1031223--3/23/2010--PHL_VARIABLE_INSURANCE_CO

related topics

{loss, insurance, financial}

{condition, economic, financial}

{capital, credit, financial}

{regulation, change, law}

{financial, litigation, operation}

{operation, natural, condition}

{personnel, key, retain}

{loan, real, estate}

{control, financial, internal}

{competitive, industry, competition}

{acquisition, growth, future}

{cost, regulation, environmental}

{cost, operation, labor}

Our business, financial condition, and results of operations have been, and are expected to continue to be, materially and adversely affected by unfavorable general economic developments, as well as by specific related factors such as the performance of the debt and equity markets and changes in interest rates. Interest rate fluctuations could adversely affect our business and results of operations. Continuing adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, our access to capital and our cost of capital. Our valuation of fixed maturity, equity and trading securities may include methodologies, estimations and assumptions that are subject to differing interpretations and could result in changes to investment valuations that may materially adversely affect our results of operations and financial condition. Guaranteed benefits within our products that protect policyholders against significant downturns in equity markets may decrease our earnings, increase the volatility of our results if hedging strategies prove ineffective, result in higher hedging costs and expose us to increased counterparty risk, which may have a material adverse effect on our results of operations, financial condition and liquidity. Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could adversely affect our businesses or result in losses. The amount of statutory capital that we have and the amount of statutory capital that we must hold to meet rating agency and other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control, including equity market and credit market conditions and changes in rating agency models. We may be unsuccessful in our efforts to implement a new business plan. If our reserves for future policyholder benefits and claims are inadequate, we may be required to increase our reserves, which would adversely affect our results of operations and financial condition. Downgrades of debt and financial strength ratings could increase policy surrenders and withdrawals, adversely affect relationships with distributors, reduce new sales and increase our future borrowing costs. Our results may be negatively impacted if investment returns, mortality rates, persistency rates, funding levels, expenses or other factors differ significantly from our assumptions used in pricing products. Losses due to defaults by others, including issuers of fixed income securities (which include structured securities such as commercial mortgage backed securities and residential mortgage backed securities or other high yielding bonds) could adversely affect our business, financial condition and results of operations. We may incur losses if our reinsurers are unwilling or unable to meet their obligations under reinsurance contracts. The availability, pricing and terms of reinsurance may not be sufficient to protect us against losses. We might be unable to attract or retain personnel who are key to our business. Our business operations and results could be adversely affected by inadequate performance of third-party relationships. We face strong competition in our businesses from insurance companies and other financial services firms. This competition could impair our ability to retain existing customers, attract new customers and maintain our results of operations. Changes in tax laws may decrease sales and profitability of products and increase our tax costs. Potential changes in federal and state regulation may increase our business costs and required capital levels, which could adversely affect our business, operating results, financial condition or liquidity. Regulatory actions could result in financial losses or harm to our businesses. Legal actions are inherent in our businesses and could adversely affect our results of operations or financial position or harm our businesses or reputation. Changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect our financial statements. Our internal control over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price. We are exposed to the risks of natural and man-made disasters, which may adversely affect our operations and financial condition. Changing climate conditions may adversely affect our financial condition, profitability or cash flows.

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1031223--3/23/2010--PHL_VARIABLE_INSURANCE_CO_/CT/