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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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06-1599088
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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One American Row, Hartford, Connecticut
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06102-5056
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(Address of principal executive offices)
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(Zip Code)
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(860) 403-5000
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(Registrant’s telephone number, including area code)
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Large accelerated filer
¨
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Accelerated filer
þ
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if smaller reporting company)
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(1)
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All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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|||||||||||||||
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2012
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2011
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2012
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2011
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As restated
and amended
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As restated
and amended
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REVENUES:
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||||||||||||||||
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Premiums
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$ | 94.8 | $ | 111.9 | $ | 290.6 | $ | 323.6 | ||||||||
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Fee income
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138.8 | 146.5 | 423.1 | 455.8 | ||||||||||||
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Net investment income
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205.1 | 203.5 | 623.3 | 628.1 | ||||||||||||
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Net realized investment gains (losses):
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Total other-than-temporary impairment (“OTTI”) losses
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(7.2 | ) | (30.9 | ) | (30.6 | ) | (44.6 | ) | ||||||||
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Portion of OTTI losses recognized in
other comprehensive income (“OCI”)
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(0.2 | ) | 21.2 | 11.3 | 26.1 | |||||||||||
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Net OTTI losses recognized in earnings
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(7.4 | ) | (9.7 | ) | (19.3 | ) | (18.5 | ) | ||||||||
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Net realized investment gains (losses), excluding OTTI losses
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34.9 | (0.4 | ) | 20.9 | 0.5 | |||||||||||
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Net realized investment gains (losses)
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27.5 | (10.1 | ) | 1.6 | (18.0 | ) | ||||||||||
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Gain on debt repurchase
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11.9 | — | 11.9 | — | ||||||||||||
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Total revenues
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478.1 | 451.8 | 1,350.5 | 1,389.5 | ||||||||||||
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BENEFITS AND EXPENSES:
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Policy benefits, excluding policyholder dividends
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352.5 | 293.1 | 888.9 | 848.6 | ||||||||||||
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Policyholder dividends
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81.0 | 53.5 | 222.3 | 199.0 | ||||||||||||
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Policy acquisition cost amortization
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71.7 | 35.1 | 164.6 | 127.0 | ||||||||||||
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Interest expense on indebtedness
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7.9 | 7.9 | 23.7 | 23.7 | ||||||||||||
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Other operating expenses
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61.9 | 57.4 | 187.1 | 187.1 | ||||||||||||
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Total benefits and expenses
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575.0 | 447.0 | 1,486.6 | 1,385.4 | ||||||||||||
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Income (loss) from continuing operations before income taxes
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(96.9 | ) | 4.8 | (136.1 | ) | 4.1 | ||||||||||
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Income tax expense (benefit)
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(4.9 | ) | (6.8 | ) | (1.0 | ) | 9.5 | |||||||||
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Income (loss) from continuing operations
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(92.0 | ) | 11.6 | (135.1 | ) | (5.4 | ) | |||||||||
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Loss from discontinued operations, net of income taxes
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(6.0 | ) | (3.9 | ) | (12.0 | ) | (6.1 | ) | ||||||||
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Net income (loss)
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(98.0 | ) | 7.7 | (147.1 | ) | (11.5 | ) | |||||||||
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Less: Net income (loss) attributable to noncontrolling interests
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0.8 | (0.3 | ) | 0.6 | (0.4 | ) | ||||||||||
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Net income (loss) attributable to The Phoenix Companies, Inc.
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$ | (98.8 | ) | $ | 8.0 | $ | (147.7 | ) | $ | (11.1 | ) | |||||
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(Continued from previous page)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2012
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2011
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2012
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2011
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As restated
and amended
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As restated
and amended
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COMPREHENSIVE INCOME (LOSS):
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Net income (loss) attributable to The Phoenix Companies, Inc.
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(98.8 | ) | 8.0 | (147.7 | ) | (11.1 | ) | |||||||||
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Net income (loss) attributable to noncontrolling interests
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0.8 | (0.3 | ) | 0.6 | (0.4 | ) | ||||||||||
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Net income (loss)
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$ | (98.0 | ) | $ | 7.7 | $ | (147.1 | ) | $ | (11.5 | ) | |||||
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Other comprehensive income (loss) before income taxes:
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Net unrealized investment gains before income taxes
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21.0 | 6.0 | 70.4 | 60.3 | ||||||||||||
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Non-credit portion of OTTI losses
recognized in OCI before income taxes
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10.6 | (21.2 | ) | 11.9 | (21.5 | ) | ||||||||||
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Net pension liability adjustment before income taxes
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2.4 | (8.1 | ) | (0.1 | ) | (2.2 | ) | |||||||||
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Net unrealized other gains (losses) before income taxes
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— | — | — | — | ||||||||||||
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Net unrealized derivative instruments gains (losses)
before income taxes
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— | — | — | — | ||||||||||||
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Other comprehensive income (loss) before income taxes
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34.0 | (23.3 | ) | 82.2 | 36.6 | |||||||||||
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Less: Income tax expense (benefit) related to:
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Net unrealized investment gains (losses)
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34.9 | (22.6 | ) | 79.4 | 8.7 | |||||||||||
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Non-credit portion of OTTI losses recognized in OCI
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3.7 | (7.5 | ) | 4.1 | (7.6 | ) | ||||||||||
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Net pension liability adjustment
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— | — | — | — | ||||||||||||
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Net unrealized other gains (losses)
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— | — | — | — | ||||||||||||
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Net unrealized derivative instrument gains (losses)
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— | — | — | — | ||||||||||||
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Total income tax expense (benefit)
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38.6 | (30.1 | ) | 83.5 | 1.1 | |||||||||||
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Other comprehensive income (loss) net of income taxes
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(4.6 | ) | 6.8 | (1.3 | ) | 35.5 | ||||||||||
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Comprehensive income (loss)
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(102.6 | ) | 14.5 | (148.4 | ) | 24.0 | ||||||||||
| Less: Comprehensive income (loss) attributable to | ||||||||||||||||
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noncontrolling interests, net of income taxes
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0.8 | (0.3 | ) | 0.6 | (0.4 | ) | ||||||||||
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Comprehensive income (loss) attributable to
The Phoenix Companies, Inc.
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$ | (103.4 | ) | $ | 14.8 | $ | (149.0 | ) | $ | 24.4 | ||||||
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EARNINGS (LOSS) PER SHARE:
(1)
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Earnings from continuing operations – basic
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$ | (16.00 | ) | $ | 1.99 | $ | (23.33 | ) | $ | (0.93 | ) | |||||
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Earnings from continuing operations – diluted
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$ | (16.00 | ) | $ | 1.97 | $ | (23.33 | ) | $ | (0.93 | ) | |||||
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Loss from discontinued operations – basic
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$ | (1.04 | ) | $ | (0.67 | ) | $ | (2.07 | ) | $ | (1.05 | ) | ||||
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Loss from discontinued operations – diluted
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$ | (1.04 | ) | $ | (0.66 | ) | $ | (2.07 | ) | $ | (1.05 | ) | ||||
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Net earnings (loss) attributable to
The Phoenix Companies, Inc.– basic
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$ | (17.19 | ) | $ | 1.38 | $ | (25.50 | ) | $ | (1.91 | ) | |||||
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Net earnings (loss) attributable to
The Phoenix Companies, Inc. – diluted
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$ | (17.19 | ) | $ | 1.36 | $ | (25.50 | ) | $ | (1.91 | ) | |||||
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Basic weighted-average common shares outstanding
(in thousands)
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5,749 | 5,816 | 5,792 | 5,814 | ||||||||||||
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Diluted weighted-average common shares
outstanding (in thousands)
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5,749 | 5,890 | 5,792 | 5,814 | ||||||||||||
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(1)
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All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
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September 30,
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2012
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2011
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As restated
and amended
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OPERATING ACTIVITIES:
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Net loss
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$ | (147.7 | ) | $ | (11.1 | ) | ||
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Net realized investment (gains) losses
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4.2 | 18.0 | ||||||
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Gain on debt repurchase
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(11.9 | ) | — | |||||
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Policy acquisition costs deferred
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(56.2 | ) | (64.6 | ) | ||||
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Amortization of deferred policy acquisition costs
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164.6 | 127.0 | ||||||
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Amortization and depreciation
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9.9 | 9.1 | ||||||
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Interest credited
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90.1 | 89.4 | ||||||
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Undistributed equity in earnings of limited partnerships and other investments
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(46.0 | ) | (48.2 | ) | ||||
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Change in:
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Accrued investment income
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(118.1 | ) | (109.8 | ) | ||||
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Deferred income taxes
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(24.7 | ) | (2.7 | ) | ||||
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Receivables
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(19.8 | ) | 10.6 | |||||
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Policy liabilities and accruals
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(312.4 | ) | (363.5 | ) | ||||
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Dividend obligations
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66.9 | 16.2 | ||||||
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Impact of operating activities of consolidated investment entities, net
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— | (2.7 | ) | |||||
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Other operating activities, net
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(2.3 | ) | (34.2 | ) | ||||
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Cash used for operating activities
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(403.4 | ) | (366.5 | ) | ||||
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INVESTING ACTIVITIES:
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Purchases of:
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Available-for-sale debt securities
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(2,367.7 | ) | (2,253.9 | ) | ||||
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Available-for-sale equity securities
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(6.3 | ) | (5.7 | ) | ||||
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Derivative instruments
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(46.0 | ) | (32.9 | ) | ||||
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Fair value investments
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(27.7 | ) | (35.0 | ) | ||||
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Other investments
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(1.0 | ) | (1.1 | ) | ||||
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Sales, repayments and maturities of:
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Available-for-sale debt securities
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2,190.1 | 1,762.2 | ||||||
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Available-for-sale equity securities
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7.9 | 1.9 | ||||||
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Derivative instruments
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16.2 | 61.4 | ||||||
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Fair value investments
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9.3 | 10.9 | ||||||
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Other investments
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8.3 | 22.0 | ||||||
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Contributions to limited partnerships and limited liability corporations
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(63.7 | ) | (67.1 | ) | ||||
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Distributions from limited partnerships and limited liability corporations
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101.9 | 78.7 | ||||||
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Policy loans, net
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106.7 | 101.8 | ||||||
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Other investing activities, net
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(5.8 | ) | (4.6 | ) | ||||
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Cash used for investing activities
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(77.8 | ) | (361.4 | ) | ||||
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(Continued from previous page)
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September 30,
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2012
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2011
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|||||||
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As restated
and amended
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FINANCING ACTIVITIES:
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Policyholder deposit fund deposits
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1,216.3 | 1,336.3 | ||||||
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Policyholder deposit fund withdrawals
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(861.8 | ) | (920.4 | ) | ||||
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Net transfers to/from separate accounts
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279.4 | 344.1 | ||||||
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Impact of financing activities of consolidated investment entities, net
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0.1 | — | ||||||
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Other financing activities, net
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(39.6 | ) | 1.3 | |||||
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Cash provided by financing activities
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594.4 | 761.3 | ||||||
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Change in cash and cash equivalents
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113.2 | 33.4 | ||||||
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Change in cash balances of discontinued operations assets
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2.4 | 1.2 | ||||||
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Cash and cash equivalents, beginning of period
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168.2 | 93.7 | ||||||
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Cash and cash equivalents, end of period
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$ | 283.8 | $ | 128.3 | ||||
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Supplemental Disclosure of Cash Flow Information
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Income taxes paid
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$ | (3.3 | ) | $ | (6.2 | ) | ||
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Interest expense on indebtedness paid
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$ | (20.4 | ) | $ | (20.4 | ) | ||
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Non-Cash Transactions During the Year
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Investment exchanges
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$ | 84.4 | $ | 54.5 | ||||
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(1)
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Amounts reflect the cumulative impact of the retrospective adoption of amended guidance to ASC 944,
Financial Services - Insurance
(ASU 2010-26), as detailed more fully within Footnote 2 to these financial statements.
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(2)
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Reflects the 1-for-20 reverse stock split, which was effective August 10, 2012. See Note 10 to our consolidated financial statements for additional information on the reverse stock split.
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●
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Accounting for Certain Universal Life Type Products:
Certain of the Company’s universal life products have benefit features that are expected to produce profits in earlier periods followed by losses in later periods. Under U.S. GAAP accounting, the Company is required to establish reserves for the anticipated benefits that exceed the projected contract value and arise from these features. The Company did not properly evaluate certain benefit features and, therefore, did not properly establish the required reserves. The resulting changes in the reserve had a secondary impact on gross profits used to amortize deferred acquisition costs and unearned revenue reserves.
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●
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Shadow Accounting:
Under U.S. GAAP accounting, assets and liabilities that are backed by a portfolio of assets classified as available-for-sale must be adjusted to reflect the amount of unrealized gains or unrealized losses “as if the amounts were realized” with a corresponding offset to other comprehensive income (loss) in a process commonly referred to as “shadow accounting.” The Company failed to recognize all of the relationships between the available-for-sale assets and the supported assets and liabilities in calculating these adjustments. During the restatement, the shadow accounting policy and valuation process were corrected to ensure all interrelated assets and liabilities were being properly identified and to ensure that the impacts of these unrealized gains or losses were properly recorded. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Actuarial Finance Errors
” table within the “
Actuarial Finance”
section of this Note below.
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●
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Loss Recognition:
Under U.S. GAAP accounting, the Company must periodically assess the net liability (net of deferred policy acquisition costs) to ensure it is sufficient to provide for the expected policyholder benefits and related expenses. Upon analysis, the Company determined that for certain lines of business the “locked-in” historical estimates used to calculate the policyholder liabilities were insufficient prior to, and also as a result of, entering into a new reinsurance treaty (as discussed within the
“Reinsurance Accounting”
section below) and in light of the current interest rate environment. Upon identification of loss recognition events, the Company reduced its deferred policy acquisition cost asset and established additional liabilities to rectify the insufficiency in the net liability which was identified for certain lines of business. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Actuarial Finance Errors
” table within the “
Actuarial Finance”
section of this Note below.
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●
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Traditional Product Revenue Recognition:
The Company did not properly recognize premiums when due under the terms of the contract related to its traditional participating life insurance policies. In conjunction with the correction of this error, the Company also revised the projected income (the “glidepath”) from inception of the closed block in order to properly reflect the revised timing of revenue recognition. The correction of these errors did not have a material impact on annual net income in any given period or the amounts disclosed ‘at inception’ within “Note 5: Demutualization and Closed Block.” The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Actuarial Finance Errors
” table within the “
Actuarial Finance”
section of this Note below.
|
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●
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Liability for the Future Cost of a Settlement Agreement:
As a result of the settlement of a class action lawsuit reached prior to demutualization and related to the Company’s participating business, the Company was required to record a liability for the future costs associated with reimbursing certain customers for supplemental premium payments. The calculation of this liability involves estimates of future policy lapses and policyholder mortality that are consistent with the assumptions used to estimate other policyholder liabilities. However, the Company did not properly record this incremental liability within the consolidated financial statements. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Actuarial Finance Errors
” table within the “
Actuarial Finance”
section of this Note below.
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●
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Fixed Indexed Annuities (“FIA”):
During the Company’s analysis of the fixed indexed annuity valuation process, errors associated with the actuarial modeling of certain fixed indexed annuity product features which were modeled beginning in 2011 were identified. These errors related to incomplete or inaccurate data and inappropriate approximations of product features which resulted in the incorrect calculation for the policyholder liabilities including the related embedded derivatives and liabilities associated with certain benefits for the product. The impact of the correction of these errors on the consolidated financial statements is presented in the
“Summary of Correction of Actuarial Finance Errors”
table within the
“Actuarial Finance”
section of this Note below.
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●
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Other Actuarial Errors
: Included within these amounts are all actuarial out-of-period errors as well as other individually immaterial errors which were identified during the restatement process in conjunction with management’s comprehensive balance sheet review and relating to the Company’s actuarial assumptions, approximations and valuation methods/models for its life and annuity business. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Actuarial Finance Errors
” table within the “
Actuarial Finance”
section of this Note below.
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Increase (decrease)
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Summary of Correction of Actuarial Finance Errors – December 31, 2011 Balance Sheet Impacts
(1)
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($ in millions)
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Actuarial Finance
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|||||||||||||||||||||||||||||||
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Accounting
for UL Type
Products
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Shadow
Accounting
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Loss
Recognition
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Traditional
Revenue
Recognition
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Future
Cost of a
Settlement
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FIA
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Other
Actuarial
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Total
Actuarial
Finance
Errors
(2)
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ASSETS:
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||||||||||||||||||||||||||||||||
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Available-for-sale debt securities, at fair value
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$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
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Available-for-sale equity securities, at fair value
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Limited partnerships and other investments
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Policy loans, at unpaid principal balances
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Derivative investments
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Fair value investments
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total investments
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Cash and cash equivalents
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Accrued investment income
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Receivables
|
— | — | — | 16.6 | — | — | 1.0 | 17.6 | ||||||||||||||||||||||||
|
Deferred policy acquisition costs
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57.3 | (11.0 | ) | (1.8 | ) | (0.7 | ) | — | (3.4 | ) | 1.1 | 41.5 | ||||||||||||||||||||
|
Deferred income taxes, net
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other assets
|
— | — | (38.6 | ) | — | — | — | 4.8 | (33.8 | ) | ||||||||||||||||||||||
|
Discontinued operations assets
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Separate account assets
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Total assets
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$ | 57.3 | $ | (11.0 | ) | $ | (40.4 | ) | $ | 15.9 | $ | — | $ | (3.4 | ) | $ | 6.9 | $ | 25.3 | |||||||||||||
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LIABILITIES:
|
||||||||||||||||||||||||||||||||
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Policy liabilities and accruals
|
$ | 179.4 | $ | 9.2 | $ | 11.0 | $ | 12.1 | $ | 7.7 | $ | — | $ | 21.3 | $ | 240.7 | ||||||||||||||||
|
Policyholder deposit funds
|
— | — | — | — | — | 0.8 | 2.1 | 2.9 | ||||||||||||||||||||||||
|
Dividend obligations
|
— | — | — | 9.4 | — | — | (8.4 | ) | 1.0 | |||||||||||||||||||||||
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Indebtedness
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Other liabilities
|
— | — | — | — | — | — | 0.2 | 0.2 | ||||||||||||||||||||||||
|
Discontinued operations liabilities
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Separate account liabilities
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Total liabilities
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179.4 | 9.2 | 11.0 | 21.5 | 7.7 | 0.8 | 15.2 | 244.8 | ||||||||||||||||||||||||
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STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||||||||||||||
|
Common stock
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Additional paid-in capital
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Accumulated other comprehensive loss
|
— | (14.2 | ) | — | — | — | — | — | (14.2 | ) | ||||||||||||||||||||||
|
Accumulated deficit
|
(80.7 | ) | — | (1.2 | ) | (0.5 | ) | (3.8 | ) | (4.2 | ) | (24.5 | ) | (114.9 | ) | |||||||||||||||||
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Treasury stock
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total stockholders’ equity –periods presented
(3)
|
(80.7 | ) | (14.2 | ) | (1.2 | ) | (0.5 | ) | (3.8 | ) | (4.2 | ) | (24.5 | ) | (129.1 | ) | ||||||||||||||||
|
Total stockholders’ equity – cumulative impact
(4)
|
(41.4 | ) | (6.0 | ) | (50.2 | ) | (5.1 | ) | (3.9 | ) | — | 16.2 | (90.4 | ) | ||||||||||||||||||
|
Total stockholders’ equity – impact
|
(122.1 | ) | (20.2 | ) | (51.4 | ) | (5.6 | ) | (7.7 | ) | (4.2 | ) | (8.3 | ) | (219.5 | ) | ||||||||||||||||
|
Total liabilities and stockholders’ equity
|
$ | 57.3 | $ | (11.0 | ) | $ | (40.4 | ) | $ | 15.9 | $ | — | $ | (3.4 | ) | $ | 6.9 | $ | 25.3 | |||||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Actuarial Finance Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(3)
|
Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
|
|
(4)
|
Amounts represent cumulative impact of restatement changes to periods prior to 2010.
|
|
Increase (decrease)
|
Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Actuarial Finance
|
|||||||||||||||||||||||||||||||
|
Accounting
for UL Type
Products
|
Shadow
Accounting
|
Loss
Recognition
|
Traditional
Revenue
Recognition
|
Future
Cost of a
Settlement
|
FIA
|
Other
Actuarial
|
Total
Actuarial
Finance
Errors
(2)
|
|||||||||||||||||||||||||
|
REVENUES
|
||||||||||||||||||||||||||||||||
|
Premiums
|
$ | — | $ | — | $ | — | $ | (5.3 | ) | $ | — | $ | — | $ | (0.2 | ) | $ | (5.5 | ) | |||||||||||||
|
Fee income
|
(1.1 | ) | — | — | — | — | — | — | (1.1 | ) | ||||||||||||||||||||||
|
Net investment income
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net realized investment gains (losses):
|
||||||||||||||||||||||||||||||||
|
Total OTTI losses
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net OTTI losses recognized in earnings
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net realized investment gains (losses), excluding OTTI losses
|
— | — | — | — | — | — | (2.1 | ) | (2.1 | ) | ||||||||||||||||||||||
|
Net realized investment gains (losses)
|
— | — | — | — | — | — | (2.1 | ) | (2.1 | ) | ||||||||||||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total revenues
|
(1.1 | ) | — | — | (5.3 | ) | — | — | (2.3 | ) | (8.7 | ) | ||||||||||||||||||||
|
BENEFITS AND EXPENSES
|
||||||||||||||||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
19.7 | — | 0.8 | (5.1 | ) | — | 4.0 | 6.9 | 26.3 | |||||||||||||||||||||||
|
Policyholder dividends
|
— | — | — | (0.1 | ) | — | — | (0.1 | ) | (0.2 | ) | |||||||||||||||||||||
|
Policy acquisition cost amortization
|
(15.2 | ) | — | — | — | — | 1.5 | (0.8 | ) | (14.5 | ) | |||||||||||||||||||||
|
Interest expense on indebtedness
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other operating expenses
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total benefits and expenses
|
4.5 | — | 0.8 | (5.2 | ) | — | 5.5 | 6.0 | 11.6 | |||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
(5.6 | ) | — | (0.8 | ) | (0.1 | ) | — | (5.5 | ) | (8.3 | ) | (20.3 | ) | ||||||||||||||||||
|
Income tax expense (benefit)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Income (loss) from continuing operations
|
(5.6 | ) | — | (0.8 | ) | (0.1 | ) | — | (5.5 | ) | (8.3 | ) | (20.3 | ) | ||||||||||||||||||
|
Noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (5.6 | ) | $ | — | $ | (0.8 | ) | $ | (0.1 | ) | $ | — | $ | (5.5 | ) | $ | (8.3 | ) | $ | (20.3 | ) | ||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Actuarial Finance Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Actuarial Finance Errors – Three months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||||||
|
Increase (decrease)
|
Actuarial Finance
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Accounting
for UL Type
Products
|
Shadow
Accounting
|
Loss
Recognition
|
Traditional
Revenue
Recognition
|
Future
Cost of a
Settlement
|
FIA
|
Other
Actuarial
|
Total
Actuarial
Finance
Errors
(2)
|
||||||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (5.6 | ) | $ | — | $ | (0.8 | ) | $ | (0.1 | ) | $ | — | $ | (5.5 | ) | $ | (8.3 | ) | $ | (20.3 | ) | ||||||||||
|
Other comprehensive income (loss) before income taxes:
|
||||||||||||||||||||||||||||||||
|
Net unrealized investment gains before income taxes
|
— | (37.1 | ) | — | — | — | — | — | (37.1 | ) | ||||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in
OCI before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
— | (37.1 | ) | — | — | — | — | — | (37.1 | ) | ||||||||||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||||||||||||||
|
Net unrealized investment gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
— | (37.1 | ) | — | — | — | — | — | (37.1 | ) | ||||||||||||||||||||||
|
Comprehensive income (loss) attributable to
The Phoenix Companies, Inc.
|
(5.6 | ) | (37.1 | ) | (0.8 | ) | (0.1 | ) | — | (5.5 | ) | (8.3 | ) | (57.4 | ) | |||||||||||||||||
|
Add: Comprehensive income attributable to
noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Comprehensive income (loss)
|
$ | (5.6 | ) | $ | (37.1 | ) | $ | (0.8 | ) | $ | (0.1 | ) | $ | — | $ | (5.5 | ) | $ | (8.3 | ) | $ | (57.4 | ) | |||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Actuarial Finance Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
Increase (decrease)
|
Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Actuarial Finance
|
|||||||||||||||||||||||||||||||
|
Accounting
for UL Type
Products
|
Shadow
Accounting
|
Loss
Recognition
|
Traditional
Revenue
Recognition
|
Future
Cost of a
Settlement
|
FIA
|
Other
Actuarial
|
Total
Actuarial
Finance
Errors
(2)
|
|||||||||||||||||||||||||
|
REVENUES
|
||||||||||||||||||||||||||||||||
|
Premiums
|
$ | — | $ | — | $ | — | $ | (14.6 | ) | $ | — | $ | — | $ | 0.5 | $ | (14.1 | ) | ||||||||||||||
|
Fee income
|
(0.7 | ) | — | — | — | — | — | 0.6 | (0.1 | ) | ||||||||||||||||||||||
|
Net investment income
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net realized investment gains (losses):
|
||||||||||||||||||||||||||||||||
|
Total OTTI losses
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net OTTI losses recognized in earnings
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net realized investment gains (losses), excluding OTTI losses
|
— | — | — | — | — | — | 0.8 | 0.8 | ||||||||||||||||||||||||
|
Net realized investment gains (losses)
|
— | — | — | — | — | — | 0.8 | 0.8 | ||||||||||||||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total revenues
|
(0.7 | ) | — | — | (14.6 | ) | — | — | 1.9 | (13.4 | ) | |||||||||||||||||||||
|
BENEFITS AND EXPENSES
|
||||||||||||||||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
41.5 | — | 2.3 | (13.6 | ) | — | 4.0 | 15.3 | 49.5 | |||||||||||||||||||||||
|
Policyholder dividends
|
— | — | — | (0.7 | ) | — | — | (1.6 | ) | (2.3 | ) | |||||||||||||||||||||
|
Policy acquisition cost amortization
|
(12.6 | ) | — | — | — | — | 2.1 | (4.7 | ) | (15.2 | ) | |||||||||||||||||||||
|
Interest expense on indebtedness
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other operating expenses
|
— | — | — | — | (0.1 | ) | — | 6.8 | 6.7 | |||||||||||||||||||||||
|
Total benefits and expenses
|
28.9 | — | 2.3 | (14.3 | ) | (0.1 | ) | 6.1 | 15.8 | 38.7 | ||||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
(29.6 | ) | — | (2.3 | ) | (0.3 | ) | 0.1 | (6.1 | ) | (13.9 | ) | (52.1 | ) | ||||||||||||||||||
|
Income tax expense (benefit)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Income (loss) from continuing operations
|
(29.6 | ) | — | (2.3 | ) | (0.3 | ) | 0.1 | (6.1 | ) | (13.9 | ) | (52.1 | ) | ||||||||||||||||||
|
Noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (29.6 | ) | $ | — | $ | (2.3 | ) | $ | (0.3 | ) | $ | 0.1 | $ | (6.1 | ) | $ | (13.9 | ) | $ | (52.1 | ) | ||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Actuarial Finance Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Actuarial Finance Errors – Nine months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||||||
|
Increase (decrease)
|
Actuarial Finance
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Accounting
for UL Type
Products
|
Shadow
Accounting
|
Loss
Recognition
|
Traditional
Revenue
Recognition
|
Future
Cost of a
Settlement
|
FIA
|
Other
Actuarial
|
Total
Actuarial
Finance
Errors
(2)
|
||||||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (29.6 | ) | $ | — | $ | (2.3 | ) | $ | (0.3 | ) | $ | 0.1 | $ | (6.1 | ) | $ | (13.9 | ) | $ | (52.1 | ) | ||||||||||
|
Other comprehensive income (loss) before income taxes:
|
||||||||||||||||||||||||||||||||
|
Net unrealized investment gains before income taxes
|
— | (29.0 | ) | — | — | — | — | — | (29.0 | ) | ||||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
before income taxes
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
— | (29.0 | ) | — | — | — | — | — | (29.0 | ) | ||||||||||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||||||||||||||
|
Net unrealized investment gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
— | (29.0 | ) | — | — | — | — | — | (29.0 | ) | ||||||||||||||||||||||
|
Comprehensive income (loss) attributable to
The Phoenix Companies, Inc.
