Connecticut Insurance Commissioner Andrew Mais reported that most of the work to prepare PHL Variable Insurance Co. and its affiliated businesses for potential sale has been completed, although the process has taken longer than expected.
In a May 20 status report, Mais said actions required to support a marketing or sale process for the company or portions of its business are largely finished.
PHL Variable was found to have a capital and surplus deficit of approximately $900 million, and projections at the time indicated its assets would be depleted by 2030, leaving around $1.46 billion in remaining liabilities to policyholders.
In May of last year, the Connecticut Superior Court placed PHL and its two insurance subsidiaries into rehabilitation, appointing Mais as the rehabilitator. A moratorium was issued as part of the court order, limiting certain policy transactions and payments in an effort to contain the company’s cash outflows while a long-term plan is developed.
The moratorium has led to legal challenges from policyholders, especially those with life insurance benefits exceeding $300,000. These policyholders have argued that they are being treated unfairly compared to others with smaller claims, raising concerns about equitable treatment during the rehabilitation process.
To facilitate the potential sale, the rehabilitation team compiled a list of 50 companies with potential interest in acquiring the business or certain blocks of it. By April, that list had been narrowed to 45, and non-disclosure agreements were distributed for review.
As of May, 13 companies had executed the NDA and were granted access to a virtual data room containing documentation such as actuarial appraisals, summaries of reinsurance arrangements, and information on the company’s administrative and investment service providers.
Another 12 firms have submitted comments on the NDA and are in discussions with legal counsel for the rehabilitator to address those concerns.
Mais said this sale strategy is intended to deliver a better result for policyholders and stakeholders than liquidation would, and is expected to generate at least equivalent value.
The 2024 financial statements show that capital and surplus remain negative at $2.2 billion. Prior to this, the company’s financial condition had been deteriorating over several years, with total adjusted surplus falling from $239 million at year-end 2013 to $85 million by year-end 2022.
These figures were recorded despite the company receiving $245 million in capital infusions and issuing $55 million in surplus notes during that period.
The commissioner’s report also included information from the company’s finalized 2024 combined financial statements, which show capital and surplus remain negative at $2.2 billion.
PHL Variable Insurance Company was incorporated in Connecticut in 1981. It became part of The Phoenix Companies, which was acquired in 2016 by Nassau Reinsurance Group Holdings, backed by Golden Gate Capital. In 2021, PHL was separated from Nassau and became a subsidiary of GG Holding Company.
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