Washington, D.C. 20549
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FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. 1 [x]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 36 [x]
(Check appropriate box or boxes.)
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Phoenix Life Variable Universal Life Account
(Exact Name of Registrant)
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Phoenix Life Insurance Company
(Name of Depositor)
One American Row, Hartford, Connecticut 06103-2899
(Address of Depositor's Principal Executive Offices) (Zip Code)
(800) 447-4312
(Depositor's Telephone Number, including Area Code)
John H. Beers, Esq.
Phoenix Life Insurance Company
One American Row
Hartford, CT 06102-5056
(Name and Address of Agent for Service)
Title of Security being Registered: Interests in a Flexible Premium Variable
Universal Life Insurance Policy.
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
PART A
PHOENIX BENEFIT CHOICE VUL(SM)
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
ISSUED BY: PHOENIX LIFE INSURANCE COMPANY ("PHOENIX")
PROSPECTUS DECEMBER 21, 2007
This prospectus describes a flexible premium, variable universal life insurance policy that can provide lifetime insurance protection on the life of one person. We will pay the death benefit when the insured person dies. You may allocate policy value to the Guaranteed Interest Account, Long-term Guaranteed Interest Account (collectively, "Guaranteed Interest Accounts") and/or one or more of the investment options of the Phoenix Life Variable Universal Life Account ("Separate Account"). The investment options purchase shares of the following funds:
See Appendix A for additional information.
The U.S. Securities and Exchange Commission ("SEC") has neither approved nor disapproved these securities, nor have they passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Read and keep this prospectus for future reference. Replacing any existing policy or contract with this policy may not be to your advantage. You should carefully compare this policy with your existing one and you should also determine if the replacement will result in any income taxes. The policy is not a deposit of any bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Policy investments are subject to risk, including the possible loss of principal invested. If you have any questions, please contact us at:
[GRAPHIC OF PHOENIX VARIABLE PRODUCTS [GRAPHIC OF VARIABLE AND UNIVERSAL
ENVELOPE] MAIL OPERATIONS ("VPMO") TELEPHONE] LIFE ADMINISTRATION
PO Box 8027 ("VULA")
Boston, MA 02266-8027 800/541-0171
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TABLE OF CONTENTS
Heading Page
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INDEX OF SPECIAL TERMS ............................................. 3
SUMMARY OF BENEFITS AND RISKS ...................................... 4
Summary of Policy Benefits ....................................... 4
Summary of Policy Risks .......................................... 5
FEE TABLES ......................................................... 6
Transaction Fees ................................................. 6
Periodic Charges Other than Fund Operating Expenses .............. 7
Other Available Policy Benefits Expenses ......................... 8
Minimum and Maximum Fund Operating Expenses ...................... 8
Annual Fund Expenses ............................................. 9
DESCRIPTION OF PHOENIX LIFE INSURANCE COMPANY ...................... 12
DESCRIPTION OF PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT ........ 12
Performance History .............................................. 12
VOTING RIGHTS ...................................................... 12
THE UNDERLYING FUNDS ............................................... 12
Administrative, Marketing and Support Service Fees ............... 13
THE GUARANTEED INTEREST ACCOUNTS ................................... 13
Guaranteed Interest Account ...................................... 14
Long-term Guaranteed Interest Account ............................ 14
THE POLICY ......................................................... 14
Contract Rights: Owner, Insured, Beneficiary, Assignment ......... 14
PURCHASING A POLICY AND YOUR RIGHT TO CANCEL ....................... 15
PREMIUM PAYMENTS AND ALLOCATION OF PREMIUM ......................... 15
Premium Flexibility .............................................. 15
Ways to Pay Premium .............................................. 16
Processing Premium Payments ...................................... 16
Premium Limitations .............................................. 17
POLICY VALUES ...................................................... 17
How the Value of Your Policy is Calculated ....................... 17
Separate Account Policy Value .................................... 17
Guaranteed Interest Accounts Policy Value ........................ 17
POLICY FACE AMOUNT AND DEATH BENEFIT ............................... 17
Death Benefit Options and Minimum Death Benefit .................. 18
Changing the Death Benefit Option ................................ 18
Changing the Policy Face Amount .................................. 18
Effects of Loans, Withdrawals and Requested Decreases in Face
Amount on Death Benefit ....................................... 19
Payment of Death Benefit ......................................... 19
Limitations on Payment of the Death Benefit ...................... 19
Reduced Paid-Up Death Benefit .................................... 19
SURRENDERS AND WITHDRAWALS ......................................... 19
Surrenders........................................................ 19
Withdrawals ...................................................... 19
Processing and Payment of Surrenders, Withdrawals ................ 20
POLICY LOANS ....................................................... 20
Overloan Protection Option ....................................... 21
Systematic Income Program ........................................ 21
TRANSFER OF POLICY VALUE ........................................... 21
Internet, Interactive Voice Response and Telephone Transfers ..... 21
Transfer Restrictions ............................................ 21
CHARGES AND DEDUCTIONS ............................................. 22
General .......................................................... 22
Charges Deducted from Premium Payments ........................... 22
Periodic Charges ................................................. 22
Loan Interest Rates .............................................. 23
Costs for Policy Riders .......................................... 23
Conditional Charges .............................................. 24
Tax Charges ...................................................... 24
Fund Charges ..................................................... 24
MARKET TIMING AND OTHER DISRUPTIVE TRADING ......................... 25
ALLOCATION PROGRAMS ................................................ 26
Asset Allocation and Strategic Programs .......................... 26
SYSTEMATIC TRANSFER PROGRAMS ....................................... 27
Asset Rebalancing Program ........................................ 27
Dollar Cost Averaging Program .................................... 27
Enhanced Dollar Cost Averaging Program ........................... 27
Use of Dollar Cost Averaging with Asset Rebalancing and
Allocation Programs ........................................... 27
POLICY LAPSE AND REINSTATEMENT ..................................... 27
Lapse ............................................................ 27
No Lapse Guarantee Benefit ....................................... 28
Termination ...................................................... 28
Reinstatement..................................................... 28
OTHER AVAILABLE POLICY BENEFITS .................................... 28
Alternate Surrender Value Rider .................................. 28
Disability Payment of Specified Premium Rider .................... 29
Accelerated Benefit Rider ........................................ 29
LifePlan Options Rider ........................................... 29
No Lapse Guarantee Rider.......................................... 29
Overloan Protection Rider ........................................ 29
GENERAL ............................................................ 29
Postponement of Payments ......................................... 29
Reservation of Company Rights to Change the Separate Account ..... 29
TAX CONSIDERATIONS ................................................. 29
General .......................................................... 29
Income Tax Status ................................................ 30
Policy Benefits .................................................. 30
Business and Corporate-Owned Policies ............................ 31
Modified Endowment Contracts ..................................... 31
Limitations on Unreasonable Mortality and Expense Charges ........ 32
Qualified Plans .................................................. 32
Diversification Standards ........................................ 32
Owner Control..................................................... 32
Change of Ownership or Insured or Assignment ..................... 33
Other Taxes ...................................................... 33
Withholding ...................................................... 33
THE PHOENIX COMPANIES, INC. - LEGAL PROCEEDINGS ABOUT COMPANY
SUBSIDIARIES ..................................................... 33
FINANCIAL STATEMENTS ............................................... 34
DISTRIBUTION OF POLICIES ........................................... 34
Compensation ..................................................... 34
Percentage of Premium Payment .................................... 35
Promotional Incentives and Payments .............................. 35
Preferred Distribution Arrangements .............................. 35
APPENDIX A - INVESTMENT OPTIONS .................................... A-1
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We have tried to make this prospectus as readable and understandable for you as possible. By the very nature of the policy, however, certain technical words or terms are unavoidable. We have identified the following as some of these words or terms. The page that is indicated here is where we believe you will find the best explanation for the word or term. The word or term will appear in italics the first time it appears on that page.
Page
amount at risk 22
base face amount 17
Company 12
coverage layer 6
good order 14
investment options 12
modified endowment contract ("MEC") 31
monthly calculation day 22
monthly deduction amount 22
no lapse guarantee period 28
no lapse guarantee premium 28
net surrender value 4
policy anniversary 15
policy date 15
policy value 17
policy year 15
preferred loan 20
termination 28
supplemental face amount 17
total cumulative premium test 28
total face amount 17
valuation date 16
7-pay test 31
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Most of the terms used throughout this prospectus are described within the text where they first appear.
This prospectus contains information about the material rights and features of the variable life policy that you should understand before investing. This summary describes the basic benefits and risks of the policy.
SUMMARY OF POLICY BENEFITS
DEATH BENEFITS
This policy is a flexible premium variable universal life insurance policy. The
policy is first and foremost, a life insurance policy. While the policy remains
in force we will pay a death benefit to your named beneficiary when the person
insured under the policy dies. You have a choice of three death benefit options
with the policy:
> Death Benefit Option A will equal the policy's face amount, or the minimum death benefit if greater.
> Death Benefit Option B will equal the face amount plus the policy value, or the minimum death benefit if greater.
> Death Benefit Option C will equal the face amount plus the Death Benefit Option C Increase Amount, or the minimum death benefit if greater. This option is only available at policy issue.
The minimum death benefit is equal to the policy value on the date of death increased by a percentage taken from a table in the policy based on the attained age of the insured person at the beginning of the policy year in which death occurs.
The death benefit we pay will be reduced by any unpaid policy loan amounts and, unless the No Lapse Guarantee is in effect, unpaid policy charges.
SURRENDERS AND WITHDRAWALS
While the insured is living, you may surrender the policy for its net surrender
value. The net surrender value is the policy value reduced by outstanding loans
and loan interest and any applicable surrender charge.
Beginning in the second policy year, subject to certain limitations, you may take withdrawals from the policy. You may incur a partial surrender charge on the amount withdrawn.
A withdrawal is not permitted if it would reduce the net surrender value to zero or would reduce the face amount below the minimum face amount for the policy. A withdrawal reduces the policy values, may reduce the face amount of the policy and may increase the risk that the policy will lapse.
Surrenders and withdrawals may have adverse tax consequences.
LOANS
Generally, you may borrow up to 100% of your policy value less the current surrender charge and loan interest accrued to the end of the policy year. We count any outstanding loans and loan interest toward the applicable limit. Taking a loan may have adverse tax consequences and may increase the risk that your policy will terminate.
INVESTMENT CHOICES
You may direct your premium to a wide variety of investment options available through the Separate Account, and to the Guaranteed Interest Accounts. Each investment option of the Separate Account invests directly in an underlying fund. You may generally transfer policy value among any of the Separate Account investment options and the Guaranteed Interest Accounts while continuing to defer current income taxes. Your ability to make transfers is limited by (1) our minimum transfer amount, generally $500 per transfer, (2) limitations on transfers into and from the Guaranteed Interest Accounts contained in the policy and (3) restrictions on frequent trading and market timing activity imposed by us and the underlying funds. Each of these limitations is described in this prospectus. Otherwise, the policy does not limit the right to make transfers among the Separate Account investment options.
ASSET ALLOCATION AND STRATEGIC PROGRAMS
You may also elect an asset allocation or strategic program through which to
allocate your premiums and policy value. Participation in a program is optional.
Although we may offer other programs in the future, whether those programs will
be made available to both current and prospective policy owners will be
determined at our sole discretion.
FLEXIBLE PREMIUMS
This policy allows for flexible premiums, which means that, within limitations,
you may choose the amount of premium to allocate to the policy. The only premium
you must pay is the minimum initial premium. Unless your initial premium is
sufficient to keep the policy in force over time, additional premium payments
may be required to prevent policy lapse. The minimum premium we will accept is
$25.00.
OTHER AVAILABLE INSURANCE BENEFITS
The following additional coverages and features may be available to you by
rider. We currently make the following optional riders available with the
policy. These riders increase a policy's charges.
o Alternate Surrender Value Rider
o Disability Payment of Specified Premium Rider (maximum issue age is 60)
We also attach the following riders to the policy at issue:
o Accelerated Benefit Rider -a transaction fee applies when you use this rider
o LifePlan Options Rider-attached automatically at issue for policies with face
amounts of $1,000,000 or more
o No Lapse Guarantee Rider (maximum issue age is 70)
o Overloan Protection Rider-a transaction fee applies when you use this rider
The riders may involve extra cost to you as indicated in the Fee Tables in this prospectus.
YOUR RIGHT TO CANCEL THE POLICY
You have the right to review the policy and cancel it if you are not satisfied.
Simply return the policy to us at our administrative office within ten days
after you receive it, or within 45 days of signing the application. Your state
may require a longer period.
SUMMARY OF POLICY RISKS
SUITABILITY RISK
Variable life insurance is designed for long-term financial planning, and the policy is not suitable as a short-term investment. Additionally, this policy is not suitable if you intend to utilize short-term trading strategies. Surrender charges apply during the first ten policy years and the first ten years following an increase in the policy face amount for coverage provided as base face amount, and in the first fifteen years on coverage provided by supplemental face amount. See "Policy Face Amount and Death Benefit" for a description of these components of the policy's total face amount. Therefore, it may not be appropriate for you to purchase a policy if you foresee the need to withdraw all or part of your policy value during the first few policy years. Also, while the policy offers a variety of available investment options and the potential for appreciation, the policy is a life insurance contract containing policy charges and charges associated with the investment options of the Separate Account. These charges will reduce the investment performance of your policy.
TAX EFFECTS
Existing tax laws that currently provide favorable treatment of life insurance
death benefit proceeds and deferred taxation of any increase in policy value due
to investment earnings may change at any time. Generally, under current federal
income tax law, death benefits are not subject to income taxes. Earnings on the
policy value invested in the Separate Account or the Guaranteed Interest
Accounts are not subject to income taxes until there is a distribution from the
policy. Taking a loan or a full or partial surrender from the policy could
result in recognition of income for tax purposes. Additionally, certain
circumstances may cause a policy to become a modified endowment contract or
(MEC). Under federal tax law, loans, withdrawals and other pre-death
distributions received from a MEC policy are taxed as income first and recovery
of basis second. Also, distributions from a MEC policy received prior to the
policyowner's attainment of age 59 1/2 are subject to a 10% penalty tax.
RISK OF LAPSE
Your policy will be at risk of terminating if the policy value less policy loans
and accrued loan interest is not sufficient to cover the monthly charges due and
the policy does not have a No Lapse Guarantee in effect. Your policy value will
be reduced by the amount of any withdrawal, applicable withdrawal charge, loan,
and loan interest due. Additionally, poor investment experience will also
decrease your policy value. Therefore, these factors increase the risk that your
policy will lapse, requiring you to make additional premium payments to keep the
policy in force. Before your policy terminates, you will have a grace period
during which we will alert you to an impending lapse and give you an opportunity
to keep the policy in force by paying a specified amount. If the policy lapses,
you may be given the opportunity to reinstate it by making the required premium
payment and satisfying our other reinstatement requirements.
INVESTMENT RISK
The value of your policy will fluctuate with the performance of the Separate
Account investment options you select. The investment options may decline in
value and the underlying funds may not meet their stated objectives or perform
to your expectations. You bear the investment risk, whether a gain or a loss,
for any premium allocated to the Separate Account investment options. A
comprehensive discussion of an underlying fund's risks may be found in that
fund's prospectus.
TRANSFER RISK
Transfers or deposits to the Guaranteed Interest Accounts are generally limited
to no more than $250,000 during any one week period. Transfers out of the
Guaranteed Interest Accounts are limited to one transfer per year. The amount
you may transfer out of the Guaranteed Interest Accounts is limited based on a
schedule described later in the prospectus. Additionally, we reserve the right
to reject or restrict transfers among investment options if we or an underlying
fund determine the transfers reflect disruptive trading. Minimum balance and
minimum transfer limits also apply.
EARLY SURRENDER RISK
This policy is designed to be held for the long-term. Surrender charges apply to surrenders, withdrawals and face amount decreases taken from the base face amount in the first ten policy years, and if you have increased the base face amount since the policy was issued, for the ten-year period following the date of any increase affected by the surrender, withdrawal, or face amount decrease. Surrender charges also apply during the first fifteen years for coverage provided by supplemental face amount. It is possible that a policy will have little or no net surrender value during the early policy years.
LIMITATIONS ON ACCESS TO CASH VALUE
No loans will be allowed at issue of this policy other than loans carried from
another policy as part of an exchange under Section 1035 of the Internal Revenue
Code (IRC). When available, loans are subject to maximum and minimum amounts.
Withdrawals from the policy are not available in the first policy year or once
the insured has attained age 100. When available, withdrawals are subject to
maximum and minimum amounts and we reserve the right to charge a withdrawal fee
of $25.00 per withdrawal. Withdrawals may reduce the policy face amount and may
be subject to a partial surrender charge. Because of these charges and
restrictions, there will be less cash value available for loans and withdrawals
in the policy's early years.
POLICY CHARGE RISK
We have the right to increase certain policy and rider charges; however, these
charges are capped at the maximums shown in the Fee Tables included in the
following pages.
THE FOLLOWING TABLES DESCRIBE THE FEES, AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING AND SURRENDERING THE POLICY. THERE ARE TWO TABLES DESCRIBING THE POLICY CHARGES. THE FIRST DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU MAKE PREMIUM PAYMENTS, SURRENDER THE POLICY, TRANSFER POLICY VALUE BETWEEN INVESTMENT OPTIONS, OR EXERCISE THE CERTAIN RIDERS.
TRANSACTION FEES
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CHARGE WHEN DEDUCTED AMOUNT DEDUCTED
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PREMIUM EXPENSE CHARGE Upon premium payment Maximum of 8% of each premium payment
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Upon surrender BASE FACE AMOUNT CHARGE: MAXIMUM of $60.00 to MINIMUM of $3.00
1) For the base face per $1,000 of base face amount
amount, during the
SURRENDER CHARGE(1, 2, 4) first ten policy years SUPPLEMENTAL FACE AMOUNT CHARGE: MAXIMUM of $60.00 to MINIMUM
2) For the supplemental of $3.00 per $1,000 of supplemental face amount
face amount, during the
first fifteen policy years REPRESENTATIVE CHARGE for a 35-year old male, $500,000 face
amount, Death Benefit Option A, in preferred plus risk class:
$13.00 per $1,000 of face amount
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Upon withdrawal of BASE FACE AMOUNT CHARGE: MAXIMUM of $60.00 to MINIMUM of $3.00
policy value; and per $1,000 of base face amount
upon face amount
decrease SUPPLEMENTAL FACE AMOUNT CHARGE: MAXIMUM of $60.00 to MINIMUM
PARTIAL SURRENDER of $3.00 per $1,000 of supplemental face amount
CHARGE(2, 3, 4, 6) 1) For the base face
amount, during the first REPRESENTATIVE CHARGE for a 35-year old male, $500,000 face
ten policy years amount, Death Benefit Option A, in preferred plus risk class,
assuming a partial surrender in the first policy year at the
2) For the supplemental end of the month:
face amount, during the
first fifteen policy years $13.00 per $1,000 of face amount
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TRANSFER CHARGE Upon transfer Maximum of $25 per transfer after the first twelve transfers;
not currently charged.
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WITHDRAWAL FEE(6) Upon withdrawal Maximum of $25.00 for each withdrawal; not currently charged.
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ACCELERATION OF DEATH Upon exercise of the option $300.00
BENEFIT RIDER CHARGE
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On the next monthly
OVERLOAN PROTECTION calculation day following 3.5% of the policy value
OPTION CHARGE(5) exercise of the option
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(1) This charge is incurred only if there is a full surrender. Each of the base face amount of the policy at issue and any increase in the base face amount is considered a coverage layer. Separate surrender charges apply to each coverage layer.
(2) A surrender charge is applicable for 10 years from the policy date for the initial face amount and for 10 years from the date any additional coverage layer is added, and for 15 years from the policy date for coverage provided as supplemental face amount. This charge varies according to the gender and issue age and risk class of the insured at the time of policy issue, as well as by the death benefit option in effect at the time of issue, and decreases as the insured ages. Surrender charges on additional coverage layers will also vary based on these factors as they exist at the time the layer is added. No surrender charge is applied after the policy anniversary on and following the insured's attained age 100.
(3) This charge is incurred only if there is a withdrawal or face amount decrease. To determine the charge, the full surrender charge is multiplied by the result of dividing the partial surrender amount by the net surrender value before the withdrawal or, in the case of a decrease, by the base face amount before the decrease.
(4) This charge varies based on the insured's individual characteristics. The surrender charges shown in this table may not be typical of the charges a particular policy owner will pay. Before you purchase the policy, we will provide you personalized illustrations of your future benefits under the policy based upon factors including the age and risk class of the person you wish to insure, the death benefit option, face amount, planned premiums and riders requested. The personalized illustrations will show the effect of the surrender charges for the policy based on these factors. You may call us at 1-800-417-4769 to obtain a personalized illustration. Your policy's specifications pages will show the surrender charges for your policy.
(5) This benefit is provided by rider that is automatically made a part of any policy for which the Guideline Premium Test has been elected.
(6) Partial surrenders are subject both to the Partial Surrender Charge and the Withdrawal Fee; however, we do not currently charge the Withdrawal Fee.
THE TABLE BELOW DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY, NOT INCLUDING FUND FEES AND EXPENSES.
PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES
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CHARGE WHEN DEDUCTED AMOUNT DEDUCTED
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COST OF INSURANCE(1, 2, 3, 6) On each monthly MAXIMUM of $83.33 to MINIMUM of $0.06 per $1,000 of amount at risk
calculation day*
REPRESENTATIVE CHARGE for a 35-year old male, $500,00 face amount,
Death Benefit Option A, in preferred plus risk class:
$0.18 per $1,000 of amount at risk
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COVERAGE CHARGE(2, 4, 6) On each monthly BASE FACE AMOUNT CHARGE: MAXIMUM of $4.00 to MINIMUM $ 0.04 per
calculation day* $1,000 of base face amount during the first ten policy years
SUPPLEMENTAL FACE AMOUNT CHARGE:MAXIMUM of $4.00 to MINIMUM of
$0.04 per $1,000 of supplemental face amount in all policy years.
REPRESENTATIVE CHARGE for a 35-year old male, $500,000 face amount,
Death Benefit Option A, in preferred plus risk class:
$0.16 per $1,000 of face amount
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MORTALITY AND EXPENSE On each monthly POLICY YEARS 1-20
RISK CHARGE(6) calculation day*
Maximum charge is 0.50% on an annual basis of investments in the
Separate Account investment options.
POLICY YEARS 21 +
Maximum charge is 0.30% on an annual basis of investments in the
Separate Account investment options.
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ADMINISTRATIVE CHARGE(6) On each monthly Maximum of $7.00
calculation day*
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TAX CHARGES When we become liable Currently, there are no charges for taxes; however, we reserve the
for taxes. right to impose a charge should we become liable for taxes in the
future.
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LOAN INTEREST RATE Interest accrues daily Maximum annual net cost is 1%
CHARGED(5) and is due on each
policy anniversary.
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(1) Cost of insurance charges will vary according to the insured's age at issue, gender, risk class, policy year, death benefit option at issue and the ratio of policy value to death benefit. Cost of insurance charges generally will increase as the insured ages. Separate cost of insurance charges apply to each layer of coverage; the new charge for each layer is based on the insured's attained age, gender, death benefit option at the time of increase and risk class at the time the layer is added. This table shows cost of insurance rates for standard risks. Additional charges, if any, may be assessed for risks associated with certain health conditions, occupations or avocations.
(2) This charge varies based on the insured's individual characteristics. The cost of insurance and coverage charges shown in this table may not be typical of the charges a particular policy owner will pay. Before you purchase the policy, we will provide you personalized illustrations of your future benefits under the policy based upon factors including the age and risk class of the person you wish to insure, the death benefit option, face amount, planned premiums and riders requested. The personalized illustrations will show the effect of the cost of insurance and coverage charges for the policy based on these factors. You may call us at 1-800-417-4769 to obtain a personalized illustration. Your policy's specifications pages will show the cost of insurance and coverage charges for your policy.
(3) The amount at risk at any given time is the difference between the total death benefit we would pay and the policy value.
(4) The coverage charge varies based on the insured's age, gender, death benefit option and risk classification at issue. A separate coverage charge will apply to each coverage layer and will be based on the insured's attained age, gender, risk classification and death benefit option at the time the layer is added.
(5) The maximum net cost to the policy is the difference between the rate we charge for the outstanding loan, and the rate we credit the loaned portion of the Guaranteed Interest Account, where we allocate policy value equal to the amount of the loan, as collateral.
(6) This charge does not apply beginning on the policy anniversary on which the insured's attained age reaches 100.
* The monthly calculation day is the day each month on which we assess these charges. The monthly calculation day is the same date each month beginning with the policy date.
THIS TABLE SHOWS THE CHARGES YOU WILL PAY PERIODICALLY FOR CERTAIN RIDERS YOU ELECT TO ADD TO YOUR POLICY. OTHER RIDERS ARE AVAILABLE WITH THIS POLICY FOR WHICH NO SEPARATE RIDER CHARGE IS ASSESSED BUT THAT MAY INCREASE MONTHLY COST OF INSURANCE DEDUCTIONS. WE DESCRIBE RIDERS LATER UNDER "OTHER AVAILABLE POLICY BENEFITS."
OTHER AVAILABLE POLICY BENEFITS EXPENSES
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CHARGE WHEN DEDUCTED AMOUNT DEDUCTED
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ALTERNATE SURRENDER VALUE RIDER(1) On each monthly calculation day* MAXIMUM of 5% to MINIMUM of 3% of one-twelfth of
the target annual premium(3)
REPRESENTATIVE CHARGE for a 35-year old male,
$500,000 face amount, Death Benefit Option A, in
preferred plus risk class:
$11.56
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DISABILITY PAYMENT OF SPECIFIED On each monthly calculation day* MAXIMUM of $0.64 to MINIMUM of $0.19 per $100 of
PREMIUM RIDER (DISABILITY BENEFIT premium waived
RIDER)(1, 2)
REPRESENTATIVE CHARGE for a 35-year old male,
$500,000 face amount, Death Benefit Option A, in
preferred plus risk class:
$0.24 per $100 of premium waived
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(1) The charge for this rider varies based on the insured's issue age, gender, death benefit option at issue and risk classification. We will increase this charge as the insured ages. The charges shown in this table may not be typical of the charges a particular policy owner will pay. Your policy's rider specifications pages will indicate the costs applicable to your policy. If you would like information on the rider charges that would apply to your particular situation, you may request a personalized illustration from your financial representative or by calling us at 1-800-417-4769.
(2) The charge for this rider also varies based on the specified benefit amount.
* The monthly calculation day is the day each month on which we assess these charges. The monthly calculation day is the same date each month beginning with the policy date.
THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM FEES AND EXPENSES AS A PERCENTAGE OF DAILY NET ASSETS, FOR THE YEAR ENDED DECEMBER 31, 2006, CHARGED BY THE FUNDS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE POLICY. MORE DETAIL CONCERNING EACH OF THE FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM FUND OPERATING EXPENSES
Minimum Maximum
Total Annual Fund Operating Expenses (1) 0.29% - 3.29%
(expenses that are deducted from a fund's assets, including
management fees, distribution and/or 12b-1 fees, and other expenses)
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(1) The total and net fund operating expenses for each available investment portfolio are given in the following table.
ANNUAL FUND EXPENSES (as a percentage of fund average net assets for the year ended 12/31/06)
This table shows each fund's investment management fee, Rule 12b-1 fee (if applicable), other operating expenses and total annual fund expenses. The funds provided this information and we have not independently verified it. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN EACH FUND'S PROSPECTUS, WHICH YOU MAY OBTAIN BY CALLING 800/541-0171.
The company and its affiliates may have arrangements with the fund's investment advisors, subadvisors, distributor and/or affiliated companies under which the company or its affiliates receive payments in connection with the provision of administrative, marketing or other support services to the funds. Further information about these arrangements is provided in the "Underlying Funds" section of this prospectus.
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Investment Rule 12b-1 Other Acquired Total Contractual
Management or Service Operating Fund Fees Annual Fund Reimbursements Net Annual
Series Fee Fees Expenses and Expenses Expenses & Waivers Fund Expenses
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AIM V.I. Capital Appreciation Fund 0.61 0.00 0.30 0.00 0.91 N/A 0.91(1)
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DWS Equity 500 Index VIP 0.29 0.00 0.00 0.00 0.29 (0.01) 0.28(3)
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Federated Fund for U.S. Government
Securities II 0.60 0.00 0.39 0.00 0.99 N/A 0.99(18)
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Federated High Income Bond Fund II 0.60 0.00 0.42 0.00 1.02 N/A 1.02(18)
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Fidelity VIP Contrafund(R) Portfolio 0.57 0.10 0.09 0.00 0.76 N/A 0.76(4,18)
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Fidelity VIP Growth Opportunities
Portfolio 0.57 0.10 0.15 0.00 0.82 N/A 0.82(5,18)
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Fidelity VIP Growth Portfolio 0.57 0.10 0.11 0.00 0.78 N/A 0.78(4,6,18)
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Fidelity VIP Investment Grade Bond
Portfolio 0.32 0.10 0.12 0.00 0.54 N/A 0.54
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Franklin Income Securities Fund 0.46 0.25 0.01 0.00 0.72 N/A 0.72(7)
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Lord Abbett Bond-Debenture Portfolio 0.50 0.00 0.46 0.00 0.96 (0.06) 0.90(8)
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Lord Abbett Growth and Income
Portfolio 0.48 0.00 0.39 0.00 0.87 N/A 0.87
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Lord Abbett Mid-Cap Value Portfolio 0.74 0.00 0.38 0.00 1.12 N/A 1.12
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Mutual Shares Securities Fund 0.60 0.25 0.21 0.00 1.06 N/A 1.06
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Neuberger Berman AMT Fasciano
Portfolio 1.15 0.25 0.60 0.00 2.00 (0.60) 1.40(9)
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Neuberger Berman AMT Guardian
Portfolio 0.85 0.25 0.15 0.00 1.25 N/A 1.25
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Oppenheimer Capital Appreciation
Fund/VA 0.64 0.25 0.03 0.00 0.92 N/A 0.92
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Oppenheimer Global Securities Fund/VA 0.63 0.25 0.03 0.00 0.91 N/A 0.91
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Oppenheimer Main Street Small Cap
Fund/VA 0.74 0.25 0.01 0.00 1.00 N/A 1.00
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Phoenix Capital Growth Series 0.68 0.00 0.24 0.00 0.92 N/A 0.92(10c)
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Phoenix Growth and Income Series 0.70 0.00 0.27 0.00 0.97 (0.06) 0.91(10a)
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Phoenix Mid-Cap Growth Series 0.80 0.00 0.34 0.00 1.14 (0.01) 1.13(10d)
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Phoenix Money Market Series 0.40 0.00 0.26 0.00 0.66 (0.01) 0.65(10c)
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Phoenix Multi-Sector Fixed Income
Series 0.50 0.00 0.24 0.00 0.74 N/A 0.74(10c)
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Phoenix Multi-Sector Short Term Bond
Series 0.50 0.00 0.38 0.00 0.88 (0.18) 0.70(10b)
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Phoenix Strategic Allocation Series 0.59 0.00 0.25 0.00 0.84 (0.01) 0.83(10c)
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Phoenix-Aberdeen International Series 0.75 0.00 0.26 0.00 1.01 0.00 1.01(10d)
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Investment Rule 12b-1 Other Acquired Total Contractual
Management or Service Operating Fund Fees Annual Fund Reimbursements Net Annual
Series Fee Fees Expenses and Expenses Expenses & Waivers Fund Expenses
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Phoenix-Alger Small-Cap Growth Series 0.85 0.00 0.42 0.00 1.27 (0.27) 1.00(10a)
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Phoenix-Duff & Phelps Real Estate
Securities Series 0.75 0.00 0.27 0.00 1.02 N/A 1.02(10e)
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Phoenix-S&P Dynamic Asset Allocation
Series: Aggressive Growth 0.40 0.25 1.02 0.31(11b) 1.98 (0.97) 1.01(11a)
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Phoenix-S&P Dynamic Asset Allocation
Series: Growth 0.40 0.25 0.93 0.14(11b) 1.72 (0.88) 0.84(11a)
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Phoenix-S&P Dynamic Asset Allocation
Series: Moderate 0.40 0.25 2.45 0.19(11b) 3.29 (2.40) 0.89(11a)
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Phoenix-S&P Dynamic Asset Allocation
Series: Moderate Growth 0.40 0.25 1.34 0.15(11b) 2.14 (1.29) 0.85(11a)
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Phoenix-Sanford Bernstein Mid-Cap
Value Series 1.05 0.00 0.28 0.00 1.33 (0.02) 1.31(10c)
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Phoenix-Sanford Bernstein Small-Cap
Value Series 1.05 0.00 0.30 0.00 1.35 (0.05) 1.30(10c)
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Phoenix-Van Kampen Comstock Series 0.70 0.00 0.30 0.00 1.00 (0.05) 0.95(10c)
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Phoenix-Van Kampen Equity 500 Index
Series 0.35(17) 0.00 0.32 0.00 0.67 (0.14) 0.53(10a)
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PIMCO VIT CommodityRealReturn(TM)
Strategy Portfolio 0.49 0.25 0.25 0.03(2) 1.02 (0.03) 0.99(12,13)
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PIMCO VIT Real Return Portfolio 0.25 0.25 0.25 0.00 0.75 N/A 0.75
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PIMCO VIT Total Return Portfolio 0.25 0.25 0.25 0.00 0.75 N/A 0.75(14)
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Sentinel Variable Products Balanced
Fund 0.55 0.00 0.26 N/A 0.81 N/A 0.81
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Sentinel Variable Products Bond Fund 0.40 0.00 0.28 N/A 0.68 N/A 0.68
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Sentinel Variable Products Common
Stock Fund 0.38 0.00 0.23 N/A 0.61 N/A 0.61
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Sentinel Variable Products Mid Cap
Growth 0.48 0.00 0.29 N/A 0.77 N/A 0.77
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Sentinel Variable Products Small
Company Fund 0.40 0.00 0.25 N/A 0.65 N/A 0.65
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Templeton Developing Markets
Securities Fund 1.23 0.25 0.24 0.00 1.72 N/A 1.72
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Templeton Foreign Securities Fund 0.63 0.25 0.15 0.03(2) 1.06 (0.03) 1.03(15)
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Templeton Growth Securities Fund 0.74 0.25 0.04 0.00 1.03 N/A 1.03(7)
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Van Kampen UIF Equity and Income
Portfolio 0.43 0.35 0.30 0.00 1.08 N/A 1.08(16,18)
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Wanger International Select 0.99 0.00 0.20 0.00 1.19 N/A 1.19
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Wanger International Small Cap 0.91 0.00 0.10 0.00 1.01 N/A 1.01
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Wanger Select 0.85 0.00 0.09 0.00 0.94 N/A 0.94
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Wanger U.S. Smaller Companies 0.90 0.00 0.05 0.00 0.95 N/A 0.95
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(1) The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) of Series I shares to 1.30% of average daily net assets. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total net annual fund expenses to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the expense offset arrangements from which the Fund may benefit are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. In addition, the fund will also benefit from a one time credit to be used to offset future custodian expenses. Those credits are used to pay certain expenses incurred by the Fund. The expense limitation agreement is in effect through April 30, 2008.
(2) As an investor in an underlying fund, the portfolio or fund will also bear its pro rata portion of the operating expenses of the underlying fund, and policy owners, as investors in the fund, indirectly assume a proportional share of these expenses. The expenses of the underlying funds are based upon the weighted average of the total operating expenses of the underlying funds that the series expects to invest in for the year ended December 31, 2006. Investors may be able to realize lower aggregate expenses by investing directly in an underlying fund instead of the series.
(3) The advisor has contractually agreed to waive its fees and/or reimburse expenses of the fund, to the extent necessary, to limit all expenses to 0.28% until April 30, 2009. This includes a 0.10% administration fee.
(4) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce the fund's custodian expenses. Including these reductions, the total class operating expenses would have been 0.75% for the Fidelity VIP Contrafund Portfolio and 0.77% for the Fidelity VIP Growth Portfolio. These offsets may be discontinued at any time.
(5) A portion of the brokerage commissions that the fund pays may be reimbursed and used to reduce the fund's expenses. Including this reduction, the total class operating expenses would have been 0.78% for the Fidelity VIP Growth Opportunities Portfolio. These offsets may be discontinued at any time.
(6) The fund's manager has voluntarily agreed to reimburse the class to the extent that total operating expenses (excluding interest, taxes, certain security lending costs, brokerage commissions and extraordinary expenses), as a percentage of its average net assets, exceed 0.95%. This arrangement can be discontinued by the fund's manager at any time.
(7) The fund administration fee is paid indirectly through the management fee.
(8) For the fiscal year ended December 31, 2006, Lord Abbett contractually agreed to reimburse the Fund to the extent necessary so that the total annual operating expenses (excluding management fee) did not exceed an annual rate of 0.40% of average daily net assets. A similar agreement is in place through April 30, 2008.
(9) Neuberger Berman Management Inc. ("NBMI") has contractually undertaken through December 31, 2010 to reimburse the fund for its operating expenses (including the compensation of NBMI but excluding interest, taxes, brokerage commissions, extraordinary expenses and transaction costs), which exceed, in the aggregate, 1.40% of the fund's average daily net assets.
(10) Effective September 1, 2006, the advisor contractually agreed to reimburse the series for expenses necessary or appropriate for the operation of the series (excluding advisory and management fees, Rule 12b-1 fees, taxes, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) to the extent that such expenses exceed series' average net assets ("Expense Cap") through April 30, 2008 as follows:
------------------- -------------------- -------------------
EXPENSE CAP % EXPENSE CAP % EXPENSE CAP %
------------------- -------------------- -------------------
a 0.15 c 0.25 e 0.35
b 0.20 d 0.30
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During 2006, prior to September 1, 2006, the advisor provided voluntary reimbursement of the expenses now contractually capped at various levels. The amount of reimbursement shown is the actual amount reimbursed for the year ended December 31, 2006.
(11a) Effective September 1, 2006, the advisor contractually agreed to reimburse the series for expenses necessary or appropriate for the operation of the series (excluding advisory and management fees, Rule 12b-1 fees, taxes, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) to the extent that such expenses exceed 0.05% of the series' average net assets through April 30, 2008. During 2006, prior to September 1, 2006, the advisor provided voluntary reimbursement of the expenses now contractually capped at various levels. The amount of reimbursement shown is the actual amount reimbursed for the year ended December 31, 2006.
(11b) As an investor in an underlying fund, the series will also bear its pro rata portion of the operating expenses of the underlying fund, and policy owners, as investors in the series, indirectly assume a proportional share of these expenses. The expenses of the underlying funds are based upon the weighted average of the total operating expenses of the underlying funds that the series expects to invest in for the year ended December 31, 2006. Total operating expenses of the underlying funds range from 0.15% to 0.77%. Investors may be able to realize lower aggregate expenses by investing directly in an underlying fund instead of the series. An investor who chooses to invest directly in an underlying fund would not, however, receive the asset allocation services available in the series.
(12) The Subsidiary has entered into a separate contract with PIMCO for the management of the Subsidiary's portfolio pursuant to which the Subsidiary pays PIMCO a management fee and administration fee at the annual rates of 0.49% and 0.20%, respectively.
(13) PIMCO has contractually agreed to waive the advisory fee and the administration fee it receives from the Portfolio in an amount equal to the advisory fee and administration fee, respectively, paid to PIMCO by the Subsidiary. This waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO's contract with the Subsidiary is in place.
(14) Other Operating Expenses reflect an administrative fee of 0.25%.
(15) The manager has agreed in advance to reduce its fee from assets invested by the fund in a Franklin Templeton money market fund (the acquired fund) to the extent that the fund's fees and expenses are due to those of the acquired fund. This reduction is required by the Trust's board of trustees and an exemptive order of the SEC.
(16) The advisor has voluntarily agreed to waive 0.30% of the 0.35% distribution fee that it may receive. Including this waiver, the total class operating expenses would have been 0.78%. This waiver can be discontinued at any time.
(17) Effective October 1, 2007, the Investment Management Fee has been reduced. The Total Annual Fund Expenses and the Net Annual Fund Expenses shown are restated to show the effect of the reduction. Prior to October 1, 2007, the Investment Management Fee was 0.45%, Total Annual Fund Expenses were 0.77% and Net Annual Fund Expenses were 0.63%.
(18) The chart below shows the amount of the waiver or reimbursement and the total net annual operating expenses for Funds that have entered into a voluntary fee waiver and/or expense reimbursement arrangement. As these arrangements are voluntary, they may be changed or terminated at any time. Without such waivers performance would have been lower.
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Net Annual Fund
Fund Reimbursements Expenses
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Federated Fund for U.S. Government (0.27) 0.72
Securities II
Federated High Income Bond Fund II (0.25) 0.77
Fidelity VIP Contrafund(R) Portfolio (0.01) 0.75
Fidelity VIP Growth Opportunities Portfolio (0.04) 0.78
Fidelity VIP Growth Portfolio (0.01) 0.77
Van Kampen UIF Equity and Income Portfolio (0.30) 0.78
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In this prospectus, the "Company," "we," "us," and "our" refers to Phoenix Life Insurance Company. Phoenix Life sells variable life insurance and annuity products to individual and institutional customers. Phoenix Life is organized as a New York stock company. Our executive and administrative office is at One American Row, Hartford, CT 06103-2899. Our New York principal office is at 31 Tech Valley Drive, East Greenbush, New York 12061.
Phoenix Life established the Phoenix Life Variable Universal Life Account ("Separate Account") as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940. The SEC does not supervise the management, investment practices or policies of the Separate Account or of the Company.
The Separate Account purchases shares in mutual funds called "underlying funds." The Separate Account is divided into sections called "investment options." There is a corresponding investment option for each underlying fund in which the Separate Account invests. You do not invest directly in the underlying funds. Instead, the policy value you allocate to the Separate Account purchases "units" of the Separate Account. The units are allocated to the investment options of your choice. Each time you buy units of the Separate Account, the Separate Account purchases shares of the corresponding underlying fund. The value of your units will vary. Please refer to "Policy Values" for more details on unit values and to "the Underlying Funds" for more information about the funds.
Phoenix Life does not guarantee the investment performance of the Separate Account or any of its investment options. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. As policy owner, you bear the full investment risk for all monies invested in the Separate Account. Phoenix Life insurance Company is obligated to pay all amounts contractually owed under the policies.
All income, gains or losses, credited to or charged against the Separate Account reflect the Separate Account's own investment experience and not the investment experience of Phoenix Life's other assets. The assets of the Separate Account may not be used to pay liabilities of Phoenix Life other than those arising from the variable life insurance policies issued by the Separate Account.
We reserve the right to add, remove, modify, or substitute underlying funds in which the Separate Account invests.
Your registered representative should provide you with a copy of this prospectus at the time you apply for a policy. YOU MAY OBTAIN A COPY OF THE UNDERLYING FUND PROSPECTUSES BY CALLING THE VULA. Additionally, we will provide a copy of these prospectuses when you have purchased the policy. We will mail you updated prospectuses for your policy and the underlying funds annually.
PERFORMANCE HISTORY
We may choose to include performance history of the investment options or the
underlying funds in advertisements, sales literature or reports. Performance
information about each investment option is based on past performance and is not
an indication of future performance.
We legally own all fund shares held by the investment options; however, we vote those shares at shareholder meetings according to voting instructions we receive from policy owners with an interest in the investment options. We may decide to vote the shares in our own right should the law change to permit us to do so.
While your policy is in effect, you may provide us with voting instructions for each investment option in which you have an interest. We determine the number of votes you may cast by applying your percentage interest in an investment option to the total number of votes attributable to the investment option.
We will send you or, if permitted by law, make available electronically, proxy material, reports and other materials relevant to the investment options in which you have a voting interest. In order to vote you must complete the proxy form and return it with your voting instructions. You may also be able to vote your interest by telephone or over the Internet if such instructions are included in the proxy material. We will vote all of the shares we own on your behalf, in accordance with your instructions. We will vote the shares for which we do not receive instructions, and any other shares we own, in the same proportion as the shares for which we do receive instructions. This process may result in a small number of policyowners controlling the vote. We may ask you to provide voting instructions for such items as:
1) the election of the fund's Trustees;
2) the ratification of the independent accountants for the fund;
3) approval or amendment of investment advisory agreements;
4) a change in fundamental policies or restrictions of the fund; and
5) any other matters requiring a shareholder vote.
Each underlying fund available through the policy is a portfolio of an open-end management investment company that is registered with the SEC under the Investment Company Act of 1940. These underlying funds are not publicly traded and are offered only through variable annuity and variable life insurance products, or directly to tax qualified plans. They are not the
same retail mutual funds as those offered outside of a variable annuity or variable life insurance product, or directly to tax qualified plans, although the investment practices and fund names may be similar, and the portfolio managers may be identical. Accordingly, the performance of the retail mutual fund is likely to be different from that of the underlying fund, and you should not compare the two.
The underlying funds offered through this product are selected by the Company based on several criteria, including asset class coverage, the strength of the manager's reputation and tenure, brand recognition, performance, and the capability and qualification of each sponsoring investment firm. Another factor the Company considers during the initial selection process is whether the underlying fund or an affiliate of the underlying fund will compensate the Company for providing administrative, marketing, and support services that would otherwise be provided by the underlying fund, the underlying fund's investment advisor, or its distributor. Finally, when the Company develops a variable annuity or life product in cooperation with a fund family or distributor (e.g. a "private label" product), the company will generally include underlying funds based on recommendations made by the fund family or distributor, whose selection criteria may differ from the Company's selection criteria.
Each underlying fund is reviewed periodically after having been selected. Upon review, the Company may remove an underlying fund or restrict allocation of additional premium payments to an underlying fund if the Company determines the underlying fund no longer meets one or more of the criteria and/or if the underlying fund has not attracted significant policy owner assets.
In addition, if any of the underlying funds become available for allocating premium payments, or if we believe that further investment in an underlying fund is inappropriate for the purposes of the policy, we may substitute shares of another underlying fund for those held by the affected investment option. However, we will not make any substitutions without notifying you and obtaining any state and SEC approval, if necessary. From time to time we may make new investment options available.
Each underlying fund and the associated investment option of the Separate Account is subject to market fluctuations and has varying degrees of risk and there can be no assurance that any investment option or underlying fund will achieve its stated investment objective.
You will find detailed information about the underlying funds and their inherent risks in their current prospectuses. COPIES OF THE FUND PROSPECTUSES MAY BE OBTAINED BY CONTACTING US AT THE ADDRESS OR TELEPHONE NUMBER PROVIDED ON THE FIRST PAGE OF THIS PROSPECTUS. YOU SHOULD READ THESE PROSPECTUSES CAREFULLY.
For additional information concerning the available investment options, please see Appendix A.
ADMINISTRATIVE, MARKETING AND SUPPORT SERVICE FEES
The Company and the principal underwriter for the policies have arrangements
with the investment adviser, subadviser, distributor, and/or affiliated
companies of most of the underlying funds under which the Company and the
principal underwriter for the policies receive payments in connection with our
provision of administrative, marketing or other support services to the
underlying funds. Proceeds of these payments may be used for any corporate
purpose, including payment of expenses that the Company and the principal
underwriter for the policies incur in promoting, issuing, distributing and
administering the policies. The Company and its affiliates may profit from these
fees.
The payments are generally based on a percentage of the average assets of each underlying fund allocated to the investment options under the policy or other policies offered by the Company. The amount of the fee that an underlying fund and its affiliates pay the Company and/or the Company's affiliates is negotiated and varies with each underlying fund. Aggregate fees relating to the different underlying funds may be as much as 0.40% of the average net assets of an underlying fund attributable to the relevant policies. A portion of these payments may come from revenue derived from the Distribution and/or Service Fees (12b-1 fees) that are paid by an underlying fund out of its assets as part of its Total Annual Operating Expenses.
In addition to the Separate Account, you may allocate premiums or transfer values to the Guaranteed Interest Account or Long-term Guaranteed Interest Account (collectively, the Guaranteed Interest Accounts). Amounts you allocate to any of the Guaranteed Interest Accounts are deposited in our general account. You do not share in the investment experience of our general account. Rather, we guarantee a minimum rate of return on the allocated amounts. Although we are not obligated to credit interest at a higher rate than the minimum, we may credit any excess interest as determined by us based on expected investment yield information.
The Long-term Guaranteed Interest Account has more restrictive transfer options out of the general account than the Guaranteed Interest Account so that longer term investments can be made.
In general, you may make only one transfer per policy year from the Guaranteed Interest Accounts. Additionally, we may impose limitations on the amounts of premium or policy value that can be allocated to or transferred into or out of the Guaranteed Interest Accounts. These limitations are described below.
Because of exemptive and exclusionary provisions, we have not registered interests in our general account under the Securities Act of 1933. Also, we have not registered our general account as an investment company under the Investment Company Act of 1940, as amended. Therefore, neither the general account nor any of its interests are subject to these Acts, and the SEC
has not reviewed the general account disclosures. These disclosures may, however, be subject to certain provisions of the federal securities law regarding accuracy and completeness of statements made in this prospectus.
The features specific to each type of Guaranteed Interest Account are detailed below.
GUARANTEED INTEREST ACCOUNT
We reserve the right to limit transfers to the Guaranteed Interest Account to no
more than $250,000 during any one-week period per policy. Except for transfers
resulting from the Systematic Income Program described later in this prospectus,
the amount that can be transferred out is limited to the greater of $1,000 or
25% of the policy value in the non-loaned portion of the Guaranteed Interest
Account as of the date of the transfer. You may transfer the total non-loaned
policy value out of the Guaranteed Interest Account to one or more of the
investment options over a consecutive 4-year period according to the following
schedule:
> First Year: 25% of the total value
> Second Year: 33% of remaining value
> Third Year: 50% of remaining value
> Fourth Year: 100% of remaining value
LONG-TERM GUARANTEED INTEREST ACCOUNT
The amount that can be transferred out is limited to the greatest of (a) $1,000,
(b) 10% of the policy value in the Long-term Guaranteed Interest Account as of
the date of the transfer, or (c) the amount of policy value transferred out of
the Long-term Guaranteed Interest Account in the prior policy year.
Transfers from the Long-term Guaranteed Interest Account are not permitted under the Systematic Transfer Programs.
We reserve the right to limit transfers and cumulative premium payments to the Long-term Guaranteed Interest Account to $1,000,000 over a 12-month period.
This prospectus describes a flexible premium variable universal life policy insuring the life of a single person. The policy has a death benefit, net surrender value, and a loan privilege, as does a traditional fixed benefit whole life policy. However, you may allocate your premium into one or more investment options of the Separate Account or the Guaranteed Interest Accounts. Each investment option of the Separate Account, in turn, invests its assets exclusively in an underlying fund. Accordingly, the policy value varies according to the investment performance of the funds to which net premiums have been allocated.
Generally, the policy allows you to change the death benefit coverage by increases or decreases to the face amount and through optional riders. The policy also provides a No Lapse benefit through a rider that is attached to the policy automatically at issue for policies with insureds who are age 70 or younger on the policy date. This benefit guarantees that the policy will not lapse as a result of inadequate cash value if your policy meets certain criteria. These and other policy features are described later in this prospectus.
You may contact us about the policy through our VPMO or VULA as listed on the first page of this prospectus. We will process your premiums and policy requests when we receive them in good order. "Good order" means that we have received all necessary documents and properly completed forms at the designated office.
CONTRACT RIGHTS: OWNER, INSURED, BENEFICIARY, ASSIGNMENT
OWNER
The owner is the person named in the application for the policy or, if the ownership of the policy has changed, the person we have listed as the owner in our records. The owner will generally make the choices that determine how the policy operates while it is in force. When we use the terms "you" or "your" in this prospectus, we are referring to the owner or, if the policy was issued as a group contract, we are referring to the certificate holder. If, during the existence of the policy, a third party offers you consideration to transfer ownership of your policy or any interest in your policy, including by means of a collateral or absolute assignment to such third party, we, or one of our affiliates, will have the right to offer compensation for your policy before we process the transfer in ownership.
INSURED
The insured is the person on whose life the policy is issued. You name this
person in the application for the policy. A policy may be issued to insureds
ages 18 through 85 for most underwriting classes. We will require that you
provide evidence that the person to be insured is, in fact, insurable.
BENEFICIARY
The beneficiary is the person you name in the application to receive any death
benefit. You may name different classes of beneficiaries, such as primary and
contingent. These classes will set the order of payment.
Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before the insured dies by sending a written request to VPMO. Generally, the change will take effect as of the date your request is signed.
If no beneficiary is living when the person insured dies, we will pay you the death benefit, unless you have given us other instructions; or, if you are no longer living, we will pay the death benefit to your estate.
ASSIGNMENT
You may assign the policy. We will not be bound by such assignment until we
receive a written copy of the assignment at VPMO, nor will we be liable for any
payment we make before then. We assume no responsibility for determining whether
an assignment is valid.
You may purchase a policy on the life of any person as long as you are at least 18 years old, and have an insurable interest in the life of the person to be insured. You must also have the consent of the person to be insured. We may decline to issue you a policy if the insured does not meet our underwriting standards.
HOW TO PURCHASE A POLICY
To purchase a policy, you must complete an application with your registered
representative. The person to be insured may be required to undergo a medical
examination. We base our insurance risk rates on the person's gender, attained
age, death benefit option and risk class. We may require certain medical
information in order to determine the risk class of the person to be insured. We
are not permitted to consider gender as a factor in some states and under
certain qualified plans. We may decline to issue a policy if the insured does
not meet our underwriting standards.
The minimum initial premium is due no later than the policy date. The policy date is the date shown on the specifications pages and is the date from which policy years and policy anniversaries are measured. Each 12-month period following the policy date is a policy year and each anniversary of the policy date is a policy anniversary. If you submit the initial premium before the policy date, we will consider the payment not in good order and will deposit it to a non-interest bearing account. If we decline coverage, we will refund your initial premium payment. If we approve you for coverage, we will apply the initial premium payment, less the premium expense charge to the policy, as described under "Processing Premium Payments" below and in accordance with the Right to Return provision in the policy.
We will determine the minimum initial premium based on the selected face amount for the policy, including amounts provided by rider, the death benefit selected at issue and the insured's rating characteristics. The minimum initial premium will be shown on the policy's specifications pages.
The insured person must be alive when the initial premium is paid. You must deliver the initial premium to your registered representative, who will forward it to our underwriting department. If, for any reason, your initial net premium payment is insufficient, we will not consider the premium payment to be in good order until we receive the balance due. If we receive your initial premium after the policy date, and monthly charges are due for the policy, we will deduct the premium expense charge and any monthly charges due before applying the payment to the policy.
YOUR RIGHT TO CANCEL
State law provides a policy owner with a right to return and cancel the policy
for a limited period, generally 10 days, following receipt of the policy. Should
you elect to return your policy under your right to cancel, we will treat your
policy as if we had never issued it.
The amount of premium refund you will receive depends on the law of the policy's issue state. Depending on the law of the issue state, the refund will equal either:
o the policy's value on the date of cancellation; or
o premium paid less certain amounts deducted from the policy.
For states that require the refund of policy value, we will return the sum of the following as of the date we receive the returned policy:
o the current policy value less any debt; plus
o any monthly deductions and other charges made under the policy.
For policies issued in states that require the full premium, less any amount surrendered or withdrawn to be refunded upon cancellation during the right to cancel period ("return of premium states"), and policies issued in certain states pursuant to applications which indicate that the policy is intended to replace existing insurance, we temporarily allocate the entire issue premium paid less applicable charges (along with any other premiums paid during your right to cancel period) to the money market investment option of the Separate Account. At the expiration of the right to cancel period, the policy value of the money market investment option is allocated among the investment options of the Separate Account and to the Guaranteed Interest Accounts in accordance with your premium allocation instructions in effect. The amount returned upon policy cancellation for a policy issued in a return of premium state will equal any premiums paid less any debt and less any partial surrender amounts paid.
PREMIUM FLEXIBILITY
Other than payment of the minimum initial premium, there is no minimum premium required for this policy; however, you must maintain policy value sufficient to pay the charges due on each monthly calculation day in order to keep the policy in force. Payment of premiums will not guarantee that the policy will remain in force. Conversely, failure to pay premiums will not necessarily cause the policy to lapse. The policy will be issued with a No Lapse Guarantee benefit. This benefit will prevent the policy from lapsing for insufficient policy value if certain criteria are met. This benefit is described in the "No Lapse Guarantee" benefit section of this prospectus.
Subject to the maximum limitations on premiums described below, you may pay additional premium to your policy at any time before the policy anniversary following the insured's 100th birthday. The minimum premium payment we will accept is $25.00, except when a policy is in its grace period. In that case, the minimum premium we will accept is the amount necessary
to prevent the policy from terminating. To pay premiums by check or money order, the amount must be drawn against a U.S. bank and be made in U.S. dollars. We will not accept any starter or third party check unless it meets our administrative requirements. Amounts you pay us by check may not be available for surrender, withdrawal or loan until the check clears the banking system.
WAYS TO PAY PREMIUM
You may make subsequent premium payments by establishing a planned premium
schedule for your policy, participating in our automated payment service, or
making unplanned premium payments.
You may establish a planned premium schedule for your policy at the time of application or after issue. At the time of application, you may select (within limits) the planned premium amount for your policy and the frequency with which we will send you premium notices. We currently provide billing at annual, semi-annual, and quarterly intervals. You should note that we do not provide bills for fractional periods. As a result, you may wish to consult your registered representative or the VULA to consider the effect of a change to the planned premium arrangement for your policy.
You may participate in our automated payment service. Under this service you may elect to pay subsequent premiums by pre-authorized check. Under this service, we automatically deduct premium payments each month from a bank account you designate. We will not send a bill for these automatic payments. Withdrawals from your bank account will be made on the 15th of each month. You may commence the pre-authorized check service at any time, unless your policy has entered its grace period.
You can discontinue the automated payment service by contacting our VPMO. We must receive notification of account changes at our VPMO at least 30 days before the next draft date. Upon termination of this service, we will establish your policy on regular billing at the most frequent modal premium available under your policy.
We may automatically switch you to quarterly billing if we are unable to obtain the premium payment from your bank account. We may discontinue this service with 30 days written notice to you.
You may also make unplanned premium payments by contacting the VULA for the appropriate check processing address.
PROCESSING PREMIUM PAYMENTS
When we receive your premium payment in good order, we reduce the payment amount
by the premium expense charge shown in the fee table. Generally, the resulting
amount, also known as the net premium, is then applied to your policy according
to your premium allocation instructions as of the valuation date on which we
received the premium.
A "valuation date" is any day on which the net asset value of the units of each investment option of the Separate Account are determined. Generally, this will be any date on which the New York Stock Exchange ("NYSE"), or its successor, is open for regular trading. Our valuation date ends when the NYSE closes. This is usually at 4:00 p.m. Eastern Time. Valuation dates do not include days when the NYSE is closed, which generally includes weekends and major U.S. holidays. If we receive your premium payment in good order after the close of a valuation day or on a non-valuation day, we will apply it according to the rules below on the next valuation day.
As noted above, for policies issued in return of premium states, initial net premium is allocated to the money market investment option of the Separate Account. You may change your premium allocation instructions at any time by submitting a new premium allocation form to the VPMO, or by contacting us at the phone number shown on the first page of this prospectus. Except for premiums that may cause a policy to become a modified endowment contract ("MEC"), premiums submitted after the effective date of a premium allocation change will be allocated in accordance with your premium allocation instructions we then have on file.
Premium payments received during a grace period, after deduction of the premium expense charge, will first be used to cover any monthly deductions due during the grace period. Any remaining balance will be applied to the investment options of the Separate Account and to the Guaranteed Interest Accounts in accordance with your then current premium allocation instructions.
We may delay the application of a subsequent premium payment if applying it would cause the policy to become a MEC. Generally, we will apply the portion of the subsequent premium payment that will not cause the policy to become a MEC and we will refund the balance to you. However, if we receive a subsequent premium payment that will cause the policy to become a MEC within 20 days prior to the policy anniversary date, we will hold the portion of the subsequent premium payment that would cause the MEC status. We will apply the remaining portion on the policy anniversary date when it can be applied without creating a MEC. If it is your intention to create a MEC or if you would like the portion of the premium payment that will not create a MEC returned to you, you must notify us in writing within thirty days of the policy anniversary date. If you intend to create a MEC, you will be required to sign a form acknowledging that you understand the tax consequences of MEC status.
For policies in which a material change impacting the 7-pay limit or 7-pay period occurred, if the material change caused the start of the 7-pay year to no longer coincide with the policy anniversary, the procedure described above for holding payments may not apply. Generally speaking, the 7-pay limit and 7-pay period are measures of the amount of premium that can be paid into a life insurance contract without causing the contract to become a MEC under federal tax law. For additional information about the 7-pay test, see the "Modified Endowments Contracts" section of this prospectus.
PREMIUM LIMITATIONS
We establish maximum premiums and may change them at any time. Additionally, the
Internal Revenue Code (IRC) has limits on the amount of money you may put into a
life insurance contract and still meet the definition of life insurance for tax
purposes. There are two tests used to determine if a policy meets IRC rules, the
Cash Value Accumulation Test, and the Guideline Premium Test. The test that
applies to a policy is shown in the policy's specifications pages. Your election
to follow one of the two tests cannot be changed after issue. More discussion of
these tax law requirements is provided under "Tax Considerations."
We reserve the right to refuse any premium payments that would cause the policy to fail the test you elected unless such amount is necessary to keep the policy in force. If the total premium limit is exceeded, the policy owner will receive the excess, with interest at an annual rate of not less than 4%, not later than 60 days after the end of the policy year in which the limit was exceeded. The policy value will then be adjusted to reflect the refund. If the policy's death benefit requires adjustment as a result of this premium refund, we will make this adjustment effective the date the premium is removed from the policy. We will refund the premium from the Separate Account investment options and the Guaranteed Interest Accounts on a pro rata basis according to your then current allocation instructions unless you request otherwise in writing.
HOW THE VALUE OF YOUR POLICY IS CALCULATED
Your policy value is the sum of the policy's values in the investment options of
the Separate Account, and the values in the Guaranteed Interest Accounts.
We will calculate your policy value on each valuation date. If we receive your premium payment or transaction request in good order prior to the close of the valuation date, we will process that premium or transaction using the unit values determined following the close of the NYSE for that day. If we receive your premium or transaction request after the close of the valuation date, we will process that premium or transaction using the unit values calculated for the next valuation date. If a scheduled transaction falls on a non-valuation date, we will process it as of the next valuation date.
SEPARATE ACCOUNT POLICY VALUE
On each valuation date, the Separate Account policy value is the total of your
policy values in each investment option of the Separate Account. When you make a
premium payment, and have amounts allocated to the investment options of the
Separate Account, we credit your policy with accumulation units. Your net
premium purchases units of each Separate Account investment option to which you
have allocated premium. We determine the number of accumulation units to credit
to each Separate Account investment option by dividing the amount of the net
premium payment by the unit value of that Separate Account investment option.
The value of a unit of the Separate Account investment options varies from
valuation date to valuation date. Changes in the accumulation unit value reflect
the investment performance of the underlying fund and the fund's fees and
expenses. On each monthly calculation day, we deduct the mortality and expense
risk charge from the Separate Account policy value.
Policy transactions that involve amounts allocated to the Separate Account investment options, including loans, withdrawals, and transfers are effected by purchasing and selling the units of the investment options.
GUARANTEED INTEREST ACCOUNTS POLICY VALUE
If you allocate premium or transfer money to the Guaranteed Interest Accounts,
your policy value includes the value of those amounts. The amount you allocate
or transfer to the Guaranteed Interest Accounts will earn interest at the rates
we declare from time to time. We guarantee that the rates will not be less than
3.00% on an annual basis. You may determine the current crediting rates for the
Guaranteed Interest Accounts by contacting the VULA at the number shown on the
first page of this prospectus. Your policy value in the Guaranteed Interest
Accounts is not subject to the mortality and expense risk charge. Otherwise, all
policy charges apply to this portion of the policy value.
The policy provides for a base face amount, which is the face amount you select in your policy application and any increases to that face amount. You may also elect supplemental face amount coverage, which is additional face amount coverage, at the time of application. You can elect up to 900% of the base face amount at the issue date as supplemental face amount. The policy's total face amount is the sum of the base face amount and any supplemental face amount you elect to add.
Generally speaking, whether to elect all coverage as base face amount or some as supplemental face amount depends on your tolerance for longer, or potentially longer, charge periods in exchange for certain charges being lower on a current basis.
You should know that
[diamond] Both the base face amount and supplemental face amount are
subject to the same types of charges, namely, the cost of
insurance charge, coverage charge and surrender charges. These
charges are described in the "Policy Charges" section of this
prospectus.
[diamond] The maximum guaranteed charges are the same for the base face amount and the supplemental face amount. These maximum charges are shown in the "Fee Tables" section of this prospectus.
[diamond] The cost of insurance charges are the same for the base face amount and the supplemental face amount on a current basis.
[diamond] The coverage charges on a current basis are lower for supplemental face amount than for base face amount coverage.
[diamond] Coverage charges may extend for a longer period of time for supplemental face amount than they do for base face amount. The coverage charge on the base face amount lasts for only 10 years on both a current
and guaranteed basis. The supplemental face amount coverage charges last for 10 years on a current basis and to age 100 on a guaranteed basis.
[diamond] Surrender charges extend for a longer period for supplemental face amount than for base face amount coverage on both a current and guaranteed basis. The base face amount surrender charge lasts for only 10 years on both a current and guaranteed basis. The supplemental face amount surrender charge lasts for 15 years on both a current and guaranteed basis.
[diamond] Your registered representative will generally receive less compensation for selling supplemental coverage than for selling coverage provided by the base face amount.
You should consult with your registered representative and request a personalized illustration to determine whether a combination of base face amount and supplemental face amount is appropriate for your situation.
DEATH BENEFIT OPTIONS AND MINIMUM DEATH BENEFIT
The policy provides a choice of three death benefit options.
1. Death Benefit Option A will pay the policy's total face amount, but not less than the minimum death benefit on the date of the insured person's death.
2. Death Benefit Option B will pay the policy's total face amount plus the policy value but not less than the minimum death benefit on the date of the insured person's
death. Death Benefit Option B is a variable death benefit. Because this death benefit option includes policy value, it will vary from day to day due to the performance of the investment options in which you have policy value.
3. Death Benefit Option C will pay the policy's total face amount plus the Death Benefit Option C Increase Amount on the date of death of the insured or, if greater, the minimum death benefit on the date of the insured person's death. The Death Benefit Option C Increase Amount is equal to total premiums paid less total withdrawals, each accumulated at an annual effective rate equal to the Death Benefit Option C Interest Rate shown on your policy's specification pages. This increase amount is subject to a maximum and not less than zero. This option is only available at policy issue.
On the policy anniversary following the insured's 100th birthday, we will change the Death Benefit Option to option A and the amount payable under this option will be the greater of the policy's total face amount or the policy value on the insured's date of death.
We will determine the minimum death benefit by increasing the policy value on the date of death using the applicable percentage as shown by a table in your policy. The applicable percentage will be based on the insured person's attained age at the beginning of the policy year in which death occurs.
CHANGING THE DEATH BENEFIT OPTION
Beginning in the second policy year, you may change the Death Benefit Option
once per policy year prior to the policy anniversary following the insured's
100th birthday. You may not change to Death Benefit Option C and may not change
from Death Benefit Option C to Death Benefit Option B. We will not require
evidence of insurability for a change in Death Benefit Option. A change in Death
Benefit Option will become effective on the monthly calculation day on or next
following the date we approve your written request for the change.
Changing from Death Benefit Option A to Death Benefit Option B, decreases the face amount of the policy by the policy value as of the effective date of the option change.
Changing from Death Benefit Option B to Death Benefit Option A increases the face amount of the policy by the amount of policy value as of the effective date of the option change. Additional cost of insurance charges apply to the increased face amount.
Changing from Death Benefit Option C to Death Benefit Option A increases the total face amount of the policy by the Death Benefit Option C Increase Amount. Additional cost of insurance charges apply to the increased face amount.
Changing death benefit options will not change the surrender charges for the policy.
CHANGING THE POLICY FACE AMOUNT
REQUESTS FOR DECREASE IN FACE AMOUNT
You may request a decrease in face amount at any time after the first policy year provided Death Benefit Option C is not in effect. Unless we agree otherwise, the decrease must be at least $25,000 and the base face amount remaining after the decrease must be at least $100,000. We will implement a requested face amount decrease by first reducing the supplemental face amount, then reducing any coverage layers that have been added to the policy beginning with the layer most recently added, and finally reducing the base face amount.
All face amount decrease requests must submitted on our form to the VPMO. Face
amount decreases will be effective on the first monthly calculation day
following the date we approve the request. A partial surrender charge will be
deducted from the policy value based on the amount of the decrease. The partial
surrender charge on the total face amount will be a portion of the surrender
charges that would apply to a full surrender at the time of the decrease. This
portion is determined by multiplying the full surrender charges by the result of
(a) divided by (b) where (a) is the amount of the total face amount decrease and
(b) is the total face amount before the decrease.
Generally, there will be a pro-rata reduction of the cost of insurance and coverage charges as a result of a face amount decrease.
REQUESTS FOR INCREASE IN FACE AMOUNT
Unless Death Benefit Option C is in effect, you may request an increase to the base face amount in the third policy year. An approved increase will be effective on the first policy anniversary after we approve the request.
The minimum face amount increase is $25,000 per increase. The amount of each increase will be considered a new coverage layer. Each coverage layer will have its own 10-year surrender charge, 10-year coverage charge and current cost of insurance charge. These charges will be based on the insured's gender, attained age, and risk class at the time the layer is added, as well as on the death benefit option in effect at the time the layer is added.
All face amount increase requests must be submitted on our form to the VPMO and will be subject to evidence of the insured's insurability according to our then current guidelines. We reserve the right to limit increases in face amount.
EFFECT OF LOANS, WITHDRAWALS AND REQUESTED DECREASES IN FACE AMOUNT ON DEATH
BENEFIT
Loans can reduce the policy's death benefit. We deduct the amount of any
outstanding loans plus any accrued loan interest from your policy value before
we calculate the death benefit. A withdrawal or a requested decrease to face
amount generally decreases the death benefit. A requested decrease in face
amount reduces the death benefit on the next monthly calculation day by the
requested amount of the decrease. A decrease in the death benefit may have tax
consequences.
PAYMENT OF DEATH BENEFIT
Upon our receipt of due proof of death of the insured while the policy was in
force, we will make the death benefit payment based on the death benefit option
then in effect. We will process death benefits at values next computed after we
receive the due proof of death, provided this documentation is in good order.
Payment of death proceeds usually will be made in one lump sum within seven
days, unless another mode of payment has been agreed upon by you and us.
Payment of the death proceeds, however, may be delayed if the claim for payment of the death proceeds needs to be investigated; e.g., to ensure payment of the proper amount to the proper payee. Any such delay will not be beyond that reasonably necessary and consistent with insurance practices customary in the life insurance industry. Also, payment may be delayed if allowed or required by law as described in "Postponement of Payments."
LIMITATIONS ON PAYMENT OF THE DEATH BENEFIT
The death benefit may be limited if the insured person commits suicide within
certain time periods specified by state law, generally two years of the date
that the policy is issued or coverage is increased.
Also, if the insured's age or gender was misstated in the policy application we will adjust the amount of any death benefit as described in the policy. Upon adjustment, the death benefit will be the amount provided by the most recent monthly insurance charges using the insured's correct age and gender.
If the policy was in the grace period on the date of the insured's death, the death proceeds will be reduced by any outstanding monthly charges, unless a No Lapse Guarantee benefit was in effect for the policy.
REDUCED PAID-UP DEATH BENEFIT
For policies issued in the State of New York only, upon your written request,
after this policy has been in force at least one full year, this policy can be
lapsed to a reduced paid-up death benefit as of the date of your written
request. The amount of death benefit will be calculated based on the net
surrender value of the policy, a 4% interest rate and the maximum monthly cost
of insurance rates as shown in the specifications pages of the policy. Once
elected, no further premiums may be paid into the policy and all riders attached
to the policy will terminate.
SURRENDERS
You may surrender the policy for its net surrender value at any time as long as
insured person is living and the policy is in force. A policy's net surrender
value is the policy value less any applicable surrender charge and less any
unpaid policy loans and interest. The amount available for surrender will be the
net surrender value at the end of the valuation date on which we receive the
policy and the written surrender request in a form satisfactory to us at VPMO.
WITHDRAWALS
Beginning in the second policy year, you may receive a part of the policy's net
surrender value by submitting a written request for a withdrawal to VPMO. You
may request one withdrawal per policy month.
We do not permit withdrawals of less than $500 (if required by your state, a lower minimum will be shown on the policy's specifications pages), if the resulting death benefit would be less than the policy's minimum face amount as shown on the specification's pages for the policy, or if the withdrawal would reduce the net surrender value to zero. We may require you to withdraw the entire value allocated to an investment option if the withdrawal would result in a value below $500 in that investment option.
You may choose in what proportions we deduct the following amounts from among your investment options. If you do not choose, we will make the deductions in the same manner as for monthly deductions.
A withdrawal will reduce your policy value by the sum of the:
> Withdrawal Amount - the portion of the net surrender value you choose, but not less than $500; plus
> Withdrawal Fee - currently set at $0 (not to exceed $25); plus
> Pro rated Surrender Charge. We deduct a pro rata portion of the surrender charge that would apply to a full surrender. The pro rata portion equals the full surrender charge multiplied by the result of (a) divided by (b) where (a) equals the withdrawal amount and (b) equals the net surrender value.
We will reduce your policy's net surrender value by the withdrawal amount. Additionally, if your policy has Death Benefit Option A or Death Benefit Option C, we will reduce your
policy's total face amount, unless at the time the withdrawal is to be processed, your policy is within the cash value corridor defined by the IRC test you have selected for your policy. For more information about these tests, see "Tax Considerations."
For Death Benefit Option A, we will reduce the policy's total face amount by the amount of the withdrawal. For Death Benefit Option C, we will reduce the policy's total face amount by the withdrawal amount, but only once cumulative withdrawals taken are greater than the cumulative premiums paid.
Any reduction in face amount resulting from a withdrawal will be processed by first reducing the supplemental face amount, then reducing any coverage layers that have been added to the policy beginning with the layer most recently added, and finally reducing the base face amount.
PROCESSING AND PAYMENT OF SURRENDERS, WITHDRAWALS
A surrender or withdrawal will be effective on the valuation date we receive
your written request at the VPMO in good order or, if we receive your request
after the end of a valuation date or on a non-valuation date, on the next
following valuation date. We generally pay surrendered and withdrawn amounts
within seven days of receiving your request in good order.
We may postpone payment of amounts surrendered, withdrawn or loaned under certain circumstances as described in the section of this prospectus entitled "Postponement of Payments."
As discussed below, you may borrow up to a specified amount of your policy value less the current surrender charge and loan interest accrued to the end of the policy year. We will count any outstanding loan toward the applicable limit. We generally do not allow loans under $500.
You may transfer a policy loan from another life insurance policy to this policy as part of an exchange under Section 1035 of the IRC. These amounts are called preferred loans. If you requested a preferred loan at issue, the maximum preferred loan value is the lesser of the actual loan requested to be carried over from the previously issued policy, and 75% of the proceeds exchanged from the previously issued policy. Once you take a preferred loan at issue, you may not take subsequent preferred loans from the policy. For all loans other than preferred loans, the maximum loan amount will be 100% of the net surrender value.
When you take a loan, we will take an amount equal to the loan from your investment options as collateral and deposit it to the loaned portion of the Guaranteed Interest Account. You may instruct us how to withdraw policy value from the Separate Account investment options and the Guaranteed Interest Accounts for deposit to the loaned portion of the Guaranteed Interest Account. If you do not instruct us, we will make the withdrawal in the same manner as monthly deductions.
The rate of interest we charge on policy loans depends on the type of policy loan and the policy year in which the loan is taken. The maximum loan interest rates are shown in the "Charges and Deductions" section of this prospectus. Loan interest accrues daily from the date of the loan and is payable in arrears. At the end of each policy year, all interest due will be treated as a new loan and we will transfer the amount of any unpaid loan interest from your Separate Account investment options, the non-loaned portion of the Guaranteed Interest Account or Long-term Guaranteed Interest Account to the loaned portion of the Guaranteed Interest Account.
We credit the loaned portion of the Guaranteed Interest Account with interest at an effective annual rate of 3%, compounded daily and payable in arrears. At the end of each policy year, or when you repay a loan, the interest credited to the loaned portion of the Guaranteed Interest Account will be transferred to the non-loaned portion of the Guaranteed Interest Account.
You may repay a loan at any time the policy is in force. Unless you designate a policy payment as a loan repayment, we will apply the payment as premium. We apply loan repayments first to pay any outstanding loan interest on regular loans and then on preferred loans. We then apply any remaining amount to reduce the loaned portion of the Guaranteed Interest Account first for all regular loans and then for any preferred loans, and correspondingly increase the non-loaned portion of the Guaranteed Interest Account. If you make a loan repayment that exceeds the remaining loan interest and loan balance, we will apply the excess among the investment options according to your most recent premium allocation instructions on file.