|
(29.6 | ) | (29.0 | ) | (2.3 | ) | (0.3 | ) | 0.1 | (6.1 | ) | (13.9 | ) | (81.1 | ) | |||||||||||||||||
|
Add: Comprehensive income attributable to
noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Comprehensive income (loss)
|
$ | (29.6 | ) | $ | (29.0 | ) | $ | (2.3 | ) | $ | (0.3 | ) | $ | 0.1 | $ | (6.1 | ) | $ | (13.9 | ) | $ | (81.1 | ) | |||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Actuarial Finance Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
●
|
Limited Partnerships and Other Investments (“OIA”) –
The Company did not have an adequate process to properly determine the appropriate accounting method for OIA at acquisition or for determining the appropriate accounting for investee transactions resulting in errors associated with the application of equity or fair value methods of accounting, and conclusions reached regarding consolidation. Additionally, the Company did not perform the proper evaluation necessary for determining impairments of certain OIA assets which led to additional adjustments. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Investments Errors
” table within the “
Investments”
section of this Note below.
|
|
●
|
Available-for-Sale Securities –
The Company did not have an adequate process over: (1) the valuation and recording of private placement debt, private equity securities, and certain publicly traded securities; and (2) utilizing an appropriate model for identifying impairments related to these securities. The errors identified were related to: (i) inaccurate inputs used in the valuation models; (ii) and inappropriate valuation methodologies used to value certain instruments; and (iii) ineffective review of internally developed (matrix or manual) prices. The Company also failed to maintain an adequate process over the leveling and disclosure of fair value measurements. In the course of correcting these valuation errors, the Company also reassessed the presentation of the fair value hierarchy as disclosed within “Note 13: Fair Value of Financial Instruments.” This resulted in the determination in the leveling classification of $5,939.1 million of securities to Level 3 in the fair value hierarchy. The classification in Level 3 had no impact on the fair value of these securities.
|
|
●
|
Derivative Valuation –
The Company did not appropriately apply U.S. GAAP accounting standards regarding the valuation of certain derivative instruments. Specifically, the Company did not properly recognize and measure counterparty non-performance risk on non-collateralized derivative assets. The impact of the correction of these errors on the consolidated financial statements is presented in the “
Summary of Correction of Investments Errors
” table within the “
Investments”
section of this Note below.
|
|
●
|
Structured Securities –
The Company did not appropriately maintain a process over the assessment of accounting methodologies used to determine the appropriate interest income models. This resulted in improper income recognition and impairments for certain structured securities. In addition, the Company did not properly assess securitized financial assets for potential embedded derivatives which, when properly assessed, resulted in the reclassification of assets to fair value investments. The reclassification of these assets results in the recognition of the change in fair value of these assets in net investment income. The impact of the correction of these errors on the consolidated statements of comprehensive income is presented in the “
Summary of Correction of Investments Errors
” table within the “
Investments”
section of this Note below.
|
|
Increase (decrease)
|
Summary of Correction of Investments Errors – December 31, 2011 Balance Sheet Impacts
(1)
|
|||||||||||||||||||||||
|
($ in millions)
|
Investments
|
|||||||||||||||||||||||
|
OIA
|
Available-for-Sale
Securities
|
Derivative
Valuation
|
Structured
Securities
|
Total
Investments
Errors
(2)
|
||||||||||||||||||||
|
Valuation
|
Bond Call
|
|||||||||||||||||||||||
|
ASSETS:
|
||||||||||||||||||||||||
|
Available-for-sale debt securities, at fair value
|
$ | — | $ | (10.0 | ) | $ | (25.3 | ) | $ | — | $ | (55.7 | ) | $ | (91.0 | ) | ||||||||
|
Available-for-sale equity securities, at fair value
|
— | — | — | — | — | — | ||||||||||||||||||
|
Limited partnerships and other investments
|
(35.9 | ) | — | — | — | — | (35.9 | ) | ||||||||||||||||
|
Policy loans, at unpaid principal balances
|
— | — | — | — | — | — | ||||||||||||||||||
|
Derivative investments
|
— | — | — | (12.6 | ) | — | (12.6 | ) | ||||||||||||||||
|
Fair value investments
|
44.0 | (2.2 | ) | — | — | 55.7 | 97.5 | |||||||||||||||||
|
Total investments
|
8.1 | (12.2 | ) | (25.3 | ) | (12.6 | ) | — | (42.0 | ) | ||||||||||||||
|
Cash and cash equivalents
|
2.0 | — | — | — | — | 2.0 | ||||||||||||||||||
|
Accrued investment income
|
— | — | — | — | — | — | ||||||||||||||||||
|
Receivables
|
— | — | — | — | — | — | ||||||||||||||||||
|
Deferred policy acquisition costs
|
— | — | — | (13.1 | ) | — | (13.1 | ) | ||||||||||||||||
|
Deferred income taxes, net
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other assets
|
(4.4 | ) | — | 23.2 | (6.7 | ) | — | 12.1 | ||||||||||||||||
|
Discontinued operations assets
|
— | — | — | — | — | — | ||||||||||||||||||
|
Separate account assets
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total assets
|
$ | 5.7 | $ | (12.2 | ) | $ | (2.1 | ) | $ | (32.4 | ) | $ | — | $ | (41.0 | ) | ||||||||
|
LIABILITIES:
|
||||||||||||||||||||||||
|
Policy liabilities and accruals
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
|
Policyholder deposit funds
|
— | — | — | — | — | — | ||||||||||||||||||
|
Dividend obligations
|
4.1 | (9.6 | ) | (2.1 | ) | — | — | (7.6 | ) | |||||||||||||||
|
Indebtedness
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other liabilities
|
5.4 | 7.1 | — | — | — | 12.5 | ||||||||||||||||||
|
Discontinued operations liabilities
|
— | — | — | — | — | — | ||||||||||||||||||
|
Separate account liabilities
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total liabilities
|
9.5 | (2.5 | ) | (2.1 | ) | — | — | 4.9 | ||||||||||||||||
|
STOCKHOLDERS’ EQUITY:
|
||||||||||||||||||||||||
|
Common stock
|
— | — | — | — | — | — | ||||||||||||||||||
|
Additional paid-in capital
|
— | — | — | — | — | — | ||||||||||||||||||
|
Accumulated other comprehensive loss
|
(15.7 | ) | 24.3 | — | — | 3.0 | 11.6 | |||||||||||||||||
|
Accumulated deficit
|
0.9 | 4.9 | — | (16.6 | ) | (3.0 | ) | (13.8 | ) | |||||||||||||||
|
Treasury stock
|
— | — | — | — | — | — | ||||||||||||||||||
|
Noncontrolling interests
|
(1.0 | ) | — | — | — | — | (1.0 | ) | ||||||||||||||||
|
Total stockholders’ equity –periods presented
(3)
|
(15.8 | ) | 29.2 | — | (16.6 | ) | — | (3.2 | ) | |||||||||||||||
|
Total stockholders’ equity – cumulative impact
(4)
|
12.0 | (38.9 | ) | — | (15.8 | ) | — | (42.7 | ) | |||||||||||||||
|
Total stockholders’ equity – impact
|
(3.8 | ) | (9.7 | ) | — | (32.4 | ) | — | (45.9 | ) | ||||||||||||||
|
Total liabilities and stockholders’ equity
|
$ | 5.7 | $ | (12.2 | ) | $ | (2.1 | ) | $ | (32.4 | ) | $ | — | $ | (41.0 | ) | ||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Investments Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(3)
|
Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
|
|
(4)
|
Amounts represent cumulative impact of restatement changes made to periods prior to 2010.
|
|
Increase (decrease)
|
Summary of Correction of Investments Errors – Three months ended September 30, 2011
Income Statement Impacts
(1)
|
|||||||||||||||||||||||
|
($ in millions)
|
Investments
|
|||||||||||||||||||||||
|
OIA
|
Available-for-Sale
Securities
|
Derivative
Valuation
|
Structured
Securities
|
Total
Investments
Errors
(2)
|
||||||||||||||||||||
|
Valuation
|
Bond Call
|
|||||||||||||||||||||||
|
REVENUES
|
||||||||||||||||||||||||
|
Premiums
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
|
Fee income
|
||||||||||||||||||||||||
|
Net investment income
|
6.2 | 0.1 | — | — | (1.1 | ) | 5.2 | |||||||||||||||||
|
Net realized investment gains (losses):
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total OTTI losses
|
— | — | — | — | — | — | ||||||||||||||||||
|
Portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net OTTI losses recognized in earnings
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net realized investment gains (losses), excluding OTTI losses
|
(2.1 | ) | (0.4 | ) | — | (10.7 | ) | (0.8 | ) | (14.0 | ) | |||||||||||||
|
Net realized investment gains (losses)
|
(2.1 | ) | (0.4 | ) | — | (10.7 | ) | (0.8 | ) | (14.0 | ) | |||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total revenues
|
4.1 | (0.3 | ) | — | (10.7 | ) | (1.9 | ) | (8.8 | ) | ||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||||
|
BENEFITS AND EXPENSES
|
— | — | — | — | — | — | ||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
— | — | — | — | — | — | ||||||||||||||||||
|
Policyholder dividends
|
2.1 | 0.2 | — | — | 0.1 | 2.4 | ||||||||||||||||||
|
Policy acquisition cost amortization
|
— | — | — | (0.4 | ) | — | (0.4 | ) | ||||||||||||||||
|
Interest expense on indebtedness
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other operating expenses
|
0.3 | — | — | — | — | 0.3 | ||||||||||||||||||
|
Total benefits and expenses
|
2.4 | 0.2 | — | (0.4 | ) | 0.1 | 2.3 | |||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
1.7 | (0.5 | ) | — | (10.3 | ) | (2.0 | ) | (11.1 | ) | ||||||||||||||
|
Income tax expense (benefit)
|
||||||||||||||||||||||||
|
Income (loss) from continuing operations
|
1.7 | (0.5 | ) | — | (10.3 | ) | (2.0 | ) | (11.1 | ) | ||||||||||||||
|
Noncontrolling interests
|
(0.3 | ) | — | — | — | — | (0.3 | ) | ||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | 2.0 | $ | (0.5 | ) | $ | — | $ | (10.3 | ) | $ | (2.0 | ) | $ | (10.8 | ) | ||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Investments Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Investments Errors – Three months ended September 30, 2011
Income Statement Impacts
(1)
|
|||||||||||||||||||||||
|
Increase (decrease)
|
Investments
|
|||||||||||||||||||||||
| ($ in millions) |
OIA
|
Available-for-Sale
Securities
|
Derivative
Valuation
|
Structured
Securities
|
Total
Investments
Errors
(2)
|
|||||||||||||||||||
|
Valuation
|
Bond Call
|
|||||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | 2.0 | $ | (0.5 | ) | $ | — | $ | (10.3 | ) | $ | (2.0 | ) | $ | (10.8 | ) | ||||||||
|
Other comprehensive income (loss) before income taxes:
|
||||||||||||||||||||||||
|
Net unrealized investment gains before income taxes
|
(4.8 | ) | (3.6 | ) | — | — | 1.9 | (6.5 | ) | |||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized derivative instruments gains (losses) before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
(4.8 | ) | (3.6 | ) | — | — | 1.9 | (6.5 | ) | |||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||||||
|
Net unrealized investment gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
(4.8 | ) | (3.6 | ) | — | — | 1.9 | (6.5 | ) | |||||||||||||||
|
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
|
(2.8 | ) | (4.1 | ) | — | (10.3 | ) | (0.1 | ) | (17.3 | ) | |||||||||||||
|
Add: Comprehensive income attributable to noncontrolling interests
|
— | — | — | — | — | — | ||||||||||||||||||
|
Comprehensive income (loss)
|
$ | (2.8 | ) | $ | (4.1 | ) | $ | — | $ | (10.3 | ) | $ | (0.1 | ) | $ | (17.3 | ) | |||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Investments Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
Increase (decrease)
|
Summary of Correction of Investments Errors – Nine months ended September 30, 2011
Income Statement Impacts
(1)
|
|||||||||||||||||||||||
|
($ in millions)
|
Investments
|
|||||||||||||||||||||||
|
OIA
|
Available-for-Sale
Securities
|
Derivative
Valuation
|
Structured
Securities
|
Total
Investments
Errors
(2)
|
||||||||||||||||||||
|
Valuation
|
Bond Call
|
|||||||||||||||||||||||
|
REVENUES
|
||||||||||||||||||||||||
|
Premiums
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
|
Fee income
|
||||||||||||||||||||||||
|
Net investment income
|
16.4 | 1.8 | — | — | (1.4 | ) | 16.8 | |||||||||||||||||
|
Net realized investment gains (losses):
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total OTTI losses
|
— | — | — | — | — | — | ||||||||||||||||||
|
Portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net OTTI losses recognized in earnings
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net realized investment gains (losses), excluding OTTI losses
|
— | (0.1 | ) | — | (12.3 | ) | (1.3 | ) | (13.7 | ) | ||||||||||||||
|
Net realized investment gains (losses)
|
— | (0.1 | ) | — | (12.3 | ) | (1.3 | ) | (13.7 | ) | ||||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total revenues
|
16.4 | 1.7 | — | (12.3 | ) | (2.7 | ) | 3.1 | ||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||||
|
BENEFITS AND EXPENSES
|
— | — | — | — | — | — | ||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
— | — | — | — | — | — | ||||||||||||||||||
|
Policyholder dividends
|
13.0 | (1.1 | ) | — | — | 1.0 | 12.9 | |||||||||||||||||
|
Policy acquisition cost amortization
|
— | — | — | (0.4 | ) | — | (0.4 | ) | ||||||||||||||||
|
Interest expense on indebtedness
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other operating expenses
|
0.9 | — | — | — | — | 0.9 | ||||||||||||||||||
|
Total benefits and expenses
|
13.9 | (1.1 | ) | — | (0.4 | ) | 1.0 | 13.4 | ||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
2.5 | 2.8 | — | (11.9 | ) | (3.7 | ) | (10.3 | ) | |||||||||||||||
|
Income tax expense (benefit)
|
||||||||||||||||||||||||
|
Income (loss) from continuing operations
|
2.5 | 2.8 | — | (11.9 | ) | (3.7 | ) | (10.3 | ) | |||||||||||||||
|
Noncontrolling interests
|
(0.4 | ) | — | — | — | — | (0.4 | ) | ||||||||||||||||
|
Income (loss) from discontinued operations, net of income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
| Net income (loss) attributable to | ||||||||||||||||||||||||
|
The Phoenix Companies, Inc.
|
$ | 2.9 | $ | 2.8 | $ | — | $ | (11.9 | ) | $ | (3.7 | ) | $ | (9.9 | ) | |||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Investments Errors
” which is further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Errors – Nine months ended September 30, 2011
Income Statement Impacts
(1)
|
|||||||||||||||||||||||
|
Increase (decrease)
|
Investments
|
|||||||||||||||||||||||
| ($ in millions) |
OIA
|
Available-for-Sale
Securities
|
Derivative
Valuation
|
Structured
Securities
|
Total
Investments
Errors
(2)
|
|||||||||||||||||||
|
Valuation
|
Bond Call
|
|||||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | 2.9 | $ | 2.8 | $ | — | $ | (11.9 | ) | $ | (3.7 | ) | $ | (9.9 | ) | |||||||||
|
Other comprehensive income (loss) before income taxes:
|
||||||||||||||||||||||||
|
Net unrealized investment gains before income taxes
|
(3.8 | ) | 4.6 | — | — | 3.6 | 4.4 | |||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized derivative instruments gains (losses) before income taxes
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
(3.8 | ) | 4.6 | — | — | 3.6 | 4.4 | |||||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||||||
|
Net unrealized investment gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | — | ||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
(3.8 | ) | 4.6 | — | — | 3.6 | 4.4 | |||||||||||||||||
|
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
|
(0.9 | ) | 7.4 | — | (11.9 | ) | (0.1 | ) | (5.5 | ) | ||||||||||||||
|
Add: Comprehensive income attributable to noncontrolling interests
|
— | — | — | — | — | — | ||||||||||||||||||
|
Comprehensive income (loss)
|
$ | (0.9 | ) | $ | 7.4 | $ | — | $ | (11.9 | ) | $ | (0.1 | ) | $ | (5.5 | ) | ||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Amounts represent the total “
Summary of Correction of Investments Errors
” which are further aggregated into the “
Consolidated Summary of Correction of Errors
” in the following pages.
|
|
●
|
Consolidated Statement of Cash Flows –
The Company identified errors within its previously issued consolidated statement of cash flows which primarily consisted of: (i) the incorrect classification of deposits and withdrawals of universal life products as cash flows used for operating activities; (ii) the incorrect classification of capitalized interest on policy loans as an investing activity; (iii) certain other classification errors within cash flows from investing activities primarily related to investment purchases and sales; and (iv) the net impact of all other errors previously and separately described within this Note. The impact of the correction of these errors to each individual financial statement line item within the consolidated statement of cash flows is summarized below and included in detail within the restated and amended consolidated statement of cash flows within this Note.
|
|
Increase (decrease)
|
For the
|
|||
|
($ in millions)
|
period ended
|
|||
|
Sept 30,
2011
|
||||
|
Consolidated Statement of Cash Flows
|
||||
|
Cash provided by (used for) operating activities
|
$ | (227.1 | ) | |
|
Cash provided by (used for) investing activities
|
90.2 | |||
|
Cash provided by (used for) financing activities
|
143.4 | |||
|
●
|
Changes in Classifications –
The Company made certain corrections to: (i) present outstanding checks and cash held as collateral by a third party related to our derivative transactions in order to appropriately reflect the legal right of offset and to properly reclassify certain suspense accounts; (ii) reflect direct and ceded reinsurance liabilities gross in the consolidated balance sheets as described above in “
Reinsurance Accounting
” section; and (iii) reclassify sales inducements assets from deferred policy acquisition costs to other assets as well as separately present dividend obligations as its own financial statement line within the consolidated balance sheets. These corrections had no impact to net income or total stockholders’ equity. The impact of the changes in classification are reflected in the correction of errors column in the
“Consolidated Summary of Correction of Errors
” table within this Note.
|
|
Increase (decrease)
|
Consolidated Summary of Correction of Errors – December 31, 2011 Balance Sheet Impacts
(1)
|
|||||||||||||||||||||||||||||||||||||||
|
($ in millions)
|
Changes in Classification
|
|||||||||||||||||||||||||||||||||||||||
|
ASSETS:
|
Total
Actuarial
Finance
(2)
|
Total
Investments
(3)
|
Reinsurance
Accounting
|
Pensions
|
OIA
Taxable
Income
|
Cash and
Suspense
|
Reinsurance
|
Reclassify &
Separately
Present
|
Other
Restatement
Adjustments
|
Total
Correction
of Errors
(4)
|
||||||||||||||||||||||||||||||
|
Available-for-sale
debt securities, at fair value
|
$ | — | $ | (91.0 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (2.0 | ) | $ | (93.0 | ) | |||||||||||||||||
|
Available-for-sale
equity securities, at fair value
|
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Limited partnerships and
other investments
|
— | (35.9 | ) | — | — | — | — | — | — | (0.1 | ) | (36.0 | ) | |||||||||||||||||||||||||||
|
Policy loans,
at unpaid principal balances
|
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Derivative investments
|
— | (12.6 | ) | — | — | — | — | — | — | — | (12.6 | ) | ||||||||||||||||||||||||||||
|
Fair value investments
|
— | 97.5 | — | — | — | — | — | — | (0.1 | ) | 97.4 | |||||||||||||||||||||||||||||
|
Total investments
|
— | (42.0 | ) | — | — | — | — | — | — | (2.2 | ) | (44.2 | ) | |||||||||||||||||||||||||||
|
Cash and cash equivalents
|
— | 2.0 | — | — | — | (28.4 | ) | — | — | 0.3 | (26.1 | ) | ||||||||||||||||||||||||||||
|
Accrued investment income
|
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Receivables
|
17.6 | — | — | — | — | 16.4 | 196.6 | — | 2.9 | 233.5 | ||||||||||||||||||||||||||||||
|
Deferred policy acquisition costs
|
41.5 | (13.1 | ) | — | — | — | — | — | (42.2 | ) | 0.1 | (13.7 | ) | |||||||||||||||||||||||||||
|
Deferred income taxes, net
|
— | — | — | — | — | — | — | — | 2.4 | 2.4 | ||||||||||||||||||||||||||||||
|
Other assets
|
(33.8 | ) | 12.1 | 39.6 | — | — | 8.8 | — | 42.2 | (2.4 | ) | 66.5 | ||||||||||||||||||||||||||||
|
Discontinued operations assets
|
— | — | — | — | — | — | 14.1 | — | 2.0 | 16.1 | ||||||||||||||||||||||||||||||
|
Separate account assets
|
— | — | — | (0.7 | ) | — | — | — | — | — | (0.7 | ) | ||||||||||||||||||||||||||||
|
Total assets
|
$ | 25.3 | $ | (41.0 | ) | $ | 39.6 | $ | (0.7 | ) | $ | — | $ | (3.2 | ) | $ | 210.7 | $ | — | $ | 3.1 | $ | 233.8 | |||||||||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors ”
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(5)
|
Amounts represent restatement changes made to the 2011 and 2010 periods as presented within the 2012 Form 10-K.
|
|
(6)
|
Amounts represent cumulative impact of restatement changes made to periods prior to 2010.
|
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Errors – Three months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||
|
Increase (decrease)
|
Consolidated
|
|||||||||||||||||||||||||||
|
($ in millions)
|
Total
Actuarial
Finance
(2)
|
Total
Investments
(3)
|
Reinsurance
Accounting
|
Pensions
|
OIA
Taxable
Income
|
Other
Restatement
Adjustments
|
Total
Correction
of Errors
(4)
|
|||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (20.3 | ) | $ | (10.8 | ) | $ | 1.0 | $ | (2.3 | ) | $ | — | $ | 2.4 | $ | (30.0 | ) | ||||||||||
|
Other comprehensive income (loss) before income taxes:
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized investment gains before income taxes
(5)
|
(37.1 | ) | (6.5 | ) | — | — | — | 61.3 | 17.7 | |||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
before income taxes
(5)
|
— | — | — | — | — | (43.6 | ) | (43.6 | ) | |||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | 7.2 | — | (16.4 | ) | (9.2 | ) | |||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
before income taxes
(5)
|
— | — | — | — | — | (1.1 | ) | (1.1 | ) | |||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
(37.1 | ) | (6.5 | ) | — | 7.2 | — | 0.2 | (36.2 | ) | ||||||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized investment gains (losses)
(5)
|
— | — | — | — | — | 20.8 | 20.8 | |||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
(5)
|
— | — | — | — | — | (15.3 | ) | (15.3 | ) | |||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | 5.5 | 5.5 | |||||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
(37.1 | ) | (6.5 | ) | — | 7.2 | — | (5.3 | ) | (41.7 | ) | |||||||||||||||||
|
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
|
(57.4 | ) | (17.3 | ) | 1.0 | 4.9 | — | (2.9 | ) | (71.7 | ) | |||||||||||||||||
|
Add: Comprehensive income attributable to noncontrolling interests
|
— | — | — | — | — | (0.3 | ) | (0.3 | ) | |||||||||||||||||||
|
Comprehensive income (loss)
|
$ | (57.4 | ) | $ | (17.3 | ) | $ | 1.0 | $ | 4.9 | $ | — | $ | (3.2 | ) | $ | (72.0 | ) | ||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(5)
|
In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.
|
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(Continued from previous page)
|
Summary of Correction of Errors – Nine months ended September 30, 2011 Income Statement Impacts
(1)
|
|||||||||||||||||||||||||||
|
Increase (decrease)
|
Consolidated
|
|||||||||||||||||||||||||||
|
($ in millions)
|
Total
Actuarial
Finance
(2)
|
Total
Investments
(3)
|
Reinsurance
Accounting
|
Pensions
|
OIA
Taxable
Income
|
Other
Restatement
Adjustments
|
Total
Correction
of Errors
(4)
|
|||||||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (52.1 | ) | $ | (9.9 | ) | $ | 4.2 | $ | (3.9 | ) | $ | — | $ | 2.8 | $ | (58.9 | ) | ||||||||||
|
Other comprehensive income (loss) before income taxes:
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized investment gains before income taxes
(5)
|
(29.0 | ) | 4.4 | — | — | — | 60.6 | 36.0 | ||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI before income taxes
(5)
|
— | — | — | — | — | (44.9 | ) | (44.9 | ) | |||||||||||||||||||
|
Net pension liability adjustment before income taxes
|
— | — | — | 8.9 | — | (16.3 | ) | (7.4 | ) | |||||||||||||||||||
|
Net unrealized other gains (losses) before income taxes
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses) before income taxes
(5)
|
— | — | — | — | — | 0.1 | 0.1 | |||||||||||||||||||||
|
Other comprehensive income (loss) before income taxes
|
(29.0 | ) | 4.4 | — | 8.9 | — | (0.5 | ) | (16.2 | ) | ||||||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized investment gains (losses)
(5)
|
— | — | — | — | — | 29.6 | 29.6 | |||||||||||||||||||||
|
Non-credit portion of OTTI losses recognized in OCI
(5)
|
— | — | — | — | — | (15.8 | ) | (15.8 | ) | |||||||||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Total income tax expense (benefit)
|
— | — | — | — | — | 13.8 | 13.8 | |||||||||||||||||||||
|
Other comprehensive income (loss), net of income taxes
|
(29.0 | ) | 4.4 | — | 8.9 | — | (14.3 | ) | (30.0 | ) | ||||||||||||||||||
|
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
|
(81.1 | ) | (5.5 | ) | 4.2 | 5.0 | — | (11.5 | ) | (88.9 | ) | |||||||||||||||||
|
Add: Comprehensive income attributable to noncontrolling interests
|
— | — | — | — | — | (0.4 | ) | (0.4 | ) | |||||||||||||||||||
|
Comprehensive income (loss)
|
(81.1 | ) | $ | (5.5 | ) | $ | 4.2 | $ | 5.0 | $ | — | $ | (11.9 | ) | $ | (89.3 | ) | |||||||||||
|
(1)
|
All amounts are shown before income taxes, unless otherwise noted.
