Why might PHL Variable Insurance Co. be liquidated?

Regulators believe PHL Variable Insurance Co. is in worse financial condition than previously thought, making rehabilitation infeasible and liquidation the likely next step.

Are regulators suing Golden Gate Capital over PHL?

State regulators may sue Golden Gate Capital and Nassau Financial Group for breach of fiduciary duty if a settlement isn't reached.

What happens to PHL policyholders if the company is liquidated?

Policyholders might receive less from liquidation than through rehabilitation, though state guaranty associations offer capped benefits.

Home / Business and Economy / Insurance Giant Faces Liquidation Over "Worse Than Thought" Finances

Insurance Giant Faces Liquidation Over "Worse Than Thought" Finances

3 Jan

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Summary

State regulators may liquidate PHL Variable Insurance Co. instead of rehabilitation.
Regulators threaten lawsuits against Golden Gate Capital and Nassau Financial Group.
PHL's financial problems are worse than previously estimated, regulators claim.

Insurance Giant Faces Liquidation Over "Worse Than Thought" Finances

Connecticut state regulators have abandoned plans to rehabilitate PHL Variable Insurance Co., now considering liquidation due to the insurer's significantly deteriorated financial condition, which is worse than previously understood. The interim head of Connecticut's insurance department, Joshua Hershman, stated in a court filing on New Year's Eve that rehabilitation is no longer feasible as PHL lacks sufficient assets for a strategy that would benefit policyholders more than liquidation.

Regulators also indicated potential lawsuits against Golden Gate Capital and its insurance arm, Nassau Financial Group, for alleged breach of fiduciary duty if a settlement isn't reached, although Nassau disputes these accusations. PHL, acquired by Golden Gate a decade ago, is now seen as a cautionary tale, with authorities citing underperforming investments and failed captive reinsurance deals as contributing factors to a substantial shortfall, estimated at $2.2 billion last year.