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DUFF & PHELPS: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY CLAIMS PAYING ABILITY RATED 'AA'

 CHICAGO, June 24 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a claims paying ability rating of `AA' (Double-A) to Phoenix Home Life Mutual Insurance Company. The company's rating is supported by:(1) a reasonable capital position relative to its insurance and investment risks; (2) solid profitability before policyholder dividends which has been fostered by sound underwriting disciplines and demonstrated capabilities in product innovation; (3) strong market positions in individual and group insurance; (4) ample liquidity relative to liability withdrawal characteristics; and (5) cost reduction benefits resulting from the integration of product, administration and distribution strategies of Phoenix Mutual Life Insurance Company and Home Life Insurance Company. (Phoenix Mutual Life Insurance Company and Home Life Insurance Company were merged into the single entity of Phoenix Home Life Mutual Insurance Company on July 1, 1992.) These strengths are balanced against the generally poor economic conditions in various real estate markets and their effect on the company's mortgage and real estate investment returns and ultimately the company's earnings.
 Phoenix Home Life's year end 1992 admitted assets totaled approximately $10.4 billion, and adjusted surplus was $717 million. Operating leverage (adjusted liabilities to adjusted surplus) was about 11.2 times, a reasonable level when considering the company's product and investment mix. Phoenix Home Life's reserves and deposit fund liabilities are most heavily represented by traditional life products and separate account liabilities. This liability structure affords favorable withdrawal characteristics relative to the company's liquidity. Phoenix Home Life's proforma return on adjusted surplus was 2.3 percent during 1992, a level which we consider to be adequate given the strong level of dividends being supported and the merger expenses absorbed during the year.
 Analysis of Phoenix Home Life demonstrates that the efficiencies and financial results that the companies anticipated upon merging are not only being achieved, but are being achieved on the schedule announced at the time of the merger. The merger of Phoenix Mutual and Home Life is allowing meaningful expense savings compared with pre-merger expense levels of the combined companies. Strong early indication is that the merger is leading to a more effective combined distribution system and higher quality administrative and policyholder services. These benefits are expected to allow Phoenix Home Life to become a stronger distributor and to become more cost competitive. The company has entered into an agreement to sell the Home Life group operation and is expanding its third party money management operations, which should lead to increased fee-based earnings.
 The asset quality of both Phoenix Mutual and Home Life has been affected in recent years by poor economic conditions in real estate markets across the country. As of year end 1992, Phoenix Home Life Mutual Insurance Company's invested assets were divided: 40 percent- bonds; 32 percent-mortgages and real estate; 17 percent-policy loans; 3 percent-cash and short-term investments; 3 percent-unaffiliated common and preferred stocks and an additional 3 percent in affiliated investments; and 2 percent-other. The company's exposure to mortgage and real estate investments is above industry average but the proportion of mortgage loans which are underperforming was close to industry norms at year end 1992. The company also has about 8 percent of its bond portfolio in below investment grade securities. This was in line with average industry exposure at the end of 1992. About three-fourths of these less than investment grade securities are private placements with better security and covenant protection than public securities.
 -0- 6/24/93
 /CONTACT: Kevin A. Ceurvorst, CFA of Duff & Phelps Credit Rating Co., 312-368-3144/


CO: Phoenix Home Life Mutual Insurance Company ST: IN: INS SU: RTG

MP -- NY048 -- 5325 06/24/93 12:44 EDT
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Publication:PR Newswire
Date:Jun 24, 1993
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