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Phoenix Reports 2nd Quarter Net Loss

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NU Online News Service, July 31, 2003, 5:53 p.m. EDT – Executives at the Phoenix Companies Inc., Hartford, say the rebound in the stock market should help the company’s third-quarter results.

The company is reporting a $49 million net loss for the second quarter on $542 million in revenue, compared with a $37 million net loss on $592 million in revenue for the second quarter of 2002.

Total life premiums fell to $44 million, from $56 million, and net sales of annuities fell to $176 million, from $472 million.

Investors ended the quarter with $2.2 billion of their Phoenix variable annuity assets in accounts that offered guaranteed interest rates, up from $1.5 billion a year earlier.

Annuity “earnings continued to be affected by spread compression due to the low interest rate environment during the quarter,” the company says. “Overall sales levels were affected by the lack of demand for fixed annuity products as the current credited rates approached minimum contract guarantees.”

But Phoenix points out that net annuity sales were down partly because the discontinuation of the Retirement Planners Edge annuities cost the company more than $300 million in deposits.

Deposits for other annuity products were up more than 17%, Phoenix says.

Meanwhile, rising stock prices helped Phoenix put $351 million in interest and investment earnings in the accounts of annuity holders. During the second quarter of 2002, the plummeting stock market sucked $219 million from the accounts.

The strong performance of the stock market should give the performance of the company’s asset management unit a boost in the third quarter, because the unit bases its fees partly on asset levels from the end of the prior quarter, Phoenix says.