CT commissioner: 70% of policyholders covered in PHL liquidation plan

Interim Connecticut Insurance Commissioner Joshua Hershman estimates that about 70% of PHL Variable Insurance Co. policyholders will be fully covered by state guaranty associations.

The liquidation of the financial troubled PHL is expected by the end of 2026, Hershman added in a rehabilitator’s report filed Tuesday.

“Ideally, the centerpiece of a liquidation will be a liquidation plan that is built around a transaction in which a third party takes over the operations of PHL, assumes policies on a modified basis and acquires the assets of the Companies,” Hershman wrote.

The National Organization of Life and Health Guaranty Associations agreed to “solicit proposals for the assumption of the guaranteed portion of the PHL business,” he added, which could include a potential buyer that previously expressed interest.

“These efforts are at an early stage,” Hershman wrote.

Large policyholders still unhappy

Meanwhile, over-the-cap policyholders, mainly investors entitled to death benefits in excess of $300,000, await a ruling from State Superior Court Judge Daniel J. Klau on motions to intervene in the case.

A group of over-the-cap policyholders filed a motion last month to obtain “relief” allowing the group to pursue “certain claims against Nassau Financial Group (and related subsidiaries), Golden Gate Capital and others … for looting PHL at the expense of the” policyholders.

Klau has remained silent on the latest intervenor motions but previously denied similar requests.

“For policyholders who have policies with benefits in excess of guaranty association limits [generally $300,000], the Rehabilitator continues to believe that a transaction that will provide coverage in excess of the guaranty association limits is in the best interests of policy and annuity holders,” Hershman wrote.

Nassau Financial Group (then Nassau Re) acquired PHL Variable as part of a 2016 purchase of The Phoenix Companies for $217.2 million. PHL steadily deteriorated financially and Klau approved rehabilitation for the insurer in May 2024.

As of the end of 2025, there are about 8,000 active universal life insurance policies, with about 3,200 having death benefits greater than the applicable state guaranty association limits, Hershman previously reported.

Of those, 343 of the active over-the-cap UL policies “appear to be owned by institutional investors,” Hershman has said, which represents 26% of the total outstanding death benefits on the policies.

Information session planned

Also Tuesday, the Connecticut Insurance Department announced that it will host a virtual information session at 10:30 a.m. April 13 for PHL policy and annuity holders “to provide updates and important information.” The one-hour session will address questions submitted in advance and offer “clear, timely guidance on what policy and annuity holders can expect moving forward,” CID said in a news release.

Policyholders can submit questions in advance by emailing [email protected]. CID will accept questions up until 5 p.m. on Thursday, April 9.

“This has been a difficult and uncertain time for many policyholders,” Hershman said. “We are committed to providing clear, timely information and helping policyholders understand what this process means for them and what to expect at each step.”

Following the session, a recording will be made available on the CID website, the release said.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.