Provision for income taxes from continuing operations	$	98		$	198		$	100

Upon adoption of FIN 48 on January 1, 2007 (Note 1), the Company had unrecognized tax benefits of $32 million, which relate entirely to an uncertain tax position regarding refund claims for the impact of short-term capital gains on computing dividends received deductions relating to the Company’s separate accounts (DRD). A reconciliation of the changes in the unrecognized tax benefits from January 1, 2007 to December 31, 2007 is as follows (In Millions):

Balance at January 1, 2007	$	32
Additions and deletions		—
Balance at December 31, 2007	$	32

Depending on the outcome of Internal Revenue Service (IRS) appeals proceedings, approximately $7 million of the unrecognized DRD tax benefits may be realized during the next twelve months. All realized tax benefits and related interest will be recorded as a discrete item that will impact the effective tax rate in the accounting period in which the uncertain DRD tax position is ultimately settled.

During the year ended December 31, 2007, the Company paid an immaterial amount of interest and penalties to state tax authorities.

PL-42

The net deferred tax liability, included in other liabilities as of December 31, 2007 and 2006, is comprised of the following tax effected temporary differences:

	December 31,
	2007			2006
	(In Millions)
Deferred tax assets:
Policyholder reserves	$	894		$	825
Investment valuation		133			42
Deferred compensation		49			43
Interest in PIMCO		41			40
Dividends to policyholders		7			7
Total deferred tax assets		1,124			957
Deferred tax liabilities:
DAC		(1,187	)		(1,108	)
Hedging		(65	)		(53	)
Partnership income		(53	)		(35	)
Reinsurance		(51	)		(12	)
Retirement benefits		(19	)		(13	)
Depreciation		(9	)		(7	)
Other		(16	)		(4	)
Total deferred tax liabilities		(1,400	)		(1,232	)
Net deferred tax liability from continuing operations		(276	)		(275	)
Unrealized gain on derivatives and securities available for sale		(102	)		(234	)
Unrealized gain on interest in PIMCO and other security		(43	)		(42	)
Deferred taxes on cumulative changes in accounting principles		27
Minimum pension liability and other adjustments		1			1
Net deferred tax liability		($393	)		($550	)

SFAS No. 109, Accounting for Income Taxes requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that a portion or all of the deferred tax assets will not be realized. Based on management’s assessment, it is more likely than not that deferred tax assets will be realized through future taxable earnings.

The Company files income tax returns in U.S. Federal and various state jurisdictions and have tax years open by statute, or valid extension thereof, for tax years after 1997. The Company is under continuous audit by the IRS and is audited periodically by some state taxing authorities. The IRS and state taxing authorities have completed audits of the Company’s tax returns through the tax years ended December 31, 2003 and are currently auditing the tax years ended December 31, 2005 and 2004. The Company does not expect the Federal and state audits to result in any material assessments.

PL-43

17.	SEGMENT INFORMATION
	The Company has three operating segments: Life Insurance, Investment Management, and Annuities & Mutual Funds. These segments are managed separately and have been identified based on differences in products and services offered. All other activity is included in Corporate and Other segment.
	The Life Insurance segment offers UL, VUL and other life insurance products to individuals, small businesses and corporations through a network of distribution channels that include regional life offices, sales centers, marketing organizations, wirehouse broker-dealer firms and a national producer group that has produced over 10% of the segment’s in force business.
	The Investment Management segment offers investment and annuity products to pension fund sponsors and other institutional investors primarily through its home office marketing team and other intermediaries.
	The Annuities & Mutual Funds segment offers variable annuities, fixed annuities and mutual funds to individuals and small businesses through Financial Industry Regulatory Authority (FINRA) firms, regional and national wirehouses, and financial institutions. FINRA was created in July 2007 through the consolidation of the National Association of Securities Dealers and the member regulation, enforcement and arbitration functions of the New York Stock Exchange.
	The Corporate and Other segment primarily includes investment income, expenses and assets not attributable to the operating segments, and the operations of certain subsidiaries that do not qualify as operating segments. The Corporate and Other segment also includes the interest in PIMCO and the elimination of intersegment transactions. Discontinued operations (Note 6) are also included in Corporate and Other segment.
	The Company uses the same accounting policies and procedures to measure segment net income and assets as it uses to measure its consolidated net income and assets. Net investment income and net realized investment gain (loss) are allocated based on invested assets purchased and held as is required for transacting the business of that segment. Overhead expenses are allocated based on services provided. Interest expense is allocated based on the short-term borrowing needs of the segment and is included in net investment income. The provision for income taxes is allocated based on each segment’s actual tax provision.
	The operating segments are allocated equity based on formulas determined by management and receive a fixed interest rate of return on interdivision debentures supporting the allocated equity. The debenture amount is reflected as investment expense in net investment income in the Corporate and Other segment and as investment income in the operating segments.
	The Company generates substantially all of its revenues and net income from customers located in the U.S. As of December 31, 2007 and 2006, the Company had foreign investments with an estimated fair value of $6.8 billion and $6.4 billion, respectively.