|
|
(2)
|
Represents “
Summary of Correction of Actuarial Finance Errors
” from the previous pages of this Note.
|
|
(3)
|
Represents “
Summary of Correction of Investments Errors
from the previous pages of this Note.
|
|
(4)
|
Amounts represent total correction of errors which is also presented in the
“Consolidated Statement of Comprehensive Income”
reflected in the tables on the following pages.
|
|
(5)
|
In addition to adjustments described within this footnote , the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.
|
|
(1)
|
Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
|
|
(2)
|
Adjustments related to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26)
,
have been updated from those originally disclosed in the First Quarter 2012 Quarterly Report on Form 10-Q filing to reflect the correction of errors identified related to the adoption of the amended guidance as well as indirect impact of the correction of errors associated with the restatement.
|
|
(3)
|
Included within policyholder liabilities and accruals is the post-ASU gross profits followed by losses reserve of $211.8 million. The corresponding net post-ASU amount of $200.5 million reported within the consolidated financial statements includes $(11.2) million of shadow profits followed by losses, both of which are discussed further within the “Actuarial Finance” section of this Note.
|
|
(4)
|
Dividend obligations were previously included in policy liabilities and accruals.
|
|
(5)
|
All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
|
|
Consolidated Statement of Comprehensive Income
|
||||||||||||||||||||
|
($ in millions, except share data)
|
Three months ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
REVENUES:
|
||||||||||||||||||||
|
Premiums
|
$ | 117.4 | $ | (5.5 | ) | $ | 111.9 | $ | — | $ | 111.9 | |||||||||
|
Fee income
|
147.6 | (1.1 | ) | 146.5 | — | 146.5 | ||||||||||||||
|
Net investment income
|
201.0 | 2.5 | 203.5 | — | 203.5 | |||||||||||||||
|
Net realized investment gains (losses):
|
||||||||||||||||||||
|
Total OTTI losses
|
(31.0 | ) | 0.1 | (30.9 | ) | — | (30.9 | ) | ||||||||||||
|
Portion of OTTI losses recognized in OCI
|
22.6 | (1.4 | ) | 21.2 | — | 21.2 | ||||||||||||||
|
Net OTTI losses recognized in earnings
|
(8.4 | ) | (1.3 | ) | (9.7 | ) | — | (9.7 | ) | |||||||||||
|
Net realized investment gains (losses),
excluding OTTI losses
|
14.5 | (14.9 | ) | (0.4 | ) | — | (0.4 | ) | ||||||||||||
|
Net realized investment losses
|
6.1 | (16.2 | ) | (10.1 | ) | — | (10.1 | ) | ||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | |||||||||||||||
|
Total revenues
|
472.1 | (20.3 | ) | 451.8 | — | 451.8 | ||||||||||||||
|
BENEFITS AND EXPENSES:
|
||||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
268.2 | 25.1 | 293.3 | (0.2 | ) | 293.1 | ||||||||||||||
|
Policyholder dividends
|
51.5 | 2.0 | 53.5 | — | 53.5 | |||||||||||||||
|
Policy acquisition cost amortization
|
57.5 | (14.9 | ) | 42.6 | (7.5 | ) | 35.1 | |||||||||||||
|
Interest expense on indebtedness
|
7.9 | — | 7.9 | — | 7.9 | |||||||||||||||
|
Other operating expenses
|
57.2 | (0.2 | ) | 57.0 | 0.4 | 57.4 | ||||||||||||||
|
Total benefits and expenses
|
442.3 | 12.0 | 454.3 | (7.3 | ) | 447.0 | ||||||||||||||
|
Income (loss) from continuing operations
before income taxes
|
29.8 | (32.3 | ) | (2.5 | ) | 7.3 | 4.8 | |||||||||||||
|
Income tax benefit
|
(6.7 | ) | (1.2 | ) | (7.9 | ) | 1.1 | (6.8 | ) | |||||||||||
|
Income (loss) from continuing operations
|
36.5 | (31.1 | ) | 5.4 | 6.2 | 11.6 | ||||||||||||||
|
Income (loss) from discontinued operations,
net of income taxes
|
(4.7 | ) | 0.8 | (3.9 | ) | — | (3.9 | ) | ||||||||||||
|
Net income (loss)
|
31.8 | (30.3 | ) | 1.5 | 6.2 | 7.7 | ||||||||||||||
|
Less: Net income (loss) attributable to
noncontrolling interests
|
— | (0.3 | ) | (0.3 | ) | — | (0.3 | ) | ||||||||||||
|
Net income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 31.8 | $ | (30.0 | ) | $ | 1.8 | $ | 6.2 | $ | 8.0 | |||||||||
|
(Continued from previous page)
|
Consolidated Statement of Comprehensive Income
|
|||||||||||||||||||
|
($ in millions, except share data)
|
Three months September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||
|
Net income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 31.8 | $ | (30.0 | ) | $ | 1.8 | $ | 6.2 | $ | 8.0 | |||||||||
|
Less: Net income (loss) attributable to
noncontrolling interests
|
— | (0.3 | ) | (0.3 | ) | — | (0.3 | ) | ||||||||||||
|
Net income (loss)
|
31.8 | (30.3 | ) | 1.5 | 6.2 | 7.7 | ||||||||||||||
|
Other comprehensive income (loss)
before income taxes:
|
||||||||||||||||||||
|
Net unrealized investment gains
before income taxes
(5)
|
(13.3 | ) | 17.7 | 4.4 | 1.6 | 6.0 | ||||||||||||||
|
Non-credit portion of OTTI losses
recognized in OCI before income taxes
(5)
|
22.4 | (43.6 | ) | (21.2 | ) | — | (21.2 | ) | ||||||||||||
|
Net pension liability adjustment
before income taxes
|
1.1 | (9.2 | ) | (8.1 | ) | — | (8.1 | ) | ||||||||||||
|
Net unrealized other gains (losses)
before income taxes
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized derivative instruments gains (losses)
before income taxes
(5)
|
1.1 | (1.1 | ) | — | — | — | ||||||||||||||
|
Other comprehensive income (loss)
before income taxes
|
11.3 | (36.2 | ) | (24.9 | ) | 1.6 | (23.3 | ) | ||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||
|
Net unrealized investment gains (losses)
|
(42.2 | ) | 20.8 | (21.4 | ) | (1.2 | ) | (22.6 | ) | |||||||||||
|
Non-credit portion of OTTI losses
recognized in OCI
(5)
|
7.8 | (15.3 | ) | (7.5 | ) | — | (7.5 | ) | ||||||||||||
|
Net pension liability adjustment
(5)
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized derivative instruments
gains (losses)
|
— | — | — | — | — | |||||||||||||||
|
Total income tax benefit
|
(34.4 | ) | 5.5 | (28.9 | ) | (1.2 | ) | (30.1 | ) | |||||||||||
|
Other comprehensive income (loss),
net of income taxes
|
45.7 | (41.7 | ) | 4.0 | 2.8 | 6.8 | ||||||||||||||
|
Comprehensive income (loss)
|
77.5 | (72.0 | ) | 5.5 | 9.0 | 14.5 | ||||||||||||||
|
Less: Comprehensive income (loss) attributable to
noncontrolling interests, net of income taxes
|
— | (0.3 | ) | (0.3 | ) | — | (0.3 | ) | ||||||||||||
|
Comprehensive income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 77.5 | $ | (71.7 | ) | $ | 5.8 | $ | 9.0 | $ | 14.8 | |||||||||
|
(Continued from previous page)
|
Consolidated Statement of Comprehensive Income
|
|||||||||||||||||||
|
($ in millions, except share data)
|
Three months ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
EARNINGS (LOSS) PER SHARE:
(3)
|
||||||||||||||||||||
|
Earnings (loss) from continuing operations – basic
|
$ | 6.25 | $ | (5.35 | ) | NM | $ | 1.07 | $ | 1.99 | ||||||||||
|
Earnings (loss) from continuing operations – diluted
|
$ | 6.23 | $ | (5.28 | ) | NM | $ | 1.05 | $ | 1.97 | ||||||||||
|
Earnings (loss) from discontinued operations – basic
|
$ | (0.80 | ) | $ | 0.14 | NM | $ | — | $ | (0.67 | ) | |||||||||
|
Earnings (loss) from discontinued operations – diluted
|
$ | (0.80 | ) | $ | 0.14 | NM | $ | — | $ | (0.66 | ) | |||||||||
|
Net earnings (loss) attributable to
The Phoenix Companies, Inc. – basic
|
$ | 5.44 | $ | (5.16 | ) | NM | $ | 1.07 | $ | 1.38 | ||||||||||
|
Net earnings (loss) attributable to
The Phoenix Companies, Inc. – diluted
|
$ | 5.43 | $ | (5.09 | ) | NM | $ | 1.05 | $ | 1.36 | ||||||||||
|
Basic weighted-average common shares outstanding
(in thousands)
|
5,844 | 5,816 | (4) | NM | 5,816 | 5,816 | ||||||||||||||
|
Diluted weighted-average common shares
outstanding (in thousands)
|
5,856 | 5,890 | (4) | NM | 5,890 | 5,890 | ||||||||||||||
|
(1)
|
Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
|
|
(2)
|
Adjustments related to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26)
.
|
|
(3)
|
All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
|
|
(4)
|
Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.
|
|
(5)
|
In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.
|
|
Consolidated Statement of Comprehensive Income
|
||||||||||||||||||||
|
($ in millions, except share data)
|
Nine months ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
REVENUES:
|
||||||||||||||||||||
|
Premiums
|
$ | 337.7 | $ | (14.1 | ) | $ | 323.6 | $ | — | $ | 323.6 | |||||||||
|
Fee income
|
456.0 | (0.2 | ) | 455.8 | — | 455.8 | ||||||||||||||
|
Net investment income
|
612.6 | 15.5 | 628.1 | — | 628.1 | |||||||||||||||
|
Net realized investment gains (losses):
|
||||||||||||||||||||
|
Total OTTI losses
|
(45.0 | ) | 0.4 | (44.6 | ) | — | (44.6 | ) | ||||||||||||
|
Portion of OTTI losses recognized in OCI
|
27.9 | (1.8 | ) | 26.1 | — | 26.1 | ||||||||||||||
|
Net OTTI losses recognized in earnings
|
(17.1 | ) | (1.4 | ) | (18.5 | ) | — | (18.5 | ) | |||||||||||
|
Net realized investment gains (losses),
excluding OTTI losses
|
10.1 | (9.6 | ) | 0.5 | — | 0.5 | ||||||||||||||
|
Net realized investment losses
|
(7.0 | ) | (11.0 | ) | (18.0 | ) | — | (18.0 | ) | |||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | |||||||||||||||
|
Total revenues
|
1,399.3 | (9.8 | ) | 1,389.5 | — | 1,389.5 | ||||||||||||||
|
BENEFITS AND EXPENSES:
|
||||||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
800.0 | 45.4 | 845.4 | 3.2 | 848.6 | |||||||||||||||
|
Policyholder dividends
|
188.8 | 10.2 | 199.0 | — | 199.0 | |||||||||||||||
|
Policy acquisition cost amortization
|
172.0 | (15.6 | ) | 156.4 | (29.4 | ) | 127.0 | |||||||||||||
|
Interest expense on indebtedness
|
23.7 | — | 23.7 | — | 23.7 | |||||||||||||||
|
Other operating expenses
|
175.4 | 10.6 | 186.0 | 1.1 | 187.1 | |||||||||||||||
|
Total benefits and expenses
|
1,359.9 | 50.6 | 1,410.5 | (25.1 | ) | 1,385.4 | ||||||||||||||
|
Income (loss) from continuing operations
before income taxes
|
39.4 | (60.4 | ) | (21.0 | ) | 25.1 | 4.1 | |||||||||||||
|
Income tax expense (benefit)
|
2.4 | (0.3 | ) | 2.1 | 7.4 | 9.5 | ||||||||||||||
|
Income (loss) from continuing operations
|
37.0 | (60.1 | ) | (23.1 | ) | 17.7 | (5.4 | ) | ||||||||||||
|
Income (loss) from discontinued operations,
net of income taxes
|
(6.9 | ) | 0.8 | (6.1 | ) | — | (6.1 | ) | ||||||||||||
|
Net income (loss)
|
30.1 | (59.3 | ) | (29.2 | ) | 17.7 | (11.5 | ) | ||||||||||||
|
Less: Net income (loss) attributable to
noncontrolling interests
|
— | (0.4 | ) | (0.4 | ) | — | (0.4 | ) | ||||||||||||
|
Net income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 30.1 | $ | (58.9 | ) | $ | (28.8 | ) | $ | 17.7 | $ | (11.1 | ) | |||||||
|
(Continued from previous page)
|
Consolidated Statement of Comprehensive Income
|
|||||||||||||||||||
|
($ in millions, except share data)
|
Nine months ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||||||
|
Net income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 30.1 | $ | (58.9 | ) | $ | (28.8 | ) | $ | 17.7 | $ | (11.1 | ) | |||||||
|
Net income (loss) attributable to
noncontrolling interests
|
— | (0.4 | ) | (0.4 | ) | — | (0.4 | ) | ||||||||||||
|
Net income (loss)
|
30.1 | $ | (59.3 | ) | $ | (29.2 | ) | $ | 17.7 | $ | (11.5 | ) | ||||||||
|
Other comprehensive income (loss)
before income taxes:
|
||||||||||||||||||||
|
Net unrealized investment gains
before income taxes
(5)
|
19.9 | 36.0 | 55.9 | 4.4 | 60.3 | |||||||||||||||
|
Non-credit portion of OTTI losses
recognized in OCI before income taxes
(5)
|
23.4 | (44.9 | ) | (21.5 | ) | — | (21.5 | ) | ||||||||||||
|
Net pension liability adjustment
before income taxes
|
5.2 | (7.4 | ) | (2.2 | ) | — | (2.2 | ) | ||||||||||||
|
Net unrealized other gains (losses)
before income taxes
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized derivative instruments gains (losses)
before income taxes
(5)
|
(0.1 | ) | 0.1 | — | — | — | ||||||||||||||
|
Other comprehensive income (loss)
before income taxes
|
48.4 | (16.2 | ) | 32.2 | 4.4 | 36.6 | ||||||||||||||
|
Less: Income tax expense (benefit) related to:
|
||||||||||||||||||||
|
Net unrealized investment gains (losses)
(5)
|
(13.4 | ) | 29.6 | 16.2 | (7.5 | ) | 8.7 | |||||||||||||
|
Non-credit portion of OTTI losses
recognized in OCI
(5)
|
8.2 | (15.8 | ) | (7.6 | ) | — | (7.6 | ) | ||||||||||||
|
Net pension liability adjustment
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized other gains (losses)
|
— | — | — | — | — | |||||||||||||||
|
Net unrealized derivative instruments gains (losses)
|
— | — | — | — | — | |||||||||||||||
|
Total income tax expense (benefit)
|
(5.2 | ) | 13.8 | 8.6 | (7.5 | ) | 1.1 | |||||||||||||
|
Other comprehensive income
net of income taxes
|
53.6 | (30.0 | ) | 23.6 | 11.9 | 35.5 | ||||||||||||||
|
Comprehensive income (loss)
|
83.7 | $ | (89.3 | ) | $ | (5.6 | ) | $ | 29.6 | $ | 24.0 | |||||||||
|
Less: Comprehensive income attributable to
noncontrolling interests, net of income taxes
|
— | (0.4 | ) | (0.4 | ) | — | (0.4 | ) | ||||||||||||
|
Comprehensive income (loss) attributable to
The Phoenix Companies, Inc.
|
$ | 83.7 | $ | (88.9 | ) | $ | (5.2 | ) | $ | 29.6 | $ | 24.4 | ||||||||
|
(Continued from previous page)
|
Consolidated Statement of Comprehensive Income
|
|||||||||||||||||||
|
($ in millions, except share data)
|
Nine months ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(1)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(2)
|
As restated
and amended
|
||||||||||||||||
|
EARNINGS (LOSS) PER SHARE:
(3)
|
||||||||||||||||||||
|
Earnings (loss) from continuing operations – basic
|
$ | 6.34 | $ | (10.34 | ) | NM | $ | 3.04 | $ | (0.93 | ) | |||||||||
|
Earnings (loss) from continuing operations – diluted
|
$ | 6.33 | $ | (10.34 | ) | NM | $ | 3.04 | $ | (0.93 | ) | |||||||||
|
Earnings (loss) from discontinued operations – basic
|
$ | (1.18 | ) | $ | 0.14 | NM | $ | — | $ | (1.05 | ) | |||||||||
|
Earnings (loss) from discontinued operations – diluted
|
$ | (1.18 | ) | $ | 0.14 | NM | $ | — | $ | (1.05 | ) | |||||||||
|
Net earnings (loss) attributable to
The Phoenix Companies, Inc. – basic
|
$ | 5.15 | $ | (10.13 | ) | NM | $ | 3.04 | $ | (1.91 | ) | |||||||||
|
Net earnings (loss) attributable to
The Phoenix Companies, Inc. – diluted
|
$ | 5.15 | $ | (10.13 | ) | NM | $ | 3.04 | $ | (1.91 | ) | |||||||||
|
Basic weighted-average common shares outstanding
(in thousands)
|
5,840 | 5,814 | (4) | NM | 5,814 | 5,814 | ||||||||||||||
|
Diluted weighted-average common shares
outstanding (in thousands)
|
5,849 | 5,814 | (4) | NM | 5,814 | 5,814 | ||||||||||||||
|
(1)
|
Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
|
|
(2)
|
Adjustments related to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26)
.
|
|
(3)
|
All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012.
|
|
(4)
|
Weighted-average common shares outstanding have been updated to reflect the impact of an error which had no material impact to EPS information, basic or diluted, for any period presented.
|
|
(5)
|
In addition to adjustments described within this footnote the correction of errors column contains reclassifications related to changes in presentation of components of other comprehensive income.
|
|
Consolidated Statement of Cash Flows
|
||||||||||||||||||||
|
($ in millions)
|
For the period ended September 30, 2011
|
|||||||||||||||||||
|
As previously
Reported
(1)
|
Correction
of errors
(2)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(3)
|
As restated
and amended
|
||||||||||||||||
|
OPERATING ACTIVITIES:
|
||||||||||||||||||||
|
Net income (loss)
|
$ | 30.1 | $ | (58.9 | ) | $ | (28.8 | ) | $ | 17.7 | $ | (11.1 | ) | |||||||
|
Net realized investment gains
|
7.0 | 11.0 | 18.0 | — | 18.0 | |||||||||||||||
|
Gain on debt repurchase
|
— | — | — | — | — | |||||||||||||||
|
Policy acquisition costs deferred
|
(104.3 | ) | 38.6 | (65.7 | ) | 1.1 | (64.6 | ) | ||||||||||||
|
Amortization of deferred policy acquisition costs
|
172.0 | (15.6 | ) | 156.4 | (29.4 | ) | 127.0 | |||||||||||||
|
Amortization and depreciation
|
9.1 | — | 9.1 | — | 9.1 | |||||||||||||||
|
Interest credited
|
— | 89.4 | 89.4 | — | 89.4 | |||||||||||||||
|
Equity in earnings of
limited partnerships and other investments
|
— | (48.2 | ) | (48.2 | ) | — | (48.2 | ) | ||||||||||||
|
Change in:
|
||||||||||||||||||||
|
Accrued investment income
|
(66.9 | ) | (42.9 | ) | (109.8 | ) | — | (109.8 | ) | |||||||||||
|
Deferred income taxes
|
1.3 | (11.4 | ) | (10.1 | ) | 7.4 | (2.7 | ) | ||||||||||||
|
Receivables
|
(7.6 | ) | 18.2 | 10.6 | — | 10.6 | ||||||||||||||
|
Policy liabilities and accruals
|
(175.9 | ) | (190.8 | ) | (366.7 | ) | 3.2 | (363.5 | ) | |||||||||||
|
Dividend obligations
|
— | 16.2 | 16.2 | — | 16.2 | |||||||||||||||
|
Impact of operating activities of
consolidated investment entities, net
|
— | (2.7 | ) | (2.7 | ) | — | (2.7 | ) | ||||||||||||
|
Other operating activities, net
|
(10.4 | ) | (23.8 | ) | (34.2 | ) | — | (34.2 | ) | |||||||||||
|
Cash from (for) continuing operations
|
(145.6 | ) | (220.9 | ) | (366.5 | ) | — | (366.5 | ) | |||||||||||
|
Discontinued operations, net
|
6.2 | (6.2 | ) | — | — | — | ||||||||||||||
|
Cash used for operating activities
|
(139.4 | ) | (227.1 | ) | (366.5 | ) | — | (366.5 | ) | |||||||||||
|
INVESTING ACTIVITIES:
|
||||||||||||||||||||
|
Purchases of:
|
||||||||||||||||||||
|
Available-for-sale debt securities
|
(5,017.7 | ) | 2,763.8 | (2,253.9 | ) | — | (2,253.9 | ) | ||||||||||||
|
Available-for-sale equity securities
|
— | (5.7 | ) | (5.7 | ) | — | (5.7 | ) | ||||||||||||
|
Derivative instruments
|
— | (32.9 | ) | (32.9 | ) | — | (32.9 | ) | ||||||||||||
|
Fair value investments
|
— | (35.0 | ) | (35.0 | ) | — | (35.0 | ) | ||||||||||||
|
Other investments
|
— | (1.1 | ) | (1.1 | ) | — | (1.1 | ) | ||||||||||||
|
Sales, repayments and maturities of:
|
||||||||||||||||||||
|
Available-for-sale debt securities
|
4,540.3 | (2,778.1 | ) | 1,762.2 | — | 1,762.2 | ||||||||||||||
|
Available-for-sale equity securities
|
— | 1.9 | 1.9 | — | 1.9 | |||||||||||||||
|
Derivative instruments
|
— | 61.4 | 61.4 | — | 61.4 | |||||||||||||||
|
Fair value investments
|
— | 10.9 | 10.9 | — | 10.9 | |||||||||||||||
|
Other investments
|
— | 22.0 | 22.0 | — | 22.0 | |||||||||||||||
|
Contributions to limited partnerships
and limited liability corporations
|
— | (67.1 | ) | (67.1 | ) | — | (67.1 | ) | ||||||||||||
|
Distributions from limited partnerships
and limited liability corporations
|
— | 78.7 | 78.7 | — | 78.7 | |||||||||||||||
|
Policy loans, net
|
34.1 | 67.7 | 101.8 | — | 101.8 | |||||||||||||||
|
Impact of investing activities of
consolidated investment entities, net
|
— | — | — | — | — | |||||||||||||||
|
Other investing activities, net
|
— | (4.6 | ) | (4.6 | ) | — | (4.6 | ) | ||||||||||||
|
Premises and equipment additions
|
(3.4 | ) | 3.4 | — | — | — | ||||||||||||||
|
Discontinued operations, net
|
(4.9 | ) | 4.9 | — | — | — | ||||||||||||||
|
Cash provided by (used for) investing activities
|
(451.6 | ) | 90.2 | (361.4 | ) | — | (361.4 | ) | ||||||||||||
|
(Continued from previous page)
|
Consolidated Statement of Cash Flows
|
|||||||||||||||||||
|
($ in millions)
|
For the period ended September 30, 2011
|
|||||||||||||||||||
|
As previously
reported
|
Correction
of errors
(2)
|
Adjusted
prior to the
retrospective
adoption
|
Retrospective
Adoption
(3)
|
As restated
and amended
|
||||||||||||||||
|
FINANCING ACTIVITIES:
|
||||||||||||||||||||
|
Policyholder deposit fund deposits
|
1,068.6 | 267.7 | 1,336.3 | — | 1,336.3 | |||||||||||||||
|
Policyholder deposit fund withdrawals
|
(450.7 | ) | (469.7 | ) | (920.4 | ) | — | (920.4 | ) | |||||||||||
|
Net transfers to/from separate accounts
|
— | 344.1 | 344.1 | — | 344.1 | |||||||||||||||
|
Impact of financing activities of
consolidated investment entities, net
|
— | 1.3 | 1.3 | — | 1.3 | |||||||||||||||
|
Cash provided by financing activities
|
617.9 | 143.4 | 761.3 | — | 761.3 | |||||||||||||||
|
Change in cash and cash equivalents
|
26.9 | 6.5 | 33.4 | — | 33.4 | |||||||||||||||
|
Change in cash included in
discontinued operations assets
|
— | 1.2 | 1.2 | — | 1.2 | |||||||||||||||
|
Cash and cash equivalents, beginning of period
|
121.9 | (28.2 | ) | 93.7 | — | 93.7 | ||||||||||||||
|
Cash and cash equivalents, end of period
|
$ | 148.8 | $ | (20.5 | ) | $ | 128.3 | $ | — | $ | 128.3 | |||||||||
|
Supplemental Disclosure of Cash Flow Information
|
||||||||||||||||||||
|
Income taxes paid
|
$ | (6.2 | ) | $ | — | $ | (6.2 | ) | $ | — | $ | (6.2 | ) | |||||||
|
Interest expense on indebtedness paid
|
$ | (23.0 | ) | $ | 2.6 | $ | (20.4 | ) | $ | — | $ | (20.4 | ) | |||||||
|
Non-Cash Transactions During the Year
|
||||||||||||||||||||
|
Investment exchanges
|
$ | — | $ | 54.5 | $ | 54.5 | $ | — | $ | 54.5 | ||||||||||
|
(1)
|
Operating activities of the consolidated statement of cash flows for the period ended September 30, 2011 was previously reported using the direct method. Reported numbers herein reflect adjustment to indirect method currently presented.
