Pacific Life Insurance Company Announces Offer to Purchase Up to $250,000,000 Principal Amount of Outstanding Surplus Notes

Pacific Life Insurance Company (“Pacific Life”) today announced the commencement of a cash tender offer to purchase up to $250,000,000 (subject to increase, the “Tender Cap”) aggregate principal amount of Pacific Life’s 9.25% Surplus Notes due 2039 (the “Notes”), at a purchase price determined based on the yield to maturity of a U.S. Treasury reference security specified in the table below plus a spread determined in accordance with the procedures of a modified “Dutch Auction” (the “Offer”).

(1) Per $1,000 principal amount of Notes accepted for purchase.
(2) The Clearing Spread (defined below) within the Acceptable Bid Spread Range (defined below) will be used to calculate the Full Tender Offer Consideration (defined below), which includes the Early Tender Payment (defined below).

The Offer will expire at 11:59 p.m., New York City time, on January 30, 2013, unless extended or earlier terminated by Pacific Life (such date and time, as the same may be extended or earlier terminated, the “Expiration Time”). Holders must validly tender and not properly withdraw their Notes at or prior to 5:00 p.m., New York City time, on January 15, 2013, unless extended by Pacific Life (such date and time, the “Early Tender Time”) in order to be eligible to receive the Full Tender Offer Consideration, which includes an early tender payment of $50 per $1,000 principal amount of Notes (the “Early Tender Payment”). Holders that validly tender their Notes after the Early Tender Time and at or prior to the Expiration Time will not be eligible to receive the Early Tender Payment and will only be eligible to receive the Late Tender Offer Consideration (defined below). Notes validly tendered may be withdrawn at any time on or prior to 5:00 p.m., New York City time, on January 15, 2013, unless extended by Pacific Life (such date and time, as the same may be extended, the “Withdrawal Deadline”), but not thereafter. The Depositary Trust Company and any broker, dealer, commercial bank, trust company or other nominee that holds the Notes may have earlier deadlines for tendering Notes pursuant to the Offer than the Early Tender Time or the Expiration Time.

The terms and conditions of the Offer are described in the offer to purchase dated January 2, 2013 (the “Offer to Purchase”) and the related letter of transmittal (the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer Documents”).

The Offer is subject to the satisfaction or waiver of certain conditions, including a financing condition and a minimum tender condition, specified in the Offer to Purchase.

Under these conditions and as more fully described in the Offer to Purchase, Pacific Life expressly reserves its right, but is not obligated, to extend the Offer at any time and may amend or terminate the Offer if, before such time as any Notes have been accepted for payment pursuant to the Offer, any condition of the Offer is not satisfied or, where applicable, waived.

Holders that validly tender and do not properly withdraw their Notes at or prior to the Early Tender Time will be eligible to receive the Full Tender Offer Consideration. Holders that validly tender their Notes after the Early Tender Time and at or prior to the Expiration Time will only be eligible to receive the “Late Tender Offer Consideration,” which is equal to the Full Tender Offer Consideration minus the Early Tender Payment. In each case, Holders that validly tender Notes that are accepted for purchase by Pacific Life will receive accrued and unpaid interest from, and including, the last interest payment date for their tendered Notes to, but not including, the settlement date for such Notes, in each case rounded to the nearest cent (“Accrued Interest”).

The “Full Tender Offer Consideration” payable for the Notes will be a price per $1,000 principal amount of the Notes equal to an amount that would reflect, as of the date of purchase, a yield to the maturity date of the Notes (which is June 15, 2039) equal to the sum of (i) the yield to maturity of the U.S. Treasury reference security listed in the table above (the “UST Reference Security”) for the Notes (the “Reference Yield”), plus (ii) a spread (the “Clearing Spread”) that is not less than the minimum spread (the “Minimum Spread”) or greater than the maximum spread (the “Maximum Spread”) listed in the table above, as determined in accordance with the modified “Dutch Auction” procedures set forth below with respect to Notes validly tendered at or prior to the Early Tender Time. In addition, determination of the Clearing Spread is subject to the Price Cap (as defined below), pursuant to which the Full Tender Offer Consideration may not exceed $1,500 per $1,000 principal amount of Notes tendered. See Schedule A to the Offer to Purchase for the formula to be used in determining the Full Tender Offer Consideration for the Notes. Any Notes validly tendered after the Early Tender Time and at or prior to the Expiration Time will be deemed to have been tendered with a Bid Spread (defined below) equal to the Clearing Spread, regardless of the Bid Spread set forth in the Letter of Transmittal or the Agent’s Message, as applicable. Acceptance of tendered Notes will be subject to rejection of tenders made at a Bid Spread below the Clearing Spread and may be subject to proration.

