PHL Variable liquidation pushed out to 2027, Connecticut regulators say

The liquidation of PHL Variable Insurance Co. will not happen until next year at the earliest, Connecticut Insurance Commissioner Josh Hershman said in a status update filed Tuesday.

State insurance guaranty associations are preparing to seek bids from insurers willing to assume portions of the troubled company's business, Hershman explained, a process that will take months. The court-appointed rehabilitator for PHL, Hershman had maintained that a liquidation order would be entered by the end of 2026.

The National Organization of Life and Health Insurance Guaranty Associations is handling the request for proposals to take PHL business, the report said.

The organization "anticipates that its RFP process will commence in the third quarter of 2026," he wrote. "After the RFP process commences, the timing of critical next steps will vary depending on the proposals that are received."

Connecticut regulators placed PHL Variable into rehabilitation in May 2024 due to hazardous financial conditions, attaching a moratorium on benefits and premiums. In December, a judge approved changes to the moratorium that could reduce universal life death benefits owed by up to $4.1 billion.

Bumpy road to liquidation

Regulators tried for months to rehabilitate PHL, before abruptly pivoting to a liquidation plan announced in the rehabilitator's year-end 2025 filing.

Hershman remains confident that insurers are interested in assuming some of PHL's guaranteed insurance and annuity obligations.

The rehabilitator said the bidding process also could include proposals that provide policyholders with benefits above state guaranty association coverage limits, funded by assets remaining in the receivership estate. Any enhanced benefits would depend on factors including the proposals received, available estate assets, applicable guaranty association coverage and court approval.

"The shared goal is to protect policyholders as provided for under receivership and guaranty association statutes while maximizing the value of the estate assets," the report said.

The report also provided an update on policyholder elections under a court-approved modification of the rehabilitation moratorium. Universal life and fixed indexed annuity holders were given options to receive fixed amounts under their policies.

According to the filing, nearly all eligible policyholders and annuity contract holders have received election packages outlining available modification options. About 350 customized election packages remain outstanding for certain universal life policyholders who own multiple policies or annuity contracts covering the same insured. Those mailings are expected to be completed in July, Hershman reported.

As of June 23, about 40% of eligible policyholders and annuity holders had submitted elections selecting one of the available modification options.

PHL's administrative service provider has processed approximately 80% of the fixed indexed annuity election forms received and about 60% of universal life election forms, the report said, with processing continuing within the timeframes outlined in the election materials.

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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.