Registration No. 333-20277
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHL VARIABLE INSURANCE COMPANY
------------------------------
(Exact name of registrant as specified in its charter)
Connecticut
- ------------------ ---------------------- -------------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation or Classification Number)
organization) Code Number)
ONE AMERICAN ROW
HARTFORD, CT 06102-5056
(800) 447-4312
-----------------------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
DONA D. YOUNG, ESQ.
PHL VARIABLE INSURANCE COMPANY
ONE AMERICAN ROW
HARTFORD, CT 06102-5056
(860) 403-5967
-----------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: ______________
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of this earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
Registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If the delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
================================================================================
<PAGE>
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
PHL VARIABLE INSURANCE COMPANY
<TABLE>
CROSS REFERENCE SHEET PURSUANT TO
REGULATION S-K, ITEM 501(B)
<CAPTION>
FORM S-1 ITEM NUMBER CAPTION HEADING IN PROSPECTUS
-------------------- -----------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus............................... Outside Front Cover
2. Inside Front and Outside Back Pages of Prospectus.................... Inside Front Cover
3. Summary Information, Risk Factors and Ratio of Fixed Charges......... Product Description
4. Use of Proceeds...................................................... Investments by PHL Variable
5. Determination of Offering Price...................................... Not Applicable
6. Dilution............................................................. Not Applicable
7. Selling Security Holders............................................. Not Applicable
8. Plan of Distribution................................................. Distribution of Contracts
9. Description of Securities to be Registered........................... Product Description
10. Interests of Named Experts and Counsel............................... Not Applicable
11. Information with Respect to the Registrant........................... Description of PHL Variable; Management's
Discussion and Analysis of Financial Condition
and Officers of PHL Variable; Executive
Compensation; Directors and Officers of PHL
Variable; Experts and Legal Proceedings;
Financial Statements
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities....................................... Not Applicable
</TABLE>
<PAGE>
PROSPECTUS
MARKET VALUE ADJUSTED GUARANTEED INTEREST ACCOUNT
Offered through PHL Variable Accumulation Account Annuities
issued by
PHL VARIABLE INSURANCE COMPANY
VARIABLE PRODUCTS OPERATIONS
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
TELEPHONE: (800) 447-4312
-------------------------
mailing address:
PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS
P.O. BOX 8027
BOSTON, MASSACHUSETTS 02266-8027
This Prospectus describes PHL Variable Insurance Company's ("PHL Variable",
"Company" or "We") Market Value Adjusted Guaranteed Interest Account ("MVA").
The MVA is available for use under the Company's deferred variable accumulation
annuity contract (the "Contract"). The MVA is an account to which Contract
Owners may allocate purchase payments or transfer accumulation value to and
from, subject to the rules outlined in the Contract prospectus. As this
Prospectus focuses on the operations and features of the MVA, an investor should
carefully review the Contract prospectus.
PHL Variable guarantees specified rates of interest for amounts allocated to
the MVA for specified periods (Guarantee Period). The Guaranteed Rate offered
will, in no event, be less than 3%.
The assets supporting the Company's obligations based on allocations to the
MVA are held in PHL Variable Separate Account MVA1 ("Separate Account MVA1"),
which is a "non-unitized" separate account. Such obligations are based on the
interest rates credited to allocations to the MVA and the terms of the Contract.
These obligations do not depend on the investment performance of the assets in
Separate Account MVA1. Separate Account MVA1 was established by the Company
according to Connecticut law.
Any partial or full surrenders or transfers from the MVA, before the end of
a Guarantee Period, may be adjusted up or down by the application of the Market
Value Adjustment. Any values allocated to the MVA that are applied to determine
the annuity benefit before the end of the Guarantee Period also will be subject
to the Market Value Adjustment. Accordingly, a Contract Owner may experience a
negative investment return.
The annuity benefits available under the Contract may be either fixed or
variable amounts. The Contract Value before maturity will vary with the
investment performance of the Subaccounts of the PHL Variable Accumulation
Account selected and amounts allocated to the Guaranteed Interest Account and
the MVA. The amount of any variable annuity payments thereafter will fluctuate
with the investment performance of the Subaccounts of the PHL Variable
Accumulation Account selected.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY THE PROSPECTUSES FOR A PHL VARIABLE
ACCUMULATION ACCOUNT ANNUITY CONTRACT, THE PHOENIX EDGE SERIES FUND AND WANGER
ADVISORS TRUST. THIS PROSPECTUS AND THE PROSPECTUSES FOR THE CONTRACT AND THE
FUNDS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
___________________, 1997
1
<PAGE>
TABLE OF CONTENTS
Heading Page
SPECIAL TERMS.................................................................3
PRODUCT DESCRIPTION...........................................................3
The Nature of the Contract and the MVA.....................................3
Availability of the MVA....................................................3
The Market Value Adjusted Guaranteed Interest Account .....................3
Market Value Adjustment....................................................4
Setting the Guaranteed Rate................................................5
Application of the Market Value Adjustment on Withdrawals..................5
INVESTMENTS BY PHL VARIABLE...................................................5
DISTRIBUTION OF CONTRACTS.....................................................5
FEDERAL TAXATION DISCUSSION...................................................6
ACCOUNTING PRACTICES..........................................................6
DESCRIPTION OF PHL VARIABLE ..................................................6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND OFFICERS OF PHL VARIABLE................................................7
Executive Compensation.....................................................8
DIRECTORS AND OFFICERS OF PHL VARIABLE........................................8
EXPERTS.......................................................................8
LEGAL PROCEEDINGS.............................................................8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Any statement contained in a document incorporated by reference herein shall
be deemed modified or superseded hereby to the extent that a statement contained
in a later-filed document or herein shall modify or supersede such statement.
Any statement so modified or superseded shall be deemed, except as so modified
or superseded, to constitute a part of the Prospectus.
The Company will furnish, without charge, to each person to whom a copy this
Prospectus is delivered, upon the written or oral request of such person, a copy
of the document referred to above which has been incorporated by reference in
the Prospectus, other than exhibits to such document (unless such exhibits are
specifically incorporated by reference in the Prospectus). Requests for such
document should be directed to 800-447-4312.
2
<PAGE>
SPECIAL TERMS
- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms mean:
ACCOUNT: PHL Variable Accumulation Account.
CONTINGENT DEFERRED SALES CHARGE: Surrender charges.
CONTRACT: The deferred variable accumulation annuity contract issued by PHL
Variable Insurance Company.
CONTRACT VALUE: Prior to its maturity, the sum of the values under a Contract of
all accumulation units held in the Subaccounts of the Account plus the values
held in the Guaranteed Interest Account and the Market Value Adjusted Guaranteed
Interest Account.
CURRENT RATE: The Guaranteed Rate currently in effect for amounts allocated to
the Market Value Adjusted Guaranteed Interest Account, established from time to
time for various durations.
EXPIRATION DATE: The date on which the Guarantee Period ends.
GUARANTEE PERIOD: The duration for which interest accrues at the Guaranteed Rate
on amounts allocated to the Market Value Adjusted Guaranteed Interest Account.
GUARANTEED INTEREST ACCOUNT (GIA): An allocation option under which premium
amounts are guaranteed to earn a fixed rate of interest. Excess interest also
may be credited, in the sole discretion of PHL Variable Insurance Company.
GUARANTEED RATE: The effective annual interest rate PHL Variable uses to accrue
interest on amounts allocated to the Market Value Adjusted Guaranteed Interest
Account for a Guarantee Period. Guaranteed Rates are fixed at the time an amount
is credited to the Market Value Adjusted Guaranteed Interest Account and remain
level throughout the Guarantee Period.
MARKET VALUE ADJUSTED GUARANTEED INTEREST ACCOUNT (MVA): An account that pays
interest at a Guaranteed Rate if held to maturity. If such amounts are withdrawn
before the end of the Guarantee Period, a Market Value Adjustment will be made.