PL-44

The following is segment information as of and for the year ended December 31, 2007:

					Annuities
	Life		Investment		& Mutual			Corporate
	Insurance		Management		Funds			and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	777	$	224	$	779					$	1,780
Net investment income		803		905		186		$	220			2,114
Net realized investment gain (loss)		1		20		(99	)		32			(46	)
Investment advisory fees		29				298						327
Other income		9				84			5			98
Total revenues		1,619		1,149		1,248			257			4,273
BENEFITS AND EXPENSES
Interest credited		618		504		144						1,266
Policy benefits		308		535		12						855
Commission expenses		209		11		470						690
Operating expenses		252		34		346			108			740
Total benefits and expenses		1,387		1,084		972			108			3,551
Income from continuing operations before provision for income taxes		232		65		276			149			722
Provision (benefit) for income taxes		58		12		(6	)		34			98
Income from continuing operations		174		53		282			115			624
Minority interest									(36	)		(36	)
Discontinued operations, net of taxes									11			11
Net income	$	174	$	53	$	282		$	90		$	599
Total assets	$	27,969	$	16,163	$	57,322		$	3,049		$	104,503
DAC		1,813		70		2,598						4,481
Separate account assets		6,529		333		50,743						57,605
Policyholder and contract liabilities		19,535		14,574		3,933						38,042
Separate account liabilities		6,529		333		50,743						57,605

PL-45

The following is segment information as of and for the year ended December 31, 2006:

						Annuities
	Life			Investment		& Mutual		Corporate
	Insurance			Management		Funds		and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	722		$	206	$	610				$	1,538
Net investment income		777			861		204	$	200			2,042
Net realized investment gain (loss)		(6	)		23		29		16			62
Realized investment gain on interest in PIMCO									32			32
Investment advisory fees		32					287					319
Other income		4			16		15		12			47
Total revenues		1,529			1,106		1,145		260			4,040
BENEFITS AND EXPENSES
Interest credited		588			478		153					1,219
Policy benefits		280			468		32					780
Commission expenses		189			11		406					606
Operating expenses		234			25		261		110			630
Total benefits and expenses		1,291			982		852		110			3,235
Income from continuing operations before provision for income taxes		238			124		293		150			805
Provision for income taxes		60			32		58		48			198
Income from continuing operations		178			92		235		102			607
Minority interest									(13	)		(13	)
Discontinued operations, net of taxes									(4	)		(4	)
Net income	$	178		$	92	$	235	$	85		$	590
Total assets	$	26,241		$	15,118	$	49,122	$	2,716		$	93,197
DAC		1,700			74		2,474					4,248
Separate account assets		5,838			52		43,010					48,900
Policyholder and contract liabilities		18,604			13,483		3,998					36,085
Separate account liabilities		5,838			52		43,010					48,900

PL-46

The following is segment information for the year ended December 31, 2005:

						Annuities
	Life			Investment		& Mutual		Corporate
	Insurance			Management		Funds		and Other			Total
REVENUES	(In Millions)
Policy fees and insurance premiums	$	708		$	168	$	485				$	1,361
Net investment income		752			828		225	$	113			1,918
Net realized investment gain (loss)		(14	)		7		26		4			23
Realized investment gain on interest in PIMCO									104			104
Investment advisory fees		28					220		1			249
Other income		1			10		8		4			23
Total revenues		1,475			1,013		964		226			3,678
BENEFITS AND EXPENSES
Interest credited		577			455		166					1,198
Policy benefits		275			415		16					706
Commission expenses		181			7		342					530
Operating expenses		236			26		247		133			642
Total benefits and expenses		1,269			903		771		133			3,076
Income from continuing operations before provision for income taxes		206			110		193		93			602
Provision for income taxes		44			25		13		18			100
Income from continuing operations		162			85		180		75			502
Cumulative adjustment due to change in accounting principle									(2	)		(2	)
Minority interest									(1	)		(1	)
Discontinued operations, net of taxes									43			43
Net income	$	162		$	85	$	180	$	115		$	542

