SC judge rules Atlantic Coast can stay in business; rips regulators

A South Carolina judge reversed a state Department of Insurance order today that had banned Atlantic Coast Life Insurance Co. from writing new premiums.

Judge Ralph King Anderson III rejected the department’s conclusion that Atlantic Coast is in financial distress.

“The evidence shows that ACL maintains a positive cash flow and has not experienced any difficulty paying amounts owed to either its policyholders or creditors,” he wrote.

Atlantic Coast is owned by Advantage Capital Partners, known as A-Cap. Claiming the insurer's underlying financial condition is poor, South Carolina regulators banned Atlantic Coast from writing new life policies after Dec. 31, 2024. The directive also covers Southern Atlantic Re, another A-Cap insurer.

A-Cap appealed the decision, and Anderson granted a stay and convened a Jan. 15 hearing. Anderson is a judge in the administrative law court, which handles appeals to government actions.

In a scathing 24-page decision, Anderson rebuked the department’s process for moving ahead with its directive despite Atlantic Coast's good faith efforts. The judge wrote that the results financially damaged the insurance companies.

The directive “has tarnished Petitioners’ credibility in the market, resulting in a loss of employees, and damaged relations with its brokerage distribution and amongst local funeral homes,” Anderson wrote. “Moreover, policyholders have sought recoupment of premiums, resulting in financial loss to the public.”

A department spokesperson sent this response to InsuranceNewsNet: "We are reviewing the order that was issued earlier today and defer comment until we have had an opportunity to complete our review."

A-Cap representatives deferred comment until they read the entire decision.

Utah is up next

The saga of Atlantic Coast is tied to that of Sentinel Security Life in Utah, which also banned the insurer and two associated reinsurance companies, Haymarket Insurance Co. and Jazz Reinsurance Co., from writing new business after Dec. 31.

A-Cap likewise appealed the Utah decision and a similar administrative law hearing is scheduled for mid-March. Regulators from both states worked together throughout 2024 to examine the A-Cap insurers and their financial assets, court documents say.

In South Carolina, Michael Wise, director of the South Carolina Department of Insurance, issued an April 10, 2024 “confidential order” placing Atlantic Coast and Southern Atlantic Re into “confidential administrative supervision,” court documents say.

On Oct. 21, a directive informed the insurance companies that South Carolina was “unwilling to continue to permit the insurers to incur new liabilities . . . when all companies[’] RBC are at a mandatory control level and each of the insurers exhibit negative surplus.”

South Carolina regulators directed Atlantic Coast to cease writing new business on Nov. 14, court documents say. Utah made its directive official on Dec. 2 and South Carolina followed on Dec. 11.

But Anderson concluded that South Carolina regulators mishandled the situation.

“It is notable that … [the] directive was issued despite ACL’s efforts to reduce premium sales,” Anderson wrote. “Indeed, as recently as December 2, 2024, ACL provided notice … of its continued success in lowering its premiums without causing panic amongst its policyholders.”

Anderson noted Atlantic Coast's efforts to get its finances in order included reducing its premium sales by 90%.

History with 777

A-Cap's affiliation with troubled investment firm 777 Partners is an ongoing source of concern for regulators.

According to reporting by Semafor, A-Cap sold blocks of life policies to 777’s reinsurance arm, while separately loaning hundreds of millions to 777 Partners itself and various portfolio companies.

In a May lawsuit, Leadenhall Capital Partners, a London-based asset manager, said that it provided 777 Partners with more than $600 million in financing. Leadenhall said it later learned that roughly $350 million in assets serving as collateral for the loans either were not in 777’s control or had already been pledged to other lenders.

A-Cap is also named as a defendant, with the firm telling the New York Times that the claims are “baseless.”

Also in May, Sentinel Security and Atlantic Coast sued to prevent AM Best from downgrading their financial strength ratings from B++ to B-. That lawsuit was later settled.

In his ruling, Anderson said he is satisfied with A-Cap's efforts to untangle itself from 777.

“ACL has also modified its reinsurance structure, recapturing assets previously held by 777,” he wrote. “Additionally, one of ACL’s existing reinsurers is also poised to buy $800 million of assets previously reinsured by Haymarket.”

Evidence included 2024 financial statements reflecting a capital and surplus of $100.7 million held by Atlantic Coast and Southern Re, Anderson noted. Additionally, A-Cap also has $3.9 billion of liquid assets “which could be sold to meet any liquidity” needs, he added.

“Importantly, the department has introduced no evidence to refute these facts,” Anderson concluded.

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.