Assets allocated to the MVA are not part of the assets allocated to the Account
or the general account of PHL Variable Insurance Company.
MARKET VALUE ADJUSTMENT: An adjustment made to the amount that a Contract Owner
will receive if money is withdrawn or transferred from the Market Value Adjusted
Guaranteed Interest Account before the Expiration Date of its Guarantee Period.
PHL VARIABLE: PHL Variable Insurance Company.
WINDOW PERIOD: The 15-day period before and after the Expiration Date during
which time any withdrawals or transfers from the MVA will not be subject to a
Market Value Adjustment.
PRODUCT DESCRIPTION
- --------------------------------------------------------------------------------
THE NATURE OF THE CONTRACT AND THE MVA
The investment option described in this Prospectus is a Market Value
Adjusted Guaranteed Interest Account (MVA) available only under the flexible
premium deferred variable annuity contract (the "Contract") offered by PHL
Variable Insurance Company ("PHL Variable" or the "Company"). The Contract is
described in detail in its prospectus. You should review the Contract prospectus
with this Prospectus before deciding to invest in the Contract or allocate
purchase payments to the MVA.
The MVA currently provides four choices of interest rate Guarantee Periods:
3-year, 5-year, 7-year and 10-year. Purchase payments can be allocated to one or
more of the available MVA Guarantee Period options, either at the time the
payment is made or by transferring amounts held in the Subaccounts of the PHL
Variable Accumulation Account (the "Account"), the Guaranteed Interest Account
or other available MVA options, anytime prior to Contract maturity. Generally,
amounts allocated to an MVA option must be for at least $1,000.
Amounts may be transferred to or from the MVA according to the Contract
transfer rules. (See "The Accumulation Period -- Transfers" of the Contract
prospectus.)
Allocations that remain in the MVA until the applicable Expiration Date will
be equal to the amount originally allocated multiplied, on an annually
compounded basis, by its Guaranteed Rate.
A Market Value Adjustment will be made if amounts are withdrawn or
transferred from the MVA before the Expiration Date. (See "The Market Value
Adjusted Guaranteed Interest Account.")
The Contract provides for the accumulation of values before maturity and for
the payment of annuity benefits thereafter. A death benefit also is available
under the Contract. Since MVA values are part of the Contract Value, earnings on
allocations to the MVA will impact the values available at surrender, maturity
or death.
AVAILABILITY OF THE MVA
The MVA is not available in all states.
THE MARKET VALUE ADJUSTED GUARANTEED INTEREST ACCOUNT
The MVA is available only during the accumulation phase of the Contract. The
MVA option currently offers different Guarantee Periods, which provide the
ability to earn interest at different Guaranteed Rates on all or part of the
Contract Value. Each allocation has its own Guaranteed Rate and Expiration Date.
Because the Company changes Guaranteed Rates periodically, amounts allocated to
a Guarantee Period at different times may have varied Guaranteed Rates and
Expiration Dates. The applicable Guaranteed Rate does not change during the
Guarantee Period. The Guaranteed Rate may never be less than 3%.
PHL Variable will notify you of the expiration of the Guarantee Period and
of your available options within 30 days of the Expiration Date. You will have
15 days before and 15 days following the Expiration Date ("Window Period") to
notify us of your election. During this Window Period, any withdrawals or
transfers from the MVA will not be subject to a market value adjustment. Unless
you elect to transfer funds to another Guarantee Period, Account, the Guaranteed
Interest Account or elect to withdraw funds, we will begin another Guarantee
Period of the same duration as the one just ended and credit interest at the
then current rate for that new Guarantee Period. If you chose a Guarantee Period
that is no longer available or your original Guarantee Period is no longer
available, we will use the Guarantee Period with the next longest duration.
To the extent permitted by law, we reserve the right, anytime, to offer
Guarantee Periods that differ from those available at the time
3
<PAGE>
your Contract was issued. Since Guarantee Periods may change, please contact
Variable Products Operations to determine the current Guarantee Periods being
offered.
MARKET VALUE ADJUSTMENT
Any withdrawal from your MVA will be subject to a Market Value Adjustment
unless the effective date of the withdrawal is within 15 days before and after
the end of a Guarantee Period. For this purpose, redemptions, transfers and
maturity amounts are treated as withdrawals. The Market Value Adjustment will be
applied to the amount being withdrawn after the deduction of any applicable
Administrative Charge and before the deduction of any applicable Contingent
Deferred Sales Charges (surrender charges). The Market Value Adjustment can be
positive or negative. The amount being withdrawn after application of the Market
Value Adjustment can be greater than or less than the amount withdrawn before
the application of the Market Value Adjustment.
A Market Value Adjustment will not be applied upon the payment of the Death
Benefit.
The Market Value Adjustment will reflect the relationship between the
Current Rate (defined below) for the amount being withdrawn and the Guaranteed
Rate. It is also reflective of the time remaining in the applicable Guarantee
Period. Generally, if the Guaranteed Rate is lower than the applicable Current
Rate, then the application of the Market Value Adjustment will result in a lower
payment upon withdrawal. Conversely, if the Guaranteed Rate is higher than the
applicable Current Rate, the application of the Market Value Adjustment will
produce a higher payment upon withdrawal.
The Market Value Adjustment which is applied to the amount being withdrawn
is determined by using the following formula:
Market Value Adjustment
1+i n/12
= Amount x [(----------) -1]
1+j+0.0025
where,
Amount, is the amount being withdrawn from a given accumulated amount less
any applicable administrative charges.
i, is the Guaranteed Rate being credited to the amount subject to
the Market Value Adjustment; and
j, is the Current Rate for new deposits with a Guarantee Period equal to the
number of years remaining in the current Guarantee Period, rounded up to the
next higher number of complete years; and
n, is the number of months rounded up to the next whole number from the date
of the withdrawal or transfer to the end of the Guarantee Period.
If the Company does not offer a Guarantee Period equal to the number of
years remaining in the Guarantee Period, "j" will be determined by interpolation
or extrapolation of the Guaranteed Rate for the Guarantee Periods then
available.
EXAMPLES
The following examples illustrate how the Market Value Adjustment operates:
EXAMPLE 1
$10,000 is deposited on January 1, 1997, into an MVA with a 5-year Guarantee
Period. The Guaranteed Rate for this deposit amount is 5.50%.
If, on January 1, 1999 (2 years after deposit), the full amount is taken
from this MVA segment, the following amount is available:
1. The accumulated amount prior to application of Market Value Adjustment
is:
2
$10,000 x (1.055) = $11,130.25
2. The Current Rate that would be applied on January 1, 1999 to amounts
credited to a 3-year MVA segment is 6.50%.
3. The number of months remaining in the Guarantee Period (rounded up to
next whole number) is 36.
4. The Market Value Adjustment equals $-386.43, and is calculated as
follows:
1+0.055 36/12
$-386.43 = $11,130.25 x [(--------------) -1]
1+0.065+0.0025
The market value for the purposes of surrender on January 1, 1999 is
therefore equal to $10,743.82 ($11,130.25 - $386.43).
EXAMPLE 2
$10,000 is deposited on January 1, 1997, into an MVA with a 5-year Guarantee
Period. The Guaranteed Rate for this amount is 5.50%.
If, on January 1, 1999 (2 years from deposit), the full amount is taken from
this MVA segment, the following amount is available:
1. The accumulated amount prior to application of Market Value Adjustment
is:
2
$10,000 x (1.055) = $11,130.25
2. The Current Rate being applied on January 1, 1999 to amounts credited to
a 3-year MVA segment is 4.50%.
3. The number of months remaining in the Guarantee Period (rounded up to
next whole number) is 36.
4. The Market Value Adjustment equals $240.79, and is calculated as follows:
1+0.055 36/12
$+240.79 = $11,130.25 x [(--------------) -1]
1+0.045+0.0025
The market value for the purposes of surrender on January 1, 1999 is
therefore equal to $11,371.04 ($11,130.25 + $240.79).
