Another Life Carrier Implodes- PHL Variable
Last month the State of Connecticut placed PHL Variable into rehabilitation. This is a sad situation, and I believe there will be other carriers defaulting because they won’t be able to climb out of the hole they are in.
Phoenix Life was historically a strong mutual carrier with an excellent dividend history. PHL Variable was a subsidiary that sold term, universal and variable life products. Phoenix demutualized in 2001 and from there it seems like it has been all downhill. What is most concerning is this might be the first time in life insurance history that death benefits won’t be paid in full. The links provided below shares information sent out to policyholders last month along with a recent ALIRT report. The rehabilitation order includes a temporary moratorium limiting many policy holder rights. Death benefits are currently limited to the guaranteed amount only. At this time, most policyholders will be unable to make any changes including surrendering their policy.
Notice of Rehabilitation for PHL variable
ALIRT Report
Phoenix and its subsidiaries were acquired by Nassau Life in 2015. At this time, it appears only PHL variable is in receivership, but from the ratings report you can see Nassau is not in a strong financial position.
Other Carrier Concerns
I have concerns for other carriers listed on the vital signs report. Genworth’s story is linked to their huge block of long-term care products along with their secondary guaranteed life insurance mispricing. American Equity continues to see their financial position erode. Through the years they had some of the highest guarantees for their guaranteed minimum income benefit (GMIB) rider on annuity products. My contention is when more and more policy holders turn those riders on for lifetime income, it will further strain American Equity’s cash flow, reserves and ultimately overall financials. A carrier can slowly bleed out through the years but ultimately, as in the case of PHL Variable, they can be in a deep financial hole that is impossible to climb out of.
Vital signs rating report
The bottom line is any insurance purchase should start with the quality, ratings and reputation of the carrier. Insurance is priced based upon interest, expenses and mortality. If something is much better than the competition, in the long run you might find out if it was properly priced or not. If they sold too much of it, it may bring down the company.
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