Registration No. 333-20277
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
POST-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)
<TABLE>
<S> <C> <C> <C>
Connecticut 06-1045829
------------------------------- ---------------------------- ----------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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: May 1, 1998.
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 ]
================================================================================
<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 only 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 (which is attached to this 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 "nonunitized" 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 SEC 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, WANGER
ADVISORS TRUST AND THE TEMPLETON VARIABLE PRODUCTS SERIES FUND. THIS PROSPECTUS
AND THE PROSPECTUSES FOR THE CONTRACT AND THE FUNDS SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE.
MAY 1, 1998
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.......................................6
FEDERAL TAXATION DISCUSSION.....................................6
ACCOUNTING PRACTICES............................................6
DESCRIPTION OF PHL VARIABLE ....................................6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION..............................7
Executive Compensation.......................................8
DIRECTORS AND OFFICERS OF PHL VARIABLE..........................8
EXPERTS.........................................................8
LEGAL PROCEEDINGS...............................................9
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 of
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.
DEATH BENEFIT: An amount, calculated pursuant to the terms of the Contract,
payable upon the death of the Annuitant or Owner, as applicable, to a
beneficiary designated in the Contract to receive such proceeds.
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.
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, transferred or applied to an annuity option 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.
MARKET VALUE ADJUSTMENT: An adjustment made to the amount that a Contract Owner
will receive if money is withdrawn, transferred or applied to an annuity option
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 MVA available only
under the Contract offered by PHL Variable. 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 Guarantee Periods of the MVA option, anytime prior to
Contract maturity. Generally, amounts allocated to an MVA option must be for at
least $1,000. We reserve the right to limit cumulative amounts allocated to the
MVA during any one-week period to not more than $250,000.
Amounts may be transferred to or from the MVA according to the Contract
transfer rules. You may make up to six transfers per year from the MVA. (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, transferred
or applied to an annuity option 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. (For a discussion of the Death Benefit available under the
Contract, please refer to "Payment Upon Death Before Maturity Date" and "Payment
Upon Death After Maturity Date" in the Contract prospectus.) Since MVA values
are part of the Contract Value, earnings on allocations to the MVA will impact
the values available at surrender or maturity. No Market Value Adjustment will
be applied to Death Benefit proceeds.
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
3
<PAGE>
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, the 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
discontinue Guarantee Periods or to offer Guarantee Periods that differ from
those available at the time 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, which is the current interest 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 current 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
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:
$10,000 x (1.055)(2) = $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:
$10,000 x (1.055)(2) = $11,130.25
4
<PAGE>
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.
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, up to 10% of the Contract
Value may be withdrawn without a sales charge applied. Sales charges (expressed
as a percentage) on the amount to be withdrawn in excess of the 10% allowable
amount, are as follows:
AGE OF PURCHASE PAYMENT DEFERRED
IN COMPLETE YEARS FROM SALES CHARGE AS A
PAYMENT DATE UNIT PERCENTAGE OF
RELEASED WAS CREDITED AMOUNT WITHDRAWN
--------------------- ----------------
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 and over 0%
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 nonunitized separate account established under
Connecticut law. Contract Values attributable to such proceeds are based on the
interest rate we credit to MVA allocations and terms of the Contract, and do not
depend on the investment performance of the assets in Separate Account MVA1.
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 MVA1. 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 must 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:
o 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.
o 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),
5
<PAGE>
Standard & Poor's Corporation (AAA, AA, A or BBB) or any other
nationally recognized rating service.
o 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 Dealers, Inc. (the "NASD"). PHL Variable, PEPCO and
W.S. Griffith are indirect 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" in 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 of PHL Variable 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 generally accepted accounting
principles ("GAAP").