We will use any loan repayment we receive during a grace period first to pay any overdue monthly deductions. We will then apply any remaining balance to reduce loan interest and any loans.
Failure to repay a policy loan or to pay loan interest will not terminate the policy unless your policy's net surrender value is not sufficient to pay monthly charges that come due and the policy does not have a No Lapse Guarantee period in effect.
Outstanding loans can also reduce your policy's death benefit and surrender value. We deduct the amount of any outstanding loans plus any accrued loan interest from your death benefit and surrender value.
The proceeds of policy loans may be subject to federal income tax under some circumstances. If a policy owner requests a decrease in face amount and, following the decrease the policy becomes a modified endowment contract (MEC), any loan on the policy must be treated as a taxable distribution to the owner to the extent of gain in the policy.
A policy loan will have a permanent effect on the policy value because the investment results of the loaned portion of the Guaranteed Interest Account will differ from the investment results of the Separate Account investment options, the non-loaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account. The effect could be favorable or unfavorable. Since taking a policy loan may negatively impact policy value, it may increase the risk that your policy will terminate. The longer a loan is outstanding, the greater the effect is likely to be. Additionally, the favorable or
unfavorable effect of a policy loan on policy value may be greater for policies with Death Benefit Option B since the death benefit amount for that option includes the amount of policy value.
OVERLOAN PROTECTION OPTION
We provide this option by rider attached to the policy automatically when the policy is issued. There is no periodic charge for this option; however, as described below, a charge applies when you exercise the option.
This option is designed to prevent a heavily loaned policy from lapsing. You may exercise this option when you make a written request and satisfy the following conditions.
> The policy has been in force for at least 15 years;
> The insured is at least 65 years old;
> All premiums paid have been withdrawn by policy withdrawals; and
> The loan balance is equal to 96% of the policy value (any loan in excess of this amount must be repaid at the time you request to exercise this option).
When you elect this option, the following actions will occur on the next monthly calculation day.
> Optional riders in effect, if any, will terminate;
> We will deduct a one-time transaction charge of 3.5% of the policy value;
> The death benefit option will permanently change to Death Benefit Option A;
> The face amount will be reduced to the policy value multiplied by 101%;
> The remaining policy value will be transferred to the Long-term Guaranteed Interest Account. No transfer charge will be assessed for this transfer. No further transfers will be allowed;
> The death benefit will be the greater of:
o the new total face amount, or
o the greater of the policy value or the loan multiplied by the applicable minimum death benefit percentage.
After this option is exercised, monthly charges will no longer be assessed. Loan interest will continue to accrue but the loan interest rate charged will be equal to the interest rate credited on policy loans. No additional premium payments will be accepted. No additional partial surrenders, policy loans or loan repayments will be allowed. Any loan balance and accrued interest will reduce the death benefit payable and the loan interest will continue to accrue. Exercise of this option may result in an income tax liability.
SYSTEMATIC INCOME PROGRAM
Systematic Income is a predetermined series of periodic withdrawals and loans.
You may initiate or terminate these periodic withdrawals and loans by completing
the appropriate form and returning it to our VPMO.
Typically, the payments under Systematic Income will be withdrawals until the total premiums paid into the policy are exhausted, and then the payments will be loans. The minimum amount available for withdrawals and loans under our rules is $500. However, we reserve the right to waive this minimum. Additionally, the restrictions on withdrawals from the Guaranteed Interest Accounts are waived for Systematic Income payments. You may contact the VULA for more detailed information about Systematic Income.
INTERNET, INTERACTIVE VOICE RESPONSE AND TELEPHONE TRANSFERS
You may transfer your policy value among the available investment options and make changes to your premium allocation by Internet, Interactive Voice Response ("IVR") or telephone. You may also write to VPMO or call VULA between the hours of 8:30 AM and 4:00 PM, Eastern Time. (The appropriate address and telephone number are on the front page.) We will execute transfer requests as of the valuation date we receive them in good order.
We do not charge for transfers at this time. However, we reserve the right to charge a fee of $25 for each transfer after your first twelve transfers in a policy year. Should we begin imposing this charge, we would not count transfers made under a Systematic Transfer Program toward the twelve-transfer limit. For more information, see "Market Timing and Other Disruptive Trading."
You may permit your registered representative to submit transfer requests on your behalf.
Phoenix Life and Phoenix Equity Planning Corporation ("PEPCO"), our national distributor, will use reasonable procedures to confirm that transfer instructions are genuine. We require verification of account information and will record telephone instructions, which are stored digitally. You will receive written confirmation of all transfers. Phoenix Life and PEPCO may be liable for following unauthorized transfer instructions if we fail to follow our established security procedures. However, you will bear the risk of a loss resulting from instructions entered by an unauthorized third party that Phoenix Life and PEPCO reasonably believe to be genuine.
We may modify or terminate your Internet and telephonic transfer and allocation privileges at any time. You may find it difficult to exercise these privileges during times of extreme market volatility. In such a case, you should submit your request in writing.
TRANSFER RESTRICTIONS
We do not permit transfers of less than $500 unless either:
> the entire balance in the investment option or the Guaranteed Interest Accounts is being transferred; or
> the transfer is part of a Systematic Transfer Program.
We may not allow transfers that result in less than $500 remaining in any investment option of the Separate Account and may require that the entire balance of an investment option or the Guaranteed Interest Accounts be transferred if the requested transfer would result in less than $500 remaining in any of these options.
The Guaranteed Interest Accounts have additional transfer restrictions:
> You may make only one transfer per policy year from the non-loaned portion of the Guaranteed Interest Account or the Long-term Guaranteed Interest Account. You may make additional transfers out of the Guaranteed Interest Account if the transfers are made as part of a Systematic Transfer Program or if we agree to make an exception to this rule.
> The amount you may transfer is the greater of $1,000 or 25% of the value of the non-loaned portion of the Guaranteed Interest Account.
> The total non-loaned portion of the Guaranteed Interest Account may be transferred over a consecutive 4-year period, as described in "The Guaranteed Interest Accounts."
> For the Long-term Guaranteed Interest Account, the amount you may transfer is limited to the greatest of $1,000, 10% of the value of the Long-term Guaranteed Interest Account, or the amount of policy value transferred out of the Long-term Guaranteed Interest Account in the prior policy year.
You may transfer policy value into the Guaranteed Interest Accounts at any time. We reserve the right to limit maximum transfers into the Guaranteed Interest Accounts during any one-week period.
For more information on the Guaranteed Interest Accounts, please see, "The Guaranteed Interest Accounts."
GENERAL
Charges affect your policy value and the amount you may receive from your
policy.
We make deductions to compensate us for our various expenses in selling, maintaining, underwriting and issuing the policy and guaranteeing certain insurance benefits. The policy provides for three types of charges; charges deducted from premium payments, periodic charges deducted monthly, and conditional charges that are imposed only if certain events occur.
CHARGES DEDUCTED FROM PREMIUM PAYMENTS
PREMIUM EXPENSE CHARGE
We deduct a premium expense charge from each premium payment to the policy that we use to reimburse the Company for a variety of expenses we incur in selling the policy (e.g., commissions, advertising and printing). This charge currently equals 6% per premium payment and is guaranteed not to exceed 8% per premium payment. We may increase the current charge. Any increase would be made on a uniform and nondiscriminatory basis and would apply to premium we receive on and after the effective date of the new charge.
PERIODIC CHARGES
MONTHLY CHARGES
We make monthly deductions on each monthly calculation day. Your policy's first monthly calculation day is the policy date. Subsequent monthly calculation days are on the same day of each calendar month. Your policy's monthly calculation day will be listed on the policy specifications pages. The policy's monthly deduction amount is the sum of the following charges: cost of insurance, mortality and expense risk charge, administrative charge, coverage charge and rider charges. We do not assess monthly charges beginning on the policy anniversary on which the insured is age 100.
With the exception of the monthly deduction of the mortality and expense risk charge described below, monthly charges are deducted from your policy value in the investment options within the Separate Account, the non-loaned portion of the Guaranteed Interest Account and the Long-term Guaranteed Interest Account on a proportionate basis unless you request that we exclude any of these in your application for the policy. Should your balance in any of the investment options become depleted, unless we agree otherwise, we will proportionally increase the deduction from your policy value in the remaining investment options.
COST OF INSURANCE
We determine this charge by multiplying the appropriate cost of insurance rate
by the amount at risk. The amount at risk is the difference between your
policy's death benefit and your policy value. The amount at risk depends in part
on the death benefit option in effect. Since the policy value is included in the
death benefit under Death Benefit Option B, the death benefit under this death
benefit option is affected by performance of the investment options chosen,
payment of premiums and charges assessed.
We base our current rates on gender, attained age, risk class, and death benefit option at issue. We also consider the duration, or how long the policy has been in force. We are not permitted to consider gender as a factor in some states and under certain qualified plans. We base the current monthly cost of insurance charge, in part, on what we expect our future mortality experiences will be. Charges will not exceed the guaranteed cost of insurance rates set forth in your policy. The guaranteed maximum rates are equal to 100% of the applicable 1980 Commissioners Standard Ordinary ("CSO") Mortality Table, based on the insured's last birthday.
We will apply any change in our cost of insurance rates uniformly to all persons of the same gender, insurance age and risk class whose policies have been in force for the same length of time. We currently insure lives as either standard risk class or a risk class involving a higher mortality risk. We determine your risk class based on your health and the medical
information you provide. Lives in the standard risk classes will have a lower cost of insurance for otherwise identical policies, than lives in the higher mortality risk classes. Nonsmokers will generally incur a lower cost of insurance than will similarly situated smokers.
Additionally, the cost of insurance charge applicable to your policy depends on the total face amount, including supplemental face amount and any coverage layers in addition to the base face amount.
Policy owners who qualified for our most selective risk classifications at the time of policy issue and who have Body Mass Index within a specified range at the end of policy years 5, 10, 15, and 20, and, in Puerto Rico, at issue, may be eligible for discounted cost of insurance rates beginning at the end of policy years 5, 10, 15 and 20. Under this program, policy owners may request an improvement in risk classification for the base face amount at the end of the 5th policy year, and also at the end of policy years 10, 15, and 20 if we have granted all prior improvement requests related to the policy. We will require evidence that the insured meets our underwriting requirements for an improved risk classification. If approved, and the improved risk classification results in lower cost of insurance rates, these rates will be effective on the monthly calculation day following our approval of your request. We may cease to offer this program for new policies at any time.
MORTALITY AND EXPENSE RISK CHARGE
We assume a mortality risk that, as a whole, the people we insure may die sooner
than expected. We would then pay greater total death benefits than we had
expected.
We assume an expense risk that expenses we incur in issuing and maintaining the policies may exceed the administrative charges expected for the policies.
If the expenses do not exceed the charges, or if our mortality projections prove to be accurate, we may profit from this charge. We may use profits from this charge for any proper purpose, including the payment of sales expenses or any other expenses that may exceed income in a given year.
The mortality and expense risk charge applies to the policy value held in the Separate Account investment options. We guarantee that the mortality and expense risk charge will not exceed an annual rate of 0.50% of the policy value in the Separate Account in the first twenty policy years, and 0.30% of the policy value in the Separate Account beginning in policy year 21.
ADMINISTRATION CHARGE
The administrative charge compensates us for various activities associated with
issuing and administering the policy. The maximum administrative charge is $7.00
per policy, per month.
COVERAGE CHARGE
The coverage charge is a monthly charge assessed on the base face amount primarily to help reimburse us for sales costs. The coverage charge is assessed on the base face amount during the first ten policy years. To determine this charge, we multiply the amount of base face amount at issue by a monthly rate that varies with the insured's gender, issue age, risk class and death benefit option at issue. There is an additional coverage charge associated with supplemental coverage which may be assessed in all policy years. On a current basis, this charge is deducted only during the first ten policy years. To determine this charge, we multiply the supplemental face amount at issue by a monthly rate that varies with the insured's gender, issue age, risk class and death benefit option at issue.
The coverage charge is established at policy issue; it is not changed by decreases, withdrawals or other transactions that may affect the face amount of the policy after the policy date. However, a separate 10-year coverage charge applies to each layer of coverage. This charge is determined by multiplying the amount of the increase in face amount by the applicable monthly rate which varies based on the insured's gender, death benefit option, attained age and risk class at the time each layer is added.
LOAN INTEREST RATES
We charge your policy for outstanding loans at the maximum rates illustrated in
the table below. As shown, the rate we charge your policy may be higher than the
rate we credit the loaned portion of the Guaranteed Interest Account.
-----------------------------------------------------------------------------------
LOAN TYPE RATE WE CHARGE RATE WE CREDIT TO THE LOANED
PORTION OF THE GUARANTEED
INTEREST ACCOUNT
-----------------------------------------------------------------------------------
Preferred Loan, 4% in all policy years 3%
including capitalized
interest on a
Preferred Loan
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Other Loans 4% in all policy years* 3%
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|
*Policy loans are not available until the second policy anniversary; however, policy loan interest is charged in arrears.
Loans can reduce the policy's death benefit. We deduct the amount of any outstanding loans plus any accrued loan interest from your policy value before we calculate the death benefit.
COSTS FOR POLICY RIDERS
When you apply for a policy, you can request any of the optional benefit riders we then make available and for which you are eligible under our rules. We may add, delete or modify the available riders for new policies. Each rider contains specific details you should review in selecting your coverage. Certain optional benefit riders have their own charges which are assessed against policy value on each monthly calculation day. We may change the rates charged, but they will not exceed the maximum rates shown in the rider specifications pages.
The riders listed below are currently available with the policy for additional charges assessed each month as follows:
o Alternate Surrender Value Rider - the charge ranges from 3% to 5% of one-twelfth of the annual target premium
o Disability Payment of Specified Premium Rider - the charge ranges from $0.19 to $0.64 per $100 of premium waived
We also attach the following riders to the policy at issue:
o Accelerated Benefit Rider
o Life Plan Options Rider-attached automatically at issue for policies with face amounts of $1,000,000 or more
o No Lapse Guarantee Rider (maximum issue age is 70)
o Overloan Protection Rider
These riders do not have monthly charges. However, we deduct transaction charges from policy value for the Accelerated Benefit Rider and the Overloan Protection Rider upon exercise of these options. The transaction fee for the Accelerated Benefit Rider is $300.00 The transaction fee for Overloan Protection is 3.5% of policy value. While there is no separate charge for the No Lapse Guarantee Rider, you must pay premium meeting the requirements described in that rider to obtain the benefit provided by the rider.
More detail about the charges for these riders is located in the "Fee Table" of this prospectus and the charges that apply to your policy will be shown in the rider specifications pages. You may find more detail about these benefits in the section of this prospectus entitled "Other Available Policy Benefits."
CONDITIONAL CHARGES
These are other charges that are imposed only if certain events occur.
> SURRENDER CHARGE. The surrender charge applies during the ten policy years following policy issue and following an increase in face amount for coverage provided by the base face amount and for the first fifteen years for coverage provided by the supplemental face amount if you surrender the policy for its net surrender value or request a face amount decrease. This charge is intended to recoup the costs incurred in issuing the policy. The actual surrender charge will never exceed policy value; therefore, we will never require you to submit an additional payment in order to surrender your policy.
The total surrender charge is the sum of the surrender charge for the base face amount, including any coverage layers, and the surrender charge for the supplemental face amount. The surrender charge for the base face amount is an amount determined by multiplying the number of thousands of face amount by the surrender charge factor. The surrender charge factor will vary by the insured's gender, issue age, death benefit option at issue and risk class. We calculate surrender charges for the face amount at issue and each additional coverage layer separately. Tables of surrender charges for the face amount at issue and each coverage layer are included in the specifications pages of the policy. The surrender charge for the supplemental face amount is a 15-year declining charge based on the insured's gender, issue age, and risk class and the death benefit option for the policy at issue. If your policy has supplemental coverage, a table of surrender charges for the supplemental face amount will be shown on the policy specifications pages.
The surrender charge is assessed against the policy value in proportion to the policy's values in the Separate Account, and the Guaranteed Interest Accounts, excluding loaned amounts, on the effective date of the surrender or decrease in face amount.
We do not impose a surrender charge after the policy anniversary on which the insured has reached age 100.
> PARTIAL SURRENDER CHARGE - We charge a portion of the surrender charge when you request a face amount decrease or withdrawal. This charge is intended to help defray the costs of issuing a policy.
o REQUESTED FACE AMOUNT DECREASE - a pro rata portion of the surrender charge will be deducted from your policy value in direct proportion to any decrease in face amount.
o WITHDRAWAL OF POLICY VALUE - a pro rata portion of the surrender charge will be deducted from your policy value in direct proportion to any withdrawal of policy value. Face amount reductions may result if you request a withdrawal of policy value.
> TRANSFER CHARGE. Currently, we do not charge for transfers, however, we reserve the right to charge up to $25.00 for each transfer in excess of twelve each policy year upon prior written notice. This charge, if we were to impose a transfer charge, would be intended to recoup the cost of administering the transfer.
> WITHDRAWAL FEE. We reserve the right to charge a fee of up to $25 per withdrawal for withdrawals of policy value. This fee would compensate us for the administrative costs associated with processing withdrawals.
TAX CHARGES
Currently, no charge is made against the Separate Account for federal income
taxes that may be attributable to the Separate Account. The Separate Account
may, however, make such a charge in the future for these or any other taxes
attributable to the Separate Account, should the Separate Account become liable
for such taxes.
FUND CHARGES
As compensation for investment management services to the funds, the advisors
are entitled to fees, payable monthly and based on an annual percentage of the
average aggregate daily net asset values of each series. These fees are paid by
the funds from their assets. We provide a table of these charges in the Fee
Tables section of this prospectus.
These fund charges and other expenses are described more fully in the fund prospectuses. You may obtain a fund prospectus by contacting VULA.
We discourage market timing activity, frequent transfers of policy value among investment options and other activity determined to be "Disruptive Trading", as described below. Your ability to make transfers among investment options under the policy is subject to modification if we determine, in our sole opinion, that your exercise of the transfer privilege constitutes "Disruptive Trading" that may disadvantage or potentially harm the rights or interests of other policy owners.
"Disruptive Trading" includes, but is not limited to: frequent purchases, redemptions and transfers; transfers into and then out of an investment option in a short period of time; and transfers of large amounts at one time. The risks and harmful effects of Disruptive Trading include:
> dilution of the interests of long-term investors in an investment option, if market timers or others transfer into or out of the investment option rapidly in order to take advantage of market price fluctuations;
> an adverse affect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the underlying fund to maintain a higher level of cash than would otherwise be the case, or causing the underlying fund to liquidate investments prematurely; and
> increased brokerage and administrative expenses.
To protect our policy owners and the underlying funds from Disruptive Trading, we have adopted certain policies and procedures.
Under our Disruptive Trading policy, we can modify your transfer privileges for some or all of the investment options. Modifications include, but are not limited to, not accepting a transfer request from you or from any person, asset allocation service, and/or market timing service made on your behalf. We may also limit the amount that may be transferred into or out of any investment option at any one time. Unless prohibited by the terms of your policy, we may (but are not obligated to):
> limit the dollar amount and frequency of transfers (e.g., prohibit more than one transfer a week, or more than two a month, etc.),
> restrict the method of making a transfer (e.g., require that all transfers into a particular investment option be sent to our Service Center by first class U.S. mail and/or rescind telephone, internet, IVR or fax transfer privileges),
> require a holding period for some investment options (e.g., prohibit transfers into a particular investment option within a specified period of time after a transfer out of that investment option),
> impose redemption fees on short-term trading (or implement and administer redemption fees imposed by one or more of the underlying funds), or
> impose other limitations or restrictions.
Currently we attempt to detect Disruptive Trading by monitoring both the dollar amount of individual transfers and the frequency of a policy owner's transfers. With respect to both dollar amount and frequency, we may consider an individual transfer alone or when combined with transfers from other policies owned by or under the control or influence of the same individual or entity. We currently review transfer activity on a regular basis. We also consider any concerns brought to our attention by the managers of the underlying funds. We may change our monitoring procedures at any time without notice.
Because we reserve discretion in applying these policies, they may not be applied uniformly. However, we will to the best of our ability apply these policies uniformly. Consequently, there is a risk that some policy owners could engage in Disruptive Trading while others will bear the effects of their activity.
Currently we attempt to detect Disruptive Trading by monitoring activity for all policies. Possible Disruptive Trading activity may result in our sending a warning letter advising the owner of our concern. Regardless of whether a warning letter is sent, once we determine that Disruptive Trading activity has occurred, we may revoke the owner's right to make Internet and Interactive Voice Response (IVR) transfers. We will notify policy owners in writing (by mail to their address of record on file with us) if we limit their trading.
We have adopted these policies and procedures as a preventative measure to protect all policy owners from the potential effects of Disruptive Trading, while recognizing the need for policy holders to have available reasonable and convenient methods of making transfers that do not have the potential to harm other policy owners.
We currently do not make any exceptions to the policies and procedures discussed above to detect and deter Disruptive Trading. We may reinstate Internet, IVR, telephone and fax transfer privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading.
We cannot guarantee that our monitoring will be 100% successful in detecting and restricting all transfer activity that constitutes Disruptive Trading. Moreover, we cannot guarantee that revoking or limiting a policy owner's Internet, IVR, telephone and fax transfer privileges will successfully deter all Disruptive Trading. In addition, some of the underlying funds are available to insurance companies other than Phoenix Life and we do not know whether those other insurance companies have adopted any policies and procedures to detect and deter Disruptive Trading, or if so what those policies and procedures might be. Because we may not be able to detect or deter all Disruptive Trading and because some of these funds are available through other insurance companies, some policy owners may be treated differently than others, resulting in the risk that some policy owners could engage in Disruptive Trading while others will bear the effects of their activity.
We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. In addition, orders for the
purchase of underlying fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any transfer request into any investment option if the purchase of shares in the corresponding underlying fund is not accepted for any reason.
We do not include transfers made pursuant to the Dollar Cost Averaging, Automatic Asset Rebalancing or other similar programs when applying our Disruptive Trading policy.
You may elect any of the allocation programs described below at no charge and at any time. We may discontinue, modify or amend these programs as well as offer new programs in the future.
ASSET ALLOCATION AND STRATEGIC PROGRAMS
Asset allocation and strategic programs (referred to as "programs" throughout
this section) are intended to optimize the selection of investment options for a
given level of risk tolerance, in order to attempt to maximize returns and limit
the effects of market volatility. The programs reflect the philosophy that
diversification among asset classes may help reduce volatility. An asset class
is a category of investments that have similar characteristics, such as stocks,
or bonds. Within asset classes there are often further divisions. For example,
there may be divisions according to the size of the issuer (large cap, mid cap,
small cap) or type of issuer government, corporate, municipal).
We currently offer the following programs: Franklin Templeton Founding Investment Strategy, Phoenix- Ibbotson Strategic Asset Allocation, and Phoenix-S&P Dynamic Asset Allocation Series* which are described below. For ease of reference, throughout this section of the prospectus, we refer to these asset allocation and strategic programs, simply as "programs", and we refer to the asset allocation options available within the programs, as "options." There is presently no additional charge for participating in these programs and options. We may, on a prospective basis, charge fees for individual programs and may vary fees among the available programs.
You may participate in only one program at a time. Subject to regulatory requirements and approvals, in the future we may modify or eliminate any existing program or option, or may offer other asset allocation services which, at our discretion, may be available to current and/or prospective contract owners. For the most current information on any program or option, please contact your registered representative.
*"S&P," "S&P 500," "SPDR," "Standard & Poor's" and "Standard & Poor's Depositary Receipts" are registered trademarks of The McGraw-Hill Companies, Inc.
SELECTING A PROGRAM AND OPTION
If you are interested in adding a program, consult with your registered
representative to discuss your choices. For certain programs, a questionnaire
may be used to help you and your registered representative assess your financial
needs, investment time horizon, and risk tolerance. You should periodically
review these factors to determine if you need to change programs or options.
You may at any time switch your current program or option, and may choose any
modified or new programs or options the Company may make available. You may
cancel your participation in a program at any time, and later re-enroll in a
program, after first consulting with your registered representative and then
contacting our VPMO. If a program is eliminated, you will receive notice and you
may choose, in consultation with your registered representative, among the other
programs available at that time.
The following programs are currently available:
> FRANKLIN TEMPLETON FOUNDING INVESTMENT STRATEGY
Through the Franklin Templeton Founding Investment Strategy, premium
payments and policy value are allocated to the three investment options as
listed below. On a monthly basis, we will rebalance the policy value
allocated to the three investment options back to the original allocation
percentages in each investment option.
o Franklin Income Securities Fund - 34%
o Mutual Shares Securities Fund - 33%
o Templeton Growth Securities Fund - 33%
> PHOENIX-IBBOTSON STRATEGIC ASSET ALLOCATION
Phoenix Life and Ibbotson Associates have developed five asset allocation
options, each comprised of selected combinations of investment options. The
options approved for use are:
o Conservative Portfolio
o Moderately Conservative Portfolio
o Moderate Portfolio
o Moderately Aggressive Portfolio
o Aggressive Portfolio
On a periodic basis (typically annually), Ibbotson evaluates the options and updates them to respond to market conditions and to ensure style consistency. If you select one of the Phoenix-Ibbotson options, your premium payments (policy value for in force policies), however, will not be allocated in accordance with the updated options unless you specifically request we do so. On an annual basis, we will rebalance the policy value allocated to the investment options of the Separate Account used in the asset allocation option for your policy back to the original percentages. You should consult with your registered representative for the most current information on this program and the options within the program.
> PHOENIX-S&P DYNAMIC ASSET ALLOCATION SERIES
The Phoenix-S&P Dynamic Asset Allocation Series are "funds of funds" that
invest in other mutual funds based on certain target percentages. The series
were designed on established principles of asset allocation and are intended
to provide various levels of potential total return at various levels of
risk. Asset allocations are updated quarterly, or more often, depending on
changes in the economy or markets. Each option is rebalanced regularly to
the most recent allocations. The options approved for use are:
o Phoenix-S&P Dynamic Asset Allocation Series: Moderate
o Phoenix-S&P Dynamic Asset Allocation Series: Moderate Growth
o Phoenix-S&P Dynamic Asset Allocation Series: Growth
o Phoenix-S&P Dynamic Asset Allocation Series: Aggressive Growth
If you should elect any of the programs listed above, transfers made under these programs will not be counted toward the 12 transfers per year after which we may impose a transfer fee.
You may elect a systematic transfer program that we offer under the policy. We reserve the right to change, eliminate or add optional programs subject to applicable laws.
We base transfers under a Systematic Transfer Program on the investment option values on the first day of the month following our receipt of your transfer request. Should the first day of the month fall on a holiday or weekend, we will process the transfer on the next business day. Except as described below, you may have only one program in effect at a time.
We do not charge for these programs.
ASSET REBALANCING PROGRAM
Under this program, we transfer policy value among the investment options to
match your chosen allocation percentages. You can choose to have us make these
transfers monthly, quarterly, semiannually or annually. We reserve the right to
not permit transfers to or from the Guaranteed Interest Accounts.
You may start or discontinue this program at any time by submitting a written request to VPMO or calling VULA (see page one). The Asset Rebalancing Program does not ensure a profit nor guarantee against a loss in a declining market. Except as described below, we reserve the right not to allow election of the Asset Rebalancing Program while the Dollar Cost Averaging Program is in effect.
DOLLAR COST AVERAGING PROGRAM
Dollar Cost Averaging periodically transfers policy value from one of the
investment options or from the Guaranteed Interest Account (a "source account")
to one or several of the available investment options ("target investment
options") and the Long-term Guaranteed Interest Account. You choose to make
these transfers monthly, quarterly, semiannually or annually. The minimums you
may transfer from the source account are:
> $25 monthly > $150 semiannually
> $75 quarterly > $300 annually
You must have at least $2,000 in the source account to begin a Dollar Cost Averaging Program. Should the value in the source account fall below the transfer amount, we will transfer the remaining balance and end the program. Transfers must be made in approximately equal amounts over a minimum of six months. The Dollar Cost Averaging Program is not available if you invest through a bank draft program.
You may start or discontinue this program at any time by submitting a written request to VPMO, or calling VULA (see page one). Dollar Cost Averaging does not ensure a profit nor guarantee against a loss in a declining market. Except as described below, we reserve the right not to allow election of the Dollar Cost Averaging Program while the Asset Rebalancing Program is in effect.
ENHANCED DOLLAR COST AVERAGING PROGRAM
We may at different times offer an Enhanced Dollar Cost Averaging Program that can offer a higher interest rate during selected periods. This program will not be offered at the same time as the standard Dollar Cost Averaging program. Under this program, the first net premium payment will be held in the money market investment option of the Separate Account and then transferred to the source account at the end of the policy's right to cancel period. The source account is an account within the Guaranteed Interest Account. If you elect this program, monthly transfers from the source account to the target accounts you establish will begin on the first monthly calculation day following the end of the right to cancel period. The Enhanced Dollar Cost Averaging interest rate will be guaranteed from the end of the right to cancel period for six months or to the first policy anniversary, depending on the period you chose when you elected the Enhanced Dollar, Cost Averaging Program. This may be substantially less than a full year if the policy has been backdated to save age.
USE OF DOLLAR COST AVERAGING WITH ASSET REBALANCING AND ALLOCATION PROGRAMS
If you elect to participate in either the Franklin Templeton Founding Investment Strategy, or the Phoenix-Ibbotson Strategic Asset Allocation Program, then you may also elect to participate in the following programs:
1. Dollar Cost Averaging or Enhanced Dollar Cost Averaging; and
2. Asset Rebalancing with monthly rebalancing in the Franklin Templeton Founding Investment Strategy, or Asset Rebalancing with annual rebalancing in the Phoenix-Ibbotson Strategic Asset Allocation Program.
If you elect both the Enhanced Dollar Cost Averaging and the Asset Rebalancing Program, your entire dollar cost averaging transfer amount must be allocated to the Allocation Program in effect for your policy.
LAPSE
Payment of the initial premium, no matter how large or the payment of additional
premiums will not necessarily guarantee the policy will remain in force. If you
take a withdrawal or a policy loan, it could negatively affect the policy value,
and therefore increase the risk of policy lapse.
If the policy value is less than the monthly deduction, we will allow a grace period of 61 days during which you must pay an
amount equal to three times the required monthly deduction plus any amount overdue to prevent the policy from lapsing.
If you fail to make the required payment before the 61- day grace period ends, the policy will lapse and expire without value. We will mail you notice following the monthly calculation day on which the policy value is less than the monthly deduction. We will mail you additional notice at least 15 days and not more than 45 days before any potential lapse will occur. By lapse, we mean that the policy is no longer in full force and has no available value.
The policy will remain in force during the grace period. We apply any premium payment we receive during the grace period, less the premium expense charge, to first pay any monthly deductions due during the grace period. We will apply any excess premium according to your current premium allocation schedule.
The death benefit during the grace period is equal to the death benefit immediately before the grace period begins.
NO LAPSE GUARANTEE BENEFIT
This benefit will be made a part of the policy by rider automatically attached at issue for policies with insureds who are age 70 or younger on the policy date. The rider provides for four No Lapse Guarantee periods as shown in the specifications pages for the rider. Under the rider, as long as the cumulative premium test, described below, is satisfied for any No Lapse Guarantee periods then in effect, the policy will not lapse even if the policy's account value reduces to zero as a result of adverse investment performance or other factors. There is no separate charge for the No Lapse Guarantee benefit; however, to maintain the guarantee, the policy must meet the total cumulative premium test. This test requires that cumulative premiums paid since policy issue (accumulated at 4%) less withdrawals (accumulated at 4%) and less policy loans and accrued interest be at least equal to the minimum cumulative monthly No Lapse Guarantee premiums since issue for any No Lapse Guarantee periods then in effect (accumulated at 4%).
The monthly No Lapse Guarantee premium will be set at the time the rider is issued and will vary based on the total face amount, the insured's age, gender, risk classification, additional ratings, other than flat extra ratings, and the amount, if any, provided by the Disability Payment of Specified Premium Benefit Rider. The monthly No Lapse Guarantee premiums will be shown on the specifications pages for the feature.
If the policy does not meet this total cumulative premium test, the policy owner will have a certain amount of time, depending on the No Lapse Guarantee period in effect, within which to restore the option by paying a shortfall amount. The shortfall amount is the amount by which the total cumulative premiums paid to the policy is less than the amount required by the total cumulative premium test.
If the total cumulative premium test is not met and the policy owner does not restore the No Lapse Guarantee by paying the shortfall amount within the required period, the No Lapse Guarantee will terminate and cannot be reinstated. Also, if there is not sufficient policy value to pay any monthly charges due at the time the total cumulative premium test is not met, the policy will enter the grace period. While the No Lapse Guarantee benefit is in effect, the premium necessary to restore a policy that has entered the grace period is different from the amount otherwise required to restore a policy in the grace period. The premium necessary to restore a policy with the No Lapse Guarantee benefit is the lesser of:
o An amount that will result in a net surrender value equal to at least three monthly deductions plus monthly deduction amounts that have been incurred but not charged under the policy as a result of the No Lapse Guarantee benefit; and
o If the shortfall period has not expired, the shortfall amount plus the next three monthly No Lapse Guarantee premiums.
TERMINATION
This policy terminates automatically on the earliest of the date of death, full
surrender, or the date that the grace period expires without the payment of
sufficient premium in accordance with the lapse provision.
REINSTATEMENT
Unless this policy has been surrendered for its net surrender value, this policy may be reinstated at any time within five years from the date the premium payment was insufficient to pay the monthly deduction due. You may request reinstatement in writing and we will require submission of evidence of insurability satisfactory to us along with the payment of an amount that would result in a net surrender value equal to at least three monthly deductions.
When you apply for a policy, you can request any of the optional benefit riders we then make available. Our rules and procedures will govern eligibility for any rider. Each rider contains specific details you should review in selecting your coverage. Riders we offer as optional riders have separate monthly charges as shown in the "Fee Tables" of this prospectus.
OPTIONAL RIDERS
We currently make the optional riders listed below available with the policy. We may also add, delete or modify the list of optional riders.
ALTERNATE SURRENDER VALUE RIDER. This rider will provide a higher net surrender value in the early policy years. Upon full surrender of the policy during the rider benefit period, we will pay the policy owner the greater of the net surrender value of the policy and the Alternate Surrender Value. The Alternate Surrender Value equals the lesser of:
o The policy net surrender value; and
o The lesser of all premiums paid for the policy or the policy value plus a refund of all of the following charges made on
the policy since issue: premium expense charges, administrative charges, coverage charges and charges for the Alternate Surrender Value Rider.
DISABILITY PAYMENT OF SPECIFIED PREMIUM RIDER. This rider provides a benefit of a specified monthly amount due to the total disability of the insured as defined in the rider. The benefit amount is credited to the policy on each monthly calculation day during a period of the insured's total disability that persists for at least 6 continuous months and occurs within a disability benefit period. The rider terminates on the policy anniversary immediately following the insured's 65th birthday; however, benefits will continue to be paid beyond that time if the insured has been continuously disabled under the terms of the rider since the policy anniversary immediately following the insured's 60th birthday. The rider will also terminate under other circumstances described in the rider. The maximum age of the insured at issue for this rider is age 60.
RIDERS WE MAKE PART OF THE POLICY AT ISSUE
We also attach certain riders to the policy automatically at issue. These riders do not have separate monthly charges but the Accelerated Benefit Rider and the Overloan Protection Rider have transaction charges that are assessed at the time the benefit is exercised. We may add, modify or delete riders available with this policy for new policies.
ACCELERATED BENEFIT RIDER. Under certain conditions, in the event of the terminal illness of the insured, an acceleratedpayment of up to 75% of the policy's face amount (up to a maximum of $250,000 aggregate for all policies issued by Phoenix and its insurance company affiliates) is available under this rider. The minimum face amount of the policy after any such accelerated payment is $10,000.
LIFEPLAN OPTIONS RIDER. This rider is only available for policies of $1 million face amount or more. This rider is not available with any policy issued as part of a qualified plan. At specified 5th, 10th and 15th year policy anniversaries, subject to various limitations as set forth in the rider, the rider provides the following favorable policy options:
1) An option to increase the total face amount of the policy by up to $1,000,000 without a medical exam requirement, while other traditional underwriting rules will still apply;
2) An option to reduce the base policy face amount up to 50% without incurring a partial surrender charge.
NO LAPSE GUARANTEE RIDER. This rider provides a guarantee that the policy will not lapse as a result of the cash value becoming insufficient to pay the policy's monthly charges if the conditions of the rider are met. For additional details, see the "Lapse and Reinstatement" section of this prospectus.
OVERLOAN PROTECTION RIDER. This rider is designed to prevent a heavily loaned policy from lapsing. For additional details, see the "Policy Loan" section of this prospectus.
You should read the riders carefully for all their terms and conditions.
POSTPONEMENT OF PAYMENTS
We may postpone payment of surrenders, partial withdrawals, policy loan or death
benefits in certain cases including the following circumstances:
> we may postpone for up to six months, payment for any transaction that depends on the value of the Guaranteed Interest Accounts;
> we may postpone payment whenever the NYSE is closed on what would otherwise be a regular trading day, when trading on the NYSE is restricted, on days when a certain market is closed (e.g., the U.S. Government bond market is closed on Columbus Day and Veteran's Day) or may have closed early; or
> when the SEC decides an emergency exists and the sale of securities or the determination of the value of securities in the Separate Account is not reasonably practicable.
Transfers also may be postponed under these circumstances.
RESERVATION OF COMPANY RIGHTS TO CHANGE THE SEPARATE ACCOUNT
We have the right, subject to compliance with applicable law, to add, delete, or
substitute investment options of the Separate Account, combine the Separate
Account into another Separate Account, transform the Separate Account into a
mutual fund, and/or deregister the Separate Account under the Investment Company
Act of 1940. We also reserve the right to close any underlying fund to new
investment or eliminate the shares of any underlying fund(s) if they are no
longer available for investment, or if we believe investing in any underlying
fund(s) is no longer appropriate for the purposes of the Separate Account.
GENERAL
This discussion is general in nature and is not intended as income tax advice.
We make no attempt to consider any estate and inheritance taxes, or any state,
local or other tax laws. Because this discussion is based upon our understanding
of federal income tax laws as they are currently interpreted, we cannot
guarantee the income tax status of any policy. The Internal Revenue Service
("IRS") makes no representation regarding the likelihood of continuation of
current federal income tax laws, U.S. Treasury regulations or of the current
interpretations. We reserve the right to make changes to the policy to assure
that it will continue to qualify as a life insurance contract for federal income
tax purposes.
The ultimate effect of federal income taxes on values under the Separate Account and on the economic benefit to you or your beneficiary depends on our income tax status and upon the income tax status of the individual concerned. For complete information on federal and state income tax considerations, an income tax advisor should be consulted.
INCOME TAX STATUS
We are taxed as a life insurance company under the Internal Revenue Code of 1986
(the "Code"), as amended. For federal income tax purposes, neither the Separate
Account nor the Guaranteed Interest Accounts are separate entities from Phoenix
Life Insurance Company. PHL Variable Insurance Company and Phoenix Life and
Annuity Company and their operations form a part of the Company.
Investment income and realized capital gains on the assets of the Separate Account are reinvested and taken into account in determining the value of the Separate Account. Investment income of the Separate Account, including realized net capital gains, is not taxed to us. Due to our income tax status under current provisions of the Code, no charge currently will be made to the Separate Account for our federal income taxes which may be attributable to the Separate Account. We reserve the right to make a deduction for taxes if our federal income tax treatment is determined to be other than what we currently believe it to be, if changes are made affecting the income tax treatment to our variable life insurance contracts, or if changes occur in our income tax status. If imposed, such charge would be equal to the federal income taxes attributable to the investment results of the Separate Account.
POLICY BENEFITS
TAX TREATMENT AS LIFE INSURANCE
In order to be treated as life insurance for federal income tax purposes, the
policy must meet certain requirements. If these requirements are met, the death
benefits are generally received without federal income tax and the earnings on
the policy are not subject to federal income tax until withdrawn. These
requirements include definitional tests and rules for diversification of the
policy's investments. These requirements are generally described below.
In 2004, the Department of Treasury ruled that income received by residents of Puerto Rico under a life insurance policy issued by a United States company is U.S.-source income that is subject to United States Federal income tax. See Rev. Rul. 2004-74, 2004-31 I.R.B. 109.
DEATH BENEFIT PROCEEDS
The policy, whether or not it is a modified endowment contract (see "Modified
Endowment Contracts"), should be treated as meeting the definition of a life
insurance contract for federal income tax purposes under Section 7702 of the
Code. As such, the death benefit proceeds thereunder should be excludable from
the gross income of the beneficiary under Code Section 101(a)(1) unless there
has been a transfer for valuable consideration. Also, a policy owner should not
be considered to be in constructive receipt of the net surrender value,
including investment income. However, see the sections below on possible
taxation of amounts received under the policy, via full surrender, partial
surrender or loan. In addition, a benefit paid under the Accelerated Benefit
Rider may be taxable as income in the year of receipt.
Code Section 7702 imposes certain conditions with respect to premiums received under a policy based on the definitional test you choose for the policy. We monitor the premiums to assure compliance with such conditions. However, if the premium limitation is exceeded during the year, we may return the excess premium, with interest, to the policy owner within 60 days after the end of the policy year, and maintain the qualification of the policy as life insurance for federal income tax purposes.
There are two definitional tests for life insurance in the Internal Revenue Code; (1) Cash Value Accumulation Test, and (2) Guideline Premium Test. The selection of the tests is made at issue and cannot be changed thereafter. The choice of test is dependent on several factors, including the insured's age at issue and intention of the owner concerning policy funding patterns. You should consult your own tax advisor for advice with respect to the selection of the definitional test for your policy.
Under the Cash Value Accumulation Test, there must, at all times, be a minimum ratio of death benefit to cash value. Compliance with the test is based on the policy design at issue. The premiums permitted under this test are based on the death benefit, age and characteristics of the insured and types of riders on the policy.
Under the Guideline Premium Test, there is a limit as to the amount of premium that can be paid into the policy in relation to the death benefit. The initial premium limit is based on the death benefit, age and characteristics of the insured and types of riders on the policy. The actual premium limits each year will depend on the amount of premiums paid in a prior year. In addition to this premium test, there is also a minimum ratio of death benefit to cash value under the Cash Value Corridor. This Corridor looks to the age of the insured and the cash value each year and may require periodic adjustments in death benefit for compliance. In general, the death benefit required under this test is lower in the early years than that under the Cash Value Accumulation Test.
FULL SURRENDER
Upon full surrender of a policy for its net surrender value, the excess, if any,
of the policy value (unreduced by any outstanding indebtedness) over the
premiums paid will be treated as ordinary income for federal income tax
purposes. The full surrender of a policy that is a modified endowment contract
may result in the imposition of an additional 10% tax on any income received.
PARTIAL SURRENDER
If the policy is a modified endowment contract, partial surrenders and other
distributions are fully taxable to the extent of income in the policy and are
possibly subject to an additional 10% tax. See the discussion on modified
endowment contracts below. If the policy is not a modified endowment contract,
partial surrenders still may be taxable, as follows. Code Section 7702(f)(7)
provides that where a reduction in death benefits occurs during the first 15
years after a policy is issued and there is a cash distribution associated with
that reduction, the
policy owner may be taxed on all or a part of that amount distributed. A reduction in death benefits may result from a partial surrender. After 15 years, the proceeds will not be subject to tax, except to the extent such proceeds exceed the total amount of premiums paid but not previously recovered. We suggest you consult with your tax advisor in advance of a proposed decrease in death benefits or a partial surrender as to the portion, if any, which would be subject to tax, and in addition as to the impact such partial surrender might have under the new rules affecting modified endowment contracts. The benefit payment under the Accelerated Benefit Rider is not considered a partial surrender.
LOANS
We believe that any loan received under a policy will be treated as your
indebtedness. If the policy is a modified endowment contract, loans are fully
taxable to the extent of income in the policy and are possibly subject to an
additional 10% tax. See the discussion on modified endowment contracts. If the
policy is not a modified endowment contract, we believe that no part of any loan
under a policy will constitute income to you as long as the policy remains in
force.
The deductibility by a policy owner of loan interest under a policy may be limited under Code Section 264, depending on the circumstances. A policy owner intending to fund premium payments through borrowing should consult an income tax advisor with respect to the tax consequences. Under the "personal" interest limitation provisions of the Code, interest on policy loans used for personal purposes is not tax deductible. Other rules may apply to allow all or part of the interest expense as a deduction if the loan proceeds are used for "trade or business" or "investment" purposes. See your tax advisor for further guidance.
BUSINESS AND CORPORATE-OWNED POLICIES
If the policy owner is an entity, such as a business or corporation, there are
Internal Revenue Code provisions that apply to the tax treatment of premiums,
policy loan interest, contract earnings and death benefits. No deduction is
permitted for premiums paid if the policy owner is a beneficiary under the
contract. No deduction generally is allowed for interest paid or accrued on any
policy loan. A pro rata interest deduction disallowance rule may also apply in
the case of a policy insuring the life of an individual who is not an owner of
the policy owner, or an officer, director, or employee of the policy owner's
business. The death benefits and policy earnings may be subject to tax under the
corporate alternative minimum tax. As of August 2006, death benefits may be
subject to income tax unless (1) specified notice and consent provisions are met
and (2) criteria are satisfied concerning the relationship between the insured
and policy owner. The policy owner is responsible for ensuring that the notice
and consent requirements are satisfied and for determining whether the
relationship between insured and policy owner meets the statutory criteria. The
policyowner must also comply with Internal Revenue Service annual reporting and
recordkeeping requirements.
MODIFIED ENDOWMENT CONTRACTS
GENERAL
Pursuant to Code Section 72(e), loans and other amounts received under modified
endowment contracts will, in general, be taxed to the extent of accumulated
income (generally, the excess of policy value over premiums paid). Life
insurance policies can be modified endowment contracts if they fail to meet the
"7-pay test" of Code Section 7702A.
This test compares your policy to a hypothetical life insurance policy of equal face amount which requires seven equal annual premiums to be "fully paid-up," continuing to provide a level death benefit with no further premiums. A policy becomes a modified endowment contract if, at any time during the first seven years, the cumulative premium paid on the policy exceeds the cumulative premium that would have been paid under the hypothetical policy. Premiums paid during a policy year but which are returned by us with interest within 60 days after the end of the policy year will be excluded from the 7-pay test. A life insurance policy received in exchange for a modified endowment contract will be treated as a modified endowment contract.
REDUCTION IN BENEFITS DURING THE FIRST SEVEN YEARS
If there is a reduction in death benefits previously elected, during the first
seven policy years, the premiums are redetermined for purposes of the 7-pay test
as if the policy originally had been issued at the reduced death benefit level
and the new limitation is applied to the cumulative amount paid for each of the
first seven policy years.
DISTRIBUTIONS AFFECTED
If a policy fails to meet the 7-pay test, it is considered a modified endowment
contract only as to distributions in the year in which the test is failed and
all subsequent policy years. However, distributions made in anticipation of such
failure (there is a presumption that distributions made within two years prior
to such failure were "made in anticipation") also are considered distributions
under a modified endowment contract.
PENALTY TAX
Any amounts taxable under the modified endowment contract rule will be subject
to an additional 10% excise tax, with certain exceptions. This additional tax
will not apply in the case of distributions that are:
> made on or after the taxpayer attains age 59 1/2;
> attributable to the taxpayer's disability (within the meaning of Code
Section 72(m)(7)); or
> part of a series of substantially equal periodic payments (not less often than annually) made for the life (or life expectancy) of the taxpayer or the joint lives (or life expectancies) of the taxpayer and his beneficiary.
MATERIAL CHANGE RULES
Any determination of whether the policy meets the 7-pay test will begin again
any time the policy undergoes a "material change," which includes any increase
in death benefits or any increase in or addition of a qualified additional
benefit, or any increase in or addition of any rider benefit available as an
optional insurance benefit (described above), with the following two exceptions.
> First, if an increase is attributable to premiums paid "necessary to fund" the lowest death benefit and qualified additional benefits payable in the first seven policy years or to the crediting of interest or dividends with respect to these premiums, the "increase" does not constitute a material change.
> Second, to the extent provided in regulations, if the death benefit or qualified additional benefit increases as a result of a cost-of-living adjustment based on an established broad-based index specified in the policy, this does not constitute a material change if:
o the cost-of-living increase is funded ratably over the remaining premium payment period of the policy.
A material change may occur at any time during the life of the policy (within the first seven years or thereafter), and future taxation of distributions or loans would depend upon whether the policy satisfied the applicable 7-pay test from the time of the material change. An exchange of policies is considered to be a material change for all purposes.
SERIAL PURCHASE OF MODIFIED ENDOWMENT CONTRACTS
All modified endowment contracts issued by the same insurer (or affiliated
companies of the insurer) to the same policy owner within the same calendar year
will be treated as one modified endowment contract in determining the taxable
portion of any loans or distributions made to the policy owner. The U.S.
Treasury has been given specific legislative authority to issue regulations to
prevent the avoidance of the new distribution rules for modified endowment
contracts. A tax advisor should be consulted about the tax consequences of the
purchase of more than one modified endowment contract within any calendar year.
LIMITATIONS ON UNREASONABLE MORTALITY AND EXPENSE CHARGES
The Code imposes limitations on unreasonable mortality and expense charges for
purposes of ensuring that a policy qualifies as a life insurance contract for
federal income tax purposes. The mortality charges taken into account to compute
permissible premium levels may not exceed those charges required to be used in
determining the federal income tax reserve for the policy, unless U.S. Treasury
regulations prescribe a higher level of charge. In addition, the expense charges
taken into account under the guideline premium test are required to be
reasonable, as defined by the U.S. Treasury regulations. We will comply with the
limitations for calculating the premium we are permitted to receive from you.
QUALIFIED PLANS
A policy may be used in conjunction with certain qualified plans. Since the
rules governing such use are complex, you should not use the policy in
conjunction with a qualified plan until you have consulted a pension consultant
or income tax advisor.
DIVERSIFICATION STANDARDS
To comply with the Diversification Regulations under Code Section 817(h),
("Diversification Regulations") each series is required to diversify its
investments. The Diversification Regulations generally require that on the last
day of each calendar quarter the series' assets be invested in no more than:
> 55% in any one investment
> 70% in any two investments
> 80% in any three investments
> 90% in any four investments
A "look-through" rule applies to treat a pro rata portion of each asset of a series as an asset of the Separate Account; therefore, each series will be tested for compliance with the percentage limitations. For purposes of these diversification rules, all securities of the same issuer are treated as a single investment, but each United States government agency or instrumentality is treated as a separate issuer.
The general diversification requirements are modified if any of the assets of the Separate Account are direct obligations of the U.S. Treasury. In this case, there is no limit on the investment that may be made in U.S. Treasury securities, and for purposes of determining whether assets other than U.S. Treasury securities are adequately diversified, the generally applicable percentage limitations are increased based on the value of the Separate Account's investment in U.S. Treasury securities. Notwithstanding this modification of the general diversification requirements, the portfolios of the funds will be structured to comply with the general diversification standards because they serve as an investment vehicle for certain variable annuity contracts that must comply with these standards.
We intend to comply with the Diversification Regulations to assure that the policies continue to qualify as a life insurance contract, for federal income tax purposes.
OWNER CONTROL
For variable contracts, tax deferral depends on the insurance company and not
you having control of the assets held in the separate accounts. You can allocate
policy value from one fund of the separate account to another but you cannot
direct the investments each fund makes. If you have too much "investor control"
of the assets supporting the separate account funds, then you will be taxed on
the gain in the contract as it is earned rather than when it is withdrawn.
In 2003, the IRS in Revenue Ruling 2003-91, issued formal guidance that indicates that if the number of underlying mutual funds available in a variable insurance product does not exceed 20, the number of underlying mutual funds alone would not cause the contract to not qualify for the desired tax treatment. The IRS has also indicated that exceeding 20 investment options may be considered a factor, along with other factors, including the number of transfer opportunities available under the contract, when determining whether the contract qualifies for the desired tax treatment. The Revenue Ruling did not indicate the actual number of underlying mutual funds that would cause the contract to not provide the desired tax treatment but stated that whether the owner of a variable contract is to be treated as the
owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances.
The Revenue Ruling considered certain variable annuity and variable life insurance contracts and held that the types of actual and potential control that the contract owners could exercise over the investment assets held by the insurance company under the variable contracts was not sufficient to cause the contract owners to be treated as the owners of those assets and thus to be subject to current income tax on the income and gains produced by those assets. Under this contract, like the contracts described in the Revenue Ruling, there will be no arrangement, plan, contract or agreement between the contract owner and the company, regarding the availability of a particular investment option and, other than the contract owner's right to allocate premium payments and transfer funds among the available investment options, all investment decisions concerning the investment options will be made by us or an advisor in its sole and absolute discretion.
At this time, it cannot be determined whether additional guidance will be provided by the U.S. Treasury on this issue and what standards may be contained in such guidance. Should the U.S. Treasury issue additional rules or regulations limiting the number of underlying mutual funds, transfers between or among underlying mutual funds, exchanges of underlying mutual funds or changes in investment objectives of underlying mutual funds such that the contract would no longer qualify for tax deferred treatment, The company reserves the right to modify the contract to the extent required to maintain favorable tax treatment.
CHANGE OF OWNERSHIP OR INSURED OR ASSIGNMENT
Changing the policy owner or the insured or an exchange or assignment of the
policy may have tax consequences depending on the circumstances. Code Section
1035 provides that a life insurance contract can be exchanged for another life
insurance contract, without recognition of gain or loss, assuming that no money
or other property is received in the exchange, and that the policies relate to
the same Insured. If the surrendered policy is subject to a policy loan, this
may be treated as the receipt of money on the exchange. We recommend that any
person contemplating such actions seek the advice of an income tax advisor.
OTHER TAXES
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership or receipt of policy proceeds depend on the
circumstances of each policy owner or beneficiary. We do not make any
representations or guarantees regarding the tax consequences of any policy with
respect to these types of taxes.
WITHHOLDING
We are required to withhold federal income taxes on the taxable portion of any amounts received under the policy unless you elect to not have any withholding or in certain other circumstances. You are not permitted to elect out of withholding if you do not provide a taxpayer identification number. Special withholding rules apply to payments made to nonresident aliens. You are liable for payment of federal income taxes on the taxable portion of any amounts received under the policy. You may be subject to penalties if your withholding or estimated tax payments are insufficient.
We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. The litigation and arbitration naming us as a defendant ordinarily involves our activities as an insurer, investor, investment advisor or taxpayer. It is not feasible to predict or determine the ultimate outcome of all legal or arbitration proceedings or to provide reasonable ranges of potential losses. We believe that the outcomes of our litigation and arbitration matters are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation and arbitration, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operations or cash flows in particular quarterly or annual periods.
State regulatory bodies, the Securities and Exchange Commission, or SEC, the Financial Industry Regulatory Authority, or FINRA (formerly known as the National Association of Securities Dealers, Inc., or NASD, and other regulatory bodies regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our compliance with, among other things, insurance laws and securities laws. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted.
For example, during 2003 and 2004, the SEC conducted examinations of certain variable products and certain affiliated investment advisers and mutual funds. In 2004, FINRA also commenced examinations of two affiliated broker-dealers; the examinations were closed in April 2005 and November 2004, respectively. In February 2005, FINRA notified PNX that it was asserting violations of trade reporting rules by a subsidiary. PNX responded to FINRA allegations in May 2005. Thereafter, in January 2007, FINRA notified PNX that the matter is being referred for potential violations and possible action.
In addition, federal and state regulatory authorities from time to time make inquiries and conduct examinations regarding compliance by the company and its subsidiaries with securities and other laws and regulations affecting their registered products. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted. There has been a significant increase in federal and state regulatory activity relating to financial services companies, with a number of recent regulatory inquiries focusing on late- trading, market timing and valuation issues. Our products entitle us to impose restrictions on transfers between separate account sub-accounts associated with our variable products.
In 2004 and 2005, the Boston District Office of the SEC conducted a compliance examination of certain of PNX's affiliates that are registered under the Investment Company Act of 1940 or the Investment Advisers Act of 1940. Following the examination, the staff of the Boston District Office issued a deficiency letter primarily focused on perceived weaknesses in procedures for monitoring trading to prevent market timing activity. The staff requested PNX to conduct an analysis as to whether shareholders, policyholders and contract holders who invested in the funds that may have been affected by undetected market timing activity had suffered harm and to advise the staff whether PNX believes reimbursement is necessary or appropriate under the circumstances. A third party was retained to assist PNX in preparing the analysis. Based on this analysis, PNX advised the SEC that it does not believe that reimbursement is appropriate.
Over the past several years, a number of companies have announced settlements of enforcement actions with various regulatory agencies, primarily the SEC and the New York Attorney General's Office. While no such action has been initiated against us, it is possible that one or more regulatory agencies may pursue this type of action against us in the future.
Financial services companies have also been the subject of broad industry inquiries by state regulators and attorneys general which do not appear to be company-specific. In this regard, in 2004, PNX received a subpoena from the Connecticut Attorney General's office requesting information regarding certain distribution practices since 1998. Over 40 companies received such a subpoena. PNX cooperated fully and has had no further inquiry since filing its response.
In May 2005, The Phoenix Companies received a subpoena from the Connecticut Attorney General's office and an inquiry from the Connecticut Insurance Department requesting information regarding finite reinsurance. The Phoenix Companies cooperated fully and have had no further inquiry since responding.
These types of regulatory actions may be difficult to assess or quantify, may seek recovery of indeterminate amounts, including punitive and treble damages, and the nature and magnitude of their outcomes may remain unknown for substantial periods of time. While it is not feasible to predict or determine the ultimate outcome of all pending inquiries, investigations, legal proceedings and other regulatory actions, or to provide reasonable ranges of potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these actions and the inherent unpredictability of regulatory matters, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operation or cash flows in particular quarterly or annual periods.
The financial statements of Phoenix Life Variable Universal Life Account as of December 31, 2006, and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company as of December 31, 2006 and 2005, and for each of the three years in the period ended December 31, 2006 are contained in the Statement of Additional Information (SAI), which you can get free of charge by calling the toll free number given on page one. The financial statements of Phoenix Life Insurance Company included herein should be considered only as bearing upon the ability of Phoenix Life Insurance Company to meet its obligations under the policies. You should not consider them as bearing on the investment performance of the assets held in the Separate Account or the Guaranteed Interest Accounts' rates that we credit during a guarantee period.
The company has appointed PEPCO to serve as the principal underwriter and distributor of the securities offered through this prospectus, pursuant to the terms of a distribution agreement. PEPCO, which is an affiliate of the company, also acts as the principal underwriter and distributor of other variable life insurance policies and variable annuity contracts issued by the company and its affiliated companies. The company reimburses PEPCO for expenses PEPCO incurs in distributing the policies (e.g., commissions payable to retail broker-dealers who sell the policies). PEPCO does not retain any fees under the policies; however, PEPCO may receive 12b-1 fees from the funds.
PEPCO's principal executive offices are located at 56 Prospect Street, Hartford, Connecticut 06103. PEPCO is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934, as well as the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority ("FINRA"), formerly known as the National Association of Securities Dealers, Inc. or "NASD").
PEPCO and the company enter into selling agreements with broker-dealers who are registered with the SEC and are members of FINRA, and with entities that may offer the policies but are exempt from registration. Applications for the policy are solicited by registered representatives who are associated persons of such broker-dealer firms. Those representatives act as appointed agents of the company under applicable state insurance law and must be licensed to sell variable life insurance products. The company intends to offer the policy in all jurisdictions where it is licensed to do business and where the policy is approved. The policies are offered on a continuous basis.
COMPENSATION
Broker-dealers having selling agreements with PEPCO and the company are paid
compensation for the promotion and sale of the policies. Registered
representatives who solicit sales of the policy typically receive a portion of
the compensation payable to the broker-dealer firm, depending on the agreement
between
the firm and the registered representatives. A broker-dealer firm or registered representative of a firm may receive different compensation for selling one product over another and/or may be inclined to favor or disfavor one product provider over another product provider due to differing compensation rates.
Compensation paid on the policies, as well as other incentives or payments, is not assessed as an additional direct charge to policy owners or the Separate Account. Instead, you pay for sales and distribution expenses through overall charges and fees assessed under your policy. For example, front end sales charges, per thousand sales loads, and /or any profits the company may realize through assessing the mortality and expense risk charge under your policy may be used to pay for sales and distribution expenses. We may also pay for sales and distribution expenses out of any payments the company or PEPCO may receive from the funds for providing administrative, marketing and other support and services to the funds.
The amount and timing of overall compensation, which includes both commissions and the additional compensation as outlined below, may vary depending on the selling and other agreements in place. The additional compensation or reimbursement we pay to certain broker-dealers may be paid in the form of flat fees. However, these payments may be represented as a percentage of expected premium payments. Sales commissions will be paid to registered representatives on purchase payments we receive under these policies. Phoenix will pay a maximum total sales commission of up to 99% of target premium payments in the first policy year, up to 20% of excess target premium payments in the first policy year, up to 20% of target premium payments in the following policy years, and asset based fees of up to 0.25% of policy value in the following policy years.
PERCENTAGE OF PREMIUM PAYMENT
We generally pay compensation as a percentage of premium payments invested in
the policy ("commissions"). The amount of commissions we pay may vary depending
on the selling agreement.
PROMOTIONAL INCENTIVES AND PAYMENTS
To the extent permitted by FINRA rules and other applicable laws and regulations, PEPCO may pay or allow other promotional incentives or payments in the firm of cash or other compensation.
PREFERRED DISTRIBUTION ARRANGEMENTS
The company and PEPCO have also entered into preferred distribution arrangements
with certain broker-dealer firms. These arrangements are sometimes called
"shelf space" arrangements. Under these arrangements, the company and PEPCO pay
separate, additional compensation to the broker-dealer firm for services the
broker-dealer provides in connection with the distribution of the Company's
products. These services may include providing the company with access to the
distribution network of the broker-dealer, the hiring and training of the
broker-dealer's sales personnel, the sponsoring of conferences and seminars by
the broker-dealer, or general marketing services performed by the broker-
dealer. The broker-dealer may also provide other services or incur other costs
in connection with distributing the company's products.
These preferred distribution arrangements will not be offered to all broker-dealer firms and the terms of such arrangements may differ between broker-dealer firms. Compensation payable under such arrangements may be based on: aggregate, net or anticipated sales of the policies; total assets attributable to sale of the policies by registered representatives of the broker-dealer firm; the length of time that a policy owner has owned the policy; meeting certain sales thresholds; and/or actual or anticipated overhead expenses incurred by the broker-dealer firms in offering the policies and other variable insurance products offered by the company or its affiliates. Compensation under these arrangements may be in the form of one-time or periodic lump sum payments. The company and PEPCO have entered into such arrangements with Merrill Lynch, Pierce, Fenner & Smith, Inc., Wachovia Securities, 1st Global Capital Corp., AXA Network, A.G. Edwards & Sons, Inc., LPL Financial Services, National Financial Partners, FFR Financial and Insurance Services, and BISYS Insurance Services, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
FUND NAME INVESTMENT OBJECTIVE INVESTMENT ADVISOR / SUBADVISOR
-----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Growth of capital AIM Advisors, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
DWS Equity 500 Index VIP Match the performance of the Standard & Poor's
500 Composite Stock Price Index which Deutsche Asset Management, Inc.
emphasizes stocks of large U.S. companies
-----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government Current income by investing primarily in a Federated Investment Management
Securities II diversified portfolio or U.S. government Company
securities
-----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond Fund II High current income by investing primarily Federated Investment Management
in a professionally managed, diversified Company
portfolio of fixed income securities
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R) Portfolio Long-term capital appreciation Fidelity Management and
Research Company
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Opportunities Portfolio Capital growth Fidelity Management and
Research Company
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio Capital appreciation Fidelity Management and
Research Company
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio As high a level of current income as is Fidelity Management and Research
consistent with the preservation of capital Company Subadvisor: Fidelity
Investments Money Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund Maximize income while maintaining prospects Franklin Advisers, Inc.
for capital appreciation
-----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Bond-Debenture Portfolio High current income and the opportunity for Lord, Abbett & Co. LLC
capital appreciation to produce a high
total return
-----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Growth and Income Portfolio Long-term growth of capital and income without Lord, Abbett & Co. LLC
excessive fluctuations in market value
-----------------------------------------------------------------------------------------------------------------------------------
Capital appreciation through investments,
Lord Abbett Mid-Cap Value Portfolio primarily in equity securities which are Lord, Abbett & Co. LLC
believed to be undervalued in the marketplace
-----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund Capital appreciation with income as a Franklin Mutual Advisers, LLC
secondary goal
-----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Fasciano Portfolio Long term capital growth Neuberger Berman Management Inc.
Subadvisor: Neuberger Berman, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian Portfolio Long term growth of capital; current Neuberger Berman Management Inc.
income is a secondary goal Subadvisor: Neuberger Berman, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation Fund/VA Capital appreciation by investing in OppenheimerFunds, Inc.
securities of well-known, established
companies
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA Long-term capital appreciation by investing in OppenheimerFunds, Inc.
securities of foreign insurers, "growth-type"
companies, cyclical industries and special
situations
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund/VA Capital appreciation OppenheimerFunds, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Capital Growth Series Intermediate and long-term growth of capital Phoenix Variable Advisors, Inc.
appreciation with income as a secondary Subadvisor: Harris Investment
consideration Management
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Growth and Income Series Dividend growth, current income and capital Phoenix Variable Advisors, Inc.
appreciation
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Mid-Cap Growth Series Capital appreciation Phoenix Variable Advisors, Inc.
Subadvisor: Neuberger Berman
Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Money Market Series As high a level of current income as is Phoenix Variable Advisors, Inc.
consistent with the preservation of capital
and maintenance of liquidity
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Series Long-term total return Phoenix Variable Advisors, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Multi-Sector Short Term Bond Series High current income while attempting to limit Phoenix Variable Advisors, Inc.
changes in the series' net asset value per
share caused by interest rate changes
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Strategic Allocation Series High total return consistent with prudent Subadvisors: Goodwin Capital
investment risk Advisers, Inc. (fixed income
portion) Phoenix Investment
Counsel, Inc. (equity portion)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series High total return consistent with Phoenix Variable Advisors, Inc.
reasonable risk Subadvisor: Aberdeen Asset
Management Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Alger Small-Cap Growth Series Long-term capital growth Phoenix Variable Advisors, Inc.
Subadvisor: Fred Alger
Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate Securities Capital appreciation and income with Phoenix Variable Advisors, Inc.
Series approximately equal emphasis Subadvisor: Duff & Phelps
Investment Management Co.
-----------------------------------------------------------------------------------------------------------------------------------
|
-----------------------------------------------------------------------------------------------------------------------------------
FUND NAME INVESTMENT OBJECTIVE INVESTMENT ADVISOR / SUBADVISOR
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation Long-term capital growth Phoenix Variable Advisors, Inc.
Series: Aggressive Growth Subadvisor: Standard & Poor's
Investment Advisory Services, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation Long-term capital growth with current income Phoenix Variable Advisors, Inc.
Series: Growth as a secondary consideration Subadvisor: Standard & Poor's
Investment Advisory Services, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation Current income with capital growth as a Phoenix Variable Advisors, Inc.
Series: Moderate secondary consideration Subadvisor: Standard & Poor's
Investment Advisory Services, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation Long-term capital growth and current income Phoenix Variable Advisors, Inc.
Series: Moderate Growth with a greater emphasis on capital growth Subadvisor: Standard & Poor's
Investment Advisory Services, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Sanford Bernstein Mid-Cap Value Long-term capital appreciation with current Phoenix Variable Advisors, Inc.
Series income as a secondary investment objective Subadvisor: AllianceBernstein L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Sanford Bernstein Small-Cap Value Long-term capital appreciation by investing Phoenix Variable Advisors, Inc.
Series primarily in small-capitalization stocks that Subadvisor: AllianceBernstein L.P.
appear to be undervalued with current income
as a secondary investment objective
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Van Kampen Comstock Series Long-term capital appreciation with current Phoenix Variable Advisors, Inc.
income as a secondary consideration Subadvisor: Morgan Stanley
Investment Management Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Van Kampen Equity 500 Index Series High total return Phoenix Variable Advisors, Inc.
Subadvisor: Morgan Stanley
Investment Management Inc.
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT CommodityRealReturn(TM) Strategy Maximum real return consistent with prudent Pacific Investment Management
Portfolio investment management Company LLC
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Real Return Portfolio Maximum real return, consistent preservation Pacific Investment Management
of real capital and prudent investment Company LLC
management
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return Portfolio Maximum total return, consistent with Pacific Investment Management
preservation of capital and prudent Company LLC
investment management
-----------------------------------------------------------------------------------------------------------------------------------
Sentinel Variable Products Balanced Fund Seeks a combination of growth of capital and Sentinel Asset Management, Inc.
current income, with relatively low risk and
relatively low fluctuations in value
-----------------------------------------------------------------------------------------------------------------------------------
Sentinel Variable Products Bond Fund Seeks high current income while seeking to Sentinel Asset Management, Inc.
control risk
-----------------------------------------------------------------------------------------------------------------------------------
Sentinel Variable Products Common Stock Seeks a combination of growth of capital, Sentinel Asset Management, Inc.
Fund current income, growth of income and
relatively low risk as compared with the
stock market as a whole
-----------------------------------------------------------------------------------------------------------------------------------
Sentinel Variable Products Mid Cap Growth Seeks growth of capital Sentinel Asset Management, Inc.
Fund
-----------------------------------------------------------------------------------------------------------------------------------
Sentinel Variable Products Small Company Seeks growth of capital Sentinel Asset Management, Inc.
Fund
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Long-term capital appreciation Templeton Asset Management Ltd.
Fund
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Securities Fund Long-term capital growth Templeton Investment Counsel, LLC
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund Long-term capital growth Templeton Global Advisors Limited
-----------------------------------------------------------------------------------------------------------------------------------
Van Kampen UIF Equity and Income Portfolio Capital appreciation and current income Morgan Stanley Investment
Management Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Wanger International Select Long-term growth of capital Columbia Wanger Asset
Management, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap Long-term growth of capital Columbia Wanger Asset
Management, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Wanger Select Long-term growth of capital Columbia Wanger Asset
Management, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Smaller Companies Long-term growth of capital Columbia Wanger Asset
Management, L.P.
-----------------------------------------------------------------------------------------------------------------------------------
|
PHOENIX LIFE INSURANCE COMPANY
PO Box 22012
Albany, NY 12201-2012
Additional information about the Phoenix Benefit Choice VUL(SM) (the "Policy") and the Phoenix Life Variable Universal Life Account (the "Separate Account") is contained in the Policy's Statement of Additional Information ("SAI") dated December 21, 2007, which has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus.
The SAI, personalized illustrations of death benefits and net surrender values are available, without charge, upon request. Inquiries and requests for the SAI and other requests should be directed in writing to Phoenix Variable Products Mail Operations, PO Box 8027, Boston, Massachusetts 02266-8027, or by telephone at (800) 541-0171, or you can download the SAI from the Phoenix Companies, Inc., web site phoenixwm.com.
Information about the Separate Account, including the SAI, can be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. You can obtain
information on the operation of the Public Reference Room by calling the SEC at
(202) 551-8090. Reports and other information about the Separate Account are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of the information may be obtained, after paying a
duplicating fee, by electronic request at the following e-mail address:
publicinfo@sec.gov, or by writing the SEC Public Reference Section, 100 F
Street, NE, Room 1580, Washington, D.C. 20549.
Phoenix Life Insurance Company
A member of The Phoenix Companies, Inc.
phoenixwm.com
07VUL
Investment Company Act File No. 811-04721
[logo] PHOENIX(R)
L4840 PR2 (C)2007 The Phoenix Companies, Inc. 12/07
PART B
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
ISSUED BY: PHOENIX LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION DECEMBER 21, 2007
FLEXIBLE PREMIUM FIXED AND VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This Statement of Additional Information ("SAI") is not a prospectus and should be read in conjunction with the prospectus, dated December 21, 2007. You may obtain a copy of the prospectus without charge by contacting Phoenix Life Insurance Company ("Phoenix") at the address or telephone number below. Terms used in the current prospectus are incorporated in this SAI.
TABLE OF CONTENTS
Phoenix Life Insurance Company......................................... 2
The Separate Account................................................... 2
The Policy............................................................. 3
Underwriter............................................................ 3
Services............................................................... 3
Information Sharing Agreements......................................... 4
Performance History.................................................... 4
Additional Information about Charges................................... 5
Safekeeping of the Separate Account's Assets........................... 5
State Regulation....................................................... 5
Reports................................................................ 6
Experts ............................................................... 6
Separate Account Financial Statements.................................. SA-1
Company Financial Statements........................................... F-1
--------------
|
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT US AT OUR MAIN ADMINISTRATIVE OFFICE: [Envelope] PHOENIX VARIABLE PRODUCTS MAIL OPERATIONS
("VPMO")
PO Box 8027
Boston, Massachusetts 02266-8027
[Telephone] Tel. (800) 541-0171
|
Phoenix Life Insurance Company ("Phoenix") sells variable life insurance and annuity products to individual and institutional customers. Phoenix is organized as a New York stock company. It was incorporated in the State of Connecticut on May 1, 1851, and then changed its domicile to the State of New York on July 1, 1992. Phoenix is a wholly-owned subsidiary of The Phoenix Companies, Inc., a publicly traded Delaware corporation. Our executive and administrative office is at One American Row, Hartford, CT 06103-2899. Our New York principal office is at 31 Tech Valley Drive, East Greenbush, New York 12061.
Phoenix established the Phoenix Life Variable Universal Life Account ("Separate Account") as a separate account under New York insurance law on June 17, 1985. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act") under which it meets the definition of a "separate account."
The Separate Account purchases shares in mutual funds called "underlying funds." The Separate Account is divided into sections called "investment options." There is a corresponding investment option for each underlying fund in which the Separate Account invests. You do not invest directly in the underlying funds. Instead, the account value you allocate to the Separate Account purchases "units" of the Separate Account. The units are allocated to the investment option of your choice. Each time you buy units of the Separate Account, the Separate Account purchases shares of the corresponding underlying fund. The value of your units will vary. Please refer to "Determination of Investment Option Values" located in this section for more details on unit values.
The shares of the underlying funds are not offered for sale to the general public. The underlying funds are used exclusively in variable life insurance and annuity products. The underlying funds will perform differently than mutual funds offered to the general public because the underlying funds may not make the same investments or have the same charges as mutual funds available to the general public.
Phoenix does not guarantee the investment performance of the Separate Account or any of its investment options. The policy value allocated to the Separate Account depends on the investment performance of the underlying funds. As policy owner, you bear the full investment risk for all monies invested in the Separate Account.
All income, gains or losses, credited to or charged against the Separate Account reflect the Separate Account's own investment experience and not the investment experience of PHL Variable's other assets. The assets of the Separate Account may not be used to pay liabilities of PHL Variable other than those arising from the variable life insurance policies issued by the Separate Account.
REINVESTMENT AND REDEMPTION
All dividend distributions of a fund are automatically reinvested in shares of
the fund at their net asset value on the date of distribution; any capital gains
distributions of a fund are likewise reinvested at the net asset value on the
record date. Phoenix redeems fund shares at their net asset value to the extent
necessary to make payments under the policy.
SUBSTITUTION OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions for
the investments held by the Separate Account, subject to compliance with the law
as currently applicable or as subsequently changed.
If the shares of any of the portfolios of a fund should no longer be available for investment, or, if in our judgment, further investment in shares of any of the portfolios becomes inappropriate in view of the objectives of the policy, then we may substitute shares of another fund for shares already purchased, or to be purchased in the future. No substitution of fund shares held by the Separate Account may take place without prior approval of the SEC and prior notice to you. In the event of a substitution, you will be given the option of transferring the policy value from the affected investment option to another investment option without penalty.
DETERMINATION OF INVESTMENT OPTION VALUES
We establish the unit value of each investment option on the first valuation
date of that investment option. The unit value of an investment option on any
other valuation date is determined by multiplying the unit value of that
investment option on the previous valuation date by the net investment factor
for that investment option for the then current valuation period. The unit value
of each investment option on a day other than a valuation date is the unit value
on the next valuation date. Unit values are carried to six decimal places. The
unit value of each investment option on a valuation date is determined at the
end of that day.
The net investment factor for each investment option is determined by the investment performance of the assets held by the investment option during the valuation period. Each valuation will follow applicable law and accepted procedures. The net investment factor is determined by the formula:
(A) = The value of the assets in the investment option on the current valuation date, including accrued net investment income and realized and unrealized capital gains and losses, but excluding the net value of any transactions during the current valuation period.
(B) = The amount of any dividend (or, if applicable, any capital gain distribution) received by the investment option if the "ex-dividend" date for shares of the fund occurs during the current valuation period.
(C) = The value of the assets in the investment option as of the just prior valuation date, including accrued net investment income and realized and unrealized capital gains and losses, and including the net amount of any deposits and withdrawals made during the valuation period ending on that date.