THE ABOVE EXAMPLES ARE HYPOTHETICAL AND ARE NOT INDICATIVE OF FUTURE OR PAST
PERFORMANCE.
4
<PAGE>
SETTING THE GUARANTEED RATE
PHL Variable determines Guaranteed Rates for current and future purchase
payments, transfers or renewals. Although future Guaranteed Rates cannot be
predicted, the Company guarantees that the Guaranteed Rate will never be less
than 3% per annum.
APPLICATION OF THE MARKET VALUE ADJUSTMENT ON WITHDRAWALS
A Market Value Adjustment will apply if a withdrawal is made before the
Expiration Date and outside the Window Period as described above. When a
withdrawal is made for full or partial surrender, the Contract Value also may be
reduced by a Contingent Deferred Sales Charge (surrender charge) according to
the following schedule:
SURRENDER CHARGE
YEAR SINCE PAYMENT ASSESSED
------------------ --------
1st 7%
2nd 6%
3rd 5%
4th 4%
5th 3%
6th 2%
7th 1%
8th None
The Company makes this adjustment for surrender charge since we make no
deduction for sales charges when a purchase payment is made. The surrender
charge is computed based on the date that the particular payment is received
into the Contract.
Purchase payments that remain on deposit for 7 complete years are not
subject to surrender charges. Amounts allocated to the MVA however, continue to
be subject to a Market Value Adjustment. For more information regarding the
application of surrender charges, please consult the Contract prospectus.
Please note that other charges also are imposed against the Contract
including mortality and expense risk and administrative charges. For a more
detailed explanation of applicable charges, please see the "Deductions and
Charges" section of the Contract prospectus.
INVESTMENTS BY PHL VARIABLE
- --------------------------------------------------------------------------------
Assets of PHL Variable must be invested according to applicable state laws
regarding the nature and quality of investments that may be made by life
insurance companies and the percentage of their assets that may be committed to
any particular type of investment. In general, these laws permit investments
within specified limits and subject to certain qualifications, in federal, state
and municipal obligations, corporate bonds, stock, real estate mortgages, real
estate and other investments.
Proceeds from the purchases of the MVA option will be deposited into
Separate Account MVA1, which is a non-unitized separate account. Such proceeds
are based on the interest rate we credit to MVA allocations and terms of the
Contract. These proceeds do not depend on the investment performance of the
assets in Separate Account MVA1. Separate Account MVA1 was established under
Connecticut law.
Under Connecticut law, all income, gains or losses of Separate Account MVA1
whether realized or not, must be credited to or charged against the amounts
placed in Separate Account MVA1 without regard to other income, gains and losses
of PHL Variable. The assets of the Separate Account may not be charged with
liabilities arising out of any other business that the Company may conduct.
Obligations under the Contracts are obligations of PHL Variable.
There are no discreet units in Separate Account MVA1. No party with rights
under any Contract participates in the investment gain or loss from assets
belonging to Separate Account. Such gain or loss accrues solely to the Company.
PHL Variable retains the risk that the value of the assets in Separate Account
MVA1 may drop below the reserves and other liabilities it maintain. Should the
value of the assets in Separate Account MVA1 drop below the reserve and other
liabilities the Company must maintain in relation to the Contracts supported by
such assets, the Company will transfer assets from its general account to
Separate Account MVA1, conversely, if the amount the Company is maintaining is
too much, the Company may transfer the excess to the general account.
In establishing Guaranteed Rates, PHL Variable intends to take into account
the yields available on the instruments in which it intends to invest the
proceeds from the Contracts. The Company's investment strategy with respect to
the proceeds attributable to the Contracts generally will be to invest in
investment-grade debt instruments having durations tending to match the
applicable Guarantee Periods.
Investment-grade debt instruments in which the Company intends to invest the
proceeds from the Contracts include:
0 Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the
United States Government.
0 Debt securities which have an investment grade, at the time of
purchase, within the four highest grades assigned by Moody's Investors
Services, Inc. (Aaa, Aa, A or Bb), Standard & Poor's Corporation (AAA,
AA, A or BBB) or any other nationally recognized rating service.
0 Other debt instruments, including but not limited to, issues of or
guaranteed by banks or bank holding companies and corporations, which
obligations, although not rated by Moody's or Standard & Poor's are
deemed by the Company's management to have an investment quality
comparable to securities which may be purchased as stated above.
While the foregoing generally describes the Company's investment strategy
with respect to the proceeds attributable to the Contracts, the Company is not
obligated to invest the proceeds attributable to the Contract according to any
particular strategy, except as may be required by Connecticut and other state
insurance law.
DISTRIBUTION OF CONTRACTS
- --------------------------------------------------------------------------------
Phoenix Equity Planning Corporation ("PEPCO") acts as the
principal underwriter of the Contracts. Contracts may be purchased
through representatives of W.S. Griffith & Company ("W.S. Griffith")
licensed to sell PHL Variable Annuity Contracts. PEPCO and W.S.
Griffith are registered as broker-dealers under the Securities Exchange
Act of 1934 and are members of the National Association of Securities
5
<PAGE>
Dealers, Inc. (the "NASD"). PHL Variable, PEPCO and W.S. Griffith are
indirect wholly-owned subsidiaries of Phoenix Home Life Mutual Insurance
Company.
PEPCO enters selling agreements with other broker-dealers or entities
registered under or exempt under the Securities Act of 1934 ("selling brokers").
The Contracts are sold through agents who are licensed by state insurance
officials to sell the Contracts. These agents also are registered
representatives of selling brokers or W.S. Griffith. Contracts with the MVA
option are offered in states where PHL Variable has received authority to write
modified guarantee annuity business and the MVA and the Contracts have been
approved. The maximum dealer concession that a selling broker will receive for
selling a Contract is 7.25%.
Although the Glass-Steagall Act prohibits banks and bank affiliates from
engaging in the business of underwriting securities, banking regulators have not
indicated that such institutions are prohibited from purchasing variable annuity
contracts upon the order and for the account of their customers.
FEDERAL TAXATION DISCUSSION
- --------------------------------------------------------------------------------
Please refer to "Federal Income Taxes" of the Contract prospectus for a
discussion of the tax status of the Contract.
ACCOUNTING PRACTICES
- --------------------------------------------------------------------------------
The information presented below should be read with the audited financial
statements and other information included elsewhere in this Prospectus.
The financial statements and other financial information included in this
Prospectus have been prepared in conformity with accounting practices of the
National Association of Insurance Commissioners and the accounting practices
prescribed or permitted by the Division of Insurance of the State of Connecticut
("statutory accounting practices"), which are currently considered in accordance
with generally accepted accounting principles ("GAAP") for stock life insurance
subsidiaries of a mutual life insurance company.
The Financial Accounting Standards Board, which has no role in establishing
regulatory accounting practices issued Interpretation 40, Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises, and Statement of Financial Accounting Standards No. 120, Accounting
and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises
for certain Long-Duration Participating Contracts. The American Institute of
Certified Public Accountants, which also has no role in establishing regulatory
accounting practices, issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. These pronouncements
will require mutual life companies and their stock life insurance subsidiaries
to modify their financial statements to continue to be in accordance with the
GAAP, effective for 1996 financial statements. The manner in which policy
reserves, new business acquisition costs, asset valuations and the related tax
effects are recorded will change. The impact of these changes has not yet been
determined. The financial statements included in this Prospectus have been on
the basis as filed with regulatory authorities.
DESCRIPTION OF PHL VARIABLE
- --------------------------------------------------------------------------------
THE COMPANY
PHL Variable is a life insurance company and a wholly-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("Phoenix"). The Company (formerly
known as Dreyfuss Consumers Life) was purchased by Phoenix and its name was
changed accordingly in 1994; it is domiciled in the state of Connecticut.