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 April 1, 1998, it had obtained such authority in 45 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, 1997, 1996 and 1995:
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995
---- ---- ----
Income Statement Date: (in thousands)
Revenues:
Premiums $ 230
Insurance and investment
product fees 5,050 $ 1,491 $ 133
Net investment income 1,543 1,097 828
Net realized investment
losses (18)
--------- --------- ---------
Total revenues 6,823 2,570 961
--------- --------- ---------
Benefits, losses and
expenses:
Policy benefits and
payments 1,092 397 54
Policy acquisition expenses 1,356 578 (42)
Other operating expenses 2,869 1,124 965
--------- --------- ---------
Total benefits, losses and
expenses 5,317 2,099 977
--------- --------- ---------
Income before income taxes 1,506 471 (16)
Income taxes 553 171 (23)
--------- --------- ---------
Net income $ 953 $ 300 $ 7
========= ========= =========
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
RESULTS OF OPERATION
On May 31, 1994, 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 of approximately $775,000 was pushed-down to the Company from PM
Holdings. The Company began offering variable annuities to the public in July
1995 and recorded its first product sales during the third quarter of 1995. By
the end of 1995, variable annuity funds under management reached $18.8 million
and net income for the year, at $7,000, was slightly above break-even despite
the somewhat higher operating expenses normally associated with start-up
operations. Policy acquisition expenses of ($42,000) resulted from interest on
deferred costs that exceeded the amortization in this initial year.
Deposits from the sale of variable annuity products increased significantly
in the following two years, reaching a $212.6 million level in 1997, up from the
$142.6 million received in 1996. Variable annuity funds under management include
Contract Owners' funds at interest and separate account liabilities ending the
year at $403.7 million as of December 31, 1997, rising $232.6 million during
1997, from the $171.0 million level as of December 31, 1996. The growth in
annuity deposits during 1997 and 1996 occurred primarily in the separate
accounts, with approximately 93% of the end of year variable annuity liabilities
residing in separate accounts and 7% in guaranteed interest accounts. Although
PHL Variable began offering variable annuities with a market value adjustment
option during the third quarter of 1997, the sale of that product was
insignificant to this year's results.
The new term product introduced during 1997 generated $230,000 in premium
revenues. Investment product fees represent contract charges assessed against
variable annuity fund values. For the year ended December 31, 1997, these fees
totaled $5.1 million, a $3.6 million (240%) increase from $1.5 million reported
in 1996. The higher fees were attributed to higher fund balances generating
additional revenues. During 1997, fees were earned on approximately $287 million
in average funds under management versus approximately $95 million in average
funds producing revenues for 1996. Net investment income rose to $1.5 million in
1997, a $0.4 million (36%) improvement over the $1.1 million earned in the prior
year.
Policy benefits and payments include primarily the interest credited on the
guaranteed interest accounts and the cost of reinsuring the minimum death
benefit on variable annuity contracts. Guaranteed interest contract balances
rose to $27.7 million at December 31, 1997 from an $11.6 million balance a year
earlier and this increase is reflected in a higher amount of interest credited.
In addition, the cost of reinsurance on the growing block of variable annuity
business increased to $259,000 in 1997 from $49,000 in 1996.
Policy acquisition expenses consist primarily of commissions and field
distribution expenses. The increase in these expenses to $1.4 million in 1997
from $0.6 million in 1996 was a direct result of the significant increase in
sales volume in those years, $212.6 million and $142.6 million in deposits,
respectively.
Operating expenses include the cost of facilities and services under an
expense allocation agreement with its ultimate parent, Phoenix. Operating
expenses of $2.9 million for 1997 increased by $1.8 million (164%) from the $1.1
million incurred for 1996. The increase in this year's expenses were primarily
attributable to the administration of a larger block of business, described
previously.
Net income of $953,000 in 1997 showed a significant increase over the
$300,000 of net income reported during 1996. As explained earlier, the growth in
the variable annuity funds under management and related fees associated with
that business have provided the biggest contribution to these results. A
significant increase in revenues combined with appropriate control over expenses
produced improved profit results. Gross revenues of $6.8 million in 1997 rose
$4.2 million (162%) over 1996 revenues of $2.6 million. Benefits and expenses,
totaling $5.3 million in 1997, grew $3.2 million (152%) over 1996 benefits and
expenses of $2.1 million. Pretax income of $1.5 million in 1997 was up $1.0
million (200%) over the $0.5 million reported in 1996. Income taxes of $0.6
million for 1997 and $0.2 million for 1996 averaged 36.7% and 36.3% of pretax
earnings for both years, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of PHL Variable are met by anticipating and
managing the timing of cash uses and sources provided from the Company's
insurance operations, investing activities and capital contributions of the
parent.
The Company's rapid growth has created a temporary need to supply additional
cash in order to cover the acquisition costs incurred in operating activities.
