Connecticut Insurance Commissioner Andrew Mais has asked the Connecticut Superior Court to revise the moratorium on policies issued by PHL Variable Insurance Co, following policyholder concerns regarding access to funds and the requirement to continue premium payments despite uncertain benefit outcomes.
PHL Variable and two of its captive insurance subsidiaries were placed into rehabilitation earlier this year after a financial review revealed a capital and surplus deficit of approximately $900 million.
At the time, the Connecticut Insurance Department reported that the insurer’s assets were projected to be depleted by 2030, leaving around $1.46 billion in policyholder liabilities unpaid.
In a May status report, Mais previously stated that most of the work to prepare the company and its subsidiaries for potential sale has already been completed.
Now, the court-imposed moratorium was designed to prevent uneven claims payments, limit outflows that had exceeded $100 million each quarter since 2022 and avoid large-scale policy surrenders.
Under more changes, universal life policyholders could also see a reduction in death benefits in exchange for lower premium payments. Alternatively, they would have the option to convert their policy into a fixed claim based on an adjusted surrender value, removing the need for continued premium payments.
Mais previously stated that legacy term life and simplified issue term policies were not expected to be affected by the ongoing rehabilitation.
Prior to the sale, the company’s financial condition had been on a downward trajectory well before the formal rehabilitation order. Between year-end 2013 and year-end 2022, PHL Variable’s total adjusted surplus declined from $239 million to $85 million, even as the company received $245 million in capital infusions and issued $55 million in surplus notes.
Meanwhile, according to its finalized 2024 financials, PHL Variable’s capital and surplus remain in negative territory, now reported at -$2.2 billion. This deepening deficit underscores the urgency behind the regulator’s proposed changes and the ongoing efforts to manage the runoff of policy obligations under court supervision.
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