Exhibit 99.1
[GRAPHIC OMITTED]PHOENIX
THE PHOENIX COMPANIES, INC. N E W S R E L E A S E
One American Row
PO Box 5056
Hartford CT 06102-5056
PhoenixWealthManagement.com
---------------------------
FOR IMMEDIATE RELEASE
CONTACTS: MEDIA RELATIONS INVESTOR RELATIONS
--------------- ------------------
ALICE S. ERICSON PETER A. HOFMANN
860-403-5946 860-403-7100
PHOENIX REPORTS THIRD QUARTER 2003 RESULTS
o NET INCOME OF $14 MILLION VS. PRIOR YEAR LOSS
o SOLID SALES TRENDS IN CORE BUSINESSES
o BENEFITS FROM EXPENSE REDUCTIONS
HARTFORD, CONN., NOVEMBER 4, 2003 -The Phoenix Companies, Inc. (NYSE: PNX) today
reported third quarter 2003 net income of $14.0 million, or $0.14 per diluted
share, compared with a net loss of $93.0 million, or a $0.96 loss per share, in
the third quarter of 2002.
Total segment income improved to $11.5 million, or $0.12 per diluted share,
in the third quarter of 2003, compared with a total segment loss of $81.8
million, or a $0.85 loss per share, in the third quarter of 2002. Last year's
loss was principally related to a goodwill charge and to venture capital losses.
EARNINGS SUMMARY THIRD QUARTER SECOND QUARTER THIRD QUARTER
2003 2003 2002
----------------------- ----------------------- -----------------------
IN PER IN PER IN PER
MILLIONS SHARE MILLIONS SHARE MILLIONS SHARE
----------------------- ----------------------- -----------------------
Total Segment Income (Loss)(1) $11.5 $0.12 $11.5 $0.12 $(81.8) $(0.85)
Net Realized Investment Gains (Losses) 2.5 0.02 (59.2) (0.63) (7.6) (0.08)
Restructuring Costs - - (1.8) (0.02) (3.6) (0.03)
----------------------- ----------------------- -----------------------
Net Income (Loss) $14.0 $ 0.14 $(49.5) $(0.53) $(93.0) $(0.96)
======================= ======================= =======================
(1) Total Segment Income (Loss) is a non-GAAP financial measure. An
explanation of GAAP and non-GAAP financial measures is provided in the tables at
the end of this release.
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The Phoenix Companies, Inc ... 2
"We had a solid quarter in terms of both operating segment earnings and
overall net income. These are tangible results emerging from the ongoing
strategic actions we have taken over the past year, coupled with the improving
equity markets and lower credit losses," said Dona D. Young, chairman, president
and chief executive officer.
Since late last year, Phoenix has concentrated on its most profitable
products and services, enhanced its capital position and lowered expenses.
"As we see our efforts to sharpen our focus begin to yield results, we are
confident we are on track to grow profitably. We continue to build our
businesses for the future," Mrs. Young said.
In October, the company initiated additional steps to reorganize and
consolidate its operations that will produce approximately $21 million in
annualized expense reductions, above and beyond the previously announced $34
million, bringing the total 2003 annualized reductions identified to $55
million. These reductions are before offsets from taxes, deferred acquisition
costs and higher pension and other employee benefit expenses. The actions
included a 6 percent reduction in the workforce that will result in a fourth
quarter pre-tax charge of $3 million to $5 million.
Mrs. Young cited the following highlights from the third quarter:
o Life insurance earnings benefited from strong insurance and investment
margins and continued strong persistency. Total life insurance sales grew
21 percent, and wholesaled life insurance sales grew 35 percent from the
prior year's quarter.
o Annuities showed a modest profit, compared with a loss a year ago,
reflecting improving investment margins and lower operating expenses.
Growth in variable annuities continued, with variable products accounting
for 94 percent of all deposits.
o Asset management earnings improved and margins expanded due to higher
revenues, coupled with continued expense control.
o The company remained on track with its expense reductions. Through
September 30, Phoenix realized pre-tax savings of $10.4 million, net of
increases in deferred acquisition costs and pension and other employee
benefit expenses.
