Phoenix Companies Inc. is leading provider of wealth management products and services offered through a variety of select advisors and financial services firms to serve the accumulation preservation and transfer needs of the affluent and high net worth market businesses and institutions. The company refers to its products and services together as its wealth management solutions. The company offers a broad range of life insurance variable annuity and investment management solutions through a variety of distributors. The Phoenix Companies Inc. has a market cap of $387.3 million; its shares were traded at around $3.35 with a P/E ratio of 10.7 and P/S ratio of 0.2. Highlight of Business Operations: Fees on our life and annuity products. Fee revenues decreased by $2.6 million to $30.7 million in the third quarter of 2009, compared to $33.3 million in the third quarter of 2008. The decrease was primarily driven by lower asset-based fees of $2.0 million on our variable annuity products driven by lower account balances due to unfavorable equity markets in late 2008 and early 2009.
Mortality margins in universal life decreased by $9.0 million to $46.9 million in the third quarter of 2009, compared to $55.9 million in the third quarter of 2008, resulting from better mortality experience in the third quarter of 2008. Mortality margins in variable universal life increased by $4.2 million to $14.0 million in the third quarter of 2009, compared to $9.8 million in the third quarter of 2008, resulting from better mortality experience and no large claims in the third quarter of 2009. Fluctuations in mortality are inherent in our lines of business.
Net realized investment gains or losses on our general account investments. In the third quarter of 2009, we had net realized losses of $17.4 million, compared to net realized losses of $59.7 million in the third quarter of 2008. The realized losses in the third quarter of 2009 were primarily driven by other-than-temporary impairment losses of $14.9 million. The realized losses in the third quarter of 2008 were driven by other-than-temporary impairment losses of $38.8 million and transaction-related losses of $20.9 million.
Operating expenses. Non-deferred operating expenses increased by $31.3 million to $91.3 million in the third quarter of 2009, compared to $60.0 million in the third quarter of 2008. The increase was primarily driven by higher non-deferred sales related costs of $10.4 million due to lower sales volume and higher severance costs of $2.3 million associated with the recently completed workforce reduction resulting from the lower expected business volume in 2009.
We carried valuation allowances of $236.4 million and $287.9 million on $432.0 million and $744.6 million of deferred tax assets at September 30, 2009 and December 31, 2008, respectively, due to uncertainties related to our ability to utilize a portion of our deferred tax assets. The amount of the valuation allowance has been determined based on our estimates of taxable income over the periods in which the deferred tax assets will be recoverable, including consideration of the expiration dates and amounts of carryforwards related to net operating losses, capital losses, foreign tax credits and general business tax credits.
During the third quarter of 2009, significant appreciation of available-for-sale securities resulted in a decrease in unrealized losses. We consider securities with unrealized gains available to offset deferred tax assets related to other-than-temporary-impairments and capital loss carryforwards. As a result of our quarterly assessment, and considering the change in fact pattern related to capital items, we recorded a decrease in the valuation allowance (tax benefit) of $63.3 million for the three months ended September 30, 2009, excluding the Virtus true-up mentioned above. For the nine months ended September 30, 2009, we recorded an increase in the valuation allowance (tax expense) of $95.1 million, excluding both the third quarter Virtus item and the adoption of new guidance as of January 1, 2009, which resulted in a reduction in the valuation allowance of $12.6 million and is included in accumulated other comprehensive loss (see Note 2 to our consolidated financial statements in this Form 10-Q). This increase in the valuation allowance is recognized through elements of continuing operations and other comprehensive income. For the nine months ended September 30, 2009, we reported an increase of $150.4 million to the deferred tax valuation allowance. Offsetting this increase, we have recognized a decrease of $55.3 million through other comprehensive income. We expect to maintain valuation allowances on future tax benefits until other positive evidence is sufficient to justify realization.
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