PHL Variable Insurance Co., a private equity-owned life insurer, collapsed in 2024 and is heading for liquidation, leaving 100,000 policyholders facing a $2.2 billion shortfall, according to NBC News.
A $450 million asset tied to a 2019 reinsurance transaction turned out to have no value at all — a finding that only emerged when investigators combed through PHL's financial wreckage, according to NBC News. Backing that deal was an excess-of-loss agreement with a PHL affiliate — an arrangement in which the affiliate agreed to cover claims beyond a set threshold. Such instruments are barred from being counted as assets under National Association of Insurance Commissioners rules, since they lack the liquidity needed to pay claims on short notice. Connecticut regulators had authorized a departure from that standard.
In a liquidation, policyholders stand to recover only 34% to 57% of what they are owed, Connecticut officials announced this month, according to NBC News. The maximum recoverable amount ranges from $250,000 to $500,000, with the specific cap determined by where each policyholder lives.
Golden Gate Capital, PHL's private equity owner, declined to comment. The Connecticut Insurance Department declined to answer questions about the deals it approved, citing the possibility of future legal action.
