Three insurance trusts have sued Golden Gate Capital and its subsidiary Nassau Financial Group, accusing them of systematically draining PHL Variable Insurance Co. through self-dealing investments and reinsurance deals before the Hartford insurer collapsed under a $2.2 billion shortfall. They filed the racketeering lawsuit in Connecticut federal court on September 25; PHL is now headed into liquidation.
PHL was once part of the publicly traded Phoenix Companies before Nassau Financial Group, launched in 2015 on $750 million from Golden Gate Capital, bought Phoenix the following year. In 2021, Golden Gate executives split PHL off from Nassau’s healthier operations into its own standalone entity.
PHL had been leaning heavily on reinsurance from affiliated, offshore reinsurers — including Concord Re and Nassau Re (Cayman) Ltd — to stay afloat, the lawsuit alleges, shifting liabilities onto entities with little independent capital or regulatory disclosure. Nassau’s asset-management arm also steered roughly 30% of PHL’s assets into structured notes and collateralized loan obligations; some of those CLOs now trade at a third less than face value, and others have lost more than half their value.
Connecticut regulators put PHL into rehabilitation in May 2024 after finding a $900 million capital deficit; by the end of that year, the estimated shortfall had grown to $2.2 billion. The rehabilitator concluded in a December 31, 2025 court filing that rehabilitation wasn’t possible and recommended liquidation instead — but that order still hasn’t come, and regulators don’t expect PHL to actually enter liquidation until 2027.
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More than $2 billion moved through related-party reinsurance deals, the lawsuit alleges — roughly $1 billion of it to buy “stranger-originated” life insurance policies through shell companies. It also accuses Golden Gate and Nassau of funneling PHL’s money into Nassau’s own investment products that, the complaint says, “significantly decreased in value each year” while generating fees for both firms. It’s the second such complaint this year — policyholders separately accused Nassau in March of charging PHL $76.3 million in “materially above market” management fees between May 2024 and December 2025, while the company was already under state oversight.
Nassau denied wrongdoing in the new suit. “These claims are without merit and we will vigorously defend ourselves,” a spokesperson said. “We continue to cooperate fully with the Rehabilitator in its efforts to protect and serve PHL policyholders.” The company gave a similar response to the March complaint, calling those claims meritless too.
PHL’s roughly 100,000 policyholders won’t necessarily lose everything. State guaranty associations should fully cover about 70% of them, up to caps of $300,000 for life insurance death benefits and $250,000 for annuities. The remaining 30% face real losses on anything above those caps and become claimants in line for whatever’s left of PHL’s assets, a process that could take years. One group of universal life policyholders is looking at losses topping $120 million even though they’ve kept paying roughly $20 million a year combined just to hold onto their coverage.