(D) = Any charges for taxes on income and capital gains plus charges for changes in tax reserves for the current valuation period, per $1 of assets in the investment option. These charges will only be deducted if, in the future, the Separate Account becomes liable for them.
The number of units credited to an investment option of the Separate Account will be determined by dividing the portion of the net premium applied to that investment option by the unit value of the investment option on the payment date.
You may increase or decrease the planned premium amount (within limits) or payment frequency at any time by writing to VPMO at the address located on the first page of this SAI. We reserve the right to limit increases to such maximums as may be established from time to time. During a grace period, the minimum payment we will accept is the amount needed to prevent policy lapse.
THE POLICY
The policy and attached copy of the application are the entire contract. Only
statements in the application can be used to void the policy. The statements are
considered representations and not warranties. Only an executive officer of
Phoenix can agree to change or waive any provisions of the policy.
SUICIDE
We will stop and void the policy if the insured person commits suicide within
two years of the policy issue date. We will then return the policy value reduced
by any outstanding debt and refund any monthly deductions and other fees and
charges.
INCONTESTABILITY
We may not contest this policy or any attached rider after it has been in force
for two years during which the insured person is alive.
CHANGE OF OWNER OR BENEFICIARY
The beneficiary you name in the policy application, or subsequently change, will
receive the policy benefits upon death of the insured person. If your named
beneficiary dies before then, the named contingent beneficiary, if any, will
become the beneficiary. If there is no surviving or named beneficiary, we will
pay the death benefit to you or to your estate.
You may change the policy owner and the beneficiary as long as the policy remains in force. Changes must be made by written request, in a form satisfactory to us. A beneficiary change will take effect as of the date you sign the written notice, regardless of whether the insured person is living when we receive the notice. However, we will not be liable for any payment made or action taken before we receive your written notice.
MISSTATEMENTS
If you incorrectly state the age or gender of the insured person, we will adjust
the face amount to reflect the correct cost of insurance rate. The adjusted
death benefit will equal the coverage our most recent cost of insurance
deduction would provide based on the insured persons' correct personal
information.
SURPLUS
This nonparticipating policy does not pay dividends. You will not share in
Phoenix's surplus earnings.
Phoenix Equity Planning Corporation ("PEPCO"), an affiliate and wholly-owned subsidiary of Phoenix, as underwriter offers these contracts on a continuous basis. PEPCO is not compensated for any underwriting commissions. All underwriting commissions costs are borne directly by Phoenix. PEPCO's principal business address is 56 Prospect Street, Hartford, Connecticut 06103.
SERVICING AGENT
The Phoenix Edge Series Fund reimburses Phoenix Life Insurance Company or
various shareholder services provided by the Variable Product Operations area,
located at 31 Tech Valley Drive, East Greenbush, NY 12061. The Phoenix Edge
Series Fund is an open-end management investment company with many separate
series. Shares of the fund are not directly offered to the public, but through
variable life policies and variable annuities issued by PHL Variable, Phoenix
Life Insurance Company and Phoenix Life and Annuity Company. The functions
performed include investor inquiry support, shareholder trading, confirmation of
investment activity, quarterly statement processing and Web/Interactive Voice
Response trading. The rate of reimbursement for 2007 is 0.066% of the fund's
average daily net assets. The total administrative service fees paid by the fund
for the last three fiscal years follow:
----------------------------------------------------------
YEAR ENDED DECEMBER 31, FEE PAID
----------------------------------------------------------
2004 $2.2 Million
----------------------------------------------------------
2005 $1.9 Million
----------------------------------------------------------
2006 $1.5 Million
----------------------------------------------------------
|
OTHER SERVICE PROVIDERS
Under an Administrative and Accounting Services Agreement between PFPC, INC.
(PFPC) and the Company, PFPC provides certain services related to the Separate
Account. These services include computing investment option unit value for each
investment option of the Separate Account on each valuation date, preparing
annual financial statements for the Separate Account, filing the Separate
Account annual reports on Form N-SAR with the SEC, and maintaining certain books
and records required by law on behalf of the Separate Account. The Company pays
PFPC fees for these services. The total fee includes a flat annual charge per
investment option, an annual base fee for the company and its affiliates
utilizing the services, and license and service fees for certain software used
in providing the services. During the last three fiscal years, the Company and
insurance company affiliates of the Company
have paid PFPC the fees listed below for services provided to the Separate Account, other separate accounts of the Company, and separate accounts of insurance company affiliates of the Company.
Year Ended December 31, Fee Paid
----------------------- --------
2004 $2,059,968.19
2005 $ 548,916.20
2006 $ 537,086.62
|
Under a contract with Phoenix Life Insurance Company, Ibbotson Associates provides certain asset allocation services, including a risk tolerance questionnaire to assist the policy owner, for use in conjunction with the policy. For these services, Phoenix pays Ibbotson an annual flat fee. The fees paid for the last three fiscal years follow:
----------------------------------------------------------
YEAR ENDED DECEMBER 31, FEE PAID
----------------------------------------------------------
2004 $ 98,275
----------------------------------------------------------
2005 $ 86,000
----------------------------------------------------------
2006 $101,000
----------------------------------------------------------
|
The Company has entered into information sharing agreements with the underlying funds as required by Rule 22c-2 of the Investment Company Act of 1940. The purpose of the information sharing is to monitor, and, if necessary, warn and restrict policy owners who may be engaging in disruptive trading practices as determined by the Company or the underlying funds in accordance with their established policies.
Yield of the Phoenix Money Market Series. We calculate the yield of the Phoenix Money Market Series for a 7-day "base period" by determining the "net change in value" of a hypothetical pre-existing account. We assume the hypothetical account had an initial balance of one share of the series at the beginning of the base period. We then determine what the value of the hypothetical account would have been at the end of the 7-day base period. We assume no policy charges were deducted from the hypothetical account. The end value minus the initial value gives us the net change in value for the hypothetical account. The net change in value can then be divided by the initial value giving us the base period return (one week's return). To find the equivalent annual return we multiply the base period return by 365/7. The equivalent effective annual yield differs from the annual return because we assume all returns are reinvested in the investment option. We carry results to the nearest hundredth of one percent.
Example Calculation:
The following example of a return/yield calculation for the Phoenix Money Market Series is based on the 7-day period ending December 31, 2006:
Value of hypothetical pre-existing account with exactly one unit at the beginning of the period:................................$1.000000 Value of the same account (excluding capital changes) at the end of the 7-day period:............................................$1.000876 Calculation: Ending account value................................................$1.000876 Less beginning account value........................................$1.000000 Net change in account value.........................................$0.000876 Base period return: (adjusted change/beginning account value)...........................$0.000876 Current annual yield = return x (365/7) =..................................4.57% Effective annual yield = [(1 + return)365/7] - 1 =.........................4.67% |
The current yield and effective yield information will fluctuate. Yield and return information may not provide a suitable basis for comparison with bank deposits or other investments which are insured and/or pay a fixed yield for a stated period of time, or other investment companies, due to charges which will be deducted on the Separate Account level.
Total Return: We will usually advertise the average annual total return for an investment option calculated for one year, three years, five years, ten years and since the inception date of the underlying portfolio. We assume the reinvestment of all distributions at net asset value but do not account for the deduction of any of the daily or monthly charges made under the policy.
Performance is the compounded return for the time period indicated, net of all fund level fees. Returns for the periods greater than one year are annualized. Performance does not include the effects of product charges, including any or all of the following: issue, sales and tax charges; mortality and expense risk fees; cost of insurance charges; administrative and transfer fees; and surrender charges. If these charges were reflected in these returns, performance would be significantly lower than shown. Please obtain a personalized illustration by contacting your registered representative. The illustration will show all applicable charges deducted, including the cost of insurance.
Since investment option performance fluctuates, the policy value, when redeemed, may be worth more or less than the original cost. Withdrawals will affect the policy value and death benefit. You may obtain a copy of the most up-to-date performance numbers from your registered representative.
For detailed performance information, please visit the Phoenix web site at phoenixwm.com.
We may include information about a series' or an advisor's investment strategies and management style in advertisements, sales literature and other communications. An advisor may alter investment strategies and style in response to changing market and economic conditions. A fund may advertise all or part of a series' portfolio holdings, including holdings in specific industries. A fund may also separately illustrate the income and capital gains portions of a series' total return. A fund may also advertise performance by dividing returns into equity and debt components.
A series may compare its returns to any of a number of well-known benchmarks of market performance; including, but not limited to:
The Dow Jones Industrial Average(SM) ("DJIA")
First Boston High Yield Index
Salomon Brothers Corporate Index
Salomon Brothers Government Bond Index
Standard & Poor's 500 Index(R) ("S&P 500")
Each investment option may include its yield and total return in advertisements or communications with current or prospective policy owners. Each investment option may also include in such advertisements, its ranking or comparison to similar mutual funds by such organizations as:
Lipper Analytical Services
Morningstar, Inc.
Thomson Financial
A fund may also compare a series' performance to other investment or savings vehicles (such as certificates of deposit) and may refer to results published in such publications as:
Barron's
Business Week
Changing Times
Consumer Reports
Financial Planning
Financial Services Weekly
Forbes
Fortune
Investor's Business Daily
Money
The New York Times
Personal Investor
Registered Representative
U.S. News and World Report
The Wall Street Journal
DJIA is an unweighted index of 30 industrial "blue chip" U.S. stocks. It is the oldest continuing U.S. market index. The 30 stocks now in the DJIA are both widely-held and a major influence in their respective industries. The average is computed in such a way as to preserve its historical continuity and account for such factors as stock splits and periodic changes in the components of the index. The editors of The Wall Street Journal select the component stocks of the DJIA.
The S&P 500 is a market-value weighted index composed of 500 stocks chosen for market size, liquidity, and industry group representation. It is one of the most widely used indicators of U.S. stock market performance. The composition of the S&P 500 changes from time to time. Standard & Poor's Index Committee makes all decisions about the S&P 500.
Weighted and unweighted indexes: A market-value, or capitalization, weighted index uses relative market value (share price multiplied by the number of shares outstanding) to "weight" the influence of a stock's price on the index. Simply put, larger companies' stock prices influence the index more than smaller companies' stock prices. An unweighted index (such as the DJIA) uses stock price alone to determine the index value. A company's relative size has no bearing on its impact on the index.
The funds' annual reports, available upon request and without charge, contain a discussion of the performance of the funds and a comparison of that performance to a securities market index. You may obtain an Annual Report by contacting your registered representative or VULA at the address and telephone number on page one.
REDUCTION IN CHARGES
We may reduce or eliminate the mortality and expense risk charge, monthly
administrative charge, monthly cost of insurance charges, surrender charges or
other charges normally assessed where we expect that factors below will result
in savings of sales, underwriting, administrative or other costs.
Eligibility for the amount of these reductions will be determined by a number of factors including:
[diamond] the number of insureds,
[diamond] total premiums expected to be paid,
[diamond] total assets under management for the policyowner,
[diamond] the nature of the relationship among individual insureds,
[diamond] the purpose for which the policies are being purchased,
[diamond] where there is a preexisting relationship with us, such as being an employee of Phoenix or its affiliates and their spouses; or employees or agents who retire from Phoenix or its affiliates or Phoenix Equity Planning Corporation ("PEPCO"), or its affiliates or registered representatives of the principal underwriter and registered representatives of broker-dealers with whom PEPCO has selling agreements,
[diamond] internal transfers from other policies or contracts issued by the company or an affiliate, or making transfers of amounts held under qualified plans sponsored by the company or an affiliate, and
[diamond] other circumstances which in our opinion are rationally related to the expected reduction in expenses.
Any variations in the charge structure will be determined in a uniform manner, reflecting differences in costs of services and not unfairly discriminatory to policyholders.
We hold the assets of the Separate Account separate and apart from our General Account. We maintain records of all purchases and redemptions of fund shares.
We are subject to the provisions of the Connecticut insurance laws applicable to life insurance companies and to regulation
and supervision by the Connecticut Superintendent of Insurance. We also are subject to the applicable insurance laws of all the other states and jurisdictions in which we do insurance business.
State regulation of Phoenix includes certain limitations on investments we may make, including investments for the Separate Account and the Guaranteed Interest Account. State regulation does not include any supervision over the Separate Account's investment policies.
The financial statements of Phoenix Life Variable Universal Life Account as of December 31, 2006, and the results of its operations and the changes in its net assets for each of the periods indicated and the consolidated financial statements of Phoenix Life Insurance Company as of December 31, 2006 and 2005, and for each of the three years in the period ended December 31, 2006, included in the prospectus and this Statement of Additional Information have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The principal business address of PricewaterhouseCoopers LLP is 185 Asylum Street, Suite 2400, Hartford, CT 06103.
Kathleen A. McGah, Vice President and Counsel, Phoenix Life Insurance Company, has provided opinions on certain matters relating to federal securities and state regulations laws, respectively, in connection with the policies described in the prospectus and this Statement of Additional Information.
[LOGO OF PHOENIX]
PHOENIX
ANNUAL REPORT
PHOENIX LIFE VARIABLE
UNIVERSAL LIFE ACCOUNT
December 31, 2006
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
AIM V.I. CAPITAL AIM V.I. MID CAP ALGER AMERICAN
APPRECIATION FUND - AIM V.I. CORE EQUITY CORE EQUITY FUND - LEVERAGED ALLCAP
CLASS I FUND - CLASS I CLASS I PORTFOLIO - CLASS O
------------------- -------------------- ------------------ -------------------
Assets:
Investments at fair value $ 8,134,247 $ 4,623,374 $ 5,219,426 $ 13,373,497
Shares { 310,229} { 169,852} { 386,052} { 322,408}
Cost {$ 6,387,627} {$ 4,259,742} {$ 5,181,094} {$ 8,422,244}
------------------- -------------------- ------------------ -------------------
Total Assets $ 8,134,247 $ 4,623,374 $ 5,219,426 $ 13,373,497
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
------------------- -------------------- ------------------ -------------------
Total Net Assets $ 8,134,247 $ 4,623,374 $ 5,219,426 $ 13,373,497
=================== ==================== ================== ===================
=================== ==================== ================== ===================
Units Outstanding 7,910,657 4,236,965 4,349,214 16,097,436
=================== ==================== ================== ===================
Unit Value
Corporate Edge $ 1.13 $ 1.10 $ 1.22 $ 1.14
Estate Edge(R) $ 1.01 $ 1.09 $ 1.20 $ 0.78
Estate Strategies $ 1.10 $ - $ 1.21 $ -
Executive Benefit $ 1.13 $ 1.10 $ - $ -
Flex Edge, Flex Edge Success(R)
Individual Edge(R) and Joint Edge(R) $ 1.02 $ 1.09 $ 1.20 $ 0.80
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ - $ 1.21 $ -
The Phoenix Edge(R)--SPVL $ 1.13 $ 1.10 $ 1.22 $ 1.10
|
See Notes to Financial Statements SA - 1
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
ANCHOR SERIES TRUST
ANCHOR SERIES TRUST GOVERNMENT & ANCHOR SERIES TRUST ANCHOR SERIES TRUST
CAPITAL APPRECIATION QUALITY BOND GROWTH AND INCOME GROWTH PORTFOLIO -
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 CLASS 1
------------------- ------------------- -------------------- -------------------
Assets:
Investments at fair value $ 2,934,870 $ 425,907 $ 308,767 $ 2,437,557
Shares { 71,865} { 28,950} { 27,993} { 84,727}
Cost {$ 2,345,284} {$ 416,408} {$ 348,447} {$ 2,257,360}
------------------- ------------------- -------------------- -------------------
Total Assets $ 2,934,870 $ 425,907 $ 308,767 $ 2,437,557
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
------------------- ------------------- -------------------- -------------------
Total Net Assets $ 2,934,870 $ 425,907 $ 308,767 $ 2,437,557
=================== =================== ==================== ===================
=================== =================== ==================== ===================
Units Outstanding 29,097 9,349 7,213 24,065
=================== =================== ==================== ===================
Unit Value
RSVP Variable Life $ 107.84 $ 31.43 $ 44.14 $ 68.95
ICAP Plus Variable Life $ 100.78 $ 45.62 $ 42.72 $ 103.95
|
See Notes to Financial Statements SA - 2
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
ANCHOR SERIES
TRUST
ANCHOR SERIES TRUST ANCHOR SERIES TRUST ANCHOR SERIES TRUST STRATEGIC MULTI-
MONEY MARKET MULTI-ASSET NATURAL RESOURCES ASSET PORTFOLIO -
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 CLASS 1
-------------------- --------------------- ------------------- -----------------
Assets:
Investments at fair value $ 713,297 $ 2,966,419 $ 912,560 $ 1,676,496
Shares { 713,297} { 403,019} { 17,309} { 177,220}
Cost {$ 713,297} {$ 4,029,212} {$ 399,936} {$ 1,640,988}
-------------------- --------------------- ------------------- -----------------
Total Assets $ 713,297 $ 2,966,419 $ 912,560 $ 1,676,496
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
-------------------- --------------------- ------------------- -----------------
Total Net Assets $ 713,297 $ 2,966,419 $ 912,560 $ 1,676,496
==================== ===================== =================== =================
==================== ===================== =================== =================
Units Outstanding 30,633 68,726 10,325 36,026
==================== ===================== =================== =================
Unit Value
RSVP Variable Life $ 19.17 $ 43.33 $ 84.80 $ 48.84
ICAP Plus Variable Life $ 23.68 $ 43.16 $ 88.96 $ 46.42
|
See Notes to Financial Statements SA - 3
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
FIDELITY VIP
DWS EQUITY 500 FEDERATED FUND FOR FEDERATED HIGH CONTRAFUND(R)
INDEX FUND VIP - U.S. GOVERNMENT INCOME BOND FUND PORTFOLIO - SERVICE
CLASS A SECURITIES II II - PRIMARY SHARES CLASS
---------------- ------------------ ------------------- -------------------
Assets:
Investments at fair value $ 38,443,495 $ 35,432,221 $ 14,777,742 $ 67,672,381
Shares { 2,568,035} { 3,124,533} { 1,882,515} { 2,156,544}
Cost {$ 30,620,368} {$ 35,624,851} {$ 14,415,661} {$ 54,446,063}
---------------- ------------------ ------------------- -------------------
Total Assets $ 38,443,495 $ 35,432,221 $ 14,777,742 $ 67,672,381
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
---------------- ------------------ ------------------- -------------------
Total Net Assets $ 38,443,495 $ 35,432,221 $ 14,777,742 $ 67,672,381
================ ================== =================== ===================
================ ================== =================== ===================
Units Outstanding 27,784,671 25,745,833 10,839,429 48,160,000
================ ================== =================== ===================
Unit Value
Corporate Edge $ 1.42 $ 1.35 $ 1.55 $ 1.61
Estate Edge(R) $ 1.36 $ 1.38 $ 1.36 $ 1.35
Estate Strategies $ 1.39 $ 1.25 $ 1.51 $ 1.66
Executive Benefit $ 1.42 $ 1.27 $ - $ 1.71
Flex Edge, Flex Edge Success(R)
Individual Edge(R) and Joint Edge(R) $ 1.36 $ 1.40 $ 1.35 $ 1.37
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 1.38 $ 1.25 $ 1.40 $ 1.56
The Phoenix Edge(R)--SPVL $ 1.42 $ 1.30 $ 1.47 $ 1.70
|
See Notes to Financial Statements SA - 4
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
FIDELITY VIP GROWTH
OPPORTUNITIES FIDELITY VIP GROWTH FRANKLIN INCOME LAZARD RETIREMENT
PORTFOLIO - SERVICE PORTFOLIO - SERVICE SECURITIES FUND - SMALL CAP PORTFOLIO
CLASS CLASS CLASS 2 - SERVICE SHARES
------------------- ------------------- ------------------- -------------------
Assets:
Investments at fair value $ 5,031,976 $ 17,010,205 $ 833,289 $ 2,222,938
Shares { 277,398} { 476,210} { 48,000} { 128,420}
Cost {$ 4,144,980} {$ 13,565,165} {$ 787,250} {$ 2,045,916}
------------------- ------------------- ------------------- -------------------
Total Assets $ 5,031,976 $ 17,010,205 $ 833,289 $ 2,222,938
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
------------------- ------------------- ------------------- -------------------
Total Net Assets $ 5,031,976 $ 17,010,205 $ 833,289 $ 2,222,938
=================== =================== =================== ===================
=================== =================== =================== ===================
Units Outstanding 5,607,056 23,252,110 747,699 1,759,075
=================== =================== =================== ===================
Unit Value
Corporate Edge $ 1.18 $ 0.86 $ - $ 1.28
Estate Edge(R) $ 0.87 $ 0.71 $ 1.11 $ 1.26
Estate Strategies $ - $ 0.98 $ - $ 1.27
Executive Benefit $ - $ - $ - $ -
Flex Edge, Flex Edge Success(R)
Individual Edge(R) and Joint Edge(R) $ 0.86 $ 0.72 $ 1.11 $ 1.26
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ 0.86 $ 1.12 $ -
The Phoenix Edge(R)--SPVL $ 1.18 $ 0.86 $ 1.12 $ 1.28
|
See Notes to Financial Statements SA - 5
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
LORD ABBETT BOND- LORD ABBETT GROWTH LORD ABBETT MID- MUTUAL SHARES
DEBENTURE PORTFOLIO AND INCOME CAP VALUE PORTFOLIO SECURITIES FUND -
- CLASS VC PORTFOLIO - CLASS VC - CLASS VC CLASS 2
------------------- -------------------- ------------------- -----------------
Assets:
Investments at fair value $ 4,805,782 $ 25,175,203 $ 11,048,633 $ 42,791,159
Shares { 405,893} { 858,050} { 507,284} { 2,090,432}
Cost {$ 4,736,392} {$ 22,875,468} {$ 10,351,569} {$ 33,860,796}
------------------- -------------------- ------------------- -----------------
Total Assets $ 4,805,782 $ 25,175,203 $ 11,048,633 $ 42,791,159
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
------------------- -------------------- ------------------- -----------------
Total Net Assets $ 4,805,782 $ 25,175,203 $ 11,048,633 $ 42,791,159
=================== ==================== =================== =================
=================== ==================== =================== =================
Units Outstanding 4,309,803 20,534,768 9,130,694 22,061,057
=================== ==================== =================== =================
Unit Value
Corporate Edge $ 1.13 $ 1.24 $ 1.23 $ 1.60
Estate Edge(R) $ 1.11 $ 1.22 $ 1.21 $ 2.03
Estate Strategies $ 1.12 $ 1.23 $ 1.22 $ 1.56
Executive Benefit $ - $ - $ - $ 1.60
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.11 $ 1.22 $ 1.21 $ 2.00
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 1.12 $ 1.23 $ 1.22 $ 1.84
The Phoenix Edge(R)--SPVL $ 1.13 $ 1.24 $ 1.23 $ 1.65
|
See Notes to Financial Statements SA - 6
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
OPPENHEIMER OPPENHEIMER
NEUBERGER BERMAN NEUBERGER BERMAN CAPITAL APPRECIATION GLOBAL SECURITIES
AMT FASCIANO AMT GUARDIAN FUND/VA - SERVICE FUND/VA - SERVICE
PORTFOLIO - S CLASS PORTFOLIO - S CLASS SHARES SHARES
------------------- ------------------- -------------------- -----------------
Assets:
Investments at fair value $ 5,160 $ 107,373 $ 450,789 $ 464,999
Shares { 355} { 5,458} { 10,970} { 12,743}
Cost {$ 5,016} {$ 99,521} {$ 409,834} {$ 429,063}
------------------- ------------------- -------------------- -----------------
Total Assets $ 5,160 $ 107,373 $ 450,789 $ 464,999
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
------------------- ------------------- -------------------- -----------------
Total Net Assets $ 5,160 $ 107,373 $ 450,789 $ 464,999
=================== =================== ==================== =================
=================== =================== ==================== ==================
Units Outstanding 5,337 101,289 442,191 435,869
=================== =================== ==================== =================
Unit Value
Corporate Edge $ - $ 1.07 $ 1.02 $ -
Estate Edge(R) $ - $ 1.06 $ 1.02 $ 1.07
Estate Strategies $ - $ - $ - $ -
Executive Benefit $ - $ - $ - $ -
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 0.97 $ 1.06 $ 1.02 $ 1.07
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ - $ - $ -
The Phoenix Edge(R)--SPVL $ - $ 1.07 $ - $ -
|
See Notes to Financial Statements SA - 7
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
OPPENHEIMER MAIN
STREET SMALL CAP
FUND/VA - SERVICE PHOENIX CAPITAL PHOENIX GROWTH AND PHOENIX MID-CAP
SHARES GROWTH SERIES INCOME SERIES GROWTH SERIES
------------------- ----------------- ------------------- ------------------
Assets:
Investments at fair value $ 279,443 $ 186,428,207 $ 38,733,910 $ 37,703,727
Shares { 14,723} { 12,253,572} { 2,669,278} { 2,800,517}
Cost {$ 264,561} {$ 221,540,935} {$ 31,579,503} {$ 40,043,174}
------------------- ----------------- ------------------- ------------------
Total Assets $ 279,443 $ 186,428,207 $ 38,733,910 $ 37,703,727
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
------------------- ----------------- ------------------- ------------------
Total Net Assets $ 279,443 $ 186,428,207 $ 38,733,910 $ 37,703,727
=================== ================= =================== ==================
=================== ================= =================== ==================
Units Outstanding 279,030 50,796,953 26,367,345 27,966,980
=================== ================= =================== ==================
Unit Value
Corporate Edge $ - $ 0.94 $ 1.28 $ 0.76
Estate Edge(R) $ 1.00 $ 3.79 $ 1.44 $ 1.35
Estate Strategies $ - $ 0.92 $ 1.25 $ -
Executive Benefit $ - $ 0.88 $ - $ 0.83
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.00 $ 3.79 $ 1.51 $ 1.38
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ 4.02 $ 1.43 $ 1.29
The Phoenix Edge(R)--SPVL $ - $ 0.64 $ 1.41 $ 0.78
|
See Notes to Financial Statements SA - 8
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
PHOENIX MULTI- PHOENIX MULTI-
PHOENIX MONEY SECTOR FIXED SECTOR SHORT TERM PHOENIX STRATEGIC
MARKET SERIES INCOME SERIES BOND SERIES ALLOCATION SERIES
----------------- ---------------- ----------------- -------------------
Assets:
Investments at fair value $ 60,133,477 $ 93,566,219 $ 10,020,634 $ 75,168,623
Shares { 6,013,348} { 10,118,293} { 1,000,967} { 5,652,559}
Cost {$ 60,133,477} {$ 94,020,190} {$ 10,045,559} {$ 77,972,669}
----------------- ---------------- ----------------- -------------------
Total Assets $ 60,133,477 $ 93,566,219 $ 10,020,634 $ 75,168,623
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
----------------- ---------------- ----------------- -------------------
Total Net Assets $ 60,133,477 $ 93,566,219 $ 10,020,634 $ 75,168,623
================= ================ ================= ===================
================= ================ ================= ===================
Units Outstanding 35,146,233 26,435,159 8,836,240 16,980,223
================= ================ ================= ===================
Unit Value
Corporate Edge $ 1.16 $ 1.51 $ 1.16 $ 1.34
Estate Edge(R) $ 1.79 $ 3.58 $ 1.13 $ 4.66
Estate Strategies $ 1.09 $ 1.47 $ 1.15 $ 1.29
Executive Benefit $ 1.13 $ 1.51 $ - $ 1.34
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.79 $ 3.58 $ 1.13 $ 4.66
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 2.23 $ 4.10 $ 1.14 $ 4.97
The Phoenix Edge(R)--SPVL $ 1.15 $ 1.57 $ 1.16 $ 1.33
|
See Notes to Financial Statements SA - 9
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
PHOENIX-S&P
PHOENIX-DUFF & DYNAMIC ASSET
PHOENIX-ABERDEEN PHOENIX-ALGER SMALL PHELPS REAL ESTATE ALLOCATION SERIES:
INTERNATIONAL SERIES CAP GROWTH SERIES SECURITIES SERIES AGGRESSIVE GROWTH
-------------------- ------------------- ------------------ ------------------
Assets:
Investments at fair value $ 105,043,552 $ 15,016,222 $ 46,223,746 $ 1,165,863
Shares { 5,901,388} { 805,155} { 1,298,120} { 104,573}
Cost {$ 83,321,705} {$ 13,681,610} {$ 25,390,681} {$ 1,069,510}
-------------------- ------------------- ------------------ ------------------
Total Assets $ 105,043,552 $ 15,016,222 $ 46,223,746 $ 1,165,863
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
-------------------- ------------------- ------------------ ------------------
Total Net Assets $ 105,043,552 $ 15,016,222 $ 46,223,746 $ 1,165,863
==================== =================== ================== ==================
==================== =================== ================== ==================
Units Outstanding 30,186,745 7,108,285 8,740,707 1,042,730
==================== =================== ================== ==================
Unit Value
Corporate Edge $ 1.61 $ 2.18 $ 3.66 $ -
Estate Edge(R) $ 3.66 $ 2.11 $ 5.58 $ 1.12
Estate Strategies $ 1.85 $ 2.14 $ 3.34 $ -
Executive Benefit $ - $ 2.18 $ 3.42 $ -
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 3.66 $ 2.11 $ 5.57 $ 1.12
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 3.85 $ 2.13 $ 5.76 $ -
The Phoenix Edge(R)--SPVL $ 1.54 $ 2.18 $ 3.61 $ 1.13
|
See Notes to Financial Statements SA - 10
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
PHOENIX-S&P PHOENIX-S&P PHOENIX-S&P
DYNAMIC ASSET DYNAMIC ASSET DYNAMIC ASSET PHOENIX-SANFORD
ALLOCATION SERIES: ALLOCATION SERIES: ALLOCATION SERIES: BERNSTEIN MID-CAP
GROWTH MODERATE MODERATE GROWTH VALUE SERIES
------------------- ------------------- ------------------- -------------------
Assets:
Investments at fair value $ 3,793,949 $ 359,282 $ 962,407 $ 38,669,699
Shares { 349,126} { 34,502} { 89,765} { 2,737,887}
Cost {$ 3,572,931} {$ 360,939} {$ 915,714} {$ 31,007,244}
------------------- ------------------- ------------------- -------------------
Total Assets $ 3,793,949 $ 359,282 $ 962,407 $ 38,669,699
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
------------------- ------------------- ------------------- -------------------
Total Net Assets $ 3,793,949 $ 359,282 $ 962,407 $ 38,669,699
=================== =================== =================== ===================
=================== =================== =================== ===================
Units Outstanding 3,465,059 342,412 890,941 18,879,641
=================== =================== =================== ===================
Unit Value
Corporate Edge $ 1.10 $ - $ 1.09 $ 2.23
Estate Edge(R) $ 1.09 $ 1.05 $ 1.08 $ 1.97
Estate Strategies $ - $ - $ - $ 2.12
Executive Benefit $ - $ - $ - $ 2.24
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.09 $ 1.05 $ 1.08 $ 2.05
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ - $ - $ 2.31
The Phoenix Edge(R)--SPVL $ 1.10 $ - $ 1.09 $ 2.60
|
See Notes to Financial Statements SA - 11
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
PIMCO VIT
COMMODITY
PHOENIX-SANFORD PHOENIX-VAN PHOENIX-VAN REALRETURN STRATEGY
BERNSTEIN SMALL- KAMPEN COMSTOCK KAMPEN EQUITY 500 PORTFOLIO - ADVISOR
CAP VALUE SERIES SERIES INDEX SERIES CLASS
---------------- ---------------- ----------------- -------------------
Assets:
Investments at fair value $ 24,109,139 $ 41,459,860 $ 55,894,134 $ 344,236
Shares { 1,415,241} { 3,023,075} { 4,379,262} { 30,463}
---------------- ---------------- ----------------- -------------------
Cost {$ 19,923,412} {$ 38,481,670} {$ 55,168,867} {$ 366,075}
---------------- ---------------- ----------------- -------------------
Total Assets $ 24,109,139 $ 41,459,860 $ 55,894,134 $ 344,236
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
---------------- ---------------- ----------------- -------------------
Total Net Assets $ 24,109,139 $ 41,459,860 $ 55,894,134 $ 344,236
================ ================ ================= ===================
================ ================ ================= ===================
Units Outstanding 10,242,002 22,954,480 37,558,202 360,513
================ ================ ================= ===================
Unit Value
Corporate Edge $ 2.19 $ 1.19 $ 1.08 $ -
Estate Edge(R) $ 2.24 $ 1.87 $ 1.52 $ 0.95
Estate Strategies $ 2.11 $ 1.24 $ 1.17 $ -
Executive Benefit $ 2.16 $ 1.24 $ 1.18 $ -
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 2.42 $ 1.92 $ 1.52 $ 0.95
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 2.10 $ 1.86 $ 1.48 $ -
The Phoenix Edge(R)--SPVL $ 2.16 $ 1.19 $ 1.14 $ -
|
See Notes to Financial Statements SA - 12
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
RYDEX VARIABLE
PIMCO VIT REAL PIMCO VIT TOTAL TRUST INVERSE
RETURN PORTFOLIO - RETURN PORTFOLIO - GOVERNMENT LONG RYDEX VARIABLE
ADVISOR CLASS ADVISOR CLASS BOND FUND TRUST NOVA FUND
------------------ ------------------ ---------------- ----------------
Assets:
Investments at fair value $ 166,134 $ 582,300 $ 302,479 $ 499,967
Shares { 13,925} { 57,539} { 14,035} { 49,550}
Cost {$ 172,881} {$ 582,132} {$ 343,475} {$ 332,848}
------------------ ------------------ ---------------- ----------------
Total Assets $ 166,134 $ 582,300 $ 302,479 $ 499,967
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
------------------ ------------------ ---------------- ----------------
Total Net Assets $ 166,134 $ 582,300 $ 302,479 $ 499,967
================== ================== ================ ================
================== ================== ================ ================
Units Outstanding 162,839 561,852 318,712 295,602
================== ================== ================ ================
Unit Value
Corporate Edge $ 1.02 $ - $ 0.97 $ 1.74
Estate Edge(R) $ 1.02 $ 1.04 $ 0.94 $ 1.69
Estate Strategies $ - $ - $ - $ -
Executive Benefit $ - $ - $ - $ -
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.02 $ 1.04 $ 0.94 $ 1.69
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ - $ - $ -
The Phoenix Edge(R)--SPVL $ 1.02 $ - $ 0.97 $ -
|
See Notes to Financial Statements SA - 13
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
TEMPLETON
RYDEX VARIABLE DEVELOPING MARKETS TEMPLETON FOREIGN TEMPLETON GLOBAL
TRUST SECTOR SECURITIES FUND - SECURITIES FUND - ASSET ALLOCATION
ROTATION FUND CLASS 2 CLASS 2 FUND - CLASS 2
-------------- ------------------ ----------------- ----------------
Assets:
Investments at fair value $ 1,667,775 $ 4,576,004 $ 25,791,077 $ 1,115,004
Shares { 123,814} { 331,834} { 1,377,728} { 51,265}
Cost {$ 1,402,574} {$ 2,991,660} {$ 18,454,522} {$ 981,043}
-------------- ------------------ ----------------- ----------------
Total Assets $ 1,667,775 $ 4,576,004 $ 25,791,077 $ 1,115,004
Liabilities:
Payable to Phoenix Life
Insurance Company $ - $ - $ - $ -
-------------- ------------------ ----------------- ----------------
Total Net Assets $ 1,667,775 $ 4,576,004 $ 25,791,077 $ 1,115,004
============== ================== ================= ================
============== ================== ================= ================
Units Outstanding 1,053,409 1,547,869 15,821,267 577,698
============== ================== ================= ================
Unit Value
Corporate Edge $ 1.63 $ 2.91 $ 1.51 $ 1.76
Estate Edge(R) $ 1.58 $ 2.96 $ 1.57 $ 1.95
Estate Strategies $ - $ - $ 1.54 $ -
Executive Benefit $ - $ - $ 1.57 $ -
Flex Edge, Flex Edge
Success(R)
Individual Edge(R) and
Joint Edge(R) $ 1.58 $ 2.96 $ 1.68 $ 1.91
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ - $ 2.92 $ 1.67 $ -
The Phoenix Edge(R)--SPVL $ 1.63 $ 2.91 $ 1.51 $ 1.65
|
See Notes to Financial Statements SA - 14
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
TEMPLETON GROWTH VAN KAMPEN UIF WANGER
SECURITIES FUND - EQUITY AND INCOME WANGER INTERNATIONAL SMALL
CLASS 2 PORTFOLIO - CLASS II INTERNATIONAL SELECT CAP
----------------- -------------------- -------------------- -------------------
Assets:
Investments at fair value $ 23,091,136 $ 241,702 $ 14,342,614 $ 68,022,181
Shares { 1,449,538} { 16,233} { 538,791} { 1,628,493}
Cost {$ 16,401,407} {$ 229,068} {$ 8,288,283} {$ 37,061,878}
----------------- -------------------- -------------------- -------------------
Total Assets $ 23,091,136 $ 241,702 $ 14,342,614 $ 68,022,181
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ - $ - $ -
----------------- -------------------- -------------------- -------------------
Total Net Assets $ 23,091,136 $ 241,702 $ 14,342,614 $ 68,022,181
================= ==================== ==================== ===================
================= ==================== ==================== ===================
Units Outstanding 11,184,006 224,305 5,240,451 18,094,108
================= ==================== ==================== ===================
Unit Value
Corporate Edge $ 1.64 $ 1.08 $ 1.73 $ 2.10
Estate Edge(R) $ 2.15 $ 1.08 $ 2.61 $ 3.89
Estate Strategies $ 1.61 $ - $ 2.00 $ 2.33
Executive Benefit $ - $ - $ - $ 2.38
Flex Edge, Flex Edge Success(R)
Individual Edge(R) and Joint Edge(R) $ 2.11 $ 1.08 $ 3.05 $ 3.89
Phoenix Express VUL(SM) $ - $ - $ - $ -
The Phoenix Edge(R) $ 1.60 $ - $ 1.34 $ 4.01
The Phoenix Edge(R)--SPVL $ 1.63 $ 1.08 $ 1.79 $ 2.17
|
See Notes to Financial Statements SA - 15
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(CONTINUED)
WANGER U.S.
WANGER SELECT SMALLER COMPANIES
---------------- -----------------
Assets:
Investments at fair value $ 16,533,158 $ 85,779,337
Shares { 632,242} { 2,359,166}
Cost {$ 10,991,413} {$ 49,725,333}
---------------- -----------------
Total Assets $ 16,533,158 $ 85,779,337
Liabilities:
Payable to Phoenix Life Insurance Company $ - $ -
---------------- -----------------
Total Net Assets $ 16,533,158 $ 85,779,337
================ =================
================ =================
Units Outstanding 6,289,319 29,901,301
================ =================
Unit Value
Corporate Edge $ 2.07 $ 2.00
Estate Edge(R) $ 2.36 $ 2.92
Estate Strategies $ 2.03 $ 1.68
Executive Benefit $ 2.16 $ 1.72
Flex Edge, Flex Edge Success(R)
Individual Edge(R) and Joint Edge(R) $ 2.98 $ 2.92
Phoenix Express VUL(SM) $ - $ -
The Phoenix Edge(R) $ 2.02 $ 2.96
The Phoenix Edge(R)--SPVL $ 2.08 $ 1.99
|
See Notes to Financial Statements SA - 16
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
AIM V.I. CAPITAL AIM V.I. MID CAP ALGER AMERICAN
APPRECIATION FUND - AIM V.I. CORE EQUITY CORE EQUITY FUND - LEVERAGED ALLCAP
CLASS I FUND - CLASS I CLASS I PORTFOLIO - CLASS O
------------------- -------------------- ----------------- -------------------
Income:
Dividends $ 4,595 $ 26,024 $ 48,874 $ -
Expenses:
Mortality and expense fees 52,743 18,457 36,126 89,266
Administrative fees - - - -
------------------- -------------------- ----------------- -------------------
Net investment income (loss) (48,148) 7,567 12,748 (89,266)
------------------- -------------------- ----------------- -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares (1,464) 26,293 23,704 501,029
Realized gain distributions - - 520,749 -
------------------- -------------------- ----------------- -------------------
Realized gain (loss) (1,464) 26,293 544,453 501,029
------------------- -------------------- ----------------- -------------------
Change in unrealized appreciation
(depreciation) during the year 455,631 363,632 (43,030) 1,810,351
------------------- -------------------- ----------------- -------------------
Net increase (decrease) in net
assets from operations $ 406,019 $ 397,492 $ 514,171 $ 2,222,114
=================== ==================== ================= ===================
|
ANCHOR SERIES TRUST
ANCHOR SERIES TRUST GOVERNMENT & ANCHOR SERIES TRUST ANCHOR SERIES TRUST
CAPITAL APPRECIATION QUALITY BOND GROWTH AND INCOME GROWTH PORTFOLIO -
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 CLASS 1
-------------------- -------------------- ------------------- --------------------
Income:
Dividends $ 4,022 $ 15,407 $ 1,594 $ 14,638
Expenses:
Mortality and expense fees 7,875 1,109 824 6,728
Administrative fees 5,294 772 503 4,201
------------------- --------------------- ----------------- --------------------
Net investment income (loss) (9,147) 13,526 267 3,709
------------------- --------------------- ----------------- --------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 53,121 196 (64) 21,525
Realized gain distributions 6,120 - 30,653 216,040
------------------- --------------------- ----------------- --------------------
Realized gain (loss) 59,241 196 30,589 237,565
------------------- --------------------- ----------------- --------------------
Change in unrealized appreciation
(depreciation) during the year 246,631 (1,977) (1,210) 46,260
------------------- --------------------- ----------------- --------------------
Net increase (decrease) in net assets
from operations $ 296,725 $ 11,745 $ 29,646 $ 287,534
=================== ===================== ================= ====================
|
See Notes to Financial Statements SA - 17
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
ANCHOR SERIES TRUST
ANCHOR SERIES TRUST ANCHOR SERIES TRUST ANCHOR SERIES TRUST STRATEGIC MULTI-
MONEY MARKET MULTI-ASSET NATURAL RESOURCES ASSET PORTFOLIO -
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1 CLASS 1
-------------------- -------------------- -------------------- -------------------
Income:
Dividends $ 22,717 $ 48,047 $ 6,401 $ 25,278
Expenses:
Mortality and expense fees 1,632 7,829 2,775 4,815
Administrative fees 935 5,122 1,511 2,835
-------------------- -------------------- -------------------- -------------------
Net investment income (loss) 20,150 35,096 2,115 17,628
-------------------- -------------------- -------------------- -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares - (35,846) 22,356 (318)
Realized gain distributions - 248,305 26,460 9,027
-------------------- ------------------- ------------------- ------------------
Realized gain (loss) - 212,459 48,816 8,709
-------------------- ------------------- ------------------- ------------------
Change in unrealized appreciation
(depreciation) during the year - (44,891) 134,892 145,971
-------------------- ------------------- ------------------- ------------------
Net increase (decrease) in net assets
from operations $ 20,150 $ 202,664 $ 185,823 $ 172,308
==================== =================== =================== ==================
|
FIDELITY VIP
DWS EQUITY 500 FEDERATED FUND FOR FEDERATED HIGH CONTRAFUND(R)
INDEX FUND VIP - U.S. GOVERNMENT INCOME BOND FUND PORTFOLIO - SERVICE
CLASS A SECURITIES II II - PRIMARY SHARES CLASS
---------------- ------------------ ------------------- -------------------
Income:
Dividends $ 352,747 $ 1,354,277 $ 883,242 $ 696,069
Expenses:
Mortality and expense fees 165,013 226,039 88,041 412,899
Administrative fees - - - -
---------------- ------------------ ------------------- -------------------
Net investment income (loss) 187,734 1,128,238 795,201 283,170
---------------- ------------------ ------------------- -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 75,481 44,660 88,675 973,223
Realized gain distributions - - - 5,331,278
---------------- ------------------ ------------------- -------------------
Realized gain (loss) 75,481 44,660 88,675 6,304,501
---------------- ------------------ ------------------- -------------------
Change in unrealized appreciation
(depreciation) during the year 4,128,019 4,034 292,392 (375,622)
---------------- ------------------ ------------------- -------------------
Net increase (decrease) in net assets
from operations $ 4,391,234 $ 1,176,932 $ 1,176,268 $ 6,212,049
================ ================== =================== ===================
|
See Notes to Financial Statements SA - 18
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
FIDELITY VIP GROWTH
OPPORTUNITIES FIDELITY VIP GROWTH FRANKLIN INCOME LAZARD RETIREMENT
PORTFOLIO - SERVICE PORTFOLIO - SERVICE SECURITIES FUND - SMALL CAP PORTFOLIO
CLASS CLASS CLASS 2 - SERVICE SHARES
-------------------- ------------------- ----------------- -------------------
Income:
Dividends $ 22,127 $ 46,751 $ 1,526 $ -
Expenses:
Mortality and expense fees 28,057 119,665 1,762 15,646
Administrative fees - - - -
-------------------- ------------------- ---------------- -------------------
Net investment income (loss) (5,930) (72,914) (236) (15,646)
-------------------- ------------------- ---------------- -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 6,434 138,606 815 18,725
Realized gain distributions - - 204 167,672
-------------------- ------------------- ---------------- -------------------
Realized gain (loss) 6,434 138,606 1,019 186,397
-------------------- ------------------- ---------------- -------------------
Change in unrealized appreciation
(depreciation) during the year 242,505 907,750 46,039 127,892
-------------------- ------------------- ---------------- -------------------
Net increase (decrease) in net assets
from operations $ 243,009 $ 973,442 $ 46,822 $ 298,643
==================== =================== ================ ===================
LORD ABBETT BOND- LORD ABBETT GROWTH LORD ABBETT MID- MUTUAL SHARES
DEBENTURE PORTFOLIO AND INCOME CAP VALUE PORTFOLIO SECURITIES FUND -
- CLASS VC PORTFOLIO - CLASS VC - CLASS VC CLASS 2
-------------------- -------------------- ------------------- --------------------
Income:
Dividends $ 274,855 $ 298,194 $ 53,121 $ 474,523
Expenses:
Mortality and expense fees 27,071 160,358 75,213 252,676
Administrative fees - - - -
-------------------- -------------------- ------------------- --------------------
Net investment income (loss) 247,784 137,836 (22,092) 221,847
-------------------- -------------------- ------------------- --------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 12,220 43,482 26,157 37,167
Realized gain distributions - 799,067 827,692 1,208,487
-------------------- -------------------- ------------------- --------------------
Realized gain (loss) 12,220 842,549 853,849 1,245,654
-------------------- -------------------- ------------------- --------------------
Change in unrealized appreciation
(depreciation) during the year 119,206 2,457,372 301,016 4,565,742
-------------------- -------------------- ------------------- --------------------
Net increase (decrease) in net assets
from operations $ 379,210 $ 3,437,757 $ 1,132,773 $ 6,033,243
==================== ==================== =================== ====================
|
See Notes to Financial Statements SA - 19
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
OPPENHEIMER OPPENHEIMER
NEUBERGER BERMAN NEUBERGER BERMAN CAPITAL APPRECIATION GLOBAL SECURITIES
AMT FASCIANO AMT GUARDIAN FUND/VA - SERVICE FUND/VA - SERVICE
PORTFOLIO - S CLASS PORTFOLIO - S CLASS SHARES SHARES
------------------- ------------------- ------------------- ------------------
Income:
Dividends $ - $ 588 $ - $ -
Expenses:
Mortality and expense fees 16 284 1,204 959
Administrative fees - - - -
------------------- ------------------- ------------------- ------------------
Net investment income (loss) (16) 304 (1,204) (959)
------------------- ------------------- ------------------- ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares (2) 4 88 499
Realized gain distributions 125 - - -
------------------- ------------------- ------------------- ------------------
Realized gain (loss) 123 4 88 499
------------------- ------------------- ------------------- ------------------
Change in unrealized appreciation
(depreciation) during the year 144 7,852 40,955 35,936
------------------- ------------------- ------------------- ------------------
Net increase (decrease) in net assets
from operations $ 251 $ 8,160 $ 39,839 $ 35,476
=================== =================== =================== ==================
OPPENHEIMER MAIN
STREET SMALL CAP
FUND/VA - SERVICE PHOENIX CAPITAL PHOENIX GROWTH AND PHOENIX MID-CAP
SHARES GROWTH SERIES INCOME SERIES GROWTH SERIES
----------------- ------------------ ------------------- ------------------
Income:
Dividends $ - $ 367,458 $ 389,853 $ -
Expenses:
Mortality and expense fees 545 1,394,506 252,553 170,396
Administrative fees - - - -
----------------- ------------------ ------------------- ------------------
Net investment income (loss) (545) (1,027,048) 137,300 (170,396)
----------------- ------------------ ------------------- ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 25 (5,630,460) 188,298 (402,923)
Realized gain distributions - - - -
----------------- ------------------ ------------------- ------------------
Realized gain (loss) 25 (5,630,460) 188,298 (402,923)
----------------- ------------------ ------------------- ------------------
Change in unrealized appreciation
(depreciation) during the year 14,882 10,077,759 4,979,906 982,815
----------------- ------------------ ------------------- ------------------
Net increase (decrease) in net assets
from operations $ 14,362 $ 3,420,251 $ 5,305,504 $ 409,496
================= ================== =================== ==================
|
See Notes to Financial Statements SA - 20
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
PHOENIX MULTI- PHOENIX MULTI-
PHOENIX MONEY SECTOR FIXED SECTOR SHORT TERM PHOENIX STRATEGIC
MARKET SERIES INCOME SERIES BOND SERIES ALLOCATION SERIES
------------------ ---------------- ------------------ -------------------
Income:
Dividends $ 2,635,259 $ 4,927,521 $ 459,281 $ 1,932,678
Expenses:
Mortality and expense fees 439,468 603,399 67,747 575,871
Administrative fees - - - -
------------------ ---------------- ------------------ -------------------
Net investment income (loss) 2,195,791 4,324,122 391,534 1,356,807
------------------ ---------------- ------------------ -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares - 50,571 8,924 365,145
Realized gain distributions - - - 9,056,670
------------------ ---------------- ------------------ -------------------
Realized gain (loss) - 50,571 8,924 9,421,815
------------------ ---------------- ------------------ -------------------
Change in unrealized appreciation
(depreciation) during the year - 969,384 82,367 (2,430,779)
------------------ ---------------- ------------------ -------------------
Net increase (decrease) in net assets
from operations $ 2,195,791 $ 5,344,077 $ 482,825 $ 8,347,843
================== ================ ================== ===================
PHOENIX-S&P
PHOENIX-DUFF & DYNAMIC ASSET
PHOENIX-ABERDEEN PHOENIX-ALGER SMALL PHELPS REAL ESTATE ALLOCATION SERIES:
INTERNATIONAL SERIES CAP GROWTH SERIES SECURITIES SERIES AGGRESSIVE GROWTH
-------------------- ------------------- ------------------ ------------------
Income:
Dividends $ 1,859,364 $ 1,613 $ 534,474 $ 11,447
Expenses:
Mortality and expense fees 651,188 46,753 298,284 4,085
Administrative fees - - - -
------------------- ------------------- ------------------ ------------------
Net investment income (loss) 1,208,176 (45,140) 236,190 7,362
------------------- ------------------- ------------------ ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 684,999 34,990 651,402 738
Realized gain distributions - - 3,261,662 -
------------------- ------------------- ------------------ ------------------
Realized gain (loss) 684,999 34,990 3,913,064 738
------------------- ------------------- ------------------ ------------------
Change in unrealized appreciation
(depreciation) during the year 18,100,026 1,015,007 8,418,256 96,353
------------------- ------------------- ------------------ ------------------
Net increase (decrease) in net assets
from operations $ 19,993,201 $ 1,004,857 $ 12,567,510 $ 104,453
=================== =================== ================== ==================
|
See Notes to Financial Statements SA - 21
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
PHOENIX-S&P PHOENIX-S&P PHOENIX-S&P
DYNAMIC ASSET DYNAMIC ASSET DYNAMIC ASSET PHOENIX-SANFORD
ALLOCATION SERIES: ALLOCATION SERIES: ALLOCATION SERIES: BERNSTEIN MID-CAP
GROWTH MODERATE MODERATE GROWTH VALUE SERIES
------------------ ------------------ ------------------ ------------------
Income:
Dividends $ 45,048 $ 5,306 $ 12,186 $ 153,632
Expenses:
Mortality and expense fees 8,101 365 2,911 269,435
Administrative fees - - - -
------------------ ----------------- ----------------- ------------------
Net investment income (loss) 36,947 4,941 9,275 (115,803)
------------------ ----------------- ----------------- ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 2,108 51 348 123,568
Realized gain distributions - - 1,678 4,652,587
------------------ ----------------- ----------------- ------------------
Realized gain (loss) 2,108 51 2,026 4,776,155
------------------ ----------------- ----------------- ------------------
Change in unrealized appreciation
(depreciation) during the year 221,019 (1,657) 46,692 182,043
------------------ ----------------- ----------------- ------------------
Net increase (decrease) in net assets
from operations $ 260,074 $ 3,335 $ 57,993 $ 4,842,395
================== ================= ================= ==================
PIMCO VIT
COMMODITY
PHOENIX-SANFORD PHOENIX-VAN PHOENIX-VAN REALRETURN STRATEGY
BERNSTEIN SMALL- KAMPEN COMSTOCK KAMPEN EQUITY 500 PORTFOLIO - ADVISOR
CAP VALUE SERIES SERIES INDEX SERIES CLASS
------------------ ----------------- ------------------ -------------------
Income:
Dividends $ 50,021 $ 669,142 $ 568,640 $ 9,744
Expenses:
Mortality and expense fees 166,155 282,000 320,838 918
Administrative fees - - - -
------------------ ----------------- ------------------ ------------------
Net investment income (loss) (116,134) 387,142 247,802 8,826
------------------ ----------------- ------------------ ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 79,321 646,856 (93,181) (858)
Realized gain distributions 3,453,727 6,633,891 - 1,119
------------------ ----------------- ------------------ ------------------
Realized gain (loss) 3,533,048 7,280,747 (93,181) 261
------------------ ----------------- ------------------ ------------------
Change in unrealized appreciation
(depreciation) during the year (68,174) (453,119) 5,304,657 (21,838)
------------------ ----------------- ------------------ ------------------
Net increase (decrease) in net assets
from operations $ 3,348,740 $ 7,214,770 $ 5,459,278 $ (12,751)
================== ================= ================== ==================
|
See Notes to Financial Statements SA - 22
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
RYDEX VARIABLE
PIMCO VIT REAL PIMCO VIT TOTAL TRUST INVERSE
RETURN PORTFOLIO - RETURN PORTFOLIO - GOVERNMENT LONG RYDEX VARIABLE
ADVISOR CLASS ADVISOR CLASS BOND FUND TRUST NOVA FUND
------------------ ------------------ ---------------- -----------------
Income:
Dividends $ 2,318 $ 8,313 $ 12,617 $ 5,903
Expenses:
Mortality and expense fees 286 1,444 2,321 3,879
Administrative fees - - - -
------------------- ------------------ ---------------- -----------------
Net investment income (loss) 2,032 6,869 10,296 2,024
------------------- ------------------ ---------------- -----------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 149 (4) (17,672) 15,773
Realized gain distributions 4,404 3,049 - -
------------------- ------------------ ---------------- -----------------
Realized gain (loss) 4,553 3,045 (17,672) 15,773
------------------- ------------------ ---------------- -----------------
Change in unrealized appreciation
(depreciation) during the year (6,747) 168 32,924 64,920
------------------- ------------------ ---------------- -----------------
Net increase (decrease) in net assets
from operations $ (162) $ 10,082 $ 25,548 $ 82,717
=================== ================== ================ =================
TEMPLETON
RYDEX VARIABLE DEVELOPING MARKETS TEMPLETON FOREIGN TEMPLETON GLOBAL
TRUST SECTOR SECURITIES FUND - SECURITIES FUND - ASSET ALLOCATION
ROTATION FUND CLASS 2 CLASS 2 FUND - CLASS 2
---------------- -------------------- ------------------ -----------------
Income:
Dividends $ - $ 31,944 $ 290,988 $ 73,121
Expenses:
Mortality and expense fees 13,665 23,442 168,480 8,080
Administrative fees - - - -
---------------- -------------------- ------------------- -----------------
Net investment income (loss) (13,665) 8,502 122,508 65,041
---------------- -------------------- ------------------- -----------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 105,971 33,404 152,283 4,466
Realized gain distributions 79,258 - - 65,367
---------------- -------------------- ------------------- -----------------
Realized gain (loss) 185,229 33,404 152,283 69,833
---------------- -------------------- ------------------- -----------------
Change in unrealized appreciation
(depreciation) during the year 11,887 754,921 4,160,356 55,803
---------------- -------------------- ------------------- -----------------
Net increase (decrease) in net assets
from operations $ 183,451 $ 796,827 $ 4,435,147 $ 190,677
================ ==================== =================== =================
|
See Notes to Financial Statements SA - 23
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 2006
(CONTINUED)
TEMPLETON GROWTH VAN KAMPEN UIF WANGER
SECURITIES FUND - EQUITY AND INCOME WANGER INTERNATIONAL SMALL
CLASS 2 PORTFOLIO - CLASS II INTERNATIONAL SELECT CAP
----------------- -------------------- -------------------- -------------------
Income:
Dividends $ 275,122 $ 451 $ 35,553 $ 334,334
Expenses:
Mortality and expense fees 152,233 396 94,019 462,863
Administrative fees - - - -
----------------- -------------------- -------------------- -------------------
Net investment income (loss) 122,889 55 (58,466) (128,529)
----------------- -------------------- -------------------- -------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 260,868 5 161,504 1,780,194
Realized gain distributions 766,471 857 - -
----------------- -------------------- -------------------- -------------------
Realized gain (loss) 1,027,339 862 161,504 1,780,194
----------------- -------------------- -------------------- -------------------
Change in unrealized appreciation
(depreciation) during the year 2,905,651 12,634 3,717,461 17,095,069
----------------- -------------------- -------------------- -------------------
Net increase (decrease) in net assets
from operations $ 4,055,879 $ 13,551 $ 3,820,499 $ 18,746,734
================= ==================== ==================== ===================
WANGER U.S.