The Offer is being conducted as a modified “Dutch Auction” until the Early Tender Time. This means that if you elect to participate in the Offer at or prior to the Early Tender Time, you must specify the maximum spread (a “Bid Spread”) in excess of the Reference Yield that you would be willing to accept as the basis for determining the Full Tender Offer Consideration payable in exchange for each $1,000 principal amount of Notes you choose to tender in the Offer that is not less than the Minimum Spread or greater than the Maximum Spread for the Notes as set forth in the table above (the “Acceptable Bid Spread Range”). The Bid Spread that is specified for each $1,000 principal amount of Notes must be in increments of 2.5 basis points. If any Bid Spread is not submitted as a number of whole or half basis points that is in increments of 2.5 basis points, such Bid Spread will be rounded up to the nearest 2.5 basis point increment. The aggregate principal amount of Notes tendered at a particular Bid Spread must be in an authorized denomination.

Each Holder tendering Notes in the Offer at or prior to the Early Tender Time is required to specify a Bid Spread; however, Holders who tender Notes at or prior to the Early Tender Time without specifying a Bid Spread will be deemed to have specified the Maximum Spread as their Bid Spread. Tenders of Notes at or prior to the Early Tender Time at Bid Spreads outside of the Acceptable Bid Spread Range as described above will not be accepted and will not be used for purposes of calculating the Clearing Spread.

The “Clearing Spread” for the Notes will be determined by consideration of the Bid Spreads of all validly tendered Notes at or prior to the Early Tender Time, in order of highest to lowest Bid Spreads (i.e., lowest Note price to highest Note price) such that the resulting Full Tender Offer Consideration does not exceed $1,500 per $1,000 principal amount of Notes tendered (the “Price Cap”). See Schedule A to the Offer to Purchase for the formula to be used in determining the Full Tender Offer Consideration for the Notes. Pursuant to this procedure, the Clearing Spread for the Notes will be (1) in the event that the aggregate principal amount of all Notes validly tendered at or prior to the Early Tender Time is greater than the Tender Cap, the highest Bid Spread such that for all tenders of Notes at or prior to the Early Tender Time we will be able to purchase the maximum aggregate principal amount of Notes that does not exceed the Tender Cap and at a price that does not exceed the Price Cap, taking into account prorationing as described below, or (2) in the event that the aggregate principal amount of all Notes validly tendered at or prior to the Early Tender Time is less than or equal to the Tender Cap, the lowest Bid Spread with respect to any Note validly tendered at or prior to the Early Tender Time that does not result in Full Tender Offer Consideration that exceeds the Price Cap.

If you elect to participate in the Offer after the Early Tender Time, any Notes validly tendered after the Early Tender Time and at or prior to the Expiration Time will be deemed to have been tendered with a Bid Spread equal to the Clearing Spread, regardless of the Bid Spread set forth in the Letter of Transmittal or the Agent’s Message, as applicable, and you will only be eligible to receive the Late Tender Offer Consideration and will not be eligible to receive the Early Tender Payment. Tenders of Notes after the Early Tender Time (regardless of the Bid Spread set forth in the Letter of Transmittal or the Agent’s Message, as applicable) will not be used for purposes of calculating the Clearing Spread as described above.

If the Tender Cap is reached in respect of tenders made at or prior to the Early Tender Time, Notes validly tendered at or prior to the Early Tender Time with a Bid Spread equal to the Clearing Spread will be subject to acceptance on a prorated basis. If the Tender Cap is not reached in respect of tenders made at or prior to the Early Tender Time, but is reached in respect of tenders made at or prior to the Expiration Time, Notes validly tendered after the Early Tender Time and at or prior to the Expiration Time will be subject to acceptance on a prorated basis. If any Notes are purchased in the Offer, Notes tendered with a Bid Spread equal to or greater than the Clearing Spread at or prior to the Early Tender Time will be accepted for purchase in priority to other Notes tendered in the Offer after the Early Tender Time. Accordingly, if the Tender Cap is reached in respect of tenders made at or prior to the Early Tender Time, no Notes that are tendered after the Early Tender Time will be accepted for purchase.

Pacific Life may, but it is not obligated, to elect following the Early Tender Time and prior to the Expiration Time to accept the Notes validly tendered at or prior to the Early Tender Time provided that all conditions to the Offer, including the financing condition and the minimum tender condition, have been satisfied or waived by Pacific Life. Pacific Life may then settle such Notes at such time or promptly thereafter (such date of settlement, the “Early Settlement Date”). The “Final Settlement Date” is the date that Pacific Life settles all Notes accepted for purchase and not previously settled on the Early Settlement Date, if any, and Pacific Life expects such date to be one business day following the Expiration Time. Pacific Life refers to each of the Early Settlement Date and the Final Settlement Date as a “Settlement Date.”

Capitalized terms used in this press release and not defined herein have the meanings given to them in the Offer to Purchase.