Phoenix and its subsidiaries (the Phoenix Group) offer a wide range of insurance
and investment products and services including individual participating life
insurance, variable life insurance, group life and health insurance, life and
health reinsurance, investment advisory and mutual fund distribution services,
insurance agency and brokerage operations.
PHL Variable serves as the variable annuity operation for the Phoenix Group
and as of the date of this Prospectus, PHL Variable offers individual deferred
variable annuities that are registered with the SEC. The Company plans to obtain
authority to sell variable annuity contracts in all states except New York, and
as of December 1, 1996, it had obtained such authority in 42 states and the
District of Columbia.
The Company's Home Office is located in Hartford, Connecticut.
The Company's principal administrative office is located at 101
Munson Street, Greenfield, Massachusetts. Functionally, the Company
is part of Phoenix's operations and all administrative and operational
services are provided by Phoenix.
SELECTED FINANCIAL DATA
The following selected financial data are qualified by reference to, and
should be read in conjunction with, the financial statements, including related
notes thereto, included elsewhere in this Prospectus.
The following table reflects the results of PHL Variable's operations for
the years ended December 31, 1996, 1995 and 1994:
1996 1995 1994
---- ---- ----
($ IN MILLIONS)
Fees and other considerations....... $ 1.5 $ .1 $ 0.0
Net investment income............... 1.1 .8 .5
--- -- --
Total Revenues................. 2.6 .9 .5
Benefits and change in policy
reserves........................ 0.0 (.1) 0.0
Expenses............................ 1.0 .7 .1
--- -- --
Total Benefits and Expenses..... 1.0 .6 .1
Gain from operations before
dividends and federal
income taxes.................... 1.6 .3 .4
Dividends to policyholders.......... 0.0 0.0 0.0
----- ----- -----
Gain from operations before
federal income taxes............ $ 1.6 $ .3 $ .4
===== ===== =====
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
RESULTS OF OPERATION
PHL Variable began offering variable annuity insurance products directly to
the public in July 1995. PHL Variable currently has state licenses and also has
variable annuity authority in 42 states. The licensing for the remaining states
is ongoing. Deposits to the Company's variable annuity contracts increased from
$18.8 million in 1995 to $142.6 million in 1996, a combined total of both
separate accounts and guaranteed interest accounts within the Company's variable
annuity product.
PHL Variable's total assets increased to $178.6 million at December 31, 1996
compared to $34.6 million at December 31, 1995. The increase of $144.0 million
is the result of the increase in the separate account assets of its variable
annuity products.
In 1996, capital and surplus increased to $16.7 million from $15.7 million
at December 31, 1995. The 6.4% gain in surplus during 1996 resulted from the
$1.1 million gain from operations after federal income tax and other surplus
changes.
Gain from operations before income taxes and net realized capital gains
(losses) for the year ended December 31, 1996, was $1.6 million compared to $0.3
million in 1995. Net investment income of $1.1 million in 1996 reported an
increase from $0.8 million in 1995. Federal income taxes increased by $0.4
million in 1996 compared to 1995. As a result of the foregoing factors, net
income increased to $1.1 million in 1996 from $0.2 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirement of the Company was met by cash from insurance
operations and investment activities. Cash inflows of PHL Variable consist of
fee and investment income and the proceeds from sales or maturities of
investments. Cash outflows consist primarily of payments for investments
acquired, operating expenses, commissions and taxes. For the years ended
December 31, 1996 and 1995, the net cash flow provided by operating activities
was $(.2) million and $2.6 million, respectively.
Effective June 20, 1994 the Company was provided with a net worth guarantee
from Phoenix. This guarantee remains in effect for the period that the Company
remains a wholly-owned subsidiary or until such earlier time as: (1) the Company
requests a separate rating from the rating agencies; or (2) any of such rating
agencies on their own initiative determine that the Company requires a separate
rating.
SEGMENT INFORMATION
As of the date of this Prospectus, we offered only variable deferred
annuities.
REINSURANCE
We have entered into a reinsurance agreement with a large reinsurer. This
agreement transfers the payment obligation for the death benefit on our variable
deferred annuities to the reinsurer in exchange for a reinsurance premium.
The ceding of death benefit payments does not discharge the original insurer
from its primary liability to the policyholder. The original insurer would
remain liable in those situations where the reinsurer is unable to meet the
obligations assumed under the reinsurance agreements. The Company and its
affiliated group have established strict standards that govern the placement of
reinsurance and monitors ceded insurance security.
RESERVES
We are obligated to carry on our statutory books, as liabilities, actuarial
reserves to meet our obligations on outstanding annuity or life insurance
contracts. This is required by the life insurance laws and regulations in the
jurisdictions in which we do business. Such reserves are based on mortality
and/or morbidity tables in general use in the United States. In general,
reserves are computed amounts that, with additions from premiums to be received,
and with interest on such reserves compounded at certain assumed rates, are
expected to be sufficient to meet our policy obligations at their maturities if
death occurs in accordance with the mortality tables employed. In the
accompanying Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted accounting principles and are
included in the liabilities of our separate accounts and the general account
liabilities for future benefits of annuity or life insurance contracts we issue.
COMPETITION
We are engaged in a business that is highly competitive due to the large
number of insurance companies and other entities competing in the marketing and
sale of insurance and annuity products. There are approximately 2300 stock,
mutual and other types of insurers in the life insurance business in the United
States.
EMPLOYEES
All management and administrative functions are performed by Phoenix
employees. The Company is charged for such services on a time allocation basis.
REGULATION
We are organized as a Connecticut stock life insurance company, and are
subject to Connecticut law governing insurance companies. We are regulated and
supervised by the Connecticut Commissioner of Insurance. By March 1 of every
year, we must prepare and file an annual statement, in a form prescribed by the
Connecticut Insurance Department, which covers our operations for the preceding
calendar year, and must prepare and file our statement of financial condition as
of December 31 of such year. The Commissioner and his or her agents have the
right at all times to review or examine our books and assets. A full examination
of our operations will be conducted periodically according to the rules and
practices of the National Association of Insurance Commissioners ("NAIC"). We
are subject to the insurance laws and various federal and state securities laws
and regulations and to regulatory agencies, such as the SEC and the Connecticut
Banking Department, which administer those laws and regulations.
We can be assessed up to prescribed limits for policyholder losses incurred
by insolvent insurers under the insurance guaranty fund laws of most states. We
cannot predict or estimate the amount any such future assessments we may have to
pay. However, the insurance guaranty laws of most states provide for deferring
payment or exempting a company from paying such an assessment if it would
threaten such insurer's financial strength.
7
<PAGE>
Several states, including Connecticut, regulate insurers and their
affiliates under insurance holding company laws and regulations. This applies to
us and our affiliates. Under such laws, inter-company transactions, such as
dividend payments to parent companies and transfers of assets, may be subject to
prior notice and approval, depending on factors such as the size of the
transaction in relation to the financial position of the companies.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions and
initiatives often have significant effects on our business. Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance companies; (b) the tax treatment of insurance products; (c)
the securities laws, particularly as they relate to insurance and annuity
products; (d) the "business of insurance" exemption from many of the provisions
of the antitrust laws; (e) the barriers preventing most banks from selling or
underwriting insurance; and (f) any initiatives directed toward improving the
solvency of insurance companies. We also would be affected by federal
initiatives that have impact on the ownership of or investment in United States
companies by foreign companies or investors.
EXECUTIVE COMPENSATION
All of the executive officers of PHL Variable also serve as officers of
Phoenix and receive no direct compensation from PHL Variable. Allocations have
been made as to the officer's time devoted to duties as executive officers of
PHL Variable. No officer or Director of PHL Variable received allocated
compensation in excess of $100,000.