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The Phoenix Companies, Inc ... 3
YEAR-TO-DATE RESULTS
The company reported a year-to-date net loss of $32.3 million, or a $0.34
loss per share, compared with a net loss of $231.6 million, or a $2.34 loss per
share, through September 30, 2002. The 2003 loss was due primarily to the second
quarter $55.0 million after-tax, non-cash charge relating to the company's
equity investment in Aberdeen, while the 2002 loss was due primarily to a
first quarter adoption of an accounting change for goodwill and a third quarter
goodwill charge. Year-to-date 2003 total segment income was $39.8 million, or
$0.42 per share, compared with a total segment loss of $73.1 million, or a $0.74
loss per share through September 30, 2002. This turnaround reflects improvements
in both operating segments as well as income from venture capital investments.
EARNINGS SUMMARY YEAR TO DATE YEAR TO DATE
2003 2002
------------------ ------------------
IN PER IN PER
MILLIONS SHARE MILLIONS SHARE
---------- ------- ---------- -------
Total Segment Income (Loss) $39.8 $0.42 $(73.1) $(0.74)
Net Realized Investment Losses (69.1) (0.73) (16.7) (0.17)
Restructuring Costs (4.3) (0.04) (25.4) (0.26)
Deferred Policy Acquisition Cost Adjustment - - 15.1 0.15
Other 1.3 0.01 (1.2) (0.01)
Cumulative Effect of Accounting Change - - (130.3) (1.31)
---------- ------- ---------- -------
Net Loss $(32.3) ($0.34) $(231.6) $(2.34)
========== ======= ========== =======
SEGMENT RESULTS
Phoenix has two operating segments, "Life and Annuity" and "Asset
Management," and two reporting segments, "Venture Capital" and "Corporate and
Other." The Corporate and Other segment includes unallocated capital, interest
expense and other expenses, and certain businesses not of sufficient scale to
report independently. In the second quarter, the company transferred its equity
investment in Aberdeen from the Asset Management segment to the Corporate and
Other segment, and, as a result, all prior period information has been
reclassified to conform to the current presentation.
SEGMENT INCOME THIRD SECOND THIRD
(in millions) QUARTER QUARTER QUARTER
2003 2003 2002
---------- -------- ----------
Life Insurance $24.1 $28.6 $17.0
Annuities 0.3 (1.4) (18.9)
---------- -------- ----------
Life and Annuity Segment 24.4 27.2 (1.9)
Asset Management Segment (3.1) (5.7) (67.8)
Venture Capital Segment 5.1 5.8 (22.0)
Corporate and Other Segment (10.5) (12.5) (10.1)
---------- -------- ----------
Total Segment Income (Loss), before Income Taxes 15.9 14.8 (101.8)
Applicable Income Taxes (Benefit) 4.4 3.3 (20.0)
---------- -------- ----------
Total Segment Income (Loss) $11.5 $11.5 $(81.8)
========== ======== ==========
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The Phoenix Companies, Inc ... 4
LIFE AND ANNUITY
This segment had pre-tax earnings of $24.4 million in the third quarter of
2003, compared with a segment loss of $1.9 million in the prior year's third
quarter and segment earnings of $27.2 million in the second quarter of 2003. The
second quarter result included a $5.9 million gain related to the resolution of
a restructured investment.
The life insurance business had pre-tax earnings of $24.1 million, compared
with earnings of $17.0 million in the third quarter of 2002 and $28.6 million in
the second quarter of 2003. The improvement from a year ago reflects strong
insurance margins due to a growing inforce, overall good mortality, lower
reinsurance costs, and steady improvement in investment margins in universal
life insurance. Persistency remained strong across all product lines.
The annuity business had pre-tax earnings of $0.3 million, compared with
pre-tax losses of $18.9 million in the third quarter of 2002 and $1.4 million in
the second quarter of 2003. The improvements reflect higher investment margins,
a decrease in minimum death benefit exposure, and lower operating expenses.