WANGER SELECT SMALLER COMPANIES
----------------- -------------------
Income:
Dividends $ 53,766 $ 203,145
Expenses:
Mortality and expense fees 100,349 666,396
Administrative fees - -
----------------- ------------------
Net investment income (loss) (46,583) (463,251)
----------------- ------------------
Realized gains (losses) on investments
Realized gain (loss) on sale of
fund shares 13,584 2,345,210
Realized gain distributions 446,411 2,865,552
----------------- ------------------
Realized gain (loss) 459,995 5,210,762
----------------- ------------------
Change in unrealized appreciation
(depreciation) during the year 2,110,627 1,237,629
----------------- ------------------
Net increase (decrease) in net assets
from operations $ 2,524,039 $ 5,985,140
================= ==================
|
See Notes to Financial Statements SA - 24
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
AIM V.I. CAPITAL APPRECIATION AIM V.I. CORE EQUITY
FUND - CLASS I FUND - CLASS I
-------------------------------- ------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (48,148) $ (39,019) $ 7,567 $ -
Realized gains (losses) (1,464) 21,173 26,293 -
Unrealized appreciation (depreciation)
during the year 455,631 581,532 363,632 -
------------- ------------- ------------ --------------
Net increase (decrease) in net assets
from operations 406,019 563,686 397,492 -
------------- ------------- ------------ --------------
Contract transactions:
Payments received from
contract owners 1,319,782 1,152,583 802,399 -
Transfers between Investment Options
(including Guaranteed Interest Account), net 51,086 1,104,539 4,541,891 -
Transfers for contract
benefits and terminations (421,632) (397,916) (960,964) -
Contract maintenance charges (483,070) (394,412) (157,444) -
------------- ------------- ------------ --------------
Net increase (decrease) in net assets resulting
from contract transactions 466,166 1,464,794 4,225,882 -
------------- ------------- ------------ --------------
Total increase (decrease) in net assets 872,185 2,028,480 4,623,374 -
Net assets at beginning of period 7,262,062 5,233,582 - -
------------- ------------- ------------ --------------
Net assets at end of period $ 8,134,247 $ 7,262,062 $ 4,623,374 $ -
============= ============= ============ ==============
|
See Notes to Financial Statements SA - 25
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
AIM V.I. MID CAP CORE EQUITY ALGER AMERICAN LEVERAGED ALLCAP
FUND - CLASS I PORTFOLIO - CLASS O
------------------------------ ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 12,748 $ (8,793) $ (89,266) $ (75,059)
Realized gains (losses) 544,453 170,068 501,029 (9,161)
Unrealized appreciation
(depreciation) during the year (43,030) 192,130 1,810,351 1,526,372
------------ ------------ ------------- -------------
Net increase (decrease) in net assets
from operations 514,171 353,405 2,222,114 1,442,152
------------ ------------ ------------- -------------
Contract transactions:
Payments received from
contract owners 527,263 663,224 1,769,322 1,730,601
Transfers between Investment
Options (including Guaranteed
Interest Account), net (329,920) 495,102 (784,319) (1,452,019)
Transfers for contract
benefits and terminations (388,835) (626,667) (2,007,276) (669,984)
Contract maintenance charges (239,644) (263,207) (682,199) (730,961)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions (431,136) 268,452 (1,704,472) (1,122,363)
------------ ------------ ------------- -------------
Total increase (decrease) in net
assets 83,035 621,857 517,642 319,789
Net assets at beginning of period 5,136,391 4,514,534 12,855,855 12,536,066
------------ ------------ ------------- -------------
Net assets at end of period $ 5,219,426 $ 5,136,391 $ 13,373,497 $ 12,855,855
============ ============ ============= =============
|
See Notes to Financial Statements SA - 26
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
ANCHOR SERIES TRUST CAPITAL APPRECIATION ANCHOR SERIES TRUST GOVERNMENT & QUALITY
PORTFOLIO - CLASS 1 BOND PORTFOLIO - CLASS 1
------------------------------------------ ------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (9,147) $ (4,345) $ 13,526 $ 14,479
Realized gains (losses) 59,241 13,426 196 17,978
Unrealized appreciation
(depreciation) during the year 246,631 298,518 (1,977) (20,091)
------------ ------------ ---------- ----------
Net increase (decrease) in net assets
from operations 296,725 307,599 11,745 12,366
------------ ------------ ---------- ----------
Contract transactions:
Payments received from
contract owners 1,699 2,141 429 503
Transfers between Investment
Options (including Guaranteed
Interest Account), net (55,467) (16,401) 1,335 (33,017)
Transfers for contract
benefits and terminations (270,788) (246,431) (900) (303,573)
Contract maintenance charges (24,917) (25,858) (8,726) (8,487)
------------ ------------ ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions (349,473) (286,549) (7,862) (344,574)
------------ ------------ ---------- ----------
Total increase (decrease) in
net assets (52,748) 21,050 3,883 (332,208)
Net assets at beginning of period 2,987,618 2,966,568 422,024 754,232
------------ ------------ ---------- ----------
Net assets at end of period $ 2,934,870 $ 2,987,618 $ 425,907 $ 422,024
============ ============ ========== ==========
|
See Notes to Financial Statements SA - 27
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
ANCHOR SERIES TRUST GROWTH AND INCOME ANCHOR SERIES TRUST GROWTH
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1
-------------------------------------- --------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 267 $ 1,593 $ 3,709 $ 11,496
Realized gains (losses) 30,589 (3,267) 237,565 103,156
Unrealized appreciation
(depreciation) during the year (1,210) 14,046 46,260 43,578
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
from operations 29,646 12,372 287,534 158,230
---------- ---------- ------------ ------------
Contract transactions:
Payments received from
contract owners 428 503 694 1,020
Transfers between Investment Options
(including Guaranteed Interest
Account), net 7,256 (199) (54,835) (23,853)
Transfers for contract
benefits and terminations (155) (90,609) (196,761) (292,051)
Contract maintenance charges (3,883) (4,157) (23,676) (26,035)
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
resulting from contract transactions 3,646 (94,462) (274,578) (340,919)
---------- ---------- ------------ ------------
Total increase (decrease) in
net assets 33,292 (82,090) 12,956 (182,689)
Net assets at beginning of period 275,475 357,565 2,424,601 2,607,290
---------- ---------- ------------ ------------
Net assets at end of period $ 308,767 $ 275,475 $ 2,437,557 $ 2,424,601
========== ========== ============ ============
|
See Notes to Financial Statements SA - 28
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
ANCHOR SERIES TRUST MONEY MARKET ANCHOR SERIES TRUST MULTI-ASSET
PORTFOLIO - CLASS 1 PORTFOLIO - CLASS 1
---------------------------------- ----------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 20,150 $ 9,566 $ 35,096 $ 40,903
Realized gains (losses) - - 212,459 62,943
Unrealized appreciation
(depreciation) during the year - - (44,891) (10,225)
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
from operations 20,150 9,566 202,664 93,621
---------- ---------- ------------ ------------
Contract transactions:
Payments received from
contract owners 20,773 363 11,217 5,043
Transfers between Investment Options
(including Guaranteed Interest
Account), net 160,247 (16,938) - -
Transfers for contract
benefits and terminations - (18) (91,072) (132,526)
Contract maintenance charges (15,299) (14,522) (20,610) (19,460)
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
resulting from contract transactions 165,721 (31,115) (100,465) (146,943)
---------- ---------- ------------ ------------
Total increase (decrease) in net
assets 185,871 (21,549) 102,199 (53,322)
Net assets at beginning of period 527,426 548,975 2,864,220 2,917,542
---------- ---------- ------------ ------------
Net assets at end of period $ 713,297 $ 527,426 $ 2,966,419 $ 2,864,220
========== ========== ============ ============
|
See Notes to Financial Statements SA - 29
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
ANCHOR SERIES TRUST NATURAL RESOURCES ANCHOR SERIES TRUST STRATEGIC
PORTFOLIO - CLASS 1 MULTI-ASSET PORTFOLIO - CLASS 1
--------------------------------------- -------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 2,115 $ 214 $ 17,628 $ 3,959
Realized gains (losses) 48,816 52,272 8,709 (18,649)
Unrealized appreciation (depreciation)
during the year 134,892 188,271 145,971 148,244
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
from operations 185,823 240,757 172,308 133,554
---------- ---------- ------------ -----------
Contract transactions:
Payments received from
contract owners 2,372 1,939 8,536 17,875
Transfers between Investment Options
(including Guaranteed Interest
Account), net (56,956) 57,491 (1,650) 32,568
Transfers for contract
benefits and terminations (9,255) (23,284) (127,735) (130,255)
Contract maintenance charges (5,556) (4,017) (18,701) (20,215)
---------- ---------- ------------ ------------
Net increase (decrease) in net assets
resulting from contract transactions (69,395) 32,129 (139,550) (100,027)
---------- ---------- ------------ ------------
Total increase (decrease)
in net assets 116,428 272,886 32,758 33,527
Net assets at beginning of period 796,132 523,246 1,643,738 1,610,211
---------- ---------- ------------ ------------
Net assets at end of period $ 912,560 $ 796,132 $ 1,676,496 $ 1,643,738
========== ========== ============ ============
|
See Notes to Financial Statements SA - 30
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
FEDERATED FUND FOR U.S. GOVERNMENT
DWS EQUITY 500 INDEX FUND VIP - CLASS A SECURITIES II
----------------------------------------- ------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 187,734 $ 207,561 $ 1,128,238 $ 890,676
Realized gains (losses) 75,481 76,028 44,660 606
Unrealized appreciation
(depreciation) during the year 4,128,019 728,054 4,034 (473,487)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 4,391,234 1,011,643 1,176,932 417,795
------------- ------------- ------------- -------------
Contract transactions:
Payments received from
contract owners 6,386,515 10,240,501 5,359,380 4,645,554
Transfers between Investment Options
(including Guaranteed Interest
Account), net 1,359,987 2,053,342 (1,929,140) 7,185,595
Transfers for contract
benefits and terminations (1,633,638) (1,165,616) (2,719,558) (1,876,019)
Contract maintenance charges (1,189,211) (978,147) (1,911,368) (1,709,071)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions 4,923,653 10,150,080 (1,200,686) 8,246,059
------------- ------------- ------------- -------------
Total increase (decrease)
in net assets 9,314,887 11,161,723 (23,754) 8,663,854
Net assets at beginning of period 29,128,608 17,966,885 35,455,975 26,792,121
------------- ------------- ------------- -------------
Net assets at end of period $ 38,443,495 $ 29,128,608 $ 35,432,221 $ 35,455,975
============= ============= ============= =============
|
See Notes to Financial Statements SA - 31
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
FEDERATED HIGH INCOME BOND FUND II - FIDELITY VIP CONTRAFUND(R) PORTFOLIO -
PRIMARY SHARES SERVICE CLASS
----------------------------------------- --------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 795,201 $ 836,994 $ 283,170 $ (228,796)
Realized gains (losses) 88,675 (30,091) 6,304,501 1,538,352
Unrealized appreciation
(depreciation) during the year 292,392 (645,404) (375,622) 6,373,123
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 1,176,268 161,499 6,212,049 7,682,679
------------- ------------- ------------- -------------
Contract transactions:
Payments received from
contract owners 959,171 1,713,444 5,389,919 4,682,639
Transfers between Investment
Options (including Guaranteed
Interest Account), net 1,159,153 (75,031) 7,331,448 7,711,176
Transfers for contract
benefits and terminations (852,183) (641,034) (3,006,727) (3,158,270)
Contract maintenance charges (607,887) (608,428) (2,618,927) (2,056,312)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions 658,254 388,951 7,095,713 7,179,233
------------- ------------- ------------- -------------
Total increase (decrease) in
net assets 1,834,522 550,450 13,307,762 14,861,912
Net assets at beginning of period 12,943,220 12,392,770 54,364,619 39,502,707
------------- ------------- ------------- -------------
Net assets at end of period $ 14,777,742 $ 12,943,220 $ 67,672,381 $ 54,364,619
============= ============= ============= =============
|
See Notes to Financial Statements SA - 32
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
FIDELITY VIP GROWTH OPPORTUNITIES FIDELITY VIP GROWTH
PORTFOLIO - SERVICE CLASS PORTFOLIO - SERVICE CLASS
--------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (5,930) $ 1,493 $ (72,914) $ (50,721)
Realized gains (losses) 6,434 12,837 138,606 122,607
Unrealized appreciation
(depreciation) during the year 242,505 246,981 907,750 642,307
---------- ---------- ----------- -----------
Net increase (decrease) in net assets
from operations 243,009 261,311 973,442 714,193
---------- ---------- ----------- -----------
Contract transactions:
Payments received from
contract owners 912,264 523,877 1,885,293 2,760,229
Transfers between Investment Options
(including Guaranteed
Interest Account), net 823,464 613,931 (869,510) (3,415,852)
Transfers for contract
benefits and terminations (273,065) (239,915) (920,126) (1,051,878)
Contract maintenance charges (304,252) (216,492) (945,342) (1,012,167)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 1,158,411 681,401 (849,685) (2,719,668)
---------- ---------- ----------- -----------
Total increase (decrease)
in net assets 1,401,420 942,712 123,757 (2,005,475)
Net assets at beginning of period 3,630,556 2,687,844 16,886,448 18,891,923
---------- ---------- ----------- -----------
Net assets at end of period $5,031,976 $3,630,556 $17,010,205 $16,886,448
========== ========== =========== ===========
|
See Notes to Financial Statements SA - 33
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
FRANKLIN INCOME SECURITIES LAZARD RETIREMENT SMALL CAP
FUND - CLASS 2 PORTFOLIO - SERVICE SHARES
--------------------------------- --------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (236) $ - $ (15,646) $ (8,503)
Realized gains (losses) 1,019 - 186,397 125,821
Unrealized appreciation
(depreciation) during the year 46,039 - 127,892 49,130
-------- ----------- ---------- -----------
Net increase (decrease) in net assets
from operations 46,822 - 298,643 166,448
-------- ----------- ---------- -----------
Contract transactions:
Payments received from
contract owners 55,355 - 286,693 171,134
Transfers between Investment Options
(including Guaranteed
Interest Account), net 809,470 - (18,214) 1,849,961
Transfers for contract
benefits and terminations (49,545) - (212,360) (109,123)
Contract maintenance charges (28,813) - (143,963) (66,281)
-------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 786,467 - (87,844) 1,845,691
-------- ----------- ---------- -----------
Total increase (decrease)
in net assets 833,289 - 210,799 2,012,139
Net assets at beginning of period - - 2,012,139 -
-------- ----------- ---------- -----------
Net assets at end of period $833,289 $ - $2,222,938 $2,012,139
======== =========== ========== ===========
|
See Notes to Financial Statements SA - 34
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
LORD ABBETT BOND-DEBENTURE LORD ABBETT GROWTH AND INCOME
PORTFOLIO - CLASS VC PORTFOLIO - CLASS VC
-------------------------- -----------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 247,784 $ 186,060 $ 137,836 $ 113,697
Realized gains (losses) 12,220 63,517 842,549 1,171,996
Unrealized appreciation
(depreciation) during the year 119,206 (49,815) 2,457,372 (157,637)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets
from operations 379,210 199,762 3,437,757 1,128,056
---------- ---------- ----------- -----------
Contract transactions:
Payments received from
contract owners 582,540 345,349 2,456,856 2,520,667
Transfers between Investment Options
(including Guaranteed
Interest Account), net 225,299 4,090,542 1,636,281 17,484,446
Transfers for contract
benefits and terminations (324,073) (258,531) (1,264,849) (559,103)
Contract maintenance charges (278,502) (155,814) (1,109,672) (555,236)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 205,264 4,021,546 1,718,616 18,890,774
---------- ---------- ----------- -----------
Total increase (decrease)
in net assets 584,474 4,221,308 5,156,373 20,018,830
Net assets at beginning of period 4,221,308 - 20,018,830 -
---------- ---------- ----------- -----------
Net assets at end of period $4,805,782 $4,221,308 $25,175,203 $20,018,830
========== ========== =========== ===========
|
See Notes to Financial Statements SA - 35
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
LORD ABBETT MID-CAP VALUE MUTUAL SHARES SECURITIES
PORTFOLIO - CLASS VC FUND - CLASS 2
------------------------- ----------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (22,092) $ (848) $ 221,847 $ 29,063
Realized gains (losses) 853,849 564,260 1,245,654 75,490
Unrealized appreciation
(depreciation) during the year 301,016 396,048 4,565,742 2,080,109
----------- ---------- ----------- -----------
Net increase (decrease) in net assets
from operations 1,132,773 959,460 6,033,243 2,184,662
----------- ---------- ----------- -----------
Contract transactions:
Payments received from
contract owners 1,002,645 771,368 2,875,837 2,252,280
Transfers between Investment Options
(including Guaranteed
Interest Account), net 491,898 8,809,002 4,176,259 16,992,818
Transfers for contract
benefits and terminations (744,884) (520,768) (1,344,758) (1,778,585)
Contract maintenance charges (555,543) (297,318) (1,454,008) (1,072,093)
----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 194,116 8,762,284 4,253,330 16,394,420
----------- ---------- ----------- -----------
Total increase (decrease)
in net assets 1,326,889 9,721,744 10,286,573 18,579,082
Net assets at beginning of period 9,721,744 - 32,504,586 13,925,504
----------- ---------- ----------- -----------
Net assets at end of period $11,048,633 $9,721,744 $42,791,159 $32,504,586
=========== ========== =========== ===========
|
See Notes to Financial Statements SA - 36
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
NEUBERGER BERMAN AMT FASCIANO NEUBERGER BERMAN AMT GUARDIAN
PORTFOLIO - S CLASS PORTFOLIO - S CLASS
----------------------------- -----------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (16) $ - $ 304 $ -
Realized gains (losses) 123 - 4 -
Unrealized appreciation (depreciation)
during the year 144 - 7,852 -
------- -------- -------- --------
Net increase (decrease) in net assets
from operations 251 - 8,160 -
------- -------- -------- --------
Contract transactions:
Payments received from
contract owners 588 - 5,982 -
Transfers between Investment Options
(including Guaranteed Interest Account), net 6,044 - 96,049 -
Transfers for contract
benefits and terminations (1,395) - (1,335) -
Contract maintenance charges (328) - (1,483) -
------- -------- -------- --------
Net increase (decrease) in net assets resulting
from contract transactions 4,909 - 99,213 -
------- -------- -------- --------
Total increase (decrease) in net assets 5,160 - 107,373 -
Net assets at beginning of period - - - -
------- -------- -------- --------
Net assets at end of period $ 5,160 $ - $107,373 $ -
======= ======== ======== ========
|
See Notes to Financial Statements SA - 37
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
OPPENHEIMER CAPITAL APPRECIATION OPPENHEIMER GLOBAL SECURITIES
FUND/VA - SERVICE SHARES FUND/VA - SERVICE SHARES
-------------------------------- -----------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (1,204) $ - $ (959) $ -
Realized gains (losses) 88 - 499 -
Unrealized appreciation (depreciation)
during the year 40,955 - 35,936 -
-------- -------- -------- --------
Net increase (decrease) in net assets
from operations 39,839 - 35,476 -
-------- -------- -------- --------
Contract transactions:
Payments received from
contract owners 57,983 - 31,795 -
Transfers between Investment Options
(including Guaranteed Interest Account), net 358,132 - 412,560 -
Transfers for contract
benefits and terminations (115) - (6,984) -
Contract maintenance charges (5,050) - (7,848) -
-------- -------- -------- --------
Net increase (decrease) in net assets resulting
from contract transactions 410,950 - 429,523 -
-------- -------- -------- --------
Total increase (decrease) in net assets 450,789 - 464,999 -
Net assets at beginning of period - - - -
-------- -------- -------- --------
Net assets at end of period $450,789 $ - $464,999 $ -
======== ======== ======== ========
|
See Notes to Financial Statements SA - 38
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
OPPENHEIMER MAIN STREET SMALL
CAP FUND/VA - SERVICE SHARES PHOENIX CAPITAL GROWTH SERIES
----------------------------- -----------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (545) $ - $ (1,027,048) $ (1,388,227)
Realized gains (losses) 25 - (5,630,460) (8,916,627)
Unrealized appreciation (depreciation)
during the year 14,882 - 10,077,759 14,894,120
-------- -------- ------------ ------------
Net increase (decrease) in net assets
from operations 14,362 - 3,420,251 4,589,266
-------- -------- ------------ ------------
Contract transactions:
Payments received from
contract owners 19,949 - 21,686,676 25,131,195
Transfers between Investment Options
(including Guaranteed Interest Account), net 249,777 - 5,743,369 (17,020,634)
Transfers for contract
benefits and terminations (594) - (17,357,094) (17,686,395)
Contract maintenance charges (4,051) - (13,710,777) (16,101,944)
-------- -------- ------------ ------------
Net increase (decrease) in net assets resulting
from contract transactions 265,081 - (3,637,826) (25,677,778)
-------- -------- ------------ ------------
Total increase (decrease) in net assets 279,443 - (217,575) (21,088,512)
Net assets at beginning of period - - 186,645,782 207,734,294
-------- -------- ------------ ------------
Net assets at end of period $279,443 $ - $186,428,207 $186,645,782
======== ======== ============ ============
|
See Notes to Financial Statements SA - 39
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX GROWTH AND PHOENIX MID-CAP
INCOME SERIES GROWTH SERIES
---------------------------------- ---------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 137,300 $ 96,093 $ (170,396) $ (152,123)
Realized gains (losses) 188,298 218,672 (402,923) (418,828)
Unrealized appreciation (depreciation)
during the year 4,979,906 1,039,293 982,815 1,153,950
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations 5,305,504 1,354,058 409,496 582,999
----------- ----------- ----------- -----------
Contract transactions:
Payments received from
contract owners 3,777,431 4,152,838 2,716,144 2,620,200
Transfers between Investment Options
(including Guaranteed Interest Account), net 1,640,809 (2,808,007) 19,218,689 (4,611,652)
Transfers for contract
benefits and terminations (2,116,669) (1,911,353) (1,801,609) (1,202,674)
Contract maintenance charges (2,039,828) (2,070,143) (1,325,429) (1,224,199)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from contract transactions 1,261,743 (2,636,665) 18,807,795 (4,418,325)
----------- ----------- ----------- -----------
Total increase (decrease) in net assets 6,567,247 (1,282,607) 19,217,291 (3,835,326)
Net assets at beginning of period 32,166,663 33,449,270 18,486,436 22,321,762
----------- ----------- ----------- -----------
Net assets at end of period $38,733,910 $32,166,663 $37,703,727 $18,486,436
=========== =========== =========== ===========
|
See Notes to Financial Statements SA - 40
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX MONEY MARKET SERIES PHOENIX MULTI-SECTOR FIXED INCOME SERIES
--------------------------------- --------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 2,195,791 $ 1,130,871 $ 4,324,122 $ 3,259,343
Realized gains (losses) - - 50,571 (302)
Unrealized appreciation (depreciation)
during the year - - 969,384 (2,388,744)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 2,195,791 1,130,871 5,344,077 870,297
------------- ------------- ------------- -------------
Contract transactions:
Payments received from
contract owners 16,419,465 16,311,665 5,737,457 6,096,060
Transfers between Investment Options
(including Guaranteed Interest
Account), net 5,873,224 (7,970,640) 9,077,906 4,390,007
Transfers for contract
benefits and terminations (16,775,408) (9,032,489) (3,957,426) (3,841,341)
Contract maintenance charges (6,209,205) (6,088,120) (3,876,158) (3,873,803)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions (691,924) (6,779,584) 6,981,779 2,770,923
------------- ------------- ------------- -------------
Total increase (decrease) in
net assets 1,503,867 (5,648,713) 12,325,856 3,641,220
Net assets at beginning of period 58,629,610 64,278,323 81,240,363 77,599,143
------------- ------------- ------------- -------------
Net assets at end of period $ 60,133,477 $ 58,629,610 $ 93,566,219 $ 81,240,363
============= ============= ============= =============
|
See Notes to Financial Statements SA - 41
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX MULTI-SECTOR SHORT
TERM BOND SERIES PHOENIX STRATEGIC ALLOCATION SERIES
--------------------------------- ------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 391,534 $ 222,322 $ 1,356,807 $ 1,218,861
Realized gains (losses) 8,924 (2,890) 9,421,815 2,194,265
Unrealized appreciation (depreciation)
during the year 82,367 (148,536) (2,430,779) (2,728,483)
------------- ------------- ------------- --------------
Net increase (decrease) in net assets
from operations 482,825 70,896 8,347,843 684,643
------------- ------------- ------------- --------------
Contract transactions:
Payments received from
contract owners 818,898 728,934 6,755,534 7,309,642
Transfers between Investment Options
(including Guaranteed Interest
Account), net 137,036 5,671,636 (4,322,479) (4,424,111)
Transfers for contract
benefits and terminations (519,405) (311,426) (7,450,275) (8,846,761)
Contract maintenance charges (359,661) (277,803) (4,481,583) (4,984,870)
------------- ------------- ------------- --------------
Net increase (decrease) in net assets
resulting from contract transactions 76,868 5,811,341 (9,498,803) (10,946,100)
------------- ------------- ------------- --------------
Total increase (decrease) in
net assets 559,693 5,882,237 (1,150,960) (10,261,457)
Net assets at beginning of period 9,460,941 3,578,704 76,319,583 86,581,040
------------- ------------- ------------- --------------
Net assets at end of period $ 10,020,634 $ 9,460,941 $ 75,168,623 $ 76,319,583
============= ============= ============= ==============
|
See Notes to Financial Statements SA - 42
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-ABERDEEN INTERNATIONAL
SERIES PHOENIX-ALGER SMALL-CAP GROWTH SERIES
--------------------------------- ------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 1,208,176 $ 2,365,178 $ (45,140) $ (20,941)
Realized gains (losses) 684,999 (165,916) 34,990 296,352
Unrealized appreciation (depreciation)
during the year 18,100,026 9,064,538 1,015,007 156,111
-------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 19,993,201 11,263,800 1,004,857 431,522
-------------- ------------- ------------- -------------
Contract transactions:
Payments received from
contract owners 6,181,809 6,268,971 910,018 539,127
Transfers between Investment Options
(including Guaranteed Interest
Account), net 15,588,370 2,741,501 10,935,619 115,431
Transfers for contract
benefits and terminations (7,028,001) (5,575,741) (812,365) (142,427)
Contract maintenance charges (4,407,684) (3,908,344) (350,522) (193,133)
-------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions 10,334,494 (473,613) 10,682,750 318,998
-------------- ------------- ------------- -------------
Total increase (decrease) in
net assets 30,327,695 10,790,187 11,687,607 750,520
Net assets at beginning of period 74,715,857 63,925,670 3,328,615 2,578,095
-------------- ------------- ------------- -------------
Net assets at end of period $ 105,043,552 $ 74,715,857 $ 15,016,222 $ 3,328,615
============== ============= ============= =============
|
See Notes to Financial Statements SA - 43
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-DUFF & PHELPS REAL PHOENIX-S&P DYNAMIC ASSET ALLOCATION
ESTATE SECURITIES SERIES SERIES: AGGRESSIVE GROWTH
--------------------------------- ------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 236,190 $ 332,809 $ 7,362 $ -
Realized gains (losses) 3,913,064 2,262,379 738 -
Unrealized appreciation (depreciation)
during the year 8,418,256 1,894,594 96,353 -
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets
from operations 12,567,510 4,489,782 104,453 -
-------------- ------------- ------------ -------------
Contract transactions:
Payments received from
contract owners 3,324,341 3,148,914 144,614 -
Transfers between Investment Options
(including Guaranteed Interest
Account), net 732,150 427,494 956,554 -
Transfers for contract
benefits and terminations (4,181,326) (2,465,042) (1,015) -
Contract maintenance charges (1,978,486) (1,640,678) (38,743) -
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets
resulting from contract transactions (2,103,321) (529,312) 1,061,410 -
-------------- ------------- ------------ -------------
Total increase (decrease) in
net assets 10,464,189 3,960,470 1,165,863 -
Net assets at beginning of period 35,759,557 31,799,087 - -
-------------- ------------- ------------ -------------
Net assets at end of period $ 46,223,746 $ 35,759,557 $ 1,165,863 $ -
============== ============= ============ =============
|
See Notes to Financial Statements SA - 44
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-S&P DYNAMIC ASSET PHOENIX-S&P DYNAMIC ASSET ALLOCATION
ALLOCATION SERIES: GROWTH SERIES: MODERATE
--------------------------------- ------------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 36,947 $ - $ 4,941 $ -
Realized gains (losses) 2,108 - 51 -
Unrealized appreciation (depreciation)
during the year 221,019 - (1,657) -
------------ ---------- ----------- ---------
Net increase (decrease) in net assets
from operations 260,074 - 3,335 -
------------ ---------- ----------- ---------
Contract transactions:
Payments received from
contract owners 379,561 - 29,919 -
Transfers between Investment Options
(including Guaranteed Interest
Account), net 3,303,756 - 334,100 -
Transfers for contract
benefits and terminations (51,910) - - -
Contract maintenance charges (97,532) - (8,072) -
------------ ---------- ----------- ---------
Net increase (decrease) in net assets
resulting from contract transactions 3,533,875 - 355,947 -
------------ ---------- ----------- ---------
Total increase (decrease) in
net assets 3,793,949 - 359,282 -
Net assets at beginning of period - - - -
------------ ---------- ----------- ---------
Net assets at end of period $ 3,793,949 $ - $ 359,282 $ -
============ ========== =========== =========
|
See Notes to Financial Statements SA - 45
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-S&P DYNAMIC ASSET PHOENIX-SANFORD BERNSTEIN MID-CAP
ALLOCATION SERIES: MODERATE GROWTH VALUE SERIES
----------------------------------- -----------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 9,275 $ - $ (115,803) $ (209,508)
Realized gains (losses) 2,026 - 4,776,155 2,899,145
Unrealized appreciation (depreciation)
during the year 46,692 - 182,043 (468,223)
------------ ----------- ------------- -------------
Net increase (decrease) in net assets
from operations 57,993 - 4,842,395 2,221,414
------------ ----------- ------------- -------------
Contract transactions:
Payments received from
contract owners 169,923 - 3,178,393 3,397,294
Transfers between Investment Options
(including Guaranteed Interest
Account), net 840,736 - 744,259 309,384
Transfers for contract
benefits and terminations (85,425) - (2,694,438) (2,713,011)
Contract maintenance charges (20,820) - (1,822,481) (1,862,977)
------------ ----------- ------------- -------------
Net increase (decrease) in net assets
resulting from contract transactions 904,414 - (594,267) (869,310)
------------ ----------- ------------- -------------
Total increase (decrease) in
net assets 962,407 - 4,248,128 1,352,104
Net assets at beginning of period - - 34,421,571 33,069,467
------------ ----------- ------------- -------------
Net assets at end of period $ 962,407 $ - $ 38,669,699 $ 34,421,571
============ =========== ============= =============
|
See Notes to Financial Statements SA - 46
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-SANFORD BERNSTEIN
SMALL-CAP VALUE SERIES PHOENIX-VAN KAMPEN COMSTOCK SERIES
----------------------------------- -----------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (116,134) $ (142,670) $ 387,142 $ 167,842
Realized gains (losses) 3,533,048 1,177,568 7,280,747 542,627
Unrealized appreciation (depreciation)
during the year (68,174) 146,164 (453,119) 1,038,289
------------- ------------- -------------- --------------
Net increase (decrease) in net assets
from operations 3,348,740 1,181,062 7,214,770 1,748,758
------------- ------------- -------------- --------------
Contract transactions:
Payments received from
contract owners 2,108,607 2,594,961 4,176,284 4,980,083
Transfers between Investment Options
(including Guaranteed Interest
Account), net 33,652 1,154,769 (2,740,870) (9,087,159)
Transfers for contract
benefits and terminations (1,448,103) (1,250,930) (3,251,789) (2,103,598)
Contract maintenance charges (1,087,285) (1,080,266) (1,912,624) (2,205,832)
------------- ------------- -------------- --------------
Net increase (decrease) in net assets
resulting from contract transactions (393,129) 1,418,534 (3,728,999) (8,416,506)
------------- ------------- -------------- --------------
Total increase (decrease) in
net assets 2,955,611 2,599,596 3,485,771 (6,667,748)
Net assets at beginning of period 21,153,528 18,553,932 37,974,089 44,641,837
------------- ------------- -------------- --------------
Net assets at end of period $ 24,109,139 $ 21,153,528 $ 41,459,860 $ 37,974,089
============= ============= ============== ==============
|
See Notes to Financial Statements SA - 47
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PHOENIX-VAN KAMPEN EQUITY 500 PIMCO VIT COMMODITYREALRETURN STRATEGY
INDEX SERIES PORTFOLIO - ADVISOR CLASS
----------------------------------- -----------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 247,802 $ 187,772 $ 8,826 $ -
Realized gains (losses) (93,181) (380,402) 261 -
Unrealized appreciation (depreciation)
during the year 5,304,657 1,308,900 (21,838) -
------------- -------------- ----------- -----------
Net increase (decrease) in net assets
from operations 5,459,278 1,116,270 (12,751) -
------------- -------------- ----------- -----------
Contract transactions:
Payments received from
contract owners 3,788,444 5,356,883 21,688 -
Transfers between Investment Options
(including Guaranteed Interest
Account), net 12,166,696 (2,762,923) 338,417 -
Transfers for contract
benefits and terminations (2,519,801) (2,347,864) (21) -
Contract maintenance charges (2,178,589) (2,526,306) (3,097) -
------------- -------------- ----------- -----------
Net increase (decrease) in net assets
resulting from contract transactions 11,256,750 (2,280,210) 356,987 -
------------- -------------- ----------- -----------
Total increase (decrease) in
net assets 16,716,028 (1,163,940) 344,236 -
Net assets at beginning of period 39,178,106 40,342,046 - -
------------- -------------- ----------- -----------
Net assets at end of period $ 55,894,134 $ 39,178,106 $ 344,236 $ -
============= ============== =========== ===========
|
See Notes to Financial Statements SA - 48
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
PIMCO VIT REAL RETURN PIMCO VIT TOTAL RETURN
PORTFOLIO - ADVISOR CLASS PORTFOLIO - ADVISOR CLASS
----------------------------------- -----------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 2,032 $ - $ 6,869 $ -
Realized gains (losses) 4,553 - 3,045 -
Unrealized appreciation (depreciation)
during the year (6,747) - 168 -
----------- --------- ------------ ---------
Net increase (decrease) in net assets
from operations (162) - 10,082 -
----------- --------- ------------ ---------
Contract transactions:
Payments received from
contract owners 271 - 26,962 -
Transfers between Investment Options
(including Guaranteed Interest
Account), net 168,377 - 555,883 -
Transfers for contract
benefits and terminations - - (561) -
Contract maintenance charges (2,352) - (10,066) -
----------- --------- ------------ ---------
Net increase (decrease) in net assets
resulting from contract transactions 166,296 - 572,218 -
----------- --------- ------------ ---------
Total increase (decrease) in
net assets 166,134 - 582,300 -
Net assets at beginning of period - - - -
----------- --------- ------------ ---------
Net assets at end of period $ 166,134 $ - $ 582,300 $ -
=========== ========= ============ =========
|
See Notes to Financial Statements SA - 49
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
RYDEX VARIABLE TRUST INVERSE
GOVERNMENT LONG BOND FUND RYDEX VARIABLE TRUST NOVA FUND
----------------------------------- -----------------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 10,296 $ (5,396) $ 2,024 $ (2,263)
Realized gains (losses) (17,672) (85,323) 15,773 8,180
Unrealized appreciation
(depreciation) during the year 32,924 (15,287) 64,920 20,135
----------- ----------- ---------- ----------
Net increase (decrease) in net assets
from operations 25,548 (106,006) 82,717 26,052
----------- ----------- ---------- ----------
Contract transactions:
Payments received from
contract owners 21,042 79,012 45,089 107,429
Transfers between Investment Options
(including Guaranteed Interest
Account), net (217,074) 169,083 (150,503) 141,329
Transfers for contract
benefits and terminations (22,368) (38,462) (17,339) (86,916)
Contract maintenance charges (17,874) (41,158) (34,595) (32,153)
----------- ----------- ---------- ----------
Net increase (decrease) in net assets
resulting from contract transactions (236,274) 168,475 (157,348) 129,689
----------- ----------- ---------- ----------
Total increase (decrease) in
net assets (210,726) 62,469 (74,631) 155,741
Net assets at beginning of period 513,205 450,736 574,598 418,857
----------- ----------- ---------- ----------
Net assets at end of period $ 302,479 $ 513,205 $ 499,967 $ 574,598
=========== =========== ========== ==========
|
See Notes to Financial Statements SA - 50
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
RYDEX VARIABLE TRUST SECTOR TEMPLETON DEVELOPING MARKETS
ROTATION FUND SECURITIES FUND - CLASS 2
---------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (13,665) $ (9,049) $ 8,502 $ 10,599
Realized gains (losses) 185,229 14,066 33,404 93,953
Unrealized appreciation (depreciation)
during the year 11,887 199,811 754,921 368,647
------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations 183,451 204,828 796,827 473,199
------------- ------------ ------------ ------------
Contract transactions:
Payments received from
contract owners 204,901 189,335 196,513 113,738
Transfers between Investment Options
(including Guaranteed Interest
Account), net (1,035,430) 1,862,845 1,850,722 (163,311)
Transfers for contract
benefits and terminations (128,448) (124,712) (248,131 (124,767)
Contract maintenance charges (105,607) (91,283) (161,829) (110,060)
------------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from contract transactions (1,064,584) 1,836,185 1,637,275 (284,400)
------------- ------------ ------------ ------------
Total increase (decrease) in net assets (881,133) 2,041,013 2,434,102 188,799
Net assets at beginning of period 2,548,908 507,895 2,141,902 1,953,103
------------- ------------ ------------ ------------
Net assets at end of period $ 1,667,775 $ 2,548,908 $ 4,576,004 $ 2,141,902
============= ============ ============ ============
|
See Notes to Financial Statements SA - 51
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
TEMPLETON FOREIGN SECURITIES TEMPLETON GLOBAL ASSET
FUND - CLASS 2 ALLOCATION FUND - CLASS 2
---------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 122,508 $ 82,954 $ 65,041 $ 29,880
Realized gains (losses) 152,283 205,815 69,833 10,593
Unrealized appreciation (depreciation)
during the year 4,160, 356 1,511,988 55,803 (14,638)
------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations 4,435,147 1,800,757 190,677 25,835
------------- ------------ ------------ ------------
Contract transactions:
Payments received from
contract owners 2,283,285 2,161,564 50,567 63,722
Transfers between Investment Options
(including Guaranteed Interest
Account), net 603,203 600,898 (15,347) (13,117)
Transfers for contract
benefits and terminations (1,420,969) (1,285,374) (24,029) (100,218)
Contract maintenance charges (1,048,512) (1,027,745) (67,416) (67,274)
------------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from contract transactions 417,007 449,343 (56,225) (116,887)
------------- ------------ ------------ ------------
Total increase (decrease) in net assets 4,852,154 2,250,100 134,452 (91,052)
Net assets at beginning of period 20,938,923 18,688,823 980,552 1,071,604
------------- ------------ ------------ ------------
Net assets at end of period $ 25,791,077 $ 20,938,923 $ 1,115,004 $ 980,552
============= ============= ============ ============
|
See Notes to Financial Statements SA - 52
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
TEMPLETON GROWTH SECURITIES VAN KAMPEN UIF EQUITY AND
FUND - CLASS 2 INCOME PORTFOLIO CLASS - II
---------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ 122,889 $ 116,220 $ 55 $ -
Realized gains (losses) 1,027,339 1,490,353 862 -
Unrealized appreciation (depreciation)
during the year 2,905,651 116,111 12,634 -
------------- ------------- ----------- ---------
Net increase (decrease) in net assets
from operations 4,055,879 1,722,684 13,551 -
------------- ------------- ----------- ---------
Contract transactions:
Payments received from
contract owners 1,922,175 2,051,930 21,522 -
Transfers between Investment Options
(including Guaranteed Interest
Account), net 18,348 (4,559,272) 210,924 -
Transfers for contract
benefits and terminations (1,604,258) (1,714,054) (898) -
Contract maintenance charges (993,545) (1,062,339) (3,397) -
------------- ------------- ----------- ---------
Net increase (decrease) in net assets resulting
from contract transactions (657,280) (5,283,735) 228,151 -
------------- ------------- ----------- ---------
Total increase (decrease) in net assets 3,398,599 (3,561,051) 241,702 -
Net assets at beginning of period 19,692,537 23,253,588 - -
------------- ------------- ----------- ---------
Net assets at end of period $ 23,091,136 $ 19,692,537 $ 241,702 $ -
============= ============= =========== =========
|
See Notes to Financial Statements SA - 53
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
WANGER INTERNATIONAL SELECT WANGER INTERNATIONAL SMALL CAP
---------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (58,466) $ 103,013 $ (128,529) $ 121,493
Realized gains (losses) 161,504 95,046 1,780,194 506,427
Unrealized appreciation (depreciation)
during the year 3,717,461 1,169,383 17,095,069 8,528,527
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 3,820,499 1,367,442 18,746,734 9,156,447
------------- ------------- ------------- -------------
Contract transactions:
Payments received from
contract owners 1,144,714 1,116,448 4,714,389 5,324,238
Transfers between Investment Options
(including Guaranteed Interest
Account), net 597,748 998,748 (1,404,621) 2,203,515
Transfers for contract
benefits and terminations (872,084) (529,073) (5,057,607) (3,407,905)
Contract maintenance charges (701,645) (564,315) (3,207,507) (2,851,864)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from contract transactions 168,733 1,021,808 (4,955,346) 1,267,984
------------- ------------- ------------- -------------
Total increase (decrease) in net assets 3,989,232 2,389,250 13,791,388 10,424,431
Net assets at beginning of period 10,353,382 7,964,132 54,230,793 43,806,362
------------- ------------- ------------- -------------
Net assets at end of period $ 14,342,614 $ 10,353,382 $ 68,022,181 $ 54,230,793
============= ============= ============= =============
|
See Notes to Financial Statements SA - 54
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 2006 AND 2005
(CONTINUED)
WANGER SELECT WANGER U.S. SMALLER COMPANIES
---------------------------------- ---------------------------------
2006 2005 2006 2005
---- ---- ---- ----
Increase (decrease) in net assets from
operations:
Net investment income (loss) $ (46,583) $ (78,697) $ (463,251) $ (664,076)
Realized gains (losses) 459,995 823,011 5,210,762 3,350,413
Unrealized appreciation (depreciation)
during the year 2,110,627 453,993 1,237,629 6,142,086
------------- ------------- -------------- -------------
Net increase (decrease) in net assets
from operations 2,524,039 1,198,307 5,985,140 8,828,423
------------- ------------- -------------- -------------
Contract transactions:
Payments received from
contract owners 1,308,379 1,324,781 7,232,259 7,213,487
Transfers between Investment Options
(including Guaranteed Interest
Account), net 1,138,698 1,418,537 (4,915,802) (5,190,140)
Transfers for contract
benefits and terminations (866,567) (789,416) (7,718,347) (5,864,377)
Contract maintenance charges (657,871) (619,150) (4,539,981) (4,915,183)
------------- ------------- -------------- -------------
Net increase (decrease) in net assets resulting
from contract transactions 922,639 1,334,752 (9,941,871) (8,756,213)
------------- ------------- -------------- -------------
Total increase (decrease) in net assets 3,446,678 2,533,059 (3,956,731) 72,210
Net assets at beginning of period 13,086,480 10,553,421 89,736,068 89,663,858
------------- ------------- -------------- -------------
Net assets at end of period $ 16,533,158 $ 13,086,480 $ 85,779,337 $ 89,736,068
============= ============= ============== =============
|
See Notes to Financial Statements SA - 55
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION
The Phoenix Life Variable Universal Life Account (the "Separate Account") is a
separate investment account of Phoenix Life Insurance Company ("Phoenix").
Phoenix is a wholly-owned subsidiary of The Phoenix Companies, Inc. The Separate
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended, and was established June 17, 1985. The Separate Account
currently consists of 62 investment options that invest in shares of underlying
funds. The underlying funds include The Phoenix Edge Series Fund, AIM Variable
Insurance Funds, The Alger American Fund, Anchor Series Trust Funds, DWS
Investments VIT Funds (formerly Scudder Investments VIT Funds), Federated
Insurance Series, Fidelity(R) Variable Insurance Products, Franklin Templeton
Variable Insurance Products Trust, Lazard Retirement Series, Lord Abbett Series
Fund, Inc., Neuberger Berman Advisers Management Trust, Oppenheimer Variable
Account Funds, PIMCO Variable Insurance Trust, The Rydex Variable Trust, The
Universal Institutional Funds, Inc. and Wanger Advisors Trust (collectively, the
"Funds").
The Separate Account invests in the following investment options:
SA - 56
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION (CONTINUED)
Additionally, policy owners may direct the allocation of their investments between the Separate Account and the Guaranteed Interest Account.
Comparative year information for the year ended December 31, 2004 and prior year financial highlight data (December 31, 2002 through December 31, 2004) have been reformatted to be consistent with the 2005 and 2006 disclosures.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of the Separate
Account, which are in accordance with accounting principles generally accepted
in the United States of America in the investment company industry:
A. VALUATION OF INVESTMENTS: Investments are made exclusively in the Funds and are valued at the reported net asset values per share of the respective investment options.
B. INVESTMENT TRANSACTIONS AND RELATED INCOME: Investment transactions are recorded on the trade date. Realized gains and losses on the sales of shares of the Funds are computed on the basis of the identified cost of the share sold. Dividend income and gains from investments are recorded on the ex-distribution date.
C. INCOME TAXES: The Separate Account is not a separate entity from Phoenix, and under current federal income tax law, income arising from the Separate Account is not taxed since reserves are established equivalent to such income. Therefore, no provision for related federal taxes is required.
D. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities, revenues and expenses. Actual results could differ from those estimates.
E. DISTRIBUTIONS: Distributions from the Funds are recorded by each investment option on the ex-dividend date.
SA - 57
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 3--PURCHASES AND PROCEEDS FROM SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments for the period
ended December 31, 2006 were as follows:
INVESTMENT OPTION PURCHASES SALES
----------------- --------- -----
AIM V.I. Capital Appreciation Fund - Class I $ 2,283,301 $ 1,865,420
AIM V.I. Core Equity Fund - Class I 6,227,367 1,993,918
AIM V.I. Mid Cap Core Equity Fund - Class I 1,355,312 1,253,050
Alger American Leveraged AllCap Portfolio - Class O 2,271,439 4,065,410
Anchor Series Trust Capital Appreciation Portfolio - Class 1 77,571 427,003
Anchor Series Trust Government & Quality Bond Portfolio - Class 1 16,452 10,765
Anchor Series Trust Growth and Income Portfolio - Class 1 40,641 6,099
Anchor Series Trust Growth Portfolio - Class 1 252,115 300,008
Anchor Series Trust Money Market Portfolio - Class 1 362,345 176,474
Anchor Series Trust Multi-Asset Portfolio - Class 1 305,963 123,788
Anchor Series Trust Natural Resources Portfolio - Class 1 136,228 176,943
Anchor Series Trust Strategic Multi-Asset Portfolio - Class 1 40,941 153,937
DWS Equity 500 Index Fund VIP - Class A 9,941,723 4,830,755
Federated Fund for U.S. Government Securities II 9,723,444 9,796,528
Federated High Income Bond Fund II - Primary Shares 6,483,599 5,030,414
Fidelity VIP Contrafund(R) Portfolio - Service Class 24,317,842 11,608,692
Fidelity VIP Growth Opportunities Portfolio - Service Class 2,094,910 942,496
Fidelity VIP Growth Portfolio - Service Class 3,147,230 4,070,158
Franklin Income Securities Fund - Class 2 912,821 126,387
Lazard Retirement Small Cap Portfolio - Service Shares 626,471 562,330
Lord Abbett Bond-Debenture Portfolio - Class VC 1,456,356 1,003,375
Lord Abbett Growth and Income Portfolio - Class VC 6,980,240 4,325,114
Lord Abbett Mid-Cap Value Portfolio - Class VC 3,648,196 2,648,675
Mutual Shares Securities Fund - Class 2 11,261,734 5,578,682
Neuberger Berman AMT Fasciano Portfolio - S Class 6,757 1,739
Neuberger Berman AMT Guardian Portfolio - S Class 102,619 3,102
Oppenheimer Capital Appreciation Fund/VA - Service Shares 417,513 7,767
Oppenheimer Global Securities Fund/VA - Service Shares 465,641 37,077
Oppenheimer Main Street Small Cap Fund/VA - Service Shares 279,172 14,636
Phoenix Capital Growth Series 44,698,894 49,367,843
Phoenix Growth and Income Series 8,528,491 7,130,107
Phoenix Mid-Cap Growth Series 27,183,645 8,546,637
Phoenix Money Market Series 49,235,664 47,727,035
Phoenix Multi-Sector Fixed Income Series 24,598,828 13,294,460
Phoenix Multi-Sector Short Term Bond Series 2,486,491 2,018,270
Phoenix Strategic Allocation Series 18,285,993 17,372,939
Phoenix-Aberdeen International Series 29,279,356 17,738,288
Phoenix-Alger Small-Cap Growth Series 13,980,122 3,342,578
Phoenix-Duff & Phelps Real Estate Securities Series 12,682,959 11,289,142
Phoenix-S&P Dynamic Asset Allocation Series: Aggressive Growth 1,152,531 83,759
Phoenix-S&P Dynamic Asset Allocation Series: Growth 3,771,015 200,193
Phoenix-S&P Dynamic Asset Allocation Series: Moderate 369,324 8,436
Phoenix-S&P Dynamic Asset Allocation Series: Moderate Growth 1,024,665 109,298
Phoenix-Sanford Bernstein Mid-Cap Value Series 11,419,009 7,477,190
Phoenix-Sanford Bernstein Small-Cap Value Series 7,876,442 4,932,403
Phoenix-Van Kampen Comstock Series 13,408,288 10,117,003
Phoenix-Van Kampen Equity 500 Index Series 21,377,877 9,874,155
PIMCO VIT CommodityRealReturn Strategy Portfolio - Advisor Class 433,762 66,829
PIMCO VIT Real Return Portfolio - Advisor Class 208,764 36,032
PIMCO VIT Total Return Portfolio - Advisor Class 594,206 12,071
Rydex Variable Trust Inverse Government Long Bond Fund 85,880 311,868
|
SA - 58
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 3--PURCHASES AND PROCEEDS FROM SALES OF INVESTMENTS (CONTINUED)
INVESTMENT OPTION PURCHASES SALES
----------------- --------- -----
Rydex Variable Trust Nova Fund 68,421 223,759
Rydex Variable Trust Sector Rotation Fund 1,104,234 2,103,280
Templeton Developing Markets Securities Fund - Class 2 $ 2,221,366 $ 575,638
Templeton Foreign Securities Fund - Class 2 5,045,484 4,506,384
Templeton Global Asset Allocation Fund - Class 2 189,081 114,920
Templeton Growth Securities Fund - Class 2 5,222,019 4,990,333
Van Kampen UIF Equity and Income Portfolio - Class II 239,069 10,007
Wanger International Select 5,750,659 5,640,605
Wanger International Small Cap 13,423,040 18,508,047
Wanger Select 4,711,880 3,389,663
Wanger U.S. Smaller Companies 12,155,340 19,696,782
------------ ------------
$438,048,742 $331,956,696
------------ ------------
|
SA - 59
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 4--CHANGES IN UNITS OUTSTANDING
The changes in units outstanding were as follows:
==================================================================================
For period ended December 31, 2006 For period ended December 31, 2005
Units Units Net Increase Units Units Net Increase
----- ----- ------------ ----- ----- ------------
INVESTMENT OPTION Issued Redeemed (Decrease) Issued Redeemed (Decrease)
----------------- ------ -------- ---------- ------ -------- ----------
-----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund - Class I 2,304,623 (1,848,441) 456,182 3,427,985 (1,789,341) 1,638,644
-----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Core Equity Fund - Class I 6,173,262 (1,936,297) 4,236,965 - - -
-----------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Mid Cap Core Equity Fund - Class I 693,109 (1,069,969) (376,860) 1,723,435 (1,436,594) 286,841
-----------------------------------------------------------------------------------------------------------------------------------
Alger American Leveraged
AllCap Portfolio - Class O 2,808,285 (4,773,557) (1,965,272) 5,133,696 (7,257,597) (2,123,901)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Capital
Appreciation Portfolio - Class 1 922 (4,669) (3,747) 579 (5,686) (5,107)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Government & Quality
Bond Portfolio - Class 1 44 (220) (176) 193 (10,069) (9,876)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Growth
and Income Portfolio - Class 1 322 (231) 91 718 (3,183) (2,465)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Growth
Portfolio - Class 1 1,103 (4,002) (2,899) 656 (6,114) (5,458)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Money Market
Portfolio - Class 1 14,758 (7,747) 7,011 3,230 (6,154) (2,924)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Multi-Asset
Portfolio - Class 1 313 (2,770) (2,457) 1,030 (6,299) (5,269)
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Natural Resources
Portfolio - Class 1 1,274 (2,146) (872) 3,175 (1,357) 1,818
-----------------------------------------------------------------------------------------------------------------------------------
Anchor Series Trust Strategic Multi-Asset
Portfolio - Class 1 195 (3,272) (3,077) 1,629 (6,183) (4,554)
-----------------------------------------------------------------------------------------------------------------------------------
DWS Equity 500 Index Fund VIP - Class A 7,264,556 (3,713,926) 3,550,630 12,512,530 (3,923,201) 8,589,329
-----------------------------------------------------------------------------------------------------------------------------------
Federated Fund for U.S. Government
Securities II 6,207,510 (7,372,010) (1,164,500) 12,968,735 (6,416,879) 6,551,856
-----------------------------------------------------------------------------------------------------------------------------------
Federated High Income Bond
Fund II - Primary Shares 4,288,405 (3,892,961) 395,444 7,345,168 (7,076,164) 269,004
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Contrafund(R)
Portfolio - Service Class 13,969,596 (8,349,449) 5,620,147 17,373,997 (10,027,170) 7,346,827
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Opportunities
Portfolio - Service Class 2,461,110 (1,063,499) 1,397,611 1,803,265 (964,705) 838,560
-----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth
Portfolio - Service Class 4,418,590 (5,545,921) (1,127,331) 6,239,075 (10,393,113) (4,154,038)
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Income Securities Fund - Class 2 862,104 (114,405) 747,699 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Lazard Retirement Small Cap
Portfolio - Service Shares 389,223 (464,537) (75,314) 2,140,665 (306,276) 1,834,389
-----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Bond-Debenture
Portfolio - Class VC 1,113,678 (915,528) 198,150 5,103,143 (991,490) 4,111,653
-----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Growth and Income
Portfolio - Class VC 5,194,723 (3,670,494) 1,524,229 20,948,820 (1,938,281) 19,010,539
-----------------------------------------------------------------------------------------------------------------------------------
Lord Abbett Mid-Cap Value
Portfolio - Class VC 2,493,376 (2,311,881) 181,495 10,424,280 (1,475,081) 8,949,199
-----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund - Class 2 5,296,581 (2,986,494) 2,310,087 12,752,210 (2,218,548) 10,533,662
-----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Fasciano
Portfolio - S Class 7,253 (1,916) 5,337 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian
Portfolio - S Class 104,159 (2,870) 101,289 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Appreciation
Fund/VA - Service Shares 448,877 (6,686) 442,191 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities
Fund/VA - Service Shares 470,511 (34,642) 435,869 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Small Cap
Fund/VA - Service Shares 294,142 (15,112) 279,030 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Capital Growth Series 12,919,552 (13,186,697) (267,145) 8,142,778 (15,749,784) (7,607,006)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Growth and Income Series 6,010,023 (5,024,954) 985,069 5,273,233 (7,310,841) (2,037,608)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Mid-Cap Growth Series 19,903,923 (6,262,787) 13,641,136 4,093,810 (7,678,757) (3,584,947)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Money Market Series 27,645,070 (28,403,393) (758,323) 26,292,955 (30,567,858) (4,274,903)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Multi-Sector Fixed Income Series 5,700,896 (4,184,368) 1,516,528 4,775,769 (3,862,355) 913,414
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Multi-Sector Short Term Bond Series 1,840,974 (1,766,226) 74,748 6,998,095 (1,576,663) 5,421,432
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix Strategic Allocation Series 1,772,080 (4,155,383) (2,383,303) 2,392,889 (5,260,500) (2,867,611)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Aberdeen International Series 9,220,372 (5,561,115) 3,659,257 5,961,319 (5,971,853) (10,534)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Alger Small-Cap Growth Series 6,859,693 (1,619,428) 5,240,265 760,191 (552,721) 207,470
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Duff & Phelps Real Estate
Securities Series 1,955,521 (2,377,418) (421,897) 2,171,027 (2,291,889) (120,862)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation
Series: Aggressive Growth 1,119,786 (77,056) 1,042,730 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation
Series: Growth 3,652,143 (187,084) 3,465,059 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation
Series: Moderate 350,379 (7,967) 342,412 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation
Series: Moderate Growth 995,981 (105,040) 890,941 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Sanford Bernstein Mid-Cap
Value Series 3,470,795 (3,756,734) (285,939) 4,505,519 (5,026,181) (520,662)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Sanford Bernstein
Small-Cap Value Series 2,008,645 (2,176,372) (167,727) 3,708,250 (3,035,973) 672,277
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Van Kampen Comstock Series 3,821,716 (6,243,543) (2,421,827) 4,733,722 (10,362,157) (5,628,435)
-----------------------------------------------------------------------------------------------------------------------------------
Phoenix-Van Kampen Equity 500 Index Series 14,641,134 (6,776,475) 7,864,659 5,057,570 (6,795,897) (1,738,327)
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT CommodityRealReturn Strategy
Portfolio - Advisor Class 428,338 (67,825) 360,513 - - -
-----------------------------------------------------------------------------------------------------------------------------------
|
SA - 60
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 4--CHANGES IN UNITS OUTSTANDING (CONTINUED)
==================================================================================
For period ended December 31, 2006 For period ended December 31, 2005
Units Units Net Increase Units Units Net Increase
----- ----- ------------ ----- ----- ------------
INVESTMENT OPTION Issued Redeemed (Decrease) Issued Redeemed (Decrease)
----------------- ------ -------- ---------- ------ -------- ----------
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Real Return
Portfolio - Advisor Class 197,489 (34,650) 162,839 - - -
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT Total Return
Portfolio - Advisor Class 572,177 (10,325) 561,852 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Rydex Variable Trust Inverse Government
Long Bond Fund 75,915 (339,878) (263,963) 1,767,093 (1,665,773) 101,320
-----------------------------------------------------------------------------------------------------------------------------------
Rydex Variable Trust Nova Fund 41,360 (147,841) (106,481) 285,448 (185,657) 99,791
-----------------------------------------------------------------------------------------------------------------------------------
Rydex Variable Trust Sector Rotation Fund 657,961 (1,383,734) (725,773) 1,726,020 (346,618) 1,379,402
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets
Securities Fund - Class 2 839,271 (211,884) 627,387 58,312 (198,732) (140,420)
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Securities Fund - Class 2 3,244,411 (2,924,907) 319,504 4,726,772 (4,383,948) 342,824
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Global Asset Allocation
Fund - Class 2 29,061 (61,931) (32,870) 121,104 (197,765) (76,661)
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund - Class 2 2,279,623 (2,638,124) (358,501) 3,895,574 (8,479,285) (4,583,711)
-----------------------------------------------------------------------------------------------------------------------------------
Van Kampen UIF Equity and Income
Portfolio - Class II 233,868 (9,563) 224,305 - - -
-----------------------------------------------------------------------------------------------------------------------------------
Wanger International Select 2,528,280 (2,360,057) 168,223 2,083,066 (1,511,190) 571,876
-----------------------------------------------------------------------------------------------------------------------------------
Wanger International Small Cap 4,141,982 (5,560,021) (1,418,039) 6,187,419 (5,807,899) 379,520
-----------------------------------------------------------------------------------------------------------------------------------
Wanger Select 1,771,707 (1,366,734) 404,973 2,207,908 (1,541,047) 666,861
-----------------------------------------------------------------------------------------------------------------------------------
Wanger U.S. Smaller Companies 3,406,296 (6,973,798) (3,567,502) 5,793,702 (9,165,715) (3,372,013)
-----------------------------------------------------------------------------------------------------------------------------------
|
SA - 61
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS
A summary of units outstanding, unit values, net assets, investment income ratios, expense ratios (excluding expenses of the underlying fund) and total return ratios for each of the five years in the periods ended December 31, 2006, 2005, 2004, 2003 and 2002 follows:
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund - Class I
2006 7,911 1.01 to 1.13 8,134 0.06% - to 0.80% 4.89% to 6.55%
2005 7,454 0.95 to 1.06 7,262 0.07% - to 0.80% 7.97% to 8.83%
2004 5,816 0.88 to 0.97 5,234 - 0.40% to 0.80% 5.77% to 6.71%
2003 3,853 0.84 to 0.91 3,274 - 0.40% to 0.80% 28.48% to 29.52%
2002 1,756 0.65 to 0.70 1,160 - 0.40% to 0.80% (24.96%) to (4.08%)
AIM V.I. Core Equity Fund - Class I
2006(12) 4,237 1.09 to 1.10 4,623 0.83% - to 0.80% 8.57% to 9.16%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
AIM V.I. Mid Cap Core Equity Fund - Class I
2006 4,349 1.20 to 1.22 5,219 0.95% - to 0.80% 10.35% to 11.24%
2005 4,726 1.09 to 1.10 5,136 0.51% - to 0.80% 6.76% to 7.62%
2004(8) 4,439 1.02 to 1.02 4,515 1.95% 0.40% to 0.80% 1.92% to 1.98%
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Alger American Leveraged AllCap Portfolio - Class O
2006 16,097 0.78 to 1.14 13,373 - - to 0.80% 10.38% to 19.26%
2005 18,063 0.66 to 0.96 12,856 - - to 0.80% 13.53% to 14.45%
2004 20,187 0.58 to 0.84 12,536 - 0.40% to 0.80% (3.77%) to 8.19%
2003 15,970 0.54 to 0.83 9,232 - 0.40% to 0.80% 33.65% to 34.72%
2002 13,000 0.41 to 0.62 5,542 0.01% 0.40% to 0.80% (34.44%) to (33.91%)
Anchor Series Trust Capital Appreciation Portfolio - Class 1
2006 29 100.78 to 107.84 2,935 0.14% 0.45% to 0.60% 10.76% to 10.92%
2005 33 90.85 to 97.37 2,988 0.30% 0.45% to 0.60% 10.90% to 11.10%
2004 36 81.74 to 87.79 2,967 - 0.45% to 0.60% 8.47% to 8.62%
2003 38 75.25 to 80.94 2,864 - 0.45% to 0.60% 30.96% to 31.45%
2002 36 57.46 to 61.57 2,103 - 0.45% to 0.60% (23.13%) to (23.01%)
Anchor Series Trust Government & Quality Bond Portfolio - Class 1
2006 9 31.43 to 45.62 426 3.67% 0.45% to 0.60% 2.68% to 2.84%
2005 10 30.61 to 44.36 422 3.28% 0.45% to 0.60% 1.70% to 2.20%
2004 17 30.11 to 43.42 754 4.73% 0.45% to 0.60% 2.54% to 2.94%
2003 19 29.36 to 42.18 817 4.54% 0.45% to 0.60% 0.92% to 1.86%
2002 23 28.82 to 41.79 968 3.59% 0.45% to 0.60% 8.64% to 8.81%
Anchor Series Trust Growth and Income Portfolio - Class 1
2006 7 42.72 to 44.14 309 0.55% 0.45% to 0.60% 10.50% to 10.67%
2005 7 38.60 to 39.94 275 0.94% 0.45% to 0.60% 4.20% to 4.40%
2004 10 36.99 to 38.32 358 0.51% 0.45% to 0.60% 5.29% to 5.66%
2003 10 35.00 to 36.40 336 0.57% 0.45% to 0.60% 25.34% to 25.57%
2002 12 27.88 to 29.04 347 0.45% 0.45% to 0.60% (24.73%) to (24.60%)
|
SA - 62
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Anchor Series Trust Growth Portfolio - Class 1
2006 24 68.95 to 103.95 2,438 0.61% 0.45% to 0.60% 12.61% to 12.78%
2005 27 61.23 to 92.17 2,425 0.91% 0.45% to 0.60% 6.50% to 6.60%
2004 31 57.50 to 86.43 2,607 0.55% 0.45% to 0.60% 10.18% to 10.36%
2003 32 52.19 to 78.32 2,494 0.55% 0.45% to 0.60% 29.00% to 29.14%
2002 37 40.41 to 60.71 2,174 0.38% 0.45% to 0.60% (22.63%) to (22.53%)
Anchor Series Trust Money Market Portfolio - Class 1
2006 31 19.17 to 23.68 713 4.08% 0.45% to 0.60% 3.50% to 3.66%
2005 24 18.52 to 22.84 527 2.23% 0.45% to 0.60% 1.60% to 1.80%
2004 25 18.23 to 22.44 549 0.33% 0.45% to 0.60% (0.26%) to (0.11%)
2003 27 18.28 to 22.46 583 0.34% 0.45% to 0.60% (0.29%) to (0.13%)
2002 38 18.33 to 22.49 842 1.08% 0.45% to 0.60% 0.48% to 0.63%
Anchor Series Trust Multi-Asset Portfolio - Class 1
2006 69 43.16 to 43.33 2,966 1.68% 0.45% to 0.60% 7.11% to 7.27%
2005 71 40.23 to 40.45 2,864 1.90% 0.45% to 0.60% 3.30% to 3.40%
2004 75 38.91 to 39.18 2,918 1.76% 0.45% to 0.60% 4.04% to 4.19%
2003 76 37.34 to 37.66 2,855 2.30% 0.45% to 0.60% 16.20% to 16.31%
2002 80 32.11 to 32.41 2,562 2.90% 0.45% to 0.60% (13.58%) to (13.45%)
Anchor Series Trust Natural Resources Portfolio - Class 1
2006 10 84.80 to 88.96 913 0.69% 0.45% to 0.60% 24.18% to 24.37%
2005 11 68.29 to 71.53 796 0.50% 0.45% to 0.60% 45.30% to 45.50%
2004 11 47.01 to 49.17 523 0.78% 0.45% to 0.60% 24.29% to 24.49%
2003 9 37.82 to 39.50 368 1.54% 0.45% to 0.60% 45.75% to 46.82%
2002 10 25.76 to 27.10 263 0.86% 0.45% to 0.60% 7.73% to 7.89%
Anchor Series Trust Strategic Multi-Asset Portfolio - Class 1
2006 36 46.42 to 48.84 1,676 1.52% 0.45% to 0.60% 10.77% to 10.93%
2005 39 41.85 to 44.10 1,644 0.71% 0.45% to 0.60% 8.40% to 8.60%
2004 42 38.55 to 40.68 1,610 2.13% 0.45% to 0.60% 10.52% to 10.68%
2003 44 34.83 to 36.81 1,527 1.01% 0.45% to 0.60% 28.28% to 28.47%
2002 47 27.15 to 28.65 1,282 0.76% 0.45% to 0.60% (12.87%) to (12.74%)
DWS Equity 500 Index Fund VIP - Class A
2006 27,785 1.36 to 1.42 38,443 1.13% - to 0.80% 10.75% to 15.52%
2005 24,234 1.19 to 1.23 29,129 1.48% - to 0.80% 3.84% to 4.68%
2004 15,645 1.14 to 1.17 17,967 1.06% 0.40% to 0.80% 9.71% to 10.59%
2003 11,193 1.04 to 1.06 11,694 0.95% 0.40% to 0.80% 27.13% to 28.16%
2002 4,411 0.82 to 0.83 3,621 3.01% 0.40% to 0.80% (22.94%) to 7.90%
Federated Fund for U.S. Government Securities II
2006 25,746 1.25 to 1.40 35,432 3.96% - to 0.80% 3.31% to 4.35%
2005 26,910 1.20 to 1.35 35,456 3.69% - to 0.80% 1.21% to 2.03%
2004 20,358 1.18 to 1.33 26,792 4.10% 0.40% to 0.80% 2.78% to 3.61%
2003 25,120 1.15 to 1.30 31,813 3.58% 0.40% to 0.80% 1.55% to 2.37%
2002 30,348 1.12 to 1.28 37,072 3.53% 0.40% to 0.80% 3.27% to 9.05%
|
SA - 63
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Federated High Income Bond Fund II - Primary Shares
2006 10,839 1.35 to 1.55 14,778 7.50% - to 0.80% 9.92% to 10.80%
2005 10,444 1.23 to 1.40 12,943 8.34% - to 0.80% (0.79%) to 2.66%
2004 10,175 1.21 to 1.36 12,393 6.77% 0.40% to 0.80% 9.58% to 10.46%
2003 6,733 1.10 to 1.23 7,487 6.34% 0.40% to 0.80% 21.24% to 22.22%
2002 4,527 0.91 to 1.01 4,137 9.03% 0.40% to 0.80% 0.58% to 1.39%
Fidelity VIP Contrafund(R) Portfolio - Service Class
2006 48,160 1.35 to 1.71 67,672 1.16% - to 0.80% 10.70% to 11.59%
2005 42,540 1.22 to 1.53 54,365 0.18% - to 0.80% 15.92% to 16.85%
2004 35,193 1.05 to 1.31 39,503 0.23% 0.40% to 0.80% 14.42% to 15.34%
2003 23,995 0.92 to 1.14 23,591 0.22% 0.40% to 0.80% 27.33% to 28.35%
2002 8,202 0.72 to 0.89 6,051 0.47% 0.40% to 0.80% (10.15%) to 6.81%
Fidelity VIP Growth Opportunities Portfolio - Service Class
2006 5,607 0.86 to 1.18 5,032 0.53% - to 0.80% 4.46% to 10.02%
2005 4,209 0.83 to 1.12 3,631 0.71% - to 0.80% 2.01% to 8.86%
2004 3,371 0.77 to 1.03 2,688 0.43% 0.80% to 0.80% 6.20% to 7.06%
2003 2,806 0.72 to 0.96 2,142 0.57% 0.50% to 0.80% (7.16%) to 29.66%
2002 2,145 0.56 to 0.74 1,266 0.68% 0.50% to 0.80% (22.54%) to (21.92%)
Fidelity VIP Growth Portfolio - Service Class
2006 23,252 0.71 to 0.98 17,010 0.28% - to 0.80% 5.88% to 6.73%
2005 24,379 0.67 to 0.92 16,886 0.42% - to 0.80% (3.30%) to 5.67%
2004 28,533 0.64 to 0.88 18,892 0.14% 0.40% to 0.80% 2.44% to 3.26%
2003 30,444 0.62 to 0.85 20,431 0.17% 0.40% to 0.80% 31.72% to 32.78%
2002 22,981 0.47 to 0.64 11,808 0.06% 0.40% to 0.80% (30.76%) to (30.20%)
Franklin Income Securities Fund - Class 2
2006(15) 748 1.11 to 1.12 833 0.59% - to 0.80% 5.16% to 11.73%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Lazard Retirement Small Cap Portfolio - Service Shares
2006 1,759 1.26 to 1.28 2,223 - - to 0.80% 15.14% to 16.07%
2005(10) 1,834 1.10 to 1.10 2,012 - - to 0.80% 11.98% to 12.59%
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Lord Abbett Bond-Debenture Portfolio - Class VC
2006 4,310 1.11 to 1.13 4,806 6.09% - to 0.80% 8.46% to 9.33%
2005(9) 4,112 1.03 to 1.03 4,221 6.99% - to 0.80% 3.04% to 5.33%
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
|
SA - 64
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Lord Abbett Growth and Income Portfolio - Class VC
2006 20,535 1.22 to 1.24 25,175 1.33% - to 0.80% 10.01% to 17.27%
2005(9) 19,011 1.05 to 1.06 20,019 1.73% - to 0.80% 6.05% to 7.89%
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Lord Abbett Mid-Cap Value Portfolio - Class VC
2006 9,131 1.21 to 1.23 11,049 0.52% - to 0.80% 11.34% to 12.23%
2005(9) 8,949 1.09 to 1.09 9,722 0.71% - to 0.80% 11.46% to 13.98%
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Mutual Shares Securities Fund - Class 2
2006 22,061 1.56 to 2.03 42,791 1.29% - to 0.80% 17.44% to 18.38%
2005 19,751 1.33 to 1.72 32,505 0.66% - to 0.80% 3.12% to 10.55%
2004 9,217 1.20 to 1.57 13,926 0.77% 0.40% to 0.80% 2.26% to 12.63%
2003 7,972 1.07 to 1.41 10,802 1.05% 0.40% to 0.80% 13.75% to 25.15%
2002 6,484 0.86 to 1.13 7,185 0.88% 0.40% to 0.80% (12.52%) to 2.20%
Neuberger Berman AMT Fasciano Portfolio - S Class
2006(20) 5 0.97 to 0.97 5 - 0.80% to 0.80% 3.32% to 3.32%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Neuberger Berman AMT Guardian Portfolio - S Class
2006(17) 101 1.06 to 1.07 107 1.47% - to 0.80% 9.12% to 12.63%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Oppenheimer Capital Appreciation Fund/VA - Service Shares
2006(17) 442 1.02 to 1.02 451 - - to 0.80% (0.48%) to 7.97%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Oppenheimer Global Securities Fund/VA - Service Shares
2006(14) 436 1.07 to 1.07 465 - - to 0.80% 4.65% to 13.50%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
|
SA - 65
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Oppenheimer Main Street Small Cap Fund/VA - Service Shares
2006(18) 279 1.00 to 1.00 279 - 0.80% to 0.80% 5.47% to 10.02%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Phoenix Capital Growth Series
2006 50,797 0.64 to 4.02 186,428 0.21% - to 0.80% (0.23%) to 3.22%
2005 51,064 0.62 to 3.91 186,646 0.06% - to 0.80% 2.89% to 3.71%
2004 58,671 0.60 to 3.79 207,734 0.86% 0.50% to 0.80% 4.13% to 4.97%
2003 63,192 0.57 to 3.63 215,668 0.10% 0.50% to 0.80% 25.48% to 26.49%
2002 65,838 0.45 to 2.88 179,241 - 0.40% to 0.80% (25.41%) to (24.81%)
Phoenix Growth and Income Series
2006 26,367 1.25 to 1.51 38,734 1.14% - to 0.80% 11.57% to 17.18%
2005 25,382 1.07 to 1.30 32,167 1.05% - to 0.80% 3.97% to 4.80%
2004 27,420 1.03 to 1.25 33,449 1.28% 0.40% to 0.80% 9.59% to 10.48%
2003 22,752 0.94 to 1.14 25,394 1.16% 0.40% to 0.80% 26.44% to 27.46%
2002 21,039 0.74 to 0.90 18,605 0.83% 0.40% to 0.80% (23.13%) to (22.51%)
Phoenix Mid-Cap Growth Series
2006 27,967 0.76 to 1.38 37,704 - - to 0.80% 3.30% to 4.13%
2005 14,326 0.73 to 1.34 18,486 - - to 0.80% 3.35% to 4.18%
2004 17,911 0.70 to 1.30 22,322 - 0.40% to 0.80% (8.40%) to 6.72%
2003 16,041 0.66 to 1.22 19,061 - 0.40% to 0.80% 27.80% to 28.83%
2002 14,444 0.51 to 0.96 13,501 - 0.40% to 0.80% (33.04%) to (32.50%)
Phoenix Money Market Series
2006 35,146 1.09 to 2.23 60,133 4.32% - to 0.80% 0.28% to 4.41%
2005 35,905 1.05 to 2.14 58,630 2.54% - to 0.80% 1.76% to 2.58%
2004 40,179 1.03 to 2.10 64,278 0.77% 0.40% to 0.80% (0.01%) to 0.79%
2003 51,761 1.03 to 2.09 83,073 0.69% 0.40% to 0.80% (0.12%) to 0.68%
2002 66,402 1.02 to 2.09 102,728 1.40% 0.40% to 0.80% 0.61% to 1.42%
Phoenix Multi-Sector Fixed Income Series
2006 26,435 1.47 to 4.10 93,566 5.45% - to 0.80% 5.99% to 6.84%
2005 24,919 1.38 to 3.86 81,240 4.88% - to 0.80% 0.97% to 1.78%
2004 24,005 1.37 to 3.81 77,599 6.32% 0.40% to 0.80% 4.83% to 6.84%
2003 17,070 1.28 to 3.59 54,291 6.70% 0.40% to 0.80% 13.66% to 14.58%
2002 16,355 1.13 to 3.15 46,115 7.37% 0.40% to 0.80% 9.12% to 10.00%
Phoenix Multi-Sector Short Term Bond Series
2006 8,836 1.13 to 1.16 10,021 4.66% - to 0.80% 4.87% to 5.71%
2005 8,761 1.08 to 1.10 9,461 4.05% - to 0.80% 0.55% to 1.36%
2004 3,340 1.07 to 1.08 3,579 4.52% 0.50% to 0.80% 4.20% to 5.33%
2003(7) 1,438 1.02 to 1.03 1,473 6.22% 0.50% to 0.80% 1.19% to 2.47%
2002 - - to - - - - to - - to -
|
SA - 66
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Phoenix Strategic Allocation Series
2006 16,980 1.29 to 4.97 75,169 2.59% - to 0.80% 11.79% to 12.69%
2005 19,364 1.15 to 4.43 76,320 2.31% - to 0.80% 0.98% to 1.79%
2004 22,231 1.14 to 4.38 86,581 2.59% 0.40% to 0.80% 6.60% to 7.46%
2003 24,395 1.06 to 4.09 90,921 2.66% 0.40% to 0.80% 18.91% to 19.87%
2002 25,912 0.89 to 3.43 81,273 2.75% 0.40% to 0.80% (12.28%) to (11.58%)
Phoenix-Aberdeen International Series
2006 30,187 1.54 to 3.85 105,044 2.21% - to 0.80% 14.36% to 27.37%
2005 26,527 1.21 to 3.04 74,716 4.34% - to 0.80% 17.62% to 18.57%
2004 26,538 1.02 to 2.57 63,926 2.80% 0.40% to 0.80% 19.82% to 20.78%
2003 25,947 0.85 to 2.14 52,769 1.94% 0.40% to 0.80% 30.81% to 41.79%
2002 25,724 0.64 to 1.63 40,119 1.07% 0.50% to 0.80% (15.49%) to (14.81%)
Phoenix-Alger Small-Cap Growth Series
2006 7,108 2.11 to 2.18 15,016 0.03% - to 0.80% 0.87% to 19.45%
2005 1,868 1.78 to 1.83 3,329 - - to 0.80% 14.72% to 15.64%
2004 1,661 1.55 to 1.58 2,578 - 0.40% to 0.80% (10.27%) to 2.12%
2003 1,052 1.53 to 1.55 1,609 - 0.80% to 0.80% 44.83% to 53.38%
2002(4) 116 1.01 to 1.01 116 - 0.80% to 0.80% (9.69%) to 1.95%
Phoenix-Duff & Phelps Real Estate Securities Series
2006 8,741 3.34 to 5.76 46,224 1.30% - to 0.80% 19.51% to 37.07%
2005 9,163 2.45 to 4.22 35,760 1.74% - to 0.80% 14.18% to 15.10%
2004 9,283 2.14 to 3.69 31,799 2.48% 0.40% to 0.80% 33.61% to 34.69%
2003 8,324 1.59 to 2.75 21,543 3.49% 0.40% to 0.80% 37.16% to 38.27%
2002 7,432 1.16 to 2.00 14,263 3.99% 0.40% to 0.80% 2.11% to 12.08%
Phoenix-S&P Dynamic Asset Allocation Series: Aggressive Growth
2006(11) 1,043 1.12 to 1.13 1,166 2.23% - to 0.80% (0.47%) to 12.47%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Phoenix-S&P Dynamic Asset Allocation Series: Growth
2006(11) 3,465 1.09 to 1.10 3,794 3.81% - to 0.80% 6.50% to 10.18%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Phoenix-S&P Dynamic Asset Allocation Series: Moderate
2006(11) 342 1.05 to 1.05 359 23.55% 0.80% to 0.80% 0.01% to 5.51%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
|
SA - 67
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Phoenix-S&P Dynamic Asset Allocation Series: Moderate Growth
2006(11) 891 1.08 to 1.09 962 3.37% - to 0.80% 7.82% to 9.41%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Phoenix-Sanford Bernstein Mid-Cap Value Series
2006 18,880 1.97 to 2.60 38,670 0.42% - to 0.80% 6.30% to 14.91%
2005 19,166 1.73 to 2.26 34,422 0.11% - to 0.80% 6.87% to 7.73%
2004 19,686 1.62 to 2.10 33,069 0.18% 0.40% to 0.80% 19.44% to 20.41%
2003 18,177 1.35 to 1.74 25,502 0.19% 0.40% to 0.80% 39.85% to 40.97%
2002 18,224 0.97 to 1.24 18,246 0.96% 0.40% to 0.80% (9.28%) to (8.55%)
Phoenix-Sanford Bernstein Small-Cap Value Series
2006 10,242 2.10 to 2.42 24,109 0.22% - to 0.80% 7.72% to 16.75%
2005 10,410 1.81 to 2.09 21,154 - - to 0.80% 6.60% to 7.46%
2004 9,737 1.69 to 1.96 18,554 - 0.40% to 0.80% 21.69% to 22.67%
2003 8,071 1.38 to 1.61 12,639 - 0.40% to 0.80% 42.71% to 43.86%
2002 6,431 0.97 to 1.13 7,087 0.60% 0.40% to 0.80% (16.25%) to 7.43%
Phoenix-Van Kampen Comstock Series
2006 22,954 1.19 to 1.92 41,460 1.70% - to 0.80% 19.93% to 20.90%
2005 25,376 0.98 to 1.60 37,974 1.14% - to 0.80% 4.59% to 5.43%
2004 31,005 0.93 to 1.53 44,642 0.98% 0.40% to 0.80% 12.01% to 12.92%
2003 21,152 0.82 to 1.37 27,660 0.95% 0.40% to 0.80% 22.88% to 23.88%
2002 19,603 0.66 to 1.11 21,043 0.95% 0.40% to 0.80% (22.56%) to (21.93%)
Phoenix-Van Kampen Equity 500 Index Series
2006 37,558 1.08 to 1.52 55,894 1.36% - to 0.80% 3.32% to 14.21%
2005 29,694 0.95 to 1.34 39,178 1.25% - to 0.80% 2.86% to 3.69%
2004 31,432 0.92 to 1.30 40,342 1.48% 0.50% to 0.80% 8.96% to 9.84%
2003 31,533 0.83 to 1.19 37,193 1.12% 0.50% to 0.80% 25.22% to 26.23%
2002 31,028 0.66 to 0.95 29,285 0.92% 0.50% to 0.80% (24.30%) to (23.68%)
PIMCO VIT CommodityRealReturn Strategy Portfolio - Advisor Class
2006(13) 361 0.95 to 0.95 344 8.40% 0.80% to 0.80% (6.38%) to (5.42%)
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
PIMCO VIT Real Return Portfolio - Advisor Class
2006(19) 163 1.02 to 1.02 166 4.58% - to 0.80% (0.71%) to 1.62%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
|
SA - 68
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
PIMCO VIT Total Return Portfolio - Advisor Class
2006(16) 562 1.04 to 1.04 582 4.54% 0.80% to 0.80% 3.67% to 3.95%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003 - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Rydex Variable Trust Inverse Government Long Bond Fund
2006 319 0.94 to 0.97 302 3.46% - to 0.80% 7.24% to 8.11%
2005 583 0.88 to 0.90 513 - - to 0.80% (6.00%) to (5.24%)
2004 481 0.93 to 0.95 451 - 0.80% to 0.80% (11.38%) to (6.95%)
2003(5) 485 1.05 to 1.06 512 - 0.80% to 0.80% (4.35%) to 6.62%
2002 - - to - - - - to - - to -
Rydex Variable Trust Nova Fund
2006 296 1.69 to 1.74 500 1.20% - to 0.80% 16.13% to 19.27%
2005 402 1.43 to 1.46 575 0.30% - to 0.80% (3.15%) to 11.24%
2004 302 1.39 to 1.40 419 0.05% 0.80% to 0.80% 13.71% to 14.62%
2003(6) 232 1.22 to 1.22 283 - 0.80% to 0.80% 9.08% to 21.02%
2002 - - to - - - - to - - to -
Rydex Variable Trust Sector Rotation Fund
2006 1,053 1.58 to 1.63 1,668 - - to 0.80% (11.88%) to 11.39%
2005 1,779 1.43 to 1.46 2,549 - - to 0.80% 12.80% to 13.71%
2004 400 1.27 to 1.29 508 - 0.80% to 0.80% 9.83% to 10.71%
2003(7) 187 1.16 to 1.16 216 - 0.80% to 0.80% 1.82% to 16.55%
2002 - - to - - - - to - - to -
Templeton Developing Markets Securities Fund - Class 2
2006 1,548 2.91 to 2.96 4,576 1.05% - to 0.80% 27.07% to 28.09%
2005 920 2.27 to 2.33 2,142 1.33% - to 0.80% 26.41% to 27.43%
2004 1,061 1.78 to 1.84 1,953 1.83% 0.50% to 0.80% 23.71% to 24.71%
2003 1,162 1.43 to 1.49 1,728 1.20% 0.50% to 0.80% 51.77% to 52.99%
2002 1,329 0.93 to 0.98 1,303 1.39% 0.50% to 0.80% (12.95%) to (0.15%)
Templeton Foreign Securities Fund - Class 2
2006 15,821 1.51 to 1.68 25,791 1.25% - to 0.80% 20.48% to 21.44%
2005 15,502 1.24 to 1.40 20,939 1.14% - to 0.80% 9.29% to 10.17%
2004 15,159 1.13 to 1.28 18,689 1.06% 0.40% to 0.80% 17.58% to 18.53%
2003 12,805 0.95 to 1.09 13,445 1.75% 0.40% to 0.80% 31.15% to 32.21%
2002 10,043 0.72 to 0.83 8,100 1.55% 0.40% to 0.80% (19.21%) to (18.56%)
Templeton Global Asset Allocation Fund - Class 2
2006 578 1.65 to 1.95 1,115 7.09% - to 0.80% 20.14% to 21.11%
2005 611 1.37 to 1.62 981 3.77% - to 0.80% 2.73% to 3.55%
2004 687 1.32 to 1.58 1,072 2.82% 0.80% to 0.80% 14.79% to 15.72%
2003 720 1.14 to 1.38 977 2.55% 0.80% to 0.80% 30.90% to 31.95%
2002 725 0.86 to 1.05 752 1.77% 0.80% to 0.80% (6.69%) to (4.39%)
|
SA - 69
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Templeton Growth Securities Fund - Class 2
2006 11,184 1.60 to 2.15 23,091 1.31% - to 0.80% 20.84% to 21.81%
2005 11,543 1.32 to 1.78 19,693 1.15% - to 0.80% 8.00% to 8.86%
2004 16,126 1.22 to 1.65 23,254 1.20% 0.40% to 0.80% 15.10% to 16.03%
2003 13,781 1.05 to 1.43 17,313 1.54% 0.40% to 0.80% 31.08% to 32.14%
2002 11,518 0.80 to 1.09 10,839 2.45% 0.40% to 0.80% (19.14%) to (16.40%)
Van Kampen UIF Equity and Income Portfolio - Class II
2006(18) 224 1.08 to 1.08 242 0.57% - to 0.80% 9.32% to 10.40%
2005 - - to - - - - to - - to -
2004 - - to - - - - to - - to -
2003(7) - - to - - - - to - - to -
2002 - - to - - - - to - - to -
Wanger International Select
2006 5,240 1.34 to 3.05 14,343 0.28% - to 0.80% 34.91% to 36.00%
2005 5,072 0.99 to 2.26 10,353 1.89% - to 0.80% 15.50% to 16.43%
2004 4,500 0.85 to 1.96 7,964 0.29% 0.40% to 0.80% 14.54% to 24.34%
2003 4,340 0.69 to 1.59 6,293 0.29% 0.50% to 0.80% 40.11% to 41.24%
2002 2,858 0.49 to 1.13 3,067 - 0.50% to 0.80% (15.97%) to (15.29%)
Wanger International Small Cap
2006 18,094 2.10 to 4.01 68,022 0.55% - to 0.80% 14.10% to 37.16%
2005 19,512 1.53 to 2.94 54,231 1.03% - to 0.80% 20.56% to 21.53%
2004 19,133 1.26 to 2.43 43,806 0.69% 0.40% to 0.80% 29.23% to 30.27%
2003 20,004 0.96 to 1.87 35,683 0.30% 0.40% to 0.80% 47.67% to 48.87%
2002 17,887 0.65 to 1.27 21,788 - 0.40% to 0.80% (14.52%) to (13.83%)
Wanger Select
2006 6,289 2.02 to 2.98 16,533 0.37% - to 0.80% 18.75% to 19.70%
2005 5,884 1.69 to 2.51 13,086 - - to 0.80% 9.61% to 10.49%
2004 5,217 1.54 to 2.29 10,553 - 0.40% to 0.80% 18.35% to 19.31%
2003 3,832 1.30 to 1.93 6,651 - 0.40% to 0.80% 29.68% to 30.73%
2002 2,569 1.00 to 1.49 3,620 - 0.40% to 0.80% (8.36%) to (0.54%)
|
SA - 70
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 5--FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, For the periods ended December 31,
------------------------------------------------- ------------------------------------------------------------------
Unit Net Investment Expense Total
Units Value Assets Income Ratio(2) Return(3)
(000's) (Lowest to Highest) (000's) Ratio(1) (Lowest to Highest) (Lowest to Highest)
------------------------------------------------- ------------------------------------------------------------------
Wanger U.S. Smaller Companies
2006 29,901 1.68 to 2.96 85,779 0.23% - to 0.80% 0.83% to 7.87%
2005 33,469 1.57 to 2.76 89,736 - - to 0.80% 10.37% to 11.25%
2004 36,841 1.41 to 2.49 89,664 - 0.40% to 0.80% 17.39% to 18.33%
2003 34,006 1.20 to 2.12 70,547 - 0.40% to 0.80% 42.08% to 43.22%
2002 33,760 0.84 to 1.48 49,480 - 0.40% to 0.80% (17.48%) to (16.81%)
|
(1) The investment income ratios represent the annualized dividends, excluding distributions of capital gains, received by the Investment Option from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the daily average net assets. These ratios exclude those expenses, such as mortality and expense charges that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the Investment Option is affected by the timing of the declaration of dividends by the underlying fund in which the Investment Option invests.
(2) The expense ratios represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded.
(3) The total returns are for the periods indicated, including changes in the value of the underlying fund, and the expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. Total return is presented as the minimum and maximum return for the units invested in the Investment Option. While the Investment Option may be active in a given year, certain units may be initiated during the year. The corresponding return on those units, which is for the partial year, may cause the minimum and maximum total return for all the units in that Investment Option to deviate outside the range of the expense ratios presented.
(4) From inception August 14, 2002 to December 31, 2002.
(5) From inception June 2, 2003 to December 31, 2003.
(6) From inception June 3, 2003 to December 31, 2003.
(7) From inception June 4, 2003 to December 31, 2003.
(8) From inception December 3, 2004 to December 31, 2004.
(9) From inception April 21, 2005 to December 31, 2005.
(10) From inception April 29, 2005 to December 31, 2005.
(11) From inception February 6, 2006 to December 31, 2006.
(12) From inception April 28, 2006 to December 31, 2006.
(13) From inception May 2, 2006 to December 31, 2006.
(14) From inception May 8, 2006 to December 31, 2006.
(15) From inception May 12, 2006 to December 31, 2006.
(16) From inception May 16, 2006 to December 31, 2006.
(17) From inception May 18, 2006 to December 31, 2006.
(18) From inception May 24, 2006 to December 31, 2006.
(19) From inception June 1, 2006 to December 31, 2006.
(20) From inception June 7, 2006 to December 31, 2006.
SA - 71
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 6---POLICY LOANS
Policy provisions generally allow policyowners to borrow up to 90%-100% of the
policy's cash surrender value, reduced by an amount equal to the surrender
charge with loan interest payable on each policy anniversary. Loan interest
rates vary by product. At the time the loan is granted, an amount equivalent to
the amount of the loan is transferred from the Separate Account and the
non-loaned portion of the Guaranteed Interest Account to the loaned portion of
the Guaranteed Interest Account, part of Phoenix's general account as collateral
for the outstanding loan. Transfers from the account are included as participant
withdrawals in the accompanying financial statements. Amounts in the loaned
portion of the Guaranteed Interest Account are credited with interest at 2% for
all states except New York and 4% for New York. Loan repayments result in a
transfer of collateral back to the Separate Account and the non-loaned portion
of the Guaranteed Interest Account.
NOTE 7---FEES AND RELATED PARTY TRANSACTIONS
Phoenix and its affiliate, Phoenix Equity Planning Corporation ("PEPCO"), a
registered broker/dealer in securities, provide all services to the Separate
Account. PEPCO is the principal underwriter and distributor for the Separate
Account.
Certain fees are deducted from the Contracts. To understand all of the charges that are assessed for your individual policy you should refer to your policy contract provided to you at issue or the most recent product prospectus provided to you annually. Those fees are described below:
A) Contract Maintenance Charges
The Separate Account is assessed periodic Contract Maintenance Charges which are designed to compensate Phoenix for certain costs associated with maintenance. These expenses are included in a separate line item entitled 'Contract Maintenance Charges' in the accompanying statements of changes in net assets. The total aggregate expense for the periods ended December 31, 2006, and 2005, were $70,310,745 and $76,043,316 respectively. The maximum charges assessed the Separate Account for Contract Maintenance Charges are outlined as follows:
Administration Charge - In accordance with terms of the contracts, Phoenix may make deductions for administrative charges. Because a policy face amount and policy duration may vary, the administrative charge may also vary.
Policy Surrender Charge - In accordance with terms of the contracts, Phoenix makes deductions for surrender charges. Because a policy's account value and policy duration may vary, the surrender charge may also vary.
Cost of Insurance Charge - In accordance with terms of the contracts, Phoenix makes deductions for costs of insurance to cover Phoenix's anticipated mortality costs. Because a policy's account value and death benefit may vary from month to month, the cost of insurance charge may also vary.
Other Charges - Phoenix may deduct other costs depending on the policy terms.
All of the above expenses are taken out as a redemption of units.
B) Optional Rider and Benefit Charges
Phoenix may deduct other charges and fees based on the selection of Other Optional Policy Benefits and Riders. These expenses are included in a separate line item entitled 'Transfers for contract benefits and terminations' in the accompanying statements of changes in net assets. This expense is taken out as a redemption of units.
C) Mortality and Expense Charge and Administration Fee charges
Phoenix will make deductions at a maximum rate of .80% of the contracts value for the mortality and expense risks and 0% for administration fees, which the company undertakes. These expenses are included in separate line items 'Mortality and Expense Fees' and 'Administration Fees' in the accompanying statements of operations. The total aggregate expense for the period ended December 31, 2006 is $9,058,453 and $21,173 respectively. This expense is taken out as a reduction of unit values.
SA - 72
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 8---DISTRIBUTION OF NET INCOME
The Separate Account does not declare distributions to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of withdrawals of amounts in the form of surrenders, death
benefits, transfers or annuity payments in excess of net purchase payments.
NOTE 9---DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code of 1986 (the
"Code") as amended, a variable contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
a variable contract for federal tax purposes for any period for which the
investments of the segregated asset account on which the contract is based are
not adequately diversified. Each investment option is required to satisfy the
requirements of Section 817(h). The Code provides that the "adequately
diversified" requirement may be met if the underlying investments satisfy either
the statutory safe harbor test or diversification requirements set forth in
regulations issued by the Secretary of the Treasury.
Phoenix intends that each of the investment options shall comply with the diversification requirements and, in the event of any failure to comply, will take immediate corrective action to assure compliance.