DIRECTORS AND OFFICERS OF PHL VARIABLE
- --------------------------------------------------------------------------------
NAME POSITION WITH REGISTRANT
Richard H. Booth Director and Executive
Vice President
Robert G. Chipkin Director
Robert W. Fiondella Director, Chairman and
President
Joseph E. Kelleher Director and Senior
Vice President
Philip R. McLoughlin Director and Executive
Vice President
Charles J. Paydos Director and Executive
Vice President
David W. Searfoss Director, Executive President,
Chief Financial Officer and
Treasurer
Simon Y. Tan Director and Senior Vice
President
Dona D. Young Director and Executive
Vice President
Robert G. Lautensack Senior Vice President
Lisa-Lynn Bassi Vice President
EXPERTS
- --------------------------------------------------------------------------------
The financial statements of PHL Variable Insurance Company as of December
31, 1996 have been examined by Price Waterhouse LLP, independent public
accountants, whose reports are set forth herein, and the financial statements
have been included upon the authority of said firm as experts in accounting and
auditing. Price Waterhouse LLP, whose address is One Financial Plaza, Hartford,
Connecticut, also provides other accounting and tax-related services as
requested by PHL Variable from time to time.
Legal matters involving federal securities laws in connection with the
Contracts have been passed upon by Blazzard, Grodd & Hasenauer, P.C. of
Westport, Connecticut.
Legal matters relating to the validity of the securities being issued have
been passed upon by Richard J. Wirth, Counsel, Phoenix Home Life Mutual
Insurance Company, Hartford, Connecticut.
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
PHL Variable, the Account and PEPCO are not parties to any litigation that
would have a material adverse effect upon the Account or the Contracts.
8
<PAGE>
PHL VARIABLE
INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
9
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
TABLE OF CONTENTS
- ----------------------------------------------------------------------------
Page
Reports of Independent Accountants.................................. 11-12
Balance Sheets at December 31, 1996 and 1995........................ 13
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994.................................. 14
Statements of Stockholder's Equity for the Years Ended
December 31, 1996, 1995 and 1994.................................. 15
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994................................... 16
Notes to Financial Statements....................................... 17-27
10
<PAGE>
[logo]Price Waterhouse
Report of Independent Accountants
February 12, 1997
To the Board of Directors
and Stockholder of
PHL Variable Insurance Company
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in stockholder's equity and of cash flows present fairly,
in all material respects, the financial position of PHL Variable Insurance
Company (the Company), at December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years ended December 31, 1996 and 1995 and
the period from June 1, 1994 through December 31, 1994 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
<PAGE>
[logo]Price Waterhouse
Report of Independent Accountants
February 14, 1995
To the Board of Directors
and Stockholder of
PHL Variable Insurance Company
(formerly Dreyfus Consumer Life Insurance Company)
In our opinion, the accompanying statements of operations, of changes in
stockholder's equity and of cash flows present fairly, in all material respects,
the results of operations and cash flows of Dreyfus Consumer Life Insurance
Company (Predecessor or the Company), for the period from January 1, 1994
through May 31, 1994 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the financial statements, the Company adopted
Statement of Financial Accounting Standard No. 115, Accounting for Certain
Investments in Debt and Equity Securities, in 1994.
/s/Price Waterhouse LLP
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEETS
- --------------------------------------------------------------------------------
DECEMBER 31,
1996 1995
(IN THOUSANDS)
ASSETS
Investments:
Fixed maturities:
Held-to-maturity, at amortized cost $ 1,827
Available-for-sale, at fair value 15,279 $ 11,023
-------------- --------------
Total investments 17,106 11,023
Cash and cash equivalents 1,822 8,445
Accrued investment income 208 165
Deferred policy acquisition costs 9,557 1,061
Current income taxes 14
Deferred income taxes 363
Other assets 225 44
Goodwill 756 859
Separate account assets 159,418 15,312
-------------- --------------
Total assets $ 189,469 $ 36,909
============== ==============
LIABILITIES
Contractholders' funds at interest $ 11,569 $ 3,497
Other liabilities 1,678 1,295
Current income taxes 72
Deferred income taxes 52
Separate account liabilities 159,418 15,312
-------------- --------------
Total liabilities 172,665 20,228
-------------- --------------
EQUITY
Common stock, $1 par value, 2,500,000
shares authorized, issued and outstanding 2,500 2,500
Additional paid-in-capital 13,864 13,864
Unrealized investment gains, net 44 221
Retained earnings 396 96
-------------- --------------
Total equity 16,804 16,681
-------------- --------------
Total liabilities and equity $ 189,469 $ 36,909
============== ==============
The accompanying notes are an integral part of these statements.
13
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
PERIOD FROM PERIOD FROM
SUCCESSOR SUCCESSOR JUNE 1, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 TO 1994
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO MAY 31,
1996 1995 1994 1994
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES
Investment product fees $ 1,491 $ 133
Net investment income 1,097 828 $ 352 $ 137
Net realized investment losses (18) (29)
------------------- ------------------- ----------------- ------------------
Total revenues 2,570 961 323 137
------------------- ------------------- ----------------- ------------------
BENEFITS, LOSSES AND EXPENSES
Policy benefits and payments 397 54
Policy acquisition expenses 578 (42)
Other operating expenses 1,124 965 168 24
------------------- ------------------- ----------------- ------------------
Total benefits, losses and expenses 2,099 977 168 24
------------------- ------------------- ----------------- ------------------
INCOME (LOSS) BEFORE INCOME TAXES 471 (16) 155 113
Income tax expense (benefit) 171 (23) 66 (13)
------------------- ------------------- ------------------ ------------------
NET INCOME $ 300 $ 7 $ 89 $ 126
=================== =================== ================== ==================
</TABLE>
The accompanying notes are an integral part of these statements.
14
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENTS OF STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------------
<TABLE>
PREDECESSOR
PERIOD FROM JANUARY 1, 1994
TO MAY 31, 1994
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balances at December 31, 1993 $ 2,000 $ 4,477 $ 3,160 $ 9,637
Adoption of FAS 115 (174) (174)
Net income 126 126
--------------- ------------------ ----------------- --------------------
Balances at May 31, 1994 $ 2,000 $ 4,477 $ 3,112 $ 9,589
--------------- ------------------ ----------------- --------------------
</TABLE>
<TABLE>
SUCCESSOR
PERIOD FROM JUNE 1, 1994
TO DECEMBER 31, 1996
<CAPTION>
ADDITIONAL NET UNREALIZED TOTAL
COMMON PAID-IN RETAINED INVESTMENT STOCKHOLDER'S
STOCK CAPITAL EARNINGS GAINS (LOSSES) EQUITY
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balances at May 31, 1994 $ 2,000 $ 4,477 $ 3,112 $ 9,589
Acquisition adjustment 3,887 (3,112) 775
------------- ------------- --------------- -------------
Balances at June 1, 1994 2,000 8,364 10,364
Net income 89 89
Net unrealized loss $ (110) (110)
------------- ------------- --------------- ------------- -------------
Balances at December 31, 1994 2,000 8,364 89 (110) 10,343
Capital contribution from parent 500 5,500 6,000
Net income 7 7
Net unrealized gain 331 331
------------- ------------- --------------- ------------- -------------
Balances at December 31, 1995 2,500 13,864 96 221 16,681
Net income 300 300
Net unrealized loss (177) (177)
------------- ------------- --------------- ------------- -------------
Balances at December 31, 1996 $ 2,500 $ 13,864 $ 396 $ 44 $ 16,804
============= ============= =============== ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
PERIOD FROM PERIOD FROM
SUCCESSOR SUCCESSOR JUNE 1, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, MAY 31,
1996 1995 1994 1994
(IN THOUSANDS)
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income $ 300 $ 7 $ 89 $ 126
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH (USED IN) PROVIDED BY OPERATIONS
Net realized investment losses 18 29
Amortization of bond premium 6 9
Amortization and depreciation 106 102 60 11
Deferred income taxes and other assets (501) (192) 7 11
Increase in accrued investment income (43) (7) (67) 24
Increase in deferred policy acquisition costs (8,551) (1,061)
Increase in contractholder funds 8,072 3,497
Increase (decrease) in other liabilities 1 (13)
Increase (decrease) in payable to affiliates 222 1,184 108 (112)
------------------- ------------------ ------------------ ------------------
Net cash (used in) provided by operating activities (377) 3,537 226 56
------------------- ------------------ ------------------ ------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposals of fixed maturities:
Available-for-sale 3,219 1,532 43,474 2,023
Purchase of fixed maturities:
Available-for-sale (7,638) (2,714) (44,045) (2,724)
Held-to-maturity (1,827)
------------------- ------------------ ------------------ ------------------
Net cash used for investing activities (6,246) (1,182) (571) (701)
------------------- ------------------ ------------------ ------------------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution from parent 6,000
------------------- ------------------ ------------------ ------------------
Net cash provided by financing activities 6,000
------------------- ------------------ ------------------ ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (6,623) 8,355 (345) (645)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,445 90 435 1,080
------------------- ------------------ ------------------ ------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,822 $ 8,445 $ 90 $ 435
================== ================== ================== ==================
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 569 $ 13 $ 64 $ 32
</TABLE>
The accompanying notes are an integral part of these statements.