|
|
(2)
|
Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26). See footnote 3 for additional information regarding these amounts and the retrospective adoption.
|
|
(3)
|
Adjustments related to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26)
.
|
|
(1)
|
Adjustments related to the correction of errors reflect amounts prior to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26). See footnote 2 below for additional information regarding these amounts and the retrospective adoption.
|
|
(2)
|
Adjustments related to the retrospective adoption of amended guidance to ASC 944,
Financial Services – Insurance
(ASU 2010-26)
.
|
|
(3)
|
Reflects the 1-for-20 reverse stock split, which was effective August 10, 2012.
|
|
Direct Business and Reinsurance
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
in Continuing Operations:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Direct premiums
|
$ | 133.4 | $ | 151.8 | $ | 411.6 | $ | 463.6 | ||||||||
|
Premiums assumed from reinsureds
|
1.9 | 2.8 | 6.1 | 7.8 | ||||||||||||
|
Premiums ceded to reinsurers
(1)
|
(40.5 | ) | (42.7 | ) | (127.1 | ) | (147.8 | ) | ||||||||
|
Premiums
|
$ | 94.8 | $ | 111.9 | $ | 290.6 | $ | 323.6 | ||||||||
|
Percentage of amount assumed to net premiums
|
2.0 | % | 2.5 | % | 2.1 | % | 2.4 | % | ||||||||
|
Direct policy benefits incurred
|
$ | 191.9 | $ | 183.0 | $ | 574.1 | $ | 587.3 | ||||||||
|
Policy benefits assumed from reinsureds
|
30.0 | 2.0 | 67.9 | 7.8 | ||||||||||||
|
Policy benefits ceded to reinsurers
|
(49.3 | ) | (58.8 | ) | (200.1 | ) | (194.0 | ) | ||||||||
|
Premiums paid to reinsurers
(2)
|
28.1 | 28.5 | 69.5 | 75.4 | ||||||||||||
|
Policy benefits
(3)
|
$ | 200.7 | $ | 154.7 | $ | 511.4 | $ | 476.5 | ||||||||
|
(1)
|
Primarily represents premiums ceded to reinsurers related to traditional life and term insurance policies.
|
|
(2)
|
For universal life and variable universal life contracts, premiums paid to reinsurers are reflected within policy benefits. See Note 3 to these financial statements for additional information regarding significant accounting policies.
|
|
(3)
|
Policy benefit amounts above exclude changes in reserves, interest credited to policyholders, and other items, which total $151.8 million and $138.4 million, net of reinsurance, for the three months ended September 30, 2012 and 2011, respectively and $377.5 million and $372.1 million, net of reinsurance, for the nine months ended September 30, 2012 and 2011, respectively.
|
|
Closed Block Assets and Liabilities as of:
|
Sept 30,
|
Dec 31,
|
||||||||||
|
($ in millions)
|
2012
|
2011
|
Inception
|
|||||||||
|
As restated and amended
|
||||||||||||
|
Debt securities
|
$
|
6,424.1
|
$
|
6,323.5
|
$
|
4,773.1
|
||||||
|
Equity securities
|
9.4
|
12.6
|
—
|
|||||||||
|
Limited partnerships and other investments
|
342.3
|
338.0
|
399.0
|
|||||||||
|
Policy loans
|
1,249.6
|
1,280.4
|
1,380.0
|
|||||||||
|
Fair value investments
|
33.0
|
27.8
|
—
|
|||||||||
|
Total closed block investments
|
8,058.4
|
7,982.3
|
6,552.1
|
|||||||||
|
Cash and cash equivalents
|
30.8
|
15.1
|
—
|
|||||||||
|
Accrued investment income
|
91.1
|
94.2
|
106.8
|
|||||||||
|
Receivables
|
74.0
|
68.8
|
35.2
|
|||||||||
|
Deferred income taxes
|
231.2
|
226.8
|
389.4
|
|||||||||
|
Other closed block assets
|
49.3
|
39.2
|
6.2
|
|||||||||
|
Total closed block assets
|
8,534.8
|
8,426.4
|
7,089.7
|
|||||||||
|
Policy liabilities and accruals
|
8,487.2
|
8,680.4
|
8,301.7
|
|||||||||
|
Policyholder dividends payable
|
235.1
|
241.0
|
325.1
|
|||||||||
|
Policy dividend obligation
|
755.8
|
511.5
|
—
|
|||||||||
|
Other closed block liabilities
|
63.8
|
41.0
|
12.3
|
|||||||||
|
Total closed block liabilities
|
9,541.9
|
9,473.9
|
8,639.1
|
|||||||||
|
Excess of closed block liabilities over closed block assets
(1)
|
$ |
1,007.1
|
$ |
1,047.5
|
$ |
1,549.4
|
||||||
|
Less: Excess of closed block assets over closed block liabilities
attributable to noncontrolling interests
|
(4.1
|
)
|
(1.4
|
)
|
||||||||
|
Excess of closed block liabilities over closed block assets
attributable to The Phoenix Companies, Inc.
|
$
|
1,011.2
|
$
|
1,048.9
|
||||||||
|
(1)
|
The maximum future earnings summary to inure to the benefit of the stockholders is represented by the excess of closed block liabilities over closed block assets. All unrealized investment gains (losses), net of income tax, have been allocated to the policyholder dividend obligation.
|
|
Closed Block Revenues and Expenses and
Changes in
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Policyholder Dividend Obligations:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Closed block revenues
|
||||||||||||||||
|
Premiums
|
$
|
89.5
|
$
|
100.5
|
$
|
270.1
|
$
|
298.0
|
||||||||
|
Net investment income
|
115.7
|
113.2
|
343.5
|
358.2
|
||||||||||||
|
Net realized investment gains (losses)
|
7.5
|
(4.3
|
)
|
9.4
|
(1.6
|
)
|
||||||||||
|
Total revenues
|
212.7
|
209.4
|
623.0
|
654.6
|
||||||||||||
|
Policy benefits, excluding dividends
|
120.1
|
143.6
|
364.8
|
415.4
|
||||||||||||
|
Other operating expenses
|
1.3
|
1.5
|
3.6
|
4.4
|
||||||||||||
|
T Total benefits and expenses, excluding policyholder dividends
|
121.4
|
145.1
|
368.4
|
419.8
|
||||||||||||
|
Closed block contribution to income before dividends and income taxes
|
91.3
|
64.3
|
254.6
|
234.8
|
||||||||||||
|
Policyholder dividends
|
(80.9
|
)
|
(53.6
|
)
|
(221.6
|
)
|
(198.8
|
)
|
||||||||
|
Closed block contribution to income before income taxes
|
10.4
|
10.7
|
33.0
|
36.0
|
||||||||||||
|
Applicable income tax expense
|
3.6
|
3.8
|
11.5
|
12.6
|
||||||||||||
|
Closed block contribution to income
|
6.8
|
7.0
|
21.5
|
23.5
|
||||||||||||
|
Less: Closed block contribution to income attributable to
noncontrolling interests
|
0.4
|
(0.2
|
)
|
0.4
|
(0.2
|
)
|
||||||||||
|
Closed block contribution to income attributable to
The Phoenix Companies, Inc.
|
$
|
6.4
|
$
|
7.2
|
$
|
21.1
|
$
|
23.7
|
||||||||
|
Closed Block Policyholder Dividend Obligation as of:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
As restated
and amended
|
||||||||
|
Policyholder dividend obligation
|
||||||||
|
Policyholder dividends provided through earnings
|
$ | 221.6 | $ | 258.7 | ||||
|
Policyholder dividends provided through OCI
|
171.5 | 158.6 | ||||||
|
Additions to policyholder dividend liabilities
|
393.1 | 417.3 | ||||||
|
Policyholder dividends paid
|
(154.7 | ) | (251.3 | ) | ||||
|
Increase in policyholder dividend liabilities
|
238.4 | 166.0 | ||||||
|
Policyholder dividend liabilities, beginning of period
|
752.5 | 586.5 | ||||||
|
Policyholder dividend liabilities, end of period
|
990.9 | 752.5 | ||||||
|
Policyholder dividends payable, end of period
|
(235.1 | ) | (241.0 | ) | ||||
|
Policyholder dividend obligation, end of period
|
$ | 755.8 | $ | 511.5 | ||||
|
Deferred Policy Acquisition Costs:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Policy acquisition costs deferred
|
$
|
18.0
|
$
|
28.6
|
$
|
56.2
|
$
|
64.6
|
||||||||
|
Costs amortized to expenses:
|
||||||||||||||||
|
Recurring costs
|
(5.5
|
)
|
(43.3
|
)
|
(103.4
|
)
|
(134.4
|
)
|
||||||||
|
Assumption unlocking
|
(46.3
|
)
|
2.8
|
(46.3
|
)
|
2.8
|
||||||||||
|
Realized investment gains (losses)
|
(20.0
|
)
|
5.7
|
(14.9
|
)
|
4.6
|
||||||||||
|
Off Offsets to net unrealized investment gains or losses included in AOCI
(1)
|
(15.1
|
)
|
(17.1
|
)
|
(66.4
|
)
|
(43.5
|
)
|
||||||||
|
Change in deferred policy acquisition costs
|
(68.9
|
)
|
(23.3
|
)
|
(174.8
|
)
|
(105.9
|
)
|
||||||||
|
De Deferred policy acquisition costs, beginning of period
|
1,013.3
|
1,156.1
|
1,119.2
|
1,238.7
|
||||||||||||
|
Deferred policy acquisition costs, end of period
|
$
|
944.4
|
$
|
1,132.8
|
$
|
944.4
|
$
|
1,132.8
|
||||||||
|
(1)
|
An offset to deferred policy acquisition costs and accumulated other comprehensive income (“AOCI”) is recorded each period to the extent that, had unrealized holding gains or losses from securities classified as available-for-sale actually been realized, an adjustment to deferred policy acquisition costs amortized using gross profits or gross margins would result.
|
|
Changes in Deferred Sales Inducement Activity:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Deferred asset, beginning of period
|
$ | 47.8 | $ | 40.6 | $ | 50.2 | $ | 20.9 | ||||||||
|
Sales inducements deferred
|
2.7 | 12.2 | 12.4 | 39.1 | ||||||||||||
|
Amortization charged to income
|
(2.1 | ) | (0.5 | ) | (6.2 | ) | (7.7 | ) | ||||||||
|
Offsets to net unrealized investment gains or losses
included in AOCI
|
10.2 | (11.1 | ) | 2.2 | (11.1 | ) | ||||||||||
|
Deferred asset, end of period
|
$ | 58.6 | $ | 41.2 | $ | 58.6 | $ | 41.2 | ||||||||
|
Fair Value and Cost of Securities:
|
September 30, 2012
|
|||||||||||||||||||
|
($ in millions)
|
Gross
|
Gross
|
OTTI
|
|||||||||||||||||
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
Recognized
|
||||||||||||||||
|
Cost
|
Gains
(1)
|
Losses
(1)
|
Value
|
in AOCI
(2)
|
||||||||||||||||
|
U.S. government and agency
|
$ | 872.8 | $ | 65.3 | $ | (5.4 | ) | $ | 932.7 | $ | — | |||||||||
|
State and political subdivision
|
309.1 | 38.5 | (3.1 | ) | 344.5 | — | ||||||||||||||
|
Foreign government
|
180.2 | 34.4 | — | 214.6 | — | |||||||||||||||
|
Corporate
|
6,736.1 | 757.2 | (86.9 | ) | 7,406.4 | (5.8 | ) | |||||||||||||
|
Commercial mortgage-backed (“CMBS”)
|
905.9 | 75.7 | (8.3 | ) | 973.3 | (21.8 | ) | |||||||||||||
|
Residential mortgage-backed (“RMBS”)
|
1,808.5 | 102.4 | (29.3 | ) | 1,881.6 | (98.5 | ) | |||||||||||||
|
CDO/CLO
|
242.9 | 4.0 | (30.4 | ) | 216.5 | (28.5 | ) | |||||||||||||
|
Other asset-backed
|
453.0 | 27.1 | (13.0 | ) | 467.1 | 5.9 | ||||||||||||||
|
Available-for-sale debt securities
|
$ | 11,508.5 | $ | 1,104.6 | $ | (176.4 | ) | $ | 12,436.7 | $ | (148.7 | ) | ||||||||
|
Amounts applicable to the closed block
|
$ | 5,810.7 | $ | 665.7 | $ | (52.3 | ) | $ | 6,424.1 | $ | (49.4 | ) | ||||||||
|
Available-for-sale equity securities
|
$ | 28.2 | $ | 9.4 | $ | (6.7 | ) | $ | 30.9 | $ | — | |||||||||
| — | ||||||||||||||||||||
|
Amounts applicable to the closed block
|
$ | 11.2 | $ | 1.7 | $ | (3.5 | ) | $ | 9.4 | $ | — | |||||||||
|
(1)
|
Net unrealized investment gains and losses on securities classified as available-for-sale and certain other assets are included in our consolidated balance sheets as a component of AOCI. The table above presents the special category of AOCI for debt securities that are other-than-temporarily impaired when the impairment loss has been split between the credit loss component (in earnings) and the non-credit component (separate category of AOCI).
|
|
(2)
|
Represents the amount of non-credit OTTI losses recognized in AOCI excluding net unrealized gains or losses subsequent to the date of impairment.
|
|
Fair Value and Cost of Securities:
|
December 31, 2011
|
|||||||||||||||||||
|
($ in millions)
|
As restated and amended
|
|||||||||||||||||||
|
Gross
|
Gross
|
OTTI
|
||||||||||||||||||
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
Recognized
|
||||||||||||||||
|
Cost
|
Gains
(1)
|
Losses
(1)
|
Value
|
in AOCI
(2)
|
||||||||||||||||
|
U.S. government and agency
|
$ | 678.0 | $ | 71.6 | $ | (7.8 | ) | $ | 741.8 | $ | — | |||||||||
|
State and political subdivision
|
259.3 | 25.4 | (2.9 | ) | 281.8 | — | ||||||||||||||
|
Foreign government
|
185.7 | 21.2 | (1.7 | ) | 205.2 | — | ||||||||||||||
|
Corporate
|
6,127.9 | 601.7 | (171.4 | ) | 6,558.2 | (5.8 | ) | |||||||||||||
|
Commercial mortgage-backed (“CMBS”)
|
1,098.9 | 50.4 | (20.0 | ) | 1,129.3 | (29.2 | ) | |||||||||||||
|
Residential mortgage-backed (“RMBS”)
|
2,094.7 | 82.9 | (70.6 | ) | 2,107.0 | (92.2 | ) | |||||||||||||
|
CDO/CLO
|
283.8 | 2.5 | (53.9 | ) | 232.4 | (36.2 | ) | |||||||||||||
|
Other asset-backed
|
538.7 | 18.9 | (16.3 | ) | 541.3 | 2.8 | ||||||||||||||
|
Available-for-sale debt securities
|
$ | 11,267.0 | $ | 874.6 | $ | (344.6 | ) | $ | 11,797.0 | $ | (160.6 | ) | ||||||||
|
Amounts applicable to the closed block
|
$ | 5,884.0 | $ | 565.7 | $ | (126.2 | ) | $ | 6,323.5 | $ | (53.1 | ) | ||||||||
|
Available-for-sale equity securities
|
$ | 32.6 | $ | 10.9 | $ | (7.8 | ) | $ | 35.7 | $ | — | |||||||||
|
Amounts applicable to the closed block
|
$ | 13.4 | $ | 3.2 | $ | (4.0 | ) | $ | 12.6 | $ | — | |||||||||
|
(1)
|
Net unrealized investment gains and losses on securities classified as available-for-sale and certain other assets are included in our consolidated balance sheets as a component of AOCI. The table above presents the special category of AOCI for debt securities that are other-than-temporarily impaired when the impairment loss has been split between the credit loss component (in earnings) and the non-credit component (separate category of AOCI).
|
|
(2)
|
Represents the amount of non-credit OTTI losses recognized in AOCI excluding net unrealized gains or losses subsequent to the date of impairment.
|
|
Maturities of Debt Securities:
|
September 30, 2012
|
|||||||
|
($ in millions)
|
Amortized
|
Fair
|
||||||
|
Cost
|
Value
|
|||||||
|
Due in one year or less
|
$ | 930.5 | $ | 942.0 | ||||
|
Due after one year through five years
|
2,048.2 | 2,224.5 | ||||||
|
Due after five years through ten years
|
2,621.4 | 2,917.6 | ||||||
|
Due after ten years
|
2,498.1 | 2,814.2 | ||||||
|
CMBS/RMBS/ABS/CDO/CLO
(1)
|
3,410.3 | 3,538.4 | ||||||
|
Total
|
$ | 11,508.5 | $ | 12,436.7 | ||||
|
(1)
|
CMBS, RMBS, ABS, CDO and CLO are not listed separately in the table as each security does not have a single fixed maturity.
|
|
Sales of Available-for-Sale Securities:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
As restated and amended
|
||||||||
|
Fixed maturities, available-for-sale
|
||||||||
|
Proceeds from sales
|
$ | 998.9 | $ | 1,087.2 | ||||
|
Proceeds from maturities/repayments
|
1,252.3 | 1,264.0 | ||||||
|
Gross investment gains from sales, prepayments and maturities
|
41.4 | 13.6 | ||||||
|
Gross investment losses from sales and maturities
|
(4.9 | ) | (6.0 | ) | ||||
|
Equity securities, available-for-sale
|
||||||||
|
Proceeds from sales
|
$ | 8.1 | $ | 9.4 | ||||
|
Gross investment gains from sales
|
5.0 | 3.8 | ||||||
|
Gross investment losses from sales
|
(0.3 | ) | (0.1 | ) | ||||
|
Aging of Temporarily Impaired Securities:
|
As of September 30, 2012
|
|||||||||||||||||||||||
|
($ in millions)
|
Less than 12 months
|
Greater than 12 months
|
Total
|
|||||||||||||||||||||
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
|
Debt Securities
|
||||||||||||||||||||||||
|
U.S. government and agency
|
$ | 0.9 | $ | — | $ | 35.5 | $ | (5.4 | ) | $ | 36.4 | $ | (5.4 | ) | ||||||||||
|
State and political subdivision
|
12.8 | (0.8 | ) | 6.7 | (2.3 | ) | 19.5 | (3.1 | ) | |||||||||||||||
|
Foreign government
|
— | — | — | — | — | — | ||||||||||||||||||
|
Corporate
|
152.5 | (7.5 | ) | 362.3 | (79.4 | ) | 514.8 | (86.9 | ) | |||||||||||||||
|
CMBS
|
10.7 | — | 51.3 | (8.3 | ) | 62.0 | (8.3 | ) | ||||||||||||||||
|
RMBS
|
37.7 | (0.3 | ) | 274.7 | (29.0 | ) | 312.4 | (29.3 | ) | |||||||||||||||
|
CDO/CLO
|
22.9 | (2.9 | ) | 145.1 | (27.5 | ) | 168.0 | (30.4 | ) | |||||||||||||||
|
Other asset-backed
|
21.1 | (1.3 | ) | 36.8 | (11.7 | ) | 57.9 | (13.0 | ) | |||||||||||||||
|
Debt securities
|
258.6 | (12.8 | ) | 912.4 | (163.6 | ) | 1,171.0 | (176.4 | ) | |||||||||||||||
|
Equity securities
|
1.1 | (0.2 | ) | 6.3 | (6.5 | ) | 7.4 | (6.7 | ) | |||||||||||||||
|
Total temporarily impaired securities
|
$ | 259.7 | $ | (13.0 | ) | $ | 918.7 | $ | (170.1 | ) | $ | 1,178.4 | $ | (183.1 | ) | |||||||||
|
Amounts inside the closed block
|
$ | 106.6 | $ | (5.1 | ) | $ | 394.6 | $ | (50.7 | ) | $ | 501.2 | $ | (55.8 | ) | |||||||||
|
Amounts outside the closed block
|
$ | 153.1 | $ | (7.9 | ) | $ | 524.1 | $ | (119.4 | ) | $ | 677.2 | $ | (127.3 | ) | |||||||||
|
Amounts outside the closed block
that are below investment grade
|
$ | 46.6 | $ | (4.2 | ) | $ | 177.8 | $ | (75.0 | ) | $ | 224.4 | $ | (79.2 | ) | |||||||||
|
Number of securities
|
70 | 230 | 300 | |||||||||||||||||||||
|
Aging of Temporarily Impaired Securities:
|
As of December 31, 2011
|
|||||||||||||||||||||||
|
($ in millions)
|
As restated and amended
|
|||||||||||||||||||||||
|
Less than 12 months
|
Greater than 12 months
|
Total
|
||||||||||||||||||||||
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
|
Debt Securities
|
||||||||||||||||||||||||
|
U.S. government and agency
|
$ | — | $ | (2.4 | ) | $ | 41.2 | $ | (5.4 | ) | $ | 41.2 | $ | (7.8 | ) | |||||||||
|
State and political subdivision
|
26.1 | (0.1 | ) | 6.2 | (2.8 | ) | 32.3 | (2.9 | ) | |||||||||||||||
|
Foreign government
|
25.6 | (1.7 | ) | — | — | 25.6 | (1.7 | ) | ||||||||||||||||
|
Corporate
|
367.0 | (29.4 | ) | 501.2 | (142.0 | ) | 868.2 | (171.4 | ) | |||||||||||||||
|
CMBS
|
132.4 | (4.1 | ) | 52.1 | (15.9 | ) | 184.5 | (20.0 | ) | |||||||||||||||
|
RMBS
|
178.1 | (7.8 | ) | 392.4 | (62.8 | ) | 570.5 | (70.6 | ) | |||||||||||||||
|
CDO/CLO
|
15.4 | (0.8 | ) | 167.6 | (53.1 | ) | 183.0 | (53.9 | ) | |||||||||||||||
|
Other asset-backed
|
101.3 | (2.1 | ) | 57.8 | (14.2 | ) | 159.1 | (16.3 | ) | |||||||||||||||
|
Debt securities
|
845.9 | (48.4 | ) | 1,218.5 | (296.2 | ) | 2,064.4 | (344.6 | ) | |||||||||||||||
|
Equity securities
|
12.1 | (7.0 | ) | 0.4 | (0.8 | ) | 12.5 | (7.8 | ) | |||||||||||||||
|
Total temporarily impaired securities
|
$ | 858.0 | $ | (55.4 | ) | $ | 1,218.9 | $ | (297.0 | ) | $ | 2,076.9 | $ | (352.4 | ) | |||||||||
|
Amounts inside the closed block
|
$ | 308.5 | $ | (23.6 | ) | $ | 552.7 | $ | (106.6 | ) | $ | 861.2 | $ | (130.2 | ) | |||||||||
|
Amounts outside the closed block
|
$ | 549.5 | $ | (31.8 | ) | $ | 666.2 | $ | (190.4 | ) | $ | 1,215.7 | $ | (222.2 | ) | |||||||||
|
Amounts outside the closed block
that are below investment grade
|
$ | 68.8 | $ | (13.9 | ) | $ | 248.5 | $ | (125.2 | ) | $ | 317.3 | $ | (139.1 | ) | |||||||||
|
Number of securities
|
255 | 304 | 559 | |||||||||||||||||||||
|
8.
|
Investing Activities (continued)
|
|
8.
|
Investing Activities (continued)
|
|
Credit Losses Recognized in Earnings on Debt Securities for
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
which a Portion of the OTTI Loss was Recognized in OCI:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Balance, beginning of period
|
$ | (78.8 | ) | $ | (70.8 | ) | $ | (79.1 | ) | $ | (65.8 | ) | ||||
|
Add: Credit losses on securities not previously impaired
(1)
|
(1.5 | ) | (3.4 | ) | (3.8 | ) | (9.1 | ) | ||||||||
|
Add: Credit losses on securities previously impaired
(1)
|
(5.6 | ) | (2.4 | ) | (11.8 | ) | (4.6 | ) | ||||||||
|
Less: Credit losses on securities impaired due to intent to sell
|
— | — | — | — | ||||||||||||
|
Less: Credit losses on securities sold
|
5.3 | 4.0 | 14.1 | 6.9 | ||||||||||||
|
Less: Increases in cash flows expected on
previously impaired securities
|
— | — | — | — | ||||||||||||
|
Balance, end of period
|
$ | (80.6 | ) | $ | (72.6 | ) | $ | (80.6 | ) | $ | (72.6 | ) | ||||
|
(1)
|
Additional credit losses on securities for which a portion of the OTTI loss was recognized in AOCI are included within net OTTI losses recognized in earnings on the statements of comprehensive income.
|
|
Limited Partnerships and Other Investments:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
As restated and amended
|
||||||||
|
Limited partnerships
|
||||||||
|
Private equity funds
|
$ | 236.3 | $ | 233.0 | ||||
|
Mezzanine funds
|
195.6 | 191.9 | ||||||
|
Infrastructure funds
|
40.0 | 35.4 | ||||||
|
Hedge funds
|
13.5 | 14.9 | ||||||
|
Mortgage and real estate funds
|
7.9 | 12.4 | ||||||
|
Leverage leases
|
18.3 | 24.1 | ||||||
|
Direct equity investments
|
21.6 | 28.5 | ||||||
|
Life settlements
|
20.6 | 21.1 | ||||||
|
Other alternative assets
|
5.4 | 4.0 | ||||||
|
Limited partnerships and other investments
|
$ | 559.2 | $ | 565.3 | ||||
|
Amounts applicable to the closed block
|
$ | 342.3 | $ | 338.0 | ||||
|
8.