Total life sales for the third quarter of 2003 were $122.9 million, compared
with $101.7 million in the prior year's third quarter and $44.3 million in the
second quarter of 2003. Sales of private placement variable universal life
insurance and wholesaled universal life insurance products drove the growth.
Total wholesaled premium was up 35 percent from the prior year's third quarter
and 26 percent from the second quarter of 2003. The growth continues to be
fueled by sales at key firms.
Annuity deposits in the third quarter of 2003 were $452.1 million, compared
with $804.2 million in the prior year's third quarter and $371.0 million in the
second quarter of 2003. Variable annuities accounted for 94 percent of all
deposits, about half of which were in private placement variable annuities. In
October, the company discontinued sales of deferred fixed annuities to
concentrate on variable annuities and began focusing its annuity wholesaling on
selected distribution relationships.
ASSET MANAGEMENT
This segment reported a pre-tax loss of $3.1 million, compared with segment
losses of $67.8 million in the prior year's third quarter and $5.7 million in
the second quarter of 2003. These results include amortization of identified
intangible assets of $8.3 million in the third quarter of 2003, $8.7 million in
the third quarter of 2002, and $8.2 million in the second quarter of 2003. Last
year's third quarter also includes a $66.3 million goodwill charge. The
improvement in 2003 reflects higher revenues resulting from positive market
performance as well as a higher operating margin resulting from continued
expense control.
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The Phoenix Companies, Inc ... 5
Assets under management for the segment on September 30, 2003 were $57.3
billion, including $12.9 billion related to the life insurance company's general
account, up from $53.3 billion on September 30, 2002 and $56.5 billion on June
30, 2003, reflecting market improvements.
Net flows for assets under management were negative $200.7 million in the
third quarter of 2003, compared with positive $410.3 million in the prior year's
third quarter and negative $312.0 million in the second quarter of 2003. The
improvement from this year's second quarter reflects decreases in outflows in
most product categories.
Total inflows were $1.7 billion in the third quarter of 2003, compared with
$3.0 billion in the prior year's third quarter and $1.9 billion in the second
quarter of 2003. The decline in flows from the prior year's quarter was due
primarily to a $1 billion collateralized bond obligation included in that
period. The decline from the second quarter of 2003 was due primarily to
institutional accounts, which can fluctuate significantly because sales are made
up of fewer, larger deposits. Total outflows were $1.9 billion in the third
quarter of 2003, compared with $2.6 billion in the prior year's third quarter
and $2.2 billion in the second quarter of 2003.
VENTURE CAPITAL SEGMENT
The Venture Capital segment, which excludes venture capital investments held
by Phoenix Life Insurance Company's closed block, had pre-tax earnings of $5.1
million in the third quarter of 2003, compared with a segment loss of $22.0
million in the prior year's third quarter.
This quarter's venture capital segment results reflect improving conditions
in the private equity markets, while the prior year's loss reflected the
combination of weak equity markets and the conservatism of the company's
accounting methodology. The company's methodology makes downward adjustments
based on public market indices, but limits upward adjustments to the amounts
previously reported by the partnerships. Accordingly, Phoenix does not record
gains until they are reported by the partnerships.
CORPORATE AND OTHER
In the third quarter of 2003, the Corporate and Other segment had a pre-tax
loss of $10.5 million, compared with a segment loss of $10.1 million in the
prior year's third quarter. The loss was due primarily to interest and other
corporate expenses.
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The Phoenix Companies, Inc ... 6
INVESTMENT PORTFOLIO
The company reported third quarter 2003 net realized investment gains related
to debt and equity securities of $2.5 million, compared with net realized losses
of $7.6 million in the third quarter of 2002. Pre-tax bond impairments in the
third quarter totaled $15.0 million, compared with $19.8 million in the second
quarter, reflecting the substantially improved credit environment. Gross
unrealized losses in the debt securities portfolio declined slightly in the
quarter, to $117.7 million at September 30, 2003 from $119.3 million at June 30,
2003. The change was due to improvements in credit quality, offset by the effect
of higher interest rates.