NOTE 10---LIQUIDATIONS AND MERGERS
On October 20, 2006, the Growth and Income Series acquired all of the net assets
of the Phoenix-Kayne Rising Dividends Series ("Kayne Rising Dividends") pursuant
to an Agreement and Plan of Reorganization approved by the Kayne Rising
Dividends shareholders on October 5, 2006. The acquisition was accomplished by a
tax-free exchange of 835,783 shares of Growth and Income outstanding on October
20, 2006 and valued at $11,722,358 for 1,002,388 shares of Kayne Rising
Dividends outstanding on October 20, 2006. Kayne Rising Dividend's net assets of
$11,722,362, including $1,654,538 of net unrealized appreciation were combined
with those of Growth and Income. The aggregate net assets of Growth and Income
immediately after the merger were $163,685,403.
On October 20, 2006, the Aberdeen International Series acquired all of the net assets of the Phoenix-Lazard International Equity Select Series ("Lazard International Equity Select") pursuant to an Agreement and Plan of Reorganization approved by the Lazard International Equity Select shareholders on October 5, 2006. The acquisition was accomplished by a tax- free exchange of 10,426,631 shares of Aberdeen International outstanding on October 20, 2006 and valued at $175,009,666 for 10,514,476 shares of Lazard International Equity Select outstanding on October 20, 2006. Lazard International Equity Select's net assets of $175,009,669, including $33,022,037 of net unrealized appreciation were combined with those of Aberdeen International. The aggregate net assets of Aberdeen International immediately after the merger were $389,209,267.
On October 27, 2006, the Capital Growth Series acquired all of the net assets of the Phoenix-AIM Growth Series ("AIM Growth") pursuant to an Agreement and Plan of Reorganization approved by the AIM Growth shareholders on October 5, 2006. The acquisition was accomplished by a tax-free exchange of 3,996,273 shares of Capital Growth outstanding on October 27, 2006 and valued at $61,016,844 for 8,399,603 shares of AIM Growth outstanding on October 27, 2006. AIM Growth's net assets of $61,016,844, including $8,256,215 of net unrealized appreciation were combined with those of Capital Growth. The aggregate net assets of Capital Growth immediately after the merger were $452,685,507.
On October 27, 2006, the Mid-Cap Growth Series acquired all of the net assets of the Phoenix Strategic Theme Series ("Strategic Theme") pursuant to an Agreement and Plan of Reorganization approved by the Strategic Theme shareholders on October 5, 2006. The acquisition was accomplished by a tax-free exchange of 3,950,319 shares of Mid-Cap Growth outstanding on October 27, 2006 and valued at $53,113,639 for 4,883,118 shares of Strategic Theme outstanding on October 27, 2006. Strategic Theme's net assets of $53,113,639, including $7,454,917 of net unrealized appreciation were combined with those of Mid-Cap Growth. The aggregate net assets of Mid-Cap Growth immediately after the merger were $98,521,888.
On October 27, 2006, the Alger Small-Cap Growth Series acquired all of the net assets of the Phoenix-Engemann Small- Cap Growth Series ("Engemann Small-Cap Growth") and the Phoenix-Kayne Small-Cap Quality Value Series ("Kayne Small-Cap Quality Value") pursuant to an Agreement and Plan of Reorganization approved by the Engemann Small-Cap Growth and Kayne Small-Cap Quality Value shareholders on October 26, 2006. The acquisition was accomplished by a tax-free exchange of 1,912,431 shares of Alger Small-Cap Growth outstanding on October 27, 2006 and valued at $34,546,959 for 2,108,424 shares of Engemann Small-Cap Growth valued at $16,831,325 and 1,054,130 shares of Kayne Small-Cap Quality Value valued at $17,715,634. Engemann Small-Cap Growth's net assets of $16,831,325, including $4,238,547 of net unrealized appreciation and Kayne Small-Cap Quality Value's net assets of $17,715,634, including $4,213,331 of net unrealized appreciation were combined with those of Alger Small-Cap Growth. The aggregate net assets of Alger Small-Cap Growth immediately after the merger were $59,092,472.
SA - 73
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 10---LIQUIDATIONS AND MERGERS (CONTINUED)
On October 27, 2006, the Van Kampen Equity 500 Index Series acquired all of the
net assets of the Phoenix-Northern Dow 30 Series ("Northern Dow 30") and the
Phoenix-Northern Nasdaq-100 Index(R) Series ("Northern Nasdaq-100 Index(R)")
pursuant to an Agreement and Plan of Reorganization approved by the Northern Dow
30 and Northern Nasdaq-100 Index(R) shareholders on October 26, 2006. The
acquisition was accomplished by a tax-free exchange of 3,550,335 shares of Van
Kampen Equity 500 Index outstanding on October 27, 2006 and valued at
$44,067,409 for 2,100,979 shares of Northern Dow 30 valued at $21,817,938 and
4,901,410 shares of Northern Nasdaq-100 Index(R) valued at $22,249,471. Northern
Dow 30's net assets of $21,817,938, including $4,937,365 of net unrealized
appreciation and Northern Nasdaq- 100 Index(R)'s net assets of $22,249,471,
including $5,784,158 of net unrealized appreciation were combined with those of
Van Kampen Equity 500 Index. The aggregate net assets of Van Kampen Equity 500
Index immediately after the merger were $145,082,755.
On July 22, 2005, the Scudder VIT EAFE Equity Index Fund (the "Index Fund") was liquidated pursuant to approval of it's Board. On that date the Index Fund involuntarily redeemed its outstanding shares. Contract value in the Index Fund was automatically transferred to the Phoenix Money Market Series.
On April 29, 2005, Lazard Retirement Small Cap Portfolio acquired all of the net assets of the Phoenix-Lazard Small-Cap Value Series pursuant to an Agreement and Plan of Reorganization approved by the Phoenix-Lazard Small-Cap Value Series' shareholders on April 26, 2005. The acquisition was accomplished by a tax-free exchange of 771,728 shares of the Lazard Retirement Small Cap Value Series valued at $12,046,680 for 960,107 shares of Phoenix-Lazard Small-Cap Value Portfolio outstanding on April 29, 2005. Phoenix-Lazard Small-Cap Value Portfolio's net assets on that date including $714,260 of unrealized appreciation and $254,282 of accumulated realized net gain were combined with those of the Lazard Retirement Small-Cap Value Portfolio. The aggregate net assets of the Lazard Retirement Small Cap Value Portfolio and the Phoenix-Lazard Small-Cap Value Series immediately before the reorganization were $104,311,297 and $12,046,680, respectively. The aggregate net assets of Lazard Retirement Small Cap Value Portfolio immediately after the reorganization were $116,357,977.
On April 29, 2005, Lord Abbett Growth and Income Portfolio acquired all of the net assets of the Phoenix-Lord Abbett Large-Cap Value Series pursuant to an Agreement and Plan of Reorganization approved by Phoenix-Lord Abbett Large- Cap Value Series shareholders on April 12, 2005. The acquisition was accomplished by a tax-free exchange of 3,737,233 shares of the Lord Abbett Growth and Income Portfolio valued at $97,205,428 for 7,250,139 shares of Phoenix-Lord Abbett Large-Cap Value Series outstanding on April 29, 2005. Phoenix-Lord Abbett Large-Cap Value Series' net assets at that date, including $7,237,561 of unrealized appreciation, were combined with those of the Lord Abbett Growth and Income Portfolio. The aggregate net assets of the Lord Abbett Growth and Income Portfolio and the Phoenix-Lord Abbett Large- Cap Value Series immediately before the acquisition were $1,216,447,332 and $97,205,428, respectively. The aggregate net assets of the Lord Abbett Growth and Income Portfolio immediately after the acquisition were $1,313,652,760. On April 29, 2005, Lord Abbett Mid-Cap Value Portfolio acquired all of the net assets of Phoenix-Lord Abbett Mid-Cap Value Series pursuant to an Agreement and Plan of Reorganization approved by Phoenix-Lord Abbett Mid-Cap Value Series shareholders on April 12, 2005. The acquisition was accomplished by a tax-free exchange of 1,515,826 shares of the Lord Abbett Mid-Cap Value Series valued at $29,922,414 for 2,115,079 shares of Phoenix-Lord Abbett Mid-Cap Value Portfolio outstanding on April 29, 2005. Phoenix-Lord Abbett Mid-Cap Value Series' net assets at that date including $3,926,421 of unrealized appreciation were combined with those of the Lord Abbett Mid- Cap Value Portfolio. The aggregate net assets of the Lord Abbett Mid-Cap Value Portfolio and the Phoenix-Lord Abbett Mid-Cap Value Series immediately before the acquisition were $895,257,168 and $29,922,414, respectively. The aggregate net assets of the Lord Abbett Mid-Cap Value Portfolio immediately after the acquisition were $925,179,582.
On April 29, 2005, Lord Abbett Bond-Debenture Portfolio acquired all of the net assets of Phoenix-Lord Abbett Bond- Debenture Series pursuant to an Agreement and Plan of Reorganization approved by Phoenix-Lord Abbett Bond- Debenture Series shareholders on April 12, 2005. The acquisition was accomplished by a tax-free exchange of 2,017,717 shares of the Lord Abbett Bond-Debenture Series valued at $23,385,336, for 2,114,305 shares of Phoenix-Lord Abbett Bond-Debenture Series outstanding on April 29, 2005. Phoenix-Lord Abbett Bond-Debenture Series' net assets at that date, including $285,615 of unrealized depreciation, were combined with those of the Lord Abbett Bond-Debenture Portfolio. The aggregate net assets of the Lord Abbett Bond-Debenture Portfolio and the Phoenix-Lord Abbett Bond - Debenture Series immediately before the acquisition were $144,433,446 and $23,385,336, respectively. The aggregate net assets of the Lord Abbett Bond-Debenture Portfolio immediately after the acquisition were $167,818,782.
SA - 74
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 11---MANAGER OF MANAGERS EXEMPTIVE ORDER
The Phoenix Edge Series Fund ("PESF") and Phoenix Variable Advisors, Inc.
("PVA") have received an exemptive order from the Securities and Exchange
Commission ("SEC") granting exemptions from certain provisions of the Investment
Company Act of 1940, as amended, pursuant to which PVA will, subject to
supervision and approval of the PESF's Board of Trustees, be permitted to enter
into and materially amend subadvisory agreements without such agreements being
approved by the shareholders of the applicable series of the PESF. The PESF and
PVA will therefore have the right to hire, terminate, or replace subadvisors
without shareholder approval, including, without limitation, the replacement or
reinstatement of any subadvisor with respect to which a subadvisory agreement
has automatically terminated as a result of an assignment. PVA will continue to
have the ultimate responsibility to oversee the subadvisors and recommend their
hiring, termination and replacement.
NOTE 12---MIXED AND SHARED FUNDING
Shares of the PESF are not directly offered to the public. Shares of the PESF
are currently offered through separate accounts to fund variable accumulation
annuity contracts and variable universal life insurance policies issued by
Phoenix Life Insurance Company, PHL Variable Insurance Company, and Phoenix Life
and Annuity Company. Shares of the PESF may be offered to separate accounts of
other insurance companies in the future.
The interests of variable annuity contract owners and variable life policy owners could diverge based on differences in federal and state regulatory requirements, tax laws, investment management or other unanticipated developments. The PESF's Trustees currently do not foresee any such differences or disadvantages at this time. However, the PESF's Trustees intend to monitor for any material conflicts and will determine what action, if any, should be taken in response to such conflicts. If such a conflict should occur, one or more separate accounts may be required to withdraw its investment in the PESF or shares of another fund may be substituted.
NOTE 13---OTHER
On May 1, 2006, the Rydex Variable Trust Juno Fund changed its name to the
Inverse Government Long Bond Fund, and the class identifier of "Service Shares"
was added to the Lazard Retirement Series: Lazard Retirement Small Cap
Portfolio.
On June 26, 2006, Phoenix Investment Counsel, Inc. ("PIC") became the investment advisor to the Phoenix Capital Growth Series and Harris Investment Management, Inc (HIM) is the new subadvisor.
On September 1, 2006, the Board of Trustees of PESF approved a name and subadvisor change for the Phoenix-Alliance Bernstein Enhanced Index Series. The new series name is Phoenix-Van Kampen Equity 500 Index Series. Morgan Stanley Investment Management Inc. (dba, "Van Kampen") became the new subadvisor.
On October 23, 2006, the Board of Trustees of PESF approved the following name changes: Phoenix-Engemann Growth and Income Series to Phoenix Growth and Income Series; Phoenix-Engemann Strategic Allocation Series to Phoenix Strategic Allocation Series; Phoenix-Goodwin Money Market Series to Phoenix Money Market Series; Phoenix-Goodwin Multi-Sector Fixed Income Series to Phoenix Multi-Sector Fixed Income Series; and Phoenix-Goodwin Multi-Sector Short Term Bond Series to Phoenix Multi-Sector Short Term Bond Series.
On October 23, 2006, PIC replaced Engemann Asset Management as the subadvisor to the Phoenix Growth and Income Series. Engemann Asset Management was removed as subadvisor for the Phoenix Strategic Allocation Series, which will be managed by the advisor, PIC.
The insurance company affiliates of the Fund distribute the Fund as investment options in variable annuity and life insurance products ("Variable Products") through non-affiliated advisors, broker-dealers and other financial intermediaries. There is substantial competition for business within most of these distributors. One of the largest distributors of the Variable Products (and the Fund) includes a subsidiary of State Farm Mutual Automobile Company, or State Farm. In 2006, State Farm accounted for approximately 29% of new life insurance and annuity sales, including the sales of Variable Products, based on first year commissions. The insurance company affiliates of the Fund have had distribution arrangements with State Farm since 2001. In 2007, the agreement with State Farm to provide life and annuity products and related services to State Farm's affluent and high-net-worth customers through qualified State Farm agents was extended until 2016.
On August 12, 2005, pursuant to approval of the Board of Trustees of PESF - the
name, advisor and subadvisor were changed for the Phoenix-Seneca Mid-Cap Growth
and Phoenix-Seneca Strategic Theme Series. The new names for the series are:
Phoenix Mid-Cap Growth and Phoenix Strategic Theme Series. The new advisor for
both series is PVA. The subadvisor for the two renamed series is Bennett
Lawrence Management, LLC. The PESF relied on its exemptive order from the SEC to
effect the subadvisor change.
SA - 75
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 13---OTHER (CONTINUED)
State Street Research & Management Company ("SSR") notified PVA that it was
terminating its subadvisory relationship with PVA to subadvise Phoenix-State
Street Research Small-Cap Growth Series, a series of the Fund. PVA and the PESF
have been granted an exemptive order from the SEC that permits them to hire,
terminate and replace subadvisors without shareholder approval. Effective
January 7, 2005, PVA hired Fred Alger Management, Inc. ("Alger"), as the new
subadvisor for the series, and the name of the series changed to Phoenix-Alger
Small-Cap Growth Series.
SA - 76
PRICEWATERHOUSECOOPERS LLP
100 Pearl St.
Hartford CT 06103-4508
Telephone (860) 241 7000
Facsimile (860) 241 7590
Report of Independent Registered Public Accounting Firm
To the Board of Directors of Phoenix Life Insurance Company and Participants of Phoenix Life Variable Universal Life Account:
In our opinion, the accompanying statements of assets and liabilities and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of each of the subaccounts constituting the Phoenix Life Variable Universal Life Account at December 31, 2006, and the results of each of their operations and the changes in each of their net assets for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Phoenix Life Insurance Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 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, which included confirmation of securities at December 31, 2006 by correspondence with the mutual funds' advisors, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP March 23, 2007 |
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
Phoenix Life Insurance Company
One American Row
Hartford, Connecticut 06103-2899
PHOENIX EQUITY PLANNING CORPORATION
56 Prospect Street
Hartford, Connecticut 06115-0480
Underwriter
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
100 Pearl Street
Hartford, Connecticut 06103
SA-1
PHOENIX LIFE
INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF THE PHOENIX COMPANIES, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm.......... F-3 Consolidated Balance Sheet as of December 31, 2006 and 2005...... F-4 Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2006, 2005 and 2004............... F-5 Consolidated Statement of Cash Flows for the years ended December 31, 2006, 2005 and 2004............................... F-6 Consolidated Statement of Changes in Stockholder's Equity for the years ended December 31, 2006, 2005 and 2004................... F-7 Notes to Financial Statements.................................... F-8 - F-41 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of Phoenix Life Insurance Company:
In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income and comprehensive income, cash flows and changes in stockholder's equity present fairly, in all material respects, the financial position of Phoenix Life Insurance Company and its subsidiaries (the Company) at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 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 our opinion.
/s/ PricewaterhouseCoopers LLP Hartford, Connecticut March 23, 2007 |
PHOENIX LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
($ in millions, except share data)
DECEMBER 31, 2006 AND 2005
2006 2005
-------------- --------------
ASSETS:
Available-for-sale debt securities, at fair value........................................... $ 12,549.9 $ 13,402.6
Available-for-sale equity securities, at fair value......................................... 173.6 169.6
Mortgage loans, at unpaid principal balances................................................ 71.9 128.6
Venture capital partnerships, at equity in net assets....................................... 116.8 145.1
Policy loans, at unpaid principal balances.................................................. 2,322.0 2,245.0
Other invested assets....................................................................... 307.8 308.6
------------- -------------
15,542.0 16,399.5
Available-for-sale debt and equity securities pledged as collateral, at fair value.......... 267.8 304.4
------------- -------------
Total investments........................................................................... 15,809.8 16,703.9
Cash and cash equivalents................................................................... 289.0 225.6
Accrued investment income................................................................... 208.3 225.8
Premiums, accounts and notes receivable..................................................... 212.9 183.3
Deferred policy acquisition costs........................................................... 1,743.6 1,546.7
Goodwill.................................................................................... 5.2 5.2
Other assets................................................................................ 151.5 128.2
Separate account assets..................................................................... 9,458.6 7,722.2
------------- -------------
TOTAL ASSETS................................................................................ $ 27,878.9 $ 26,740.9
============= =============
LIABILITIES:
Policy liabilities and accruals............................................................. $ 13,494.2 $ 13,246.2
Policyholder deposit funds.................................................................. 2,228.4 3,060.7
Indebtedness................................................................................ 174.0 204.1
Deferred income taxes....................................................................... 69.6 31.7
Other liabilities........................................................................... 310.5 336.8
Non-recourse collateralized obligations..................................................... 344.0 389.9
Separate account liabilities................................................................ 9,458.6 7,722.2
------------- -------------
TOTAL LIABILITIES........................................................................... 26,079.3 24,991.6
------------- -------------
COMMITMENTS AND CONTINGENCIES (NOTES 21 AND 22).............................................
MINORITY INTEREST:
MINORITY INTEREST IN NET ASSETS OF SUBSIDIARIES............................................. 12.2 10.5
------------- -------------
STOCKHOLDER'S EQUITY:
Common stock, ($1,000 par value, 10,000 shares authorized and outstanding).................. 10.0 10.0
Additional paid-in capital.................................................................. 1,714.9 1,714.9
Retained earnings........................................................................... 78.3 12.4
Accumulated other comprehensive income (loss)............................................... (15.8) 1.5
------------- -------------
TOTAL STOCKHOLDER'S EQUITY.................................................................. 1,787.4 1,738.8
------------- -------------
TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDER'S EQUITY............................... $ 27,878.9 $ 26,740.9
============= =============
The accompanying notes are an integral part of these financial statements.
|
PHOENIX LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
($ in millions)
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
-------------- -------------- --------------
REVENUES:
Premiums..................................................................... $ 839.7 $ 928.7 $ 990.6
Insurance and investment product fees........................................ 400.6 314.8 294.7
Investment income, net of expenses........................................... 1,030.4 1,092.5 1,068.0
Unrealized gain on trading equity securities................................. -- -- 85.9
Net realized investment gains (losses)....................................... 73.8 (53.2) (2.0)
------------- ------------- -------------
TOTAL REVENUES............................................................... 2,344.5 2,282.8 2,437.2
------------- ------------- -------------
BENEFITS AND EXPENSES:
Policy benefits, excluding policyholder dividends............................ 1,331.5 1,376.7 1,422.2
Policyholder dividends....................................................... 399.1 364.4 404.7
Policy acquisition cost amortization......................................... 148.5 99.6 110.0
Interest expense on indebtedness............................................. 14.5 14.7 12.8
Interest expense on non-recourse collateralized obligations.................. 18.7 29.4 33.6
Other operating expenses..................................................... 204.0 236.5 259.9
------------- ------------- -------------
TOTAL BENEFITS AND EXPENSES.................................................. 2,116.3 2,121.3 2,243.2
------------- ------------- -------------
Income from continuing operations before income taxes,
minority interest and equity in earnings of affiliates..................... 228.2 161.5 194.0
Applicable income tax expense................................................ 73.9 39.9 59.7
------------- ------------- -------------
Income from continuing operations before minority interest
and equity in earnings of affiliates....................................... 154.3 121.6 134.3
Minority interest in net income of consolidated subsidiaries................. (0.9) (0.7) (0.1)
Equity in undistributed losses of affiliates................................. -- -- (10.4)
------------- ------------- -------------
NET INCOME................................................................... $ 153.4 $ 120.9 $ 123.8
============= ============= =============
COMPREHENSIVE INCOME:
NET INCOME................................................................... $ 153.4 $ 120.9 $ 123.8
OTHER COMPREHENSIVE INCOME (LOSS)............................................ (17.3) (47.0) 7.5
------------- ------------- -------------
COMPREHENSIVE INCOME......................................................... $ 136.1 $ 73.9 $ 131.3
============= ============= =============
The accompanying notes are an integral part of these financial statements.
|
PHOENIX LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in millions)
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
-------------- -------------- --------------
OPERATING ACTIVITIES:
Income from continuing operations............................................ $ 153.4 $ 120.9 $ 123.8
Proceeds from sale of trading equity securities.............................. -- 129.7 --
Unrealized gain on trading equity securities................................. -- -- (85.9)
Net realized investment (gains) losses....................................... (73.8) 53.2 2.0
Amortization and depreciation................................................ 8.7 6.9 12.7
Investment gains............................................................. (45.1) (129.9) (73.6)
Equity in losses of affiliates............................................... -- -- 17.2
Deferred income taxes........................................................ 42.1 38.2 65.7
Decrease (increase) in receivables........................................... (15.4) (18.6) 37.8
Deferred policy acquisition costs increase................................... (180.6) (88.1) (54.7)
Increase in policy liabilities and accruals.................................. 339.8 327.6 60.1
Other assets and other liabilities net change................................ (22.4) 22.8 (44.6)
------------- ------------- -------------
Cash from continuing operations.............................................. 206.7 462.7 60.5
Discontinued operations, net................................................. 21.8 5.4 16.1
------------- ------------- -------------
CASH FROM OPERATING ACTIVITIES............................................... 228.5 468.1 76.6
------------- ------------- -------------
INVESTING ACTIVITIES:
Investment purchases......................................................... (4,713.2) (4,852.4) (4,159.6)
Investment sales, repayments and maturities.................................. 5,561.3 4,801.7 4,213.8
Debt and equity securities pledged as collateral purchases................... -- -- (17.2)
Debt and equity securities pledged as collateral sales....................... 26.5 956.0 97.0
Subsidiary sales............................................................. -- 10.7 6.6
Premises and equipment additions............................................. (18.2) (25.1) (7.9)
Premises and equipment dispositions.......................................... -- 17.3 26.4
Discontinued operations, net................................................. (32.8) 1.2 --
------------- ------------- -------------
CASH FROM INVESTING ACTIVITIES............................................... 823.6 909.4 159.1
------------- ------------- -------------
FINANCING ACTIVITIES:
Policyholder deposit fund deposits........................................... 638.6 609.6 917.3
Policyholder deposit fund withdrawals........................................ (1,470.9) (1,041.3) (1,067.6)
Other indebtedness proceeds.................................................. -- -- 171.6
Indebtedness repayments...................................................... (30.2) -- (155.2)
Collateralized obligations repayments........................................ (39.5) (1,009.1) (90.8)
Common stock dividends paid.................................................. (87.5) (35.1) (69.7)
Contributions from minority interests........................................ 0.8 -- --
------------- ------------- -------------
CASH FOR FINANCING ACTIVITIES................................................ (988.7) (1,475.9) (294.4)
------------- ------------- -------------
CHANGE IN CASH AND CASH EQUIVALENTS.......................................... 63.4 (98.4) (58.7)
Cash and cash equivalents, beginning of year................................. 225.6 324.0 382.7
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, END OF YEAR....................................... $ 289.0 $ 225.6 $ 324.0
============= ============= =============
Included in cash and cash equivalents above is cash pledged as collateral of
$3.1 million, $15.2 million and $61.0 million at December 31, 2006, 2005 and
2004, respectively.
The accompanying notes are an integral part of these financial statements.
|
PHOENIX LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
($ in millions)
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
-------------- -------------- --------------
RETAINED EARNINGS (ACCUMULATED DEFICIT):
Net income................................................................... $ 153.4 $ 120.9 $ 123.8
Common stock dividends declared.............................................. (87.5) (35.1) (69.7)
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Other comprehensive income (loss)............................................ (17.3) (47.0) 7.5
------------- ------------- -------------
CHANGE IN STOCKHOLDER'S EQUITY............................................... 48.6 38.8 61.6
Stockholder's equity, beginning of year...................................... 1,738.8 1,700.0 1,638.4
------------- ------------- -------------
STOCKHOLDER'S EQUITY, END OF YEAR............................................ $ 1,787.4 $ 1,738.8 $ 1,700.0
============= ============= =============
The accompanying notes are an integral part of these financial statements.
|
PHOENIX LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in millions)
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Phoenix Life Insurance Company and its subsidiaries (together, Phoenix Life) offer a broad range of life insurance and annuity products in the United States of America. Phoenix Life Insurance Company is a wholly-owned subsidiary of The Phoenix Companies, Inc. (The Phoenix Companies), a publicly traded company on the New York Stock Exchange. Significant intercompany accounts and transactions have been eliminated in consolidating these financial statements.
We are a manufacturer of individual life insurance and annuity products, such as universal life, variable life, term life and variable annuities. Our consolidated financial statements include the results of our closed block, which consists primarily of participating whole life products.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
We have prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). In preparing these financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities at reporting dates and the reported amounts of revenues and expenses during the reporting periods. Actual results will differ from these estimates and assumptions. We employ significant estimates and assumptions in the determination of deferred policy acquisition costs; policyholder liabilities and accruals; the valuation of intangible assets, investments in debt and equity securities and venture capital partnerships; pension and other post-employment benefits liabilities; deferred tax balances and accruals for contingent liabilities.
ADOPTION OF NEW ACCOUNTING STANDARDS
In September 2006, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 provides guidance for how errors should be evaluated to assess materiality from a quantitative perspective. SAB 108 permits companies to initially apply its provisions by either restating prior financial statements or recording the cumulative effect of initially applying the approach as adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment to retained earnings. We adopted SAB 108 on December 31, 2006 with no effect to the financial statements.
Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial Instruments" (SFAS 155). SFAS 155 resolves certain issues surrounding the accounting for beneficial interests in securitized financial assets. Our adoption of SFAS 155 did not have a material effect on our financial statements.
Effective January 1, 2006, we adopted the Financial Accounting Standards Board (FASB) Staff Position Nos. SFAS 115-1 and SFAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (FSP 115-1). FSP 115-1 provides guidance as to the determination of other-than- temporarily impaired securities and requires certain financial disclosures with respect to unrealized losses. These accounting and disclosure requirements largely codify our existing practices as to other-than-temporarily impaired securities and thus, our adoption did not have a material effect on our consolidated financial statements.
Effective January 1, 2004, we adopted the American Institute of Certified Public Accountants (AICPA) Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" (SOP 03-1). SOP 03-1 provides guidance related to the accounting, reporting and disclosure of certain insurance contracts and separate accounts, including guidance for computing reserves for products with guaranteed benefits such as guaranteed minimum death benefits and for products with annuitization benefits such as guaranteed minimum income benefits. In addition, SOP 03-1 addresses the
presentation and reporting of separate accounts, as well as rules concerning the capitalization and amortization of sales inducements. Since this new accounting standard largely codifies certain accounting and reserving practices related to applicable nontraditional long-duration contracts and separate accounts that we already followed, our adoption did not have a material effect on our consolidated financial statements.
ACCOUNTING STANDARDS NOT YET ADOPTED
In February 2007, the FASB issued SFAS No. 159, "The Fair Value for Financial Assets and Financial Liabilities" (SFAS 159). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted provided the entity also elects early to apply the provisions of SFAS No. 157, "Fair Value Measurement", at the same time. We are currently assessing the impact of SFAS 159 on our financial position and results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. The statement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels ("Level 1, 2 and 3"). Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date. Level 2 inputs are observable inputs, other than quoted prices included in Level 1, for the asset or liability. Level 3 inputs are unobservable inputs reflecting our estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Quantitative and qualitative disclosures will focus on the inputs used to measure fair value for both recurring and non-recurring fair value measurements and the effects of the measurements in the financial statements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, with earlier application encouraged only in the initial quarter of an entity's fiscal year. Adoption of this statement is expected to have an impact on our financial statements; however, the timing for adoption and impact have not yet been determined.
In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on measurement and classification of taxes and introduces new disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2006. We anticipate that FIN 48 will not have a material effect on GAAP equity as of January 1, 2007.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140" (SFAS 156). SFAS 156 provides guidance on recognition and disclosure of servicing assets and liabilities and is effective beginning January 1, 2007. We will adopt this standard effective January 1, 2007 and do not expect it to have a material impact on our financial position and results of operations.
In September 2005, the Accounting Standards Executive Committee (AcSEC) of the AICPA issued Statement of Position 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts" (SOP 05-1). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred policy acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments" (SFAS 97). The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. We will adopt this standard effective January 1, 2007 and do not expect it to have a material effect on our financial position and results of operations.
SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Debt and equity securities
Our debt and equity securities classified as available-for-sale are reported on our balance sheet at fair value. Fair value is based on quoted market price, where available. When quoted market prices are not available, we estimate fair value by discounting debt security cash flows to reflect interest rates currently being offered on similar terms to borrowers of similar credit quality (private placement debt securities), by quoted market prices of comparable instruments (untraded public debt securities) and by independent pricing sources or internally developed pricing models (equity securities). We recognize unrealized investment gains and losses on investments in debt and equity securities that we classify as available-for-sale. We report these unrealized investment gains and losses as a component of other comprehensive income, net of the closed block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable deferred income taxes.
For mortgage-backed and other asset-backed debt securities, we recognize income using a constant effective yield based on anticipated prepayments and the estimated economic lives of the securities. When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date and any resulting adjustment is included in net investment income. For certain asset-backed securities, changes in estimated yield are recorded on a prospective basis and specific valuation methods are applied to these securities to determine if there has been an other-than- temporary decline in value.
Mortgage loans
We report mortgage loans at unpaid principal balances, net of valuation reserves on impaired mortgages. We consider a mortgage loan to be impaired if we believe it is probable that we will be unable to collect all amounts of contractual interest and principal as scheduled in the loan agreement. We do not accrue interest income on impaired mortgage loans when the likelihood of collection is doubtful. We estimate the fair value of mortgage loans by discounting the present value of scheduled loan payments. We base the discount rate on the comparable U.S. Treasury rates for loan durations plus spreads of 100 to 880 basis points, depending on our internal quality ratings of the loans. For in-process-of-foreclosure or defaulted loans, we estimate fair value as the lower of the underlying collateral value or the loan balance.
Venture capital partnerships
We record our equity in the earnings of venture capital partnerships in net investment income using the most recent financial information received from the partnerships and estimating the change in our share of partnership earnings for significant changes in equity market conditions during the quarter to eliminate the effect of any lag in reporting. We estimate the change in valuation each quarter by applying a public industry index if there has been a material shift in the S&P index, either upward or downward.
Affiliate equity securities
Our investments in affiliate equity securities represent investments in operating entities in which we own less than a majority of the outstanding common stock and where we exercise significant influence over the operating and financial policies of the companies. We use the equity method of accounting for our investments in common stock of these affiliates. We evaluate our equity method investments for an other-than-temporary impairment at each balance sheet date considering quantitative and qualitative factors including quoted market price of underlying equity securities, the duration the carrying value is in excess of fair value and historical and projected earnings and cash flow capacity.
Policy loans
Policy loans are carried at their unpaid principal balances and are collateralized by the cash values of the related policies. We estimate the fair value of fixed rate policy loans by discounting loan interest and loan repayments. We base the discount rate on the 10-year U.S. Treasury rate. We assume that loan interest payments are made at the fixed rate less 17.5 basis points and that loan repayments only occur as a result of anticipated policy lapses. For variable rate policy loans, we consider the unpaid loan balance as fair value, as interest rates on these loans are reset annually based on market rates.
Other investments
Other investments primarily include leveraged lease investments and other partnership and joint venture interests. Leveraged lease investments represent the net amount of the estimated residual value of the lease assets, rental receivables and unearned and deferred income to be allocated over the lease term. Investment income is calculated using the interest method and is recognized only in periods in which the net investment is positive. Other partnership and joint venture interests in which we do not have control or a majority ownership interest are recorded using the equity method of accounting. These investments include affordable housing, mezzanine and other partnership interests. We record the net income from investments in partnerships and joint ventures in net investment income.
DERIVATIVE INSTRUMENTS
We use derivative financial instruments, including options, futures and swaps as a means of hedging exposure to interest rate, equity price change and foreign currency risk. We also use derivative instruments to economically hedge our exposure on guaranteed minimum benefits offered on certain of our variable products. We recognize derivative instruments on the balance sheet at fair value. The derivative contracts are reported as assets or liabilities in other investments and other liabilities, respectively, on the balance sheet, excluding embedded derivatives. Embedded derivatives are recorded on the balance sheet with the associated host contract.
We do not designate the purchased derivatives related to guaranteed minimum benefits as hedges for accounting purposes. For other derivatives, we designate each instrument according to the associated exposure as either a fair value or cash flow hedge at its inception as we do not enter into derivative contracts for trading or speculative purposes.
To qualify for hedge accounting, the changes in value of the derivative must be expected to substantially offset the changes in value of the hedged item. Hedges are monitored to ensure that there is a high correlation between the change in the value of the derivative instruments and the change in value of the hedged investment. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings.
Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in accumulated other comprehensive income and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains (losses). If it is probable that a hedged forecasted transaction will no longer occur, the effective portions of the gains or losses on derivative instruments designated as cash flow hedges are reclassified into earnings immediately.
Changes in the fair value of derivatives that are designated and qualify as foreign currency hedges are recorded in either current period earnings or accumulated other comprehensive income, depending on whether the hedged transaction is a fair value hedge or cash flow hedge. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized investment gains (losses).
Changes in the fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in net realized investment gains (losses) in the period incurred.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, amounts due from banks, money market instruments and other debt instruments with maturities of three months or less when purchased.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions, underwriting, distribution and policy issue expenses, all of which vary with and are primarily related to production of new business, are deferred. In connection with our 1997 acquisition of the Confederation Life business, we recognized an asset for the present value of future profits representing the present value of estimated net cash flows embedded in the existing contracts acquired. This asset is included in deferred policy acquisition costs.
We amortize deferred policy acquisition costs and present value of future profits based on the related policy's classification. For individual participating life insurance policies, deferred policy acquisition costs and present value of future profits are amortized in proportion to estimated gross margins. For universal life, variable universal life and accumulation annuities, deferred policy acquisition costs and present value of future profits are amortized in proportion to estimated gross profits (EGPs). Policies may be surrendered for value or exchanged for a different one of our products (internal replacement). The deferred policy acquisition costs balance associated with the replaced or surrendered policies is amortized to reflect these surrenders.
Each year, we develop future EGPs for the products sold during that year. The EGPs for products sold in a particular year are aggregated into cohorts. Future EGPs are projected for the estimated lives of the contracts. The amortization of deferred policy acquisition costs and present value of future profits requires the use of various assumptions, estimates and judgments about the future. The assumptions, in the aggregate, are considered important in the projections of EGPs. The assumptions developed as part of our annual process are based on our current best estimates of future events, which are likely to be different for each year's cohort. Assumptions considered to be significant in the development of EGPs include separate account fund performance, surrender and lapse rates, interest margin, mortality, premium persistency and expenses. These assumptions are reviewed on a regular basis and are based on our past experience, industry studies, regulatory requirements and estimates about the future.
To determine the reasonableness of the prior assumptions used and their impact on previously projected account values and the related EGPs, we evaluate, on a quarterly basis, our previously projected EGPs. Our process to assess the reasonableness of our EGPs involves the use of internally developed models, together with studies and actual experience. Incorporated in each scenario are our current best estimate assumptions with respect to separate account returns, surrender and lapse rates, interest margin, mortality, premium persistency and expenses. Underlying assumptions for future periods of EGPs are not altered unless experience deviates significantly from original assumptions. For example, when lapses of our insurance products meaningfully exceed levels assumed in determining the amortization of deferred policy acquisition costs, we adjust amortization to reflect the change in future premiums or EGPs resulting from the unexpected lapses. In the event that we were to revise assumptions used for prior year cohorts, our estimate of projected account values would change and the related EGPs in the deferred policy acquisition cost amortization model would be adjusted to reflect such change. This process is known as "unlocking". Continued favorable experience on key assumptions, which could include increasing separate account fund return performance, decreasing lapses or decreasing mortality could result in an unlocking which would result in a decrease to deferred policy acquisition cost amortization and an increase in the deferred policy acquisition costs asset. Finally, an analysis is performed periodically to assess whether there are sufficient gross margins or gross profits to amortize the remaining deferred policy acquisition costs balances.
PREMISES AND EQUIPMENT
Premises and equipment, consisting primarily of office buildings occupied by us, are stated at cost less accumulated depreciation and amortization. We depreciate buildings on the straight-line method over 10 to 45 years and equipment primarily on a modified accelerated method over three to 10 years. We amortize leasehold improvements over the terms of the related leases.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate account assets and liabilities related to policyholder funds are carried at fair 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. Fees assessed to the contractholders for management services are included in revenues when services are rendered.
POLICY LIABILITIES AND ACCRUALS
Policy liabilities and accruals includes future benefit liabilities for certain life and annuity products. We establish liabilities in amounts adequate to meet the estimated future obligations of policies in force. Future benefit liabilities for traditional life insurance are computed using the net level premium method on the basis of actuarial assumptions as to contractual guaranteed rates of interest, mortality rates guaranteed in calculating the cash surrender values described in such contracts and morbidity. Future benefit liabilities for term and annuities in the payout phase that have significant mortality risk are computed using the net premium method on the basis of actuarial assumptions at the issue date of these contracts for rates of interest, contract administrative expenses, mortality and surrenders. We establish liabilities for outstanding claims, losses and loss adjustment expenses based on individual case estimates for reported losses and estimates of unreported losses based on past experience.
Certain contracts may also include additional death or other insurance benefit features, such as guaranteed minimum death or income benefits offered with variable annuity contracts or no lapse guarantees offered with universal life insurance contracts. An additional liability is established for these benefits by estimating the expected present value of the excess benefits and recognizing the excess ratably over the accumulation period based on total expected assessments.
POLICYHOLDER DEPOSIT FUNDS
Amounts received as payment for certain universal life contracts, deferred annuities and other contracts without life contingencies are reported as deposits to Policyholder deposit funds. The liability for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the financial statement date, including interest credited, amounts that have been assessed to compensate us for services to be performed over future periods, and any amounts previously assessed against the policyholder that is refundable. The liability for deferred annuities and other contracts without life contingencies is equal to the balance that accrues to the benefit of the contract holder as of the financial statement date which includes the accumulation of deposits plus interest credited, less withdrawals and amounts assessed through the financial statement date.
FAIR VALUE OF INVESTMENT CONTRACTS
For purposes of fair value disclosures, we determine the fair value of guaranteed interest contracts by assuming a discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the present value of projected contractual liability payments through final maturity. We determine the fair value of deferred annuities and supplementary contracts without life contingencies with an interest guarantee of one year or less at the amount of the policy reserve. In determining the fair value of deferred annuities and supplementary contracts without life contingencies with interest guarantees greater than one year, we use a discount rate equal to the appropriate U.S. Treasury rate plus 150 basis points to determine the present value of the projected account value of the policy at the end of the current guarantee period.
Deposit type funds, including pension deposit administration contracts, dividend accumulations, and other funds left on deposit not involving life contingencies, have interest guarantees of less than one year for which interest credited is closely tied to rates earned on owned assets. For these liabilities, we assume fair value to be equal to the stated liability balances.
REINSURANCE
We recognize assets and liabilities related to reinsurance ceded contracts on a gross basis. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.
CONTINGENT LIABILITIES
Amounts related to contingent liabilities are accrued if it is probable that a liability has been incurred and an amount is reasonable estimable.
DEMUTUALIZATION AND CLOSED BLOCK
The closed block assets, including future assets from cash flows generated by the assets and premiums and other revenues from the policies in the closed block, will benefit only holders of the policies in the closed block. The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, investment purchases and sales, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions, investment income and realized investment gains and losses on investments held outside the closed block that support the closed block business. All of these excluded income and expense items enter into the determination of total gross margins of closed block policies for the purpose of amortization of deferred policy acquisition costs.
In our financial statements, we present closed block assets, liabilities, revenues and expenses together with all other assets, liabilities, revenues and expenses. Within closed block liabilities, we have established a policyholder dividend obligation to record an additional liability to closed block policyholders for cumulative closed block earnings in excess of expected amounts calculated at the date of demutualization. These closed block earnings will not inure to stockholders, but will result in additional future dividends to closed block policyholders unless otherwise offset by future performance of the closed block that is less favorable than expected.
INVESTMENTS PLEDGED AS COLLATERAL AND NON-RECOURSE COLLATERALIZED OBLIGATIONS
Collateralized obligations for which Phoenix Investment Partners (PXP) is the sponsor and actively manages the assets, where we are deemed to be a primary beneficiary as a result of our variable interests, are consolidated in our financial statements.
Debt and equity securities pledged as collateral are recorded at fair value with any applicable unrealized investment gains or losses reflected as a component of accumulated other comprehensive income, net of applicable minority interest. We recognize realized investment losses on debt and equity securities in these collateralized obligations when declines in fair values, in our judgment, are considered to be other-than-temporarily impaired. Non-recourse obligations issued by the consolidated collateralized obligation trusts at face value are recorded at unpaid principal balance. Non-recourse derivative cash flow hedges are carried on our consolidated balance sheet at fair value with an offsetting amount recorded in accumulated other comprehensive income.
REVENUE RECOGNITION
We recognize premiums for participating life insurance products and other long-duration life insurance products as revenue when due from policyholders. We recognize life insurance premiums for short-duration life insurance products as premium revenue pro rata over the related contract periods. We match benefits, losses and related expenses with premiums over the related contract periods.
Amounts received as payment for interest sensitive life contracts, deferred annuities and other contracts without life contingencies are considered deposits and are not included in revenue. Revenues from these products consist primarily of fees assessed during the period against the policyholders' account balances for mortality charges, policy administration charges and surrender charges. Fees assessed that represent compensation for services to be provided in the future are deferred and amortized into revenue over the life of the related contracts. Related benefit expenses include universal life benefit claims in excess of fund values, net investment income credited to policyholders' account balances and amortization of deferred policy acquisition costs.
NET INVESTMENT INCOME AND NET REALIZED INVESTMENT GAINS (LOSSES)
We recognize realized investment gains (losses) on asset dispositions on a first-in, first-out basis. We recognize realized investment losses when declines in fair value of debt and equity securities are considered to be other-than-temporarily impaired. We adjust the cost basis of these written down investments to fair value at the date the determination of impairment is made and do not change the new cost basis for subsequent recoveries in value. In evaluating whether a decline in value is other than temporary, we consider several factors including, but not limited to the following:
o the extent and the duration of the decline;
o the reasons for the decline in value (credit event, interest related or
market fluctuations);
o our ability and intent to hold the investment for a period of time to
allow for a recovery of value; and
o the financial condition of and near term prospects of the issuer.
The closed block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable income taxes, which offset realized investment gains and losses, are each reported separately as components of net income.
UNREALIZED INVESTMENT GAINS (LOSSES)
We recognize unrealized investment gains and losses on investments in debt and equity securities that we classify as available-for-sale. These gains and losses are reported as a component of other comprehensive income, net of the closed block policyholder dividend obligation, applicable deferred policy acquisition costs and applicable deferred income taxes.
INCOME TAXES
We recognize income tax expense or benefit based upon amounts reported in the financial statements and the provisions of currently enacted tax laws. We allocate income taxes to income, other comprehensive income and additional paid-in capital, as applicable.
We recognize current income tax assets and liabilities for estimated income taxes refundable or payable based on the current year's income tax returns. We recognize deferred income tax assets and liabilities for the estimated future income tax effects of temporary differences and carryforwards. Temporary differences are the differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as well as the timing of income or expense recognized for financial reporting and tax purposes of items not related to assets or liabilities. If necessary, we establish valuation allowances to reduce the carrying amount of deferred income tax assets to amounts that are more likely than not to be realized. We periodically review the adequacy of these valuation allowances and record any reduction in allowances through earnings.
3. BUSINESS COMBINATIONS AND DISPOSITIONS
Phoenix National Insurance Company
Effective December 30, 2005, we sold 100% of the common stock we held in Phoenix National Insurance Company. This transaction was not material to our consolidated financial statements.
Aberdeen Asset Management PLC
On January 14, 2005, we closed the sale to third parties of our equity holdings in Aberdeen Asset Management PLC (Aberdeen) for net proceeds of $70.4 million, resulting in an after-tax realized investment loss of $7.0 million, in our 2005 consolidated statement of operations. The January 2005 sale of our equity holdings in Aberdeen completed our disposition of our direct financial interests in Aberdeen.
On November 19, 2004, we received payment in full of a $27.5 million convertible subordinated note issued by Aberdeen, a United Kingdom-based asset management company. Concurrently we relinquished our contractual right to one of two Aberdeen board seats we held related to our 16.5% equity interest in Aberdeen, at which point we concluded that in our judgment, we no longer had the ability to significantly influence Aberdeen's operations. Accordingly, effective November 19, 2004, we changed our method of accounting for our equity holdings in Aberdeen from the equity method of accounting to the fair value method of accounting under SFAS 115, Accounting for Investments in Debt and Equity Securities. Based on our intent to sell our equity holdings in Aberdeen in the near-term, we designated our equity holdings as trading securities under the fair value method of accounting. Under the fair value method, the changes in fair value, based on the underlying value of Aberdeen's shares as traded on the London Stock Exchange, as compared to our carrying value under the equity method are presented as an after-tax realized investment gain of $55.1 million in our consolidated statement of operations for the year ended December 31, 2004. In addition, our 2004 income from continuing operations include a $14.7 million after-tax, non-cash charge related to the accounting for our proportionate share of Aberdeen's December 2004 settlement of alleged misselling activities with the United Kingdom's Financial Services Authority. This charge has been accounted for by us under the equity method of accounting as it pre-dates our November 19, 2004 change in accounting for Aberdeen from the equity method to the fair value method. See Note 9 to these financial statements for more information on our holdings in Aberdeen.
Lombard International Assurance S.A.
On January 11, 2005, we disposed of our interests in Lombard International Assurance S.A. (Lombard) for consideration of $59.0 million. We realized an after-tax gain of $9.3 million in the first quarter of 2005 related to this sale, including earn-out consideration received. In the first quarter of 2006, we recognized an additional $6.5 million after-tax earn-out gain, and we may be entitled to additional consideration based on Lombard's financial performance through 2006.
Phoenix Global Solutions (India) Pvt. Ltd.
In July 2004, we sold the stock of Phoenix Global Solutions (India) Pvt. Ltd., our India-based information technology subsidiary, and essentially all of the assets of its United States affiliate, Phoenix Global Solutions, Inc., to Tata Consultancy Services Limited, a division of Tata Sons Ltd. This transaction was not material to our consolidated financial statements.
4. DEMUTUALIZATION AND CLOSED BLOCK
In 1999, we began the process of reorganizing and demutualizing. We completed the process in June 2001, when all policyholder membership interests in our company were extinguished and eligible policyholders received shares of common stock of The Phoenix Companies, Inc., together with cash and policy credits, as compensation. To protect the future dividends of these policyholders, we also established a closed block for their existing policies.
Because closed block liabilities exceed closed block assets, we have a net closed block liability at each period-end. This net liability represents the maximum future earnings contribution to be recognized from the closed block and the change in this net liability each period is in the earnings contribution recognized from the closed block for the period. To the extent that actual cash flows differ from amounts anticipated, we may adjust policyholder dividends. On November 3, 2005, the 2006 policyholder dividend scale was reduced for most policyholders with a reduction in the interest component of the scale, partially offset by improvements in the mortality component. If the closed block has excess funds, those funds will be available only to the closed block policyholders. However, if the closed block has insufficient funds to make policy benefit payments that are guaranteed, the payments will be made from assets outside of the closed block.
CLOSED BLOCK ASSETS AND LIABILITIES: AS OF DECEMBER 31,
($ in millions) ------------------------------
2006 2005 INCEPTION
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Debt securities.............................................................. $ 7,000.5 $ 6,992.0 $ 4,773.1
Equity securities............................................................ 120.5 95.4 --
Mortgage loans............................................................... 66.5 109.9 399.0
Venture capital partnerships................................................. 97.9 73.4 --
Policy loans................................................................. 1,346.6 1,349.2 1,380.0
Other invested assets........................................................ 85.5 69.3 --
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Total closed block investments............................................... 8,717.5 8,689.2 6,552.1
Cash and cash equivalents.................................................... 66.3 87.0 --
Accrued investment income.................................................... 112.8 118.2 106.8
Receivables.................................................................. 46.7 40.9 35.2
Deferred income taxes........................................................ 329.8 328.0 389.4
Other closed block assets.................................................... 19.9 24.9 6.2
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TOTAL CLOSED BLOCK ASSETS.................................................... 9,293.0 9,288.2 7,089.7
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Policy liabilities and accruals.............................................. 9,798.8 9,815.8 8,301.7
Policyholder dividends payable............................................... 331.7 338.9 325.1
Policyholder dividend obligation............................................. 326.9 334.1 --
Other closed block liabilities............................................... 47.9 53.8 12.3
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TOTAL CLOSED BLOCK LIABILITIES............................................... 10,505.3 10,542.6 8,639.1
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EXCESS OF CLOSED BLOCK LIABILITIES OVER CLOSED BLOCK ASSETS.................. $ 1,212.3 $ 1,254.4 $ 1,549.4
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CLOSED BLOCK REVENUES AND EXPENSES AND YEAR ENDED
CHANGES IN POLICYHOLDER DIVIDEND OBLIGATION: CUMULATIVE DECEMBER 31,
($ in millions) FROM ---------------------------------------------
INCEPTION 2006 2005 2004
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Premiums..................................................... $ 6,838.9 $ 786.5 $ 881.6 $ 932.8
Net investment income........................................ 3,868.4 540.7 556.5 560.0
Net realized investment losses............................... (72.8) 40.2 (21.9) (2.0)
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TOTAL REVENUES............................................... 10,634.5 1,367.4 1,416.2 1,490.8
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Policy benefits, excluding dividends......................... 7,246.3 898.6 980.1 1,007.1
Other operating expenses..................................... 72.8 6.3 8.6 8.9
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Total benefits and expenses,
excluding policyholder dividends........................... 7,319.1 904.9 988.7 1,016.0
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Closed block contribution to income
before dividends and income taxes.......................... 3,315.4 462.5 427.5 474.8
Policyholder dividends....................................... 2,762.4 398.5 363.7 403.9
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Closed block contribution to income before income taxes...... 553.0 64.0 63.8 70.9
Applicable income taxes...................................... 193.4 22.0 22.2 24.7
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CLOSED BLOCK CONTRIBUTION TO INCOME.......................... $ 359.6 $ 42.0 $ 41.6 $ 46.2
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Policyholder dividends provided through earnings............. $ 2,807.6 $ 398.5 $ 363.7 $ 403.9
Policyholder dividends provided through
other comprehensive income................................. 167.9 (73.7) (194.9) 3.8
------------- ------------- ------------- -------------
ADDITIONS TO POLICYHOLDER DIVIDEND LIABILITIES............... 2,975.5 324.8 168.8 407.7
POLICYHOLDER DIVIDENDS PAID.................................. (2,642.0) (339.2) (397.2) (395.3)
------------- ------------- ------------- -------------
Change in policyholder dividend liabilities.................. 333.5 (14.4) (228.4) 12.4
Policyholder dividend liabilities, beginning of period....... 325.1 673.0 901.4 889.0
------------- ------------- ------------- -------------
Policyholder dividend liabilities, end of period............. 658.6 658.6 673.0 901.4
Less: Policyholder dividends payable, end of period....... (331.7) (331.7) (338.9) (365.5)
------------- ------------- ------------- -------------
POLICYHOLDER DIVIDEND OBLIGATION, END OF PERIOD.............. $ 326.9 $ 326.9 $ 334.1 $ 535.9
============= ============= ============= =============
|
In addition to the closed block assets, we hold assets outside the closed block in support of closed block liabilities. We recognize investment earnings on these invested assets, less deferred policy acquisition cost amortization and allocated expenses, as an additional source of earnings to our stockholders.
5. REINSURANCE
We use reinsurance agreements to provide for greater diversification of business, control exposure to potential losses arising from large risks and provide additional capacity for growth.
We remain liable to the extent that reinsuring companies may not be able to meet their obligations under reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses to us; consequently, we establish reserves for amounts deemed or estimated to be uncollectible. To minimize our exposure to significant losses from reinsurance insolvencies, we evaluate the financial condition of our reinsurers and monitor concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers.
Our reinsurance program varies based on the type of risk, for example:
o On direct policies, the maximum of individual life insurance retained by
us on any one life is $10 million for single life and joint first-to-die
policies and $12 million for joint last-to-die policies, with excess
amounts ceded to reinsurers.
o We reinsure up to 80% of the mortality risk on most new issues of term
insurance.
o In August of 2006, we entered into an agreement to reinsure 50% of the
risk on policies issued from July 1, 2002 through December 31, 2005,
inclusive, with a net amount at risk of $2,000,000 or greater.
o We reinsure 100% of guaranteed minimum death benefits on variable
annuities issued between January 1, 1983 and December 31, 1999,
including subsequent deposits. We retain the guaranteed minimum death
benefit risks on the remaining variable deferred annuities in force that
are not covered by this reinsurance agreement.
o We reinsure 80% of the mortality risk on the in-force block of the
Confederation Life business we acquired in December 1997.
o We entered into two separate reinsurance agreements in 1998 and 1999 to
reinsure 80% and 60%, respectively, of the mortality risk on a
substantial portion of our otherwise retained individual life insurance
business.
o We assume and cede business related to the group accident and health
block in run-off. While we are not writing any new contracts, we are
contractually obligated to assume and cede premiums related to existing
contracts.
DIRECT BUSINESS AND REINSURANCE: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Direct premiums.............................................................. $ 917.5 $ 994.7 $ 1,043.3
Premiums assumed from reinsureds............................................. 13.7 14.0 13.8
Premiums ceded to reinsurers................................................. (91.5) (80.0) (66.5)
------------- ------------- -------------
PREMIUMS..................................................................... $ 839.7 $ 928.7 $ 990.6
============= ============= =============
Percentage of amount assumed to net premiums................................. 1.6% 1.5% 1.4%
============= ============= =============
Direct policy benefits incurred.............................................. $ 486.4 $ 440.1 $ 416.3
Policy benefits assumed from reinsureds...................................... 14.8 8.2 3.9
Policy benefits ceded to reinsurers.......................................... (64.8) (56.4) (52.9)
------------- ------------- -------------
POLICY BENEFITS.............................................................. $ 436.4 $ 391.9 $ 367.3
============= ============= =============
Direct life insurance in force............................................... $ 143,120.6 $ 133,990.2 $ 126,367.9
Life insurance in force assumed from reinsureds.............................. 1,838.7 1,810.5 1,759.5
Life insurance in force ceded to reinsurers.................................. (90,812.5) (83,144.7) (80,040.1)
------------- ------------- -------------
LIFE INSURANCE IN FORCE...................................................... $ 54,146.8 $ 52,656.0 $ 48,087.3
============= ============= =============
Percentage of amount assumed to net insurance in force....................... 3.4% 3.4% 3.7%
============= ============= =============
|
The policy benefit amounts above exclude changes in reserves, interest credited to policyholders and withdrawals, which total $895.1 million, $984.8 million and $1,054.9 million, net of reinsurance, for the years ended December 31, 2006, 2005 and 2004.
Irrevocable letters of credit aggregating $52.9 million at December 31, 2006 have been arranged with commercial banks in favor of us to collateralize the ceded reserves.
6. DEFERRED POLICY ACQUISITION COSTS
ACTIVITY IN DEFERRED POLICY ACQUISITION COSTS: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Policy acquisition costs deferred............................................ $ 329.2 $ 187.7 $ 164.7
Costs amortized to expenses:
Recurring costs............................................................ (151.9) (114.3) (110.4)
Credit related to realized investment gains................................ 3.4 14.7 0.4
Offsets to net unrealized investment gains or losses
included in other comprehensive income................................... 16.2 70.5 7.7
------------- ------------- -------------
Change in deferred policy acquisition costs.................................. 196.9 158.6 62.4
Deferred policy acquisition costs, beginning of year......................... 1,546.7 1,388.1 1,325.7
------------- ------------- -------------
DEFERRED POLICY ACQUISITION COSTS, END OF YEAR............................... $ 1,743.6 $ 1,546.7 $ 1,388.1
============= ============= =============
|
Upon completion of a study during the fourth quarter of 2006, we updated our best estimate assumptions used to project expected gross profits and margins in the deferred policy acquisition cost amortization schedules. Major projection assumptions updated included expected mortality and lapse experience, investment margins and expenses. In our review to develop the best estimate, we examined our own experience, industry studies, market conditions and input from reinsurers. The deferred policy acquisition cost unlocking for universal life and variable universal life was driven largely by improved mortality. We also reflected higher interest earned in the investment margin for universal life and annuities, consistent with recent experience and maintenance expenses were shifted among various lines of business.
The deferred policy acquisition cost unlocking that resulted from these updated assumptions, along with related adjustments resulted in an overall $8.2 million pre-tax benefit to net income. The change in deferred policy acquisition cost assumptions also impacted our assumptions in reserves. As a result, we recorded an additional universal life reserve. The effects of the unlocking and related adjustments increased unearned revenue liabilities by $3.5 million, benefit reserves by $7.2 million, reinsurance liability by $0.2 million and decreased amortization by $19.1 million.
During the second quarter of 2005, our net income benefited from an unlocking of assumptions primarily related to deferred policy acquisition costs. The unlocking was driven by revised assumptions reflecting favorable mortality experience, offset by interest rate and spread adjustments for annuities. The effects of the unlocking decreased insurance product fees by $0.3 million, increased the change in policyholder reserves by $3.5 million, increased non-deferred expenses by $0.5 million and decreased deferred policy acquisition cost amortization by $28.1 million. The net effect of the unlocking increased pre-tax income by $23.8 million.
7. POLICY LIABILITIES AND ACCRUALS
Policyholder liabilities are primarily for participating life insurance policies and universal life insurance policies. For universal life, this includes deposits received from customers and investment earnings on their fund balances, which ranged from 4.00% to 5.25% as of December 31, 2006, less administrative and mortality charges.
PARTICIPATING LIFE INSURANCE
Participating life insurance in force was 26.8% and 30.7% of the face value of total individual life insurance in force at December 31, 2006 and 2005, respectively.
POLICYHOLDER DEPOSIT FUNDS
Policyholder deposit funds primarily consist of annuity deposits received from customers, dividend accumulations and investment earnings on their fund balances, which ranged from 2.0% to 14.0% as of December 31, 2006, less administrative charges.
8. GOODWILL
GROSS AND NET CARRYING AMOUNTS OF GOODWILL AND YEAR ENDED DECEMBER 31,
OTHER INTANGIBLE ASSETS: ------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
GROSS NET GROSS NET
-------------- -------------- -------------- --------------
GOODWILL..................................................... $ 6.8 $ 5.2 $ 6.8 $ 5.2
============= ============= ============= =============
|
9. INVESTING ACTIVITIES
DEBT AND EQUITY SECURITIES
See Note 12 for information on available-for-sale debt and equity securities pledged as collateral.
FAIR VALUE AND COST OF DEBT AND EQUITY SECURITIES: AS OF DECEMBER 31,
($ in millions) ------------------------------------------------------------
2006 2005
----------------------------- -----------------------------
FAIR VALUE COST FAIR VALUE COST
-------------- -------------- -------------- --------------
U.S. government and agency................................... $ 688.5 $ 674.1 $ 736.8 $ 699.9
State and political subdivision.............................. 262.6 253.0 365.0 344.2
Foreign government........................................... 269.6 237.9 333.9 298.8
Corporate.................................................... 7,179.0 7,111.7 7,450.3 7,322.2
Mortgage-backed.............................................. 3,072.4 3,067.1 3,276.0 3,241.2
Other asset-backed........................................... 1,077.8 1,060.3 1,240.6 1,224.6
------------- ------------- ------------- -------------
AVAILABLE-FOR-SALE DEBT SECURITIES........................... $ 12,549.9 $ 12,404.1 $ 13,402.6 $ 13,130.9
============= ============= ============= =============
Amounts applicable to the closed block....................... $ 7,000.4 $ 6,858.2 $ 6,992.0 $ 6,748.4
============= ============= ============= =============
AVAILABLE-FOR-SALE EQUITY SECURITIES......................... $ 173.6 $ 142.5 $ 169.6 $ 151.2
============= ============= ============= =============
Amounts applicable to the closed block....................... $ 120.5 $ 95.2 $ 95.4 $ 82.5
============= ============= ============= =============
UNREALIZED GAINS AND LOSSES FROM AS OF DECEMBER 31,
GENERAL ACCOUNT SECURITIES: ------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
GAINS LOSSES GAINS LOSSES
-------------- -------------- -------------- --------------
U.S. government and agency................................... $ 21.0 $ (6.6) $ 41.4 $ (4.5)
State and political subdivision.............................. 12.1 (2.5) 23.0 (2.2)
Foreign government........................................... 32.5 (0.8) 36.0 (0.9)
Corporate.................................................... 168.6 (101.3) 219.2 (91.1)
Mortgage-backed.............................................. 45.9 (40.6) 71.0 (36.2)
Other asset-backed........................................... 22.7 (5.2) 25.4 (9.4)
------------- ------------- ------------- -------------
Debt securities gains and losses............................. $ 302.8 $ (157.0) $ 416.0 $ (144.3)
============= ============= ============= =============
DEBT SECURITIES NET GAINS.................................... $ 145.8 $ 271.7
============= =============
Equity securities gains and losses........................... $ 34.2 $ (3.1) $ 20.4 $ (2.0)
============= ============= ============= =============
EQUITY SECURITIES NET GAINS.................................. $ 31.1 $ 18.4
============= =============
|
AGING OF TEMPORARILY IMPAIRED AS OF DECEMBER 31, 2006
DEBT AND EQUITY SECURITIES: ---------------------------------------------------------------------------------
($ in millions) LESS THAN 12 MONTHS GREATER THAN 12 MONTHS TOTAL
--------------------------- ------------------------- -------------------------
FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED
VALUE LOSSES VALUE LOSSES VALUE LOSSES
------------- ------------ ----------- ------------ ----------- ------------
DEBT SECURITIES
U.S. government and agency................ $ 106.3 $ (2.1) $ 160.5 $ (4.5) $ 266.8 $ (6.6)
State and political subdivision........... 2.5 -- 61.2 (2.5) 63.7 (2.5)
Foreign government........................ 8.7 (0.1) 36.2 (0.7) 44.9 (0.8)
Corporate................................. 958.9 (14.5) 2,634.2 (86.8) 3,593.1 (101.3)
Mortgage-backed........................... 482.8 (4.7) 1,496.9 (35.9) 1,979.7 (40.6)
Other asset-backed........................ 157.6 (1.3) 265.1 (3.9) 422.7 (5.2)
------------- ------------ ----------- ------------ ----------- ------------
DEBT SECURITIES........................... $ 1,716.8 $ (22.7) $ 4,654.1 $ (134.3) $ 6,370.9 $ (157.0)
EQUITY SECURITIES......................... 32.7 (2.7) 1.2 (0.4) 33.9 (3.1)
------------- ------------ ----------- ------------ ----------- ------------
TOTAL TEMPORARILY IMPAIRED SECURITIES..... $ 1,749.5 $ (25.4) $ 4,655.3 $ (134.7) $ 6,404.8 $ (160.1)
============= ============ =========== ============ =========== ============
AMOUNTS INSIDE THE CLOSED BLOCK........... $ 888.7 $ (14.8) $ 2,050.6 $ (64.2) $ 2,939.3 $ (79.0)
============= ============ =========== ============ =========== ============
AMOUNTS OUTSIDE THE CLOSED BLOCK.......... $ 860.8 $ (10.6) $ 2,604.7 $ (70.5) $ 3,465.5 $ (81.1)
============= ============ =========== ============ =========== ============
AMOUNTS OUTSIDE THE CLOSED BLOCK
THAT ARE BELOW INVESTMENT GRADE......... $ 65.9 $ (1.4) $ 194.9 $ (9.9) $ 260.8 $ (11.3)
============= ============ =========== ============ =========== ============
AFTER OFFSETS FOR DEFERRED ACQUISITION
COST ADJUSTMENT AND TAXES............... $ (3.4) $ (21.5) $ (24.9)
============ ============ ============
NUMBER OF SECURITIES...................... 970 1,882 2,852
============ ============ ============
|
There were no unrealized losses of below investment grade debt securities outside the closed block with a fair value less than 80% of the securities amortized cost total at December 31, 2006.
The securities are considered to be temporarily impaired at December 31, 2006 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.
AGING OF TEMPORARILY IMPAIRED AS OF DECEMBER 31, 2005
DEBT AND EQUITY SECURITIES: ---------------------------------------------------------------------------------
($ in millions) LESS THAN 12 MONTHS GREATER THAN 12 MONTHS TOTAL
--------------------------- ------------------------- -------------------------
FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED
VALUE LOSSES VALUE LOSSES VALUE LOSSES
------------- ------------ ----------- ------------ ----------- ------------
DEBT SECURITIES
U.S. government and agency................ $ 177.6 $ (3.2) $ 47.9 $ (1.3) $ 225.5 $ (4.5)
State and political subdivision........... 40.0 (1.0) 37.3 (1.2) 77.3 (2.2)
Foreign government........................ 41.1 (0.6) 10.6 (0.3) 51.7 (0.9)
Corporate................................. 2,599.5 (59.5) 790.7 (31.6) 3,390.2 (91.1)
Mortgage-backed........................... 1,507.4 (26.8) 326.4 (9.4) 1,833.8 (36.2)
Other asset-backed........................ 309.2 (4.6) 205.4 (4.8) 514.6 (9.4)
------------- ------------ ----------- ------------ ----------- ------------
DEBT SECURITIES........................... $ 4,674.8 $ (95.7) $ 1,418.3 $ (48.6) $ 6,093.1 $ (144.3)
EQUITY SECURITIES......................... 46.8 (2.0) -- -- 46.8 (2.0)
------------- ------------ ----------- ------------ ----------- ------------
TOTAL TEMPORARILY IMPAIRED SECURITIES..... $ 4,721.6 $ (97.7) $ 1,418.3 $ (48.6) $ 6,139.9 $ (146.3)
============= ============ =========== ============ =========== ============
AMOUNTS INSIDE THE CLOSED BLOCK........... $ 2,058.4 $ (44.2) $ 340.0 $ (16.3) $ 2,398.4 $ (60.5)
============= ============ =========== ============ =========== ============
AMOUNTS OUTSIDE THE CLOSED BLOCK.......... $ 2,663.2 $ (53.5) $ 1,078.3 $ (32.3) $ 3,741.5 $ (85.8)
============= ============ =========== ============ =========== ============
AMOUNTS OUTSIDE THE CLOSED BLOCK
THAT ARE BELOW INVESTMENT GRADE......... $ 147.8 $ (8.4) $ 106.0 $ (5.5) $ 253.8 $ (13.9)
============= ============ =========== ============ =========== ============
AFTER OFFSETS FOR DEFERRED ACQUISITION
COST ADJUSTMENT AND TAXES............... $ (2.6) $ (1.4) $ (4.0)
============ ============ ============
NUMBER OF SECURITIES...................... 1,069 351 1,420
============ ============ ============
|
Unrealized losses of below investment grade debt securities outside the closed block with a fair value less than 80% of the securities amortized cost totaled $2.5 million at December 31, 2005. Of these, $0.7 million ($0.0 million after offsets for taxes and deferred policy acquisition cost amortization) had been in an unrealized loss for greater than 12 months.
Unrealized losses of below investment grade debt securities held in the closed block with a fair value of less than 80% of the securities amortized cost totaled $0.4 million at December 31, 2005 ($0.0 million after offsets for change in policy dividend obligation), of which $0.4 million had been in an unrealized loss for greater than 12 months.
The securities are considered to be temporarily impaired at December 31, 2005 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.
MORTGAGE LOANS
Mortgage loans are collateralized by the related properties and are generally no greater than 75% of the properties' value.
CARRYING VALUE OF INVESTMENTS IN MORTGAGE LOANS AS OF DECEMBER 31,
($ in millions) ------------------------------------------------------------
2006 2005
----------------------------- -----------------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
-------------- -------------- -------------- --------------
PROPERTY TYPE
Apartment buildings.......................................... $ 13.7 $ 14.2 $ 39.9 $ 38.2
Office buildings............................................. -- -- 14.4 13.8
Retail stores................................................ 51.5 52.1 62.1 59.5
Industrial buildings......................................... 8.4 8.3 22.8 21.8
Other........................................................ 0.1 0.1 0.1 0.1
-------------- -------------- -------------- --------------
Subtotal..................................................... 73.7 74.7 139.3 133.4
Less: Valuation allowances................................ (1.8) -- (10.7) --
-------------- -------------- -------------- --------------
MORTGAGE LOANS............................................... $ 71.9 $ 74.7 $ 128.6 $ 133.4
============== ============== ============== ==============
Amounts applicable to the closed block....................... $ 66.5 $ 68.5 $ 109.9 $ 105.2
============== ============== ============== ==============
|
The carrying values of delinquent or in-process-of-foreclosure mortgage loans as of December 31, 2006 and 2005 were $0.0 million and $8.2 million, respectively. The carrying values of mortgage loans on which the payment terms have been restructured or modified were $5.3 million and $10.5 million as of December 31, 2006 and 2005, respectively. We have provided valuation allowances for restructured or modified mortgage loans.
MORTGAGE LOAN VALUATION ALLOWANCE ACTIVITY: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Valuation allowance, beginning of year....................................... $ 10.7 $ 9.9 $ 12.8
Additions charged to income.................................................. -- 0.8 --
Deductions for write-offs and disposals...................................... (8.9) -- (2.9)
-------------- -------------- --------------
VALUATION ALLOWANCE, END OF YEAR............................................. $ 1.8 $ 10.7 $ 9.9
============== ============== ==============
|
During the three years ended December 31, 2006, the amount of interest that was foregone due to the restructuring of mortgage loans and to non-income producing loans was not material to our consolidated financial statements. Refinancing of mortgage loans was not material in any of the three years ended December 31, 2006.
VENTURE CAPITAL PARTNERSHIPS
In October 2005, we entered into an agreement to sell $138.5 million of the venture capital assets held in the open block to an outside party. The first phase of the sale closed in 2005 and the remaining partnerships were sold in the first quarter of 2006. The carrying value of the funds sold in 2005 was $98.8 million (net of a $6.7 million pre-tax realized loss on partnerships to be sold in 2006) and an additional $33.8 million was sold in 2006. A pre-tax realized loss of $13.9 million was recognized in 2005 and a pre-tax gain of $4.2 million was recognized in 2006 upon the completion of the sale.
INVESTMENT ACTIVITY IN VENTURE CAPITAL PARTNERSHIPS: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Contributions................................................................ $ 41.8 $ 66.0 $ 59.2
Equity in earnings of partnerships........................................... 3.2 23.8 25.5
Distributions................................................................ (23.8) (94.6) (64.3)
Proceeds from sale of partnership interests.................................. (51.9) (91.5) --
Realized loss on sale of partnership interests............................... 2.4 (13.9) --
-------------- -------------- --------------
Change in venture capital partnerships....................................... (28.3) (110.2) 20.4
Venture capital partnership investments, beginning of period................. 145.1 255.3 234.9
-------------- -------------- --------------
VENTURE CAPITAL PARTNERSHIP INVESTMENTS, END OF PERIOD....................... $ 116.8 $ 145.1 $ 255.3
============== ============== ==============
|
AFFILIATE EQUITY AND DEBT SECURITIES
There were no affiliate debt securities held at December 31, 2006 or 2005.
SOURCES OF EARNINGS FROM AFFILIATE SECURITIES: YEAR ENDED
($ in millions) DEC 31,
2004
--------------
Aberdeen common stock dividends............................................................................. $ 3.0
Equity in Aberdeen undistributed loss....................................................................... (21.9)
Other....................................................................................................... 1.7
--------------
AFFILIATE EQUITY SECURITIES INVESTMENT LOSS................................................................. $ (17.2)
==============
AFFILIATE DEBT SECURITIES INVESTMENT INCOME................................................................. $ 2.0
==============
|
There were no earnings from affiliate debt securities during 2006 or 2005.
Aberdeen Asset Management PLC (Aberdeen)
As of December 31, 2004, we owned 38.1 million shares of Aberdeen common stock, which represented 16.5% of its then outstanding common shares. We acquired these shares between 1996 and 2001 at a total cost of $109.1 million, which, through November 18, 2004, we accounted for under the equity method of accounting based on our ability to significantly influence Aberdeen's operations.
AFTER-TAX EFFECT OF EQUITY INTEREST IN ABERDEEN: YEAR ENDED DECEMBER 31,
($ in millions) -----------------------------
2005 2004
-------------- --------------
Equity in undistributed earnings (losses) of affiliates..................................... $ -- $ (12.3)
Unrealized gain on trading securities....................................................... -- 55.1
Realized investment loss.................................................................... (7.0) --
-------------- --------------
NET INCOME (LOSS)........................................................................... $ (7.0) $ 42.8
============== ==============
|
On January 14, 2005, we closed the sale to third parties of our equity holdings in Aberdeen for net proceeds of $70.4 million, which resulted in an after-tax realized investment loss of $7.0 million. The January 2005 sale of our equity holdings in Aberdeen completed our disposition of our direct financial interests in Aberdeen. We continue to participate in sub-advisory arrangements related to several of our asset management product offerings with Aberdeen, the financial effects of which are not material to our consolidated financial statements.
Hilb Rogal & Hobbs (HRH)
HRH is a Virginia-based property and casualty insurance and employee benefit products distributor traded on the New York Stock Exchange. Prior to November 2002, we owned 6.4% of its common shares, as well as convertible debt securities which, if converted, would have represented 16.8% of HRH's common stock outstanding. We also had a contractual right to designate two nominees for election to its board of directors.
In November 2002, we converted our HRH note into additional shares of HRH common stock, resulting in total HRH holdings with a fair value of $167.1 million. Following the conversion, we sold the majority of our shares of HRH common stock to The Phoenix Companies for $157.4 million.
OTHER INVESTMENTS
OTHER INVESTMENTS: AS OF DECEMBER 31,
($ in millions) -----------------------------
2006 2005
-------------- --------------
Transportation and other equipment leases................................................... $ 60.3 $ 63.6
Separate account equity investments......................................................... 0.9 17.2
Mezzanine partnerships...................................................................... 100.9 75.0
Affordable housing partnerships............................................................. 19.6 22.8
Derivative instruments (Note 12)............................................................ 7.0 8.6
Other affiliate investments................................................................. -- 5.7
Real estate................................................................................. 73.0 64.6
Other partnership interests................................................................. 46.1 51.1
-------------- --------------
OTHER INVESTED ASSETS....................................................................... $ 307.8 $ 308.6
============== ==============
Amounts applicable to the closed block...................................................... $ 85.5 $ 69.3
============== ==============
|
STATUTORY DEPOSITS
Pursuant to certain statutory requirements, as of December 31, 2006, our Life Companies had on deposit securities with a fair value of $62.2 million in insurance department special deposit accounts. Our Life Companies are not permitted to remove the securities from these accounts without approval of the regulatory authority.