|
Investing Activities (continued)
|
|
Sources of Net Investment Income:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Debt securities
|
$ | 158.9 | $ | 153.8 | $ | 462.2 | $ | 457.4 | ||||||||
|
Equity securities
|
0.5 | 0.5 | 2.4 | 1.1 | ||||||||||||
|
Limited partnerships and other investments
|
14.0 | 13.6 | 48.5 | 48.1 | ||||||||||||
|
Policy loans
|
35.7 | 42.5 | 120.7 | 128.1 | ||||||||||||
|
Fair value investments
|
(0.1 | ) | (4.4 | ) | 1.5 | 0.1 | ||||||||||
|
Total investment income
|
209.0 | 206.0 | 635.3 | 634.8 | ||||||||||||
|
Less: Discontinued operations
|
0.4 | 0.5 | 1.6 | 1.5 | ||||||||||||
|
Less: Investment expenses
|
3.5 | 2.0 | 10.4 | 5.2 | ||||||||||||
|
Net investment income
|
$ | 205.1 | $ | 203.5 | $ | 623.3 | $ | 628.1 | ||||||||
|
Amounts applicable to the closed block
|
$ | 115.7 | $ | 113.2 | $ | 343.5 | $ | 358.2 | ||||||||
|
Sources and Types of
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Net Realized Investment Gains (Losses):
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Total other-than-temporary debt impairments
|
$ | (6.9 | ) | $ | (30.9 | ) | $ | (28.8 | ) | $ | (44.6 | ) | ||||
|
Portion of loss recognized in OCI
|
(0.2 | ) | 21.2 | 11.3 | 26.1 | |||||||||||
|
Net debt impairment losses recognized in earnings
|
$ | (7.1 | ) | $ | (9.7 | ) | $ | (17.5 | ) | $ | (18.5 | ) | ||||
|
Debt security impairments:
|
||||||||||||||||
|
U.S. government and agency
|
$ | — | $ | — | $ | — | $ | — | ||||||||
|
State and political subdivision
|
— | — | — | — | ||||||||||||
|
Foreign government
|
— | — | — | — | ||||||||||||
|
Corporate
|
— | (3.2 | ) | (0.6 | ) | (7.5 | ) | |||||||||
|
CMBS
|
(3.3 | ) | (2.5 | ) | (4.5 | ) | (2.5 | ) | ||||||||
|
RMBS
|
(2.6 | ) | (2.5 | ) | (10.4 | ) | (7.0 | ) | ||||||||
|
CDO/CLO
|
(0.7 | ) | (1.2 | ) | (0.7 | ) | (1.2 | ) | ||||||||
|
Other asset-backed
|
(0.5 | ) | (0.3 | ) | (1.3 | ) | (0.3 | ) | ||||||||
|
Net debt security impairments
|
(7.1 | ) | (9.7 | ) | (17.5 | ) | (18.5 | ) | ||||||||
|
Equity security impairments
|
— | — | (1.5 | ) | — | |||||||||||
|
Limited partnerships and other investment impairments
|
(0.3 | ) | — | (0.3 | ) | — | ||||||||||
|
Impairment losses
|
(7.4 | ) | (9.7 | ) | (19.3 | ) | (18.5 | ) | ||||||||
|
Debt security transaction gains
|
33.4 | 1.8 | 41.4 | 13.1 | ||||||||||||
|
Debt security transaction losses
|
(1.3 | ) | (1.0 | ) | (4.9 | ) | (3.9 | ) | ||||||||
|
Equity security transaction gains
|
5.0 | — | 5.0 | 0.1 | ||||||||||||
|
Equity security transaction losses
|
(0.2 | ) | (0.1 | ) | (0.3 | ) | (0.1 | ) | ||||||||
|
Limited partnerships and other investment transaction gains
|
5.5 | 0.2 | 6.8 | 2.6 | ||||||||||||
|
Limited partnerships and other investment transaction losses
|
(1.5 | ) | (0.4 | ) | (2.5 | ) | (2.4 | ) | ||||||||
|
Net transaction gains
|
40.9 | 0.5 | 45.5 | 9.4 | ||||||||||||
|
Derivative instruments
|
(14.2 | ) | 52.3 | (33.4 | ) | 35.7 | ||||||||||
|
Embedded derivatives
(1)
|
7.1 | (50.5 | ) | 6.9 | (42.9 | ) | ||||||||||
|
Fair value investments
|
1.1 | (2.7 | ) | 1.9 | (1.7 | ) | ||||||||||
|
Net realized investment gains (losses),
excluding impairment losses
|
34.9 | (0.4 | ) | 20.9 | 0.5 | |||||||||||
|
Net realized investment gains (losses),
including impairment losses
|
$ | 27.5 | $ | (10.1 | ) | $ | 1.6 | $ | (18.0 | ) | ||||||
|
(1)
|
Includes the change in fair value of embedded derivatives associated with variable annuity GMWB, GMAB and COMBO riders. See Note 11 to these financial statements for additional disclosures.
|
|
8.
|
Investing Activities (continued)
|
|
Sources of Changes in
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Net Unrealized Investment Gains (Losses):
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Debt securities
|
$
|
193.6
|
$
|
93.2
|
$
|
398.2
|
$
|
252.0
|
||||||||
|
Equity securities
|
(3.3
|
)
|
(4.3
|
)
|
(0.4
|
)
|
(3.8
|
)
|
||||||||
|
Other investments
|
—
|
(0.1
|
)
|
—
|
(0.1
|
)
|
||||||||||
|
Net unrealized investment gains
|
$
|
190.3
|
$
|
88.8
|
$
|
397.8
|
$
|
248.1
|
||||||||
|
Net unrealized investment gains
|
$
|
190.3
|
$
|
88.8
|
$
|
397.8
|
$
|
248.1
|
||||||||
|
Applicable closed block policyholder dividend obligation
|
84.7
|
73.5
|
171.5
|
155.4
|
||||||||||||
|
Applicable deferred policy acquisition cost
|
15.1
|
|
17.1
|
|
66.4
|
|
43.5
|
|
||||||||
|
Applicable other actuarial offsets
|
58.9
|
13.4
|
77.6
|
10.4
|
||||||||||||
|
Applicable deferred income tax expense
|
38.6
|
(30.1
|
)
|
83.5
|
1.1
|
|||||||||||
|
Offsets to net unrealized investment gains
|
197.3
|
73.9
|
399.0
|
210.4
|
||||||||||||
|
Net unrealized investment gains (losses) included in OCI
|
$
|
(7.0
|
)
|
$
|
14.9
|
$
|
(1.2
|
)
|
$
|
37.7
|
||||||
|
Carrying Value of Assets and Liabilities for
|
September 30, 2012
|
December 31, 2011
|
||||||||||||||||||||||
|
Consolidated Variable Interest Entities:
|
As restated and amended
|
|||||||||||||||||||||||
|
($ in millions)
|
Maximum
|
Maximum
|
||||||||||||||||||||||
|
Exposure
|
Exposure
|
|||||||||||||||||||||||
|
Assets
|
Liabilities
|
to Loss
(1)
|
Assets
|
Liabilities
|
to Loss
(1)
|
|||||||||||||||||||
|
Debt securities, at fair value
(2)
|
$ | 3.6 | $ | — | $ | 3.5 | $ | 0.3 | $ | — | $ | 0.2 | ||||||||||||
|
Equity securities, at fair value
(2)
|
22.7 | — | 18.5 | 27.8 | — | 26.5 | ||||||||||||||||||
|
Cash and cash equivalents
|
9.7 | — | 9.5 | 3.5 | — | 3.3 | ||||||||||||||||||
|
Investment in partnership interests
|
15.4 | — | 15.4 | 14.6 | — | 14.6 | ||||||||||||||||||
|
Investment in single asset LLCs
|
5.0 | — | 4.1 | 1.7 | — | 1.0 | ||||||||||||||||||
|
Other assets
|
0.2 | — | 0.2 | 0.1 | — | — | ||||||||||||||||||
|
Total assets of consolidated VIEs
|
$ | 56.6 | $ | — | $ | 51.2 | $ | 48.0 | $ | — | $ | 45.6 | ||||||||||||
|
Other liabilities
|
— | 0.1 | 0.1 | — | 0.1 | 0.1 | ||||||||||||||||||
|
Total liabilities of consolidated VIEs
|
$ | — | $ | 0.1 | $ | 0.1 | $ | — | $ | 0.1 | $ | 0.1 | ||||||||||||
|
(1)
|
Creditors or beneficial interest holders of the consolidated VIEs have no recourse to our general credit. Our obligation to the VIEs is limited to the amount of our committed investment. We have not provided material financial or other support that was not contractually required to these VIEs. The maximum exposure to loss above for September 30, 2012 and December 31, 2011 excludes unfunded commitments of $3.1 million and $3.6 million, respectively.
|
|
(2)
|
Included in fair value investments on the consolidated balance sheets.
|
|
8.
|
Investing Activities (continued)
|
|
Carrying Value of Assets and Liabilities
|
September 30, 2012
|
December 31, 2011
|
||||||||||||||||||||||
|
and Maximum Exposure Loss Relating
|
As restated and amended
|
|||||||||||||||||||||||
|
to Variable Interest Entities:
|
Maximum
|
Maximum
|
||||||||||||||||||||||
|
($ in millions)
|
Exposure
|
Exposure
|
||||||||||||||||||||||
|
Assets
|
Liabilities
|
to Loss
(1)
|
Assets
|
Liabilities
|
to Loss
(1)
|
|||||||||||||||||||
|
Limited partnerships
|
$ | 125.6 | $ | — | $ | 192.4 | $ | 133.2 | $ | — | $ | 201.6 | ||||||||||||
|
LLCs
|
3.3 | — | 3.3 | 8.5 | — | 8.5 | ||||||||||||||||||
|
Total
|
$ | 128.9 | $ | — | $ | 195.7 | $ | 141.7 | $ | — | $ | 210.1 | ||||||||||||
|
(1)
|
Creditors or beneficial interest holders of the VIEs have no recourse to our general credit. Our obligation to the VIEs is limited to the amount of our committed investment. We have not provided material financial or other support that was not contractually required to these VIEs.
|
|
Indebtedness at Carrying Value:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
7.15% surplus notes
|
$ | 126.1 | $ | 174.2 | ||||
|
7.45% senior unsecured bonds
|
252.7 | 252.7 | ||||||
|
Total indebtedness
|
$ | 378.8 | $ | 426.9 | ||||
|
Interest Expense on Indebtedness, including
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Amortization of Debt Issuance Costs:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
Surplus notes
|
$ | 3.1 | $ | 3.1 | $ | 9.4 | $ | 9.4 | ||||||||
|
Senior unsecured bonds
|
4.8 | 4.8 | 14.3 | 14.3 | ||||||||||||
|
Interest expense on indebtedness
|
$ | 7.9 | $ | 7.9 | $ | 23.7 | $ | 23.7 | ||||||||
|
11.
|
Separate Accounts, Death Benefits and Other Insurance Benefit Features and Embedded Product Derivatives
|
|
|
(continued)
|
|
Separate Account Investments of Account Balances of Variable Annuity Contracts with Guarantees:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
Debt securities
|
$ | 495.5 | $ | 515.4 | ||||
|
Equity funds
|
1,902.8 | 1,883.3 | ||||||
|
Other
|
73.1 | 81.7 | ||||||
|
Total
|
$ | 2,471.4 | $ | 2,480.4 | ||||
|
|
●
|
Liabilities associated with the guaranteed minimum death benefit (“GMDB”) are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the expected life of the contract based on total expected assessments. The assumptions used for calculating the liabilities are consistent with those used for amortizing deferred policy acquisition costs.
|
|
|
●
|
Liabilities associated with the guaranteed minimum income benefit (“GMIB”) are determined by estimating the expected value of the income benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating such guaranteed income benefit liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.
|
|
Changes in Guaranteed Insurance Benefit Liability Balances:
|
Year Ended
|
|||||||
|
($ in millions)
|
September 30, 2012
|
|||||||
|
Annuity
|
Annuity
|
|||||||
|
GMDB
|
GMIB
|
|||||||
|
Liability balance as of January 1, 2012
|
$ | 16.4 | $ | 17.8 | ||||
|
Incurred
|
(0.4 | ) | 3.8 | |||||
|
Paid
|
(1.0 | ) | — | |||||
|
Assumption unlocking
|
— | (0.2 | ) | |||||
|
Liability balance as of September 30, 2012
|
$ | 15.0 | $ | 21.4 | ||||
|
11.
|
Separate Accounts, Death Benefits and Other Insurance Benefit Features and Embedded Product Derivatives
|
|
|
(continued)
|
|
Changes in Guaranteed Insurance Benefit Liability Balances:
|
Year Ended
|
|||||||
|
($ in millions)
|
December 31, 2011
|
|||||||
|
As restated and amended
|
||||||||
|
Annuity
|
Annuity
|
|||||||
|
GMDB
|
GMIB
|
|||||||
|
Liability balance as of January 1, 2011
|
$ | 17.7 | $ | 18.1 | ||||
|
Incurred
|
0.8 | (0.7 | ) | |||||
|
Paid
|
(2.1 | ) | — | |||||
|
Assumption unlocking
|
— | 0.4 | ||||||
|
Liability balance as of December 31, 2011
|
$ | 16.4 | $ | 17.8 | ||||
|
GMDB and GMIB Benefits by Type:
|
NAR
|
Average
|
||||||||||
|
($ in millions)
|
Account
|
after
|
Attained Age
|
|||||||||
|
Value
|
Reinsurance
|
of Annuitant
|
||||||||||
|
September 30, 2012
|
||||||||||||
|
GMDB return of premium
|
$ | 819.9 | $ | 8.0 | 62 | |||||||
|
GMDB step up
|
1,994.0 | 30.2 | 62 | |||||||||
|
GMDB earnings enhancement benefit (“EEB”)
|
39.0 | 0.1 | 63 | |||||||||
|
GMDB greater of annual step up and roll up
|
27.5 | 7.5 | 66 | |||||||||
|
Total GMDB at September 30, 2012
|
2,880.4 | $ | 45.8 | |||||||||
|
Less: General account value with GMDB
|
427.1 | |||||||||||
|
Subtotal separate account liabilities with GMDB
|
2,453.3 | |||||||||||
|
Separate account liabilities without GMDB
|
942.1 | |||||||||||
|
Total separate account liabilities
|
$ | 3,395.4 | ||||||||||
|
GMIB
(1)
at September 30, 2012
|
$ | 427.3 | 63 | |||||||||
|
December 31, 2011 as restated and amended
|
||||||||||||
|
GMDB return of premium
|
$ | 839.6 | $ | 22.5 | 61 | |||||||
|
GMDB step up
|
1,999.5 | 99.1 | 62 | |||||||||
|
GMDB earnings enhancement benefit (“EEB”)
|
39.8 | 0.4 | 62 | |||||||||
|
GMDB greater of annual step up and roll up
|
27.1 | 8.8 | 66 | |||||||||
|
Total GMDB at December 31, 2011
|
2,906.0 | $ | 130.8 | |||||||||
|
Less: General account value with GMDB
|
444.1 | |||||||||||
|
Subtotal separate account liabilities with GMDB
|
2,461.9 | |||||||||||
|
Separate account liabilities without GMDB
|
1,355.0 | |||||||||||
|
Total separate account liabilities
|
$ | 3,816.9 | ||||||||||
|
GMIB
(1)
at December 31, 2011
|
$ | 442.1 | 63 | |||||||||
|
(1)
|
Policies with a GMIB also have a GMDB. The NAR for each benefit is shown in the table above, however these benefits are not additive. When a policy terminates due to death, any NAR related or GMIB is released. Similarly, when a policy goes into benefit status on a GMIB, its GMDB NAR is released.
|
|
11.
|
Separate Accounts, Death Benefits and Other Insurance Benefit Features and Embedded Product Derivatives
|
|
|
(continued)
|
|
Changes in Guaranteed Liability Balances:
|
Fixed Indexed Annuity
|
|||||||
|
($ in millions)
|
GMWB & GMDB
|
|||||||
|
Sept 30,
|
Dec 31,
|
|||||||
|
2012
|
2011
|
|||||||
|
As restated and amended
|
||||||||
|
Liability balance, beginning of period
|
$ | 5.6 | $ | 0.5 | ||||
|
Incurred
|
32.3 | 5.1 | ||||||
|
Paid
|
— | — | ||||||
|
Liability balance, end of period
|
$ | 37.9 | $ | 5.6 | ||||
|
Changes in Guaranteed Liability Balances:
|
Universal Life
|
||||
|
($ in millions)
|
GMWB & GMDB
|
||||
|
Sept 30,
|
Dec 31,
|
||||
|
2012
|
2011
|
||||
|
As restated and amended
|
|||||
|
Liability balance, beginning of period
|
$
|
115.9
|
$
|
104.5
|
|
|
Incurred
|
15.0
|
34.6
|
|||
|
Paid
|
(7.2)
|
(6.2)
|
|||
|
Assumption unlocking
|
—
|
(17.0)
|
|||
|
Liability balance, end of period
|
$
|
123.7
|
$
|
115.9
|
|
|
11.
|
Separate Accounts, Death Benefits and Other Insurance Benefit Features and Embedded Product Derivatives
|
|
|
(continued)
|
|
Non-Insurance Guaranteed Product Features:
|
Average
|
|||||||
|
($ in millions)
|
Attained
|
|||||||
|
Account
|
Age of
|
|||||||
|
Value
|
Annuitant
|
|||||||
|
September 30, 2012
|
||||||||
|
GMWB
|
$ | 590.6 | 63 | |||||
|
GMAB
|
397.2 | 58 | ||||||
|
COMBO
|
10.2 | 61 | ||||||
|
Total at September 30, 2012
|
$ | 998.0 | ||||||
|
December 31, 2011 as restated and amended
|
||||||||
|
GMWB
|
$ | 572.5 | 62 | |||||
|
GMAB
|
385.6 | 57 | ||||||
|
COMBO
|
10.1 | 61 | ||||||
|
Total at December 31, 2011
|
$ | 968.2 | ||||||
|
Variable Annuity Embedded Derivative Liabilities:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
|
2011
|
||||||
|
As restated
|
||||||||
|
and amended
|
||||||||
|
GMWB
|
$ | 19.0 | $ | 23.6 | ||||
|
GMAB
|
17.1 | 25.3 | ||||||
|
COMBO
|
(0.4 | ) | (0.3 | ) | ||||
|
Total variable annuity embedded derivative liabilities
|
$ | 35.7 | $ | 48.6 | ||||
|
Derivative Instruments:
|
Fair Value as of
|
||||||||||||||
|
($ in millions)
|
Notional
|
September 30, 2012
|
|||||||||||||
|
Maturity
|
Amount
|
Assets
|
Liabilities
(1)
|
||||||||||||
|
Interest rate swaps
|
2016-2027 | $ | 180.0 | $ | 16.8 | $ | 8.2 | ||||||||
|
Variance swaps
|
2015-2017 | 0.9 | — | 3.1 | |||||||||||
|
Swaptions
|
2024 | 25.0 | — | — | |||||||||||
|
Put options
|
2015-2022 | 406.0 | 80.9 | — | |||||||||||
|
Call options
(2)
|
2013-2017 | 1,261.7 | 77.4 | 48.7 | |||||||||||
|
Cross currency swaps
|
2016 | 10.0 | 0.2 | — | |||||||||||
|
Equity futures
|
2013 | 184.2 | 19.8 | — | |||||||||||
|
Total derivative instruments
|
$ | 2,067.8 | $ | 195.1 | $ | 60.0 | |||||||||
|
(1)
|
Derivative liabilities are included in other liabilities on the consolidated balance sheets.
|
|
(2)
|
Includes a contingent receivable of $3.5 million.
|
|
Derivative Instruments:
|
Fair Value as of
|
||||||||||||||
|
($ in millions)
|
December 31, 2011
|
||||||||||||||
|
Notional
|
As restated and amended
|
||||||||||||||
|
Maturity
|
Amount
|
Assets
|
Liabilities
(1)
|
||||||||||||
|
Interest rate swaps
|
2017-2026 | $ | 131.0 | $ | 13.7 | $ | 5.2 | ||||||||
|
Variance swaps
|
2015-2017 | 0.9 | 2.8 | — | |||||||||||
|
Swaptions
|
2024 | 25.0 | 0.2 | — | |||||||||||
|
Put options
|
2015-2022 | 406.0 | 95.4 | — | |||||||||||
|
Call options
(2)
|
2012-2016 | 700.4 | 31.4 | 19.0 | |||||||||||
|
Cross currency swaps
|
2012-2016 | 15.0 | 0.2 | — | |||||||||||
|
Equity futures
|
2012 | 70.0 | 18.5 | — | |||||||||||
|
Total derivative instruments
|
$ | 1,348.3 | $ | 162.2 | $ | 24.2 | |||||||||
|
(1)
|
Derivative liabilities are included in other liabilities on the consolidated balance sheets.
|
|
(2)
|
Includes a contingent receivable of $3.4 million.
|
|
Derivative Instrument Gains (Losses) Recognized in
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Realized Investment Gains (Losses):
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Interest rate swaps
|
$ | (0.4 | ) | $ | 9.0 | $ | 0.5 | $ | 10.5 | |||||||
|
Variance swaps
|
(1.8 | ) | 5.1 | (6.4 | ) | 3.5 | ||||||||||
|
Swaptions
|
— | (0.4 | ) | (0.2 | ) | (1.3 | ) | |||||||||
|
Put options
|
(8.4 | ) | 32.9 | (14.6 | ) | 24.3 | ||||||||||
|
Call options
|
7.4 | (11.0 | ) | 7.6 | (11.0 | ) | ||||||||||
|
Equity futures
|
(11.1 | ) | 15.6 | (20.5 | ) | 9.9 | ||||||||||
|
Cross currency swaps
|
0.1 | 1.1 | 0.2 | (0.2 | ) | |||||||||||
|
Embedded derivatives
|
7.1 | (50.5 | ) | 6.9 | (42.9 | ) | ||||||||||
|
Total derivative instrument losses recognized in
realized investment gains (losses)
|
$ | (7.1 | ) | $ | 1.8 | $ | (26.5 | ) | $ | (7.2 | ) | |||||
| ● | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 securities include highly liquid government bonds and exchange-traded equities. | |
| ● | Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Examples of such instruments include government-backed mortgage products, certain collateralized mortgage and debt obligations and certain high-yield debt securities. | |
| ● | Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs reflect management’s own assumptions about inputs in which market participants would use in pricing these types of assets or liabilities. Level 3 financial instruments include values which are determined using pricing models and third-party evaluation. Additionally, the determination of some fair value estimates utilizes significant management judgments or best estimates. |
|
Fair Values of Financial Instruments by Level:
|
As of September 30, 2012
|
||||||||||||||
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||
|
Assets
|
|||||||||||||||
|
Available-for-sale debt securities
|
|||||||||||||||
|
U.S. government and agency
|
$ | 499.7 | $ | 112.4 | $ | 320.6 | (1) | $ | 932.7 | ||||||
|
State and political subdivision
|
— | 151.6 | 192.9 | 344.5 | |||||||||||
|
Foreign government
|
— | 159.6 | 55.0 | 214.6 | |||||||||||
|
Corporate
|
— | 3,673.2 | 3,733.2 | 7,406.4 | |||||||||||
|
CMBS
|
— | 899.6 | 73.7 | 973.3 | |||||||||||
|
RMBS
|
— | 1,048.8 | 832.8 | 1,881.6 | |||||||||||
|
CDO/CLO
|
— | — | 216.5 | 216.5 | |||||||||||
|
Other asset-backed
|
— | 146.1 | 321.0 | 467.1 | |||||||||||
|
Available-for-sale equity securities
|
1.6 | — | 29.3 | 30.9 | |||||||||||
|
Derivative assets
|
19.8 | 175.3 | — | 195.1 | |||||||||||
|
Fair value investments
(2)
|
31.8 | 17.9 | 164.1 | 213.8 | |||||||||||
|
Separate account assets
|
3,395.4 | — | — | 3,395.4 | |||||||||||
|
Total assets
|
$ | 3,948.3 | $ | 6,384.5 | $ | 5,939.1 | $ | 16,271.9 | |||||||
|
Liabilities
|
|||||||||||||||
|
Derivative liabilities
|
$ | — | $ | 60.0 | $ | — | $ | 60.0 | |||||||
|
Embedded derivatives
|
— | — | 84.4 | 84.4 | |||||||||||
|
Total liabilities
|
$ | — | $ | 60.0 | $ | 84.4 | $ | 144.4 | |||||||
|
(1)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
(2)
|
Fair value investments at September 30, 2012 include $144.3 million of debt securities recorded at fair value. In addition, we have also elected the fair value option for equity securities backing our deferred compensation liabilities at $22.8 million as of September 30, 2012. Changes in the fair value of these assets are recorded through net investment income. Additionally, $46.7 million of assets relate to investment holdings of consolidated VIEs held at fair value, $8.7 million of which are Level 1 securities.
|
|
Fair Values of Financial Instruments by Level:
|
As of December 31, 2011
|
||||||||||||||
|
($ in millions)
|
As restated and amended
|
||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
Assets
|
|||||||||||||||
|
Available-for-sale debt securities
|
|||||||||||||||
|
U.S. government and agency
|
$ | 268.2 | $ | 137.4 | $ | 336.2 | (1) | $ | 741.8 | ||||||
|
State and political subdivision
|
— | 165.2 | 116.6 | 281.8 | |||||||||||
|
Foreign government
|
— | 153.4 | 51.8 | 205.2 | |||||||||||
|
Corporate
|
— | 3,056.7 | 3,501.5 | 6,558.2 | |||||||||||
|
CMBS
|
— | 1,028.7 | 100.6 | 1,129.3 | |||||||||||
|
RMBS
|
— | 1,162.8 | 944.2 | 2,107.0 | |||||||||||
|
CDO/CLO
|
— | – | 232.4 | 232.4 | |||||||||||
|
Other asset-backed
|
— | 205.8 | 335.5 | 541.3 | |||||||||||
|
Available-for-sale equity securities
|
1.5 | 4.8 | 29.4 | 35.7 | |||||||||||
|
Derivative assets
|
18.9 | 143.3 | — | 162.2 | |||||||||||
|
Fair value investments
(2)
|
23.7 | 15.5 | 144.8 | 184.0 | |||||||||||
|
Separate account assets
|
3,738.6 | 78.3 | — | 3,816.9 | |||||||||||
|
Total assets
|
$ | 4,050.9 | $ | 6,151.9 | $ | 5,793.0 | $ | 15,995.8 | |||||||
|
Liabilities
|
|||||||||||||||
|
Derivative liabilities
|
$ | — | $ | 24.2 | $ | — | $ | 24.2 | |||||||
|
Embedded derivatives
|
— | — | 84.5 | 84.5 | |||||||||||
|
Total liabilities
|
$ | — | $ | 24.2 | $ | 84.5 | $ | 108.7 | |||||||
|
(1)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
(2)
|
Fair value investments at December 31, 2011 include $117.9 million of debt securities recorded at fair value. In addition, we have also elected the fair value option for equity securities backing our deferred compensation liabilities at $22.1 million as of December 31, 2011. Changes in the fair value of these assets are recorded through net investment income. Additionally, $44.0 million of assets relate to investment holdings of consolidated VIEs held at fair value, $1.6 million of which are Level 1 securities.
