Hartford Business Journal

24 HARTFORDBUSINESS.COM | NOVEMBER 3, 2025 Connecticut Insurance Commissioner Andrew N. Mais placed PHL Variable Insurance Co. into rehabilitation in May 2024, citing the company's "hazardous financial condition." Photo | Shahrzad Rasekh/CT Mirror Capital Collapse CT's first insurer failure in a decade puts policyholders at risk, raises questions about reinsurance deals known as Nassau Financial Group and based in Hartford — divested itself of PHL ownership, transferring the company to Golden Gate Capital while retaining complete operational control. PHL and Nassau became sister compa- nies under Golden Gate's umbrella, but their assets were separated. Mais, the insurance commissioner, placed PHL under administrative supervision on March 31, 2023, citing concerns about the company's deterio- rating financial condition and its ability to remedy the problem. 'Better treatment' The rehabilitation proceeding has been underway since May 2024. Jane Callanan, general counsel for the Connecticut Insurance Department, said the process aims to maximize the value of PHL's assets and ensure all policyholders are treated fairly. Options include transferring policies to a stronger insurance company or offering PHL customers choices among policy modifications or buyouts. PHL holds approximately $3.7 billion in assets but faces a $2.2 billion capital deficit, according to audited financial statements as of Dec. 31, 2024. Despite the shortfall, the insurance department expects that PHL or certain blocks of its business will attract buyers. Under the current court-imposed moratorium, life insurance claims are temporarily capped at $300,000 and annuity claims at $250,000. Those limits were approved by the judge as part of the rehabilitation order and are not connected to any state-mandated guaranty protections. If PHL cannot be rehabilitated and is instead ordered into liquidation, state The rehabilitation proceedings of PHL Variable Insurance Co. have generated thousands of pages of court documents. By Andrew Larson alarson@hartfordbusiness.com S tephen Gillen created a trust for his five children in 1998, purchasing a $3 million life insurance policy from Hartford-based PHL Variable Insurance Co. to provide for his family's future. For more than 17 years, the Gillen Children's Trust paid every premium on time, never missing the annual $24,000 payment. The family did everything by the book, building an estate plan around the promise that PHL would be there when they needed it most. Now, with more than half a million dollars paid in premiums and one of the insured already deceased — Stephen died in October 2023 — that promise has evaporated. The Gillen trust, based in New Jersey, is one of thousands of policyholders nationwide caught in the wreckage of Connecticut's first insurance company failure in a decade — and only the second this century. PHL, which traces its roots to The Phoenix Cos., was quietly taken over by the Connecticut Insurance Department in mid-2024 after a prolonged period of financial deterioration. Regulators said the move was necessary to protect policyholders and preserve what value remained in the company's troubled portfolio. According to financial statements filed in court, PHL reported negative capital of $2.2 billion as of Dec. 31, 2024 — a sign the company was deeply troubled. That has put policyholders at risk of losing significant portions of their coverage or seeing future benefits sharply reduced as the company under- goes rehabilitation under the oversight of Connecticut Insurance Commissioner Andrew Mais. The insurer's collapse has prompted scrutiny from policyholder attorneys, who point to a complex web of offshore rein- surance deals — including transactions in the Cayman Islands — that shifted billions of dollars in liabilities to affiliated entities and, they argue, masked PHL's deteriorating finances. Edward S. Stone, a Stamford attorney representing the Gillen trust and another PHL policyholder, said he believes state regulators should have stepped in sooner to address the insur- er's offshore dealings and mounting financial distress. He said the Gillen trust now faces "untenable choices" — abandoning most of the coverage the family paid for, gambling on an uncertain future payout, or watching a $3 million policy shrink significantly. "This family did everything right," Stone said. "They paid every premium on time for nearly two decades. And now they're being told the coverage they counted on simply doesn't exist." What is PHL? PHL, incorporated in 1981, specialized in selling a range of life insurance and annuity products. Its offerings included variable universal life insurance, which combined life coverage with investment options in separate accounts, and fixed and variable annuities designed to provide retirement income. In early 2016, PHL's struggling parent company, The Phoenix Cos., was acquired for $217.2 million by Nassau Reinsurance Group Holdings, an insurance and reinsurance company formed in 2015 with backing from San Francisco-based private equity firm Golden Gate Capital. By late 2020, PHL's financial condition had deteriorated significantly due to higher mortality during the COVID-19 pandemic, low interest rates, and under- performing investments, according to the rehabilitation petition filed in Waterbury Superior Court. Universal life policies sold to customers over 70 between 2004 and 2007 were identified as the primary source of the problem. On Nov. 15, 2021, Nassau — now

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