CONFERENCE CALL
The Phoenix Companies, Inc. will host a conference call today at 1:00 p.m.
Eastern time to discuss with the investment community Phoenix's third quarter
financial results. The conference call will be broadcast live over the Internet
at www.PhoenixWealthManagement.com in the Investor Relations section. To listen
to the live call, please go to the Web site at least fifteen minutes prior to
register, download and install any necessary audio software. The call can also
be accessed by telephone at 1-973-321-1020. A replay of the call will be
available through November 18, 2003 by telephone at 1-973-341-3080 (passcode
4201825) and on Phoenix's Web site, www.PhoenixWealthManagement.com in the
Investor Relations section.
The Phoenix Companies, Inc. is a leading provider of wealth management
products and services to individuals and institutions. Through a variety of
advisors and financial services firms, Phoenix helps the affluent and high net
worth accumulate, preserve and transfer their wealth with an innovative
portfolio of life insurance, annuity and asset management products and services.
Phoenix has corporate offices in Hartford, Connecticut.
FORWARD-LOOKING STATEMENT
This release may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The company intends these
forward-looking statements to be covered by the safe harbor provisions of the
federal securities laws relating to forward-looking statements. These include
statements relating to trends in, or representing management's beliefs about,
the company's future strategies, operations and financial results, as well as
other statements including words such as "anticipate", "believe," "plan,"
"estimate," "expect," "intend," "may," "should" and other similar expressions.
Forward-looking statements are made based upon management's current expectations
and beliefs concerning trends and future developments and their potential
effects on the company. They are not guarantees of future performance. Actual
results may differ materially from
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The Phoenix Companies, Inc ... 7
those suggested by forward-looking statements as a result of risks and
uncertainties which include, among others: (i) changes in general economic
conditions, including changes in interest and currency exchange rates and the
performance of financial markets; (ii) heightened competition, including with
respect to pricing, entry of new competitors and the development of new products
and services by new and existing competitors; (iii) the company's primary
reliance, as a holding company, on dividends and other payments from its
subsidiaries to meet debt payment obligations, particularly since the company's
insurance subsidiaries' ability to pay dividends is subject to regulatory
restrictions; (iv) regulatory, accounting or tax changes that may affect the
cost of, or demand for, the products or services of the company's subsidiaries;
(v) downgrades in financial strength ratings of the company's insurance
subsidiaries or in the company's credit ratings; (vi) discrepancies between
actual claims experience and assumptions used in setting prices for the products
of insurance subsidiaries and establishing the liabilities of such subsidiaries
for future policy benefits and claims relating to such products; (vii) movements
in the equity markets that affect our investment results, including those from
venture capital, the fees we earn from assets under management and the demand
for our variable products; (viii) the company's continued success in achieving
planned expense reductions; and (ix) other risks and uncertainties described in
any of the company's filings with the Securities and Exchange Commission. The
company undertakes no obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise.