These liquidity requirements are currently being met through investing
activities and by capital contributed by its parent. Since acquiring PHL
Variable, PM Holdings has made capital contributions of $6.0 million in 1995 and
$5.0 million in 1997. In addition, on February 18, 1998, PM Holdings made a cash
contribution of $12.0 million to the Company and anticipates that this
contribution will cover the Company's forseeable liquidity needs.
SEGMENT INFORMATION
As of the date of this Prospectus, we offer deferred variable annuities and
10-year guaranteed level term life insurance.
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.
7
<PAGE>
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 2,300 stock,
mutual and other types of insurers in the life insurance business in the United
States.
YEAR 2000 ISSUE
Many existing computer programs use only two digits to identify the year in
a date field. Commonly referred to as the "Year 2000 Issue," companies must
consider the impact of the upcoming change in the century on their computer
systems. The Year 2000 Issue, if not adequately addressed, could result in
computer system failures or miscalculations causing disruptions of operations
and the possible inability of companies to process transactions. PHL Variable
believes that the Year 2000 Issue is an important business priority requiring
careful analysis of every business system in order to be assured that all
information systems applications are century compliant.
PHL Variable's ultimate parent, Phoenix Home Life Mutual Insurance Company
("Phoenix") has been addressing the Year 2000 Issue in earnest since 1995 when,
with consultants, a comprehensive inventory and assessment of all business
systems, including those of its subsidiaries, was conducted. Phoenix has
identified and is now actively pursuing a number of strategies to address the
issue, including:
-- upgrading systems with compliant versions;
-- developing or acquiring new systems to replace those that are obsolete;
-- and remediating existing systems by converting code or hardware.
Based on current assessments, Phoenix expects to have its computer systems,
and those of its subsidiaries, compliant by the end of 1998, with testing to
continue through 1999. In addition, Phoenix is examining the status of its
third-party vendors, obtaining assurances that their software and hardware
products will be century compliant by 1999.
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.
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, intercompany 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
8
<PAGE>
Charles J. Paydos Director and Executive
Vice President
David W. Searfoss Director, Executive Vice
President and Chief Financial
Officer
Simon Y. Tan Director and Senior Vice
President
Dona D. Young Director and Executive
Vice President
Bruce M. Jones Senior Vice President and
Chief Operating Officer
Robert G. Lautensack, Jr. Senior Vice President
Michael J. Puckly Senior Vice President
EXPERTS
- --------------------------------------------------------------------------------
The financial statements of PHL Variable Insurance Company as of December
31, 1997 have been audited by Price Waterhouse LLP, independent 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 relating to the validity of the securities being issued have
been passed upon by Edwin L. Kerr, Counsel, Phoenix Home Life Mutual Insurance
Company, Hartford, Connecticut. Mr. Kerr also has provided advice on certain
matters relating to federal securities and income tax laws in connection with
the Contracts.
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.
9
<PAGE>
PHL VARIABLE
INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
10
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants ............................................12
Balance Sheet at December 31, 1997 and 1996 ..................................13
Statement of Income and Equity for the Years Ended
December 31, 1997, 1996 and 1995 ...........................................14
Statement of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 ...........................................15
Notes to Financial Statements ............................................16-24
11
<PAGE>
[LOGO] PRICE WATERHOUSE LLP [LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
February 11, 1998
To the Board of Directors
and Stockholder of
PHL Variable Insurance Company
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of PHL Variable
Insurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, 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
Hartford, Connecticut
12
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Held-to-maturity debt securities, at amortized cost $ 3,144 $ 1,827
Available-for-sale debt securities, at fair value 21,859 15,279
Other invested assets 1,024
-------------- --------------
Total investments 26,027 17,106
Cash and cash equivalents 1,714 1,822
Accrued investment income 257 208
Deferred policy acquisition costs 21,010 9,557
Deferred income taxes 1,259 363
Other assets 1,051 239
Goodwill 660 756
Separate account assets 376,046 159,418
-------------- --------------
Total assets $ 428,024 $ 189,469
============== ==============
LIABILITIES
Contractholders' funds at interest $ 27,667 $ 11,569
Other liabilities 1,517 1,678
Separate account liabilities 376,046 159,418
-------------- --------------
Total liabilities 405,230 172,665
-------------- --------------
EQUITY
Common stock, $5,000 par value, 1,000 shares
authorized, 500 shares issued and outstanding 2,500 2,500
