PHL Variable Rehabilitation Plan Advances with Takeover Bids, Moratorium Updates

The Connecticut Department of Insurance (CID) is assessing multiple takeover and reinsurance proposals for the troubled PHL Variable Insurance Co., with a decision expected by the end of 2025. Five bids have been received, including three for the entire company and two for partial acquisitions, along with a new full company proposal from an unengaged party. This development forms a core part of the delayed rehabilitation plan initiated earlier this year to address PHL Variable's financial distress, with an outline of the terms anticipated by year-end. The rehabilitation of PHL Variable and its subsidiaries, which are currently under the control of Insurance Commissioner Andrew Mais, involves efforts to recover losses from third parties, potentially including litigation if satisfactory resolutions are not reached. Investment committee actions aim to reduce exposure to complex, high-risk assets like collateralized loan obligations and commercial mortgage-backed securities, shifting toward higher quality, shorter-duration investments such as cash and bonds to improve portfolio stability. Cash and liquid assets have increased substantially during 2025, reflecting a strategic repositioning to enhance liquidity. The rehabilitation plan includes a moratorium on benefits payments approved by a Connecticut court, with a hardship program in place allowing policyholders to apply for payments under specific conditions. As of November 2025, over 460 hardship applications were processed, with 310 payments totaling approximately $8.8 million authorized, while some appeals and denials are ongoing. Surrenders and withdrawals, which were a major concern in 2024, showed signs of stabilization in early 2025, with notably lower activity for the first three quarters. Nearly half of surrender activity pertained to variable annuity products, with fixed indexed annuities also accounting for a significant portion under the moratorium. Regulators and stakeholders await a judicial decision on modifications to the moratorium, which may provide additional benefit access options for universal life and fixed indexed annuity policyholders. The leadership transition in Connecticut’s insurance regulatory landscape may impact the timeline and execution of PHL Variable’s rehabilitation strategy. Josh Hershman, the new Insurance Commissioner, brings previous deputy experience at CID, while Andrew Mais retired shortly after filing the latest status report. Market participants and policyholders look for clarity and progress as the rehabilitation plan advances through court processes into 2026.