|
|
Fair Values of Corporates by Level and Sector:
|
As of September 30, 2012
|
|||||||||||||||
|
($ in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
Corporates
|
||||||||||||||||
|
Consumer
|
$ | — | $ | 1,056.5 | $ | 1,837.2 | $ | 2,893.7 | ||||||||
|
Energy
|
— | 245.8 | 144.3 | 390.1 | ||||||||||||
|
Financial services
|
— | 1,421.9 | 760.9 | 2,182.8 | ||||||||||||
|
Technical/communications
|
— | 149.9 | 35.8 | 185.7 | ||||||||||||
|
Transportation
|
— | 72.8 | 149.2 | 222.0 | ||||||||||||
|
Utilities
|
— | 519.5 | 623.9 | 1,143.4 | ||||||||||||
|
Other
|
— | 206.8 | 181.9 | 388.7 | ||||||||||||
|
Total corporates
|
$ | — | $ | 3,673.2 | $ | 3,733.2 | $ | 7,406.4 | ||||||||
|
Fair Values of Corporates by Level and Sector:
|
As of December 31, 2011
|
|||||||||||||||
|
($ in millions)
|
As restated and amended
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
|
Corporates
|
||||||||||||||||
|
Consumer
|
$ | — | $ | 898.4 | $ | 1,662.4 | $ | 2,560.8 | ||||||||
|
Energy
|
— | 171.7 | 131.4 | 303.1 | ||||||||||||
|
Financial services
|
— | 1,221.3 | 721.9 | 1,943.2 | ||||||||||||
|
Technical/communications
|
— | 130.9 | 23.8 | 154.7 | ||||||||||||
|
Transportation
|
— | 60.2 | 187.4 | 247.6 | ||||||||||||
|
Utilities
|
— | 467.4 | 619.2 | 1,086.6 | ||||||||||||
|
Other
|
— | 106.8 | 155.4 | 262.2 | ||||||||||||
|
Total corporates
|
$ | — | $ | 3,056.7 | $ | 3,501.5 | $ | 6,558.2 | ||||||||
|
Level 3 Financial Assets:
|
Three months ended September 30, 2012
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Realized &
|
|||||||||||||||||||||||||||||||
|
unrealized
|
Unrealized
|
|||||||||||||||||||||||||||||||
|
gains
|
gains
|
|||||||||||||||||||||||||||||||
|
Balance,
|
Transfers
|
Transfers
|
(losses)
|
(losses)
|
||||||||||||||||||||||||||||
|
beginning
|
into
|
out of
|
included
|
included
|
||||||||||||||||||||||||||||
|
of period
|
Purchases
|
Sales
|
Level 3
|
Level 3
|
in income
(1)
|
in OCI
|
Total
|
|||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||
|
Available-for-sale debt securities
|
||||||||||||||||||||||||||||||||
|
U.S. government and agency
(2)
|
$
|
322.9
|
$
|
0.6
|
$
|
(2.3
|
)
|
$
|
—
|
$
|
—
|
$
|
0.2
|
$
|
(0.8
|
)
|
$
|
320.6
|
||||||||||||||
|
State and political subdivision
|
181.7
|
10.2
|
(0.4
|
)
|
—
|
—
|
—
|
1.4
|
192.9
|
|||||||||||||||||||||||
|
Foreign government
|
52.9
|
—
|
—
|
—
|
—
|
—
|
2.1
|
55.0
|
||||||||||||||||||||||||
|
Corporate
|
3,702.2
|
88.4
|
(10.2
|
)
|
—
|
(18.8
|
)
|
—
|
(28.4
|
)
|
3,733.2
|
|||||||||||||||||||||
|
CMBS
|
99.2
|
—
|
—
|
—
|
—
|
—
|
(25.5
|
)
|
73.7
|
|||||||||||||||||||||||
|
RMBS
|
857.5
|
3.8
|
(9.1
|
)
|
—
|
—
|
(0.4
|
)
|
(19.0
|
)
|
832.8
|
|||||||||||||||||||||
|
CDO/CLO
|
207.6
|
—
|
(5.5
|
)
|
—
|
—
|
0.5
|
13.9
|
216.5
|
|||||||||||||||||||||||
|
Other asset-backed
|
297.5
|
3.5
|
(5.9
|
)
|
32.5
|
—
|
(0.5
|
)
|
(6.1
|
)
|
321.0
|
|||||||||||||||||||||
|
Available-for-sale equity securities
|
36.0
|
—
|
—
|
—
|
—
|
(1.5
|
)
|
(5.2
|
)
|
29.3
|
||||||||||||||||||||||
|
Fair value investments
|
159.3
|
1.8
|
(10.2
|
)
|
—
|
(1.4
|
)
|
14.6
|
—
|
164.1
|
||||||||||||||||||||||
|
Total assets
|
$
|
5,916.8
|
$
|
108.3
|
$
|
(43.6
|
)
|
$
|
32.5
|
$
|
(20.2
|
)
|
$
|
12.9
|
$
|
(67.6
|
)
|
$
|
5,939.1
|
|||||||||||||
|
(1)
|
Reflected in realized investment gains and losses for all assets except limited partnerships and other investments and fair value investments.
|
|
(2)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Level 3 Financial Assets:
|
Three months ended September 30, 2011
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
As restated and amended
|
|||||||||||||||||||||||||||||||
|
Realized &
|
||||||||||||||||||||||||||||||||
|
unrealized
|
Unrealized
|
|||||||||||||||||||||||||||||||
|
gains
|
gains
|
|||||||||||||||||||||||||||||||
|
Balance,
|
Transfers
|
Transfers
|
(losses)
|
(losses)
|
||||||||||||||||||||||||||||
|
beginning
|
into
|
out of
|
included
|
included
|
||||||||||||||||||||||||||||
|
of period
|
Purchases
|
Sales
|
Level 3
|
Level 3
|
in income
(1)
|
in OCI
|
Total
|
|||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||
|
A Available-for-sale debt securities
|
||||||||||||||||||||||||||||||||
|
U.S. government and agency
(2)
|
$
|
331.7
|
$
|
—
|
$
|
(2.1
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
22.5
|
$
|
352.1
|
|||||||||||||||
|
State and political subdivision
|
74.1
|
—
|
(0.7
|
)
|
2.5
|
—
|
—
|
16.9
|
92.8
|
|||||||||||||||||||||||
|
Foreign government
|
46.0
|
—
|
—
|
—
|
—
|
—
|
(7.1
|
)
|
38.9
|
|||||||||||||||||||||||
|
Corporate
|
3,276.7
|
26.9
|
(16.4
|
)
|
175.0
|
(7.2
|
)
|
(2.6
|
)
|
(1.6
|
)
|
3,450.8
|
||||||||||||||||||||
|
CMBS
|
89.2
|
8.9
|
(2.0
|
)
|
—
|
—
|
(2.5
|
)
|
(9.8
|
)
|
83.8
|
|||||||||||||||||||||
|
RMBS
|
1,022.9
|
44.0
|
(38.9
|
)
|
—
|
—
|
(1.7
|
)
|
(46.4
|
)
|
979.9
|
|||||||||||||||||||||
|
CDO/CLO
|
230.5
|
10.1
|
(3.7
|
)
|
—
|
—
|
(1.2
|
)
|
(20.3
|
)
|
215.4
|
|||||||||||||||||||||
|
Other asset-backed
|
357.1
|
7.8
|
(10.0
|
)
|
—
|
—
|
(0.3
|
)
|
(10.4
|
)
|
344.2
|
|||||||||||||||||||||
|
A v Available-for-sale equity securities
|
39.9
|
—
|
—
|
1.1
|
—
|
—
|
(3.4
|
)
|
37.6
|
|||||||||||||||||||||||
|
Fair value investments
|
143.4
|
—
|
(1.0
|
)
|
—
|
—
|
(5.6
|
)
|
—
|
136.8
|
||||||||||||||||||||||
|
Total assets
|
$
|
5,611.5
|
$
|
97.7
|
$
|
(74.8
|
)
|
$
|
178.6
|
$
|
(7.2
|
)
|
$
|
(13.9
|
)
|
$
|
(59.6
|
)
|
$
|
5,732.3
|
||||||||||||
|
(1)
|
Reflected in realized investment gains and losses for all assets except limited partnerships and other investments and fair value investments.
|
|
(2)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Level 3 Financial Assets:
|
Nine months ended September 30, 2012
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
Realized &
|
|||||||||||||||||||||||||||||||
|
unrealized
|
Unrealized
|
|||||||||||||||||||||||||||||||
|
gains
|
gains
|
|||||||||||||||||||||||||||||||
|
Balance,
|
Transfers
|
Transfers
|
(losses)
|
(losses)
|
||||||||||||||||||||||||||||
|
beginning
|
into
|
out of
|
included
|
included
|
||||||||||||||||||||||||||||
|
of period
|
Purchases
|
Sales
|
Level 3
|
Level 3
|
in income
(1)
|
in OCI
|
Total
|
|||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||
|
Available-for-sale debt securities
|
||||||||||||||||||||||||||||||||
|
U.S. government and agency
(2)
|
$ | 336.2 | $ | 2.6 | $ | (13.9 | ) | $ | — | $ | — | $ | 0.2 | $ | (4.5 | ) | $ | 320.6 | ||||||||||||||
|
State and political subdivision
|
116.6 | 40.5 | (2.5 | ) | 22.2 | (8.3 | ) | — | 24.4 | 192.9 | ||||||||||||||||||||||
|
Foreign government
|
51.8 | 5.0 | (0.1 | ) | — | — | — | (1.7 | ) | 55.0 | ||||||||||||||||||||||
|
Corporate
|
3,501.5 | 457.6 | (65.8 | ) | 56.3 | (122.4 | ) | (0.5 | ) | (93.5 | ) | 3,733.2 | ||||||||||||||||||||
|
CMBS
|
100.6 | — | (8.2 | ) | 12.1 | (37.1 | ) | (4.2 | ) | 10.5 | 73.7 | |||||||||||||||||||||
|
RMBS
|
944.2 | 2.9 | (94.6 | ) | — | — | (6.7 | ) | (13.0 | ) | 832.8 | |||||||||||||||||||||
|
CDO/CLO
|
232.4 | 9.9 | (18.6 | ) | — | — | 1.3 | (8.5 | ) | 216.5 | ||||||||||||||||||||||
|
Other asset-backed
|
335.5 | 17.2 | (26.4 | ) | 0.1 | (11.4 | ) | (1.5 | ) | 7.5 | 321.0 | |||||||||||||||||||||
|
Available-for-sale equity securities
|
29.4 | 5.6 | — | 4.8 | — | (1.5 | ) | (9.0 | ) | 29.3 | ||||||||||||||||||||||
|
Fair value investments
|
144.8 | 26.3 | (9.0 | ) | — | — | 2.0 | — | 164.1 | |||||||||||||||||||||||
|
Total assets
|
$ | 5,793.0 | $ | 567.6 | $ | (239.1 | ) | $ | 95.5 | $ | (179.2 | ) | $ | (10.9 | ) | $ | (87.8 | ) | $ | 5,939.1 | ||||||||||||
|
(1)
|
Reflected in realized investment gains and losses for all assets except limited partnerships and other investments and fair value investments.
|
|
(2)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Level 3 Financial Assets:
|
Nine months ended September 30, 2011
|
|||||||||||||||||||||||||||||||
|
($ in millions)
|
As restated and amended
|
|||||||||||||||||||||||||||||||
|
Realized &
|
||||||||||||||||||||||||||||||||
|
unrealized
|
Unrealized
|
|||||||||||||||||||||||||||||||
|
gains
|
gains
|
|||||||||||||||||||||||||||||||
|
Balance,
|
Transfers
|
Transfers
|
(losses)
|
(losses)
|
||||||||||||||||||||||||||||
|
beginning
|
into
|
out of
|
included
|
included
|
||||||||||||||||||||||||||||
|
of period
|
Purchases
|
Sales
|
Level 3
|
Level 3
|
in income
(1)
|
in OCI
|
Total
|
|||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||||||
|
Available-for-sale debt securities
|
||||||||||||||||||||||||||||||||
|
U.S. government and agency
(2)
|
$ | 341.4 | $ | 5.2 | $ | (7.9 | ) | $ | 6.9 | $ | — | $ | — | $ | 6.5 | $ | 352.1 | |||||||||||||||
|
State and political subdivision
|
67.1 | 10.0 | (1.4 | ) | — | — | — | 17.1 | 92.8 | |||||||||||||||||||||||
|
Foreign government
|
47.1 | — | — | — | (7.0 | ) | — | (1.2 | ) | 38.9 | ||||||||||||||||||||||
|
Corporate
|
3,278.3 | 308.1 | (51.7 | ) | 149.0 | (95.9 | ) | (7.0 | ) | (130.0 | ) | 3,450.8 | ||||||||||||||||||||
|
CMBS
|
91.7 | 5.0 | (5.0 | ) | 8.4 | (17.8 | ) | (1.9 | ) | 3.4 | 83.8 | |||||||||||||||||||||
|
RMBS
|
919.1 | 184.4 | (77.2 | ) | — | — | (3.1 | ) | (43.3 | ) | 979.9 | |||||||||||||||||||||
|
CDO/CLO
|
238.0 | 0.3 | (6.2 | ) | — | — | (0.8 | ) | (15.9 | ) | 215.4 | |||||||||||||||||||||
|
Other asset-backed
|
252.8 | 102.9 | (30.9 | ) | 3.2 | (6.0 | ) | 0.5 | 21.7 | 344.2 | ||||||||||||||||||||||
|
Available-for-sale equity securities
|
36.2 | 4.0 | — | 0.6 | — | — | (3.2 | ) | 37.6 | |||||||||||||||||||||||
|
Fair value investments
|
126.0 | 13.6 | (10.5 | ) | — | — | 7.7 | — | 136.8 | |||||||||||||||||||||||
|
Total assets
|
$ | 5,397.7 | $ | 633.5 | $ | (190.8 | ) | $ | 168.1 | $ | (126.7 | ) | $ | (14.6 | ) | $ | (144.9 | ) | $ | 5,432.3 | ||||||||||||
|
(1)
|
Reflected in realized investment gains and losses for all assets except limited partnerships and other investments and fair value investments.
|
|
(2)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Level 3 Financial Liabilities:
|
Embedded Derivative Liabilities
|
|||||||||||||||
|
($ in millions)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Balance, beginning of period
|
$ | 89.3 | $ | 46.2 | $ | 84.5 | $ | 30.4 | ||||||||
|
Net purchases/(sales)
|
2.2 | (9.0 | ) | 6.8 | 14.5 | |||||||||||
|
Transfers into Level 3
|
— | — | — | — | ||||||||||||
|
Transfers out of Level 3
|
— | — | — | — | ||||||||||||
|
Realized (gains) losses
(1)
|
(7.1 | ) | 50.5 | (6.9 | ) | 42.9 | ||||||||||
|
Balance, end of period
|
$ | 84.4 | $ | 87.8 | $ | 84.4 | $ | 87.8 | ||||||||
|
(1)
|
Realized gains and losses are included in net realized investment gains on the consolidated statements of comprehensive income.
|
|
Level 3 Assets:
(1)
|
As of September 30, 2012
|
|||||||||
|
($ in millions)
|
||||||||||
|
Fair
|
Valuation
|
Unobservable
|
||||||||
|
Value
|
Technique(s)
|
Input
|
Range (Weighted Average)
|
|||||||
|
U.S. government and
agency
|
$
|
282.8
|
Spread matrix
|
Yield
|
1.54% - 5.21% (2.98%)
|
|||||
|
State and political
subdivision
|
$
|
85.7
|
Discounted cash flow
|
Yield
|
1.80% - 3.41% (2.71%)
|
|||||
|
|
||||||||||
|
Foreign Government
|
$
|
10.1
|
Spread matrix
|
Yield
|
2.11%
|
|||||
|
Corporate
|
$
|
2,825.9
|
Spread matrix
|
Yield
|
1.53% - 6.86% (2.78%)
|
|||||
|
Discounted cash flow
|
Yield
|
1.51% - 8.24% (3.16%)
|
||||||||
|
CDO/CLO
|
$
|
18.0
|
Discounted cash flow
|
Prepayment rate
|
20% (CLOs)
|
|||||
|
Default rate
|
2.5% (CLOs)
|
|||||||||
|
Recovery rate
|
65% (Loans), 35% (High yield bonds),
45% (Investment grade bonds)
|
|||||||||
|
Reinvestment spread
|
3 mo LIBOR + 400bps (CLOs)
|
|||||||||
|
Other asset-backed
|
$
|
41.9
|
Discounted cash flow
|
Yield
|
2.41% - 5.38% (2.66%)
|
|||||
|
Discounted cash flow
|
Prepayment rate
|
5%
|
||||||||
|
Default rate
|
2.53% for 48 mos then .33% thereafter
|
|||||||||
|
Recovery rate
|
10% (TRUPS)
|
|||||||||
|
Fair value option
investments
|
$
|
4.8
|
Discounted cash flow
|
Default rate
|
0.24%
|
|||||
|
Recovery rate
|
45%
|
|||||||||
|
(1)
|
Excludes Level 3 assets which are valued based upon non-binding independent third-party valuations for which unobservable inputs are not reasonably available to us.
|
|
Level 3 Liabilities:
|
As of September 30, 2012
|
|||||||||
|
($ in millions)
|
Fair Value
|
Valuation Technique(s)
|
Unobservable Input
|
Range
|
||||||
|
Embedded derivatives
|
$
|
48.7
|
Budget method
|
Swap curve
|
0.24% - 2.32%
|
|||||
|
(EIA VED)
|
Mortality rate
|
75% of A2000 basic table
|
||||||||
|
Lapse rate
|
1.00% - 35.00%
|
|||||||||
|
CSA
|
4.75%
|
|||||||||
|
Embedded derivatives
(GMAB / GMWB)
|
$
|
35.7
|
Risk neutral stochastic
valuation methodology
|
Volatility surface
|
11.75% - 48.97%
|
|||||
|
Swap curve
|
0.24% - 2.98%
|
|||||||||
|
Mortality rate
|
75% of A2000 basic table
|
|||||||||
|
Lapse rate
|
0.00% - 60.00%
|
|||||||||
|
CSA
|
4.75%
|
|||||||||
|
Total Level 3 liabilities
|
$
|
84.4
|
||||||||
|
Level 3 Assets and Liabilities by Pricing Source:
|
As of September 30, 2012
|
|||||||||||
|
($ in millions)
|
Internal
(1)
|
External
(2)
|
Total
|
|||||||||
|
Assets
|
||||||||||||
|
Available-for-sale debt securities
|
||||||||||||
|
U.S. government and agency
(3)
|
$ | 282.8 | $ | 37.8 | $ | 320.6 | ||||||
|
State and political subdivision
|
85.7 | 107.2 | 192.9 | |||||||||
|
Foreign government
|
10.1 | 44.9 | 55.0 | |||||||||
|
Corporate
|
2,825.9 | 907.3 | 3,733.2 | |||||||||
|
CMBS
|
— | 73.7 | 73.7 | |||||||||
|
RMBS
|
— | 832.8 | 832.8 | |||||||||
|
CDO/CLO
|
18.0 | 198.5 | 216.5 | |||||||||
|
Other asset-backed
|
41.9 | 279.1 | 321.0 | |||||||||
|
Available-for-sale equity securities
|
— | 29.3 | 29.3 | |||||||||
|
Fair value investments
|
4.8 | 159.3 | 164.1 | |||||||||
|
Total assets
|
$ | 3,269.2 | $ | 2,669.9 | $ | 5,939.1 | ||||||
|
Liabilities
|
||||||||||||
|
Embedded derivatives
|
$ | 84.4 | $ | — | $ | 84.4 | ||||||
|
Total liabilities
|
$ | 84.4 | $ | — | $ | 84.4 | ||||||
|
(1)
|
Represents valuations reflecting both internally-derived and market inputs, as well as third-party information or quotes.
|
|
(2)
|
Represents unadjusted prices from independent pricing services, third-party financial statements and independent indicative broker quotes where pricing inputs are not readily available.
|
|
(3)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Level 3 Assets and Liabilities by Pricing Source:
|
As of December 31, 2011
|
|||||||||||
|
As restated and amended
|
||||||||||||
|
($ in millions)
|
Internal
(1)
|
External
(2)
|
Total
|
|||||||||
|
Assets
|
||||||||||||
|
Available-for-sale debt securities
|
||||||||||||
|
U.S. government and agency
(3)
|
$ | 315.4 | $ | 20.8 | $ | 336.2 | ||||||
|
State and political subdivision
|
30.9 | 85.7 | 116.6 | |||||||||
|
Foreign government
|
10.4 | 41.4 | 51.8 | |||||||||
|
Corporate
|
2,662.8 | 838.7 | 3,501.5 | |||||||||
|
CMBS
|
— | 100.6 | 100.6 | |||||||||
|
RMBS
|
— | 944.2 | 944.2 | |||||||||
|
CDO/CLO
|
199.3 | 33.1 | 232.4 | |||||||||
|
Other asset-backed
|
59.1 | 276.4 | 335.5 | |||||||||
|
Available-for-sale equity securities
|
— | 29.4 | 29.4 | |||||||||
|
Fair value investments
|
37.9 | 106.9 | 144.8 | |||||||||
|
Total assets
|
$ | 3,315.8 | $ | 2,477.2 | $ | 5,793.0 | ||||||
|
Liabilities
|
||||||||||||
|
Embedded derivatives
|
$ | 84.5 | $ | — | $ | 84.5 | ||||||
|
Total liabilities
|
$ | 84.5 | $ | — | $ | 84.5 | ||||||
|
(1)
|
Represents valuations reflecting both internally-derived and market inputs, as well as third-party information or quotes.
|
|
(2)
|
Represents unadjusted prices from independent pricing services, third-party financial statements and independent indicative broker quotes where pricing inputs are not readily available.
|
|
(3)
|
Includes securities whose underlying collateral is an obligation of a U.S. government entity.
|
|
Carrying Amounts and Fair Values
|
As of September 30, 2012
|
As of December 31, 2011
|
||||||||||||||||
|
of Financial Instruments:
|
Fair Value
|
As restated and amended
|
||||||||||||||||
|
($ in millions)
|
Hierarchy
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
|
Level
|
Value
|
Value
|
Value
|
Value
|
||||||||||||||
|
Financial assets:
|
||||||||||||||||||
|
Policy loans
|
Level 3
|
$ | 2,338.4 | $ | 2,326.8 | $ | 2,379.3 | $ | 2,367.7 | |||||||||
|
Cash and cash equivalents
|
Level 1
|
283.8 | 283.8 | 168.2 | 168.2 | |||||||||||||
|
Financial liabilities:
|
||||||||||||||||||
|
Investment contracts
|
Level 3
|
$ | 2,914.6 | $ | 2,920.2 | $ | 2,432.3 | $ | 2,443.5 | |||||||||
|
Surplus notes
|
Level 3
|
126.1 | 95.0 | 174.2 | 126.9 | |||||||||||||
|
Senior unsecured bonds
|
Level 2
|
252.7 | 245.1 | 252.7 | 195.1 | |||||||||||||
|
Accumulated Other Comprehensive Income (Loss)
|
Non-Credit
|
|||||||||||||||
|
Attributable to The Phoenix Companies, Inc.:
|
Net
|
Portion of
|
Net
|
|||||||||||||
|
($ in millions)
|
Unrealized
|
OTTI Losses
|
Pension
|
|||||||||||||
|
Investment
|
Recognized
|
Liability
|
||||||||||||||
|
Gains
|
in OCI
|
Adjustments
|
Total
|
|||||||||||||
|
As restated and amended
(1)
|
||||||||||||||||
|
Balance, December 30, 2010
|
$ | 126.8 | $ | (82.5 | ) | $ | (200.5 | ) | $ | (156.2 | ) | |||||
|
Change in component during the year
|
51.6 | (13.9 | ) | (2.2 | ) | 35.5 | ||||||||||
|
Balance, September 30, 2011
|
178.4 | (96.4 | ) | (202.7 | ) | (120.7 | ) | |||||||||
|
Balance, December 31, 2011
|
$ | 173.4 | $ | (104.5 | ) | $ | (299.6 | ) | $ | (230.7 | ) | |||||
|
Change in component during the year
|
(9.0 | ) | 7.8 | (0.1 | ) | (1.3 | ) | |||||||||
|
Balance, September 30, 2012
|
$ | 164.4 | $ | (96.7 | ) | $ | (299.7 | ) | $ | (232.0 | ) | |||||
|
(1)
|
Except for the change in component during 2012 and the balance as of 2012.
|
|
Components of Pension Benefit Costs:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Service cost
|
$ | 0.2 | $ | 0.2 | $ | 0.7 | $ | 0.7 | ||||||||
|
Interest cost
|
8.7 | 9.2 | 26.1 | 27.6 | ||||||||||||
|
Expected return on plan assets
|
(8.6 | ) | (8.5 | ) | (25.7 | ) | (25.6 | ) | ||||||||
|
Net loss amortization
|
2.6 | 1.7 | 7.8 | 5.2 | ||||||||||||
|
Pension benefit cost
|
$ | 2.9 | $ | 2.6 | $ | 8.9 | $ | 7.9 | ||||||||
|
Components of Other Post-employment Benefit Costs:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Service cost
|
$ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.3 | ||||||||
|
Interest cost
|
0.5 | 0.7 | 1.4 | 2.0 | ||||||||||||
|
Net gain amortization
|
— | — | (0.1 | ) | — | |||||||||||
|
Prior service cost amortization
|
(0.4 | ) | (0.5 | ) | (1.2 | ) | (1.5 | ) | ||||||||
|
Other post-employment benefit cost
|
$ | 0.2 | $ | 0.3 | $ | 0.3 | $ | 0.8 | ||||||||
|
Share-Based Compensation Plans:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Compensation cost charged to income from continuing operations
|
$ | 0.7 | $ | 0.6 | $ | 2.7 | $ | 2.7 | ||||||||
|
Income tax expense (benefit) before valuation allowance
|
$ | (0.2 | ) | $ | (0.2 | ) | $ | (0.9 | ) | $ | (0.3 | ) | ||||
|
Shares Used in Calculation of Earnings Per Share:
(1)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
(shares in thousands)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Weighted-average common shares outstanding
|
5,749 | 5,816 | 5,792 | 5,814 | ||||||||||||
|
Weighted-average effect of dilutive potential common shares:
|
||||||||||||||||
|
Restricted stock units
|
77 | 74 | 76 | 75 | ||||||||||||
|
Employee stock options
|
2 | — | — | — | ||||||||||||
|
Potential common shares
|
79 | 74 | 76 | 75 | ||||||||||||
|
Less: Potential common shares excluded from calculation
due to net losses
|
79 | — | 76 | 75 | ||||||||||||
|
Dilutive potential common shares
|
— | 74 | — | — | ||||||||||||
|
Weighted-average common shares outstanding, including
dilutive potential common shares
|
5,749 | 5,890 | 5,792 | 5,814 | ||||||||||||
|
(1)
|
All share amounts for all periods reflect the 1-for-20 reverse stock split, which was effective August 10, 2012. See Note 10 to our consolidated financial statements for additional information on the reverse stock split.