16
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
On May 31, 1994, PM Holdings, Inc. (PM Holdings) acquired Dreyfus Consumer
Life Insurance Company from The Dreyfus Corporation and renamed the company
PHL Variable Insurance Company (PHL Variable or the Company). PM Holdings
accounted for the acquisition of the Company under the purchase method of
accounting. The assets and liabilities of the Company were recorded at
their fair value as of the date of acquisition and goodwill was pushed-down
to the Company from PM Holdings. PM Holdings is a wholly-owned subsidiary
of Phoenix Home Life Mutual Insurance Company (Phoenix).
PHL Variable offers variable annuity products in the United States designed
for individual purchasers and a group product offered to employees to fund
qualified pension plan deposits.
Phoenix and its affiliates provide services and facilities to the Company
and are reimbursed through a cost allocation process. Investment related
expenses are allocated to the Company from PM Holdings.
Effective January 1, 1995, the money management businesses of Phoenix were
transferred to Phoenix Securities Group, Inc. (Phoenix Securities Group), a
wholly-owned subsidiary of PM Holdings. Phoenix Securities Group entered
into contracts to manage the general account and separate account
investments of PHL Variable. On November 1, 1995, PM Holdings merged
Phoenix Securities Group into Duff & Phelps Corporation, forming Phoenix
Duff & Phelps Corporation (PDP). PM Holdings owns approximately 60% of the
outstanding PDP common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from
those estimates. Significant estimates used in determining contractholder
liabilities, taxes and valuation allowances are discussed throughout the
Notes to Financial Statements. Certain reclassifications have been made to
the 1995 and 1994 amounts to conform with the 1996 presentation.
The financial statements as of December 31, 1996 and 1995 and for the
period from June 1, 1994 through December 31, 1994 are those of PHL
Variable (the Successor). The financial statements for the period from
January 1, 1994 through May 31, 1994 are those of Dreyfus Consumer Life
Insurance Company (the Predecessor) before its business and net assets were
acquired by PM Holdings.
17
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" was adopted by PHL Variable in 1996. SFAS No. 121 mandates
specific methodologies to be used for identifying and measuring the
impairment of long-lived assets. Adoption of SFAS No. 121 did not
materially impact PHL Variable's financial statements.
Effective January 1, 1995, the Company adopted the provision of Statement
of Position 94-6 (SOP 94-6), Disclosure of Certain Significant Risks and
Uncertainties. SOP 94-6 requires disclosure about the nature of a reporting
entity's operations and the use of estimates in the preparation of
financial statements.
In 1994, PHL Variable adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. This statement requires PHL
Variable to segregate its debt into three categories: held to maturity,
available for sale or trading. The effect of implementing SFAS No. 115
resulted in a decrease in investment assets and stockholder's equity of
$174,332 in 1994. Such bonds were previously carried at amortized cost.
VALUATION OF INVESTMENTS
Investments in fixed maturities include bonds and asset-backed securities
including collateralized mortgage obligations (CMOs). The Company
classifies all its fixed maturities as either held-to-maturity or
available-for-sale investments. Fixed maturities held-to-maturity consist
of private placement bonds presented at amortized cost, net of impairments,
that management intends and has the ability to hold until maturity. Fixed
maturities available-for-sale are presented at fair value with unrealized
gains or losses included in equity and consist of public bonds that
management may not hold until maturity. Fixed maturities are considered
impaired when a decline in value is considered to be other than temporary.
Short-term investments are carried at amortized cost, which approximates
fair value.
Realized investment gains and losses, other than those related to separate
accounts for which the Company does not bear the investment risk, are
determined by the specific identification method and reported as a
component of revenue. A realized investment loss is recorded when an
investment valuation reserve is determined. Valuation reserves are netted
against the asset categories to which they apply and changes in the
valuation reserves are included in realized investment gains and losses.
Unrealized investment gains and losses on fixed maturities
available-for-sale are included as a separate component of equity, net of
deferred income taxes and deferred policy acquisition costs.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, money market instruments
and short term investments purchased with a maturity of less than three
months.
18
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, distribution
and policy issue expenses, all of which vary with and are primarily related
to the production of revenues, are deferred. Deferred policy acquisition
costs are subject to recoverability testing at the time of policy issue and
loss recognition at the end of each accounting period.
Deferred policy acquisition costs are amortized in proportion to total
estimated gross profits over the expected average life of the contracts
using estimated gross margins arising principally from investment,
mortality and expense margins and surrender charges based on historical and
anticipated experience, updated at the end of each accounting period.
OTHER ASSETS
Other assets primarily consist of prepaid expenses.
GOODWILL
Goodwill represents the excess of the cost of businesses acquired over the
fair value of their net assets. Effective June 1, 1994, goodwill arising
from the acquisition of the Company is amortized using the straight-line
method over a period of 10 years, the expected period of benefit from the
acquisition. Prior to June 1, 1994, goodwill was amortized over a period of
20 years. Management periodically reevaluates the propriety of the carrying
value of assets. Assets are considered impaired if the carrying value
exceeds the expected future undiscounted cash flows. Such analyses are
performed at least annually or more frequently if warranted by events or
circumstances affecting PHL Variable's business. At this time, management
believes that no significant impairment of the remaining goodwill asset has
occurred and that no reduction of the estimated useful lives is warranted.
SEPARATE ACCOUNTS
Separate account assets and liabilities are funds maintained in accounts to
meet specific investment objectives of contractholders who bear the
investment risk. Investment income and investment gains and losses accrue
directly to such contractholders. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company. The assets and liabilities are carried at market
value. Deposits, net investment income and realized investment gains and
losses for these accounts are excluded from revenues, and the related
liability increases are excluded from benefits and expenses. Amounts
assessed to the contractholders for management services are included in
revenues.
CONTRACTHOLDERS' FUNDS AT INTEREST
Contractholder deposit funds consist of deposits received from customers
and investment earnings on their fund balances, less administrative
charges.
19
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INVESTMENT PRODUCT FEES
Revenues for investment-related products consist of net investment income
and contract charges assessed against the fund values. Related benefit
expenses primarily consist of net investment income credited to the fund
values after deduction for investment and risk charges.
INCOME TAXES
For the tax year ended December 31, 1996, PHL Variable plans to file a
separate federal income tax return. PHL Variable filed separate federal
income tax returns for the year ended December 31, 1995 and for the period
June 1, 1994 through December 31, 1994.
For the period January 1, 1994 through May 31, 1994, the former Dreyfus
Consumer Life Insurance Company (DCLIC) was included in the consolidated
federal income tax return filed by The Dreyfus Corporation (the
Corporation). All participants in the consolidated federal income tax
return were severally liable for the full amount of any taxes payable by
the group. In accordance with an income tax apportionment agreement with
the Corporation, the provision for DCLIC's federal income tax was computed
on a separate return basis.