NET INVESTMENT INCOME AND NET REALIZED INVESTMENT GAINS (LOSSES)
SOURCES OF NET INVESTMENT INCOME: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Debt securities.............................................................. $ 782.2 $ 797.3 $ 774.4
Equity securities............................................................ 7.0 6.3 3.2
Mortgage loans............................................................... 6.2 20.2 22.5
Venture capital partnerships................................................. 3.2 23.8 25.5
Policy loans................................................................. 169.3 165.8 167.1
Other investments............................................................ 40.1 47.8 48.8
Cash and cash equivalents.................................................... 13.0 6.0 4.4
-------------- -------------- --------------
Total investment income...................................................... 1,021.0 1,067.2 1,045.9
Less: Investment expenses................................................. 9.6 8.6 18.0
-------------- -------------- --------------
NET INVESTMENT INCOME, GENERAL ACCOUNT INVESTMENTS........................... 1,011.4 1,058.6 1,027.9
Debt and equity securities pledged as collateral (Note 12)................... 19.0 33.9 40.1
-------------- -------------- --------------
NET INVESTMENT INCOME........................................................ $ 1,030.4 $ 1,092.5 $ 1,068.0
============== ============== ==============
Amounts applicable to the closed block....................................... $ 540.7 $ 556.5 $ 560.0
============== ============== ==============
|
For 2006, 2005 and 2004, net investment income was lower by $12.1 million, $15.4 million and $9.5 million, respectively, due to non-income producing debt securities. Of these amounts, $8.4 million, $12.1 million and $5.8 million, respectively, related to the closed block.
TYPES OF REALIZED INVESTMENT GAINS (LOSSES): YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Debt security impairments.................................................... $ (7.9) $ (31.2) $ (15.5)
Equity security impairments.................................................. -- (2.1) (1.5)
Mortgage loan impairments.................................................... -- (0.8) --
Affiliate equity security impairments........................................ -- -- (11.0)
Other invested asset impairments............................................. -- -- (3.3)
Debt and equity securities pledged as collateral impairments................. (1.0) (1.2) (16.6)
-------------- -------------- --------------
IMPAIRMENT LOSSES............................................................ (8.9) (35.3) (47.9)
-------------- -------------- --------------
Debt security transaction gains.............................................. 62.1 19.2 39.0
Debt security transaction losses............................................. (20.1) (37.2) (10.6)
Equity security transaction gains............................................ 25.7 5.8 17.7
Equity security transaction losses........................................... (3.8) (12.5) (5.9)
Mortgage loan transaction gains.............................................. 3.2 -- 0.2
Venture capital partnership transaction gains (losses)....................... 2.4 (13.9) --
Affiliate equity security transaction gains.................................. 10.4 14.4 --
Affiliate equity security transaction losses................................. -- (10.7) --
Real estate transaction losses............................................... -- (0.6) --
Debt and equity securities pledged as collateral gains....................... -- 2.5 --
Other invested asset transaction gains....................................... 2.8 15.1 5.5
-------------- -------------- --------------
NET TRANSACTION GAINS (LOSSES)............................................... 82.7 (17.9) 45.9
-------------- -------------- --------------
NET REALIZED INVESTMENT GAINS (LOSSES)....................................... $ 73.8 $ (53.2) $ (2.0)
============== ============== ==============
Included in realized impairment losses on debt and equity securities pledged as
collateral above, are impairments relating to our direct investments in the
consolidated collateralized obligation trusts of $3.7 million for 2004. We did
not have any impairments relating to our direct investments in the consolidated
collateralized obligation trusts in 2006 or 2005.
UNREALIZED INVESTMENT GAINS (LOSSES)
SOURCES OF CHANGES IN NET UNREALIZED INVESTMENT GAINS (LOSSES): YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Debt securities.............................................................. $ (125.9) $ (313.0) $ (27.1)
Equity securities............................................................ 12.7 2.6 0.2
Debt and equity securities pledged as collateral............................. (9.1) (93.3) 7.8
Other investments............................................................ -- (7.5) --
-------------- -------------- --------------
NET UNREALIZED INVESTMENT LOSSES............................................. $ (122.3) $ (411.2) $ (19.1)
============== ============== ==============
Net unrealized investment losses............................................. $ (122.3) $ (411.2) $ (19.1)
-------------- -------------- --------------
Applicable policyholder dividend obligation.................................. (73.8) (194.8) 3.6
Applicable deferred policy acquisition costs................................. (16.2) (70.5) (7.7)
Applicable deferred income tax benefit....................................... (8.2) (20.1) (9.8)
-------------- -------------- --------------
Offsets to net unrealized investment losses.................................. (98.2) (285.4) (13.9)
-------------- -------------- --------------
NET UNREALIZED INVESTMENT LOSSES INCLUDED IN
OTHER COMPREHENSIVE INCOME (NOTE 10)....................................... $ (24.1) $ (125.8) $ (5.2)
============== ============== ==============
|
INVESTING CASH FLOWS
INVESTMENT PURCHASES, SALES, REPAYMENTS AND MATURITIES: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Debt security purchases...................................................... $ (4,451.0) $ (4,500.4) $ (4,052.9)
Equity security purchases.................................................... (54.9) (150.8) (66.3)
Venture capital partnership investments...................................... (41.8) (65.7) (59.3)
Other invested asset purchases............................................... (88.5) (87.2) (25.8)
Policy loan advances, net.................................................... (77.0) (48.3) 44.7
-------------- -------------- --------------
INVESTMENT PURCHASES......................................................... $ (4,713.2) $ (4,852.4) $ (4,159.6)
============== ============== ==============
Debt securities sales........................................................ $ 3,653.6 $ 2,925.8 $ 2,405.2
Debt securities maturities and repayments.................................... 1,580.6 1,367.6 1,483.0
Equity security sales........................................................ 87.4 225.4 111.2
Mortgage loan maturities and principal repayments............................ 60.3 79.2 77.2
Venture capital partnership capital distributions............................ 75.7 185.9 59.4
Affiliate securities sales................................................... -- -- 1.0
Real estate and other invested assets sales.................................. 103.7 17.8 76.8
-------------- -------------- --------------
INVESTMENT SALES, REPAYMENTS AND MATURITIES.................................. $ 5,561.3 $ 4,801.7 $ 4,213.8
============== ============== ==============
The maturities of general account debt securities and mortgage loans, by
contractual sinking fund payment and maturity, as of December 31, 2006 are
summarized in the following table. Actual maturities will differ from
contractual maturities as certain borrowers have the right to call or prepay
obligations with or without call or prepayment penalties, we have the right to
put or sell certain obligations back to the issuers and we may refinance
mortgage loans. Refinancing of mortgage loans was not significant during the
three years ended December 31, 2006.
MATURITIES OF DEBT SECURITIES AND MORTGAGE LOANS: MORTGAGE
($ in millions) DEBT LOANS AT
SECURITIES CARRYING
AT COST VALUE TOTAL
-------------- -------------- --------------
Due in one year or less...................................................... $ 414.8 $ 5.4 $ 420.2
Due after one year through five years........................................ 1,954.3 27.9 1,982.2
Due after five years through ten years....................................... 3,804.0 23.2 3,827.2
Due after ten years.......................................................... 6,231.0 15.4 6,246.4
-------------- -------------- --------------
TOTAL........................................................................ $ 12,404.1 $ 71.9 $ 12,476.0
============== ============== ==============
|
10. FINANCING ACTIVITIES
INDEBTEDNESS
INDEBTEDNESS: AS OF DECEMBER 31,
------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------------- -------------- -------------- --------------
6.95% surplus notes.......................................... $ -- $ -- $ 30.2 $ 30.7
7.15% surplus notes.......................................... 174.0 189.6 173.9 183.4
-------------- -------------- -------------- --------------
TOTAL INDEBTEDNESS........................................... $ 174.0 $ 189.6 $ 204.1 $ 214.1
============== ============== ============== ==============
|
Our 7.15% surplus notes are an obligation of Phoenix Life and are due December 15, 2034. The carrying value of the 2034 notes is net of $1.0 million of unamortized original issue discount. Interest payments are at an annual rate of 7.15%, require the prior approval of the Superintendent of Insurance of the State of New York and may be made only out of surplus funds which the Superintendent determines to be available for such payments under New York Insurance Law. The notes may be redeemed at the option of Phoenix Life at any time at the "make-whole" redemption price set forth in the offering circular. New York Insurance Law provides that the notes are not part of the legal liabilities of Phoenix Life. On December 15, 2004, Phoenix Life repurchased $144.8 million of the previously issued $175.0 million outstanding principal on its 6.95% surplus notes and recognized a non-recurring
after-tax charge of $6.4 million for costs incurred, including the tender premium. Concurrent with the closing of the tender, Phoenix Life issued $175.0 million, 7.15% surplus notes. The remaining 6.95% surplus notes were redeemed at maturity in December 2006.
On June 6, 2006, The Phoenix Companies amended and restated their existing $150 million unsecured senior revolving credit facility, dated as of November 22, 2004 (the "Original Facility" and as so amended and restated, the "Amended Facility"). The financing commitments under the Amended Facility will terminate on June 6, 2009. The amendments to the terms of the Original Facility set forth in the Amended Facility include, but are not limited to, (i) the elimination of a $750 million limit on aggregate indebtedness, (ii) the modification of certain covenants and other provisions to permit a monetization or securitization of the closed block of specified life and annuity policies established in the Plan of Reorganization of Phoenix Home Life Mutual Insurance Company, and (iii) the permission of acquisitions and joint ventures which satisfy certain additional specified conditions. These conditions include, among other things, majority lender consent in the event the aggregate amount of consideration payable exceeds $400 million in respect of all acquisitions and joint ventures during the term of the agreement, excluding those to which the lenders have previously provided consent.
INTEREST EXPENSE ON INDEBTEDNESS: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
INTEREST EXPENSE INCURRED.................................................... $ 14.5 $ 14.7 $ 12.8
============== ============== ==============
INTEREST PAID................................................................ $ 14.6 $ 14.6 $ 12.6
============== ============== ==============
|
11. SEPARATE ACCOUNTS, DEATH BENEFITS AND OTHER INSURANCE BENEFIT FEATURES
Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Investment objectives for these separate accounts vary by fund account type, as outlined in the applicable fund prospectus or separate account plan of operations. Our separate account products include variable annuities and variable life insurance contracts. The assets supporting these contracts are carried at fair value and reported as Separate account assets with an equivalent amount reported as Separate account liabilities. Amounts assessed against the policyholder for mortality, administration, and other services are included within revenue in Insurance and investment product fees. In 2006 and 2005 there were no gains or losses on transfers of assets from the general account to a separate account.
Many of our variable contracts offer various guaranteed minimum death, accumulation, withdrawal and income benefits. These benefits are offered in various forms as described in the footnotes to the table below. We currently reinsure a significant portion of the death benefit guarantees associated with our in-force block of business. We establish policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity policies as follows:
o Liabilities associated with the guaranteed minimum death benefit (GMDB) are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used in estimating the liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.
o Liabilities associated with the guaranteed minimum income benefit (GMIB) are determined by estimating the expected value of the income benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating such guaranteed income benefit liabilities are generally consistent with those used for calculating the guaranteed death benefit liabilities.
For annuities with GMDB, 500 stochastically generated scenarios were used. For annuities with GMIB, we used 10,000 stochastically generated scenarios.
SEPARATE ACCOUNT INVESTMENTS OF ACCOUNT BALANCES OF CONTRACTS WITH GUARANTEES: AS OF DECEMBER 31,
($ in millions) -----------------------------
2006 2005
-------------- --------------
Debt securities............................................................................. $ 733.0 $ 729.5
Equity funds................................................................................ 2,591.0 2,342.9
Other....................................................................................... 92.2 82.7
-------------- --------------
TOTAL....................................................................................... $ 3,416.2 $ 3,155.1
============== ==============
CHANGES IN GUARANTEED LIABILITY BALANCES YEAR ENDED
(NET OF REINSURANCE RECOVERABLES): DECEMBER 31, 2006
($ in millions) -----------------------------
ANNUITY ANNUITY
GMDB(1) GMIB
-------------- --------------
Liability balance as of January 1, 2006..................................................... $ 10.7 $ 2.5
Incurred.................................................................................... 1.9 1.2
Paid........................................................................................ (1.9) --
-------------- --------------
LIABILITY BALANCE AS OF DECEMBER 31, 2006................................................... $ 10.7 $ 3.7
============== ==============
CHANGES IN GUARANTEED LIABILITY BALANCES: YEAR ENDED
DECEMBER 31, 2005
-----------------------------
(NET OF REINSURANCE RECOVERABLES): ANNUITY ANNUITY
($ in millions) GMDB(1) GMIB
-------------- --------------
Liability balance as of January 1, 2005..................................................... $ 9.1 $ 0.8
Incurred.................................................................................... 2.9 1.7
Paid........................................................................................ (1.3) --
-------------- --------------
LIABILITY BALANCE AS OF DECEMBER 31, 2005................................................... $ 10.7 $ 2.5
============== ==============
|
The GMDB and GMIB guarantees are recorded in policy liabilities and accruals on our balance sheet. Changes in the liability are recorded in Policy benefits, excluding policyholder dividends, on our statement of operations. In a manner consistent with our policy for deferred policy acquisition costs, we regularly evaluate estimates used and adjust the additional liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised.
We also offer certain variable products with a guaranteed minimum withdrawal benefit (GMWB) and a guaranteed minimum accumulation benefit (GMAB).
The GMWB guarantees the policyholder a minimum amount of withdrawals and benefit payments over time, regardless of the investment performance of the contract, subject to an annual limit. Optional resets are available. In addition, we have introduced a feature for these contracts beginning in the fourth quarter of 2005, that allows the policyholder to receive the guaranteed annual withdrawal amount for as long as they are alive.
The GMAB rider provides the contract holder with a minimum accumulation of their purchase payments deposited within a specific time period, adjusted for withdrawals, after a specified amount of time determined at the time of issuance of the variable annuity contract.
The GMWB and GMAB represent embedded derivatives in the variable annuity contracts that are required to be reported separately from the host variable annuity contract. They are carried at fair value and reported in policyholder deposit funds.
The fair value of the GMWB and GMAB obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions.
As of December 31, 2006 and 2005, 100% of the aggregate account value with the GMWB and GMAB features was not reinsured. In order to minimize the volatility associated with the unreinsured liabilities, we have established an alternative risk management strategy. In 2006, we began hedging our GMAB exposure using equity options, equity futures and swaps. These investments are included in other invested assets on our balance sheet. As of December 31, 2006 and 2005, the embedded derivative for GMWB and GMAB was immaterial. There were no benefit payments made for the GMWB or GMAB during 2006 or 2005.
For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. For guarantees of benefits that are payable upon annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the policy holder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance.
ADDITIONAL INSURANCE BENEFITS: NET AMOUNT AVERAGE
($ in millions) ACCOUNT AT RISK AFTER ATTAINED AGE
VALUE REINSURANCE OF ANNUITANT
----------------- ----------------- ----------------
GMDB return of premium(1)........................................... $ 1,363.5 $ 8.0 59
GMDB step up(2)..................................................... 1,809.8 39.3 60
GMDB earnings enhancement benefit (EEB)(3).......................... 77.6 -- 59
GMDB greater of annual step up and roll up(4)....................... 37.7 4.0 62
----------------- -----------------
TOTAL GMDB AT DECEMBER 31, 2006..................................... $ 3,288.6 $ 51.3
================= =================
GMIB................................................................ $ 620.1 $ -- 58
GMAB................................................................ 210.6 -- 54
GMWB................................................................ 30.1 -- 67
----------------- -----------------
TOTAL AT DECEMBER 31, 2006.......................................... $ 860.8 $ --
================= =================
|
Liabilities for universal life are generally determined by estimating the expected value of losses when death benefits exceed revenues and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating these liabilities are consistent with those used for amortizing deferred policy acquisition costs. A single set of best estimate assumptions is used since these insurance benefits do not vary significantly with capital markets volatility. At December 31, 2006, we held additional universal life benefit reserves of $12.7 million.
12. INVESTMENTS PLEDGED AS COLLATERAL AND NON-RECOURSE COLLATERALIZED OBLIGATIONS
We are involved with various entities in the normal course of business that may be deemed to be variable interest entities and, as a result, we may be deemed to hold interests in those entities. In particular, our asset management affiliates serve as the investment advisors to eight collateralized obligation trusts that were organized to take advantage of bond market arbitrage opportunities. These eight collateralized obligation trusts are investment trusts with aggregate assets of $4.0 billion that are primarily invested in a variety of fixed income securities acquired from third parties. Our asset management affiliates earned advisory fees of $8.0 million, $8.8 million and $8.0 million during the years ended December 31, 2006, 2005 and 2004, respectively. The collateralized obligation trusts reside in bankruptcy remote SPEs for which we provide neither recourse nor guarantees. Accordingly, our financial exposure to these collateralized obligation trusts stems from our direct investment in certain debt or equity securities issued by these collateralized obligation trusts. Our maximum exposure to loss with respect to our direct investment in the eight collateralized obligation trusts is $25.8 million at December 31, 2006 (none of which relates to trusts that are consolidated). Of that exposure, $23.7 million (none of which relates to trust that are consolidated) relates to investment grade debt securities.
Prior to September 30, 2005, we consolidated Phoenix-Mistic 2002-1 CDO, Ltd. (Mistic) which was redeemed during the third quarter of 2005. As a result of this liquidation, we recognized $3.4 million of prepayment fees, $3.9 million of realized investment gains and a reversal of $1.3 million of impairments taken previously under FIN 46-R when Mistic was consolidated on Phoenix's balance sheet.
We continued to consolidate two collateralized obligation trusts as of December 31, 2006 and 2005 and three as of December 31, 2004. As of December 31, 2006, we had no direct investment in the two consolidated collateralized obligation trusts. We recognized investment income on debt and equity securities pledged as collateral, net of interest expense on collateralized obligations and applicable minority interest, of $0.7 million, $5.0 million and $3.4 million for the years ended December 31, 2006, 2005 and 2004, respectively, related to these consolidated obligation trusts.
The other six variable interest entities not consolidated by us under FIN 46(R) represent collateralized obligation trusts with approximately $3.7 billion of investment assets pledged as collateral. Our direct investment in these unconsolidated variable interest entities was $25.8 million ($23.7 million of which are investment grade debt securities at December 31, 2006).
FAIR VALUE AND COST OF DEBT AND EQUITY SECURITIES AS OF DECEMBER 31,
PLEDGED AS COLLATERAL: ------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
FAIR VALUE COST FAIR VALUE COST
-------------- -------------- -------------- --------------
Debt securities pledged as collateral........................ $ 267.2 $ 251.4 $ 304.1 $ 278.9
Equity securities pledged as collateral...................... 0.6 0.3 0.3 0.3
-------------- -------------- -------------- --------------
TOTAL DEBT AND EQUITY SECURITIES PLEDGED AS COLLATERAL....... $ 267.8 $ 251.7 $ 304.4 $ 279.2
============== ============== ============== ==============
|
Cash and accrued investment income of $5.0 million and $17.6 million are included in the amounts above at December 31, 2006 and 2005, respectively.
Non-recourse collateralized obligations are comprised of callable collateralized obligations of $332.2 million and $371.2 million at December 31, 2006 and 2005, respectively, and non-recourse derivative cash flow hedge liability of $11.8 million (notional amount of $222.9 million with maturity of June 1, 2009) and $18.7 million (notional amount of $210.8 million with maturities of 2005-2013) at December 31, 2006 and 2005, respectively. There were no minority interest liabilities related to third-party equity investments in the consolidated variable interest entities at December 31, 2006 and 2005.
GROSS AND NET UNREALIZED GAINS AND LOSSES FROM AS OF DECEMBER 31,
DEBT AND EQUITY SECURITIES PLEDGED AS COLLATERAL: ------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
GAINS LOSSES GAINS LOSSES
-------------- -------------- -------------- --------------
Debt securities pledged as collateral........................ $ 35.4 $ (19.6) $ 35.8 $ (10.6)
Equity securities pledged as collateral...................... 0.4 (0.1) 0.1 (0.1)
-------------- -------------- -------------- --------------
TOTAL........................................................ $ 35.8 $ (19.7) $ 35.9 $ (10.7)
============== ============== ============== ==============
NET UNREALIZED GAINS......................................... $ 16.1 $ 25.2
============== ==============
|
AGING OF TEMPORARILY IMPAIRED DEBT AND AS OF DECEMBER 31, 2006
EQUITY SECURITIES PLEDGED AS COLLATERAL: -------------------------------------------------------------------------------
($ in millions) LESS THAN 12 MONTHS GREATER THAN 12 MONTHS TOTAL
-------------------------- ------------------------- --------------------------
FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED
VALUE LOSSES VALUE LOSSES VALUE LOSSES
------------ ------------- ------------ ------------ ------------ -------------
Corporate.................................. $ -- $ -- $ 0.1 $ (0.2) $ 0.1 $ (0.2)
Mortgage-backed............................ -- -- 12.9 (7.7) 12.9 (7.7)
Other asset-backed......................... -- -- 1.5 (11.7) 1.5 (11.7)
------------ ------------- ------------ ------------ ------------ -------------
DEBT SECURITIES............................ $ -- $ -- $ 14.5 $ (19.6) $ 14.5 $ (19.6)
EQUITY SECURITIES PLEDGED AS COLLATERAL.... -- -- -- (0.1) -- (0.1)
------------ ------------- ------------ ------------ ------------ -------------
TOTAL TEMPORARILY IMPAIRED SECURITIES
PLEDGED AS COLLATERAL.................... $ -- $ -- $ 14.5 $ (19.7) $ 14.5 $ (19.7)
============ ============= ============ ============ ============ =============
|
Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the security's amortized cost totaled $19.6 million at December 31, 2006. Gross unrealized losses on debt securities with a fair value less than 80% of the security's amortized cost totaled $0.6 million at December 31, 2006. The majority of these debt securities are investment grade issues that continue to perform to their original contractual terms at December 31, 2006.
MATURITY OF DEBT SECURITIES PLEDGED AS COLLATERAL: 2006
($ in millions) COST
--------------
Due in one year or less..................................................................................... $ 19.5
Due after one year through five years....................................................................... 48.2
Due after five years through ten years...................................................................... 32.6
Due after ten years......................................................................................... 151.1
--------------
TOTAL DEBT SECURITIES....................................................................................... $ 251.4
==============
|
The amount of CDO-related derivative cash flow hedge ineffectiveness recognized through earnings for the years ended December 31, 2006 and 2005 is $0.3 million and $0.3 million, respectively. See Note 9 to these financial statements for information on realized investment losses related to these CDOs.
EFFECT OF CONSOLIDATION OF AS OF AND FOR THE
COLLATERALIZED OBLIGATION TRUSTS: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
INCREASE (DECREASE) IN NET INCOME............................................ $ (1.0) $ 1.3 $ (12.9)
============== ============== ==============
REDUCTION TO STOCKHOLDERS' EQUITY............................................ $ (71.2) $ (67.9) $ (67.5)
============== ============== ==============
|
The above non-cash credits (charges) to net income (loss) and stockholders' equity primarily relate to realized and unrealized investment losses within the collateralized obligation trusts. Upon maturity or other liquidation of the trusts, the fair value of the investments pledged as collateral will be used to settle the non-recourse collateralized obligations with any shortfall in such investments inuring to the third-party note and equity holders. To the extent there remains a recorded liability for non-recourse obligations after all the assets pledged as collateral are exhausted, such amount will be reduced to zero with a corresponding benefit to earnings. Accordingly, these investment losses and any future investment losses under this method of consolidation will ultimately reverse upon the maturity or other liquidation of the non-recourse collateralized obligations. These non-recourse obligations mature between 2011 through 2012 but contain call provisions. The call provisions may be
triggered at the discretion of the equity investors based on market conditions and are subject to certain contractual limitations.
13. DERIVATIVE INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
DERIVATIVE INSTRUMENTS
We maintain an overall interest rate risk-management strategy that primarily incorporates the use of interest rate swaps as hedges of our exposure to changes in interest rates. Our exposure to changes in interest rates primarily results from our commitments to fund interest-sensitive insurance liabilities, as well as from our significant holdings of fixed rate financial instruments.
DERIVATIVE INSTRUMENTS HELD IN AS OF DECEMBER 31,
GENERAL ACCOUNT: ----------------------------------------------------
($ in millions) 2006 2005
------------------------- --------------------------
NOTIONAL
AMOUNT MATURITY ASSET LIABILITY ASSET LIABILITY
------------ ------------ ------------- ------------ ------------ -------------
INTEREST RATE SWAPS
Cash flow hedges...................... $ 30 2007 $ 0.4 $ -- $ 1.2 $ --
Non-hedging derivative instruments.... 363 2007-2016 2.1 1.2 6.6 4.9
CROSS CURRENCY SWAPS...................... 35 2012-2016 -- 1.0 0.7 --
PUT OPTIONS............................... 50 2016 4.0 -- -- --
OTHER..................................... 53 2007-2008 0.5 -- 0.1 --
------------ ------------ ------------ ------------ -------------
TOTAL GENERAL ACCOUNT
DERIVATIVE INSTRUMENT POSITIONS......... $ 531 $ 7.0 $ 2.2 $ 8.6 $ 4.9
============ ============ ============ ============ =============
|
INTEREST RATE SWAPS
Cash flow hedges
We currently hold interest rates swaps that effectively convert variable rate bond cash flows to fixed cash flows in order to better match the cash flows of associated liabilities. These hedges are accounted for under the shortcut method and, therefore, no hedge ineffectiveness was recorded in earnings for 2006, 2005 and 2004. We do not expect to reclassify any amounts reported in accumulated other comprehensive income into earnings over the next twelve months with respect to these hedges.
Non-hedging derivative instruments
We also hold interest rate swaps that were initially entered into as hedges of an anticipated purchase of assets associated with an acquisition of a block of insurance liabilities. Subsequently, offsetting swap positions were taken to lock in a stream of income to supplement the income on the assets purchased.
We are exposed to credit risk in the event of non-performance by counterparties to these derivative instruments. We do not expect that counterparties will fail to meet their financial obligation as we only enter into derivative contracts with a number of highly rated financial institutions. The credit exposure of these instruments is the positive fair value at the reporting date, or $7.0 million as of December 31, 2006. We consider the likelihood of any material loss on these instruments to be remote.
Cross currency swaps
We use cross currency swaps to hedge against market risks from changes in foreign currency exchange rates. Under foreign currency swaps, we agree with another party (referred to as the counterparty) to exchange principal and periodic interest payments denominated in foreign currency for payments in U.S. dollars. Counterparties to such financial instruments expose us to credit-related losses in the event of nonperformance, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. The credit exposure of cross currency swaps is the fair value (market value) of contracts with a positive fair value (market value) at the reporting date. We held four cross currency swaps at the end of the statement period.
FAIR VALUE OF FINANCIAL INSTRUMENTS
CARRYING AMOUNTS AND ESTIMATED FAIR VALUES OF AS OF DECEMBER 31,
FINANCIAL INSTRUMENTS: ------------------------------------------------------------
($ in millions) 2006 2005
----------------------------- -----------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------------- -------------- -------------- --------------
Cash and cash equivalents.................................... $ 289.0 $ 289.0 $ 225.6 $ 225.6
Available-for-sale debt securities (Note 9).................. 12,549.9 12,549.9 13,402.6 13,402.6
Available-for-sale equity securities (Note 9)................ 173.6 173.6 169.6 169.6
Mortgage loans (Note 9)...................................... 71.9 74.7 128.6 133.4
Debt and equity securities pledged as collateral (Note 12)... 267.8 267.8 304.4 304.4
Derivative financial instruments............................. 7.0 7.0 8.6 8.6
Policy loans (Note 9)........................................ 2,322.0 2,415.9 2,245.0 2,347.4
-------------- -------------- -------------- --------------
FINANCIAL ASSETS............................................. $ 15,681.2 $ 15,777.9 $ 16,484.4 $ 16,591.6
============== ============== ============== ==============
Investment contracts......................................... $ 2,228.4 $ 2,190.9 $ 3,060.7 $ 3,054.4
Non-recourse collateralized obligations (Note 12)............ 344.0 272.8 389.9 322.0
Indebtedness (Note 10)....................................... 174.0 189.6 204.1 214.1
Derivative financial instruments............................. 2.2 2.2 4.9 4.9
-------------- -------------- -------------- --------------
FINANCIAL LIABILITIES........................................ $ 2,748.6 $ 2,655.5 $ 3,659.6 $ 3,595.4
============== ============== ============== ==============
|
14. INCOME TAXES
ALLOCATION OF INCOME TAXES: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Income taxes (benefit) applicable to:
Current.................................................................... $ 26.1 $ 6.6 $ (12.5)
Deferred................................................................... 47.8 33.3 72.2
-------------- -------------- --------------
Continuing operations...................................................... 73.9 39.9 59.7
Equity in earnings of affiliates........................................... -- -- (6.8)
-------------- -------------- --------------
INCOME TAXES APPLICABLE TO NET INCOME........................................ 73.9 39.9 52.9
Other comprehensive income................................................... (8.2) (22.1) (14.0)
-------------- -------------- --------------
INCOME TAXES APPLICABLE TO COMPREHENSIVE INCOME.............................. $ 65.7 $ 17.8 $ 38.9
============== ============== ==============
INCOME TAXES PAID (REFUNDED)................................................. $ 14.5 $ (14.1) $ 6.0
============== ============== ==============
EFFECTIVE INCOME TAX RATE: YEAR ENDED DECEMBER 31,
($ in millions) ---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Income from continuing operations before income taxes
and minority interest...................................................... $ 228.2 $ 161.5 $ 194.0
-------------- -------------- --------------
Income taxes at statutory rate of 35.0%...................................... 79.9 56.5 67.9
Investment income not taxed.................................................. (7.1) (8.7) (10.8)
Tax interest recoveries...................................................... -- (5.3) --
Historic rehabilitation and other tax credits................................ (0.6) (2.3) --
Realized losses (gains) on available-for-sale securities pledged as collateral 0.3 (0.5) 4.5
Other, net................................................................... 1.4 0.2 (1.9)
-------------- -------------- --------------
INCOME TAX EXPENSE APPLICABLE TO CONTINUING OPERATIONS....................... $ 73.9 $ 39.9 $ 59.7
============== ============== ==============
|
DEFERRED INCOME TAX BALANCES ATTRIBUTABLE TO TEMPORARY DIFFERENCES: YEAR ENDED
($ in millions) DECEMBER 31,
-----------------------------
2006 2005
-------------- --------------
Deferred income tax assets:
Future policyholder benefits................................................................ $ 290.7 $ 233.8
Unearned premiums/deferred revenues......................................................... 103.3 108.2
Employee benefits........................................................................... 58.3 70.6
Intangible assets........................................................................... 2.1 2.3
Net operating and capital loss carryover benefits........................................... 13.7 25.4
Historic rehabilitation and other tax credits............................................... 16.4 18.7
Foreign tax credits carryover benefits...................................................... 8.9 9.0
Other....................................................................................... 5.0 0.6
Valuation allowance......................................................................... (6.7) (6.7)
-------------- --------------
GROSS DEFERRED INCOME TAX ASSETS............................................................ 491.7 461.9
-------------- --------------
Deferred tax liabilities:
Deferred policy acquisition costs........................................................... (434.6) (374.1)
Investments................................................................................. (126.7) (119.5)
Other....................................................................................... -- --
-------------- --------------
GROSS DEFERRED INCOME TAX LIABILITIES....................................................... (561.3) (493.6)
-------------- --------------
DEFERRED INCOME TAX LIABILITIES............................................................. $ (69.6) $ (31.7)
============== ==============
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We have elected to file a consolidated federal income tax return for 2006 and prior years with The Phoenix Companies.
As of December 31, 2006, we had deferred tax assets of $4.5 million and $8.1 million related to net operating and capital losses, respectively, for federal income tax purposes and $1.1 million for state net operating losses. The related federal net operating losses of $12.8 million are scheduled to expire between the years 2017 and 2026. The federal capital losses of $23.3 million are scheduled to expire in 2010. The state net operating losses of $15.3 million related to the non-life subgroup are scheduled to expire between 2019 and 2025. Due to the inability to combine the life insurance and non-life insurance subgroups for state income tax purposes, we established a $1.1 million and a $1.1 million valuation allowance at the end of 2006 and 2005, respectively, relative to the state net operating loss carryforwards.
As of December 31, 2006, the deferred income tax assets of $16.4 million related to general business tax credits are expected to expire between 2022 and 2025.
As of December 31, 2006, we had foreign tax credit carryover totaling $8.9 million, which is scheduled to expire between 2008 and 2009. As of December 31, 2006 and 2005, we had a $5.6 million valuation allowance relative to foreign tax credit carryovers.
We have determined, based on our earnings and future income, that it is more likely than not that the deferred income tax assets after valuation allowance already recorded as of December 31, 2006 and 2005 will be realized. In determining the adequacy of future income, we have considered projected future income, reversal of existing temporary differences and available tax planning strategies that could be implemented, if necessary.
Our federal income tax returns are routinely audited by the IRS, and estimated provisions are routinely provided in the financial statements in anticipation of the results of these audits. While it is often difficult to predict the outcome of these audits, including the timing of any resolution of any particular tax matter, we believe that our reserves, as reported on our consolidated balance sheet, are adequate for all open tax years. Unfavorable resolution of any particular issue could result in additional use of cash to pay liabilities that would be deemed owed to the IRS. Additionally, any unfavorable or favorable resolution of any particular issue could result in an increase or decrease, respectively, to our effective income tax rate to the extent that our estimates differ from the ultimate resolution.
15. OTHER COMPREHENSIVE INCOME
SOURCES OF OTHER COMPREHENSIVE INCOME: YEAR ENDED DECEMBER 31,
($ in millions) -----------------------------------------------------------------------------------
2006 2005 2004
---------------------------- -------------------------- ---------------------------
GROSS NET GROSS NET GROSS NET
------------- ------------- ------------- ------------- ------------- -------------
Unrealized gains (losses) on
investments.............................. $ (67.3) $ (10.4) $ (464.0) $ (193.1) $ (12.5) $ 22.5
Net realized investment losses on
available-for-sale securities included
in net income............................ (55.0) (13.7) 52.8 67.3 (6.6) (27.7)
------------- ------------- ------------- ------------- ------------- -------------
Net unrealized investment gains............ (122.3) (24.1) (411.2) (125.8) (19.1) (5.2)
Net unrealized foreign currency
translation adjustment .................. (0.3) (0.1) (6.0) (4.0) (4.6) (0.6)
Net unrealized derivative instruments
gains (losses)........................... 7.1 6.9 82.8 82.8 13.1 13.3
------------- ------------- ------------- ------------- ------------- -------------
Other comprehensive income (loss).......... (115.5) $ (17.3) (334.4) $ (47.0) (10.6) $ 7.5
------------- ============= ------------- ============= ------------- =============
Applicable policyholder dividend
obligation............................... (73.8) (194.8) 3.6
Applicable deferred policy acquisition
cost amortization........................ (16.2) (70.5) (7.7)
Applicable deferred income taxes
(benefit)................................ (8.2) (22.1) (14.0)
------------- ------------- -------------
Offsets to other comprehensive income...... (98.2) (287.4) (18.1)
------------- ------------- -------------
OTHER COMPREHENSIVE INCOME (LOSS).......... $ (17.3) $ (47.0) $ 7.5
============== ============= =============
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COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME: AS OF DECEMBER 31,
($ in millions) --------------------------------------------------------
2006 2005
--------------------------- ----------------------------
GROSS NET GROSS NET
------------- ------------- ------------- --------------
Unrealized gains on investments...................................... $ 185.4 $ 2.8 $ 307.7 $ 26.9
Unrealized foreign currency translation adjustment................... (0.6) (0.9) (0.3) (0.8)
Unrealized losses on derivative instruments.......................... (33.3) (17.7) (40.4) (24.6)
------------- ------------- ------------- -------------
Accumulated other comprehensive income............................... 151.5 $ (15.8) 267.0 $ 1.5
------------- ============= ------------- =============
Applicable policyholder dividend obligation.......................... 167.7 241.5
Applicable deferred policy acquisition costs......................... (0.3) 15.9
Applicable deferred income taxes..................................... (0.1) 8.1
------------- -------------
Offsets to accumulated other comprehensive income.................... 167.3 265.5
------------- -------------
ACCUMULATED OTHER COMPREHENSIVE INCOME............................... $ (15.8) $ 1.5
============= =============
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16. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
The Phoenix Companies sponsors a non-contributory, defined benefit pension plan covering substantially all of its employees. Retirement benefits are a function of both years of service and level of compensation. The Phoenix Companies also sponsors a non-qualified supplemental defined benefit plan to provide benefits in excess of amounts allowed pursuant to the Internal Revenue Code. The Phoenix Companies' funding policy is to contribute annually an amount equal to at least the minimum required contribution in accordance with minimum funding standards established by the Employee Retirement Income Security Act of 1974 (ERISA). Contributions are intended to provide not only for benefits attributable to service to date, but also for service expected to be earned in the future.
The Phoenix Companies sponsors pension and savings plans for its employees, and employees and agents of its subsidiaries. The qualified plans comply with requirements established by the ERISA and excess benefit plans provide for that portion of pension obligations, which is in excess of amounts permitted by ERISA. The Phoenix Companies also provides certain health care and life insurance benefits for active and retired employees. We incur applicable employee benefit expenses through the process of cost allocation by The Phoenix Companies.
In addition to The Phoenix Companies' pension plans, The Phoenix Companies currently provides certain health care and life insurance benefits to retired employees, spouses and other eligible dependents through various plans sponsored by The Phoenix Companies. A substantial portion of Phoenix affiliate employees may become eligible for these benefits upon retirement. The health care plans have varying co-payments and deductibles, depending on the plan. These plans are unfunded.
Prior to June 25, 2001, Phoenix Life sponsored the aforementioned employee benefit plans. Effective June 25, 2001, Phoenix Life's parent, The Phoenix Companies, became the sponsor of these plans. Substantially all of our employees remained participants of the plans.
Applicable information regarding the actuarial present value of vested and non-vested accumulated plan benefits, and the net assets of the plans available for benefits is not separately calculated for our participation in the plans. The Phoenix Companies, the plan sponsor, established an accrued liability and amounts attributable to us have been allocated and recorded as an expense and employee benefit liability to our parent.
UNDERLYING PRINCIPAL RATES AND ASSUMPTIONS: YEAR ENDED DECEMBER 31,
---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
PRINCIPAL RATES AND ASSUMPTIONS
ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATIONS
Projected benefit obligation discount rate................................... 5.75% 5.50% 5.75%
Future compensation increase rate............................................ 4.25% 4.00% 4.00%
Pension plan assets long-term rate of return................................. 8.50% 8.50% 8.50%
Deferred investment gain/loss amortization corridor.......................... 5.00% 5.00% 5.00%
Future health care cost increase rate, age 64 and younger.................... 9.50% 10.00% 8.50%
Future health care cost increase rate, age 65 and older...................... 11.50% 12.25% 10.50%
ASSUMPTIONS USED TO DETERMINE BENEFIT COSTS
Projected benefit obligation discount rate................................... 5.50% 5.75% 6.00%
Future compensation increase rate............................................ 4.00% 4.00% 3.50%
Pension plan assets long-term rate of return................................. 8.50% 8.50% 8.50%
Deferred investment gain/loss amortization corridor.......................... 5.00% 5.00% 5.00%
Future health care cost increase rate, age 64 and younger.................... 10.00% 8.50% 9.25%
Future health care cost increase rate, age 65 and older...................... 12.25% 10.50% 11.25%
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CHANGES IN PENSION PLANS' ASSETS AND YEAR ENDED DECEMBER 31,
PROJECTED BENEFIT OBLIGATIONS: ------------------------------------------------------------
($ in millions) EMPLOYEE PLAN SUPPLEMENTAL PLAN
----------------------------- -----------------------------
2006 2005 2006 2005
-------------- -------------- -------------- --------------
PLANS' ASSETS
Plan assets' actual gain (loss).............................. $ 63.1 $ 24.5 $ -- $ --
Employer contributions....................................... 23.9 27.7 5.9 5.5
Participant benefit payments................................. (26.7) (26.0) (5.9) (5.5)
-------------- -------------- -------------- --------------
Change in plan assets........................................ 60.3 26.2 -- --
Plan assets, beginning of year............................... 422.6 396.4 -- --
-------------- -------------- -------------- --------------
PLANS' ASSETS, END OF YEAR................................... $ 482.9 $ 422.6 $ -- $ --
============== ============== ============== ==============
PLANS' PROJECTED BENEFIT OBLIGATION
Service and interest cost accrual............................ $ (38.7) $ (36.7) $ (9.8) $ (9.1)
Actuarial gain (loss)........................................ 12.1 (13.3) 1.9 (18.3)
Participant benefit payments................................. 26.7 26.0 5.9 5.5
Plan amendments.............................................. -- -- -- (1.5)
-------------- -------------- -------------- --------------
Change in projected benefit obligation....................... 0.1 (24.0) (2.0) (23.4)
Projected benefit obligation, beginning of year.............. (523.0) (499.0) (124.6) (134.6)
-------------- -------------- -------------- --------------
PROJECTED BENEFIT OBLIGATION, END OF YEAR.................... $ (522.9) $ (523.0) $ (126.6) $ (158.0)
============== ============== ============== ==============
PLAN ASSETS LESS THAN PROJECTED BENEFIT OBLIGATION,
END OF YEAR................................................ $ (40.0) $ (100.4) $ (126.6) $ (124.6)
============== ============== ============== ==============
ACCUMULATED BENEFIT OBLIGATION............................... $ 494.2 $ 492.6 $ 111.6 $ 106.5
============== ============== ============== ==============
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The Phoenix Companies does not expect any required contributions in 2007. The Phoenix Companies made payments totaling $23.9 million to the pension plan during 2006.
CHANGES IN PLAN PROJECTED BENEFIT OBLIGATION: AS OF DECEMBER 31,
($ in millions) -----------------------------
2006 2005
-------------- --------------
Service and interest cost accrued........................................................... $ (6.2) $ (5.2)
Actuarial loss.............................................................................. (6.6) (4.2)
Participant benefit payments................................................................ 6.2 6.7
Plan amendments............................................................................. -- 0.6
-------------- --------------
Change in projected benefit obligation...................................................... (6.6) (2.1)
Projected benefit obligations, beginning of year............................................ (72.4) (70.3)
-------------- --------------
PROJECTED BENEFIT OBLIGATIONS, END OF YEAR.................................................. $ (79.0) $ (72.4)
============== ==============
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The health care cost trend rate has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation by $0.4 million and the annual service and interest cost by $0.1 million. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation by $1.1 million and the annual service and interest cost by $0.1 million.
MANAGEMENT RESTRUCTURING EXPENSE AND EMPLOYMENT AGREEMENTS
The Phoenix Companies and certain of its key executives have entered into agreements that will, in certain circumstances, provide separation benefits upon the termination of the executive's employment by The Phoenix Companies for reasons other than death, disability, cause or retirement, or by the executive for "good reason," as defined in the agreements. For most of these executives, the agreements provide this protection only if the termination occurs following (or is effectively connected with) the occurrence of a change of control, as defined in the agreements. Upon a change in control, The Phoenix Companies is required to make an irrevocable contribution to a trust as soon as possible following such change in control in an amount equal to pay such benefits payable under such agreements. In such circumstances, we might be required to fund all or a portion of any contribution made.
We recorded non-recurring expenses of $0.6 million ($0.4 million after income taxes), $6.5 million ($4.2 million after income taxes) and $31.8 million ($20.7 million after income taxes) in 2006, 2005 and 2004, respectively, primarily in connection with organizational and employment-related costs. The 2004 charges relate mainly our allocated portion of charges stemming from The Phoenix Companies' sale of its retail affiliated broker-dealer operations and the outsourcing of our information technology infrastructure services.
17. DISCONTINUED OPERATIONS
During 1999, we discontinued our reinsurance operations. We have excluded assets and liabilities of the discontinued operations from the assets and liabilities of continuing operations and on a net basis included them in other general account assets on our balance sheet.
18. PHOENIX LIFE STATUTORY FINANCIAL INFORMATION AND REGULATORY MATTERS
STATUTORY FINANCIAL DATA: AS OF AND FOR THE YEARS ENDED
($ in millions) DECEMBER 31,
---------------------------------------------
2006 2005 2004
-------------- -------------- --------------
Statutory capital, surplus, and surplus notes................................ $ 932.5 $ 885.5 $ 814.6
Asset valuation reserve (AVR)................................................ 187.8 210.8 213.6
-------------- -------------- --------------
STATUTORY CAPITAL, SURPLUS, SURPLUS NOTES AND AVR............................ $ 1,120.3 $ 1,096.3 $ 1,028.2
============== ============== ==============
STATUTORY GAIN FROM OPERATIONS............................................... $ 131.6 $ 106.2 $ 35.1
============== ============== ==============
STATUTORY NET INCOME......................................................... $ 162.0 $ 61.0 $ 47.1
============== ============== ==============
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New York Insurance Law requires that New York life insurers report their risk-based capital (RBC). RBC is based on a formula calculated by applying factors to various assets, premium and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and business risk. New York insurance law gives the New York Superintendent of Insurance explicit regulatory authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not exceed certain RBC levels. Each of the U.S. insurance subsidiaries of Phoenix Life is also subject to these same RBC requirements. Phoenix Life and each of its insurance subsidiaries' RBC was in excess of 300% of Company Action Level (the level where a life insurance enterprise must submit a comprehensive plan to state insurance regulators) as of December 31, 2006 and 2005.
Under New York Insurance Law, Phoenix Life can pay stockholder dividends to us in any calendar year without prior approval from the New York Insurance Department in the amount of the lesser of 10% of Phoenix Life's surplus to policyholders as of the immediately preceding calendar year or Phoenix Life's statutory net gain from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life paid dividends of $87.5 million in 2006 and is able to pay $92.2 million in dividends in 2007 without prior approval from the New York Insurance Department. Any additional dividend payments, in excess of $92.2 million in 2007, would be subject to the discretion of the New York Superintendent of Insurance.
19. PREMISES AND EQUIPMENT
Premises and equipment are included in other general account assets in our balance sheet.
COST AND CARRYING VALUE: AS OF DECEMBER 31,
($ in millions) ------------------------------------------------------------
2006 2005
----------------------------- -----------------------------
CARRYING CARRYING
COST VALUE COST VALUE
-------------- -------------- -------------- --------------
Real estate.................................................. $ 105.5 $ 37.0 $ 101.1 $ 34.9
Equipment.................................................... 200.2 40.9 185.4 34.8
Leasehold improvements....................................... 0.8 0.7 -- --
-------------- -------------- -------------- --------------
Premises and equipment cost and carrying value............... 306.5 $ 78.6 286.5 $ 69.7
============== ==============
Accumulated depreciation and amortization.................... (227.9) (216.8)
-------------- --------------
PREMISES AND EQUIPMENT....................................... $ 78.6 $ 69.7
============== ==============
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Depreciation and amortization expense for premises and equipment for 2006, 2005 and 2004 totaled $12.1 million, $9.2 million and $11.3 million, respectively.
In May 25, 2004, we sold our Enfield, Connecticut office facility, for a loss of $1.0 million ($0.7 million after-tax). In anticipation of that sale, we had recorded a $6.2 million ($4.0 million after-tax) realized impairment loss in 2003.
Rental expenses for operating leases for continuing operations, principally with respect to buildings, amounted to $2.7 million, $2.4 million and $6.7 million in 2006, 2005 and 2004, respectively. Future minimum rental payments under non-cancelable operating leases for continuing operations were $14.3 million as of December 31, 2006, payable as follows: 2007, $4.0 million; 2008, $2.7 million; 2009, $2.3 million; 2010, $1.9 million; 2011, $1.4 million; and thereafter, $2.0 million.
20. RELATED PARTY TRANSACTIONS
Phoenix Investment Partners (PXP), an indirect wholly-owned subsidiary of The Phoenix Companies, through its affiliated registered investment advisors, provides investment advisory services to Phoenix Life for a fee. Investment advisory fees incurred by Phoenix Life under this arrangement were $9.8 million, $9.4 million and $8.2 million for 2006, 2005 and 2004, respectively. Amounts payable to the affiliated investment advisors were $0.5 million and $0.0 million, as of December 31, 2006 and 2005, respectively. PXP receives variable product separate account fees on our behalf. They retain a portion, for services provided, and forward the remainder to us. Amounts receivable from PXP for those fees were $0.7 million and $0.5 million as of December 31, 2006 and 2005, respectively. The variable product separate accounts fees retained by PXP were $1.8 million, $1.9 million and $3.2 million for 2006, 2005 and 2004, respectively.
On February 26, 2001, Phoenix Life entered into a $69.0 million subordinated loan agreement with PXP, due March 1, 2006, in exchange for debentures held by Phoenix Life. Interest was payable quarterly in arrears at an annual rate based on LIBOR plus 2%. The average blended interest rate was approximately 5% and 3% for the years ended December 31, 2005 and 2004, respectively. On December 31, 2005, Phoenix Life entered into a new $69.0 million five-year subordinated loan agreement with PXP to replace the prior agreement. The new loan agreement requires quarterly principal payments of $3 million beginning at the closing date with all remaining principal amounts due December 31, 2010. Interest is payable quarterly in arrears at an annual rate of 6.55%. Amounts due at December 31, 2006 and 2005 were $54.0 million and $66.0 million, respectively.
Phoenix Equity Planning Corporation (PEPCO), a wholly-owned subsidiary of PXP, is the principal underwriter of Phoenix Life's annuity and variable life contracts. Contracts may be purchased through registered representatives of a former Phoenix affiliate, W.S. Griffith & Co., Inc. (Griffith), as well as other outside broker-dealers who are licensed to sell Phoenix Life annuity contracts. Phoenix Life incurred commissions for contracts underwritten by PEPCO of $48.9 million, $45.3 million and $51.8 million for 2006, 2005 and 2004, respectively. Amounts payable to PEPCO were $0.5 million and $5.1 million, as of December 31, 2006 and 2005, respectively.
Effective May 31, 2004, The Phoenix Companies sold Griffith to an unrelated third party.
State Farm Mutual Automobile Insurance Company (State Farm) currently owns of record more than 5% of The Phoenix Companies' outstanding common stock. During 2006, 2005 and 2004, we incurred $50.1 million, $37.6 million and $32.4 million, respectively, in compensation costs for the sale of our insurance and annuity products by entities that were either subsidiaries of State Farm or owned by State Farm employees. Amounts payable to State Farm were $2.4 million and $1.9 million as of December 31, 2006 and 2005, respectively.
21. CONTINGENT LIABILITIES
Litigation and Arbitration
We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. The litigation and arbitration naming us as a defendant ordinarily involves our activities as an insurer, investor or taxpayer. It is not feasible to predict or determine the ultimate outcome of all legal or arbitration proceedings or to provide reasonable ranges of potential losses. We believe that the outcomes of our litigation and arbitration matters are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation and arbitration, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operations or cash flows in particular quarterly or annual periods.
Regulatory Matters
State regulatory bodies, the Securities and Exchange Commission (SEC), the National Association of Securities Dealers, Inc. (NASD) and other regulatory bodies regularly make inquiries of The Phoenix Companies, Phoenix Life and our affiliates and, from time to time, conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted.
For example, during 2003 and 2004, the New York State Insurance Department conducted its routine quinquennial financial and market conduct examination of Phoenix Life and its New York domiciled life insurance subsidiary and the SEC conducted examinations of certain Phoenix Life variable products and certain Phoenix Life affiliated investment advisers and mutual funds. The New York State Insurance Department's report, for the five-year period ending December 31, 2002, cited no material violations. In 2004, the NASD also commenced examinations of two broker-dealer affiliates; the examinations were closed in April 2005 and November 2004, respectively. In February 2005, the NASD notified The Phoenix Companies that it was asserting violations of trade reporting rules by a subsidiary. The Phoenix Companies responded to the NASD allegations in May 2005. Thereafter, in January 2007, the NASD notified The Phoenix Companies that the matter is being referred for potential violations and possible action.
In addition, Federal and state regulatory authorities from time to time make inquiries and conduct examinations regarding compliance by Phoenix Life and its subsidiaries with securities and other laws and regulations affecting their registered products. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted. There has been a significant increase in federal and state regulatory activity relating to financial services companies, with a number of recent regulatory inquiries focusing on late-trading, market timing and valuation issues. Our products entitle us to impose restrictions on transfers between separate account sub-accounts associated with our variable products.
In 2004 and 2005, the Boston District Office of the SEC conducted a compliance examination of certain of The Phoenix Companies affiliates that are registered under the Investment Company Act of 1940 or the Investment Advisers Act of 1940. Following the examination, the staff of the Boston District Office issued a deficiency letter primarily focused on perceived weaknesses in procedures for monitoring trading to prevent market timing activity. The staff requested The Phoenix Companies to conduct an analysis as to whether shareholders, policyholders and contract holders who invested in the funds that may have been affected by undetected market timing activity had suffered harm and to advise the staff whether The Phoenix Companies believes reimbursement is necessary or appropriate under the circumstances. A third party was retained to assist The Phoenix Companies in preparing the analysis. Based on this analysis, The Phoenix Companies advised the SEC that it does not believe that reimbursement is appropriate.
Over the past several years, a number of companies have announced settlements of enforcement actions with various regulatory agencies, primarily the SEC and the New York Attorney General's Office. While no such action has been initiated against us, it is possible that one or more regulatory agencies may pursue this type of action against us in the future.
Financial services companies have also been the subject of broad industry inquiries by state regulators and attorneys general which do not appear to be company-specific. In this regard, in 2004, The Phoenix Companies received a subpoena from the Connecticut Attorney General's office requesting information regarding certain distribution practices since 1998. Over 40 companies received such a subpoena. The Phoenix Companies cooperated fully and have had no further inquiry since filing our response.
In May 2005, The Phoenix Companies received a subpoena from the Connecticut Attorney General's office and an inquiry from the Connecticut Insurance Department requesting information regarding finite reinsurance. The Phoenix Companies cooperated fully and have had no further inquiry since responding.
These types of regulatory actions may be difficult to assess or quantify, may seek recovery of indeterminate amounts, including punitive and treble damages, and the nature and magnitude of their outcomes may remain unknown for substantial periods of time. While it is not feasible to predict or determine the ultimate outcome of all pending inquiries, investigations, legal proceedings and other regulatory actions, or to provide reasonable ranges of potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these actions and the inherent unpredictability of regulatory matters, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operation or cash flows in particular quarterly or annual periods.
Discontinued Reinsurance Operations
In 1999, we discontinued our reinsurance operations through a combination of sale, reinsurance and placement of certain retained group accident and health reinsurance business into run-off. We adopted a formal plan to stop writing new contracts covering these risks and to end the existing contracts as soon as those contracts would permit. However, we remain liable for claims under contracts which have not been commuted.
For example, we participate in a workers' compensation reinsurance pool formerly managed by Unicover Managers, Inc. (Unicover). The pool ceased accepting new risks in early 1999. Further, we were a retrocessionaire (meaning a reinsurer of other reinsurers) of the Unicover pool. We have been involved in disputes relating to the activities of Unicover. These disputes have been substantially resolved or settled.
Our discontinued group accident and health reinsurance operations also include other (non-Unicover) workers' compensation reinsurance contracts and personal accident reinsurance contracts, including contracts assumed in the London market. We are engaged in arbitrations, disputes or investigations with several ceding companies over the validity of, or amount of liabilities assumed under, their contracts. These arbitrations, disputes and investigations are in various stages.
We bought retrocessional reinsurance for a significant portion of our assumed reinsurance liabilities. Some of the retrocessionaires have disputed the validity of, or amount of liabilities assumed under, their contracts with us. Most of these disputes with retrocessionaires have been resolved or settled. The remaining arbitrations and disputes are at various stages.
We have established reserves for claims and related expenses that we expect to pay on our discontinued group accident and health reinsurance business. These reserves are based on currently known facts and estimates about, among other things, the amount of insured losses and expenses that we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will collect from our retrocessionaires and the likely legal and administrative costs of winding down the business.
We expect our reserves and reinsurance to cover the run-off of the business; however, unfavorable or favorable claims and/or reinsurance recovery experience is reasonably possible and could result in our recognition of additional losses or gains, respectively, in future years. Given the uncertainty associated with litigation and other dispute resolution proceedings, as well as the lack of sufficient claims information, the range of any reasonably possible additional future losses or gains is not currently estimable. However, it is our opinion, based on current information and after consideration of the provisions made in these financial statements, that any future adverse or favorable development of recorded reserves and/or reinsurance recoverables will not have a material adverse effect on our consolidated financial position. Nevertheless, it is possible that future developments could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.
22. OTHER COMMITMENTS
During the normal course of business, the Company enters into agreements to fund venture capital partnerships and to purchase private placement investments. As of December 31, 2006, the Company had committed $181.4 million under such investments, of which $85.8 million is expected to be disbursed by December 31, 2007.
In connection with the sale of certain venture capital partnerships, we issued a guarantee with respect to the outstanding unfunded commitments related to the partnerships that were sold. We believe the likelihood that we will have to perform under this guarantee is remote. The unfunded commitments were $19.4 million at December 31, 2006.
PART C
PART C
OTHER INFORMATION
ITEM 26. EXHIBITS.
(A) BOARD OF DIRECTORS RESOLUTION.
Resolution of the Board of Directors of Phoenix Life Insurance Company (formerly Phoenix Home Life Mutual Insurance Company) establishing the Phoenix Mutual Variable Universal Life Account is incorporated by reference to Post-Effective Amendment No. 14 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 1998.
(B) CUSTODIAN AGREEMENTS.
Not applicable.
(C) UNDERWRITING CONTRACTS.
(1) Master Service and Distribution Compliance Agreement between Depositor and Phoenix Equity Planning Corporation dated November 1, 2000, is incorporated by reference to Post-Effective Amendment No. 26 on Form N-6 (File No. 033-06793) filed via EDGAR on April 30, 2004.
(2) Form of Broker Dealer Supervisory and Service Agreement between Phoenix Equity Planning Corporation and Independent Brokers with respect to the sale of Policies is incorporated by reference to Post-Effective Amendment No. 27 on Form N-6 (File No. 033-06793) filed via EDGAR on April 25, 2005.
(D) CONTRACTS.
(1) Flexible Premium Variable Universal Life Insurance Policy, Form Number
07VUL*
(2) No Lapse Guarantee Rider (Form No. 07NLGR) *
(3) Alternate Surrender Value Rider (Form No. 07ASVR) *
(4) Overloan Protection Rider (Form No. 06OLR) *
(5) Phoenix LifePlan Options Rider (Form No. 06LPOR) *
(6) Disability Payment of Specified Premium Rider (Form No. 07DPR) *
(7) Accelerated Benefit Rider (Form No. VR162) *
(8) Healthy Measure Reward Endorsement (Form No. 07UE)*
(9) Healthy Measure Reward Endorsement (Form No. 06UE) *
(10) Enhanced Dollar Cost Averaging Amendment (Form No. VR74)*
* Filed herewith.
(E) APPLICATIONS.
Form of Application for Flexible Premium Variable Universal Life Insurance Policy, Form Number OL4250NY.1 is filed herewith.
(F) DEPOSITOR'S CERTIFICATE OF INCORPORATION AND BYLAWS.
(1) Amended and Restated Charter of Phoenix Life Insurance Company dated December 20, 2004 is incorporated by reference to Pre-Effective Amendment No. 1 on Form N-6 (File No. 333-119919) filed via EDGAR on February 9, 2005.
(2) Amended and Restated Bylaws of Phoenix Life Insurance Company dated February 2, 2006 is incorporated by reference to Post-Effective Amendment No. 18 on Form N-6 (File No. 333-23171) filed via EDGAR on April 27, 2006.
(G) REINSURANCE CONTRACTS.
Form of Reinsurance contract is incorporated by reference to Pre-effective Amendment No. 1 on Form N-6 (File No. 333-143656) filed via EDGAR on November 7, 2007.
(H) PARTICIPATION AGREEMENTS.
(1) (a) Participation Agreement dated May 1, 2000 between Phoenix Home Life Mutual Insurance Company, PHL Variable Insurance Company, Franklin Templeton Variable Insurance Products Trust, and Franklin Templeton Distributors, Inc. is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(b) Amendment dated May 1, 2000 to Participation Agreement between Phoenix Home Life Mutual Insurance Company, PHL Variable Insurance Company, Franklin Templeton Variable Insurance Products Trust, and Franklin Templeton Distributors, Inc. is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(c) Amendment to Participation Agreement dated May 3, 2004 by and among Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributors, Inc., Phoenix Life Insurance Company, and PHL Variable Insurance Company is incorporated herein by reference to Post-Effective Amendment No. 9 on Form N-6 (File No. 333-76778) filed via EDGAR on April 27, 2006.
(d) Amendment No. 3 to Participation Agreement as of May 1, 2006, by and among Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributors, Inc., Phoenix Life Insurance Company, and PHL Variable Insurance Company is incorporated herein by reference to Post-Effective Amendment No. 9 on Form N-6 (File No. 333-119916) filed via EDGAR on August 14, 2006.
(e) Amendment No. 4 to Participation Agreement as of May 1, 2007, by and among Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributor's Inc., Phoenix Life Insurance Company, PHL Variable Insurance Company, and Phoenix Equity Planning Corporation is filed herewith.
(2) (a) Participation Agreement dated April 18, 1995 between Phoenix Home Life Mutual Insurance Company and Wanger Advisors Trust is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(b) Amendment No. 1 dated December 16, 1996 to Participation Agreement between Phoenix Home Life Mutual Insurance Company and Wanger Advisors Trust is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(3) Fund Participation Agreement dated July 15, 1999 among Phoenix Home Life Mutual Insurance Company, Insurance Series, and Federated Securities Corp. is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(4) (a) Fund Participation Agreement dated July 19, 1999 among Phoenix
Home Life Mutual Insurance Company, BT Insurance Funds Trust and
Bankers Trust Company, is incorporated by reference to
Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793)
filed via EDGAR on April 29, 2002.
(b) Amendment No. 1 dated April 27, 2001 to the Fund Participation
Agreement among Phoenix Home Life Mutual Insurance Company,
Deutsche Asset Management VIT Funds and Bankers Trust Company, is
incorporated by reference to Post-Effective Amendment No. 21 on
Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(c) Amendment No. 2 dated October 29, 2001 to the Fund Participation
Agreement among Phoenix Life Insurance Company, Deutsche Asset
Management VIT Funds and Deutsche Asset Management, Inc. is
incorporated by reference to Post-Effective Amendment No. 21 on
Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
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(5) Participation Agreement dated May 1, 2006 among The Universal Institutional Funds, Inc., Morgan Stanley Distribution Inc., Morgan Stanley Investment Management Inc. and Phoenix Life Insurance Company is incorporated by reference to Post-Effective Amendment No. 3 on Form N-4 (File No. 333-123035) filed via EDGAR on December 19, 2006.
(6) Participation Agreement dated June 1, 2000 among Phoenix Home Life Mutual Insurance Company, The Alger American Fund and Fred Alger & Company, Incorporated is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(7) Participation Agreement dated June 1, 2000 among Phoenix Home Life Mutual Insurance Company, Variable Insurance Products Fund, II and III and Fidelity Distributors Corporation is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(a) Amendment and Assignment dated as of June 6, 2007 between Variable Insurance Products Fund II ("Current Fund"), Fidelity Distributors Corporation (the "Underwriter") and Phoenix Life Insurance Company (the "Company") to the
Participation Agreement dated June 1, 2000, as amended, is incorporated by reference to Pre-effective Amendment No. 1 to Initial Registration Statement filed on Form N-6 (File No. 333-143656) filed via EDGAR on November 7, 2007. (Note: Fidelity reorganized the following portfolios: Asset Manager Portfolio, Asset Manager: Growth Portfolio and Investment Grade Bond Portfolio into a new Variable Insurance Products Fund V. This Amendment (1) amends the Participation Agreement to delete the affected portfolios; and (2) creates a new participation agreement for Fund V by adopting the terms of the Participation Agreement and assigning each fund's rights, benefits and obligations under the Participation Agreement with respect to the corresponding portfolios of Fund V.)
(8) Participation Agreement dated March 29, 2001 among Phoenix Home Life Mutual Insurance Company, AIM Variable Insurance Funds, Phoenix Equity Planning Corporation and AIM Distributors, Inc. is incorporated by reference to Post-Effective Amendment No. 21 on Form S-6 (File No. 033-06793) filed via EDGAR on April 29, 2002.
(9) Amended and Restated Participation Agreement dated January 1, 2007 among The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company is incorporated by reference to Post-Effective Amendment No. 27 on Form N-6 (File No. 033-87376) filed via EDGAR on February 20, 2007.
(10) Participation Agreement dated May 1, 2006 among Phoenix Life Insurance Company, PIMCO Variable Insurance Trust and Allianz Global Investors Distributors LLC is incorporated by reference to Post-Effective Amendment No. 3 on Form N-6 (File No. 333-119919) filed via EDGAR on August 14, 2006.
(11) Fund Participation Agreement dated May 1, 2006 among Phoenix Life Insurance Company, Neuberger Berman Advisers Management Trust and Neuberger Berman Management, Inc. is incorporated by reference to Post-Effective Amendment No. 3 on Form N-6 (File No. 333-119919) filed via EDGAR on August 14, 2006.
(12) Participation Agreement dated April 25, 2005 among Phoenix Life Insurance Company, Lazard Asset Management Securities LLC and Lazard Retirement Series, Inc. is incorporated by reference to Post-Effective Amendment No. 18 on Form N-6 (File No. 333-23171) filed via EDGAR on April 27, 2006.
(13) Participation Agreement dated April 14, 2005 among Phoenix Life Insurance Company, Lord Abbett Series Fund, Inc., and Lord Abbett Distributor, LLC is incorporated by reference to Post-Effective Amendment No. 18 on Form N-6 (File No. 333-23171) filed via EDGAR on April 27, 2006.
(14) Participation Agreement dated May 1, 2006 among Phoenix Life Insurance Company, Oppenheimer Variable Account Funds and Oppenheimerfunds, Inc. is incorporated by reference to Registrant's Post-Effective Amendment No. 3 on Form N-6 (File No. 333-119919) filed via EDGAR on August 14, 2006.
(15) Participation Agreement among Phoenix Life Insurance Company, Rydex Variable Trust and Rydex Distributors, Inc. dated May 30, 2003 is incorporated by reference to Post-Effective Amendment No. 26 on Form N-6 (File No. 033-06793) filed via EDGAR on April 30, 2004.
(16) Fund Participation Agreement dated September 7, 2007 among Phoenix Life Insurance Company, Sentinel Variable Products Trust and Sentinel Financial Services Company is incorporated by reference to Post-Effective Amendment No. 5 on Form N-4 (File No. 333-123040) filed via EDGAR on or about September 6, 2007.
(I) ADMINISTRATIVE CONTRACTS.
(1) Service Agreement dated January 1, 2003 between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Post-Effective Amendment No. 26 on Form N-6 (File No. 033-06793) filed via EDGAR on April 30, 2004.
(2) First Amendment to Service Agreement dated November 11, 2003 between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Post-Effective Amendment No. 26 on Form N-6 (File No. 033-06793) filed via EDGAR on April 30, 2004).
(3) Second Amendment to Service Agreement dated February 27, 2004 between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Pre-Effective Amendment No. 1 on Form N-6 (File No. 333-119919) filed via EDGAR on February 9, 2005.
(4) Third Amendment to Service Agreement dated November 15, 2004 between The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated by reference to Post-Effective Amendment No. 1 on Form N-6 (File No. 333-119919) filed via EDGAR on April 25, 2005.
(5) Fourth Amendment to Service Agreement dated November 13, 2005 by and among The Phoenix Edge Series Fund, Phoenix Life Insurance Company, PHL Variable Insurance Company and Phoenix Life and Annuity Company, is incorporated herein by reference to Post-Effective Amendment No. 18 on Form N-6 (File No. 333-23171) filed via EDGAR on April 27, 2006.
(J) OTHER MATERIAL CONTRACTS.
(1) Amended and Restated Administration and Accounting Services Agreement dated March 1, 2003 by and between Phoenix Life Insurance Company and PFPC, INC. is incorporated by reference to Post-Effective Amendment No. 5 on Form N-4 (File No. 333- 123035), filed via EDGAR on or about September 6, 2007.
(2) Amendment dated January 1, 2005 to Amended and Restated Administration and Accounting Services Agreement between Phoenix Life Insurance Company and PFPC, INC. is incorporated by reference to Post-Effective Amendment No. 5 on Form N-4 (File No. 333-123035), filed via EDGAR on or about September 6, 2007.
(3) Information Sharing Agreements pursuant to Rule 22c-2 are incorporated by reference to Form N-4 (File No. 033-87376), Post-Effective Amendment No. 29, filed via EDGAR on May 1, 2007.
(4) Information Sharing Agreement dated as of September 7, 2007, pursuant to Rule 22c-2, between Phoenix Life Insurance Company, PHL Variable Insurance Company, and Phoenix Life and Annuity Company and the Sentinel Variable Products Trust is incorporated by reference to Post-effective Amendment No. 6 on Form N-4 (File No. 333-123035), filed via EDGAR on September 28, 2007.
(K) LEGAL OPINION.
Opinion and Consent of Counsel of Kathleen A. McGah, Esq. is filed herewith.
(L) ACTUARIAL OPINION.
Not applicable.
(M) CALCULATION.
Not applicable.
(N) OTHER OPINIONS.
(1) Consent of Independent Registered Public Accounting Firm is filed herewith.
(2) (a) The Powers of Attorney are incorporated by reference to Registrant's Initial Registration Statement on Form N-6 (File No. 333-146301), filed via EDGAR on September 25, 2007.
(b) Power of Attorney for David R. Pellerin, Chief Accounting Officer, is filed herewith.
(c) Power of Attorney for Peter A. Hofmann, Chief Financial Officer, is filed herewith.
(O) OMITTED FINANCIAL STATEMENTS.
Not applicable.
(P) INITIAL CAPITAL AGREEMENTS.
Not applicable.
(Q) REDEEMABILITY EXEMPTION.
Not applicable.
ITEM 27. DIRECTORS AND OFFICERS OF THE DEPOSITOR.
------------------------------------------------------------------------------------------------------------------- Name and Principal Business Address Positions and Offices with Depositor ------------------------------------------------------------------------------------------------------------------- Sal H. Alfiero Director Protective Industries, LLC Buffalo, NY ------------------------------------------------------------------------------------------------------------------- Martin N. Baily Director The Brookings Institution Washington, DC ------------------------------------------------------------------------------------------------------------------- Jean S. Blackwell Director Cummins Inc. Columbus, IN ------------------------------------------------------------------------------------------------------------------- Peter C. Browning* Director ------------------------------------------------------------------------------------------------------------------- Arthur P. Byrne Director J.W. Childs Associates Boston, MA ------------------------------------------------------------------------------------------------------------------- Sanford Cloud, Jr.* Director ------------------------------------------------------------------------------------------------------------------- Gordon J. Davis, Esq. Director LeBoeuf, Lamb, Greene & MacRae, LLP New York, NY ------------------------------------------------------------------------------------------------------------------- John H. Forsgren* Director ------------------------------------------------------------------------------------------------------------------- Ann Maynard Gray* Director ------------------------------------------------------------------------------------------------------------------- John E. Haire* Director ------------------------------------------------------------------------------------------------------------------- Jerry J. Jasinowski* Director ------------------------------------------------------------------------------------------------------------------- Thomas S. Johnson Director New York, NY ------------------------------------------------------------------------------------------------------------------- Dona D. Young* Chairman of the Board, President and Chief Executive Officer ------------------------------------------------------------------------------------------------------------------- David R. Pellerin** Senior Vice President and Chief Accounting Officer ------------------------------------------------------------------------------------------------------------------- Peter Hofmann* Senior Executive Vice President and Chief Financial Officer ------------------------------------------------------------------------------------------------------------------- Philip K. Polkinghorn* Senior Executive Vice President and President, Life and Annuity ------------------------------------------------------------------------------------------------------------------- Tracy L. Rich* Executive Vice President, General Counsel and Secretary ------------------------------------------------------------------------------------------------------------------- Daniel J. Moskey* Vice President and Treasurer ------------------------------------------------------------------------------------------------------------------- James D. Wehr** Senior Executive Vice President and Chief Investment Officer ------------------------------------------------------------------------------------------------------------------- |
* The principal business address of this individual is One American Row, Hartford, CT 06103-2899 ** The principal business address of this individual is 56 Prospect Street, Hartford, CT 06103-2836
ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT
The Phoenix Companies, Inc. (100%) Delaware
Phoenix Distribution Holding Company (100%) Connecticut
Phoenix Investment Management Company (100%) Connecticut
Phoenix Investment Partners, Ltd. (100%) Delaware
DP Holdings, Ltd. (100%) New Brunswick, Canada
DPCM Holdings, Inc. (100%) Illinois
Duff & Phelps Investment Management Co. (100%) Illinois
Goodwin Capital Advisers, Inc. (100%) New York
Kayne Anderson Rudnick Investment Management, LLC (100%) California
Pasadena Capital Corporation (100%) California
Engemann Asset Management (100%) California
Phoenix Alternative Investment Advisers, Inc. (100%) Connecticut
Phoenix Equity Planning Corporation (100%) Connecticut
Phoenix Investment Counsel, Inc. (100%) Massachusetts
Phoenix/Zweig Advisers, LLC (100%) Delaware
Euclid Advisers, LLC (100%) New York
PXP Securities Corp. (100%) New York
Rutherford Financial Corporation (100%) Delaware
Rutherford, Brown & Catherwood, LLC (73.2%) Delaware
SCM Advisors, LLC (100%) California
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Walnut Asset Management, LLC (70.6%) Delaware
Phoenix Life Insurance Company (100%) New York
Next Generation Ventures LLC (50%) Connecticut
Phoenix Foundations (0%)
Phoenix Life Separate Account B (100%) New York Phoenix Life
Separate Account C (100%) New York Phoenix Life Separate
Account D (100%) New York Phoenix Life Variable Accumulation
Account (100%) New York Phoenix Life Variable Universal Life
Account (100%) New York PM Holdings, Inc. (100%) Connecticut
American Phoenix Life and Reassurance Company (100%) Connecticut
Phoenix Life and Reassurance Company of New York (100%) New York
Emprendimiento Compartido, S.A. (100%) Argentina
PFG Holdings, Inc. (100%) Pennsylvania
AGL Life Assurance Company (100%) Pennsylvania
PFG Distribution Company (100%) Delaware
Philadelphia Financial Group, Inc. (100%) Delaware
PHL Variable Insurance Company (100%) Connecticut
PHL Variable Accumulation Account (100%) Connecticut
PHLVIC Variable Universal Life Account (100%) Connecticut
Phoenix Founders, Inc. (100%) Connecticut
Phoenix International Capital Corporation (100%) Connecticut
Practicare, Inc. (100%) Delaware
Phoenix Life and Annuity Company (100%) Connecticut
Phoenix Life and Annuity Variable Universal Life Account (100%) Connecticut
Phoenix New England Trust Holding Company (100%) Connecticut
Phoenix Variable Advisors, Inc. (100%) Delaware
PML International Insurance Limited (100%) Bermuda
The Phoenix Edge Series Fund (0%) Massachusetts business trust
Phoenix National Trust Holding Company (100%) Connecticut
Phoenix Life Solutions, Inc. (100%) Delaware
Only companies that file consolidated financial statements
with the Securities and Exchange Commission ("SEC") are The Phoenix
Companies Inc. and Phoenix Life Insurance Company. In addition, PHL
Variable Insurance Company and Phoenix Life and Annuity Company file
individual financial statements with the SEC. For the remainder, except
the separate accounts (defined as Phoenix Life Separate Account B,
Phoenix Life Separate Account C, Phoenix Life Separate Account D,
Phoenix Life Variable Accumulation Account, Phoenix Life Variable
Universal Life Account, PHL Variable Accumulation Account, PHLVIC
Variable Universal Life Account, and Phoenix Life and Annuity Variable
Universal Life Account) all other entities are included in the
consolidated financial statement, for The Phoenix Companies, Inc., but
none file individual financial statements with the SEC.
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ITEM 29. INDEMNIFICATION.
Section 722 of the New York Business Corporation Law, as made applicable to insurance companies by Section 108 of the New York Insurance Law, 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 VI, Section 6.1 of the Bylaws of the Depositor (as amended and restated effective February 2, 2006) provides that "To the full extent permitted by the laws of the State of New York, the Company shall indemnify any person made or threatened to be made a party to any action, proceeding or investigation, whether civil or criminal, by reason of the fact that such person, or such person's testator or intestate:
(1) is or was a Director, officer or employees of the Company; or
(2) serves or served another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Company, and at the time of such services, was a director, officer or employee of the Company against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with or as a result of such action, proceeding or investigation, or any appeal therein.
Subject to applicable law, the indemnification provided in this Article VI shall not be deemed to be exclusive of any other rights to which a director, officer or employee of the Company seeking indemnification may be entitled." Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") 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 30. PRINCIPAL UNDERWRITER.
1. Phoenix Equity Planning Corporation ("PEPCO")
(a) PEPCO serves as the principal underwriter for the following entities:
Phoenix Adviser Trust, Phoenix Asset Trust, Phoenix Equity Series Fund, Phoenix Equity Trust, Phoenix Insight Funds Trust, Phoenix Institutional Mutual Funds, Phoenix Investment Series Fund, Phoenix Investment Trust 06, Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix Opportunities Trust, Phoenix PHOLIOs(SM), Phoenix Series Fund, Phoenix Strategic Equity Series Fund, The Phoenix Edge Series Fund, Phoenix Life Variable Accumulation Account, Phoenix Life Variable Universal Life Account, Phoenix Life and Annuity Variable Universal Life Account, PHL Variable Accumulation Account, PHLVIC Variable Universal Life Account and PHL Variable Separate Account MVA1.
