What happened: A class action alleges a private equity firm and its affiliates systematically stripped a life insurer of billions in assets
Who's involved: Golden Gate Private Equity, Nassau Financial Group, and PHL Variable Insurance Company
What's at stake: Death benefits capped at $300,000 for approximately 2,900 policyholders who paid for coverage worth far more
Why it matters: The case tests whether PE owners can be held liable – including under federal racketeering law – for draining an insurer they acquired
Where it stands: Filed September 25, 2026, in the US District Court for the District of Connecticut
It survived the Civil War, two World Wars, and the Great Recession. PHL Variable Insurance Company traces its roots to a Hartford life insurer that opened its doors in 1851. According to a new class action, the company could not survive its private equity owners.
Three insurance trusts have filed a sweeping complaint in the US District Court for the District of Connecticut, accusing Golden Gate Private Equity and its Nassau Financial Group entities of systematically draining PHL over nearly a decade – then leaving thousands of policyholders to absorb the loss.
The proposed class covers approximately 2,900 individual policyholders whose death benefits have been capped at $300,000 under a court-imposed freeze, regardless of how much coverage they purchased or how long they paid premiums. Some held policies worth $2 million.
The complaint alleges that Golden Gate created Nassau in 2015 with a $750 million capital contribution for the express purpose of acquiring PHL's parent company, The Phoenix Companies. Nassau bought PHL and Phoenix for $217.2 million in 2016, with Golden Gate paying the entire cost, the filing states.
To secure regulatory approval, the defendants allegedly told the Connecticut Insurance Department they had "no plans to liquidate any of PHL's assets" and intended to "operate PHL in a manner similar to how PHL was operated in the past," according to the complaint. They also allegedly committed $100 million to be used "solely to support the insurance operations" of PHL.
The complaint alleges none of those representations were true.
The first phase of the alleged scheme involved what the filing calls the "Buyback Program." According to the complaint, the defendants funnelled $150 million of PHL's own money through shell companies – entities with "no employees, no personnel, no separate email domain, no website," the filing states – to purchase 136 previously issued life insurance policies with a combined face value of approximately $1 billion.
These were stranger-originated life insurance policies, or STOLI – essentially policies taken out by investors who had no personal connection to the people they were insuring. The complaint alleges these policies were the very block of business that had made PHL financially vulnerable in the first place.
Instead of cancelling the policies and wiping $1 billion in liabilities from PHL's books, the defendants allegedly paid only the minimum premiums and waited to collect the full death benefits for themselves.
The loans that funded the program were never repaid, according to the filing.
The complaint alleges the asset stripping went further. Between 2017 and 2024, the defendants allegedly poured hundreds of millions of PHL's premium dollars into investment vehicles they owned and controlled – pools of risky corporate loans, a private credit fund, and Nassau-issued bonds. Those investments lost value consistently, the filing alleges, declining by as much as 53.3% in a single year. But the defendants kept investing because the arrangement generated fees regardless of performance, according to the complaint.
One Nassau subsidiary alone collected $82.4 million in management fees over eight years, the filing states. Service fees paid to other affiliates allegedly totalled approximately $375.2 million over the same period. The Connecticut Insurance Department later determined these fees were "significantly above market," according to the complaint.
Then came the reinsurance. The complaint alleges the defendants shifted massive portions of PHL's obligations to Concord Re, a reinsurer they created in Connecticut in 2019 and fully controlled. Concord Re then passed those obligations along to Nassau Re (Cayman) Ltd., an offshore entity the filing describes as "a black box" beyond the reach of US regulators. More than $2 billion in PHL assets allegedly moved through these arrangements.
The effect, the complaint alleges, was that PHL's financial statements overstated its condition by more than $1 billion, allowing the defendants to dodge the regulatory scrutiny that would have exposed PHL's real position. By 2023, Concord Re was carrying negative equity of $608 million, according to the filing – a figure the defendants allegedly left off PHL's financial statements entirely.
On May 17, 2024, the Connecticut Insurance Commissioner petitioned to place PHL into rehabilitation, finding it was "operating in a financially hazardous condition." Three days later, a state court imposed the $300,000 cap on all death benefit payments.
By the third quarter of 2024, the combined shortfall of PHL and its affiliated entities had ballooned to negative $2.1 billion, according to the rehabilitator's accounting cited in the complaint. The rehabilitator has since indicated that PHL will likely enter liquidation, according to the filing.
The complaint brings seven counts: interference with policyholders' contracts, fraud, negligent misrepresentation, civil conspiracy, aiding and abetting, and two counts under the federal Racketeer Influenced and Corrupt Organizations Act alleging a pattern of mail fraud, wire fraud, and international money laundering. The plaintiffs are seeking compensatory damages, triple damages under RICO, return of the inflated premiums they paid, and attorneys' fees.
The case lands as one of the most detailed policyholder challenges yet to the practice of PE-backed insurers using affiliated reinsurance structures to shift risk into offshore entities outside traditional regulatory oversight.
None of the allegations in the complaint have been tested, and no court has ruled on the merits of any claim.