Additional paid-in-capital 18,864 13,864
Unrealized investment gains, net 81 44
Retained earnings 1,349 396
-------------- --------------
Total equity 22,794 16,804
-------------- --------------
Total liabilities and equity $ 428,024 $ 189,469
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
13
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
STATEMENT OF INCOME AND EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Premiums $ 230
Insurance and investment product fees 5,050 $ 1,491 $ 133
Net investment income 1,543 1,097 828
Net realized investment losses (18)
---------------------- ------------------- --------------------
Total revenues 6,823 2,570 961
---------------------- ------------------- --------------------
BENEFITS, LOSSES AND EXPENSES
Policy benefits and payments 1,092 397 54
Policy acquisition expenses 1,356 578 (42)
Other operating expenses 2,869 1,124 965
---------------------- ------------------- --------------------
Total benefits, losses and expenses 5,317 2,099 977
---------------------- ------------------- --------------------
INCOME BEFORE INCOME TAXES 1,506 471 (16)
Income taxes 553 171 (23)
---------------------- ------------------- --------------------
NET INCOME 953 300 7
Capital contributions 5,000 6,000
Change in net unrealized investment
gains (losses), net of income taxes 37 (177) 331
---------------------- ------------------- --------------------
Net increase in equity 5,990 123 6,338
EQUITY, BEGINNING OF YEAR 16,804 16,681 10,343
---------------------- ------------------- --------------------
EQUITY, END OF YEAR $ 22,794 $ 16,804 $ 16,681
====================== =================== ====================
</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.)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 953 $ 300 $ 7
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY (USED IN) OPERATIONS
Net realized investment losses 18
Amortization 96 106 108
Deferred income taxes (916) (319) (71)
Increase in accrued investment income (49) (43) (7)
Increase in deferred policy acquisition costs (11,453) (8,496) (1,061)
Decrease (increase) in other assets/liabilities (973) 116 (120)
Other, net (209) (131) 1,184
----------------- ---------------- ----------------
Net cash (used in) provided by operating activities (12,551) (8,449) 40
----------------- ---------------- ----------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales, maturities or repayments of
available-for-sale debt securities 4,665 3,219 1,532
Proceeds from sales, maturities or repayments of
held-to-maturity debt securities 212
Purchase of available-for-sale debt securities (11,003) (7,638) (2,714)
Purchase of held-to-maturity debt securities (1,529) (1,827)
Investment in separate accounts (1,000)
----------------- ---------------- ----------------
Net cash used for investing activities (8,655) (6,246) (1,182)
----------------- ---------------- ----------------
CASH FLOW FROM FINANCING ACTIVITIES
Capital contributions from parent 5,000 6,000
Increase in contractholder funds 16,098 8,072 3,497
----------------- ---------------- ----------------
Net cash provided by financing activities 21,098 8,072 9,497
----------------- ---------------- ----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (108) (6,623) 8,355
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,822 8,445 90
----------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,714 $ 1,822 $ 8,445
================= ================ ================
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid, net $ 2,044 $ 569 $ 13
</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.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
PHL Variable Insurance Company ("PHL Variable" or the "Company") 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. During the fourth quarter of 1997, the Company
began offering an individual term product containing level premiums for
ten years and annual changes thereafter. PHL Variable is a wholly-owned
subsidiary of PM Holdings, Inc. ("PM Holdings"). PM Holdings is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company
("Phoenix").
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 1996 and 1995 amounts to conform with the 1997
presentation.
VALUATION OF INVESTMENTS
Investments in debt securities include bonds and asset-backed securities,
including collateralized mortgage obligations. PHL Variable classifies its
debt securities as either held-to-maturity or available-for-sale
investments. Debt securities held-to-maturity consist of private placement
bonds reported at amortized cost, net of impairments, that management
intends and has the ability to hold until maturity. Debt securities
available-for-sale are reported at fair value with unrealized gains or
losses included in equity and consist of public bonds that management may
not hold until maturity. Debt securities 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 PHL Variable 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 debt securities
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.
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.
16
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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. The costs are amortized on the
straight-line method over a period of 10 years, the expected period of
benefit from the acquisition. 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 the Company'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 PHL Variable. 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.
