Two large policyholders are demanding financial disclosures and relief from premium payments as the state moves toward liquidating a Hartford-based insurer after rehabilitation efforts collapsed.
A company holding more than $12 million in life insurance policies is seeking to intervene in the troubled rehabilitation of PHL Variable Insurance Co., accusing Connecticut’s former insurance commissioner of conducting “secret backroom negotiations” and misleading policyholders about the insurer’s financial condition.
SWS Holdings Inc. filed a motion to intervene Jan. 30 in Waterbury Superior Court, joining another policyholder in requesting emergency relief as the state moves toward liquidating the Hartford-based insurer after a failed 19-month rehabilitation effort.
SWS owns two universal life insurance policies issued by PHL Variable with $18 million in death benefits and has paid more than $12 million in premiums since 2006, it said in court documents. The company joins a Jan. 27 emergency motion filed by BroadRiver Asset Management, which has paid $57.1 million in premiums since purchasing policies from PHL, including $19.7 million during the rehabilitation timeframe.
The motions seek relief for policyholders who have paid millions in premiums to keep their coverage alive but stand to lose over $120 million in benefits, according to the court filings. They also demand disclosure of PHL’s financial data and details about the rehabilitator’s effort to sell the business.
$300,000 cap
At the center of policyholders’ complaints is a June 2024 court order capping death benefit payments and policy withdrawals at $300,000.
Large policyholders argue the cap unfairly favors smaller policyholders while requiring all policyholders to continue paying full premiums under threat of policy lapse.
SWS and BroadRiver are seeking either permission to stop premium payments beyond amounts covering the $300,000 cap or an escrow arrangement for excess premiums pending the final outcome.
As of Sept. 30, 2025, claims above the moratorium limits totaled $515.1 million, up from $230 million at the end of 2024.
Rehabilitation
Former Connecticut Insurance Commissioner Andrew Mais, acting as rehabilitator, took control of the financially burdened PHL in May 2024 after regulators found the company had a $900 million deficit.
Mais retired Nov. 28, 2025, after nearly seven years as commissioner, and was succeeded by interim Commissioner Josh Hershman, who
took over as rehabilitator Dec. 12.
PHL’s finances continued to worsen during the rehabilitation, with its
capital deficit growing to $2.2 billion, according to finalized 2024 financials.
Mais maintained through his departure that PHL’s rehabilitation plan remained viable and that he would present a rehab plan by the end of 2025.
However, on this past New Year’s Eve, about a month after Mais’ departure, Hershman announced that
rehabilitation of PHL was “not feasible” and recommended liquidation.
That announcement came after
multiple companies had submitted bids to purchase or reinsure the company through the rehabilitation process.
The filings allege the rehabilitator has been “hiding information about PHL’s true financial condition from policyholders, negotiating in secret with reinsurers, prospective purchasers and [state guaranty associations], in addition to taking deliberate steps to mislead the court about the prospects for an orderly rehabilitation.”
SWS’ memorandum also accuses Mais of authorizing “suspect reinsurance transactions with affiliates,” “the illogical restructuring of PHL at Nassau’s request” and other “odious” practices.
PHL traces its roots to The Phoenix Cos. and was acquired in 2016 by Nassau Reinsurance Group Holdings, backed by San Francisco-based private equity firm Golden Gate Capital.
In November 2021, Nassau — now known as Nassau Financial Group and based in Hartford — divested itself of PHL ownership, transferring the company to Golden Gate Capital.
Department defends process
A spokesperson for the Connecticut Insurance Department said the rehabilitator has “in no manner” misled the court or acted improperly.
“The rehabilitator has been consistent in his position as expressed to the court and policyholders, including SWS, that if a rehabilitation plan would not yield a better result for policyholders than liquidation, it would be necessary to pivot to a liquidation,” the spokesperson said. “After conducting an extensive marketing process, the rehabilitator determined in early December that a rehabilitation plan was not possible.”
Both SWS Holdings and BroadRiver accuse the rehabilitator of failing to produce detailed financial information promised at an October 2025 hearing.
The companies argue policyholders need this information to make informed decisions about their policies.
SWS is seeking court orders compelling the rehabilitator to provide more detailed disclosures regarding the status of the sale process and the potential claims the rehabilitator has asserted against Nassau and Golden Gate Capital.
The Connecticut Insurance Department said Tuesday it plans — by the end of this week — to release information about PHL’s statutory assets, reserves and reinsurance as of Dec. 31, 2024.
“We further expect to share a distribution analysis in conjunction with the mailing of the election packages related to the moratorium modification,” the spokesperson said. “The distribution analysis will provide an expected range of recovery for existing policy claims against the PHL estate at the time of liquidation.”
In his Dec. 31 status report, Hershman disclosed potential legal claims against Nassau Financial Group and Golden Gate Capital for breach of fiduciary duty, breach of contract and avoidable transfers.
A spokesperson for Nassau Financial
previously said the claims “are without merit” and that “the transactions concerned were undertaken only after a thorough review, negotiation, and approval process with the Connecticut Insurance Department.”
Also in the report, Hershman said he is in “active negotiations” with the National Organization of Life and Health Insurance Guaranty Associations to determine what assets may be available for providing enhanced benefits.
Under Connecticut law, insurance policies generally terminate 30 days after a liquidation order, except to the extent coverage is provided by a guaranty association.
In Connecticut, the state guaranty association generally provides up to $500,000 in life insurance benefits per individual life; coverage limits vary by state.
At the same time, the rehabilitator is working with an investment banker “to pursue a transaction that can be combined with a liquidation; however, it is uncertain whether such a transaction may be feasible,” the insurance department spokesman said.
Looking ahead
Hershman expects to update the court on the status of a potential transaction by March 31 and anticipates a liquidation order will be entered in 2026, according to updated information on the Connecticut Insurance Department’s website.
Superior Court Judge Judge Daniel J. Klau has not yet responded to the emergency motions to intervene.
SWS Holdings is represented by Edward Stone of Edward Stone Law PC in Stamford. BroadRiver is represented by John L. Cesaroni of Zeisler & Zeisler in Bridgeport and Richard A. Bixter Jr. of Holland & Knight LLP in Chicago.