(b) Directors and Executive Officers of PEPCO
NAME POSITION ---- -------- George R. Aylward, Jr.** Director, Executive Vice President John H. Beers* Vice President and Secretary John R. Flores* Vice President and Anti-Money Laundering Officer Stephen D. Gresham** Director, Senior Vice President David R. Pellerin** Director David Hanley** Vice President and Treasurer David C. Martin* Vice President and Chief Compliance Officer David R. Pellerin* Vice President and Chief Financial Officer Philip K. Polkinghorn* Executive Vice President Francis G. Waltman** Director, President |
* The business address of this individual is One American Row,
Hartford, CT 06103-2899.
** The business address of this individual is 56 Prospect Street,
Hartford, CT 06103-2836
(c) PEPCO received no compensation from the Registrant during the last fiscal year for sales of the contract.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 are maintained at the administrative offices of Phoenix Life Insurance Company located at One American Row, Hartford, CT 06103-2899.
ITEM 32. MANAGEMENT SERVICES.
Under a contract with Phoenix Life Insurance Company ("PLIC"), Ibbotson Associates provides certain asset allocation services, including a risk tolerance questionnaire to assist the policy owner, for use in conjunction with the policy. For these services, PLIC pays Ibbotson an annual flat fee. The fees paid for the last three fiscal years follow:
YEAR FEE PAID ---- -------- 2004 $ 98,275 2005 $ 86,000 2006 $101,000 |
ITEM 33. FEE REPRESENTATION.
Pursuant to Section 26(f) of the Investment Company Act of 1940, as amended, Phoenix Life Insurance Company represents that the fees and charges to be deducted under the Policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks to be assumed thereunder by Phoenix Life Insurance Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, as amended, the Registrant, Phoenix Life Variable Universal Life Account, certifies that it causes this Pre-effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, duly authorized, all in the City of Hartford and State of Connecticut on this 20th day of December, 2007.
PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
(Registrant)
By: ___________________________________________
*Dona D. Young, Chairman of the Board, President
and Chief Executive Officer of Phoenix Life
Insurance Company
PHOENIX LIFE INSURANCE COMPANY
By: ___________________________________________ *Dona D. Young, Chairman of the Board, President and Chief Executive Officer
By: /s/ Kathleen A. McGah
---------------------
*Kathleen A. McGah, as Attorney-in-Fact pursuant to Power of Attorney.
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As required by the Securities Act of 1933, this Pre-effective Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated on December 20, 2007.
SIGNATURE TITLE
--------- -----
Director
--------------------------------
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*Sal H. Alfiero
SIGNATURE TITLE
--------- -----
Director
--------------------------------
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*Jerry J. Jasinowski
Chairman of the Board,
President and
-------------------------------- Chief Executive Officer *Dona D. Young
By: /s/ Kathleen A. McGah
---------------------
*Kathleen A. McGah, as Attorney-in-Fact pursuant to Powers of Attorney.
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Exhibit 26(d)(1) Flexible Premium Variable Universal Life
Insurance Policy, Form Number 07VUL
--------------------------------------------------------------------------------
Exhibit 26(d)(2) No Lapse Guarantee Rider (Form No. 07NLGR)
--------------------------------------------------------------------------------
Exhibit 26(d)(3) Alternate Surrender Value Rider (Form No.
07ASVR)
--------------------------------------------------------------------------------
Exhibit 26(d)(4) Overloan Protection Rider (Form No. 06OLR)
--------------------------------------------------------------------------------
Exhibit 26(d)(5) Phoenix LifePlan Options Rider (Form No.
06LPOR)
--------------------------------------------------------------------------------
Exhibit 26(d)(6) Disability Payment of Specified Premium
Rider (Form No. 07DPR)
--------------------------------------------------------------------------------
Exhibit 26(d)(7) Accelerated Benefit Rider (Form No. VR162)
--------------------------------------------------------------------------------
Exhibit 26(d)(8) Healthy Measure Reward Endorsement (Form
No. 07UE)
--------------------------------------------------------------------------------
Exhibit 26(d)(9) Healthy Measure Reward Endorsement (Form
No. 06UE)
--------------------------------------------------------------------------------
Exhibit 26(d)(10) Enhanced Dollar Cost Averaging Amendment
(Form No. VR74)
--------------------------------------------------------------------------------
Exhibit 26(e) Form of Application for Flexible Premium
Variable Universal Life Insurance Policy,
Form Number OL4250NY.1
--------------------------------------------------------------------------------
Exhibit 26(h)(1)(e) Amendment No. 4 to Participation Agreement
as of May 1, 2007, by and among Franklin
Templeton Variable Insurance Products
Trust, Franklin Templeton Distributor's,
Inc., Phoenix Life Insurance Company, PHL
Variable Insurance Company, and Phoenix
Equity Planning Corporation
--------------------------------------------------------------------------------
Exhibit 26(k) Opinion and Consent of Kathleen A. McGah,
Esq., Vice president and Counsel
--------------------------------------------------------------------------------
Exhibit 26(n)(1) Consent of Independent Registered Public
Accounting Firm
--------------------------------------------------------------------------------
Exhibit 26(n)(2)(b) Power of Attorney for David R. Pellerin,
Chief Accounting Officer
--------------------------------------------------------------------------------
Exhibit 26(n)(2)(c) Power of Attorney for Peter A. Hofmann,
Chief Financial Officer
--------------------------------------------------------------------------------
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Exhibit 26(d)(1)
Flexible Premium Variable Universal Life Insurance Policy
[GRAPHIC OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
--------------------------------------------------------------------------------
INSURED: [JOHN M. PHOENIX] TOTAL FACE AMOUNT AT ISSUE: [$500,000]
POLICY NUMBER: [9730000] POLICY DATE: [July 1, 2007]
DEATH BENEFIT AT ISSUE: [Option B] ISSUE DATE: [July 1, 2007]
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PLAN: [VUL 2007]
The Phoenix Life Insurance Company ("the Company") agrees, subject to the conditions and provisions of this policy, to pay the Death Benefit to the Beneficiary in a lump sum upon the death of the Insured if such death occurs while the policy is in force, and to provide the other benefits, rights, and privileges of the policy. If the Company makes other plans of payment available other than a lump sum, then a Beneficiary may request written election of any such other plans in lieu of a lump sum. The Death Benefit will be payable on receipt at the Main Administrative Office of the Company of due proof of the Insured's death.
We are issuing the policy in consideration of the application and our receipt of the Minimum Initial Premium at our Main Administrative Office. The provisions of this policy and the following pages and any attachments make up your contract.
RIGHT TO RETURN THIS POLICY. THIS POLICY MAY BE RETURNED BEFORE THE LATER OF 10 DAYS AFTER THIS POLICY IS DELIVERED TO YOU, 10 DAYS AFTER NOTIFICATION OF YOUR RIGHT TO CANCEL THIS POLICY IS DELIVERED TO YOU, 45 DAYS AFTER THE COMPLETED APPLICATION IS SIGNED OR 60 DAYS AFTER THE POLICY IS DELIVERED TO YOU, IF THE POLICY IS ISSUED AS A REPLACEMENT OF ANOTHER LIFE INSURANCE POLICY. IF CANCELLED, THIS POLICY WILL BE VOID FROM ITS BEGINNING AND WE WILL RETURN ANY PAYMENTS MADE FOR THIS POLICY, LESS ANY UNPAID LOANS, LOAN INTEREST, AND LESS ANY WITHDRAWAL AMOUNTS PAID ONCE THE POLICY HAS BEEN RETURNED TO US. NOTICE GIVEN BY MAIL AND RETURN OF THE POLICY BY MAIL ARE EFFECTIVE ON BEING POSTMARKED, PROPERLY ADDRESSED AND POSTAGE PREPAID.
MAIN ADMINISTRATIVE OFFICE
Phoenix Life Insurance Company
[Variable and Universal Life Administration P.O. Box 8027 Boston, MA 02266-8027 Telephone (800) 541-0171]
Signed for Phoenix Life Insurance Company at its Home Office [One American Row, Hartford, Connecticut 06103-2899].
[/s/ Dona D. Young] [/s/ John H. Beers]
[Chairman, President and Chief Executive Officer] [Secretary]
READ YOUR POLICY CAREFULLY
IT IS A LEGAL CONTRACT BETWEEN THE OWNER AND PHOENIX LIFE INSURANCE COMPANY
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FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
DEATH BENEFIT PAYABLE AT DEATH OF INSURED
NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS
BENEFITS, PREMIUMS, AND THE RISK CLASSIFICATION ARE SHOWN IN SECTION 1
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST ACCOUNT, LONG-TERM GUARANTEED INTEREST ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE INVESTMENT OPTIONS WITHIN OUR SEPARATE ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. TO THE EXTENT THAT FUNDS ARE INVESTED IN THE INVESTMENT OPTIONS, THE DEATH BENEFIT AND OTHER VALUES MAY INCREASE OR DECREASE IN AMOUNT AND DURATION. SEE SECTION 6 FOR A DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
07VUL
TABLE OF CONTENTS
SECTION PROVISION
1. Schedule Pages
2. Table of Rates
3. Definitions
4. Qualification as Life Insurance
5. Total Face Amount
6. Death Proceeds
7. Coverage at and After Age [100] Anniversary
8. Separate Account and Investment Options
9. Guaranteed Interest Account and Long-Term Guaranteed Interest Account
10. Policy Value
11. Premiums
12. Grace Period
13. Policy Termination
14. Reinstatement
15. Allocations and Transfers
16. Loans
17. Surrenders and Withdrawals
18. Basis of Computations
19. Owner(s) and Beneficiary(ies)
20. Assignment
21. Misstatements
22. Suicide Exclusion
23. Incontestability
24. The Entire Contract
25. Annual Statement
26. Claims of Creditors
27. Right to Defer Payment of Benefits
POLICY NUMBER: [9730000]
INSURED: [John M. Phoenix]
AGE AT POLICY DATE: [35]
SEX: [Male]
RISK CLASSIFICATION: [Preferred]
ADDITIONAL RATINGS: [not applicable]
OWNER, BENEFICIARY: As designated in the application or subsequently changed
POLICY DATE: [July 1, 2007]
ISSUE DATE: [July 1, 2007]
DEATH BENEFIT OPTION AT ISSUE: [Option B]
LIFE INSURANCE QUALIFICATION TEST: [Guideline Premium Test]
TOTAL FACE AMOUNT AT ISSUE: Initial Coverage Layer Face Amount at Issue: [$250,000]
Supplemental Face Amount at Issue: [$250,000]
Total Face Amount at Issue: [$500,000]
PREMIUMS
--------
PREMIUM MODE: [Annual]
MINIMUM INITIAL PREMIUM: $ [2,500.00]
PLANNED PREMIUM: $ [2,700.00 per year]
[GUIDELINE SINGLE PREMIUM: $ [100,000.00]]
[GUIDELINE LEVEL PREMIUM: $ [10,000.00]]
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NOTICE: This policy provides life insurance coverage for the lifetime of the Insured if sufficient premiums are paid. EVEN IF THE PLANNED PREMIUMS SHOWN ABOVE ARE PAID AS SCHEDULED, THEY MAY NOT BE SUFFICIENT TO CONTINUE THE POLICY IN FORCE UNTIL THE DEATH OF THE INSURED. Coverage may expire if sufficient premiums are not paid. Keeping the policy and coverage in force will be affected by factors such as: changes in the current cost of insurance rates; changes in expense charges; the amount, timing and frequency of premium payments; the interest rate being credited to the GIA and LT-GIA; the investment experience of the Investment Options; changes to the Death Benefit Option; changes in the Total Face Amount; loan activity; withdrawals, and deductions for any applicable supplementary benefit riders that are attached to, and made a part of, this policy. We have the right to change the amount of interest credited to the GIA and LT-GIA, and the amount of cost of insurance and other expense charges deducted under the policy which may require more premium to be paid than was illustrated, and the Net Surrender Values may be less than those illustrated. Also refer to the Grace Period and Policy Termination provisions in Sections 12 and 13.
VULSP - 80 3
POLICY NUMBER: [9730000]
PREFERRED LOAN AMOUNT AT ISSUE: [$50,000]
[ASSET ALLOCATION PROGRAM [Ibbotson ModeratePortfolio]]
POLICY NUMBER: [9730000]
PREMIUM EXPENSE CHARGE [8%] of premium paid in all policy years.
MONTHLY DEDUCTIONS (the following charges are deducted monthly
------------------ from the Policy Value on each Monthly
Calculation Date)
ADMINISTRATIVE CHARGE: [$7.00]
COST OF INSURANCE CHARGE: Determined in accordance with Section 10.
Maximum monthly rates per $1,000 of Net
Amount at Risk are shown in Section 2.
MAXIMUM MORTALITY AND EXPENSE 0.04167% of the non-loaned separate account
value for years 1-20
RISK CHARGE: 0.025% of the non-loaned separate account
value for years 21+
COVERAGE CHARGE: [$92.08] per month for the first 120 Policy
Months
[RIDER CHARGES: As described in Section 1 under Rider
Information]
|
WITHDRAWAL FEE: [$25.00] per withdrawal
TRANSFER CHARGE: [$0] for first 12 per year (Excluding Auto
Rebalance), guaranteed not to exceed [$25]
per transfer.
SURRENDER CHARGE:
----------------------------------------
POLICY INITIAL COVERAGE SUPPLEMENTAL
------ ---------------- ------------
YEAR LAYER FACE AMOUNT FACE AMOUNT
---- ----------------- -----------
----------------------------------------
[1 $14,815 $4,988
----------------------------------------
2 $14,515 $4,988
----------------------------------------
3 $14,214 $4,988
----------------------------------------
4 $13,912 $4,988
----------------------------------------
5 $13,609 $4,988
----------------------------------------
6 $13,305 $4,988
----------------------------------------
7 $13,001 $4,988
----------------------------------------
8 $12,697 $4,988
----------------------------------------
9 $12,392 $4,988
----------------------------------------
10 $12,087 $4,988
----------------------------------------
11 $0 $4,988
----------------------------------------
12 $0 $4,988
----------------------------------------
13 $0 $4,988
----------------------------------------
14 $0 $4,988
----------------------------------------
15 $0 $4,988
----------------------------------------
16+ $0 $0]
----------------------------------------
VULSP - 80 5
|
POLICY NUMBER: [9730000]
[Fidelity VIP Growth Opportunities Portfolio 14% Fidelity VIP Investment Grade Bond Portfolio 16% Lord Abbett Growth and Income Portfolio 14% Neuberger Berman AMT Guardian Portfolio 6% Oppenheimer Main Street Small-Cap Fund/VA 6% Phoenix-Aberdeen International Series 14% Phoenix-Duff & Phelps Real Estate Securities Series 4% Phoenix Money Market Series 4% Phoenix Multi-Sector Fixed Income Series 11% Phoenix-Sanford Bernstein Mid-Cap Value Series 4% PIMCO CommodityRealReturn Strategy Portfolio 4% Wanger International Small Cap 3%] |
[RIDER INFORMATION]
[RIDER RIDER ISSUE BENEFIT RIDER
DESCRIPTION DATE AMOUNT EXPIRY DATE RIDER CHARGE]
----------- ----- ------ ----------- ------------
[07ASVR - Alternate Surrender Value 7/1/2007 N/A 7/1/2014 $18.28 per
Policy Month
07NLGR - No Lapse Guarantee 7/1/2007 N/A See Rider N/A
06OLR - Overloan Protection 7/1/2007 N/A None [3.5%] of Policy
Value upon
exercise
06UE - Policy Endorsement 7/1/2007 N/A None N/A
07DPR - Disability Payment of 7/1/2007 $2,000 See Rider $57.00 per
Specified Premium Policy Month
VR162 NY - Accelerated Benefit 7/1/2007 $250,000 None See Rider
06LPOR - Life Plan Options 7/1/2007 N/A None N/A
VR74 - EDCA Amendment 7/1/2007 N/A None N/A]
|
VULSP - 80 6
POLICY NUMBER: [9730000]
REFER TO YOUR POLICY PROVISIONS FOR DETAILS ON THE TERMS AND
VALUES SHOWN IN THIS TABLE.
Minimum Initial Coverage Layer Face Amount: [$ 100,000]
Minimum Total Face Amount: [$ 100,000]
Minimum Total Face Amount Increase: [$25,000]
Total Face Amount Increase Date: [Policy Year 4]
Minimum Total Face Amount Decrease: [$25,000]
Maximum Supplemental Face Amount: [$2,000,000.]
Minimum Supplemental Face Amount: [None]
Minimum Premium Payment: [$25]
Maximum Annual Premium: [$ 1,000,000]
Guaranteed Interest Account Minimum Interest Rate: [3%]
GIA Weekly Transfer and Premium Limit: [$250,000]
GIA Yearly Transfer and Premium Limit: [$1,000,000]
Long Term Guaranteed Interest Account Minimum Interest Rate: [3%]
LT - GIA Weekly Transfer and Premium Limit: [$250,000]
LT - GIA Yearly Transfer and Premium Limit: [$1,000,000]
Minimum Loan Amount: [$500]
Loan Interest Credited Rate: [3%]
Preferred Loan Interest Credited Rate: [3%]
Loan Interest Rate: not to exceed [4%]
Preferred Loan Interest Rate: not to exceed [4%]
Maximum Loan Value: [97%] of the Surrender Value
Preferred Loan Premium Percentage: [75%]
Withdrawal Date: [Policy Year 2]
Minimum Withdrawal Amount: [$500]
Death Benefit Option Change Date: [Policy Year 2]
[Maximum Death Benefit Option C
Increase Amount [$1,250,000]]
[Death Benefit Option C Interest Rate [0%]]
Minimum DCA Monthly Transfer Amount: [$25]
Minimum DCA Quarterly Transfer Amount: [$75]
Minimum DCA Semi-Annual Transfer Amount: [$150]
Minimum DCA Annual Transfer Amount: [$300]
|
Note: Additional amounts of interest that may be credited to the non-loaned portion of the Guaranteed Interest Account are not credited to the loaned portion of the Guaranteed Interest Account. Any additional amounts shall be nonforfeitable after the effective date of their crediting.
VULSP - 80 7
POLICY NUMBER: [9730000]
[COVERAGE LAYER INFORMATION
---------------------------
COVERAGE LAYER EFFECTIVE COVERAGE LAYER FACE COVERAGE LAYER RISK COVERAGE CHARGE *
------------------------ ------------------- ------------------- -----------------
DATE AMOUNT CLASSIFICATION
---- ------ --------------
[4/01/2012] [$100,000] [Preferred] [$26.75] per month for
120 Policy Months
COVERAGE LAYER SURRENDER CHARGE TABLE:
---------------------------------------------------
YEAR**
------ SURRENDER CHARGE
---------------------------------------------------
[1 $3,298
---------------------------------------------------
2 $3,222
---------------------------------------------------
3 $3,147
---------------------------------------------------
4 $3,071
---------------------------------------------------
5 $2,996
---------------------------------------------------
6 $2,920
---------------------------------------------------
7 $2,845
---------------------------------------------------
8 $2,769
---------------------------------------------------
9 $2,694
---------------------------------------------------
10 $2,618
---------------------------------------------------
11+ $0]
---------------------------------------------------
|
* A separate Coverage Charge will apply to each new Coverage Layer added. The charge will begin on the Coverage Layer Effective Date and continue for the number of Policy Months indicated above.
**A separate Surrender Charge will apply to each new Coverage Layer added. The charge will begin on the Coverage Layer Effective Date and continue for the number of Years indicated in the Coverage Layer Surrender Charge Table.]
VULSP - 80 8
POLICY NUMBER: [9730000]
MINIMUM DEATH BENEFIT PERCENTAGES & MAXIMUM MONTHLY COST OF INSURANCE RATE TABLE
--------------------------------------------------------------------------------
MINIMUM DEATH MAXIMUM MONTHLY MINIMUM DEATH MAXIMUM MONTHLY
------------- --------------- ------------- ---------------
ATTAINED BENEFIT RATES PER 1,000 OF ATTAINED BENEFIT RATES PER 1,000 OF
-------- ------- ------------------ -------- ------- ------------------
AGE PERCENTAGE NET AMOUNT AT RISK* AGE PERCENTAGE NET AMOUNT AT RISK*
--- ---------- ------------------- --- ---------- -------------------
[35 250% 0.1808 68 117% 2.8875
36 250% 0.1933 69 116% 3.1508
37 250% 0.2075 70 115% 3.4475
38 250% 0.2233 71 113% 3.7858
39 250% 0.2416 72 111% 4.1733
40 250% 0.2625 73 109% 4.6116
41 243% 0.2850 74 107% 5.0916
42 236% 0.3091 75 105% 5.6041
43 229% 0.3358 76 105% 6.1416
44 222% 0.3641 77 105% 6.6975
45 215% 0.3941 78 105% 7.2766
46 209% 0.4266 79 105% 7.8966
47 203% 0.4608 80 105% 8.5783
48 197% 0.4975 81 105% 9.3408
49 191% 0.5383 82 105% 10.2008
50 185% 0.5833 83 105% 11.1533
51 178% 0.6358 84 105% 12.1766
52 171% 0.6941 85 105% 13.2483
53 164% 0.7608 86 105% 14.3508
54 157% 0.8341 87 105% 15.4775
55 150% 0.9133 88 105% 16.6275
56 146% 0.9975 89 105% 17.8075
57 142% 1.0866 90 105% 19.0358
58 138% 1.1816 91 104% 20.3425
59 134% 1.2850 92 103% 21.7858
60 130% 1.4000 93 102% 23.5108
61 128% 1.5300 94 101% 25.8308
62 126% 1.6766 95 100% 29.3216
63 124% 1.8408 96 100% 35.0825
64 122% 2.0225 97 100% 45.0833
65 120% 2.2183 98 100% 62.0958
66 119% 2.4275 99 100% 83.3333
67 118% 2.6491 100+ 100% 0.0000]
|
BASIS OF CALCULATIONS: 1980 Commissioners' Standard Ordinary Mortality Smoker Composite Ultimate Table (Age Last Birthday) for the Insured's sex and Age, and 3% effective annual interest rate. The Monthly Factor used in determining Cost of Insurance is 1.0024663.
If this policy is issued on a unisex basis, we will use the 1980 Commissioners' Standard Ordinary Mortality Smoker Composite 80% Male Table (Age Last Birthday) for the Insured's Age and 3% effective annual interest rate. The Monthly Factor used in determining the Cost of Insurance is 1.0024663. If this policy is issued on a unisex basis any reference to the Insured's sex in this policy is deleted.
*The Maximum Monthly Cost of Insurance Rates above apply to both tobacco and non-tobacco risk classifications.
VULSP - 80 9
The term "AGE" means, on any given date, the age of the person in question at his or her last birthday.
The term "AGE [100] ANNIVERSARY" means the Policy Anniversary after the Insured's [100th] birthday.
The term "ATTAINED AGE" on any date means the Age at issue plus the number of whole years that have elapsed since the Policy Date.
The term "BUSINESS DAY" means any day that we are open for business and the New York Stock Exchange is open for trading. The net asset value of the underlying shares of an Investment Option will be determined at the end of each business day. We will deem each business day to end at the close of regularly scheduled trading of the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on that day.
The term "BUSINESS PERIOD" means the period in days from the end of one business day through the next business day.
The term "DEATH BENEFIT OPTION C INCREASE AMOUNT" means premiums paid less total withdrawals each accumulated at an annual effective rate equal to the Death Benefit Option C Interest Rate. In no event will the Death Benefit Option C Increase Amount exceed the Maximum Death Benefit Option C Increase Amount as shown in Section 1, or be less than zero. This amount is only applicable if Death Benefit Option C is in effect.
The term "DUE PROOF OF DEATH" means a certified death certificate, an order of a court of competent jurisdiction, or any other proof acceptable to us.
The term "COVERAGE LAYER" means a layer of insurance coverage with an associated
face amount. The face amount shown on the Schedule Pages at issue is the initial
Coverage Layer. Any requested increase in Total Face Amount, in accordance with
Section 5, will result in a new Coverage Layer.
The term "DEATH BENEFIT" is as defined in Section 6.
The term "TOTAL FACE AMOUNT" is as defined in Section 5.
The term "IN FORCE" means the policy is in effect and has not terminated or otherwise lapsed in accordance with the Grace Period provision.
The terms "IN WRITING," "WRITTEN NOTICE," and "WRITTEN REQUEST" mean a written form signed by you, satisfactory to us, and received at our Home Office or Main Administrative Office or such other medium, electronic or otherwise, that we may from time to time make available.
The term "ISSUE DATE" means the date from which the Suicide Exclusion and Incontestability provisions are applied.
The term "MINIMUM INITIAL PREMIUM" means the minimum premium needed to put the policy in force and is shown in Section 1.
The term "MONTHLY CALCULATION DATE" means the date on which Monthly Deductions are deducted from the Policy Value. The first Monthly Calculation Date is the Policy Date. Subsequent Monthly Calculation Dates are the same days of each month thereafter or, if such day does not fall within a given month, the last day of that month will be used.
The term "NET POLICY VALUE" equals the Policy Value less the Policy Debt.
The term "NET SURRENDER VALUE", or the term "CASH SURRENDER VALUE" as it applies to any applicable riders, equals the Surrender Value less the Policy Debt. The term "NOTICE" means that whenever we are required to give notice to you, it shall be deemed given if we mail it to you and, unless otherwise specified, to the assignee of record, if any, in a postage-paid envelope mailed by first class mail to the last known address of record from our Main Administrative Office. If we mutually agree, notice may also be provided by an electronic medium.
The term "PAYMENT DATE" means the business day on which a premium payment or loan repayment is received at our Main Administrative Office, unless it is received after the close of the New York Stock Exchange in which case it will be the next business day.
The term "PLANNED PREMIUM" means the premium that is selected in the application or as later changed by you for this policy that you intend to be paid on a regular modal basis.
The term "POLICY ANNIVERSARY" means the same day and month of each year as the Policy Date. If the day does not exist in a month, the last day of the month will be used.
The term "POLICY CHARGES" means any charge we deduct under the policy but no greater than the Guaranteed Policy Charges shown in Section 1.
The term "POLICY DATE" means the date shown in Section 1. Policy Charges are calculated from the Policy Date. Policy Years, Policy Months, and Policy Anniversaries are determined from the Policy Date.
The term "POLICY DEBT" means unpaid loans with accrued interest.
The term "POLICY MONTH" means the period from one Monthly Calculation Date up to, but not including, the next Monthly Calculation Date.
The term "POLICY VALUE" is the sum of the values in each Investment Option, the Long Term Guaranteed Interest Account and the Guaranteed Interest Accounts.
The term "PREFERRED LOAN" means any loan that is carried over as part of the initial premium paid for this policy from a previously issued policy plus any loan taken to pay loan interest on the Preferred Loan.
The term "POLICY YEAR" means, with respect to the first Policy Year, the one-year period beginning on the Policy Date up to, but not including, the first Policy Anniversary. Each subsequent Policy Year is the one-year period beginning on a Policy Anniversary up to, but not including, the next Policy Anniversary.
The term "INVESTMENT OPTION" refers to one of the subaccounts of the Separate Account to which non-loaned assets under this policy may be allocated.
The term "SURRENDER CHARGE" includes the Surrender Charges shown in Section 1 and also includes the Surrender Charges for any Coverage Layer, if applicable and the Supplemental Face Amount, if applicable.
The term "SURRENDER CHARGE PERIOD" is the period beginning on the Policy Date during which we will assess Surrender Charges. Surrender Charges will apply during this period if you surrender the policy, request a decrease in Total Face Amount, make a withdrawal, or if the policy terminates due to default. The Surrender Charge Period is shown in Section 1.
The term "SURRENDER VALUE" means the Policy Value less any applicable Surrender Charges.
The term "UNIT" means a standard of measurement used to determine the share of this policy in the value of each Investment Option of the Separate Account.
The terms "WE," "US," and "OUR" refer only to the Company.
The terms "YOU" and "YOUR" refer only to the owner of this policy as defined in
Section 19.
The provisions of this policy are to be interpreted to ensure or maintain qualification as a life insurance contract for federal income tax purposes, notwithstanding any other provisions of the policy to the contrary. We reserve the right to make any reasonable adjustments to the terms or conditions of this policy, including distributions from the policy to the extent we deem it necessary, if it becomes necessary to maintain qualification as life insurance. This provision should not be construed to guarantee that this policy will receive tax treatment as life insurance or that the tax treatment of life insurance will never be changed by the future actions of any tax authority. To ensure that the policy qualifies as life insurance one of the following tests will apply. The test you elected is shown in Section 1. Your election cannot be changed after issue. We reserve the right to refuse any premium payments that would cause the policy to fail the test you elected unless such amount is necessary to keep the policy in force.
GUIDELINE PREMIUM LIMIT
Under the Guideline Premium Limit test, the sum of the premiums paid less a
portion of any withdrawals, as defined in the Code, may not exceed the greater
of:
o The Guideline Single Premium (as determined for your policy); or
o The sum of the annual Guideline Level Premium to the date of the payment.
The Guideline Single Premium and the Guideline Level Premium are shown in
Section 1.
CASH VALUE ACCUMULATION TEST
Under this test, the net single premium for the future benefits of the policy
must always be greater than the Policy Value. The net single premium is that
single amount that would provide for the cost of the Death Benefit and any
applicable riders under this policy. The basis for calculating the net single
premium is the guaranteed mortality and a 4% interest rate. We reserve the right
to modify the death benefit percentages shown in Section 2, retroactively if
necessary, to ensure or maintain qualification of this policy as a life
insurance contract for federal income tax purposes, notwithstanding any other
provisions of this policy to the contrary.
If at any time the premiums received under the policy exceed the amount allowable for such tax qualification, such excess amount shall be removed from the policy as of the date of its payment, together with interest thereon from such date, and any appropriate adjustment in the Death Benefit shall be made as of such date. This excess amount (plus or minus any interest) shall be refunded to you no later than 60 days after the end of the applicable Policy Year. The amount to be taken from the Investment Options, the Long-Term Guaranteed Interest Account, and the Guaranteed Interest Account will be allocated in the same manner as provided for Monthly Deductions unless you request another allocation in writing. In no event, however, will we refuse to accept any premium necessary to prevent the policy from terminating.
The Total Face Amount is made up of three components: (i) the initial Coverage Layer, (ii) subsequent Coverage Layers, if any and (iii) the Supplemental Face Amount, if any.
The initial Total Face Amount is chosen by you at issue and is shown in Section
1. Thereafter, the Total Face Amount includes additional Coverage Layers then in
effect and the Supplemental Face Amount, if any. The Total Face Amount is used
in determining the Death Benefit under this policy and may be changed by you
after the first Policy Year or modified according to the terms of this policy.
REQUEST FOR AN INCREASE IN TOTAL FACE AMOUNT
You may request an increase in Total Face Amount at any time after the Total
Face Amount Increase Date shown in Section 1, provided this policy is in force
and Death Benefit Option C is not in effect. Each increase in Total Face Amount
creates a new Coverage Layer. The minimum of such Total Face Amount increase is
shown in Section 1. The increase will be effective on the first Policy
Anniversary on or following the date that we approve the request. We reserve the
right to limit increases in Total Face Amount. All requests to increase the
Total Face Amount must be applied for on a supplemental application and will be
subject to evidence of the Insured's insurability satisfactory to us. An
additional premium may be required to be paid, in advance, for the increase to
take effect.
For each new Coverage Layer created, a new Surrender Charge period, new Coverage Charges, and new Cost of Insurance Charges will take effect, based on the Insured's Age on the effective date of such increase.
REQUEST FOR A REDUCTION OF TOTAL FACE AMOUNT
You may request a reduction in Total Face Amount at any time after the first
Policy Year provided this policy is in force and if Death Benefit Option C is
not in effect. Any reduction is subject to the Minimum Total Face Amount shown
in Section 1. Any reduction in the Total Face Amount will be effective on the
next Monthly Calculation Date after our approval.
Any reduction in Total Face Amount will be implemented by first reducing the Supplemental Face Amount followed by additional Coverage Layers, if any, in the reverse order that they were added, followed by the initial Coverage Layer. Upon a reduction in Total Face Amount, a pro-rata Surrender Charge will be deducted from the Policy Value based on the Policy Year and amount of the reduction. During any Policy Year, such pro-rata Surrender Charge will equal (a) multiplied by (b), where:
(a) = the applicable Surrender Charge shown in Section 1 of the
policy, less any pro-rata Surrender Charges deducted previously,
and
(b) = (i) divided by (ii), where:
(i) = the Total Face Amount decrease, and
(ii) = the Total Face Amount before the decrease.
If the Insured dies while the policy is in force, we will pay the Death Proceeds, as described below, upon receipt of due proof of death of the Insured, subject to any applicable provisions of the policy.
If the Insured dies on or after the date we receive a written request at our Main Administrative Office from you to surrender the policy, no Death Proceeds will be paid. We will pay the amount payable under the Surrenders and Withdrawals provision instead.
The Death Proceeds at the death of the Insured are equal to:
(a) the Death Benefit, as described below, in effect on the Insured's date of death; plus
(b) any insurance then in effect on the life of the Insured that is provided by any additional benefit riders; less
(c) any Policy Debt then existing on this policy; less
(d) any Monthly Deductions up to and including the Policy Month of death not already made; plus
(e) any premiums received by us after the last Monthly Calculation Date just prior to the date of death which have not been applied to this policy.
If the Insured dies during the Grace Period, the Death Proceeds payable, as described above, will be reduced by any outstanding Policy Charges due as of the date of death.
We will pay interest on any Death Proceeds paid in a lump sum in the event of the Insured's death from the date of death to the date of payment at an interest rate as required by applicable state law.
DEATH BENEFIT
The Death Benefit under this policy will be determined under either Option A,
Option B or Option C, whichever is then in effect. Option C may only be elected
at issue.
Option A: The Total Face Amount on the date of death of the Insured or, if greater, the Minimum Death Benefit as described below.
Option B: The Total Face Amount plus the Policy Value on the date of death of the Insured or, if greater, the Minimum Death Benefit as described below.
Option C: The Total Face Amount plus the Death Benefit Option C Increase Amount on the date of death of the Insured or, if greater, the Minimum Death Benefit as described below.
Regardless of Death Benefit Option, withdrawals will cause a reduction in the Death Benefit.
MINIMUM DEATH BENEFIT
The Minimum Death Benefit is equal to the Policy Value on the date of death
multiplied by the applicable Minimum Death Benefit Percentage for the Attained
Age of the Insured. The Minimum Death Benefit Percentages are shown in Section
2. To the extent that the Net Amount at Risk, as described in Section 10,
associated with the Minimum Death Benefit that results from this calculation
exceeds our limitations that may be in effect, we reserve the right to:
(a) distribute to you a portion of the Policy Value such that the Net Amount at Risk associated with the resulting Minimum Death Benefit does not exceed our guidelines and limitations in effect; or
(b) require evidence of insurability satisfactory to us if we should decide to accept the additional Net Amount at Risk.
Pro-rata Surrender Charges will not apply to any portion of the Policy Value distributed to you as described in item (a) above.
CHANGE IN DEATH BENEFIT OPTION
While this policy is in force, at any time after the Death Benefit Option Change
Date shown in Section1 and prior to the Age [100] Anniversary you may request in
writing to change the Death Benefit Option, subject to the Minimum Initial
Coverage Layer Face Amount shown in Section 1. We will not require evidence of
insurability for a change in Death Benefit Options. You are limited to one
change in Death Benefit Option per Policy Year. Any change is subject to the
Minimum Total Face Amount shown in Section 1. Any change in Death Benefit
Options will be effective on the first Monthly Calculation Date following the
date we process your request. Only the following Death Benefit Option changes
may be made, and are subject to the following conditions:
o Change from Option A to Option B: the Total Face Amount will be reduced
by the Policy Value.
o Change from Option B to Option A: the Total Face Amount will be
increased by the Policy Value.
o Change from Option C to Option A: the Total Face Amount will be
increased by the Death Benefit Option C Increase Amount
Any reduction in Total Face Amount as a result of a change in Death Benefit Option will be implemented by first reducing the Supplemental Face Amount followed by the additional Coverage Layers, if any, in the reverse order that they were added, followed by the initial Coverage Layer. Any change in Total Face Amount as a result of a Death Benefit Option change will not change the Surrender Charges for this policy.
Coverage under this policy on or after the Age [100] Anniversary is subject to the conditions specified below.
DEATH BENEFIT
If Death Benefit Option B or Death Benefit Option C is in effect, we will change
to Death Benefit Option A. The Total Face Amount therefore will not be increased
by the Policy Value. The Death Benefit will be equal to the greater of (a) the
Total Face Amount on the Date of the Insured's death, or (b) the Policy Value on
or after the Age [100] Anniversary.
Death Benefit Option B will no longer be available on or after the Policy Anniversary following the date that the Insured has attained the Age of 100. If Death Benefit Option B is in effect at the Insured's Age [100], the Death Benefit will be changed to Death Benefit Option A on the following Policy Anniversary. The Total Face Amount will not be affected by the change in Death Benefit Options.
We will continue to credit interest to the GIA and the LT-GIA.
PREMIUMS AND MONTHLY DEDUCTIONS
We will cease to take Monthly Deductions specified in Section 1, and we will not
accept any further premium payments unless such premium payments are necessary
to keep the policy in force.
POLICY DEBT AND DEFAULT
The Loans provision , the Transfers provision, and the Surrenders and
Withdrawals provision will still be in effect. No Withdrawal Fee will be
charged. The policy will go into default at any time the Policy Debt exceeds the
Policy Value. Loan interest will continue to be charged if there is an
outstanding loan on the Age [100] Anniversary.
Assets under this policy may be allocated to the Investment Options of the Separate Account, the Long-Term Guaranteed Interest Account, or the Guaranteed Interest Account.
SEPARATE ACCOUNT AND INVESTMENT OPTIONS
The Phoenix Life Insurance Company's Variable Universal Life Separate Account
(VUL Account) is a Separate Account established by our Company under New York
Law and is registered as a unit investment trust under the Investment Company
Act of 1940. The VUL Account contains various Investment Options that have
different investment objectives.
All income, gains and losses, realized and unrealized, of the VUL Account are credited to or charged against the amounts placed in the VUL Account without reference to other income, gains and losses of our General Account. The assets of the VUL Account are owned solely by us and we are not a trustee with respect to such assets. These assets are not chargeable with liabilities arising out of any other business that we may conduct. The assets of the VUL Account will be valued at least as often as any policy benefits vary, but at least monthly.
We use the assets of the VUL Account to buy shares of the underlying fund(s) of this policy according to your most recent allocation instruction on file with us. The underlying fund(s) are registered under the Investment Company Act of 1940 as open-end, management investment companies. Assets of each Investment Option are invested in shares of the corresponding underlying fund Series.
No change will be made in the investment policy of any of the Investment Options of the Separate Account without approval of the appropriate insurance supervisory official of our domiciliary state of New York.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We have the right, subject to compliance with applicable law, to add, delete, or
substitute Investment Options of the Separate Account, combine the Separate
Account into another Separate Account, transform the Separate Account into a
mutual fund, and/or deregister the Separate Account under the Investment Company
Act of 1940. We also reserve the right to eliminate the shares of any underlying
fund(s) if they are no longer available for investment, or if we believe
investing in any underlying fund(s) is no longer appropriate for the purposes of
the Separate Account.
SHARE OF SEPARATE ACCOUNT INVESTMENT OPTION VALUES
The share of this policy in the value of each Investment Option of the Separate
Account on a business day is the Unit Value of that Investment Option on that
date multiplied by the number of this policy's Units in that Investment Option
after all transactions for the business period ending on that day have been
processed. For any day which does not fall on a business day, the share of this
policy in the value of each Investment Option of the Separate Account is
determined using the number of Units on that day after all transactions for that
day have been processed and the Unit Values on the next business day.
UNITS
The number of Units of each Investment Option of the Separate Account will be
increased on any day by either of the following transactions:
1. any net premium payments applied to that Investment Option divided by
the Unit Value of that Investment Option on the Payment Date; or
2. any net transfers into that Investment Option divided by the Unit
Value of that Investment Option on the transfer date.
The number of Units of each Investment Option of the Separate Account will be decreased on any day by any of the following transactions:
1. any Monthly Deductions applied against that Investment Option divided
by the Unit Value of that Investment Option on the deduction date;
2. the amount of any withdrawals paid, Withdrawal Fee and pro-rata
Surrender Charge assessed applied against that Investment Option
divided by the Unit Value of that Investment Option on the withdrawal
date;
3. the amount of any pro-rata Surrender Charge assessed (due to a
decrease in Total Face Amount) applied against that Investment Option
divided by the Unit Value of that Investment Option on the date of
the reduction in Total Face Amount; or
4. the amount of any transfers, including any policy loans taken, out
of that Investment Option divided by the Unit Value of that
Investment Option on the transfer or loan date.
UNIT VALUE
The Unit Value of each Investment Option of the Separate Account was set up by
us on the first business day of each such Investment Option. The Unit Value of
an Investment Option of the Separate Account on any other business day is
determined by multiplying the Unit Value of that Investment Option on the
immediately preceding business day by the Net Investment Factor for that
Investment Option for the then current business period. The Unit Value of each
Investment Option of the Separate Account on a day other than a business day is
the Unit Value on the next business day. Unit Values are carried to 6 decimal
places. The Unit Value of each Investment Option of the Separate Account on a
business day is determined at the end of that day.
NET INVESTMENT FACTOR
The Net Investment Factor for each Investment Option of the Separate Account is
determined by the investment performance of the assets held by the Investment
Option during the business period.
The Net Investment Factor is equal to the result of item (d) below subtracted from the result of dividing the sum of items (a) and (b) by item (c) as defined below.
(a) The value of the assets in the Investment Option on the current business day, including accrued net investment income and realized and unrealized capital gains and losses, but excluding the net value of any transactions during the current business period. Net investment income equals the investment income of the Investment Option after any fund management and fund operating expenses have been deducted.
(b) The amount of any dividend (or, if applicable, any capital gain distribution) received by the Investment Option if the "ex-dividend" date for shares of the Fund occurs during the current business period.
(c) The value of the assets in the Investment Option as of the just prior business day, including net accrued net investment income and realized and unrealized capital gains and losses, and including the value of all transactions during the business period ending on that date.
(d) The sum of the charge, if any, for taxes and reserves for taxes on investment income, and realized and unrealized capital gains multiplied by the number of days in the current business period.
MORTALITY AND EXPENSE RISK CHARGE
The Mortality and Expense Risk Charge will be based on our expectations of
future mortality, persistency, investment earnings, expense experience, capital
and reserve requirements, and tax assumptions. The Maximum Mortality and Expense
Risk Charge is shown in Section 1.
We review the Mortality and Expense Risk Charge periodically, and we may re-determine the Mortality and Expense Risk Charge at such time on a basis that does not discriminate unfairly within any class of Insureds. Any change will be determined prospectively. We will not distribute past gains or recoup prior losses, if any, by changing the charge.
GUARANTEED INTEREST ACCOUNT (GIA)
This policy also contains a Guaranteed Interest Account (GIA) to which premium
payments may be allocated. The GIA is not part of the Separate Account. It is
accounted for as part of our General Account. Cumulative premium payments and
transfers to the non-loaned portion of the GIA during any one-week period are
limited to the GIA Weekly Transfer and Premium Limit shown in Section 1.
Cumulative premium payments and transfers to the GIA are limited to the GIA
Yearly Transfer and Premium Limit shown in Section 1 over any 12-month period.
On any business day after the Policy Date, the value of this policy's Guaranteed Interest Account is equal to the value of this policy's Guaranteed Interest Account on the prior business day, increased by the credit of daily interest. In addition, this value will be increased on any day by either of the following transactions:
1. any net premium payments applied to the Guaranteed Interest Account on
the Payment Date; or
2. any transfers into the Guaranteed Interest Account on the transfer date.
The value of this policy's Guaranteed Interest Account will be decreased on any day by any of the following transactions:
1. any Monthly Deductions applied against the Guaranteed Interest Account
on the deduction date;
2. the amount of any Withdrawals paid, Withdrawal Fee and pro-rata
Surrender Charge assessed applied against the Guaranteed Interest
Account on the Withdrawal date;
3. the amount of any pro-rata Surrender Charge assessed (due to a decrease
in Total Face Amount) applied against the Guaranteed Interest Account
on the date of the reduction in Total Face Amount; or
4. the amount of any transfers, including any policy loans taken, out of
the non-loaned portion of the Guaranteed Interest Account on the
transfer or loan date.
For amounts held under the non-loaned portion of the GIA, we will credit interest daily at such rates as we shall determine. Subsequent interest rates may be higher or lower than the initial interest rate, but in no event lower than the Guaranteed Interest Account Minimum Interest Rate shown in Section 1. At least monthly, we will set the interest rate that will apply to any premium allocation made to the GIA. For amounts held under the loaned portion of the GIA, we will credit interest daily at an effective annual rate of interest equal to the Loan Interest Credited Rate shown in Section 1.
We will determine the credited interest rate based on our anticipation of future investment earnings, mortality, persistency, expense and administrative costs, and taxes. We may change the interest rate. Any changes in the rate will apply to all policies and not discriminate unfairly within any class of insureds. Any change in rate will be determined prospectively. We will not distribute past gains or recoup prior losses, if any, by changing the rates. The effective annual interest rate will never be less than the Guaranteed Interest Account Minimum Interest Rate shown in Section 1.
We may credit different interest rates on loaned and unloaned portions of the Policy Value. The rate(s) in effect on a given date for unloaned amounts is referred to as the "current interest rate(s)." We may credit interest on loaned Policy Value for Preferred Loans at a different rate than the rate credited on loaned Policy Value for non-Preferred Loans. All interest rates are stated as effective annual rates. Interest will be compounded at least monthly to yield the effective annual rate.
We may add other Guaranteed Interest Accounts subject to the extent and in the manner permitted by applicable law. Also, when required by law, we will obtain approval from any regulatory authority.
There are transfer restrictions on the GIA. For additional information regarding these restrictions please see Section 15.
SHARE OF THE NON-LOANED PORTION OF THE GUARANTEED INTEREST ACCOUNT The share of this policy in the value of the Non-Loaned Portion of the Guaranteed Interest Account on any day is the accumulation of allocated net premiums, interest and transfers into the account, less deductions, withdrawals, and transfers out of the account after all transactions for that business day have been processed.
LONG-TERM GUARANTEED INTEREST ACCOUNT (LT-GIA)
This policy also contains a Long Term Guaranteed Interest Account (LT-GIA) to
which premium payments may be allocated. The LT-GIA is not part of the Separate
Account. It is accounted for as part of our General Account. Cumulative premium
payments and transfers to the LT-GIA during any one-week period are limited to
the LT - GIA Weekly Transfer and Premium Limit shown in Section 1 and to the
LT-GIA Yearly Transfer and Premium Limit shown in Section 1 over any 12-month
period.
On any business day after the Policy Date, the value of this policy's Long-Term Guaranteed Interest Account is equal to the value of this policy's Long-Term Guaranteed Interest Account on the prior business day, increased by the credit of daily interest. In addition, this value will be increased on any day by either of the following transactions:
1. any net premium payments applied to the Long-Term Guaranteed Interest
Account on the Payment Date; or
2. any transfers into the Long-Term Guaranteed Interest Account on the
transfer date.
The value of this policy's Long-Term Guaranteed Interest Account will be decreased on any day by any of the following transactions:
1. any Monthly Deductions applied against the Long-Term Guaranteed Interest
Account on the deduction date;
2. the amount of any Withdrawals paid, and Withdrawal Fee and pro-rata
Surrender Charge assessed applied against the Long-Term Guaranteed
Interest Account on the Withdrawal date;
3. the amount of any pro-rata Surrender Charge assessed (due to a decrease
in Total Face Amount) applied against the Long-Term Guaranteed Interest
Account on the date of the reduction in Total Face Amount; or
4. the amount of any transfers, including any policy loans taken, out of
the Long-Term Guaranteed Interest Account on the transfer or loan date.
For amounts held under the LT-GIA, we will determine the credited interest rate
based on our anticipation of future investment earnings, mortality, persistency,
expense and administrative costs, and taxes. We may change the interest rate.
Any changes in the rate will apply to all policies and not discriminate unfairly
within any class of insureds. Any change in rate will be determined
prospectively. We will not distribute past gains or recoup prior losses, if any,
by changing the rates. The effective annual interest rate will never be less
than the Long Term Guaranteed Interest Account Minimum Interest Rate shown in
Section 1. Any interest credited in excess of that computed based upon the Long
Term Guaranteed Interest Account Minimum Interest Rate is referred to as "excess
interest."
There are transfer restrictions on the LT - GIA. For additional information regarding these restrictions please see Section 15.
SHARE OF THE LONG-TERM GUARANTEED INTEREST ACCOUNT
The share of this policy in the value of the Long-Term Guaranteed Interest
Account on any day is the accumulation of allocated net premiums, interest and
transfers into the account, less deductions, withdrawals, and transfers out of
the account after all transactions for that business day have been processed.
POLICY VALUE
The Policy Value on the Policy Date is equal to the initial premium net of the
Premium Expense Charge as stated in the Net Premiums Added provision below, and
minus the first month's Monthly Deduction as stated in the Monthly Deductions
provision below. The Policy Value on any subsequent date is the sum of this
policy's share in the value of each Investment Option of the Separate Account
and the value of this policy's Guaranteed Interest Account and Long-Term
Guaranteed Interest Account. See Section 8 for an explanation as to how this
policy's share in the value of each Investment Option of the Separate Account is
determined and Section 9 for a description of the Guaranteed Interest Account
and Long-Term Guaranteed Interest Account.
NET PREMIUMS ADDED
When we receive your premium payments at our Main Administrative Office, we
deduct a Premium Expense Charge which will not exceed the amount shown in
Section 1, and add the balance remaining (the Net Premium) to your Policy Value.
We will do this before we take any other deductions due on that business day.
We will not deduct a Premium Expense Charge until the date the policy takes effect, and the balance remaining will be your Policy Value from which deductions will be taken and to which any subsequent Net Premiums will be added.
Investment allocation of the initial premium payment and any subsequent premium payments will be in accordance with the Allocations provision of Section 15.
MONTHLY DEDUCTIONS
Each Monthly Deduction is due and will be taken from the Policy Value as of the
Policy Date and as of each applicable Monthly Calculation Date. Monthly
Deductions are calculated from the Policy Date. If, at your request, we set the
Policy Date to a date which precedes the date on which we receive the initial
premium, Monthly Deductions due for the period prior to receipt of the initial
premium will be taken on the later of the date we receive the initial premium
and the date our underwriters approve issuance of this policy.
Monthly Deductions will be taken from this policy's share of the remaining Investment Options, the LT-GIA, or the GIA, exclusive of the loaned portion of the Guaranteed Interest Account on a proportionate basis. You may, however, request that Monthly Deductions not be taken from certain specified Investment Options, the LT-GIA, or the GIA. Such a request may later be changed by notifying us in writing, but only with respect to future Monthly Deductions. In the event you do not have sufficient funds in an account to permit the full Monthly Deduction, the remainder will be taken on a proportionate basis from each of the other Investment Options, exclusive of the loaned portion of the GIA. The number of Units deducted from each Investment Option of the Separate Account will be determined by dividing the portion of the Monthly Deduction allocated to each such Investment Option by the Unit Value of that Investment Option on the Monthly Calculation Date.
Monthly Deductions are due until the Age [100] Anniversary, at which time we will cease to take any further Monthly Deductions as described in Section 7. The Monthly Deduction for any Policy Month that will be deducted from your Policy Value consists of charges (a) through (e) listed below, each of which will be deducted in the order as listed, where:
(a) is the Administrative Charge;
(b) is the Coverage Charge;
(c) is the sum of the charges for riders which are part of the policy, if
any;
(d) is the sum of all charges for any applicable Additional Ratings
shown in Section 1; and
(e) is the Cost of Insurance Charge, as described below.
COST OF INSURANCE CHARGE
The rates for the Cost of Insurance Charge as of the Policy Date are based on
the sex, if applicable, Age, Risk Classification, Death Benefit Option at Issue,
Total Face Amount, Net Amount at Risk, applicable rider values and duration that
the coverage has been in force for the Insured. For each increase in the Total
Face Amount, the Rate Classification applicable to the increase will apply.
The Cost of Insurance Charge for a specific Policy Month is the charge for the Net Amount at Risk, including riders that are part of the contract, if any. The charge for the Net Amount at Risk is an amount equal to the per dollar Cost of Insurance rate for that month multiplied by the Net Amount at Risk, and such rates will be based on our expectations of future mortality, persistency, investment earnings, expense experience, capital and reserve requirements, and tax assumptions. The Maximum Monthly Rates at any Age are shown in Section 2 as a rate per $1,000 of Net Amount at Risk. To determine the maximum rate per dollar, the rate shown must be divided by 1,000. Each Cost of Insurance Charge is deducted in advance of the applicable insurance coverage for which we are at risk.
The Cost of Insurance calculation will reflect any adjustment for the Minimum Death Benefit.
We review our Cost of Insurance rates periodically, and may re-determine Cost of Insurance rates at such time on a basis that does not discriminate unfairly within any class of Insureds. Any change in rates will be determined prospectively. We will not distribute past gains or recoup prior losses, if any, by changing the rates.
NET AMOUNT AT RISK
The Net Amount at Risk is the amount determined by subtracting (a) from the
greater of (b) or (c) where:
(a) is the Policy Value at the end of the immediately preceding business
day, less all charges due on the Monthly Calculation Date;
(b) if Death Benefit Option A is in effect, is the Total Face Amount; or
if Death Benefit Option B is in effect, is the Total Face Amount
plus the Policy Value; or
if Death Benefit Option C is in effect, is the Total Face Amount
plus the Death Benefit Option C Increase Amount;
(c) is the amount defined in (a), multiplied by the applicable Minimum
Death Benefit Percentage shown in Section 2.
When multiple Coverage Layers exist, the Policy Value applies to all Coverage Layers on a proportional basis when calculating the Net Amount at Risk.
The Minimum Initial Premium is shown in Section 1. Insurance under this policy will take effect once our underwriters approve issuance of this policy and the conditions specified in the application form have been satisfied, including our receipt of at least the Minimum Initial Premium.
We will process any premium payment subject to the life insurance qualification
test elected by you unless one of the following exceptions applies:
(i) we will process a payment received prior to the Policy Date as if
received on the Policy Date.
(ii) we will process the portion of any premium payment for which we
require evidence of the Insured's continued insurability on the first
business day after we have received such evidence and found it
satisfactory to us.
Premium Expense Charges, as shown in Section 1, will be deducted from any premiums received by us. If the initial premium is received by us after the Policy Date then it will be reduced by the amount necessary to cover any past unpaid Monthly Deductions. If the Minimum Initial Premium is received by us at our Main Administrative Office after the Policy Date, then it will also be reduced by the amount necessary to cover any past unpaid Monthly Deductions described below. In addition, payments received by us during a grace period will also be reduced by the amount needed to cover any Monthly Deductions during the grace period.
You may pay premiums until the Insured reaches the Age [100] Anniversary, at which time the Monthly Deductions cease and no further premiums may then be paid.
The premiums, net of the Premium Expense Charges, will be applied on the Payment Date, or based upon any alternate instructions from you, subject to our approval. The premiums will be allocated to the various Investment Options, the Long-Term Guaranteed Interest Account and the Guaranteed Interest Account based on the premium allocation schedule. You may change the allocation schedule for premium payments by written request.
If, however, our receipt of any premium payment (or portion thereof) would cause the policy to not qualify as a "life insurance contract" under the federal income tax laws, we will not process such payment (or portion thereof). In addition, absent any written instructions from you, we will process premium payments in a manner in which they will not result in adverse tax consequences.
Subject to these limitations, you may pay additional premiums at any time prior to the Age [100] Anniversary and while this policy is in force. Maximum premium payments are subject to the Maximum Annual Premium shown in Section 1. You may request a receipt signed by one of our executive officers. All premiums are payable at our Main Administrative Office.
If any premium payment results in an increase in the Death Benefit by more than it would increase the Policy Value, then we will either refund the premium or require evidence of insurability satisfactory to us. To the extent of such evidence, the Incontestability and Suicide Exclusion provisions will apply. We may limit the number and amount of premium payments in any Policy Year. The minimum premium payment that we will accept as well as the maximum amount that we will accept in any Policy Year is shown in Section 1.
We may limit the number and amount of premium payments in any Policy Year. The minimum premium payment that we will accept is as shown in Section 1, or if during the Grace Period, the amount needed to prevent lapse of this policy. We reserve the right to reduce or increase the limit.
CONTINUATION OF INSURANCE UPON DISCONTINUANCE OF PREMIUM PAYMENTS If you discontinue paying premiums, we will continue taking the Monthly Deductions from your Policy Value. Your insurance coverage will continue subject to the Grace Period, and Policy Termination provisions in Sections 12 and 13.
This policy and any riders will go into default if, on any Monthly Calculation Date, the required Monthly Deductions exceed the Net Policy Value. A Grace Period of 61 days from the date the policy goes into default will be allowed for the payment of additional premiums. Such additional premium payments must be sufficient to increase the Net Policy Value on that Monthly Calculation Date to cover three Monthly Deductions.
In addition, if the Policy Debt is greater than the maximum loan value a grace period of 61 days will be allowed for the payment of an amount necessary to reduce the total Policy Debt to an amount less than or equal to the maximum loan value.
Any premiums paid will be used, after assessment of Premium Expense Charges, to pay for any unpaid Monthly Deductions.
We will send notice(s) to your last known address within 30 days after the Monthly Calculation Date on which an insufficiency has occured and at least 15 but not more than 45 days prior to the termination of coverage. This notice will specify the amount you must pay to bring the policy out of default. If we have notice of a policy assignment on file at our Main Administrative Office, we will also mail a copy to the assignee on record of the notice of the amount due. If the necessary additional premium payments have not been received by the end of the grace period, the policy will terminate. Upon termination of the policy, the remaining Net Surrender Value, if any, will be paid to the Owner. If the Insured dies while the policy is in default, then we will deduct from the proceeds all Monthly Deductions due and unpaid as of the date of the Insured's death. Unless a rider provides otherwise, no riders will be in effect after the policy terminates.
REDUCED PAID-UP BENEFIT
Upon your written request, after this policy has been in force for at least one
full year, this policy can be lapsed to a reduced paid-up Death Benefit as of
the date of your written request. The amount of Death Benefit will be calculated
based on the Net Surrender Value of the contract, a 4% interest rate and the
Maximum Monthly Cost of Insurance Rates as shown in Section 2. Once elected, no
further premiums may be paid into the contract and all riders attached to this
policy will terminate.
This policy will terminate automatically on the earliest of:
(1) the date the Insured dies;
(2) the date the grace period expires without the payment of sufficient
premium as provided in Section 12;
(3) the date the policy is surrendered for its Net Surrender Value.
If this policy terminates in accordance with the Grace Period provision, you may reinstate this policy while the Insured is alive within three years from the date the policy goes into default, as specified in Section 12. The policy cannot be reinstated if it has been surrendered for its Net Surrender Value. It also cannot be reinstated if the date of reinstatement is on or after the Age [100] Anniversary. We will not approve a request for reinstatement until we receive at our Main Administrative Office all of the following:
(1) a written request for reinstatement;
(2) evidence of insurability satisfactory to us;
(3) payment or reinstatement of any Policy Debt as of the date of
termination, if applicable, including loan interest at the Loan
Interest Rate that has accrued between the date of termination and
the date of reinstatement;
(4) the return of the remaining Net Surrender Value as described in
Section 12; and
(5) payment of the Reinstatement Premium. The Reinstatement Premium equals
the amount that was required to bring the policy out of default
immediately prior to termination, plus three Monthly Deductions.
Requirements (2) through (4) must be satisfied within 60 days after the date we receive a written request for reinstatement.
If we approve your request,
(1) the reinstatement date will be the Monthly Calculation Date following
the date we receive the required payment at our Main Administrative
Office;
(2) any Surrender Charge will be reinstated to the amount it was at the
date of default;
(3) the remaining Surrender Charge Schedule, if any, will be the same as on
the date of default; and
(4) the Policy Value on the date of reinstatement, prior to the crediting
of any Net Premium paid on the reinstatement, will be equal to the
Policy Value on the date the policy terminated.
ALLOCATIONS
We process Net Premiums as described in Section 11. Premiums received prior to
the date the policy takes effect will be allocated to the money market
investment account during the Right to Return This Policy period. The amount in
the money market investment account will be allocated in accordance with your
allocation instructions on file with us on the first business day following the
end of the Right to Return This Policy period.
Initial allocation instructions are elected in your application for this policy. You may elect to change your allocation instructions at any time. A change may be elected by written request or by internet notification if a currently valid written authorization to make changes in this manner is on file with us. A change will be effective as of the end of the business day on which we receive notice satisfactory to us. Instructions to us must express allocation percentages as greater than or equal to zero, and less than or equal to 100%, and the sum of the allocation percentages must equal 100%. Allocation percentages must be whole numbers.
We have the right to impose a limit of no more than 12 changes within a Policy Year. We also have the right to set a minimum and percentage that may be allocated to any Investment Option, the GIA or the LT - GIA, not to exceed 25%. We also have the right to set a maximum percentage that may be allocated to any Investment Option, the GIA or the LT - GIA, not less than 25%.
TRANSFERS
Instructions may be given to us at any time while the policy is in force to
transfer portions of your Policy Value among one or more of the Investment
Options, the LT-GIA, and the non-loaned portion of the GIA. Transfers may be
made by written request or by internet notification if a currently valid written
authorization to make changes in this manner is on file with us. You may make up
to 12 transfers per Policy Year from the Investment Options without incurring a
Transfer Charge and only one transfer per Policy Year from the non-loaned
portion of the GIA unless the Dollar Cost Averaging (DCA) Program or Asset
Rebalancing Program is elected. Except as provided below, we reserve the right
to impose a Transfer Charge after the first 12 transfers made in each Policy
Year, upon prior written notice to the owner. Any Transfer Charge will be
administered in a non-discriminatory manner. In no event, however, will such
Transfer Charge exceed the Transfer Charge, shown in Section 1, per transaction.
Any such charge will be deducted from the Investment Options, the LT-GIA, or the
GIA from which the amounts are to be transferred with each such Investment
Option, the LT-GIA, or non-loaned portion of the GIA bearing a pro-rata share of
the Transfer Charge. The value of the Investment Option will be the value on the
date of transfer. The Transfer Charge, if any, is shown in Section 1.
We have the right to require that a period of at least 6 months have elapsed between transfers from the non-loaned portion of the GIA. Except as otherwise provided under the DCA Program, the amount that may be transferred from the non-loaned portion of the GIA at any one time cannot exceed the higher of $1,000 or 25% of the value of the non-loaned portion of the GIA.
Under the DCA Program, funds may be transferred automatically among the Investment Options on a monthly, quarterly, semi-annual, or annual basis subject to the minimums in Section 1. You must have an initial value of $2,000 in the non-loaned portion of the GIA or the Investment Option from which funds will be transferred. Funds may be transferred from only one Investment Option or the non-loaned portion of the GIA, but may be allocated to multiple Investment Options, the LT-GIA, and the non-loaned portion of the GIA. Under the DCA Program, you may transfer approximately equal amounts from the non-loaned portion of the GIA over a minimum 6-month period. There is no participation charge or termination charge for electing the DCA Program.
Under the Asset Rebalancing Program, funds are transferred automatically among the Investment Options on a monthly, quarterly, semi-annual, or annual basis to maintain the allocation percentage elected by written request. There is no participation charge or termination charge for electing the Asset Rebalancing Program.
We reserve the right to not allow the Asset Rebalancing and the DCA Programs to be in effect at the same time.
Transfers made under the DCA Program or Asset Rebalancing Program will be processed on the next business day following your request for the month that applies. If the value in the Investment Option or non-loaned portion of the GIA is below the amount to be transferred, then the entire remaining balance will be transferred and the DCA or Asset Rebalancing Programs will be completed. You may terminate your participation in the DCA or Asset Rebalancing Programs at any time by sending a written request to us. Upon completion of the DCA or Asset Rebalancing Programs, you must send a Written Request to us to start another DCA or Asset Rebalancing Program.
The amount that may be transferred from the LT-GIA at any time cannot exceed the greatest of $1,000, 10% of the value of the LT-GIA, and the amount transferred from the LT-GIA in the prior Policy Year. Only one transfer is permitted per Policy Year from the LT-GIA. Transfers from the LT-GIA are not permitted under the DCA Program. Transfers to or from the LT - GIA are not permitted under the Asset Rebalancing Program.
At any time during the first eighteen months from the Policy Date, you may elect to transfer all assets held in the Investment Options to the non-loaned portion of the Guaranteed Interest Account. No charge will be made for any such transfer, regardless of the number of transfers previously made.
We have the right to temporarily or permanently modify or terminate transfer privileges, or reject any specific order from anyone including the owner, market-timing organization, or individual, or other party authorized to give transfer orders whose transactions would constitute Disruptive Trading as determined by us or an underlying fund company. Disruptive Trading includes but is not limited to, frequent purchases, redemptions and transfers, transfers into and out of an Investment Option in a short period of time, and transfers of large amounts at one time. In addition to restricting or terminating transfer privileges we also have the right to limit the dollar amount and frequency of transfers, impose redemption fees on short-term trading, restrict the method of making transfers, and to require a holding period for some Investment Options. We also have the right to not accept batch transfer instructions from anyone acting under powers of attorney for multiple owners, unless we have entered into a third-party transfer service agreement. Such transfer limitations could be applied to transfers to or from some or all of the Accounts. These limitations, individually or in aggregate, may be applied in any manner reasonably designed to prevent any use of the transfer right that is considered by us to be to the disadvantage of other owners. Any termination, restriction or limitation on transfer privileges will be administered in a uniform non-discriminatory manner. If we reject a transfer for any of these reasons, we will notify you of our decision in writing.
We do not include transfers made pursuant to the DCA or Asset Rebalancing Program when applying our Disruptive Trading policy.
While this policy is in force, and sufficient loan value is available, a loan may be obtained by written request. Each loan must be for at least the Minimum Loan Amount shown in Section 1. To obtain a loan, we may require a loan agreement from you, since the policy is the only security for the loan. We may defer loans as provided by law or as provided in Section 27. Loans may not be made if the policy is in the grace period as described in Section 12.
MAXIMUM PREFERRED LOAN, MAXIMUM LOAN VALUE
If you requested a Preferred Loan at Issue, it is subject to the following
limitations:
1. A Preferred Loan is available only at issue.
2. The maximum Preferred Loan amount is equal to the lesser of the actual loan
requested to be carried over from the previously issued policy, and the
Preferred Loan Premium Percentage shown in Section 1, of premiums received at
issue, plus accrued interest. 3. Subsequent Preferred Loans are not available
under the policy.
For all loans other than Preferred Loans, the Maximum Loan Value is shown in
Section 1.
AVAILABLE LOAN VALUE
The available loan value on any date is an amount equal to the Maximum Loan
Value less Policy Debt. In no event will the Maximum Loan Value exceed the
current Policy Value less any applicable Surrender Charge.
The amount of the loan will be added to the loaned portion of the GIA and subtracted from this policy's share of the Investment Options, the LT-GIA, and the GIA based on the allocation you request at the time of the loan. The total reduction will equal the amount added to the loaned portion of the GIA. Unless we agree otherwise, allocations to each Investment Option, the LT-GIA, and GIA must be expressed in whole percentages. If no allocation request is made, the amount subtracted from the share of each Investment Option, the LT-GIA, and the GIA will be determined in the same manner as provided for Monthly Deductions. The number of Units deducted from each Investment Option of the Separate Account will be determined by dividing the portion of the loan amount allocated to such Investment Option by the Unit Value of that Investment Option on the loan date.
LOAN INTEREST CHARGED
Loan interest will accrue on a daily basis from the date of the loan, and is
payable in arrears.
Loans will bear interest at the applicable rate shown in Section 1. We will increase the applicable Loan Interest Credited Rate at any time it is determined that the rate being charged would cause a loan to be taxable under any applicable ruling, regulation, or court decision. Loan interest will be payable on each Policy Anniversary and on the date the loan is settled. In the event that you do not pay the loan interest charged in a Policy Year, such amount will be added to the Policy Debt on the Policy Anniversary.
We may charge interest on loaned Policy Value for Preferred Loans at a different rate than the rate charged on loaned Policy Value for non-Preferred Loans. All interest rates are stated as effective annual rates. Interest will be compounded at least monthly to yield the effective annual rate.
LOAN REPAYMENT
You may repay the Policy Debt in whole or in part at any time prior to the death
of the Insured and while the policy is in force. However, subject to any rider,
endorsement, or other provisions, while a loan exists, we will treat any amounts
you pay as premiums, unless you request in writing that they be treated as loan
repayments. We will first deduct from such payments the amount of accrued
interest on loans and then deduct the amount specified as a loan repayment
before applying any balance remaining as a premium payment.
Repayment, in excess of any outstanding accrued loan interest, will be applied to reduce the loaned portion of the GIA. The amount applied will be transferred first to the LT-GIA, if applicable, and then to the non-loaned portion of the GIA to the extent that loaned amounts taken from such accounts have not previously been repaid. Otherwise, such balance will be transferred among the GIA, LT-GIA, or Investment Options you request upon repayment and, if no allocation request is made, we will use your most recent premium allocation schedule on file with us. Any Policy Debt repayment received by us during a grace period as described in Section 12 will be reduced to cover any overdue Monthly Deductions and only the balance will be applied to reduce the Policy Debt. Such balance will also be applied to reduce the loaned portion of the GIA.
SURRENDER OF THE POLICY
You may surrender this policy upon written request for its Net Surrender Value
at any time prior to the death of the Insured. We will determine the Net
Surrender Value as of the end of the business day on which we have received at
our Main Administrative Office your written request for surrender of the policy.
We will process the request and pay the Net Surrender Value only if we have not
received due proof that the Insured died prior to the Surrender Date. After we
receive your written request to surrender the policy, no insurance will be in
force. If you surrender the policy during the Surrender Charge Period, we will
deduct a Surrender Charge from your Policy Value. The Surrender Charge and
Surrender Charge Period are shown in Section 1.
WITHDRAWALS
Once per Policy Month, after the Withdrawal Date shown in Section 1 and while
the Insured is living, you may request a withdrawal of part of the Net Surrender
Value, if available. An amount equal to the withdrawal and its related pro-rata
Surrender Charge, shown in Section 1, will be deducted from the Policy Value.
Withdrawals are subject to the following conditions:
1. each withdrawal must be for at least the Minimum Withdrawal Amount shown
in Section 1;
2. after the withdrawal, its related pro-rata Surrender Charge and
Withdrawal Fee, the remaining Net Surrender Value must be greater than
zero; and
3. a withdrawal will not be permitted which would reduce the initial
Coverage Layer below the Minimum Initial Coverage Layer Face Amount
shown in Section 1.
We have the right to require that the entire balance of an Investment Option, the LT-GIA, or the GIA be withdrawn if the share of this policy in the value of that Investment Option, the LT-GIA, or the GIA would, immediately after a withdrawal, be less than $500.
We will process the withdrawal, thereby reducing the Policy Value, as of the end of the business day on which we receive your written request.
When a withdrawal is made, the Policy Value will be reduced by the sum of the following:
1. the withdrawal amount paid. This amount comes from a reduction in this
policy's share in the value of each Investment Option, the LT-GIA and
the GIA based on the allocation you request at the time of the
withdrawal. If no allocation request is made, the assessment to each
Investment Option, the LT-GIA, and the GIA will be made in the same
manner as provided for Monthly Deductions.
2. the Withdrawal Fee not to exceed that shown in Section 1. The assessment
to each Investment Option, the LT-GIA, and the GIA will be made in the
same manner as provided for the withdrawal amount paid.
3. a pro-rata Surrender Charge. This charge in any Policy Year will equal
(a) multiplied by (b), where:
(a) = the applicable Surrender Charge shown in the Schedule Pages,
less any pro-rata Surrender Charges deducted previously, and
(b) = (i) divided by (ii), where:
(i) = the withdrawal amount, and
(ii) = the Policy Value minus the value specified in (a)
above.
This amount is assessed against the Investment Options, the LT-GIA, and the GIA in the same manner as provided for the withdrawal amount paid.
If Death Benefit Option A is in effect on the date of the withdrawal, such withdrawal will reduce, dollar for dollar, the Supplemental Face Amount followed by the additional Coverage Layers, if any, in the reverse order that they were added, followed by the initial Coverage Layer. If, however, the Death Benefit in effect on the date of the withdrawal is equal to the Minimum Death Benefit, withdrawals on such date will first reduce the Death Benefit by the amount withdrawn multiplied by the applicable Minimum Death Benefit Percentage (shown in Section 2) until the Death Benefit is equal to the Total Face Amount. Such excess withdrawal amount will then reduce, dollar for dollar, the Supplemental Face Amount followed by the additional Coverage Layers, if any, in the reverse order that they were added, followed by the initial Coverage Layer. Your Death Benefit will continue to be determined in accordance with Section 6 based upon the revised Total Face Amount.
If Death Benefit Option B is in effect at the time of the withdrawal, the amount of the withdrawal will be deducted from the Policy Value. The Total Face Amount does not change.
If Death Benefit Option C is in effect at the time of the withdrawal, the amount of the withdrawal will be deducted from the Total Face Amount but only once cumulative withdrawals taken are greater than the cumulative premiums paid.
Any reduction in Total Face Amount as a result of a withdrawal will be implemented by first reducing the SUPPLEMENTAL FACE AMOUNT FOLLOWED BY THE ADDITIONAL COVERAGE LAYERS, IF ANY, IN THE REVERSE ORDER THAT THEY WERE ADDED, FOLLOWED BY THE INITIAL COVERAGE LAYER.Any benefits provided are not less than that required by law of the state where this policy was delivered. We may defer payment of Surrender Values as provided by law or as provided in Section 27.
All of the values under this policy are equal to or more than the minimums required on the Policy Date by the state in which this policy was delivered or issued for delivery. The method of computation of the values under this policy has been filed as may be required with the Insurance Department of the state in which this policy was delivered or issued for delivery. For further details please see Section 2.
The Insured is the owner of this policy, unless otherwise provided in the application or if ownership is changed by later transfer of ownership. If, however, you are offered consideration by a third party to transfer ownership of your policy or any interest in your policy, including a collateral or absolute assignment to such third party, no transfer of ownership shall take effect unless we or one of our affiliated companies first have the right to also offer consideration for your policy. We will require information satisfactory to us that is necessary for us to determine the amount of such consideration we will offer for your policy.
While the Insured is living, the owner may exercise all rights provided by this policy or allowed by us. Consent of any Beneficiary not irrevocably named or any contingent owner is not required. If there is no surviving Beneficiary upon the death of the Insured, you will be the Beneficiary, but if you were the Insured, your estate will be the Beneficiary.
Unless otherwise stated in the application or as later changed, any death proceeds that become payable will be paid in equal shares to such Beneficiaries living at the death of the Insured as stated in the application or as later changed. Payments will be made successively in the following order:
(a) primary Beneficiaries;
(b) contingent Beneficiaries, if any, provided no primary Beneficiary is
living at the death of the Insured;
(c) you, or if not living, your executor or administrator, provided no
primary or contingent Beneficiary is living at the death of the
Insured, or in the absence of a Beneficiary designation.
Unless otherwise stated, the relationship of a Beneficiary is the relationship to the Insured. You may change the Beneficiary by written notice filed with us at our Main Administrative Office. When we receive it, the change will take effect as of the date it was signed by you. However, the change will be subject to any payments made or actions taken by us before we received the notice at our Main Administrative Office.
Except as otherwise provided in this policy, you may by written notice assign any interest in this policy without the consent of any person, other than an irrevocable Beneficiary. The assignment or a certified copy of it must be filed with us at our Main Administrative Office. Once received, it will bind us as of the date of the assignment, subject to any action taken by us before such receipt. We shall not be responsible for the validity or sufficiency of any assignment. The interest of the assignee shall be prior to the interest of any Beneficiary not irrevocably named or any contingent owner. An assignee cannot change the Beneficiary, owner, or contingent owner.
If the Age or sex of the Insured has been misstated, we will, if necessary, adjust the Total Face Amount and every other benefit to that which would have been purchased at the correct Age or sex by the most recent Cost of Insurance Charge deducted under Section 10.
If the Insured dies by suicide within two years from the Issue Date, (or within two years from any reinstatement of the policy) and while the policy is in force, our liability shall be limited to an amount equal to the premiums paid on this policy, less any Policy Debt owed us, and less any withdrawals.
If the Insured dies by suicide within two years from the date of the addition of a Coverage Layer, and while the policy is in force, our liability for that increase will not include the amount of such Coverage Layer but will include a pro-rata portion of the premiums paid applicable to the Coverage Layer.
