PHL Variable Insurance Co. Liquidation Raises Regulatory Concerns

PHL Variable Insurance Co. faces liquidation by a state regulator following allegations from policyholders against Nassau Financial Group and its private equity partner, Golden Gate Capital. The policyholders have filed a motion to intervene, citing misconduct such as breach of fiduciary duty and misrepresentation. This move comes amid concerns about regulatory compliance requirements and financial oversight within the insurance industry.

In 2016, Nassau Financial Group, supported by Golden Gate Capital, acquired PHL Variable, later transferring direct ownership in 2021 but continuing management through service agreements. The Connecticut Department of Insurance assumed control in 2024 due to insolvency issues. A report by Connecticut’s acting insurance commissioner, Joshua Hershman, claims Nassau received $76.3 million in management fees, exceeding market standards. Nassau contests these findings, arguing that the claims are unfounded.

State intervention began in May 2024, initiating a rehabilitation process led by then-commissioner Andrew Mais. Following a failed sale attempt, Hershman concluded in December 2025 that liquidation was necessary. Policyholders argue that Nassau's financial strategies, post-acquisition, weakened PHL's assets and highlight Mais’s role during the rehabilitation. Despite calls for legal action against Nassau, Hershman has prioritized preserving limitations and maintaining fee payments. The case progresses under Judge Daniel J. Klau at Waterbury Superior Court, where policyholders seek permission to independently pursue tort claims, potentially affecting future regulatory actions and the handling of insolvent insurers.