18.	TRANSACTIONS WITH AFFILIATES
	Pacific Life Fund Advisors LLC, a wholly owned subsidiary of Pacific Life formed in 2007, serves as the investment adviser for the Pacific Select Fund, an investment vehicle provided to the Company’s variable life insurance policyholders and variable annuity contract owners, and the Pacific Life Funds, the investment vehicle for the Company’s mutual fund products. Prior to May 1, 2007, Pacific Life served in this capacity. Investment advisory and other fees are based primarily upon the net asset value of the underlying portfolios. These fees amounted to $326 million, $316 million and $246 million for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, Pacific Life provides certain support services to the Pacific Select Fund, the Pacific Life Funds and other affiliates based on an allocation of actual costs. These fees amounted to $8 million, $7 million and $5 million for the years ended December 31, 2007, 2006 and 2005, respectively.
	In addition, effective May 1, 2007, a service plan adopted by the Pacific Select Fund went into effect whereby the fund pays PSD, as distributor of the fund, a service fee in connection with services rendered or procured to or for shareholders of the fund or their variable contract owners. These services may include, but are not limited to, payment of compensation to broker-dealers, including PSD itself, and other financial institutions and organizations which assist in providing any of the services. For the period May 1, 2007 through December 31, 2007, PSD received $74 million in

PL-47

service fees from the Pacific Select Fund, which is recorded in other income. The service fees were allocated to the operating segments, primarily the Annuities & Mutual Funds segment (Note 17).

	In April 2006, Pacific Life made a $16 million non-cash dividend to Pacific LifeCorp, consisting of a real estate investment, which resulted in a gain of $9 million for Pacific Life.
	As discussed in Note 14, no lapse guarantee benefit riders are coinsured with PAR Bermuda.
19.	COMMITMENTS AND CONTINGENCIES
	COMMITMENTS
	The Company has outstanding commitments to make investments primarily in fixed maturity securities, mortgage loans, limited partnerships and other investments, as follows (In Millions):

Years Ending December 31:
2008	$	1,144
2009 through 2012		929
2013 and thereafter		73
Total	$	2,146

The Company leases office facilities under various noncancelable operating leases. Rent expense, which is included in operating expenses, in connection with these leases was $12 million, $11 million and $10 million for the years ended December 31, 2007, 2006 and 2005, respectively. In connection with the group insurance transaction (Note 6), PL&A is contingently liable for certain future rent and expense obligations, not to exceed $16 million, related to an office lease that was assigned to the buyer. Aggregate minimum future commitments are as follows (In Millions):

Years Ending December 31:
2008	$	5
2009 through 2012		8
2013 and thereafter		1
Total	$	14

In March 2007, the Company began construction of a new office building in Aliso Viejo, California that was completed in February 2008. The Company will retain its corporate headquarters in Newport Beach, California.

CONTINGENCIES — LITIGATION

During the year ended December 31, 2007, Pacific Life settled a national class action lawsuit, Cooper v. Pacific Life, for a combination of cash distributions and contract credits to owners of qualified annuity contracts who purchased their contracts between August 19, 1998, and April 30, 2002, or paid premium payments during that time period. Pacific Life strongly disagreed with the claims in the lawsuit. The settlement is not considered an admission or concession with respect to any claims made in the lawsuit and did not have a material adverse effect on the Company’s consolidated financial position. Distributions will be made to eligible class members beginning in the first quarter of 2008 and in accordance with the terms of the settlement agreement.

The Company is a respondent in a number of other legal proceedings, some of which involve allegations for extra-contractual damages. Although the Company is confident of its position in these matters, success is not a certainty and it is possible that in any case a judge or jury could rule against the Company. In the opinion of management, the outcome of such proceedings is not likely to have a material adverse effect on the Company’s consolidated financial position. The Company believes adequate provision has been made in its consolidated financial statements for all probable and estimable losses for litigation claims against the Company.