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The Phoenix Companies, Inc ... 8
FINANCIAL HIGHLIGHTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
THREE MONTHS NINE MONTHS
----------------------------- ----------------------------
2003 2002 2003 2002
------------- ------------- ------------ ------------
INCOME STATEMENT SUMMARY ($ IN MILLIONS)
Revenues $ 682.1 $ 654.8 $ 1,867.0 $ 1,841.1
Total Segment Income (Loss) (1) $ 11.5 $ (81.8) $ 39.8 $ (73.1)
Net Income (Loss) $ 14.0 $ (93.0) $ (32.3) $ (231.6)
- --------------------------------------------------------------
EARNINGS PER SHARE
Weighted Average Shares Outstanding (in thousands)
Basic 94,276 96,570 94,158 99,087
Diluted (2) 98,272 96,570 94,158 99,087
============= ============= ============= ============
Total Segment Income (Loss) Per Share
Basic $ 0.12 $ (0.85) $ 0.42 $ (0.74)
Diluted $ 0.12 $ (0.85) $ 0.42 $ (0.74)
============= ============= ============= ============
Net Income (Loss) Per Share
Basic $ 0.15 $ (0.96) $ (0.34) $ (2.34)
Diluted (2) $ 0.14 $ (0.96) $ (0.34) $ (2.34)
============= ============= ============= ============
- --------------------------------------------------------------
BALANCE SHEET SUMMARY SEPTEMBER DECEMBER
($ IN BILLIONS, EXCEPT SHARE AND PER SHARE DATA) 2003 2002
------------- -------------
Invested Assets $ 17.2 $ 16.8
Separate Account and Investment Trust Assets 7.1 5.8
Total Assets 27.1 25.2
Total Stockholders' Equity 2.0 2.0
Common Shares Outstanding (in thousands) 94,340 94,045
------------- -------------
Book Value Per Share $ 21.26 $ 21.60
Assets Under Management $ 68.2 $ 63.8
(1) In addition to net income presented in accordance with Generally Accepted
Accounting Principles ("GAAP"), Phoenix considers total segment income in
evaluating its financial performance. A reconciliation of these measures is
provided at the end of this release. Total segment income is an internal
performance measure used by Phoenix in the management of its operations,
including its compensation plans and planning processes. In addition,
management believes that segment income provides additional insight into the
underlying trends in Phoenix's operations.
Total segment income represents income from continuing operations (which is
a GAAP measure) before realized investment gains and losses and certain
other items.
* Net realized investment gains and losses are excluded from total segment
income because their size and timing are frequently subject to our
discretion.
* Certain other items are excluded from total segment income because we
believe they are not indicative of overall operating trends and are
items that management believes are infrequent and material and which
result from a business restructuring, a change in regulatory
requirements, or other unusual circumstances.
Because certain of these items are excluded based on our discretion and
involve judgments by management, inconsistencies in their determination may
exist and total segment income may differ from similarly titled measures of
other companies.
(2) For the nine months ended September 30, 2003, the weighted average common
and equivalent shares outstanding was 95,344,000. For the calculation of net
loss per share, however, common stock equivalents were not included because
they would have been anti-dilutive.
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The Phoenix Companies, Inc ... 9
CONSOLIDATED BALANCE SHEET
September 30, 2003 (Preliminary) and December 31, 2002
(in millions, except share data)
2003 2002
---------------- ---------------
ASSETS:
Available-for-sale debt securities, at fair value $13,007.5 $11,894.1
Equity securities, at fair value 357.4 391.2
Mortgage loans, at unpaid principal balances 328.1 468.8
Venture capital partnerships, at equity in net assets 240.3 228.6
Affiliate equity securities, at cost plus equity in undistributed earnings 41.9 134.7
Policy loans, at unpaid principal balances 2,212.1 2,195.9
Other investments 413.5 398.9
---------------- ---------------
Total investments 16,600.8 15,712.2
Cash and cash equivalents 628.3 1,058.5
Accrued investment income 237.5 192.3
Receivables 184.5 217.3
Deferred policy acquisition costs 1,335.6 1,234.1
Deferred income taxes 60.9 41.4
Intangible assets with definite lives 273.6 291.7
Goodwill and other indefinite-lived intangible assets 463.7 456.0
Other general account assets 238.8 239.5
Separate account and investment trust assets 7,082.5 5,793.1
---------------- ---------------
TOTAL ASSETS $27,106.2 $25,236.1
================ ===============
LIABILITIES:
Policy liabilities and accruals 12,964.7 $12,680.0
Policyholder deposit funds 3,737.8 3,395.7
Stock purchase contracts 124.1 137.6
Indebtedness 642.5 644.3
Other general account liabilities 542.5 542.9
Separate account and investment trust liabilities 7,082.5 5,793.1
---------------- ---------------
TOTAL LIABILITIES 25,094.1 23,193.6
---------------- ---------------
MINORITY INTEREST:
MINORITY INTEREST IN NET ASSETS OF SUBSIDIARIES 6.5 10.8
---------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 106,376,291 and
106,374,510 shares issued 1.0 1.0
Additional paid-in capital 2,425.7 2,424.4
Deferred compensation on restricted stock units (3.9) -
Accumulated deficit (339.9) (292.6)
Accumulated other comprehensive income 110.4 94.6
Treasury stock, at cost: 12,036,586 and 12,330,000 shares (187.7) (195.7)
---------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 2,005.6 2,031.7
---------------- ---------------
TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY $27,106.2 $25,236.1
================ ===============
Certain reclassifications have been made to the 2002 financial statements to
conform with the 2003 presentation.