|
|
Segment Information
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
on Revenues:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Life and Annuity
(1)
|
$ | 474.8 | $ | 449.7 | $ | 1,342.7 | $ | 1,383.6 | ||||||||
|
Saybrus Partners
(2)
|
5.9 | 5.3 | 16.1 | 13.3 | ||||||||||||
|
Less: Intercompany revenues
(3)
|
2.6 | 3.2 | 8.3 | 7.4 | ||||||||||||
|
Total revenues
|
$ | 478.1 | $ | 451.8 | $ | 1,350.5 | $ | 1,389.5 | ||||||||
|
(1)
|
Includes intercompany interest revenue of $0.2 million and $0.1 million for the three months ended September 30, 2012 and 2011 and $0.5 million and $0.6 million for the nine months ended September 30, 2012 and 2011.
|
|
(2)
|
Includes intercompany commission revenue of $2.8 million and $3.3 million for the three months ended September 30, 2012 and 2011 and $8.8 million and $8.0 million for the nine months ended September 30, 2012 and 2011.
|
|
(3)
|
All intercompany balances are eliminated in consolidating the financial statements.
|
|
Results of Operations by Segment as Reconciled to
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Consolidated Net Income:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Life and Annuity operating income (loss)
|
$ | (136.8 | ) | $ | 14.9 | $ | (150.5 | ) | $ | 23.6 | ||||||
|
Saybrus Partners operating income (loss)
|
0.5 | — | 0.9 | (1.5 | ) | |||||||||||
|
Less: Applicable income tax expense (benefit)
|
(4.9 | ) | (6.8 | ) | (1.0 | ) | 9.5 | |||||||||
|
Loss from discontinued operations, net of income taxes
|
(6.0 | ) | (3.9 | ) | (12.0 | ) | (6.1 | ) | ||||||||
|
Net realized investment gains (losses)
|
27.5 | (10.1 | ) | 1.6 | (18.0 | ) | ||||||||||
|
Gain on debt repurchase
|
11.9 | — | 11.9 | — | ||||||||||||
|
Less: Net income (loss) attributable to noncontrolling interests
|
0.8 | (0.3 | ) | 0.6 | (0.4 | ) | ||||||||||
|
Net income (loss)
|
$ | (98.8 | ) | $ | 8.0 | $ | (147.7 | ) | $ | (11.1 | ) | |||||
|
|
●
|
competitive and innovative products;
|
|
|
●
|
underwriting and mortality risk management expertise;
|
|
|
●
|
ability to develop business partnerships; and
|
|
|
●
|
value-added support provided to distributors by our wholesalers and operating personnel.
|
|
|
●
|
Fees on life and annuity products
consist primarily of: (i) COI charges, which are based on the difference between policy face amounts and the account values (referred to as the NAR); (ii) asset-based fees (including mortality and expense charges for variable annuities) which are calculated as a percentage of assets under management within our separate accounts; (iii) premium-based fees to cover premium taxes and renewal commissions; and (iv) surrender charges.
|
|
|
●
|
Policy benefits
include
death claims net of reinsurance cash flows, including ceded premiums and recoverables, interest credited to policyholders and changes in reserves for future claims payments. Certain universal life reserves are based on management’s assumptions about future COI fees and interest margins which, in turn, are affected by future premium payments, surrenders, lapses and mortality rates. Actual experience can vary significantly from these assumptions, resulting in greater or lesser changes in reserves. In addition, we regularly review and reset our assumptions in light of actual experience, which can result in material changes to these reserves.
|
|
|
●
|
Interest margins
consist of net investment income earned on universal life, fixed indexed annuities and other policyholder funds, gains on options purchased to fund index credits less the interest or index credits applied to policyholders on those funds. Interest margins also include investment income on assets supporting the Company’s surplus.
|
|
|
●
|
Non-deferred operating expenses
are expenses related to servicing policies, premium taxes, reinsurance allowances, non-deferrable acquisition expenses and commissions and general overhead. They also include pension and other benefit costs which involve significant estimates and assumptions.
|
|
|
●
|
Deferred policy acquisition cost amortization
is based on the amount of expenses deferred, actual results in each quarter and management’s assumptions about the future performance of the business. The amount of future profit or margin is dependent principally on investment returns in our separate accounts, interest and default rates, reinsurance costs and recoveries, mortality, surrender rates, premium persistency and expenses. These factors enter into management’s estimates of gross profits or margins, which generally are used to amortize deferred policy acquisition costs. Actual equity market movements, net investment income in excess of amounts credited to policyholders, claims payments and other key factors can vary significantly from our assumptions, resulting in a misestimate of gross profits or margins, and a change in amortization, with a resulting impact to income. In addition, we regularly review and reset our assumptions in light of actual experience, which can result in material changes in amortization.
|
|
|
●
|
Net realized investment gains or losses
related to investments and hedging programs include transaction gains and losses, OTTIs and changes in the value of certain derivatives and embedded derivatives.
|
|
|
●
|
Income tax expense/benefit
of both current and deferred tax provisions. The computation of these amounts is a function of pre-tax income and the application of relevant tax law and U.S. GAAP accounting guidance. In assessing the realizability of our deferred tax assets, we make significant judgments with respect to projections of future taxable income, the identification of prudent and feasible tax planning strategies and the reversal pattern of the Company’s book-to-tax differences that are temporary in nature. We also consider the expiration dates and amounts of carryforwards related to net operating losses, capital losses, foreign tax credits and general business tax credits. Based on our assessment, we have recorded a valuation allowance against a significant portion of our deferred tax assets based upon our conclusion that there is insufficient objective positive evidence to overcome the significant negative evidence from our cumulative losses in recent years. This assessment could change in the future, resulting in a release of the valuation allowance and a benefit to income.
|
|
|
●
|
Fees on life and annuity products and other fee income.
Insurance and investment product fees on our life and annuity products decreased $32.7 million in the nine months ended September 30, 2012 compared with the nine months ended September 30, 2011. Lower fees were primarily a result of a $26.4 million decrease in COI charges related to declining universal and variable universal life insurance in force. In addition, investment fees decreased during 2012 compare with 2011 due to the sale of Goodwin Capital Advisers, Inc. during the fourth quarter of 2011. Included in the total fee income were unlocking adjustments of $1.3 million and $(0.5) million for the quarters ended September 30, 2012 and 2011, respectively.
|
|
|
●
|
Policy benefits.
Policy benefits increased $40.3 million for the nine months ended September 30, 2012 compared with the nine months ended September 30, 2011. The increase in policy benefit expense was a result of higher death benefits for universal life and traditional whole life products as a result of negative mortality experience during the period, primarily in the third quarter. Annuity benefits increased largely due to changes in reserves on fixed indexed annuities associated with minimum death and income benefit guarantees which were driven by increased sales during the year. Policy benefit expenses of $36.3 million were incurred due to reserve unlocking adjustments as a result of our annual comprehensive review of actuarial assumptions in the third quarter of 2012. These expenses were partially offset by lower policy benefits within the closed block due to positive mortality during 2012 and a decrease in outstanding policies in force as the block ages.
|
|
|
●
|
Interest margins
.
Universal life interest margins declined slightly during the nine months ended September 30, 2012 compared with September 30, 2011 as a result of lower net investment income, offset by lower interest credited consistent with declining funds under management. Annuity interest margins increased primarily as a result of higher investment income attributable to growth in fixed indexed annuity funds under management.
|
|
|
●
|
Deferred policy acquisition cost
. Policy acquisition cost amortization increased $37.6 million in the nine months ended September 30, 2012 compared with the nine months ended September 30, 2011. This increase in amortization was attributable to the unlocking of assumptions as a result the annual comprehensive review of assumptions in the third quarter of 2012. The unlocking resulted in amortization of $46.3 million in the third quarter of 2012, which included amortization of $37.0 million for traditional life policies from lower projected net yields related to investment income returns and amortization of $6.7 million for universal life policies primarily due to lower spreads due to the low interest rate environment. Excluding the impact of the unlocking, amortization decreased $8.7 million primarily as a result of negative mortality experience during the period. Amortization related to annuities decreased primarily as a result of improved market performance.
|
|
|
●
|
Net realized investment gains or losses on investments.
Net realized investment gains of $1.6 million were recognized for the nine months ended September 30, 2012 compared to net realized investment losses of $18.0 million for the nine months ended September 30, 2011. Net realized gains on sales of long-term debt securities accounted for $26.1 million of the total realized gains over the period as interest rates reached historically low levels in 2012. Common and preferred equity investments and other alternative investments accounted for gains of $16.6 million due to strong performance in global equity markets during 2012. These gains were partially offset by impairments of $19.3 million on long-term debt securities, common stock and limited partnership and other investments and losses of $26.5 million on derivative assets and embedded derivative liabilities. These derivative losses were primarily attributable to a loss of $21.0 million on derivative contracts which hedge the variable annuity and fixed indexed annuity guarantees, offset by $6.9 million in gains on embedded derivative liabilities associated with fixed and variable annuity guarantees. Included in the net derivative loss were gains of $6.8 million associated with the non-performance risk factor. In addition, realized losses of $12.4 million related to our surplus hedge, which utilizes futures and options to hedge against declines in equity markets and the resulting statutory capital and surplus impact.
|
|
|
|
|
●
|
Income taxes
The Company recognized a tax benefit of $1.0 million for the nine months ended September 30, 2012 compared with a $9.5 income tax expense for the nine months ended September 30, 2011. The current period income tax benefit includes $23.4 million of estimated current taxes offset by a benefit of $24.4 million related to the exception to intraperiod allocation rules in accordance with ASC 740-20,
Accounting for Income Taxes - Intraperiod Tax Allocation
.
|
|
|
●
|
Balance sheet strength;
|
|
|
●
|
Policyholder service;
|
|
|
●
|
Operational efficiency; and
|
|
|
●
|
Profitable growth.
|
|
Summary Consolidated Financial Data:
|
Three Months Ended
|
Increase (decrease) and
|
||||||||||||||
|
($ in millions)
|
September 30,
|
percentage change
|
||||||||||||||
|
2012
|
2011
|
2012 vs. 2011
|
||||||||||||||
|
As restated and amended
|
||||||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Premiums
|
$ | 94.8 | $ | 111.9 | $ | (17.1 | ) | (15%) | ||||||||
|
Fee income
|
138.8 | 146.5 | (7.7 | ) | (5%) | |||||||||||
|
Net investment income
|
205.1 | 203.5 | 1.6 | 1% | ||||||||||||
|
Net realized investment losses:
|
||||||||||||||||
|
Total other-than-temporary impairment (“OTTI”) losses
|
(7.2 | ) | (30.9 | ) | 23.7 | 77% | ||||||||||
|
Portion of OTTI losses recognized in
other comprehensive income (“OCI”)
|
(0.2 | ) | 21.2 | (21.4 | ) |
NM
|
||||||||||
|
Net OTTI losses recognized in earnings
|
(7.4 | ) | (9.7 | ) | 2.3 | 24% | ||||||||||
|
Net realized investment gains, excluding OTTI losses
|
34.9 | (0.4 | ) | 35.3 |
NM
|
|||||||||||
|
Net realized investment gains
|
27.5 | (10.1 | ) | 37.6 |
NM
|
|||||||||||
|
Gain on debt repurchase
|
11.9 | — | 11.9 |
NM
|
||||||||||||
|
Total revenues
|
478.1 | 451.8 | 26.3 | 6% | ||||||||||||
|
BENEFITS AND EXPENSES:
|
||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
352.5 | 293.1 | 59.4 | 20% | ||||||||||||
|
Policyholder dividends
|
81.0 | 53.5 | 27.5 | 51% | ||||||||||||
|
Policy acquisition cost amortization
|
71.7 | 35.1 | 36.6 |
NM
|
||||||||||||
|
Interest expense on indebtedness
|
7.9 | 7.9 | — | 0% | ||||||||||||
|
Other operating expenses
|
61.9 | 57.4 | 4.5 | 8% | ||||||||||||
|
Total benefits and expenses
|
575.0 | 447.0 | 128.0 | 29% | ||||||||||||
|
Income (loss) from continuing operations before income taxes
|
(96.9 | ) | 4.8 | (101.7 | ) |
NM
|
||||||||||
|
Income tax expense (benefit)
|
(4.9 | ) | (6.8 | ) | 1.9 | 28% | ||||||||||
|
Income (loss) from continuing operations
|
(92.0 | ) | 11.6 | (103.6 | ) |
NM
|
||||||||||
|
Loss from discontinued operations, net of income taxes
|
(6.0 | ) | (3.9 | ) | (2.1 | ) | (54%) | |||||||||
|
Net income (loss)
|
(98.0 | ) | 7.7 | (105.7 | ) |
NM
|
||||||||||
|
Less: Net income (loss) attributable to noncontrolling interests
|
0.8 | (0.3 | ) | 1.1 |
NM
|
|||||||||||
|
Net income (loss) attributable to The Phoenix Companies, Inc.
|
$ | (98.8 | ) | $ | 8.0 | $ | (106.8 | ) |
NM
|
|||||||
|
Summary Consolidated Financial Data:
|
Nine Months Ended
|
Increase (decrease) and
|
||||||||||||||
|
($ in millions)
|
September 30,
|
percentage change
|
||||||||||||||
|
2012
|
2011
|
2012 vs. 2011
|
||||||||||||||
|
As restated and amended
|
||||||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Premiums
|
$ | 290.6 | $ | 323.6 | $ | (33.0 | ) | (10%) | ||||||||
|
Fee income
|
423.1 | 455.8 | (32.7 | ) | (7%) | |||||||||||
|
Net investment income
|
623.3 | 628.1 | (4.8 | ) | (1%) | |||||||||||
|
Net realized investment losses:
|
||||||||||||||||
|
Total other-than-temporary impairment (“OTTI”) losses
|
(30.6 | ) | (44.6 | ) | 14.0 | 31% | ||||||||||
|
Portion of OTTI losses recognized in
other comprehensive income (“OCI”)
|
11.3 | 26.1 | (14.8 | ) | (57%) | |||||||||||
|
Net OTTI losses recognized in earnings
|
(19.3 | ) | (18.5 | ) | (0.8 | ) | (4%) | |||||||||
|
Net realized investment gains, excluding OTTI losses
|
20.9 | 0.5 | 20.4 |
NM
|
||||||||||||
|
Net realized investment gains (losses)
|
1.6 | (18.0 | ) | 19.6 |
NM
|
|||||||||||
|
Gain on debt repurchase
|
11.9 | — | 11.9 |
NM
|
||||||||||||
|
Total revenues
|
1,350.5 | 1,389.5 | (39.0 | ) | (3%) | |||||||||||
|
BENEFITS AND EXPENSES:
|
||||||||||||||||
|
Policy benefits, excluding policyholder dividends
|
888.9 | 848.6 | 40.3 | 5% | ||||||||||||
|
Policyholder dividends
|
222.3 | 199.0 | 23.3 | 12% | ||||||||||||
|
Policy acquisition cost amortization
|
164.6 | 127.0 | 37.6 | 30% | ||||||||||||
|
Interest expense on indebtedness
|
23.7 | 23.7 | — | 0% | ||||||||||||
|
Other operating expenses
|
187.1 | 187.1 | — | 0% | ||||||||||||
|
Total benefits and expenses
|
1,486.6 | 1,385.4 | 101.2 | 7% | ||||||||||||
|
Income from continuing operations before income taxes
|
(136.1 | ) | 4.1 | (140.2 | ) |
NM
|
||||||||||
|
Income tax expense (benefit)
|
(1.0 | ) | 9.5 | (10.5 | ) |
NM
|
||||||||||
|
Loss from continuing operations
|
(135.1 | ) | (5.4 | ) | (129.7 | ) |
NM
|
|||||||||
|
Loss from discontinued operations,
net of income taxes
|
(12.0 | ) | (6.1 | ) | (5.9 | ) | (97%) | |||||||||
|
Net loss
|
(147.1 | ) | (11.5 | ) | (135.6 | ) |
NM
|
|||||||||
|
Less: Net income (loss) attributable to noncontrolling interests
|
0.6 | (0.4 | ) | 1.0 |
NM
|
|||||||||||
|
Net loss attributable to The Phoenix Companies, Inc.
|
$ | (147.7 | ) | $ | (11.1 | ) | $ | (136.6 | ) |
NM
|
||||||
|
Debt Securities Ratings by Percentage:
|
||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||
|
% of
|
% of
|
|||||||||||||
|
NAIC
|
S&P Equivalent
|
Fair
|
Fair
|
Amortized
|
Amortized
|
|||||||||
|
Rating
|
Designation
|
Value
|
Value
|
Cost
|
Cost
|
|||||||||
|
1
|
AAA/AA/A
|
$
|
6,884.8
|
55.4%
|
$
|
6,283.9
|
54.6%
|
|||||||
|
2
|
BBB
|
4,541.8
|
36.5%
|
4,167.9
|
36.2%
|
|||||||||
|
Total investment grade
|
11,426.6
|
91.9%
|
10,451.8
|
90.8%
|
||||||||||
|
3
|
BB
|
616.2
|
5.0%
|
645.7
|
5.6%
|
|||||||||
|
4
|
B
|
199.7
|
1.6%
|
206.0
|
1.8%
|
|||||||||
|
5
|
CCC and lower
|
144.0
|
1.2%
|
160.9
|
1.4%
|
|||||||||
|
6
|
In or near default
|
50.2
|
0.4%
|
44.1
|
0.4%
|
|||||||||
|
Total debt securities
|
$
|
12,436.7
|
100.0%
|
$
|
11,508.5
|
100.0%
|
||||||||
|
Debt Securities by Type:
|
As of September 30, 2012
|
|||||||||||||||||||
|
($ in millions)
|
Unrealized Gains (Losses)
|
|||||||||||||||||||
|
Fair
|
Amortized
|
Gross
|
Gross
|
|||||||||||||||||
|
Value
|
Cost
|
Gains
|
Losses
|
Net
|
||||||||||||||||
|
U.S. government and agency
|
$ | 932.7 | $ | 872.8 | $ | 65.3 | $ | (5.4 | ) | $ | 59.9 | |||||||||
|
State and political subdivision
|
344.5 | 309.1 | 38.5 | (3.1 | ) | 35.4 | ||||||||||||||
|
Foreign government
|
214.6 | 180.2 | 34.4 | — | 34.4 | |||||||||||||||
|
Corporate
|
7,406.4 | 6,736.1 | 757.2 | (86.9 | ) | 670.3 | ||||||||||||||
|
CMBS
|
973.3 | 905.9 | 75.7 | (8.3 | ) | 67.4 | ||||||||||||||
|
RMBS
|
1,881.6 | 1,808.5 | 102.4 | (29.3 | ) | 73.1 | ||||||||||||||
|
CDO/CLO
|
216.5 | 242.9 | 4.0 | (30.4 | ) | (26.4 | ) | |||||||||||||
|
Other asset-backed
|
467.1 | 453.0 | 27.1 | (13.0 | ) | 14.1 | ||||||||||||||
|
Total debt securities
|
$ | 12,436.7 | $ | 11,508.5 | $ | 1,104.6 | $ | (176.4 | ) | $ | 928.2 | |||||||||
|
Debt securities outside closed block:
|
||||||||||||||||||||
|
Unrealized gains
|
$ | 5,338.9 | $ | 4,900.0 | $ | 438.9 | $ | — | $ | 438.9 | ||||||||||
|
Unrealized losses
|
674.4 | 798.5 | — | (124.1 | ) | (124.1 | ) | |||||||||||||
|
Total outside the closed block
|
6,013.3 | 5,698.5 | 438.9 | (124.1 | ) | 314.8 | ||||||||||||||
|
Debt securities in closed block:
|
||||||||||||||||||||
|
Unrealized gains
|
5,926.8 | 5,261.1 | 665.7 | — | 665.7 | |||||||||||||||
|
Unrealized losses
|
496.6 | 548.9 | — | (52.3 | ) | (52.3 | ) | |||||||||||||
|
Total in the closed block
|
6,423.4 | 5,810.0 | 665.7 | (52.3 | ) | 613.4 | ||||||||||||||
|
Total debt securities
|
$ | 12,436.7 | $ | 11,508.5 | $ | 1,104.6 | $ | (176.4 | ) | $ | 928.2 | |||||||||
|
Fair Value of Eurozone Exposure by Country:
|
As of September 30, 2012
|
|||||||||||||||||||
|
($ in millions)
|
Sovereign
|
Financial
|
% of Debt
|
|||||||||||||||||
|
Debt
|
Institutions
|
All Other
|
Total
|
Securities
|
||||||||||||||||
|
Spain
|
$ | — | $ | 12.0 | $ | 50.0 | $ | 62.0 | 0.5 | % | ||||||||||
|
Ireland
|
— | 5.3 | 42.5 | 47.8 | 0.4 | % | ||||||||||||||
|
Italy
|
— | — | 18.5 | 18.5 | 0.1 | % | ||||||||||||||
|
Portugal
|
— | — | 1.4 | 1.4 | 0.0 | % | ||||||||||||||
|
Greece
|
— | — | — | — | 0.0 | % | ||||||||||||||
|
Total
|
— | 17.3 | 112.4 | 129.7 | 1.0 | % | ||||||||||||||
|
All other Eurozone
(1)
|
— | 60.4 | 222.2 | 282.6 | 2.3 | % | ||||||||||||||
|
Total
|
$ | — | $ | 77.7 | $ | 334.6 | $ | 412.3 | 3.3 | % | ||||||||||
|
(1)
|
Includes Belgium, Finland, France, Germany, Luxembourg and Netherlands.
|
|
Residential Mortgage-Backed Securities:
|
||||||||||||||||||||||||||||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||||||||||||||||||||||||||||
|
NAIC Rating
|
||||||||||||||||||||||||||||||||||||||||
| 1 | 2 | 3 | 4 | 5 | 6 | |||||||||||||||||||||||||||||||||||
|
AAA/
|
In or
|
|||||||||||||||||||||||||||||||||||||||
|
Amortized
|
Market
|
% General
|
AA/
|
CCC and
|
Near
|
% Closed
|
||||||||||||||||||||||||||||||||||
|
Cost
(1)
|
Value
(1)
|
Account
(2)
|
A |
BBB
|
BB
|
B |
Below
|
Default
|
Block
|
|||||||||||||||||||||||||||||||
|
Collateral
|
||||||||||||||||||||||||||||||||||||||||
|
Agency
|
$ | 981.2 | $ | 1,062.6 | 6.6 | % | 100.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 47.4 | % | ||||||||||||||||||||
|
Prime
|
396.2 | 404.7 | 2.5 | % | 83.4 | % | 11.2 | % | 4.9 | % | 0.0 | % | 0.3 | % | 0.2 | % | 41.1 | % | ||||||||||||||||||||||
|
Alt-A
|
306.9 | 303.5 | 1.9 | % | 55.4 | % | 30.5 | % | 6.3 | % | 3.6 | % | 4.0 | % | 0.2 | % | 29.3 | % | ||||||||||||||||||||||
|
Sub-prime
|
155.3 | 142.0 | 0.9 | % | 77.4 | % | 5.0 | % | 10.6 | % | 4.7 | % | 1.9 | % | 0.4 | % | 10.7 | % | ||||||||||||||||||||||
|
Total
|
$ | 1,839.6 | $ | 1,912.8 | 11.9 | % | 87.7 | % | 7.6 | % | 2.8 | % | 1.0 | % | 0.8 | % | 0.1 | % | 40.5 | % | ||||||||||||||||||||
|
(1)
|
Individual categories may not agree with the Debt Securities by Type table on previous page due to nature of underlying collateral. In addition, RMBS holdings in this exhibit include $31.1 million classified as fair value investments on the consolidated balance sheets. For these fair value investments, there is no impact to OCI as carrying value is equal to market value.
|
|
(2)
|
Percentages based on Market Value.
|
|
Prime Mortgage-Backed Securities:
|
||||||||||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||||||||||
|
Year of Issue
|
||||||||||||||||||||||
|
S&P Equivalent
|
Amortized
|
Market
|
% General
|
Post-
|
2003 and
|
|||||||||||||||||
|
Rating
|
Designation
|
Cost
|
Value
|
Account
(1)
|
2007
|
2007
|
2006
|
2005
|
2004
|
Prior
|
||||||||||||
|
NAIC-1
|
AAA/AA/A
|
$
|
330.2
|
$
|
337.5
|
2.1%
|
0.0%
|
2.7%
|
15.7%
|
18.3%
|
31.7%
|
31.6%
|
||||||||||
|
NAIC-2
|
BBB
|
43.6
|
45.4
|
0.3%
|
0.0%
|
0.0%
|
2.7%
|
79.5%
|
17.8%
|
0.0%
|
||||||||||||
|
NAIC-3
|
BB
|
19.8
|
19.9
|
0.1%
|
0.0%
|
0.0%
|
72.2%
|
11.9%
|
12.7%
|
3.2%
|
||||||||||||
|
NAIC-4
|
B
|
—
|
—
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
||||||||||||
|
NAIC-5
|
CCC and below
|
1.3
|
1.1
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
||||||||||||
|
NAIC-6
|
In or near default
|
1.3
|
0.8
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
36.8%
|
5.1%
|
58.1%
|
||||||||||||
|
Total
|
$
|
396.2
|
$
|
404.7
|
2.5%
|
0.0
%
|
2.2%
|
17.0%
|
24.8%
|
29.1%
|
26.9%
|
|||||||||||
|
(1)
|
Percentages based on Market Value.
|
|
Alt-A Mortgage-Backed Securities:
|
||||||||||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||||||||||
|
Year of Issue
|
||||||||||||||||||||||
|
S&P Equivalent
|
Amortized
|
Market
|
% General
|
Post-
|
2003 and
|
|||||||||||||||||
|
Rating
|
Designation
|
Cost
|
Value
|
Account
(1)
|
2007
|
2007
|
2006
|
2005
|
2004
|
Prior
|
||||||||||||
|
NAIC-1
|
AAA/AA/A
|
$
|
171.7
|
$
|
168.1
|
1.0%
|
4.3%
|
2.7%
|
24.3%
|
23.4%
|
28.8%
|
16.5%
|
||||||||||
|
NAIC-2
|
BBB
|
92.9
|
92.7
|
0.6%
|
0.0%
|
0.0%
|
0.0%
|
24.3%
|
59.6%
|
16.1%
|
||||||||||||
|
NAIC-3
|
BB
|
19.1
|
19.3
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
84.7%
|
15.3%
|
||||||||||||
|
NAIC-4
|
B
|
10.5
|
10.8
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
76.5%
|
0.0%
|
23.5%
|
||||||||||||
|
NAIC-5
|
CCC and below
|
12.2
|
12.1
|
0.1%
|
0.0%
|
0.0%
|
54.7%
|
0.0%
|
45.3%
|
0.0%
|
||||||||||||
|
NAIC-6
|
In or near default
|
0.5
|
0.5
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
0.0%
|
0.0%
|
0.0%
|
||||||||||||
|
Total
|
$
|
306.9
|
$
|
303.5
|
1.9%
|
2.4%
|
1.5%
|
15.8%
|
23.1%
|
41.4%
|
15.8%
|
|||||||||||
|
(1)
|
Percentages based on Market Value.
