A.M. Best Affirms Ratings of The Phoenix Companies, Inc.; Revises Outlook to Stable.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) for the key life insurance entities of The Phoenix Companies, Inc. (Phoenix) (NYSE: PNX) (Hartford, CT). A.M. Best has also affirmed and assigned issuer credit ratings (ICR) of "a" to the same entities. Additionally, A.M. Best has affirmed the ICR of "bbb" of Phoenix, as well as the debt ratings for all outstanding debt securities of Phoenix and Phoenix Life Insurance Company (Hartford, CT), the group's lead operating company.

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and has assigned an ICR of "a-" to American Phoenix Life and Reassurance Company (Hartford, CT), reflecting the company's non-core status and the run-off nature of its operations. The outlook for all ratings has been revised to stable from negative. (See link below for a detailed list of ratings.)

The revised outlook reflects Phoenix's strong market position in the high net worth individual insurance market, improving operating fundamentals within its life insurance and annuity segment, strong product risk management discipline and improved risk-based capital position. Additionally, A.M. Best views positively the substantial growth in life sales experienced in 2005, as well as its significantly improved expense profile. The company's exposure to earnings volatility has also been somewhat mitigated through the sale of 75% of its venture capital investments and the subsequent elimination of its venture capital reporting segment.

Year-end financial leverage of roughly 27% is moderate and interest coverage of approximately four times is weak relative to similarly-rated peers. Although these measures are currently within acceptable limits for Phoenix's ratings, A.M. Best expects leverage to trend down and coverage to improve in the near to medium term.

In the near to medium term, A.M. Best expects Phoenix to be challenged to build scale in variable life, generate sales momentum in variable annuities and improve overall operating returns to levels commensurate with its peers. Phoenix is further challenged to realize earnings growth and positive net fund flows from an asset management business, which has experienced material declines in assets under management over each of the last two calendar years.

While A.M. Best believes that the performance of the asset management business has limited direct impact on the marketing efforts of Phoenix's life operations, continued sub-par operating returns by the asset management business leaves the life operations as the primary supporter of the holding company's financial obligations.

For a complete listing of The Phoenix Companies, Inc.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/022702phoenix.pdf.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.