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, 1997, PHL Variable will file a
separate federal income tax return. The Company filed separate federal
income tax returns for the years ended December 31, 1996 and 1995.
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, accruals and surrenders, policy acquisition expenses and
unrealized gains or losses on investments.
17
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT PLANS
Phoenix sponsors pension and savings plans for its employees and agents,
and those of its subsidiaries. The multiemployer 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
nonvested accumulated plan benefits, and the net assets of the plans
available for benefits is omitted, as the information is not separately
calculated for the Company's participation in the plans. The amount of
such allocated benefits is immaterial to the financial statements.
However, with respect to the Phoenix employee pension plan, the total
assets of the plan exceeded the actuarial present value of vested benefits
at January 1, 1997, the date of the most recent actuarial valuation.
3. INVESTMENTS
Information pertaining to the Company's investments, net investment income
and realized and unrealized investment gains and losses follows:
DEBT SECURITIES
The amortized cost and fair value of investments in debt securities as of
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY:
Corporate securities $ 3,144 $ 13 $ (187) $ 2,970
================== =================== ================ ==============
AVAILABLE-FOR-SALE:
U.S. government and agency bonds $ 5,997 $ 190 $ 6,187
State and political subdivision bonds 3,020 12 3,032
Corporate securities 3,480 4 $ (19) 3,465
Mortgage-backed securities 9,127 48 9,175
------------------ ------------------ ---------------- --------------
Total $ 21,624 $ 254 $ (19) $ 21,859
================== ================== ================= ==============
</TABLE>
18
<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 debt securities as of
December 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY:
Corporate securities $ 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
================== =================== ================== ===============
</TABLE>
The amortized cost and fair value of debt securities, by contractual
maturity, as of December 31, 1997 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 PHL Variable 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 $ 920 $ 921
Due after one year through five years $ 1,529 $ 1,542 8,544 8,681
Due after five years through ten years 1,615 1,428 1,945 2,011
Due after ten years 1,088 1,071
Mortgage-backed securities 9,127 9,175
------------------ ------------------- ------------------ ---------------
Total $ 3,144 $ 2,970 $ 21,624 $ 21,859
================== =================== ================== ===============
</TABLE>
The Company's investment in mortgage-backed securities at December 31,
1997 and 1996 were in sequential pay bonds.
19
<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 for the year ended December 31,
were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Debt securities $ 1,301 $ 949 $ 595
Short-term investments 269 167 233
---------------------- ------------------ ----------------------
1,570 1,116 828
Less investment expenses 27 19
---------------------- ------------------ ----------------------
Net investment income $ 1,543 $ 1,097 $ 828
====================== ================== ======================
</TABLE>
INVESTMENT GAINS AND LOSSES
Unrealized gains and losses on investments carried at fair value at
December 31, were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Unrealized investment gains (losses):
Debt securities $ 87 $ (233) $ 551
Deferred policy acquisition costs (30) (40) (42)
Deferred income taxes (benefits) 20 (96) 178
--------------- --------------- --------------
Net unrealized investment gains (losses) $ 37 $ (177) $ 331
=============== =============== ==============
</TABLE>
The proceeds from sales and repayments of available-for-sale debt
securities for the years ended December 31, 1997, 1996 and 1995 were $4.7
million, $3.2 million and $1.5 million, respectively. The gross realized
losses associated with these sales were $0, $18,044 and $0 in 1997, 1996
and 1995, respectively.
20
<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,
1997 1996
(IN THOUSANDS)
Goodwill $ 1,055 $ 1,055
Accumulated amortization (395) (299)
---------------- -----------------
Total $ 660 $ 756
================ =================
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.
DEBT SECURITIES
Fair values are based on quoted market prices, where available, or quoted
market prices of comparable instruments. Fair values of private placement
debt securities are estimated using discounted cash flows that apply
interest rates currently being offered with similar terms to borrowers of
similar credit quality.
INVESTMENT CONTRACTS
Contractholders' funds at interest 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 equal to the stated liability
balances. The contract liability balances for December 31, 1997 and 1996
were $27.7 million and $11.6 million, respectively.