Deferred income taxes result from temporary differences between the tax
basis of assets and liabilities and their recorded amounts for financial
reporting purposes. These differences result primarily from policy
liabilities and accruals, policy acquisition expenses and unrealized gains
or losses on investments.
EMPLOYEE BENEFITS
Phoenix sponsors pension and savings plans (the Plans) for its employees
and agents, and those of its subsidiaries. The qualified Plans comply with
requirements established by the Employee Retirement Income Security Act of
1974 (ERISA) and excess benefit plans provide for that portion of pension
obligations which is in excess of amounts permitted by ERISA. Phoenix also
provides certain health care and life insurance benefits for active and
retired employees. PHL Variable incurs applicable employee benefit expenses
through the process of cost allocation by Phoenix.
Applicable information regarding the actuarial present value of vested and
non-vested accumulated plan benefits, and the net assets of the plans
available for benefits is omitted, as the information is not separately
calculated for PHL Variable's participation in the Plans. The amount of
such allocated benefits is immaterial to the financial statements. However,
with respect to the Phoenix Home Life Mutual Insurance Company Employee
Pension Plan, the total assets of the plan exceeded the actuarial present
value of vested benefits at January 1, 1996, the date of the most recent
actuarial valuation.
20
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVESTMENTS
Information pertaining to PHL Variable's investments, net investment income
and realized and unrealized investment gains and losses follows:
FIXED MATURITIES
The amortized cost and fair value of investments in fixed maturities as of
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
FIXED MATURITIES:
HELD-TO-MATURITY:
<S> <C> <C> <C> <C>
Corporate securities $ 1,827 $ (337) $ 1,490
------------------ -------------------- -----------------
Total 1,827 (337) 1,490
------------------ -------------------- -----------------
AVAILABLE-FOR-SALE:
U.S. government and agency bonds 7,816 $ 167 (1) 7,982
State and political subdivision bonds 2,635 6 (1) 2,640
Mortgage-backed securities 4,679 (22) 4,657
------------------ ------------------- -------------------- -----------------
Total 15,130 173 (24) 15,279
------------------ ------------------- -------------------- -----------------
Total fixed maturities $ 16,957 $ 173 $ (361) $ 16,769
================== =================== ==================== ================
</TABLE>
21
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The amortized cost and fair value of investments in fixed maturities as of
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
FIXED MATURITIES:
AVAILABLE-FOR-SALE:
<S> <C> <C> <C> <C>
U.S. government and agency bonds $ 7,786 $ 358 $ (2) $ 8,140
State and political subdivision bonds 141 (1) 140
Mortgage-backed securities 2,714 29 2,743
----------------- ----------------- ---------------- -----------------
Total 10,641 385 (3) 11,023
----------------- ----------------- ---------------- -----------------
Total fixed maturities $ 10,641 $ 385 $ (3) $ 11,023
================= ================= ================ =================
</TABLE>
The amortized cost and fair value of fixed maturities, by contractual
maturity, as of December 31, 1996 are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties, or
the Company may have the right to put or sell the obligations back to the
issuers.
<TABLE>
<CAPTION>
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 4,278 $ 4,303
Due after one year through five years 6,067 6,215
Due after five years through ten years $ 1,827 $ 1,490
Due after ten years 106 104
Mortgage-backed securities 4,679 4,657
--------------- --------------- ---------------- -----------------
Total $ 1,827 $ 1,490 $ 15,130 $ 15,279
=============== =============== ================ =================
</TABLE>
The Company's investment in mortgage-backed securities at December 31, 1996
was in sequential pay bonds and at December 31, 1995 was in commercial
bonds. PHL Variable has no exposure in the more volatile residential
derivative market such as interest-only, principal-only or inverse float
instruments.
22
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
The components of net investment income were as follows:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
PERIOD FROM PERIOD FROM
SUCCESSOR SUCCESSOR JUNE 1, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, MAY 31,
1996 1995 1994 1994
<S> <C> <C> <C> <C>
Fixed maturities $ 949 $ 595 $ 256 $ 86
Short-term investments 167 233 96 51
-------------------- ------------------- -------------------- -------------------
1,116 828 352 137
Less investment expenses 19
-------------------- ------------------- -------------------- -------------------
Net investment income $ 1,097 $ 828 $ 352 $ 137
==================== =================== ==================== ===================
</TABLE>
INVESTMENT GAINS AND LOSSES
Unrealized gains and losses on investments carried at fair value at
December 31, were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized investment gains (losses)
Fixed maturities $ (233) $ 551 $ (169)
Deferred policy acquisition costs (40) (42)
Deferred income taxes (benefits) (96) 178 (59)
---------------- ---------------- ----------------
Net unrealized investment gains (losses) $ (177) $ 331 $ (110)
================ ================ ===============
</TABLE>
The proceeds from sales of available-for-sale fixed-maturities for the
years ended December 31, 1996, 1995 and 1994 were $3.2 million, $1.5
million and $45.5 million, respectively. The gross realized gains (losses)
associated with these sales were $(18,044), $0 and $771 in 1996, 1995 and
1994, respectively.
23
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. GOODWILL
Goodwill was as follows:
DECEMBER 31,
1996 1995
(IN THOUSANDS)
Goodwill $ 1,055 $ 1,055
Accumulated amortization (299) (196)
---------------- ------------------
Total $ 756 $ 859
================ =================
5. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure
requirements (insurance contracts are excluded) are carried in the
financial statements at amounts that approximate fair value. The fair
values presented for certain financial instruments are estimates which, in
many cases, may differ significantly from the amounts which could be
realized upon immediate liquidation. In cases where market prices are not
available, estimates of fair value are based on discounted cash flow
analyses which utilize current interest rates for similar financial
instruments which have comparable terms and credit quality.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
For these short-term investments, the carrying amount approximates fair
value.
FIXED MATURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
fixed maturities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
INVESTMENT CONTRACTS
Variable annuity contracts have guarantees of less than one year for which
interest credited is closely tied to rates earned on owned assets. For such
liabilities, fair value is assumed to be equal to the stated liability
balances. The contract liability balances for December 31, 1996 and 1995
were $11.6 million and $3.5 million, respectively.
24
<PAGE>
6. INCOME TAXES
The income taxes attributable to the results of operations are different
than the amounts determined by multiplying income before taxes by the
statutory income tax rate. The sources of the difference and the tax
effects of each for the year ended December 31, were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax expense at statutory rate $ 165 35% $ (6) 35% $ 54 35%
Dividend received deduction & tax-
exempt interest (4) -1% (2) 11%
State income tax expense 6 1% 3 -17% 14 9%
Other, net 4 -1% (18) 114% (2) -1%
--------------- --------------- ---------------
Income taxes $ 171 36% $ (23) 143% $ 66 43%
=============== =============== ===============
</TABLE>
The following is a summary of income taxes (benefits) in the statements of
operations for the year ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
(IN THOUSANDS)
Income taxes:
Current:
<S> <C> <C> <C>
Federal $ 481 $ 44 $ 50
State 9 4 22
------------------- ----------------- ----------------
490 48 72
Deferred:
Federal (319) (71) (6)
------------------- ----------------- ----------------
Income taxes $ 171 $ (23) $ 66
=================== ================= ================
</TABLE>
25
<PAGE>
The deferred income tax asset (liability) represents the tax effects of
temporary differences. The components were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ (3,374) $ (386)
Surrender charges 3,538 372
Investments (59) (27)
Future policyholder benefits 252 88
Other 29 20
----------------- -----------------
386 67
Net unrealized investment losses (23) (119)
----------------- -----------------
Deferred tax asset (liability), net $ 363 $ (52)
================= =================
</TABLE>
It is management's assessment, based on the Company's earnings and
projected future taxable income, that it is more likely than not that the
deferred tax assets at December 31, 1996 and 1995, will be realized.
