A life insurer says it will reduce the amount of dividents it expects to pay holders of participating life insurance policies in 2009.

Phoenix Companies Inc., Hartford, says the board of its Phoenix Life Insurance Company unit plans to have the company pay about $337 million in dividends to the policyholders in 2009, down from a $340 million payout for the currrent year.

“The adjustments will result in a dividend reduction for most of the life insurance policies in the closed block of business, as well as the open block,” the company says.

Phoenix set up the closed block when the company demutualized in June of 2001.

The closed block dividend scale was last adjusted in 2006, Phoenix says.

The closed block has benefited from favorable mortality experience and strong persistency, but it has been hurt by the low interest rate environment, according to Phoenix Chairman Dona Young.

Phoenix also has a small open block of participating life policies.

The dividend scale for those policies is managed separately from the closed block and was adjusted in 2002 and earlier this year, the company says.