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The Phoenix Companies, Inc ... 10
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(in millions)
THREE MONTHS NINE MONTHS
-------------------------------- --------------------------------
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
REVENUES:
Premiums $ 286.9 $ 297.1 $ 781.5 $ 813.9
Insurance and investment product fees 143.6 139.4 410.3 425.6
Investment income, net of expenses 254.2 228.8 794.7 675.7
Net realized investment losses (2.6) (10.5) (119.5) (74.1)
--------------- --------------- --------------- ---------------
TOTAL REVENUES 682.1 654.8 1,867.0 1,841.1
--------------- --------------- --------------- ---------------
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends 389.0 397.9 1,088.2 1,070.7
Policyholder dividends 99.5 112.7 310.2 294.4
Policy acquisition cost amortization 22.7 41.1 76.6 41.6
Intangible asset impairments - 66.3 - 66.3
Intangible asset amortization 8.3 8.9 24.9 24.8
Interest expense 9.8 7.7 29.5 23.1
Demutualization expenses - 0.2 - 1.7
Other operating expenses 130.3 135.9 393.3 451.0
--------------- --------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 659.6 770.7 1,922.7 1,973.6
--------------- --------------- --------------- ---------------
Income (loss) before income taxes and minority interest 22.5 (115.9) (55.7) (132.5)
Applicable income taxes (benefit) 5.6 (26.0) (31.4) (40.4)
--------------- --------------- --------------- ---------------
Income (loss) before minority interest 16.9 (89.9) (24.3) (92.1)
Minority interest in net income of subsidiaries 2.9 3.1 8.0 9.2
--------------- --------------- --------------- ---------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 14.0 (93.0) (32.3) (101.3)
Cumulative effect of accounting change for goodwill
and other intangible assets - - - (130.3)
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 14.0 $ (93.0) $ (32.3) $ (231.6)
=============== =============== =============== ===============
Certain reclassifications have been made to the 2002 financial statements to
conform with the 2003 presentation.
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The Phoenix Companies, Inc ... 11
RECONCILIATION OF INCOME MEASURES (UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(in millions)
THREE MONTHS NINE MONTHS
---------------------------------- ---------------------------------
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
SEGMENT INCOME
Life insurance $ 24.1 $ 17.0 $ 75.3 $ 69.7
Annuities 0.3 (18.9) (6.3) (15.5)
--------------- --------------- --------------- ---------------
Life and annuity segment 24.4 (1.9) 69.0 54.2
Asset management segment (3.1) (67.8) (14.6) (71.5)
Venture capital segment 5.1 (22.0) 34.8 (56.9)
Corporate and other segment (10.5) (10.1) (34.4) (24.4)
--------------- --------------- --------------- ---------------
Total segment income (loss), before income taxes 15.9 (101.8) 54.8 (98.6)
Applicable income taxes (benefit) 4.4 (20.0) 15.0 (25.5)
--------------- --------------- --------------- ---------------
TOTAL SEGMENT INCOME (LOSS) 11.5 (81.8) 39.8 (73.1)
Realized investment gains (losses), after income taxes
and other offsets 2.5 (7.6) (69.1) (16.7)
Restructuring charges - (3.6) (4.3) (25.4)
Deferred policy acquisition cost adjustment - - - 15.1
Other income (loss) - - 1.3 (1.2)
Cumulative effect of accounting change - - - (130.3)
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 14.0 $ (93.0) $ (32.3) $ (231.6)
=============== =============== =============== ===============
Note: For additional information, see our financial supplement at
PhoenixWealthManagement.com.
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