South Carolina, Atlantic Coast mediation fails to resolve reserving dispute

A mediation hearing held Friday failed to resolve the disagreement between South Carolina regulators and Atlantic Coast Life Insurance Co. over the insurer's financial condition.

In a court filing posted Tuesday, mediator Thomas J. Wills IV informed the court that the two sides are "at an impasse."

Atlantic Coast and the South Carolina Department of Insurance will now proceed with an agreed-upon briefing schedule on the insurers’ motion to dismiss and Director Michael Wise’s Motion for a moratorium on policy surrenders. The parties have proposed a trial-not-before date of Jan. 19, 2027.

The dispute began in September, when South Carolina filed an emergency court petition to place Atlantic Coast and its reinsurer, Southern Atlantic Re, into receivership for regulatory rehabilitation. Regulators allege high-risk, improper debts threaten the company's long-term ability to pay out retirees' claims.

The insurer initially fought the takeover but dismissed its lawsuit to enter into mediation with the state. In the wake of the September petition from South Carolina, two additional states took action against Atlantic Coast:

• The Florida Office of Insurance Regulation issued an immediate final order suspending the insurer’s certificate of authority. Citing a steep statutory surplus impairment — which Florida calculated at $170 million — regulators immediately barred Atlantic Coast from soliciting, writing, or renewing any insurance business in the state, though the company must continue to service its roughly 7,000 existing Florida policies.
• The Virginia State Corporation Commission approved a formal settlement that orders the company to halt all new business.

Atlantic Coast, an Advantage Capital Holdings company, said in a recent statement to InsuranceNewsNet that it "remains focused on meeting its obligation to policyholders and completing the capital raise and corporate restructuring initiatives now underway.”

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.