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PHOENIX HOME LIFE RATED BY AGENCIES

 PHOENIX HOME LIFE RATED BY AGENCIES
 HARTFORD, Conn., July 1 /PRNewswire/ -- Today in a letter to


employees, Phoenix Home Life responded to rating announcements by Standard & Poor's, Moody's and A.M. Best. John Gummere, chairman and chief executive officer said:
 "The merger of The Phoenix and Home Life will create a larger, stronger mutual life insurance company that will be better able to serve its policyholders and better positioned to compete in the future.
 "As we proceeded with the merger, we recognized the possibility that we might experience a minor and temporary drop in our rating. We recognized the fact that the rating agencies seemed to be engaged in a general process of downgrading the entire industry. We also recognized that, when a merger occurs, the rating of the combined company is likely to fall somewhere between the ratings of the two original companies.
 "Today's rating announcement by Standard & Poor's confirmed our judgment. Standard and Poor's has assigned Phoenix Home Life a rating of AA-. The rating agency says that companies with that rating have "a very strong capacity to honor insurance contracts.
 "A.M. Best's rating released earlier this week also confirmed our judgment. Best's has assigned Phoenix Home Life a rating of A+.
 "We are pleased that Standard & Poor's confirmed our substantial progress by reducing our rating only one level. However, in spite of all these positive factors, Moody's Investor Service Inc. today announced that it had given Phoenix Home Life an A1 rating. We believe this downgrade is totally unwarranted given the financial strength of both The Phoenix and Home Life and the significant efficiencies already achieved as the two companies prepare to merge. It is apparent they have given little credit to the substantial expense savings.
 "When our proposed merger was first announced, the rating agencies expressed serious reservations about our ability to even produce a merger agreement. The agencies also expressed doubts over whether we could produce the expense savings we claimed in our discussions with them.
 Here is what actually has happened:
 -- We have produced a merger agreement and the merger
 integration process is at least eight, and possibly as
 much as 12 months, ahead of schedule.
 -- Expense savings have already begun and have been even
 larger than anticipated. For example, by combining
 data processing operations in one location, the
 companies have already achieved savings of $10 million
 a year.
 -- Our earnings from both group insurance operations are
 ahead of plan for the year. Sales and earnings from
 mutual fund operations are far ahead of plan.
 -- None of the occurrences predicted by naysayers --
 accelerated attrition, deterioration in the quality of
 service, a loss of key sales personnel -- has occurred.
 "All mutual life insurance companies have been forced to cut dividends because of declining interest rates, investment losses and the DAC tax. But in choosing to merge, The Phoenix and Home Life have chosen a strategy to offset these decreases with annual expense savings of $70 million. This will provide added capital and added value to our policyholders and will, over time, allow us not only to exceed our previous rating, but to have one of the highest ratings among life insurers."
 -0- 7/1/92
 /CONTACT: Jo-Anne Leventhal of Phoenix Home Life, 203-275-5359/ CO: Phoenix Home Life ST: Connecticut IN: INS SU: RTG


PS -- NY115 -- 5924 07/01/92 17:21 EDT
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Publication:PR Newswire
Date:Jul 1, 1992
Words:558
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