21
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. INCOME TAXES
A summary of income taxes (benefits) in the Statement of Income and Equity
for the year ended December 31, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes:
Current $ 1,469 $ 490 $ 48
Deferred (916) (319) (71)
------------------ ---------------- ---------------
Total $ 553 $ 171 $ (23)
================== ================ ===============
</TABLE>
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>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income tax expense (benefit) at
statutory rate $ 527 35% $ 165 35% $ (6) 35%
Dividend received deduction and
tax-exempt interest 1 0% (4) (1%) (2) 11%
State income tax expense 6 1% 3 (17%)
Other, net 25 2% 4 1% (18) 114%
----------------- ------------------- ---------------
Income taxes (benefit) $ 553 37% $ 171 36% $ (23) 143%
----------------- ------------------- ---------------
</TABLE>
The deferred income tax asset (liability) represents the tax effects of
temporary differences. The components were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Deferred policy acquisition costs $ (6,770) $ (3,374)
Surrender charges 6,291 3,538
Investments (51) (59)
Future policyholder benefits 1,793 252
Other 39 29
---------------- ---------------
1,302 386
Net unrealized investment losses (43) (23)
---------------- ---------------
Deferred tax asset, net $ 1,259 $ 363
================ ===============
</TABLE>
22
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Gross deferred income tax assets totaled $8.1 million and $3.8 million at
December 31, 1997 and 1996, respectively. Gross deferred income tax
liabilities totaled $6.9 million and $3.5 million at December 31, 1997 and
1996, respectively. 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, 1997 and 1996, will be
realized.
The Internal Revenue Service is currently examining the Company's tax
return for 1995 and 1996. 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, PHL Variable entered into a reinsurance treaty
that cedes death benefits to a reinsurer in excess of account balances on
variable contracts. Premiums paid during 1997 and 1996 were $259 thousand
and $49 thousand, respectively. Under this treaty, claims recovered were
$1 thousand in 1997. No claims were recoverable in 1996.
In connection with the Company's term product introduced in 1997,
automatic treaties have been established with four reinsurers, covering
90% of the net amount at risk, on a first-dollar basis. No claims were
recoverable in 1997.
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>
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year $ 9,557 $ 1,061
Acquisition expense deferred 12,838 9,114
Amortized to expense during the year (1,356) (578)
Adjustment to equity during the year (29) (40)
----------------- ----------------
Balance at end of year $ 21,010 $ 9,557
================= ================
</TABLE>
9. RELATED PARTY TRANSACTIONS
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 PHL Variable from PM Holdings.
10. STATUTORY FINANCIAL INFORMATION
Insurance companies 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, 1997, 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
23
<PAGE>
PHL VARIABLE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF PM HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
insurance reserves are based on different assumptions and income tax
expense reflects only taxes paid or currently payable.
The following reconciles the statutory net income of PHL Variable as
reported to regulatory authorities to the net income as reported in these
financial statements for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory net income $ 938 $ 1,073 $ 247
Deferred policy acquisition costs 11,482 8,536 1,103
Future policy benefits (12,271) (9,515) (1,313)
Deferred income taxes 899 310 67
Other, net (95) (104) (97)
----------------- ---------------- -----------------
Net income, as reported $ 953 $ 300 $ 7
================= ================ =================
</TABLE>
The following reconciles the statutory surplus and asset valuation reserve
(AVR) of PHL Variable as reported to regulatory authorities to equity as
reported in these financial statements:
<TABLE>
<CAPTION>
1997 1996
(IN THOUSANDS)
<S> <C> <C>
Statutory surplus and AVR $ 22,727 $ 16,790
Deferred policy acquisition costs, net 21,121 9,639
Future policy benefits (23,098) (10,828)
Investment valuation allowances 125 44
Deferred income taxes 1,259 403
Other, net 660 756
----------------- ----------------
Equity, as reported $ 22,794 $ 16,804
================= ================
</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
PHL Variable during 1998 without prior approval is subject to restrictions
relating to statutory surplus.
24
<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 and
incorporated herein by reference.
5 Opinion re legality. Refer to Exhibit 23.2.
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.
II-1
<PAGE>
16 Letter re change in certifying accountant. Not applicable.
21 Subsidiaries of the registrant. Not applicable.
23.1 Consent of Price Waterhouse LLP. Filed herewith.
23.2 Opinion and Consent of Counsel--Edwin L. Kerr. Filed herewith.
24 Powers of attorney. Filed herewith.
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 28th day of April, 1998.
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 28th day of April, 1998.
