Three insurance trusts have filed a sweeping class-action lawsuit in the U.S. District Court for the District of Connecticut against Golden Gate Private Equity and its Nassau Financial Group entities. The lawsuit, filed on September 25, 2026, alleges a systematic scheme to drain PHL Variable Insurance Company of billions in assets over nearly a decade, ultimately leaving approximately 2,900 policyholders with death benefits capped at $300,000, significantly less than their purchased coverage, which in some cases was $2 million.
The complaint details several methods used by the defendants to allegedly strip assets from PHL. This includes a "Buyback Program" where $150 million of PHL's own money was funneled through shell companies to purchase $1 billion worth of its own policies. Additionally, between 2017 and 2024, hundreds of millions of PHL's premium dollars were allegedly invested into risky corporate loans, private credit funds, and Nassau-issued bonds controlled by the defendants. These investments consistently lost value, declining by as much as 53.3% in a single year, but generated substantial fees for Nassau affiliates, totaling $82.4 million in management fees and $375.2 million in service fees over eight years, which the Connecticut Insurance Department later deemed "significantly above market.
Further allegations involve the creation of Concord Re, a reinsurer fully controlled by the defendants in 2019, which then shifted PHL's obligations to Nassau Re (Cayman) Ltd., an offshore entity described as a "black box" beyond U.S. regulatory reach. Over $2 billion in PHL assets allegedly moved through these arrangements. This intricate structure allegedly allowed PHL's financial statements to overstate its condition by more than $1 billion, circumventing regulatory scrutiny. By 2023, Concord Re reportedly had negative equity of $608 million, a figure allegedly omitted from PHL's financial statements.
The situation escalated on May 17, 2024, when the Connecticut Insurance Commissioner petitioned to place PHL into rehabilitation due to its "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, PHL and its affiliates had a combined shortfall of negative $2.1 billion. The rehabilitator has indicated that PHL is likely to enter liquidation. The lawsuit brings seven counts, including interference with contracts, fraud, negligent misrepresentation, civil conspiracy, aiding and abetting, and two counts under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, seeking compensatory damages, triple damages under RICO, return of inflated premiums, and attorneys' fees.
