A California attorney said multiple lawsuits have been filed against two subsidiary units of Hartford-based Phoenix Cos., alleging, among other things, that the insurer targeted elderly individuals to purchase multi-million dollar life insurance policies with the false representation that the policies may be freely transferred or assigned.
Plaintiff's lawyer Gerald Kroll claimed today the lawsuit may be the largest life insurance litigation of its type pending.
The two Phoenix subsidiaries named in the suit are PHL Variable Insurance Co. and Phoenix Life Insurance Co., the suit said.
The Phoenix issued a statement insisting the allegations "are without merit."
The lawsuits allege that Phoenix set up a subsidiary, Phoenix Life Solutions, to purchase life insurance policies in exchange for an immediate cash settlement.
Meanwhile, PHL and Phoenix Life Insurance issued policies that promised policyholders that they may transfer or assign their policies to a third party whenever they want, the suit said.
The polices also gave the two companies, or their affiliate, Phoenix Life Solutions, the right to purchase the policy first, before they were sold to the third party entity.
But, according to the allegations, when policyholders were able to achieve money offers from third parties, the companies did not match the offers or acknowledge the validity of or allow the transfer to the new policy owners.
Instead, when policy owners attempt to transfer or assign their PHL life insurance policies to unrelated parties, PHL allegedly rescinds or seeks to rescind the policies and attempts to confiscate the premiums, the suit said. It is alleged that Phoenix Life Insurance Company does the same thing, the suit said.
Kroll said two suits have been filed on the matter. The first one was filed in June in a California court by Alan Fenton, as trustee for 17 life insurance trusts, and XLI Holdings, against PHL for fraud and other causes of action.
Fenton filed the second suit on Monday, as a trustee of 14 life insurance trusts, and Olive Tree Holdings, against PHL and Phoenix for Fraud and other causes of action.
Combined, the policies at issue in both cases have a face value that exceeds $260 million, Kroll said.
The Phoenix said in its written statement that the $260 million figure "does not represent Phoenix's alleged litigation exposure, but is simply the combined face amount of the policies mentioned."