Gross deferred income tax assets totaled $3.8 million and $.5 million at
December 31, 1996 and 1995, respectively. Gross deferred income tax
liabilities totaled $3.5 million and $.5 million at December 31, 1996 and
1995, respectively.
The Internal Revenue Service (IRS) is currently examining the Company's
tax return for 1994. Management does not believe that there will be a
material adverse effect on the financial statements as a result of pending
tax matters.
7. REINSURANCE
Beginning in January 1996, the Company entered into a reinsurance treaty
that cedes death benefits to a reinsurer in excess of account balances on
variable contracts. Premiums paid during the year were $48,715. Under this
treaty, no claims were recoverable in 1996.
26
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. DEFERRED POLICY ACQUISITION COSTS
The following reflects the amount of policy acquisition costs deferred and
amortized for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year $ 1,061
Acquisition expense deferred 9,114 $ 1,055
Amortized to expense during the year (578) 48
Adjustment to equity during the year (40) (42)
------------------ -----------------
Balance at end of year $ 9,557 $ 1,061
================== =================
</TABLE>
9. STATUTORY FINANCIAL INFORMATION
The insurance subsidiaries are required to file annual statements with
state regulatory authorities prepared on an accounting basis prescribed or
permitted by such authorities. As of December 31, 1996, there were no
material practices not prescribed by the Insurance Department of the State
of Connecticut. Statutory equity differs from stockholder's equity reported
in accordance with GAAP for life insurance companies primarily because
policy acquisition costs are expensed when incurred, investment reserves
are based on different assumptions, postretirement benefit costs are based
on different assumptions and reflect a different method of adoption, life
insurance reserves are based on different assumptions and income tax
expense reflects only taxes paid or currently payable.
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of the Company as reported to regulatory authorities to equity as
reported in these financial statements:
<TABLE>
<CAPTION>
1996 1995
(IN THOUSANDS)
<S> <C> <C>
Statutory surplus and AVR $ 16,790 $ 15,728
Deferred policy acquisition costs, net 9,639 1,103
Future policy benefits (10,828) (1,313)
Investment valuation allowances 44 221
Deferred income tax 403 84
Other, net 756 858
------------------ -----------------
Equity, as reported $ 16,804 $ 16,681
================== =================
</TABLE>
The Connecticut Insurance Holding Act limits the maximum amount of annual
dividends or other distributions available to stockholders of Connecticut
insurance companies without prior approval of the Insurance Commissioner.
Under current law, the maximum dividend distribution which may be made by
the Company during 1997 without prior approval is subject to restrictions
relating to statutory surplus.
27
<PAGE>
PHL VARIABLE SEPARATE ACCOUNT MVA1
THE EFFECTIVE DATE OF THE PHL VARIABLE
SEPARATE ACCOUNT MVA1 IS THE EFFECTIVE
DATE OF THIS REGISTRATION STATEMENT,
THEREFORE, FINANCIAL DATA IS NOT AVAILABLE.
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN A PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 5.9 of the Connecticut Corporation Law & Practice, provides
that a corporation may indemnify any director or officer of the corporation
made, or threatened to be made, a party to an action or proceeding other than
one by or in the right of the corporation to procure a judgment in its favor,
whether civil or criminal, including an action by or in the right of any other
corporation of any type or kind, by reason of the fact that he, his testator or
intestate, served such other corporation in any capacity at the request of the
indemnifying corporation.
Article III Section 14 of the By-Laws of the Company provides: "Each
Director, officer or employee of the Company, and his heirs, executors or
administrators, shall be indemnified or reimbursed by the Company for all
expenses necessarily incurred by him in connection with the defense or
reasonable settlement of any action, suit or proceeding in which he is made a
party by reason of his being or having been a Director, officer or employee of
the Company, or of any other company which he was serving as a Director or
officer at the request of the Company, except in relation to matters as to which
such Director, officer or employee is finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the performance of his
duties as such Director, officer or employee. The foregoing right of
indemnification or reimbursement shall not be exclusive of any other rights to
which he may be entitled under any statute, by-law, agreement, vote of
shareholders or otherwise."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 16. EXHIBITS
1 Underwriting Agreement. Incorporated by reference to Exhibit 3 of
File No. 33-87376 Pre-Effective Amendment No. 1 to Form N-4
filed on July 20, 1995.
2 Plan of acquisition, reorganization, arrangement, liquidation or
succession. Not applicable.
3 (i) Articles of Incorporation. Incorporated by reference to
Exhibit 6(a) of File No. 33-87376 Registration Statement on
Form N-4 filed on December 14, 1994.
(ii) By-Laws. Incorporated by reference to Exhibit 6(b) of File
No. 33-87376 Registration Statement on Form N-4 filed on
December 14, 1994.
4 Form of Variable Annuity Contract with MVA Rider. Filed with
Registration Statement on Form S-1 on January 23, 1997.
5 Opinion re legality. To be filed by amendment.
8 Opinion re tax matters. Not applicable.
9 Voting trust agreement. Not applicable.
10 Material contracts. Not applicable.
11 Statement re computation of per share earnings. Not applicable.
12 Statements re computation of ratios. Not applicable.
15 Letter re unaudited interim financial information. Not
applicable.
16 Letter re change in certifying accountant. Not applicable.
II-1
<PAGE>
21 Subsidiaries of the registrant. Not applicable.
23.1 Consent of Price Waterhouse LLP. To be filed by amendment.
23.2 Consent of Counsel. To be filed by amendment.
24 Powers of attorney. Incorporated by reference to Exhibit 15 of
File No. 33-87376 Post-Effective Amendment No. 1 to Form N-4
filed via Edgar on April 19, 1996 and Post-Effective Amendment
No. 2 to Form N-4 filed via Edgar on September 13, 1996.
25 Statement of eligibility of trustee. Not applicable.
26 Invitation for competitive bids. Not applicable.
27 Financial Data Schedule. Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers of sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) Not applicable.
ITEM 18. FINANCIAL STATEMENTS AND SCHEDULES
Financial Statements and Schedules conforming to the requirement of
Regulation S-X are filed herewith.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on this 20th day of May, 1997.
PHL Variable Insurance Company
By____________________________________
*Robert W. Fiondella
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the persons in the capacities
indicated with PHL Variable Insurance Company on this 20th day of May, 1997.
Signature Title
--------- -----
________________________ Director
*Richard H. Booth
________________________ Director
*Robert G. Chipkin
________________________ Chairman of the Board and President
*Robert W. Fiondella (Principal Executive Officer)
________________________ Director
*Joseph E. Kelleher
________________________ Director
*Philip R. McLoughlin
________________________ Director
*Charles J. Paydos
________________________ Director, Executive Vice President,
*David W. Searfoss Chief Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
________________________ Director
*Simon Y. Tan
/s/ Dona D. Young
________________________ Director
Dona D. Young
By:/s/ DONA D. YOUNG
---------------------
Dona D. Young
*DONA D. YOUNG, as Attorney-in-Fact pursuant to Powers of Attorney, copies of
which were filed previously. (See Exhibit 24.)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 1031223
<NAME> PHL Variable Insurance Company
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> dec-31-1996
<EXCHANGE-RATE> 0
<DEBT-HELD-FOR-SALE> 15,279,000
<DEBT-CARRYING-VALUE> 1,827,000
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 17,106,000
<CASH> 1,822,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 9,557,000
<TOTAL-ASSETS> 189,469,000
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 11,569,000
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,500,000
<OTHER-SE> 14,304,000
<TOTAL-LIABILITY-AND-EQUITY> 189,469,000
0
<INVESTMENT-INCOME> 1,097,000
<INVESTMENT-GAINS> (18,000)
<OTHER-INCOME> 0
<BENEFITS> 397,000
<UNDERWRITING-AMORTIZATION> 578,000
<UNDERWRITING-OTHER> 1,124,000
<INCOME-PRETAX> 471,000
<INCOME-TAX> 171,000
<INCOME-CONTINUING> 300,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
