TEXT-S&P puts Phoenix Cos ratings on watch negative

Overview
-- The Phoenix Cos. Inc. (PNX) has breached a reporting covenant
for its $253 million senior debt which, unless remedied, could lead to a
potential acceleration of principal payments.
-- As a result, we are placing our ratings on PNX, its subsidiaries, and
debt issues on CreditWatch with negative implications.
-- We may lower our ratings on PNX if it is increasingly unlikely that
the company will remedy the breach of a reporting covenant or if an event of
default is imminent

Rating Action
On Dec. 7, 2012, Standard & Poor's Rating Services affirmed its ratings on The
Phoenix Cos. Inc. (PNX), its subsidiaries, and debt issues and then placed
them on CreditWatch with negative implications.

Rationale
The CreditWatch listing reflects the risks associated with a potential
acceleration of principal on PNX's 7.45% quarterly interest bonds due 2032
because of a breach of a covenant. The covenant requires the company to
provide its filed financial statements to the trustee within 15 days of the
SEC filing deadline. PNX is currently restating its financial statements and
was unable to fulfill this requirement for the third-quarter 2012. Failure to
remedy the breach of covenant within 60 days of notice from the trustee would
constitute an event of default and would allow the holders of not less than
25% in aggregate principal amount of the outstanding bonds to declare the
principal amount of all of the bonds to be due and payable immediately. While
PNX has announced that the company will seek a covenant waiver, the
CreditWatch listing reflects the potential liquidity and capital strain if
acceleration of the $253 million of outstanding principal were declared in an
event of default.

We believe PNX has $124 million in liquid resources at the holding company,
while its regulated insurance operating subsidiaries have remaining regular
dividend capacity of $18 million for 2012 and by our estimates $80 million-$90
million of regular dividend capacity in 2013, falling short of the $253
million principal outstanding. PNX will need to seek alternative financing to
make up the potential shortfall and this may have potentially adverse impacts
on its operating company capitalization. We believe Phoenix Life Insurance
Co.'s company action level risk-based capital ratio would remain above 300%,
notwithstanding the potential draw on the operating company's capital, but its
capital adequacy would be diminished from its current level, in our view.

CreditWatch
If PNX remedies the breach of covenant or obtains a covenant waiver, we would
expect to affirm all of our ratings at the current levels. On the other hand,
we may lower the ratings by a notch if we observe that it is increasingly
unlikely that PNX will remedy the breach of covenant or obtain a covenant
waiver. If an event of default occurs and an acceleration of principal becomes
imminent, we would expect to review the ratings for further downgrades.

Related Criteria And Research
Criteria for Assigning 'CCC+', 'CCC', 'CCC-', and 'CC' Ratings, Oct. 1, 2012

Ratings List
Ratings Affirmed; Ratings Placed On CreditWatch
To From
Phoenix Cos. Inc.
Counterparty Credit Rating
Local Currency B-/Watch Neg/-- B-/Stable/--

PHL Variable Insurance Co.
Phoenix Life Insurance Co.
Counterparty Credit Rating
Local Currency BB-/Watch Neg/-- BB-/Stable/--
Financial Strength Rating
Local Currency BB-/Watch Neg/-- BB-/Stable/--

Phoenix Cos. Inc.
Senior Unsecured B-/Watch Neg B-

Phoenix Life Insurance Co.
Subordinated B/Watch Neg B

Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.