This policy shall be incontestable after it has been in force during the Insured's lifetime for two years from the Issue Date, except for any provision for reinstatement or policy change requiring evidence of insurability. In the case of reinstatement or any policy change requiring evidence of insurability, the incontestable period shall be two years from the effective date of such reinstatement or policy change. Any premium payment which we accept subject to insurability, and any increase in the Death Benefit resulting from such payment, and any increase in death benefit that is subject to evidence of insurability, shall be considered a policy change for purposes of this Section. While insurance is contestable, we may either rescind the insurance or deny a claim on the basis of:
1. a material misstatement in the application or supplemental application
for this policy or any face amount increase; or
2. a material misstatement in the reinstatement application if there has
been a reinstatement of this policy.
If we successfully contest the validity of all or a portion of the face amount provided under this policy, the amount we pay with respect to the contested amount will be limited to the higher of a return of any paid premium required by us for the contested face amount or the sum of any Monthly Deductions made under this policy for the contested face amount.
The written application for the policy is attached at issue. This policy, including the Schedule Pages (and any supplements or changes thereto), any riders, amendments, endorsements, and the application for it (and any supplemental applications) constitute the entire contract between you and us. However, additional written requests or applications for policy changes or acceptance of excess payment may be submitted to us after issue and such additional requests may become part of the policy.
We rely on all statements made by or for the Insured in the written application. Each statement made in an application will be deemed a representation and not a warranty. No statement will be used to void this policy or in defense of a claim under this policy unless:
1. it is contained in the application or in a supplemental application;
and
2. a copy of that application is attached to this policy when issued or
made a part of this policy when changes become effective.
Any change in the provisions of the policy, including modifying the policy, waiving any of its conditions, or making an agreement for the Company, to be in effect, must be in writing and signed by one of our executive officers and countersigned by our registrar or one of our executive officers. We have the right to correct any clerical errors in this policy, or in our administration of the policy.
We have the right to make any change to the provisions of this policy to comply with, or give you the benefit of, any federal or state statute, rule or regulation, including but not limited to requirements for life insurance policies under the Code or of any state. We will provide you with a copy of any such change, and file such a change with the insurance supervisory official of the state in which the policy is delivered.
Within 30 days after each Policy Anniversary, we will send you, without charge,
a report for each Policy Year which includes:
1. the current Policy Value, Death Benefit, Total Face Amount and Surrender
Value;
2. any withdrawals, premiums paid, interest credited and charges made
during the year;
3. any Policy Debt and new loans and loan repayments made during the year;
and
4. any other information required by the insurance supervisory official of
the state in which this policy was delivered; and
5. If you have elected the No Lapse Guarantee Rider, a statement indicating
whether or not the guarantee is in effect on the date of the Statement.
You have the right to request an illustrative report at any other time. We may charge a reasonable fee, not to exceed $50, for the report.
We will provide you, on written request, a projection of illustrative future benefits and values under your policy. We will provide one report annually without charge. For additional reports you request, we have the right to charge a reasonable service fee, not to exceed $50. We may limit the number of such projections in any Policy Year.
The proceeds and any income payments under this policy shall not be subject to the claims of creditors and shall be exempt from legal process, levy or attachment to the extent allowed by law. These proceeds and payments may not be assigned or withdrawn before becoming payable without our agreement.
We reserve the right to defer payment of Net Surrender Values, withdrawals, policy loans (except when used to pay premiums to the insurer), transfers and the payment of any Death Benefit in excess of the Total Face Amount for any period during which:
(a) the New York Stock Exchange (Exchange) is closed for trading (other than customary week-end and holiday closings), or trading on the Exchange is otherwise restricted;
(b) an emergency exists as defined by the Securities and Exchange Commission (SEC), or the SEC requires that trading be restricted; or
(c) the SEC permits a delay for the protection of policyholders.
We also reserve the right to postpone payments, including loans (except when used to pay premiums to the insurer), for up to 6 months from the date of request if such payments are based on values that do not depend on the investment performance of the Investment Options.
If payment is deferred 10 days or more on any surrender or policy loan, interest will be paid at an effective annual rate of at least 1.5% on the amount deferred from the date the request is received to the date of payment.
In addition, we may deny transfers under the circumstances stated in (a), (b) and (c) above, and in the Allocations and Transfers section.
[GRAPHIC OMITTED] PHOENIX
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
DEATH BENEFIT PAYABLE AT DEATH OF INSURED
NONPARTICIPATING - NOT ELIGIBLE FOR DIVIDENDS
BENEFITS, PREMIUMS, AND THE RISK CLASSIFICATION ARE SHOWN IN SECTION 1
THE DEATH BENEFIT AND OTHER VALUES PROVIDED UNDER THIS POLICY ARE BASED ON THE RATES OF INTEREST CREDITED ON ANY AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST ACCOUNT, LONG-TERM GUARANTEED INTEREST ACCOUNT AND THE INVESTMENT EXPERIENCE OF THE INVESTMENT OPTIONS WITHIN OUR SEPARATE ACCOUNT TO WHICH YOUR PREMIUMS ARE ALLOCATED. THUS, THE DEATH BENEFIT AND OTHER VALUES MAY INCREASE OR DECREASE IN AMOUNT AND DURATION. SEE SECTION 6 FOR A DESCRIPTION OF HOW THE DEATH BENEFIT IS DETERMINED.
07VUL
Exhibit 26(d)(2)
No Lapse Guarantee Rider
[LOGO OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
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This rider is part of the policy to which it is attached in consideration of the application and the Rider Charge shown on the Schedule Pages of the policy. This rider is effective on the Rider Issue Date shown in the Schedule Pages of this policy. Except as stated in this rider, it is subject to all of the provisions contained in the policy.
RIDER SPECIFICATIONS
POLICY NUMBER: [0000000]
INSURED(S): [John M. Doe]
[10 YEAR NO LAPSE GUARANTEE PERIOD
----------------------------------
No Lapse Guarantee Period Expiry Date: [January 10, 2017]
Shortfall Period: [10 years]
Initial Monthly No Lapse Guarantee Premium: [$500.00]
|
No Lapse Guarantee Period Expiry Date: [January 10, 2027] Shortfall Period: [10 years] Initial Monthly No Lapse Guarantee Premium: [$1,000.00] |
No Lapse Guarantee Period Expiry Date: [January 10, 2047] Shortfall Period: [2 years] Initial Monthly No Lapse Guarantee Premium: [$3,000.00] |
No Lapse Guarantee Period Expiry Date: [January 10, 2072] Shortfall Period: [2 years] Initial Monthly No Lapse Guarantee Premium: [$5,000.00]] |
EFFECTIVE ANNUAL RATE [4.0%]
NO LAPSE GUARANTEE
If the policy would otherwise be in default in the absence of this rider, the
policy will not terminate during the applicable No Lapse Guarantee Period as
long as you meet the requirements of the Total Cumulative Premium Test described
below.
07NLGR 1
MONTHLY NO LAPSE GUARANTEE PREMIUM
The Monthly No Lapse Guarantee Premium is the minimum amount which would have to
be paid on each Monthly Calculation Date, starting on the Policy Date, in order
to satisfy the Total Cumulative Premium Test.
SHORTFALL AMOUNT
The Shortfall amount is the minimum amount that must be paid to reinstate the No
Lapse Guarantee during the Shortfall Period by satisfying the Total Cumulative
Premium Test described below.
SHORTFALL PERIOD
Should you fail to satisfy the Total Cumulative Premium Test at any time while
this rider is in effect, you may bring the No Lapse Guarantee back into effect
by paying the Shortfall Amount prior to the end of the applicable Shortfall
Period shown in the Rider Specifications. The Shortfall Period will commence
once the Total Cumulative Premium Test has been failed and will in no event
extend beyond the applicable No Lapse Guarantee Period Expiry Date.
NO LAPSE GUARANTEE PERIODS
[10 YEAR NO LAPSE GUARANTEE PERIOD
This benefit will apply for the first 10 Policy Years as long as you satisfy the Total Cumulative Premium Test.
20 YEAR NO LAPSE GUARANTEE PERIOD
This benefit will apply for the first 20 Policy Years as long as you satisfy the Total Cumulative Premium Test.
LIFE EXPECTANCY NO LAPSE GUARANTEE PERIOD
This benefit will apply until the life expectancy at issue of the Insured as long as you satisfy the Total Cumulative Premium Test.
AGE 100 NO LAPSE GUARANTEE PERIOD
This benefit will apply until the Insured's Age 100 Anniversary as long as you satisfy the Total Cumulative Premium Test.]
TOTAL CUMULATIVE PREMIUM TEST
On any Monthly Calculation Date, while the No Lapse Guarantee is in effect, we
will calculate the sum of the Monthly No Lapse Guarantee Premiums applicable for
each Policy Month since the Policy Date, accumulated with interest at the
Effective Annual Rate shown above as long as the applicable Shortfall Period has
not expired. To meet the Total Cumulative Premium Test, when subtracting 2 from
1, the balance must equal or exceed 3 where 1, 2, and 3 are determined as
follows:
1. equals the premiums paid accumulated with interest at the Effective
Annual Rate shown above, and
2. equals withdrawals accumulated with interest at the Effective Annual
Rate shown above, and
3. equals the Policy Debt.
If the Total Cumulative Premium Test is not met while this rider is in effect, and the policy is in default the Grace Period provision of the policy will apply. While the policy is in default and the Total Cumulative Premium Test is not satisfied, the amount that you must pay in order to get the policy out of default is the lesser of:
1. The amount required under the Grace Period provision of the policy plus
any Accumulated Charges as described below; or
2. The Shortfall Amount plus the next three Monthly No Lapse Guarantee
Premiums, if the Shortfall period has not expired.
07NLGR 2
ACCUMULATED CHARGES
While the No Lapse Guarantee is in effect, any monthly deduction as shown on the
Schedule Page will continue to be deducted from the Policy Value as provided for
under the terms of the policy. If, however, the Policy Value is insufficient to
cover such monthly deduction, we will accumulate the charges and apply them to
future Policy Value(s) as may later exist. No interest will accrue on these
charges. Accumulated charges do not affect the net amount at risk and will not
be deducted from claims.
MONTHLY NO LAPSE GUARANTEE PREMIUM CHANGE
The initial Monthly No Lapse Guarantee Premium is shown in the Rider
Specifications. The Monthly No Lapse Guarantee Premium will change each time one
of the following occurs:
a) a withdrawal or a decrease in face amount or Total Face Amount as applicable;
b) an increase in any portion of the face amount or Total Face Amount as applicable;
c) a change in your Death Benefit Option;
d) the addition, change or termination of one or more riders;
e) a change in risk classification for any Insured.
Upon the occurrence of one of the above, we will notify you of any change to your Monthly No Lapse Guarantee Premium. The new Monthly No Lapse Guarantee Premium will be effective on the date of the change.
REINSTATEMENT
This rider cannot be reinstated if the policy has terminated and is later
reinstated.
TERMINATION
This rider and all rights provided under it will terminate automatically upon
the first of any of the following events to occur:
1. the date we receive your written request to cancel this rider;
2. the applicable No Lapse Guarantee Period Expiry Date as shown in the Rider Specifications of this rider;
3. the Shortfall Amount has not been paid by the end of the applicable Shortfall Period;
4. we determine at any time during the life of the policy that a beneficiary or ownership designation has been procured in order to transfer ownership or any benefits under the policy to a third party without an insurable interest;
5. the date the policy terminates.
Once this rider terminates, the Grace Period described in your policy will continue to apply. However, in addition to the payments required under the Grace Period provision, payments of any Accumulated Charges while the applicable No Lapse Guarantee Period was in effect will be also be required.
PHOENIX LIFE INSURANCE COMPANY
[/s/ John H. Beers]
[Secretary]
|
07NLGR 3
Exhibit 26(d)(3)
Alternate Surrender Value Rider
[GRAPHIC OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
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RIDER SPECIFICATIONS
POLICY NUMBER: [9730000]
[INSURED(S): John M. Doe]
ALTERNATE SURRENDER VALUE PERCENTAGE: [100%]
ALTERNATE SURRENDER VALUE PREMIUM PERCENTAGE: [100%]
This optional rider is a part of the policy to which it is attached in consideration of the application and the Rider Charge as shown in the Schedule Pages of the policy. This rider is effective on the Rider Issue Date shown in the Schedule Pages of this policy. Except as otherwise stated in this rider, it is subject to all of the provisions of the policy.
ALTERNATE SURRENDER VALUE (ASV)
If you surrender the policy while this rider is in effect, you will receive the
greater of the Alternate Surrender Value, as defined below, and the Net
Surrender Value, as defined in the policy.
The Alternate Surrender Value is equal to the lesser of:
1. the Net Policy Value, plus the ASV Percentage multiplied by the sum of (a) and (b) where;
a) equals the charge for this rider, and
b) equals total policy charges assessed since the Policy Date, excluding cost of insurance charges and other rider charges; or
2. the ASV Premium Percentage multiplied by the total premiums received excluding any Preferred Loan Amount at Issue, if applicable.
CONDITIONS
Subject to the terms and conditions of this rider and the policy, we agree to
pay the Alternate Surrender Value in lieu of the Net Surrender Value if all the
following conditions are met:
1. written notice of the surrender is received at our Main Administrative Office while the policy is in force;
2. the Alternate Surrender Value is greater than the Net Surrender Value;
3. the policy is surrendered prior to the Rider Expiry Date shown in the Schedule Pages; and
4. this rider has not terminated as set forth in the termination provision below.
EFFECT ON MINIMUM DEATH BENEFIT
While this rider is in effect, the Minimum Death Benefit under the policy is
revised to be equal to the Alternate Surrender Value on the date of death of the
Insured, or the date of death of the Surviving Insured if this rider is attached
to a survivorship policy, multiplied by the applicable Minimum Death Benefit
Percentage for the Attained Age of the Insured, or the Surviving Insured if
applicable.
07ASVR 1
CHARGE FOR BENEFIT
The Rider Charge is deducted from the Policy Value, as shown in the Schedule
Pages.
TERMINATION
This rider and all rights provided under it will terminate upon the earliest of
the following dates:
1. the date we receive your written request to cancel this rider;
2. the date you request a loan or withdrawal;
3. the date of any exchange, absolute assignment or change in ownership of this policy, including exchanges made under Section 1035 of the Internal Revenue Code, unless based on reasonably satisfactory evidence submitted to us that:
a. the change in ownership directly results from a merger, consolidation, or acquisition of your assets and the successor owner of the policy was your wholly-owned subsidiary on the date the ownership changed; or
b. the successor owner of your policy is a trust established by you for purposes of providing employee benefits.
4. the Rider Expiry Date;
5. the date the policy terminates.
Phoenix Life Insurance Company
[/s/ John H. Beers]
[Secretary]
|
Exhibit 26(d)(4)
Overloan Protection Rider
[GRAPHIC OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
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RIDER SPECIFICATIONS
POLICY NUMBER: [9730000]
[INSURED(S): John M. Doe]
This rider is made a part of the policy to which it is attached, in consideration of the application, a copy of which is attached to and made a part of the policy. The rider becomes effective on the Policy Date of the policy.
You have the option of exercising Overloan Protection, in writing, when all the following conditions exist on the Monthly Calculation Date:
1. the Policy Debt exceeds the Face Amount then in effect;
2. the Policy Debt is equal to [96%] of the Policy Value;
3. the Insured(s) is(are) at least age [65];
4. this policy has been in force for at least [15] Policy Years;
5. all premiums paid have been previously withdrawn; and
6. the Guideline Premium Test has been elected.
7. all outstanding policy loans were taken under a fixed loan interest option
Policy Debt in excess of [96%] of the Policy Value, if any, must be repaid at the time that Overloan Protection is exercised.
Once you have exercised Overloan Protection, a one-time charge, as shown in the Schedule Pages, will be assessed. There is no additional charge for this benefit or for any of the automatic changes that occur pursuant to your election of this benefit.
Overloan Protection will be effective on the Monthly Calculation Date following your written request. Once in effect, Overloan Protection will prevent your policy from terminating and the following changes will automatically take effect:
1. any riders, except this rider, then in effect will terminate;
2. the Death Benefit Option will be permanently set to Option A or 1, as applicable;
3. the Face Amount then in effect will be changed to [101%] of the Policy Value;
4. if applicable, any Policy Value not currently invested in the Fixed Account or Long Term GIA, will be transferred to such account at no additional charge.
06OLR 1
Once Overloan Protection is in effect the following will apply:
1. the Death Benefit will equal the greater of (a) or (b), where:
a. = the new Face Amount, and
b. = the applicable Minimum Death Benefit Percentage as shown in the
table below, multiplied by the greater of (i) and (ii), where:
i. = the Policy Value, and
ii. = the Policy Debt;
2. no further premium payments will be accepted;
3. no further withdrawals will be allowed;
4. no further monthly deductions will be assessed;
5. no additional loans or loan repayments will be allowed;
6. any loan balance will continue to reduce the Death Benefit payable; and
7. loan Interest will continue to accrue on this policy, but the loan interest rate charged will be equal to the interest rate credited on loaned policy value.
[MINIMUM DEATH BENEFIT PERCENTAGES
Age Pct. Age Pct. Age Pct. --- ---- --- ---- --- ---- 0 - 40 250% 54 157% 68 117% 41 243 55 150 69 116 42 236 56 146 70 115 43 229 57 142 71 113 44 222 58 138 72 111 45 215 59 134 73 109 46 209 60 130 74 107 47 203 61 128 75 105 48 197 62 126 76-90 105 49 191 63 124 91 104 50 185 64 122 92 103 51 178 65 120 93 102 52 171 66 119 94 101 53 164 67 118 95 and over 100] |
REINSTATEMENT OF THIS RIDER
If the policy terminates in accordance with the Grace Period provision in the
policy, and it is reinstated in accordance with the reinstatement provision of
the policy, you may reinstate this rider at that same time.
Phoenix Life Insurance Company
[/s/ John H. Beers]
[Secretary]
06OLR 2
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Exhibit 26(d)(5)
Phoenix LifePlan Options Rider
[GRAPHIC OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
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LIFE PLAN OPTIONS RIDER
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RIDER SPECIFICATIONS
POLICY NUMBER: [9730000]
INSURED(S): [John M. Doe]
MAXIMUM LIFETIME INCREASE: [$1,000,000]
REDUCTION LIMIT AMOUNT: [$5,000,000]
RISK CLASSIFICATION RANGE: [Table D or better]
|
This rider is part of the policy to which it is attached in consideration of the application. This rider is effective on the Rider Issue Date shown in the Schedule Pages of this policy. Except as stated in this rider, it is subject to all of the provisions contained in the policy.
Other conditions that apply to this option are as follows:
o This option may be elected only during the 90-day period immediately
preceding the [5th, 10th and 15th] policy anniversaries.
o The insured(s) must be Age 65 or younger to elect this option.
o The insured(s) must fall within the Risk Classification Range as shown above
on the Policy Date.
o The insured(s) must be living and meet our non-medical underwriting
requirements at the time of your request for election of this option.
o An individual term or joint term rider must either already be attached to the
policy or then currently approved and available for sale in the state of
applicable jurisdiction.
o Death Benefit Option A must be in effect.]
Other conditions that apply to this option are as follows:
o This option may be elected only during the 90-day period immediately
preceding the [5th, 10th and 15th] Policy Anniversaries.
o The sum of all reductions to Face Amount may not exceed the lesser of (a) or
(b) where:
a) = 50% of the total Face Amount at Issue;
b) = the Reduction Limit Amount in aggregate of all reductions under the
terms of this rider for all policies issued by the Company and its
affiliates on the same insured(s).
06LPOR 1
o The new Face Amount may not be less than Minimum Face Amount as shown in policy Schedule Pages, if applicable.]
Other conditions that apply to this option are as follows:
o This option may be elected only during the 90-day period immediately
preceding the [5th, 10th and 15th] Policy Anniversaries.
o Both insureds must be Age 65 or younger to elect this option.
o The Policy Split Option Rider must be attached to the base policy at issue or
then currently approved and available for sale in the state of applicable
jurisdiction.
o Both insureds must fall within the Risk Classification Range as shown above
on the Policy Date.
o Both insureds must be living and meet our non-medical underwriting
requirements at the time of your request for election of this option.]
TERMINATION OF THIS RIDER
This rider and all rights provided under it will terminate upon the earliest of the following dates:
1. the date we receive your written request to cancel this rider;
2. the date of the first business day following the [15th] Policy Anniversary;
3. the date the policy terminates.
[4. the date you exercise the Exchange for Annuity without Surrender Charge Option [or Alternate Policy Split Option]];
Phoenix Life Insurance Company
[/s/ John H. Beers] [Secretary] |
06LPOR 2
Exhibit 26(d)(6)
Disability Payment of Specified Premium Rider
This Rider is part of the policy to which it is attached. Except as otherwise stated below, this Rider is subject to all of the provisions contained in the policy.
Coverage under this Rider will begin on the later of the Rider Issue Date and
the first Monthly Calculation Date on which the premium applied results in a Net
Policy Value that at least equals the Monthly Deduction for the policy
(including the charge for this rider.)
RIDER SPECIFICATIONS
POLICY NUMBER [9730000]
COVERED INSURED: [John M. Doe]
RIDER ISSUE DATE: [April 1, 2007]
SPECIFIED ANNUAL AMOUNT: [$12,000]
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DEFINITIONS
TOTAL DISABILITY
Incapacity of the Covered Insured as a result of bodily injury or disease to
engage for remuneration or profit in any occupation for which the Covered
Insured is or becomes qualified:
1. by training;
2. by education; or
3. by experience.
Total Disability is also defined to include the Covered Insured's entire and irrecoverable loss through bodily injury or disease of:
1. the sight of both eyes;
2. the use of both hands or both feet; or
3. the use of one hand and one foot.
THE SPECIFIED MONTHLY AMOUNT - equals the Specified Annual Amount divided by 12. The Specified Annual Amount is shown above and is the maximum amount payable under this rider during a Policy Year. To the extent that the Specified Monthly Amount to be credited exceeds any premium limits then in effect, the Specified Monthly Amount will be reduced by such excess premium, but in no event will be less than zero.
GENERAL
DISABILITY BENEFITS
Subject to the terms of this rider, during the existence of any Total Disability
of at least 6 months continuous duration but prior to the end of the disability
benefit period as described below, we will credit a premium payment to the
policy in an amount equal to the Specified Monthly Amount on each Monthly
Calculation Date during such period, to the extent that the Specified Monthly
Amount is not already being credited under a Disability Benefit Rider which
provides coverage on another Insured under the policy.
07DPR - 1 - NY
Such disability benefit period will end on the later of:
1. the Policy Anniversary on or immediately following the Covered Insured's 65th birthday; or
2. one year from the date the Total Disability commenced if such Total Disability commenced within the one-year period prior to the Policy Anniversary on or immediately following the Covered Insured's 65th birthday.
However, we will continue to apply such disability benefits to the policy on or after the Policy Anniversary on or immediately following the Covered Insured's 65th birthday if the Covered Insured has received disability benefits under this rider continuously during the entire 5-year period just prior to that date. Such disability benefits will then continue to be applied regardless of whether Total Disability continues after that Policy Anniversary.
LIMITATIONS AND CONDITIONS
No specified monthly amount will be credited or paid under this rider unless the
following conditions are satisfied:
1. We must receive at our Main Administrative Office and during the lifetime of the Covered Insured written notice of claim and due proof that:
a. the Covered Insured is totally disabled at the time the proof is furnished to us; and
b. the Covered Insured has been so totally disabled for the entire 6-month period immediately preceding that date.
Any such proof will be subject to the requirements stated in the Required Proof of Disability section.
2. The Total Disability must not have directly resulted from either:
a. injuries willfully or intentionally self-inflicted including the use of any drug that contributes to the disability; or
b. service by the Covered Insured in the military, naval, or air force of any country at war. By "war" we mean any declared war, undeclared war, or international police action with force of arms by any country, the United Nations, or any other assembly of nations.
3. The Total Disability must have occurred:
a. after the Rider Issue Date;
b. after coverage under this rider begins;
c. before coverage under this rider terminates; and
d. while the policy is in force.
4. If coverage under this rider terminates or the policy lapses or becomes void by its terms, we must receive proof of Total Disability no later than one year from that date to avoid invalidation or reduction in any disability benefits credited to the policy under the terms of this rider. However, failure to furnish such required proof within the time required shall not invalidate or reduce any such claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.
5. If multiple disability benefits would otherwise be payable under the policy due to Disability Benefit Riders on more than one Covered Insured, benefits will be limited to only one such rider such that the highest Specified Monthly Amount disability benefit amount will be credited or paid.`
6. If the Total Disability occurs during the grace period the payment required under the policy to bring the policy out of default must first be paid to us.
07DPR - 2 - NY
REQUIRED PROOF OF DISABILITY AND ITS CONTINUANCE
In addition to requiring proof of Total Disability before granting any benefits
under this rider, we have the right to require proof that the Total Disability
continues. As part of any such proof, we shall have the right to have a
physician of our choosing conduct such physical exams of the Covered Insured as
we may reasonably require. After benefits under this rider have been received
for a period of disability of more than two years, we will not require such
exams more frequently than once a year.
Should there be a failure to furnish such proof or a refusal to permit such exams, or should the Covered Insured cease to be totally disabled before the Policy Anniversary on or immediately following the Covered Insured's 65th birthday:
1. further disability benefits will not be applied; and
2. any disability benefits already applied after that date will be charged as loans against the Policy unless repaid to us.
However, failure to furnish such required proof of disability within the time allowed shall not invalidate or reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.
LIMIT ON OUR RIGHT TO CONTEST THIS RIDER
We cannot contest the validity of this rider except for failure to pay premiums
after it has been in force during the lifetime of the Covered Insured for two
years from the Rider Issue Date.
MONTHLY RIDER CHARGES
The monthly charge for coverage under this rider is included in and part of the
Monthly Deduction for the Policy. It is deducted on each Monthly Calculation
Date until coverage under this rider terminates. The monthly Rider Charge is
shown in the policy Schedule Pages.
TERMINATION OF THIS RIDER
This rider will terminate on the first of any of the following events to occur:
1. full surrender of the policy;
2. lapse of the policy;
3. we determine at any time during the life of the policy that a beneficiary or ownership designation has been procured in order to transfer ownership or any benefits under the policy to a third party without an insurable interest;
4. death of the Covered Insured under this rider;
5. the Policy Anniversary on or immediately following the Covered Insured's 65th birthday, unless continued as provided under the Disability Benefits section; or
6. Our receipt on any Monthly Calculation Date of your written request, along with the policy, to cancel coverage under this rider.
Phoenix Life Insurance Company
[/s/ John H. Beers]
[Secretary]
|
07DPR - 3 - NY
Exhibit 26(d)(7)
Accelerated Benefit Rider
ACCELERATED BENEFIT RIDER
This rider is part of the policy to which it
is attached, effective as of the Rider Date,
if it is listed on the policy's Schedule Page
or in an Endorsement after that page. You
should therefore review the policy's Schedule
Page for applicability. Except as stated in
this rider, it is subject to all of the
provisions contained in the policy.
THE BENEFIT PAID UNDER THIS RIDER MAY BE
TAXABLE. YOU SHOULD CONSULT YOUR PERSONAL TAX
ADVISOR REGARDING POSSIBLE TAX CONSEQUENCES.
RIDER DATE SAME AS POLICY DATE
MAXIMUM ADMINISTRATIVE CHARGE $300.00
MAXIMUM PROPORTION ALLOWABLE 75%
MAXIMUM ACCELERATED BENEFIT $250,000
MINIMUM REMAINING FACE AMOUNT $10,000
DEFINITIONS INSURED is the person covered under the basic
policy.
YOU (YOUR) is the owner of the policy to
which this rider is attached.
WE (OUR, US) refers to Phoenix Life Insurance
Company, or its subsidiaries.
ELIGIBLE AMOUNT is the amount of insurance
under the policy that is eligible for
accelerated payment. It is equal to the death
benefit of the basic policy at the time of
claim plus any term insurance amounts in
force provided by rider on the life of the
insured, which provides coverage renewable to
the insured's attained age 95 or beyond, but
exclusive of any other supplemental rider
death benefits.
PROPORTION is the percentage of the Eligible
Amount that will be accelerated under this
rider. The Proportion is chosen by you at the
time of election of an accelerated benefit,
subject to the following limitations. The
Proportion elected:
1. can be no more than the Maximum
Proportion Allowable as specified in
this rider;
2. cannot result in a remaining death
benefit below the minimum as
specified in this rider; and
3. cannot result in a Requested Benefit
that exceeds the Maximum Accelerated
Benefit as specified in this rider.
VR 162 1
|
This rider terminates upon payment of the
accelerated benefit.
MAXIMUM ACCELERATED BENEFIT is the amount
shown on the first page of this rider. This
Maximum Accelerated Benefit applies, in
aggregate, to all policies issued on the
insured by us.
REQUESTED BENEFIT is the Proportion
multiplied by the Eligible Amount.
TERMINAL ILLNESS is an illness or condition
that is expected to result in the insured's
death within six months based on evidence
satisfactory to us as defined under the Proof
of Terminal Illness section below.
RIDER DESCRIPTION This rider allows you to elect an accelerated
benefit upon terminal illness of the insured.
The election must be made by a written
request signed by you. We must also receive
proof satisfactory to us of the insured's
terminal illness as described in the Proof of
Terminal Illness section below. The amount of
the accelerated benefit will be adjusted as
described under the Payment Made to You
section below. The resulting payment will be
made in a lump sum. Policy values, cash
surrender values, loan values and the death
benef it as specified in the policy to which
this rider is attached will be reduced if you
receive an accelerated benefit. There is no
premium charge for this rider.
PAYMENT MADE TO YOU The amount of the payment made to you will be
determined by discounting the Requested
Benefit at our then current discounting rate
for a period of twelve (12) months, to
reflect the early payment of insurance
proceeds under the policy.
Our discounting rate will be subject to the
higher of:
1. 5%; or
2. the Published Monthly Average for the
calendar month ending two months
before the policy anniversary on or
immediately preceding the date that
we receive your written request for
payment under this rider.
The Published Monthly Average will be:
a. The Corporate Bond Yield Average --
Monthly Average Corporates as
published by Moody's Investors
Service, Inc. or any successor to
that Service; or
b. If that Monthly Average is no longer
published, a substantially similar
average, established by regulation
for policy loan rates issued by the
insurance supervisory official of the
state where the rider was delivered
will be applicable.
If the discounting rate computed for a policy
year is no more than 1/2% higher than the
rate in effect for the previous policy year,
then we will maintain such prior year's rate.
If the discounting rate computed for a policy
year is no more than 1/2% lower than the rate
in effect for the previous policy year, then
we may, at our discretion, maintain such
prior year's rate.
If the cash surrender value multiplied by the
Proportion exceeds the discounted value, then
the discounted Requested Benefit will be
increased to equal such greater amount.
VR 162 2
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The discounted Requested Benef it is reduced
by the Proportion of any policy debt,
including any unpaid loan interest, and the
Proportion of any other amounts due us from
you. This result is then reduced by our then
current Administrative Charge for benefits
under this type of rider, not to exceed the
maximum as specif fed in this rider. The
amount that remains is the payment that will
be made to you.
In the event that the insured dies after the
written request but before we make the
payment, and we receive written notice at our
Main Administrative Office during this period
of this event, the request will be considered
void, and no payment will be made under this
rider.
EFFECT ON CONTRACT The following values will be reduced by the
Proportion at the time the payment is made to
you:
1. the future planned premium payable on
the basic policy;
2. the face amount of the policy at the
time of claim;
3. the cash value (policy value);
4. any remaining surrender charge;
5. the cash surrender value; and
6. any policy debt including any unpaid
loan interest.
If this rider is attached to a variable life
insurance policy that permits fund investment
in various subaccounts of our Variable
Universal Life Separate Account, the
reduction in policy value will be achieved
through a proportionate reduction in this
policy's share in the value of each
subaccount based on the allocation you
request at the time of your accelerated benef
it request. If no allocation request is made,
the assignment to each subaccount will be
made in the same manner as provided for
monthly deductions.
Future values under the policy will be
determined in a manner consistent with that
under the original policy, as adjusted to
reflect the above reductions. We will mail to
you a new policy Schedule Page reflecting any
payment made under this rider.
PROOF OF TERMINAL ILLNESS A licensed physician, who is not yourself or
a member of your family, must provide us with
evidence satisfactory to us of the insured's
terminal illness. We reserve the right to
obtain a second medical opinion from a
physician of our choosing at our expense.
CONDITIONS Payment under this rider is subject to the
following conditions:
1. The policy must not have lapsed.
2. We will require the consent of any
assignees and irrevocable
beneficiaries to any request for
payment under this rider.
3. No payments will be made under this
rider to satisfy the claims, demands,
or obligations of any creditor,
trustee in bankruptcy or governmental
agency, or arising under any court
order directed against you, to the
extent that we have written notice
thereof.
VR 162 3
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RIDER TERMINATION This rider will terminate on the earliest of:
1. Lapse or surrender of this policy to
which it is attached.
2. Our receipt of your written request to
terminate this rider; or
3. Payment of any benefit under this
rider.
Phoenix Life Insurance Company
/s/John H. Beers
Secretary Registrar
|
VR 162 4
Exhibit 26(d)(8)
Healthy Measure Reward Endorsement
[GRAPHIC OMITTED] PHOENIX LIFE INSURANCE COMPANY
A STOCK COMPANY
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POLICY ENDORSEMENT
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SPECIFICATIONS
POLICY NUMBER: [9730000]
INSURED: [John M. Phoenix]
|
This endorsement is made a part of the policy to which it is attached, in consideration of the application, a copy of which is attached to and made a part of the policy. There is no charge for this endorsement. The endorsement becomes effective on the Issue Date of the policy, and may not be issued subsequent to the Issue Date of the policy.
DEFINITIONS
BODY MASS INDEX
Body Mass Index ("BMI") is a mathematical formula that takes into account both
the Insured's height and weight. A Body Mass Index Table ("BMI Table"), which is
on file with the insurance department of the state in which the policy was
delivered, is used as part of our underwriting criteria when assessing
improvements in risk classifications. The BMI Table on file at the time of issue
will be used for any request to improve the Insured's risk classification under
the Body Mass Index Program.
GENERAL
REQUEST TO IMPROVE RISK CLASSIFICATION
At any time while the policy is in force and the Insured is alive, you may
request an improvement in risk classification. Any improvement in risk
classification will be subject to the following conditions:
1. any evidence that we may require must be provided to us within 30 days of our written request;
2. we must receive evidence satisfactory to us that you have met the applicable underwriting requirements for such improved risk classification
3. any evidence we may require must be provided by a Company approved medical examiner.
Any improvement in risk classification will be effective on the first Monthly Calculation Date following the date we approve your request.
REQUEST FOR BODY MASS INDEX PROGRAM
You may also request an additional improvement in risk classification once every
5 Policy Years, up to and including the 20th Policy Year, provided you meet our
eligibility requirements. You will be eligible if the following conditions are
met:
1. the policy was initially issued in at least a preferred risk classification;
2. the Insured complies with the BMI Table each time there is a request for an improvement in risk classification;
3. each 5th Policy Year you requested and received an improvement in risk classification;
4. any evidence that we may require must be provided to us within 60 days of our written request; and
5. any evidence that we require must be provided by a Company approved medical examiner.
We will provide 30 days advance written notice of your right to request an improvement in risk classification as long as you continue to be eligible. Any improvement in risk classification will be effective on the first Monthly Calculation Date following the date we approve your request.
07UE
REINSTATEMENT OF THIS ENDORSEMENT
If the policy terminates in accordance with the Grace Period provision in the
policy, and it is reinstated in accordance with the reinstatement provision of
the policy, you may reinstate this endorsement at that same time.
SIGNED FOR THE COMPANY BY:
Phoenix Life Insurance Company
[/s/ Dona D. Young]
[Chairman, President and Chief Executive Officer]
|
07UE
Exhibit 26(d)(9)
Healthy Measure Reward Endorsement
SPECIFICATIONS POLICY NUMBER: [9730000] INSURED: [John M. Phoenix] |
This endorsement is made a part of the policy to which it is attached, in consideration of the application, a copy of which is attached to and made a part of the policy. There is no charge for this endorsement. The endorsement becomes effective on the Issue Date of the policy, and may not be issued subsequent to the Issue Date of the policy.
DEFINITIONS
BODY MASS INDEX
Body Mass Index ("BMI") is a mathematical formula that takes into account both
the Insured's height and weight. A Body Mass Index Table ("BMI Table"), which is
on file with the insurance department of the state in which the policy was
delivered, is used as part of our underwriting criteria when assessing
improvements in risk classifications. The BMI Table on file at the time of issue
will be used for any request to improve the Insured's risk classification under
the Body Mass Index Program.
GENERAL
REQUEST TO IMPROVE RISK CLASSIFICATION
At any time while the policy is in force and the Insured is alive, you may
request an improvement in risk classification. Any improvement in risk
classification will be subject to the following conditions:
1. any evidence that we may require must be provided to us within 30 days of our written request;
2. we must receive evidence satisfactory to us that you have met the applicable underwriting requirements for such improved risk classification
3. any evidence we may require must be provided by a Company approved medical examiner.
Any improvement in risk classification will be effective on the first Monthly Calculation Date following the date we approve your request.
REQUEST FOR BODY MASS INDEX PROGRAM
You may also request an additional improvement in risk classification once every
5 Policy Years, up to and including the 20th Policy Year, provided you meet our
eligibility requirements. You will be eligible if the following conditions are
met:
1. the policy was initially issued in at least a preferred risk classification;
2. the Insured complies with the BMI Table in effect at the time the policy is issued;
3. the Insured complies with the BMI Table each time there is a request for an improvement in risk classification;
4. each 5th Policy Year you requested and received an improvement in risk classification;
5. any evidence that we may require must be provided to us within 60 days of our written request; and
6. any evidence that we require must be provided by a Company approved medical examiner.
We will provide 30 days advance written notice of your right to request an improvement in risk classification as long as you continue to be eligible. Any improvement in risk classification will be effective on the first Monthly Calculation Date following the date we approve your request.
06UE
REINSTATEMENT OF THIS ENDORSEMENT
If the policy terminates in accordance with the Grace Period provision in the
policy, and it is reinstated in accordance with the reinstatement provision of
the policy, you may reinstate this endorsement at that same time.
SIGNED FOR THE COMPANY BY:
Phoenix Life Insurance Company
[/s/ Dona D. Young]
[Chairman, President and Chief Executive Officer]
|
06UE
Exhibit 26(d)(10)
Enhanced Dollar Cost Averaging Amendment
ENHANCED DOLLAR COST AVERAGING AMENDMENT
This amendment is part of the policy to which it is attached. Except as stated in this amendment, it is subject to all of the provisions contained in the policy.
THE FOLLOWING IS ADDED TO THE GUARANTEED INTEREST ACCOUNT PROVISION:
Under the Enhanced Dollar Cost Averaging Program (Enhanced DCA Program), We will credit additional interest on the balance of the first premium payment, including any 1035 exchange proceeds, remaining in the Guaranteed Interest Account (GIA) provided it is allocated to the GIA for monthly transfer under the Systematic Transfer Program (DCA Program). The rate at which we pay additional interest under the Enhanced DCA Program will be guaranteed for a period commencing with the termination of the Right To Cancel period and ending at the completion of the first Policy Year. The Systematic Transfer Program period chosen must not exceed 12 months from the end of the Right To Cancel period.
When the Enhanced DCA Program is in effect, the amount you allocate to this program, less any applicable premium deductions, will be allocated to a money market subaccount until the termination of the Right To Cancel period. Upon termination of the Right To Cancel period, the amount You allocated to the Enhanced DCA Program, net of any Policy Charges and money market subaccount returns, will be transferred to the GIA and We will begin crediting additional interest on the balance under the Enhanced DCA Program.
The initial transfer under the Enhanced DCA Program will occur automatically on the Monthly Calculation Day that coincides with or immediately follows the termination of the Right To Cancel period.
If You terminate the Enhanced DCA Program while there is an existing balance, the amount remaining under the Enhanced DCA Program will be allocated according to your most recent subaccount allocation schedule.
We reserve the right to limit the amount allocated to the Enhanced DCA Program to $250,000.
Phoenix Life Insurance Company
[/s/ Dona D. Young]
[Chairman, President and Chief Executive Officer]
|
VR74
Exhibit 26e Form of Application
PHOENIX [logo] PHOENIX LIFE INSURANCE COMPANY For Overnight Delivery APPLICATION FOR LIFE INSURANCE
PO Box 8027 PHOENIX LIFE INSURANCE COMPANY PART I
Boston MA 02266-8027 30 Dan Road, Suite 8027
Underwriting Service Center Canton MA 02021-2809
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SECTION I - PROPOSED INSURED INFORMATION
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Name (First, Middle, Last) Sex Date of Birth (mm/dd/yyyy)
[ ] M [ ] F
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Birth State Birth Country U.S. Citizen Earned Income Net Worth Other Income
[ ] Y [ ] N $ $ $
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Social Security Number Driver's License Number State Marital Status
[ ] Single [ ] Married [ ] Widowed [ ] Divorced
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Residence Street Address (include Apt #) City State ZIP Code Home Telephone #
( )
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Email Address
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Current Employer Years of Service Current Occupation
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Employer Street Address City State ZIP Code Employer's Telephone #
( )
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Have you used tobacco or nicotine products in any form in the last 10 years? [ ] Yes [ ] No
a. If "Yes", check the product(s) used: [ ] Cigarettes [ ] Cigars, [ ] Pipes, [ ] Snuff, Smokeless or Chewing Tobacco,
[ ] Nicotine Patch, Gum or Lozenge
b. If "Yes", check where appropriate: [ ] Use Currently [ ] Date Quit (mm/yyyy) _____________
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SECTION II - OWNERSHIP (INDICATE THE OWNER OF THE POLICY.)
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[ ] A. INSURED (If Insured is Owner, go to Section III)
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[ ] B. PARTNERSHIP - list all partners. If there is a general partner, complete Partnership Authorization form.
Name(s) of All Partner(s) (First, Middle, Last)
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Employer's Street Address City State ZIP Code
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[ ] C. TRUST (If Owner is a Trust, complete Certification of Trust Agreement)
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[ ] D. OTHER
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Owner's Name (First, Middle, Last) Social Security Number/Tax ID Date of Birth (mm/dd/yyyy) Relationship to Proposed Insured
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Owner's Street Address (include Apt #) City State ZIP Code Home Telephone #
( )
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Email Address
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SECTION III - BENEFICIARY DESIGNATION
UNLESS OTHERWISE SPECIFIED, PAYMENTS WILL BE SHARED EQUALLY BY ALL PRIMARY BENEFICIARIES WHO SURVIVE THE PROPOSED INSURED OR IF
NONE, BY ALL CONTINGENT BENEFICIARIES WHO SURVIVE THE PROPOSED INSURED. ONLY THE OWNER HAS THE RIGHT TO CHANGE THE BENEFICIARY(IES)
UNLESS OTHERWISE STATED.
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Primary Beneficiary(ies) Date of Birth Social Security # or Tax ID# Relationship to % Share
Name(s) (First, Middle, Last) (mm/dd/yyyy) (if available) Proposed Insured
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Contingent Beneficiary(ies) Date of Birth Social Security # or Tax ID# Relationship to % Share
Name(s) (First, Middle, Last) (mm/dd/yyyy) (if available) Proposed Insured
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OL4250NY.1 1 of 6 7-07
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SECTION IV - COVERAGE APPLIED FOR
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PLAN OF INSURANCE (IN FEATURES BELOW)
FACE AMOUNT
[ ] Phoenix 2007 VUL
$ ------------------------
[ ] Phoenix Accumulator UL FIRST YEAR ANTICIPATED, BILLED PREMIUM (
LUMP SUM FUNDS, ETC.)
[ ] Phoenix Universal Life with Guarantee
$ ------------------------
[ ] Other _____________________________
SUBSEQUENT PLANNED PREMIUM
$ ________________________ per year
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LIFE INSURANCE QUALIFICATION TEST: (check one) if none checked, Guideline Premium will apply.
[ ] Guideline Premium Test
[ ] Cash Value Accumulation Test (Must always be elected with Phoenix Universal Life with Guarantee)
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RIDERS
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[ ] Life Plan Options Rider [ ] Disability Benefit Rider (Disability Waiver of a Specified Amount)
[ ] Alternate Surrender Value Rider $------------
[ ] Child Term Rider
[ ] Family Term Rider Other ________________________________________________
[ ] Living Benefit Rider
[ ] Guaranteed Extension Rider Other ________________________________________________
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FEATURES
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[ ] Increasing Term Protection Rider (Individual Increasing Term Rider) DEATH BENEFIT OPTION: (check one) if none checked,
(available only with Death Benefit Option A) Option A will apply
ANNUAL RIDER INCREASE OPTIONS [ ] Option A: Level
[ ] Percentage Increase _________% [ ] Option B: Increasing
[ ] Fixed Dollar Increase $___________ [ ] Option C: Return of Premium
[ ] Increase Equal to Premiums Paid [ ] Other _____________________________________________
[ ] Level Term Protection (Individual Level Term Rider) [ ] Other _____________________________________________
Supplemental Face Amount $________________________ [ ] Other _____________________________________________
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SECTION V - SPECIAL REQUEST
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SECTION VI - SUITABILITY
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THIS SECTION APPLIES ONLY TO VARIABLE LIFE INSURANCE PRODUCTS:
DO YOU UNDERSTAND THAT THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER CERTAIN CONDITIONS AND THE DEATH BENEFIT AND CASH VALUES
UNDER ANY VARIABLE POLICY MAY INCREASE OR DECREASE IN AMOUNT OR DURATION BASED ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING
INVESTMENT OPTIONS? [ ] YES [ ] NO
DO YOU BELIEVE THAT THE VARIABLE LIFE POLICY YOU ARE PURCHASING IS SUITABLE TO MEET YOUR FINANCIAL OBJECTIVES? [ ] YES [ ] NO
MY SIGNATURE IN THE SIGNATURE SECTION OF THIS APPLICATION ACKNOWLEDGES THAT (A) I UNDERSTAND THAT A VARIABLE LIFE INSURANCE POLICY
IS NOT AN APPROPRIATE INVESTMENT VEHICLE FOR A SHORT TERM TRADING STRATEGY OR SHORT TERM SAVINGS AND (B) I CONFIRM THAT I HAVE
RECEIVED THE PROSPECTUS FOR THE VARIABLE LIFE POLICY I AM PURCHASING.
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ILLUSTRATIONS OF BENEFITS INCLUDING DEATH BENEFITS, POLICY VALUES AND CASH SURRENDER VALUES ARE AVAILABLE ON REQUEST.
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OL4250NY.1 2 of 6 7-07
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SECTION VII - MODE OF PREMIUM PAYMENT
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[ ] Annual [ ] Semi-Annual [ ] Quarterly [ ] Phoenix Check-O-Matic Service (PCS) [ ] Minimum Monthly Payment - $25.00
Multiple Billing Option - Give # or Details
[ ] List Bill [ ] Employee Insurance Counseling Service (EICS) [ ] Salary Allotment [ ] Pension [ ] Money Purchase Pension
[ ] Other __________________________________________________________________________________________________
IF ELECTING PCS, COMPLETE THE FOLLOWING:
Existing Policy Number or PCS File Number _________________________________________________
AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
I (we) hereby authorize the Company (Note: Company is defined as indicated on page 1 of application) to initiate debit entries
to my (our) checking account and the financial institution as shown on the attached voided check below.
INFORMATION FOR NEW ACCOUNT
Attach a void check to furnish encoding details.
If the payor's name is not imprinted on the check, fill it in here exactly as it appears in the bank records.
ATTACH VOID
CHECK HERE
Signature of depositor (if different from owner) ____________________________________________________________________
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SEND ADDITIONAL PREMIUM NOTICES TO:
Name (First, Middle, Last) _____________________________________________________________________________________
Street Address _______________________________________________________________________________________________
City _______________________________________ State ______ ZIP Code ______ Relationship to Owner ____________________
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SECTION VIII - EXISTING LIFE INSURANCE
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[ ] Yes [ ] No 1. Are there any life insurance policies or annuity contracts, owned by, or on the life of, the applicant(s) or
the insured(s) or the owner(s) or the annuitant?
[ ] Yes [ ] No 2. With this policy, do you plan to replace (in whole or in part) now or in the future any existing life insurance
or annuity contract in force with this policy?
[ ] Yes [ ] No 3. Do you plan to utilize values from any existing life insurance policy or annuity contract (through loans,
surrenders or otherwise) pay any initial or subsequent premium(s) for this policy?
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For all "Yes" answers above, please provide the following information. IF NO COVERAGE IN FORCE, CHECK HERE [ ]
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Company Issue Date Plan Amount Pers/Bus Replacing
(mm/yyyy)
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Y N
$ [ ] [ ] [ ] [ ]
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$ [ ] [ ] [ ] [ ]
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$ [ ] [ ] [ ] [ ]
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Total Life Insurance in force $
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SECTION IX - MEDICAL TRANSFER STATEMENT (Complete when submitting medical examinations of another insurance company.)
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I REQUEST THAT PHOENIX REVIEW AND CONSIDER THE EXAM CONDUCTED BY THE LIFE INSURANCE COMPANY LISTED BELOW IN EVALUATING MY
APPLICATION. I AUTHORIZE PHOENIX TO RECEIVE AND REVIEW SUCH APPLICATION, AND AUTHORIZE MY PRODUCER, BROKER OR OTHER LIFE
INSURANCE COMPANY TO PROVIDE SUCH APPLICATION TO PHOENIX.
1. Name of the insurance company for which examination(s) was made
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2. Date of examination (mm/dd/yyyy)
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3. To the best of your knowledge and belief, are the statements in the examination true, accurate and
complete as of today? [ ] Yes [ ] No
If "No", please explain.
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4. Have you consulted a medical doctor or other practitioner since the above examination?
(If "Yes", complete Section X) [ ] Yes [ ] No
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SECTION X - MEDICAL HISTORY (NOT NECESSARY TO COMPLETE IF MEDICAL OR PARAMEDICAL EXAM HAS BEEN ORDERED)
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Current Height Current Weight Has your weight changed by 10 pounds or more in the
past 2 years? If "yes", how much ______ pounds [ ] Gain [ ] Loss
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FAMILY HISTORY: Age if Age at If alive, indicate health FAMILY HISTORY: Age if Age at If alive, indicate health
Alive Death problems or if deceased, Alive Death problems or if deceased,
indicate cause of death: indicate cause of death:
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Father [ ] Alive Mother [ ] Alive
[ ] Deceased [ ] Deceased
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PERSONAL PHYSICIAN: Please provide the name and address of your Has anyone in your immediate family developed any hereditary
personal physician or health care provider, date of most recent condition, cancer, or heart disease before age 60? [ ] Yes
visit, reason for visit, and results of treatment (if any): (please provide details below) [ ] No
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To the best of your knowledge and belief, have you ever had, Please provide details of "Yes" answers (include question
or been told by a physician or other health care provider number, diagnosis, date of occurrence, current status,
that you have: hospital or treating physician's name and address). Use
Application Part II Addendum if additional space is necessary
to record all details.
1. High blood pressure or hypertension? [ ] Yes [ ] No
2. Pain, pressure, or discomfort in the chest, angina
pectoris, palpitations, swelling of the ankles, or
undue shortness of breath? [ ] Yes [ ] No
3. Heart disease, coronary artery disease,
cardiomyopathy, heart failure, atrial fibrillation,
heart rhythm abnormality, heart murmur, congenital
heart disease or valvular heart disease? [ ] Yes [ ] No
4. Peripheral vascular disease, claudication,
narrowing or blockage of arteries or veins? [ ] Yes [ ] No
5. Asthma, pulmonary fibrosis, chronic cough,
emphysema, pneumonia, or any other lung disease? [ ] Yes [ ] No
6. Neurologic disease, seizures, fainting, falls,
concussion, stroke, transient ischemic attack (TIA),
tremor, neuropathy, weakness, paralysis, Parkinson's
disease, memory loss, dementia, or any other
disease of the brain or nervous system? [ ] Yes [ ] No
7. Depression, bipolar disorder, schizophrenia,
anxiety, or other psychiatric illness? [ ] Yes [ ] No
8. Arthritis, lupus, or any musculoskeletal or skin
disorder? [ ] Yes [ ] No
9. Ulcers, abdominal pain, colitis, Crohn's disease,
gall bladder disease, liver disease, hepatitis,
jaundice, pancreatitis, or any other disease
of the gastrointestinal system? [ ] Yes [ ] No
10. Diabetes, kidney disease, kidney stones, bladder
disorder, prostate disorder, protein or blood
in the urine? [ ] Yes [ ] No
11. Endocrine disorder, including disorder of the
thyroid, parathyroid, adrenal, or pituitary
glands? [ ] Yes [ ] No
12. Anemia, bleeding or clotting disorder, or any
other disorder of the blood (excluding Human
Immunodeficiency Virus) or bone marrow? [ ] Yes [ ] No
13. Cancer of any type, tumor (benign or malignant),
leukemia, lymphoma, or Hodgkin's disease? [ ] Yes [ ] No
14. Are you taking any kind of medicine, therapy,
or treatment regularly or at frequent intervals? [ ] Yes [ ] No
15. Have you ever been treated for alcoholism or
been advised to limit or stop your use of
alcohol? [ ] Yes [ ] No
16. Have you ever used narcotics, barbiturates,
amphetamines, hallucinogens, or any prescription
drug except in accordance with a physician's
instructions? [ ] Yes [ ] No
17. Have you ever been a patient in any hospital,
treatment center, or similar facility within the
last 10 years? [ ] Yes [ ] No
18. Have you had, or been advised to have, any
surgery, X-rays, electrocardiograms, blood studies
(excluding Human Immunodeficiency Virus or
AIDS tests), or other tests within the last
5 years? [ ] Yes [ ] No
19. Other than above, have you had any other
physical or psychological disorder or been
treated by a physician or other health care
provider for any reason within the past 5 years? [ ] Yes [ ] No
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Phoenix reserves the right to require additional medical information, medical examination or testing to complete the underwriting
process.
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SECTION XI - ADDITIONAL INFORMATION (GIVE FULL DETAILS FOR ALL "YES" ANSWERS BELOW. IF ADDITIONAL SPACE IS NEEDED, USE
APPLICATION ADDENDUM PART II.)
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[ ] Yes [ ] No 1. Have you ever applied for life, accident, disability or health insurance and been declined, postponed, or
been offered a policy differing in plan, amount or premium rate from the applied for? (If "Yes," give date,
company and reason.)
Date (mm/dd/yyyy): Company: Reason:
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[ ] Yes [ ] No 2. Do you intend to travel or reside outside of the United States or Canada? (If "Yes," state where, how long and
purpose.)
Location City, Country: Purpose: How Long: (Specify weeks, months, years)
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[ ] Yes [ ] No 3. Are you negotiating for other insurance? (If "Yes," name companies and total amount to be placed in force.)
Company(ies): Total Amount to be placed in force:
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[ ] Yes [ ] No 4. Have you flown during the past 3 years as a pilot, student pilot or crew member or do you plan to do so?
(If "Yes," complete Aviation Questionnaire.)
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[ ] Yes [ ] No 5. Have you participated in the past 3 years or plan to engage in any extreme sport activities such as motorized
vehicle racing, parachute jumping, underwater diving, or any other extreme avocation? (If "Yes," complete
Avocation Questionnaire.)
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[ ] Yes [ ] No 6. Have you ever been convicted of a felony? (If "Yes," give details.) DETAILS:
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[ ] Yes [ ] No 7. Have you ever been convicted of driving under the influence of alcohol or drugs, or had your driver's license
suspended or revoked, or had greater than 2 moving violations in the past 3 years? (If "Yes," give details.)
DETAILS:
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THE FOLLOWING QUESTIONS MUST BE COMPLETED IF EITHER PROPOSED INSURED IS AGE 65 OR OLDER, AND THE FACE AMOUNT OF THE POLICY IS
$2,000,000 OR MORE
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[ ] Yes [ ] No 8. Will any of the first year or subsequent premiums for the policy be borrowed by the proposed owner(s) or
proposed insureds or by any other individual, trust, partnership, corporation or similar or related entity?
If "Yes," provide the name of the Premium Financing Program _______________________________________________
If "No," identify the source of funding for the premiums. (check all that apply).
[ ] Current Income [ ] Cash and Equivalents [ ] Marketable Securities [ ] Non-Readily Marketable Securities:
[ ] Retirement Accounts [ ] Other Assets (explain): _________________________________________________
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[ ] Yes [ ] No 9. Does the owner(s) have an agreement that now or in the future, premiums will be funded by an individual and/or
entity other than the proposed insureds? (If "Yes", give details.)
DETAILS:
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[ ] Yes [ ] No 10. Is the policy being purchased in connection with any formal or informal program under which the proposed
owner(s) or proposed insureds have been advised of the opportunity to transfer the policy to a third party
within five years of its issuance? (If "Yes," give details.)
DETAILS:
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[ ] Yes [ ] No 11. Does the proposed insureds or proposed owner(s) have any understanding or agreement providing for a party,
other than the owner(s), to obtain any legal or equitable right, title or interest in the policy or entity
owning the policy?
(If "Yes," give details.)
DETAILS:
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[ ] Yes [ ] No 12. Has any entity, including, for example, any life expectancy valuation company or premium financing company,
conducted a life expectancy evaluation of the insureds within the past two years or have you entered into an
agreement to have a life expectancy evaluation performed? If yes, identify the entity or entities (including a
contact name and telephone number) that provided the life expectancy valuations.
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[ ] Yes [ ] No 13. Has either the proposed insureds or the proposed owner(s), in the past five years, sold a policy to a life
settlement, viatical, or other secondary market provider? (If yes, give details.)
DETAILS:
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[ ] Yes [ ] No 14. Has the proposed insureds or proposed owner(s), or any individual, trust, partnership, corporation or similar
or related entity received cash or other financial inducements in connection with this application or the
purchase of this insurance? (If "Yes," give details.)
DETAILS:
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15. State in detail what bona fide need the proposed owner(s) or proposed insureds has for this insurance.
(Attach additional statements or documentation if necessary.)
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SECTION XII - AUTHORIZATION TO OBTAIN INFORMATION
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I authorize any licensed physician, health care practitioner, hospital, medical laboratory, clinic or other medically-related
facility, insurance company or the Medical Information Bureau (MIB), having any records or knowledge of me or my health, to
provide any such information to Phoenix Life Insurance Company (Phoenix), or its reinsurers. The information requested may include
information regarding diagnosis and treatment of physical or mental condition, including consultations occurring after the date
this authorization is signed. I authorize any of the above sources to release to Phoenix or its reinsurers any of my information
relating to mental health care.
Medical information will be used only for the purpose of risk evaluation and determining eligibility for benefits under any
policies issued. Phoenix may disclose information it has obtained to others as permitted or required by law, including the MIB,
our reinsurers and other persons or entities performing business or legal services in connection with this application, any
contract issued pursuant to it or in connection with the determination of eligibility for benefits under an existing policy.
Information that is not personally identifiable may be used for insurance statistical studies.
To facilitate rapid submission of information, I authorize all of the above sources, except MIB, to give such records or knowledge
to any agency employed by Phoenix to collect and transmit such information. I authorize consumer reporting agencies, insurance
companies, motor vehicle departments, my attorneys, accountants and business associates and the MIB to provide any information to
Phoenix or its reinsurers that may affect my insurability. This may include information about my occupation, participation in
hazardous activities, motor vehicle record, foreign travel, finances, and other insurance coverage in place. I acknowledge that I
have received a copy of the Notice of Information Practices, including information about Investigative Consumer Reports and the
Medical Information Bureau. I authorize the preparation of an investigative consumer report. I understand that upon written
request, I am entitled to receive a copy of the investigative consumer report.
This authorization shall continue to be valid for 24 months from the date it is signed unless otherwise required by law. A
photocopy of this signed authorization shall be as valid as the original. This authorization may be revoked by writing to Phoenix
prior to the time the insurance coverage has been placed in force. I understand my authorized representative or I may receive a
copy of this authorization on request.
[ ] I DO [ ] I DO NOT (check one) require that I be interviewed in connection with any investigative consumer report that may be
prepared.
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SECTION XIII - SIGNATURE
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I have reviewed this application, and the statements made herein are those of the proposed insured and all such statements made by
the proposed insured in Part I or and in Part II of this application are full, complete, and true to the best knowledge and belief
of the undersigned and have been correctly recorded.
I understand that 1) no statement made to, or information acquired by any Licensed Producer who takes this application, shall bind
the Company unless stated in Part I and/or Part II of this application, and 2) the Licensed Producer has no authority to make,
modify, alter or discharge any contract thereby applied for.
I understand and agree that the insurance applied for shall not take effect unless and until each of the following has occurred:
1) the policy has been issued by the Company; 2) the premium required for issuance of the policy has been paid in full during the
lifetime of the insured; 3) all the representations made in the application remain true, complete and accurate as of the date the
policy is delivered; 4) the Insured is alive when the policy is delivered, and 5) as of the date of delivery of the policy, to the
best of the proposed insured's knowledge and belief there has been no change in the health of either proposed insured that would
change the answers to any of the questions in the application.
This application is attached to and made a part of the policy.
Under penalty of perjury, I confirm that 1) the Social Security or Tax Identification Number shown is correct, and 2) that I am
not subject to backup withholding. If I have applied for the Living Benefit Rider, I confirm that I have received a copy of the
disclosure form, Summary of Coverage for Accelerated Benefit Rider.
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Proposed Insured's Signature STATE SIGNED IN Witness Signature(Must be signed in presence of Date
Proposed Insured) (mm/dd/yyyy)
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Owner's Signature (if other than STATE SIGNED IN Witness Signature (Must be signed in presence of Date
Proposed Insured) Owner) (mm/dd/yyyy)
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Parent's Signature (for minor insured) STATE SIGNED IN Witness Signature (Must be signed in presence of Date
Owner) (mm/dd/yyyy)
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The Producer hereby confirms he/she has truly and accurately recorded on the application the information supplied by the Proposed
Insured; and that he/she is qualified and authorized to discuss the contract herein applied for.
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Licensed Producer's Name (Print First, Middle, Last) Licensed Producer's Email Address
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Licensed Producer's Signature Date Licensed Producer's I.D.# Licensed Producer's Telephone #
(mm/dd/yyyy) ( )
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Exhibit 26(h)(1)(e)
Amendment No. 4 to Participation Agreement as of May 1, 2007, by and among Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributor's, Inc., Phoenix Life Insurance Company, PHL Variable Insurance Company, and Phoenix Equity Planning Corporation
AMENDMENT NO. 4 TO PARTICIPATION AGREEMENT
As of May 1, 2007
by and among
Franklin Templeton Variable Insurance Products Trust Franklin/Templeton Distributors, Inc. PHL Variable Insurance Company Phoenix Life Insurance Company Phoenix Equity Planning Corporation
Franklin Templeton Variable Insurance Products Trust (the "Trust"), Franklin/Templeton Distributors, Inc. (the "Underwriter," and together with the Trust, "we" or "us"), and Phoenix Life Insurance Company and PHL Variable Insurance Company ("you"), on your behalf and on behalf of certain Accounts, have previously entered into a Participation Agreement dated May 1, 2000, and amended as of the same date and subsequently amended as of May 3, 2004 and May 1, 2006 (the "Agreement"). The parties now desire to amend the Agreement in this amendment (the "Amendment"). Except as modified hereby, all other terms and conditions of the Agreement shall remain in full force and effect. Unless otherwise indicated, the terms defined in the Agreement shall have the same meaning in this Amendment.
For good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree to amend the Agreement as follows:
1. Phoenix Life and Annuity Company is hereby added as a party to the Agreement (the "Company").
2. Section 1 and Section 2.2.1 are hereby each amended to reflect that Franklin Templeton Variable Insurance Products Trust (the "Trust") is organized as a statutory trust under the laws of the State of Delaware.
3. Section 3.1.3 is amended and restated in its entirety as follows: "3.1.3 We agree that shares of the Trust will be sold only to: (i) life insurance companies which have entered into fund participation agreements with the Trust ("Participating Insurance Companies") and their separate accounts or to qualified pension and retirement plans in accordance with the terms of the Shared Funding Order; and (ii) investment companies in the form of funds of funds. No shares of any Portfolio will be sold to the general public."
4. Section 5.2 is amended and restated in its entirety as follows:
"5.2 If and to the extent required by law, you shall: (i) solicit voting instructions from Contract owners; (ii) vote the Trust shares in accordance with the instructions received from Contract owners; and (iii) vote Trust shares owned by subaccounts for which no instructions have been received from Contract owners in the same proportion as Trust shares of such Portfolio for which instructions have been received from Contract owners; so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. You reserve the right to vote Trust shares held in any Account in your own right, to the extent permitted by law."
5. Section 6.2 is amended and restated in its entirety as follows:
"6.2 You shall furnish, or cause to be furnished to us or our designee, at least one complete copy of each registration statement, prospectus, statement of additional information, private placement memorandum, retirement plan disclosure information or other disclosure documents or similar information, as applicable (collectively "Disclosure Documents"), as well as any report, solicitation for voting instructions, Sales literature or other Promotional materials, and all amendments to any of the above that relate to the Contracts or the Accounts prior to its first use. You shall furnish, or shall cause to be furnished, to us or our designee each piece of Sales literature or other Promotional material in which the Trust or an Adviser is named or the name "Franklin Templeton Founding Investment Strategy" is used, at least fifteen (15) Business Days prior to its proposed use. No such material shall be used unless we or our designee approve such material and its proposed use."
6. Section 6.5 is amended and restated in its entirety as follows:
"6.5 Except as provided in Section 6.2, you shall not use any designation comprised in whole or part of the names or marks "Franklin" or "Templeton" or any logo or other trademark relating to the Trust or the Underwriter without prior written consent. You may use the name "Franklin Templeton Founding Investment Strategy" in conjunction with your asset allocation program which utilizes funds of the Trust or funds affiliated with the Trust as investment options, provided that such use shall be subject to the requirements of Section 6.2 for Sales literature or other Promotional material. Upon termination of this Agreement for any reason, you shall cease all use of any such name or mark as soon as reasonably practical."
7. Schedules A, B, C, D and G of the Agreement are deleted and replaced in their entirety with the Schedules A, B, C, D and G attached hereto, respectively.
8. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
This Amendment is executed effective as of May 1, 2007.
THE TRUST:
ONLY ON BEHALF OF EACH FRANKLIN TEMPLETON VARIABLE
PORTFOLIO LISTED ON INSURANCE PRODUCTS TRUST
SCHEDULE C HEREOF
By: /s/ Karen L. Skidmore
-------------------------------------
Name: Karen L. Skidmore
Title: Vice President
THE UNDERWRITER: THE DISTRIBUTOR:
FRANKLIN/TEMPLETON DISTRIBUTORS, PHOENIX EQUITY PLANNING CORPORATION
INC.
By: /s/ Thomas M. Regner By: /s/ John H. Beers
--------------------------------- -------------------------------------
Name: Thomas Regner Name: John H. Beers
Title: Senior Vice President Title: Vice President and Secretary
THE COMPANY:
PHOENIX LIFE INSURANCE COMPANY PHOENIX LIFE AND ANNUITY COMPANY
By: /s/ Gina Collopy O'Connell By: /s/ Gina Collopy O'Connell
--------------------------------- -------------------------------------
Name: Gina Collopy O'Connell Name: Gina Collopy O'Connell
Title: Senior Vice President Title: Senior Vice President
PHL VARIABLE INSURANCE COMPANY
By: /s/ Gina Collopy O'Connell
-------------------------------------
Name: Gina Collopy O'Connell
Title: Senior Vice President
|
SCHEDULE A
THE COMPANY AND ITS DISTRIBUTOR
THE COMPANY
Phoenix Life Insurance Company
One American Row
Hartford, CT 06103-2899
A life insurance company domiciled under New York law.
PHL Variable Insurance Company
One American Row
Hartford, CT 06103-2899
A life insurance company organized under Connecticut law.
Phoenix Life and Annuity Company
One American Row
Hartford, CT 06103-2899
A life insurance company domiciled under Connecticut law.
THE DISTRIBUTOR
Phoenix Equity Planning Corporation
One American Row
Hartford, Connecticut 06103-2899
A corporation organized under Connecticut law.
SCHEDULE B
ACCOUNTS OF THE COMPANY
NAME OF ACCOUNT SEC REGISTRATION
--------------- YES/NO
----------------
Phoenix Life Variable Accumulation Account Yes
Phoenix Life Variable Universal Life Account Yes
PHL Variable Accumulation Account Yes
PHL Variable Universal Life Account Yes
Phoenix Life and Annuity Variable Universal Life Yes
Account
|
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST
1. Franklin Income Securities Fund - Class 2
2. Mutual Shares Securities Fund - Class 2
3. Templeton Developing Markets Securities Fund - Class 2
4. Templeton Foreign Securities Fund - Class 2
5. Templeton Global Asset Allocation Fund - Class 2
6. Templeton Growth Securities Fund - Class 2
7. Franklin Flex Cap Growth Securities Fund - Class 2
SCHEDULE D
CONTRACTS OF THE COMPANY
PHOENIX LIFE VARIABLE ACCUMULATION ACCOUNT PHOENIX LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
o Big Edge o The Phoenix Edge(R)
o The Big Edge Plus(R) o The Phoenix Edge(R) - SPVL
o Group Strategic Edge(R) o Flex Edge Success
o The Big Edge Choice(R) for NY o Joint Edge(R)
o Templeton Investment Plus o Flex Edge
o The Phoenix Edge(R) - VA for NY o Individual Edge(R)
o Phoenix Spectrum Edge(R) o Estate Edge(R)
o Retirement Planner's Edge o Estate Strategies
o Freedom Edge(R) o Corporate Edge
o Phoenix Income Choice(R) o Executive Benefit VUL
o Phoenix Investor's Edge(R) o Phoenix Executive VUL(R)
o Phoenix Asset Manager o Phoenix Express VUL(SM)
o Phoenix Dimensions(SM) o Variable Insurance Additions
PHL VARIABLE ACCUMULATION ACCOUNT PHLVIC VARIABLE UNIVERSAL LIFE ACCOUNT
o The Big Edge Choice(R) o Flex Edge Success(R)
o The Phoenix Edge(R)-VA o The Phoenix Edge(R) -SVUL
o Phoenix Spectrum Edge(R) o The Phoenix Edge(R) -VUL
o Retirement Planner's Edge o Phoenix Express VUL(SM)
o Freedom Edge(R)
o Phoenix Premium Edge(R) o Phoenix Life and Annuity Variable UniversaL
Life Account
o Phoenix Income Choice(R)
o Phoenix Investor's Edge(R)
o Phoenix Asset Manager
o Phoenix Dimensions(SM)
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SCHEDULE G
ADDRESSES FOR NOTICES
To the Company: Phoenix Life Insurance Company
PHL Variable Insurance Company
Phoenix Life and Annuity Company
One American Row
Hartford, CT 06103-2899
Attention: John H. Beers, Vice President
With a copy to: Phoenix Life Insurance Company
PHL Variable Insurance Company
One American Row
Hartford, CT 06103-2899
Attention: Jeanie Gagnon,
Second Vice President
To the Distributor: Phoenix Equity Planning Corporation
One American Row
Hartford, Connecticut 06103-2899
Attention: John H. Beers,
Vice President and Secretary
To the Trust: Franklin Templeton Variable Insurance
Products Trust
One Franklin Parkway, Bldg. 920 2nd Floor
San Mateo, California 94403
Attention: Karen L. Skidmore, Vice President
To the Underwriter: Franklin/Templeton Distributors, Inc.
140 Fountain Parkway, 8th Floor
St. Petersburg, FL 33716
Attention: Peter Jones, President
If to the Trust or Underwriter
With a copy to: Franklin Templeton Investments
One Franklin Parkway, Bldg. 920 2nd Floor
San Mateo, California 94403
Attention: General Counsel
|
Exhibit 26(k)
Opinion and Consent of Kathleen A. McGah, Esq., Vice president and Counsel
December 20, 2007
VIA EDGAR
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
RE: Phoenix Life Insurance Company
Phoenix Life Variable Universal Life Account - Phoenix Benefit Choice
VUL(SM)
Pre-effective Amendment No. 1 to the Initial Registration Statement on
Form N-6
File Nos. 333-146301 and 811-04721
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of this Pre-effective Amendment No. 1 to Registration Statement No. 333-146301 ("Pre-effective Amendment No. 1") on Form N-6 under the Securities Act of 1933 for Phoenix Life Insurance Company's variable universal life contract ("Policy"). Phoenix Life Variable Universal Life Account issues the Policy.
As an attorney for Phoenix Life Insurance Company ("PLIC"), I provide legal advice to PLIC in connection with the operation of its variable products. In this role I am familiar with Pre-effective Amendment No. 1 for the Policy. I have made an examination of the law and the documents as in my judgment are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. PLIC is a valid corporation, organized and operated under the laws of the State of New York and is subject to regulation by the New York Commissioner of Insurance.
2. Phoenix Life Variable Universal Life Account is a separate account validly established and maintained by PLIC in accordance with New York law.
3. The Policy, when properly issued, is a legal and binding obligation of PLIC, enforceable in accordance with its terms and applicable state and federal law.
I hereby consent to the use of this opinion as an exhibit to Pre-Effective Amendment No. 1.
Very truly yours,
/s/ Kathleen A. McGah --------------------- Kathleen A. McGah Vice President and Counsel Phoenix Life Insurance Company One American Row Hartford, CT 06102-5056 phone: (806) 403-6625 |
Exhibit 26(n)(1)
Consent of Independent Registered Public Accounting Firm
We hereby consent to the use in this Pre-Effective Amendment No. 1 under the Securities Act of 1933 and Amendment No. 36 under the Investment Company Act of 1940 to the registration statement on Form N-6 ("Registration Statement") of our reports each dated March 23, 2007, relating to the financial statements of Phoenix Life Variable Universal Life Account and the consolidated financial statements of Phoenix Life Insurance Company, respectively, which appear in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP Hartford, Connecticut December 20, 2007 |
Exhibit 26(n)(2)(b)
Power of Attorney for David R. Pellerin,
Chief Accounting Officer
POWER OF ATTORNEY
File Number 333-146301; 811-04721
Phoenix Benefit Choice VUL
The undersigned, being the Chief Accounting Officer of PHOENIX LIFE INSURANCE COMPANY, does hereby constitute and appoint each of Tracy L. Rich, John H. Beers and Kathleen A. McGah as his true and lawful attorneys and agents, and each of them, with full power to act without the others, is hereby authorized, empowered and directed to take all action necessary, on behalf of Phoenix Life Insurance Company, in the capacity indicated above, in order to comply with the Securities Act of 1933, the Investment Company Act of 1940 and any other applicable federal laws, including the filing of a registration statement, any amendments to the registration statement and undertakings, any applications for exemptions from the Investment Company Act of 1940 relating to securities sold by Phoenix Life Insurance Company or any of its separate accounts, and any or all amendments to the foregoing as such attorneys and agents shall deem necessary or appropriate. The undersigned hereby ratifies and confirms his respective signature as it may be signed by said attorneys and agents. This instrument shall not be affected by my subsequent disability or incompetence.
I hereby declare that a photostatic, xerographic or similar copy of this original instrument shall be as effective as the original thereof.
I hereby further revoke any and all powers of attorney previously given by me with respect to said registration statement, provided that this revocation shall not affect the exercise of such power prior to the date hereof.
This power of attorney shall remain in full force and effect until the undersigned is no longer an officer of Phoenix Life Insurance Company, unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has duly executed this power of attorney on the 19th day of December, 2007.
/s/ David R. Pellerin
-------------------------------
David R. Pellerin
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Exhibit 26(n)(2)(c)
Power of Attorney for Peter A. Hofmann,
Chief Financial Officer
POWER OF ATTORNEY
File Number 333-146301; 811-04721
Phoenix Benefit Choice VUL
The undersigned, being the Chief Financial Officer of PHOENIX LIFE INSURANCE COMPANY, does hereby constitute and appoint each of Tracy L. Rich, John H. Beers and Kathleen A. McGah as his true and lawful attorneys and agents, and each of them, with full power to act without the others, is hereby authorized, empowered and directed to take all action necessary, on behalf of Phoenix Life Insurance Company, in the capacity indicated above, in order to comply with the Securities Act of 1933, the Investment Company Act of 1940 and any other applicable federal laws, including the filing of a registration statement, any amendments to the registration statement and undertakings, any applications for exemptions from the Investment Company Act of 1940 relating to securities sold by Phoenix Life Insurance Company or any of its separate accounts, and any or all amendments to the foregoing as such attorneys and agents shall deem necessary or appropriate. The undersigned hereby ratifies and confirms his respective signature as it may be signed by said attorneys and agents. This instrument shall not be affected by my subsequent disability or incompetence.
I hereby declare that a photostatic, xerographic or similar copy of this original instrument shall be as effective as the original thereof.
I hereby further revoke any and all powers of attorney previously given by me with respect to said registration statement, provided that this revocation shall not affect the exercise of such power prior to the date hereof.
This power of attorney shall remain in full force and effect until the undersigned is no longer an officer of Phoenix Life Insurance Company, unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned has duly executed this power of attorney on the 19th day of December, 2007.
/s/ Peter A. Hofmann
-----------------------------------
Peter A. Hofmann
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