|
|
Sub-Prime Mortgage-Backed Securities:
|
||||||||||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||||||||||
|
Year of Issue
|
||||||||||||||||||||||
|
S&P Equivalent
|
Amortized
|
Market
|
% General
|
Post-
|
2003 and
|
|||||||||||||||||
|
Rating
|
Designation
|
Cost
|
Value
|
Account
(1)
|
2007
|
2007
|
2006
|
2005
|
2004
|
Prior
|
||||||||||||
|
NAIC-1
|
AAA/AA/A
|
$
|
114.4
|
$
|
109.9
|
0.7%
|
0.0%
|
6.5%
|
8.2%
|
40.8%
|
26.7%
|
17.8%
|
||||||||||
|
NAIC-2
|
BBB
|
7.1
|
7.1
|
0.1%
|
0.0%
|
56.4%
|
0.0%
|
41.2%
|
0.0%
|
2.4%
|
||||||||||||
|
NAIC-3
|
BB
|
20.8
|
15.1
|
0.1%
|
0.0%
|
52.9%
|
18.4%
|
18.1%
|
0.0%
|
10.6%
|
||||||||||||
|
NAIC-4
|
B
|
8.5
|
6.7
|
0.0%
|
0.0%
|
0.0%
|
40.7%
|
40.9%
|
0.0%
|
18.4%
|
||||||||||||
|
NAIC-5
|
CCC and below
|
2.9
|
2.6
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
0.0%
|
0.0%
|
||||||||||||
|
NAIC-6
|
In or near default
|
1.6
|
0.6
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
||||||||||||
|
Total
|
$
|
155.3
|
$
|
142.0
|
0.9%
|
0.0
%
|
13.5%
|
10.2%
|
39.4%
|
20.7%
|
16.2%
|
|||||||||||
|
(1)
|
Percentages based on Market Value.
|
|
Commercial Mortgage-Backed Securities:
|
||||||||||||||||||||||
|
($ in millions)
|
As of September 30, 2012
|
|||||||||||||||||||||
|
Year of Issue
|
||||||||||||||||||||||
|
S&P Equivalent
|
Amortized
|
Market
|
% General
|
Post-
|
2004 and
|
% Closed
|
||||||||||||||||
|
Rating
|
Designation
|
Cost
|
Value
(1)
|
Account
(2)
|
2007
|
2007
|
2006
|
2005
|
Prior
|
Block
|
||||||||||||
|
NAIC-1
|
AAA/AA/A
|
$
|
878.0
|
$
|
951.5
|
5.9%
|
27.7%
|
5.8%
|
15.3%
|
9.7%
|
41.5%
|
47.2%
|
||||||||||
|
NAIC-2
|
BBB
|
22.7
|
18.6
|
0.1%
|
0.0%
|
0.0%
|
44.7%
|
55.3%
|
0.0%
|
34.5%
|
||||||||||||
|
NAIC-3
|
BB
|
18.8
|
17.0
|
0.1%
|
0.0%
|
48.8%
|
19.8%
|
31.4%
|
0.0%
|
26.2%
|
||||||||||||
|
NAIC-4
|
B
|
10.9
|
10.6
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
0.0%
|
36.0%
|
||||||||||||
|
NAIC-5
|
CCC and below
|
20.7
|
11.0
|
0.1%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
100.0%
|
63.1%
|
||||||||||||
|
NAIC-6
|
In or near default
|
6.0
|
4.9
|
0.0%
|
0.0%
|
76.2%
|
0.0%
|
0.0%
|
23.8%
|
28.8%
|
||||||||||||
|
Total
|
$
|
957.1
|
$
|
1,013.6
|
6.3%
|
26.0%
|
6.6%
|
15.5%
|
11.7%
|
40.2%
|
46.6%
|
|||||||||||
|
(
1)
|
Includes commercial mortgage-backed CDOs with amortized cost and market values of $39.5 million and $28.6 million, respectively. CMBS holdings in this exhibit include $11.7 million classified as fair value investments on the consolidated balance sheets. For these fair value investments, there is no impact to OCI as carrying value is equal to market value.
|
|
(2)
|
Percentages based on Market Value.
|
|
Sources and Types of
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
Net Realized Investment Gains (Losses):
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Total other-than-temporary debt impairments
|
$ | (6.9 | ) | $ | (30.9 | ) | $ | (28.8 | ) | $ | (44.6 | ) | ||||
|
Portion of loss recognized in OCI
|
(0.2 | ) | 21.2 | 11.3 | 26.1 | |||||||||||
|
Net debt impairment losses recognized in earnings
|
$ | (7.1 | ) | $ | (9.7 | ) | $ | (17.5 | ) | $ | (18.5 | ) | ||||
|
Debt security impairments:
|
||||||||||||||||
|
U.S. government and agency
|
$ | — | $ | — | $ | — | $ | — | ||||||||
|
State and political subdivision
|
— | — | — | — | ||||||||||||
|
Foreign government
|
— | — | — | — | ||||||||||||
|
Corporate
|
— | (3.2 | ) | (0.6 | ) | (7.5 | ) | |||||||||
|
CMBS
|
(3.3 | ) | (2.5 | ) | (4.5 | ) | (2.5 | ) | ||||||||
|
RMBS
|
(2.6 | ) | (2.5 | ) | (10.4 | ) | (7.0 | ) | ||||||||
|
CDO/CLO
|
(0.7 | ) | (1.2 | ) | (0.7 | ) | (1.2 | ) | ||||||||
|
Other asset-backed
|
(0.5 | ) | (0.3 | ) | (1.3 | ) | (0.3 | ) | ||||||||
|
Net debt security impairments
|
(7.1 | ) | (9.7 | ) | (17.5 | ) | (18.5 | ) | ||||||||
|
Equity security impairments
|
— | — | (1.5 | ) | — | |||||||||||
|
Limited partnerships and other investment impairments
|
(0.3 | ) | — | (0.3 | ) | — | ||||||||||
|
Impairment losses
|
(7.4 | ) | (9.7 | ) | (19.3 | ) | (18.5 | ) | ||||||||
|
Debt security transaction gains
|
33.4 | 1.8 | 41.4 | 13.1 | ||||||||||||
|
Debt security transaction losses
|
(1.3 | ) | (1.0 | ) | (4.9 | ) | (3.9 | ) | ||||||||
|
Equity security transaction gains
|
5.0 | — | 5.0 | 0.1 | ||||||||||||
|
Equity security transaction losses
|
(0.2 | ) | (0.1 | ) | (0.3 | ) | (0.1 | ) | ||||||||
|
Limited partnerships and other investment transaction gains
|
5.5 | 0.2 | 6.8 | 2.6 | ||||||||||||
|
Limited partnerships and other investment transaction losses
|
(1.5 | ) | (0.4 | ) | (2.5 | ) | (2.4 | ) | ||||||||
|
Net transaction gains
|
40.9 | 0.5 | 45.5 | 9.4 | ||||||||||||
|
Derivative instruments
|
(14.2 | ) | 52.3 | (33.4 | ) | 35.7 | ||||||||||
|
Embedded derivatives
(1)
|
7.1 | (50.5 | ) | 6.9 | (42.9 | ) | ||||||||||
|
Fair value investments
|
1.1 | (2.7 | ) | 1.9 | (1.7 | ) | ||||||||||
|
Net realized investment gains (losses),
excluding impairment losses
|
34.9 | (0.4 | ) | 20.9 | 0.5 | |||||||||||
|
Net realized investment gains (losses),
including impairment losses
|
$ | 27.5 | $ | (10.1 | ) | $ | 1.6 | $ | (18.0 | ) | ||||||
|
(1)
|
Includes the change in fair value of embedded derivatives associated with variable annuity GMWB, GMAB and COMBO riders. See Note 11 to our consolidated financial statements under “Item 1: Financial Statements” in this Quarterly Report on Form 10-Q for additional disclosures.
|
|
Credit Losses Recognized in Earnings on Debt Securities for
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
which a Portion of the OTTI Loss was Recognized in OCI:
|
September 30,
|
September 30,
|
||||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
|
As restated and amended
|
As restated and amended
|
|||||||||||||||
|
Balance, beginning of period
|
$ | (78.8 | ) | $ | (70.8 | ) | $ | (79.1 | ) | $ | (65.8 | ) | ||||
|
Add: Credit losses on securities not previously impaired
(1)
|
(1.5 | ) | (3.4 | ) | (3.8 | ) | (9.1 | ) | ||||||||
|
Add: Credit losses on securities previously impaired
(1)
|
(5.6 | ) | (2.4 | ) | (11.8 | ) | (4.6 | ) | ||||||||
|
Less: Credit losses on securities impaired due to intent to sell
|
— | — | — | — | ||||||||||||
|
Less: Credit losses on securities sold
|
5.3 | 4.0 | 14.1 | 6.9 | ||||||||||||
|
Less: Increases in cash flows expected on
previously impaired securities
|
— | — | — | — | ||||||||||||
|
Balance, end of period
|
$ | (80.6 | ) | $ | (72.6 | ) | $ | (80.6 | ) | $ | (72.6 | ) | ||||
|
(1)
|
Additional credit losses on securities for which a portion of the OTTI loss was recognized in AOCI are included within net OTTI losses recognized in earnings on the statements of comprehensive income.
|
|
Fixed Maturity Non-Credit OTTI Losses in AOCI, by Security Type:
|
Sept 30,
|
Dec 31,
|
||||||
|
($ in millions)
|
2012
(1)
|
2011
(1)
|
||||||
|
As restated and amended
|
||||||||
|
U.S. government and agency
|
$ | — | $ | — | ||||
|
State and political subdivision
|
— | — | ||||||
|
Foreign government
|
— | — | ||||||
|
Corporate
|
(5.8 | ) | (5.8 | ) | ||||
|
CMBS
|
(21.8 | ) | (29.2 | ) | ||||
|
RMBS
|
(98.5 | ) | (92.2 | ) | ||||
|
CDO/CLO
|
(28.5 | ) | (36.2 | ) | ||||
|
Other asset-backed
|
5.9 | 2.8 | ||||||
|
Total fixed maturity non-credit OTTI losses in AOCI
|
$ | (148.7 | ) | $ | (160.6 | ) | ||
|
(1)
|
Represents the amount of non-credit OTTI losses recognized in AOCI excluding net unrealized gains or losses subsequent to the date of impairment.
|
|
Duration of Gross Unrealized Losses on
|
As of September 30, 2012
|
|||||||||||||||
|
Securities Outside Closed Block:
|
0 – 6 | 6 – 12 |
Over 12
|
|||||||||||||
|
($ in millions)
|
Total
|
Months
|
Months
|
Months
|
||||||||||||
|
Debt securities outside closed block
|
||||||||||||||||
|
Total fair value
|
$ | 674.4 | $ | 96.4 | $ | 56.5 | $ | 521.5 | ||||||||
|
Total amortized cost
|
789.5 | 98.7 | 62.1 | 637.7 | ||||||||||||
|
Unrealized losses
|
$ | (124.1 | ) | $ | (2.3 | ) | $ | (5.6 | ) | $ | (116.2 | ) | ||||
|
Number of securities
(1)
|
257 | 32 | 28 | 197 | ||||||||||||
|
Investment grade:
|
||||||||||||||||
|
Unrealized losses
|
$ | (44.9 | ) | $ | (1.1 | ) | $ | (2.6 | ) | $ | (41.2 | ) | ||||
|
Below investment grade:
|
||||||||||||||||
|
Unrealized losses
|
$ | (79.2 | ) | $ | (1.2 | ) | $ | (3.0 | ) | $ | (75.0 | ) | ||||
|
Equity securities outside closed block
|
||||||||||||||||
|
Unrealized losses
|
$ | (3.2 | ) | $ | — | $ | — | $ | (3.2 | ) | ||||||
|
Number of securities
(1)
|
10 | 3 | 2 | 5 | ||||||||||||
|
(1)
|
Certain securities are held in both the open and closed blocks.
|
|
Duration of Gross Unrealized Losses on
|
As of September 30, 2012
|
|||||||||||||||
|
Securities Outside Closed Block:
|
0 – 6 | 6 – 12 |
Over 12
|
|||||||||||||
|
($ in millions)
|
Total
|
Months
|
Months
|
Months
|
||||||||||||
|
Debt securities outside closed block
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (84.9 | ) | $ | (1.5 | ) | $ | (3.4 | ) | $ | (80.0 | ) | ||||
|
Number of securities
(1)
|
50 | 3 | 4 | 43 | ||||||||||||
|
Investment grade:
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (22.8 | ) | $ | (1.1 | ) | $ | (2.7 | ) | $ | (19.0 | ) | ||||
|
Below investment grade:
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (62.1 | ) | $ | (0.4 | ) | $ | (0.7 | ) | $ | (61.0 | ) | ||||
|
Equity securities outside closed block
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (3.3 | ) | $ | (0.8 | ) | $ | - | $ | (2.5 | ) | |||||
|
Number of securities
(1)
|
8 | 3 | 2 | 3 | ||||||||||||
|
(1)
|
Certain securities are held in both the open and closed blocks.
|
|
Duration of Gross Unrealized Losses on
|
As of September 30, 2012
|
|||||||||||||||
|
Securities Inside Closed Block:
|
0 – 6 | 6 – 12 |
Over 12
|
|||||||||||||
|
($ in millions)
|
Total
|
Months
|
Months
|
Months
|
||||||||||||
|
Debt securities inside closed block
|
||||||||||||||||
|
Total fair value
|
$ | 496.6 | $ | 81.8 | $ | 23.9 | $ | 390.9 | ||||||||
|
Total amortized cost
|
548.9 | 84.0 | 26.6 | 438.3 | ||||||||||||
|
Unrealized losses
|
$ | (52.3 | ) | $ | (2.2 | ) | $ | (2.7 | ) | $ | (47.4 | ) | ||||
|
Number of securities
(1)
|
142 | 21 | 10 | 111 | ||||||||||||
|
Investment grade:
|
||||||||||||||||
|
Unrealized losses
|
$ | (26.9 | ) | $ | (1.2 | ) | $ | (0.7 | ) | $ | (25.0 | ) | ||||
|
Below investment grade:
|
||||||||||||||||
|
Unrealized losses
|
$ | (25.4 | ) | $ | (1.0 | ) | $ | (2.0 | ) | $ | (22.4 | ) | ||||
|
Equity securities inside closed block
|
||||||||||||||||
|
Unrealized losses
|
$ | (3.5 | ) | $ | (0.2 | ) | $ | - | $ | (3.3 | ) | |||||
|
Number of securities
(1)
|
12 | 5 | - | 7 | ||||||||||||
|
(1)
|
Certain securities are held in both the open and closed blocks.
|
|
Duration of Gross Unrealized Losses on
|
As of September 30, 2012
|
|||||||||||||||
|
Securities Inside Closed Block:
|
0 – 6 | 6 – 12 |
Over 12
|
|||||||||||||
|
($ in millions)
|
Total
|
Months
|
Months
|
Months
|
||||||||||||
|
Debt securities inside closed block
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (19.3 | ) | $ | (1.1 | ) | $ | (1.9 | ) | $ | (16.3 | ) | ||||
|
Number of securities
(1)
|
20 | 3 | 3 | 14 | ||||||||||||
|
Investment grade:
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (7.0 | ) | $ | (1.1 | ) | $ | (1.9 | ) | $ | (4.0 | ) | ||||
|
Below investment grade:
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (12.3 | ) | $ | - | $ | — | $ | (12.3 | ) | ||||||
|
Equity securities inside closed block
|
||||||||||||||||
|
Unrealized losses over 20% of cost
|
$ | (3.3 | ) | $ | (0.7 | ) | $ | — | $ | (2.6 | ) | |||||
|
Number of securities
(1)
|
8 | 4 | — | 4 | ||||||||||||
|
(1)
|
Certain securities are held in both the open and closed blocks.
|
|
Summary Consolidated Cash Flows:
|
Nine Months Ended
|
|||||||
|
($ in millions)
|
September 30,
|
|||||||
|
2012
|
2011
|
|||||||
|
As restated
and amended
|
||||||||
|
Cash used for operating activities
|
$ | (403.4 | ) | $ | (366.5 | ) | ||
|
Cash used for investing activities
|
(77.8 | ) | (361.4 | ) | ||||
|
Cash provided by financing activities
|
594.4 | 761.3 | ||||||
|
Change in cash and cash equivalents
|
$ | 113.2 | $ | 33.4 | ||||
|
Financial Strength Rating
|
Senior Debt Rating
|
|||||||
|
Rating Agency
|
of Phoenix Life
(1)
|
Outlook
|
of PNX
|
Outlook
|
||||
|
A.M. Best Company, Inc.
|
B
|
Stable
|
b
|
Negative
|
||||
|
Standard & Poor’s
|
BB-
|
Negative
|
B-
|
Negative
|
|
(1)
|
PHLVIC is also rated by A.M. Best Company, Inc. and Standard & Poor’s. Phoenix Life and Annuity Company and American Phoenix Life and Reassurance Company are only rated by A.M. Best Company, Inc. All subsidiaries have the same rating as Phoenix Life.
|
|
Consolidated Balance Sheet:
|
Increase (decrease) and
|
|||||||||||||||
|
($ in millions)
|
Sept 30,
|
Dec 31,
|
percentage change
|
|||||||||||||
|
2012
|
2011
|
2012 vs. 2011
|
||||||||||||||
|
As restated and amended
|
||||||||||||||||
|
ASSETS
|
||||||||||||||||
|
Available-for-sale debt securities, at fair value
|
$ | 12,436.7 | $ | 11,797.0 | $ | 662.2 | 5 | % | ||||||||
|
Available-for-sale equity securities, at fair value
|
30.9 | 35.7 | (4.8 | ) | (13 | %) | ||||||||||
|
Limited partnerships and other investments
|
559.2 | 565.3 | (6.1 | ) | (1 | %) | ||||||||||
|
Policy loans, at unpaid principal balances
|
2,338.4 | 2,379.3 | (40.9 | ) | (2 | %) | ||||||||||
|
Derivative instruments
|
195.1 | 162.2 | 32.9 | 20 | % | |||||||||||
|
Fair value investments
|
213.8 | 184.0 | 7.3 | 16 | % | |||||||||||
|
Total investments
|
15,774.1 | 15,123.5 | 650.6 | 4 | % | |||||||||||
|
Cash and cash equivalents
|
283.8 | 168.2 | 115.6 | 69 | % | |||||||||||
|
Accrued investment income
|
207.8 | 175.6 | 32.2 | 18 | % | |||||||||||
|
Receivables
|
663.1 | 648.6 | 14.5 | 2 | % | |||||||||||
|
Deferred policy acquisition costs
|
944.4 | 1,105.1 | (160.7 | ) | (15 | %) | ||||||||||
|
Deferred income taxes, net
|
61.1 | 120.6 | (59.5 | ) | (49 | %) | ||||||||||
|
Other assets
|
279.3 | 244.2 | 35.1 | 14 | % | |||||||||||
|
Discontinued operations assets
|
53.9 | 85.3 | (31.4 | ) | (37 | %) | ||||||||||
|
Separate account assets
|
3,395.4 | 3,816.9 | (421.5 | ) | (11 | %) | ||||||||||
|
Total assets
|
$ | 21,662.9 | $ | 21,488.0 | $ | 174.9 | 1 | % | ||||||||
|
LIABILITIES
|
||||||||||||||||
|
Policy liabilities and accruals
|
$ | 12,657.1 | $ | 12,631.4 | $ | 25.7 | 0 | % | ||||||||
|
Policyholder deposit funds
|
2,914.6 | 2,432.2 | 482.4 | 20 | % | |||||||||||
|
Dividend obligations
|
991.0 | 752.5 | 238.5 | 32 | % | |||||||||||
|
Indebtedness
|
378.8 | 426.9 | (48.1 | ) | (11 | %) | ||||||||||
|
Other liabilities
|
730.5 | 658.0 | 72.5 | 11 | % | |||||||||||
|
Discontinued operations liabilities
|
48.8 | 74.4 | (25.6 | ) | (34 | %) | ||||||||||
|
Separate account liabilities
|
3,395.4 | 3,816.9 | (421.5 | ) | (11 | %) | ||||||||||
|
Total liabilities
|
21,116.2 | 20,792.3 | 323.9 | 2 | % | |||||||||||
|
STOCKHOLDERS’ EQUITY
|
||||||||||||||||
|
Common stock
|
0.1 | 1.3 | (1.2 | ) | (92 | %) | ||||||||||
|
Additional paid in capital
|
2,632.7 | 2,630.5 | 2.2 | 0 | % | |||||||||||
|
Accumulated other comprehensive loss
|
(232.0 | ) | (230.7 | ) | (1.3 | ) | (1 | %) | ||||||||
|
Accumulated deficit
|
(1,676.4 | ) | (1,528.7 | ) | (147.7 | ) | (10 | %) | ||||||||
|
Treasury stock
|
(182.9 | ) | (179.5 | ) | (3.4 | ) | (2 | %) | ||||||||
|
Total The Phoenix Companies, Inc. stockholders’ equity
|
541.5 | 692.9 | (151.4 | ) | (22 | %) | ||||||||||
|
Noncontrolling interests
|
5.2 | 2.8 | 2.4 | 86 | % | |||||||||||
|
Total liabilities and stockholders’ equity
|
546.7 | 695.7 | (149.0 | ) | (21 | %) | ||||||||||
|
Total The Phoenix Companies, Inc. stockholders’ equity
|
$ | 21,662.9 | $ | 21,488.0 | $ | 174.9 | 1 | % | ||||||||
|
Composition of Deferred Policy Acquisition Costs
|
Increase (decrease) and | |||||||||||||||
|
by Product:
|
Sept 30,
|
Dec 31,
|
percentage change
|
|||||||||||||
|
($ in millions)
|
2012
|
2011
|
2012 vs. 2011
|
|||||||||||||
|
As restated
and amended
|
||||||||||||||||
|
Variable universal life
|
$ | 143.7 | $ | 155.7 | $ | (12.0 | ) | (8 | %) | |||||||
|
Universal life
|
241.3 | 380.7 | (139.4 | ) | (37 | %) | ||||||||||
|
Variable annuities
|
100.0 | 115.2 | (15.2 | ) | (13 | %) | ||||||||||
|
Fixed annuities
|
116.3 | 67.4 | 48.9 |
NM
|
||||||||||||
|
Traditional life
|
343.1 | 400.2 | (57.1 | ) | (14 | %) | ||||||||||
|
Total deferred policy acquisition costs
|
$ | 944.4 | $ | 1,119.2 | $ | (174.8 | ) | (16 | %) | |||||||
|
Annuity Funds on Deposit:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Deposits
|
$ | 211.1 | $ | 279.0 | $ | 631.0 | $ | 675.6 | ||||||||
|
Performance and interest credited
|
138.9 | (350.5 | ) | 329.2 | (138.6 | ) | ||||||||||
|
Fees
|
(14.6 | ) | (13.0 | ) | (43.5 | ) | (41.6 | ) | ||||||||
|
Benefits and surrenders
|
(134.9 | ) | (134.9 | ) | (453.1 | ) | (426.4 | ) | ||||||||
|
Change in funds on deposit
|
200.5 | (219.4 | ) | 463.6 | 69.0 | |||||||||||
|
Funds on deposit, beginning of period
|
4,758.5 | 4,371.7 | 4,495.4 | 4,083.3 | ||||||||||||
|
Annuity funds on deposit, end of period
|
$ | 4,959.0 | $ | 4,152.3 | $ | 4,959.0 | $ | 4,152.3 | ||||||||
|
Variable Universal Life Funds on Deposit:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Deposits
|
$ | 20.6 | $ | 23.9 | $ | 62.8 | $ | 71.3 | ||||||||
|
Performance and interest credited
|
43.6 | (138.8 | ) | 106.5 | (76.9 | ) | ||||||||||
|
Fees and cost of insurance
|
(19.5 | ) | (20.5 | ) | (59.3 | ) | (62.9 | ) | ||||||||
|
Benefits and surrenders
|
(24.2 | ) | (27.2 | ) | (92.6 | ) | (108.7 | ) | ||||||||
|
Change in funds on deposit
|
20.5 | (162.6 | ) | 17.4 | (177.2 | ) | ||||||||||
|
Funds on deposit, beginning of period
|
1,016.0 | 1,137.0 | 1,019.1 | 1,151.6 | ||||||||||||
|
Variable universal life funds on deposit, end of period
|
$ | 1,036.5 | $ | 974.4 | $ | 1,036.5 | $ | 974.4 | ||||||||
|
Universal Life Funds on Deposit:
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
($ in millions)
|
September 30,
|
September 30,
|
||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
As restated
and amended
|
As restated
and amended
|
|||||||||||||||
|
Deposits
|
$ | 97.1 | $ | 94.2 | $ | 275.8 | $ | 285.0 | ||||||||
|
Interest credited
|
18.7 | 19.4 | 56.7 | 60.2 | ||||||||||||
|
Fees and cost of insurance
|
(93.1 | ) | (101.1 | ) | (283.4 | ) | (307.6 | ) | ||||||||
|
Benefits and surrenders
|
(27.2 | ) | (30.7 | ) | (81.6 | ) | (91.2 | ) | ||||||||
|
Change in funds on deposit
|
(4.5 | ) | (18.2 | ) | (32.5 | ) | (53.6 | ) | ||||||||
|
Funds on deposit, beginning of period
|
1,824.8 | 1,883.5 | 1,852.8 | 1,918.9 | ||||||||||||
|
Universal life funds on deposit, end of period
|
$ | 1,820.3 | $ | 1,865.3 | $ | 1,820.3 | $ | 1,865.3 | ||||||||
|
(a)
|
Not applicable.
|
|
(b)
|
Not applicable.
|
|
(c)
|
Not applicable.
|
|
THE PHOENIX COMPANIES, INC.
|
|||
|
Date:
April 22 , 2014
|
By:
|
/s/ Bonnie J. Malley
|
|
|
Bonnie J. Malley
|
|||
|
Executive Vice President and Chief Financial Officer
|
|||