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 and Chief Financial Officer
(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 are filed herewith.
S-1
EXHIBIT 16.23.1
Consent of Price Waterhouse LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 of
our report dated February 11, 1998, relating to the financial statements of
PHL Variable Insurance Company, which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
April 28, 1998
EXHIBIT 16.23.2
Opinion and Consent of Counsel
<PAGE>
April 28, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: PHL Variable Insurance Company
Registration No. 333-20277
Dear Sirs:
As Counsel to the Registrant, I have participated in the development of
and am familiar with the market value adjustment feature ("MVA") that is offered
under the variable annuity contracts registered under Registration No. 33-87376
(the "Contracts"), which is the subject of the above-captioned Registration
Statement on Form S-1.
In connection with this opinion, I have reviewed the Contracts, the
Registration Statements, the Charter and By-Laws of the company, relevant
proceedings of the Board of Directors, and the provisions of Connecticut
insurance law relevant to the issuance of the Contracts with the MVA added.
Based upon this review, I am of the opinion that each of the Contracts,
when issued with the MVA will have been validly and legally issued as fully paid
and nonassessable securities.
I further consent to the use of this opinion as an exhibit to the
above-captioned Registration Statement and to my being named as an expert under
"Experts" therein.
Very truly yours,
/s/ Edwin L. Kerr
Edwin L. Kerr, Counsel
Phoenix Home Life Mutual
Insurance Company
EXHIBIT 24
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/Richard H. Booth , Director March 23, 1998
- ------------------------------
Richard H. Booth
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Robert G. Chipkin , Director March 25, 1998
- ------------------------------
Robert G. Chipkin
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Robert W. Fiondella , Director March 24, 1998
- ------------------------------
Robert W. Fiondella
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Joseph E. Kelleher , Director March 24, 1998
- ------------------------------
Joseph E. Kelleher
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Philip R. McLoughlin , Director March 24, 1998
- ------------------------------
Philip R. McLoughlin
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Charles J. Paydos , Director March 25, 1998
- ------------------------------
Charles J. Paydos
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ David W. Searfoss , Director March 23, 1998
- ------------------------------
David W. Searfoss
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Simon Y. Tan , Director March 26, 1998
- ------------------------------
Simon Y. Tan
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Directors of PHL Variable
Insurance Company, hereby constitute and appoint John H. Beers, Donald E.
Bertrand, Edwin L. Kerr and Dona D. Young or either of them as my true and
lawful attorneys and agents with full power to sign for me in the capacity
indicated below, any or all Registration Statements or amendments thereto filed
with the Securities and Exchange Commission under the Securities Act of 1933
and/or the Investment Company Act of 1940 relating to variable annuity contracts
issued or sold by PHL Variable Insurance Company or any of its separate accounts
and any and all periodic reports required to be filed by PHL Variable Insurance
Company with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and hereby ratify and confirm my signature as it may be
signed by said attorneys and agents.
I hereby further revoke any and all powers of attorney previously given
by me with respect to said PHL Variable Insurance Company, provided that this
revocation shall not affect the exercise of such prior powers prior to the date
hereof.
WITNESS my hand and seal on the date set forth below.
/s/ Dona D. Young , Director March 26, 1998
- ------------------------------
Dona D. Young
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0001031223
<NAME> PHL Variable Ins Co
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 21,859,000
<DEBT-CARRYING-VALUE> 3,144,000
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 26,027,000
<CASH> 1,714,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 21,010,000
<TOTAL-ASSETS> 428,024,000 <F1>
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 27,667,000
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,500,000
<OTHER-SE> 20,294,000
<TOTAL-LIABILITY-AND-EQUITY> 428,024,000 <F2>
230,000
<INVESTMENT-INCOME> 1,543,000
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 5,050,000
<BENEFITS> 1,092,000
<UNDERWRITING-AMORTIZATION> 1,356,000
<UNDERWRITING-OTHER> 2,869,000
<INCOME-PRETAX> 1,506,000
<INCOME-TAX> 553,000
<INCOME-CONTINUING> 953,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 953,000
<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
<FN>
<F1> Included in Total Assets are Assets Held in Separate Accounts of
$376,046,000.
<F2> Included in Total Liabilities and Equity are Liabilities Related to
Separate Accounts of$376,046,000.
</FN>
</TABLE>