PL-48

CONTINGENCIES — IRS REVENUE RULING

On August 16, 2007, the IRS issued Revenue Ruling 2007-54, which provided the IRS’ interpretation of tax law regarding the computation of the Company’s DRD. On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which suspended Revenue Ruling 2007-54 and indicated the IRS would address the proper interpretation of tax law in a regulation project that has been added to the IRS’ 2007/2008 priority guidance plan. If, after public notice and comment, the IRS regulation project ultimately adopts the IRS’ interpretation contained in Revenue Ruling 2007-54, the Company could lose a substantial amount of DRD tax benefits, which could have a material adverse effect on the Company’s consolidated financial statements.

CONTINGENCIES — OTHER

In connection with the sale of certain broker-dealer subsidiaries (Note 6), certain indemnifications triggered by breaches of representations, warranties or covenants were provided by the Company. Also, included in the indemnifications is indemnification for certain third-party claims arising from the normal operation of these broker-dealers prior to the closing and within the nine month period following the sale. Management believes that its exposure to loss, if any, is not likely to have a material adverse effect on the Company’s consolidated financial statements.

In the course of its business, the Company provides certain indemnifications related to other dispositions, acquisitions, investments, lease agreements or other transactions that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. These obligations are typically subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. Because the amounts of these types of indemnifications often are not explicitly stated, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. The Company has not historically made material payments for these types of indemnifications. The estimated maximum potential amount of future payments under these obligations is not determinable due to the lack of a stated maximum liability for certain matters, and therefore, no related liability has been recorded. Management believes that judgments, if any, against the Company related to such matters are not likely to have a material adverse effect on the Company’s consolidated financial statements.

Most of the jurisdictions in which the Company is admitted to transact business require life insurance companies to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by insolvent life insurance companies. These associations levy assessments, up to prescribed limits, on all member companies in a particular state based on the proportionate share of premiums written by member companies in the lines of business in which the insolvent insurer operated. The Company has not received notification of any insolvency that is expected to result in a material guaranty fund assessment.

In relation to an asset securitization sponsored by Aviation Capital Group Corp., a wholly owned subsidiary of Pacific LifeCorp, Pacific Life is contingently obligated to purchase certain notes from the asset securitization trust to cover shortfalls in amounts due to the holders of the notes, up to certain levels as specified under the related agreements. As of December 31, 2007, the maximum potential amount of this future investment commitment was $50 million.

In connection with the operations of PSD, Pacific Life has made commitments to provide for additional capital funding as may be required.

See Note 9 for discussion of contingencies related to derivative instruments.

See Note 16 for discussion of other contingencies related to income taxes.

PL-49

Supplement dated May 1, 2008 to Prospectus Dated May 1, 2008 for

Pacific Select Exec, Pacific Select Choice, Pacific Select Performer 500

Pacific Select Estate Preserver Last Survivor,

Pacific Select Estate Preserver II Last Survivor,

Pacific Select Estate Preserver III Last Survivor,

Pacific Select Estate Preserver IV Last Survivor

and Pacific Select Estate Preserver V Last Survivor

Flexible Premium Variable Life Insurance Policies

and the Pacific Select Estate Maximizer Modified Single

Premium Variable Life Insurance Policy (each a “Policy”)

Issued by Pacific Life Insurance Company

In this supplement, you and your mean the Policyholder or Owner. Pacific Life, we, us, and our refer to Pacific Life Insurance Company. M Fund refers to M Fund, Inc. You’ll find an explanation of what terms used in this supplement mean in the accompanying variable life insurance prospectus or the M Fund prospectus.

The M Fund is described in detail in its prospectus and in its Statement of Additional Information (SAI).

Each Policy is described in detail in its accompanying variable life insurance prospectus. Except as described below, all features and procedures of each Policy described in its prospectus remain intact.

This supplement provides information about four additional Variable Investment Options offered under your Policy. Each of these Investment Options is set up as a Variable Account under our Separate Account, and invests in a corresponding portfolio of the M Fund: Brandes International Equity Variable Account (“Variable Account I”), Turner Core Growth Variable Account (“Variable Account II”), Frontier Capital Appreciation Variable Account (“Variable Account III”), and Business Opportunity Value Variable Account (“Variable Account V”).

Variable Account I:  Brandes International Equity Fund

Variable Account II:  Turner Core Growth Fund

Variable Account III: Frontier Capital Appreciation Fund

Variable Account V: Business Opportunity Value Fund

You can allocate Net Premium and transfer Accumulated Value to these Variable Investment Options, as well as to the other Investment Options described in the accompanying variable life insurance prospectus, subject to any allocation and transfer limitations described in that prospectus. Additionally, only 2 transfers in any calendar month may involve Variable Account I.

About the Variable Investment Options

The following chart is a summary of the M Fund portfolios. Each M Fund portfolio invests in different securities and has its own investment goals, strategies and risks. The value of each portfolio will fluctuate with the value of the investments it holds and returns are not guaranteed. You’ll find detailed descriptions of the portfolios, including the risks associated with investing in the portfolios, in the accompanying M Fund prospectus. There’s no guarantee that a portfolio will achieve its investment objective. You should read the M Fund prospectus carefully before investing.

Your Policy’s Accumulated Value will fluctuate depending on the Investment Options you’ve chosen.

	The Portfolio’s
Portfolio	Investment Goal	The Portfolio’s Main Investments	Portfolio Manager
Brandes International Equity	Long-term capital appreciation.	Equity securities of foreign issuers. Focuses on stocks with capitalizations of $1 billion or more.	Brandes Investment Partners, L.P.
Turner Core Growth	Long-term capital appreciation.	Common stocks of U.S. companies that the subadviser believes have strong earnings growth potential.	Turner Investment Partners, Inc.
Frontier Capital Appreciation	Maximum capital appreciation.	Common stock of U.S. companies of all sizes, with emphasis on stocks of companies with capitalizations that are consistent with the capitalizations of those companies found in the Russell 2500.	Frontier Capital Management Company, LLC
Business Opportunity Value	Long-term capital appreciation	Equity securities of U.S. issuers in the large-to-medium-capitalization segment of the U.S. stock market.	Iridian Asset Management LLC

M Financial Investment Advisers, Inc. (“MFIA”) is the investment adviser to the M Funds, and has retained other firms to manage the portfolios. The MFIA and the M Fund’s Board of Directors oversee the management of all of the M Fund portfolios.

We are not responsible for the operation of the M Fund or any of its portfolios. We also are not responsible for ensuring that the M Fund and its portfolios comply with any laws that apply.

The section Fee Tables: Total annual Fund operating expenses is replaced with the following:

Total annual Fund operating expenses¹

This table shows the minimum and maximum total operating expenses paid by the portfolios that you indirectly pay during the time you own the Policy. This table shows the range (minimum and maximum) of fees and expenses (including management fees, shareholder servicing or distribution (12b-1) fees, and other expenses) paid by any of the portfolios, expressed as an annual percentage of average daily net assets. The amounts are based on expenses paid in the year ended December 31, 2007, adjusted to reflect anticipated changes in fees and expenses, or, for new portfolios, based on estimates for the current fiscal year.

Each Variable Account of the Separate Account purchases shares of the corresponding Fund portfolio at net asset value. The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of the portfolio. The advisory fees and other expenses are not fixed or specified under the terms of the Policy, and they may vary from year to year. These fees and expenses are described in each Fund’s prospectus.

	Minimum	Maximum
Range of total annual portfolio operating expenses before any waivers or expense reimbursements	0.25%	4.21%

	Minimum	Maximum
Range of total annual portfolio operating expenses after waivers or expense reimbursements	0.25%	1.54%

¹ Pacific Life Fund Advisors, LLC, adviser to Pacific Select Fund, and M Fund Financial Investment Advisers, adviser to M Fund, and other advisers and/or other service providers to the other Funds have contractually agreed to reduce investment advisory fees or otherwise reimburse certain portfolios of their respective Funds which may reduce the portfolio’s expenses. The range of expenses in the first row above does not include the effect of any fee reduction or expense reimbursement arrangement. The range of expenses in the second row above shows the effect of contractual fee reduction and expense reimbursement arrangements that will remain in effect at least through December 31, 2008. There can be no assurance that expense waivers or reimbursement contracts will be extended beyond their current terms, and they may not cover certain expenses such as extraordinary expenses. See each Fund’s prospectus for complete information regarding annual operating expenses of that Fund.

Statements and Reports We’ll Send You

We’ll send you financial statements that we receive from M Fund.

Voting Rights

We’re the legal owner of the shares of the M Fund that are held by the Variable Accounts. The voting rights we describe in the Voting Rights section of the accompanying variable life insurance prospectus and how we’ll exercise them also apply to the M Fund.

The Separate Account

The rights we describe in the accompanying variable life insurance prospectus under Making changes to the separate account also apply to the M Fund.

Form No. 15-22325-08