OLDWICK, N.J.--(BUSINESS WIRE)-- In this ^AMBestTV episode, Fred Eslami, associate director, AM Best, examines a new report that finds captive insurance organizations rated by AM Best have been growing surplus, returning dividends and reporting better combined ratios than the overall commercial insurance sector. Click on http://www.ambest.com/v.asp?v=captivereport819 to view the entire program.

Eslami highlighted how the captive industry did in 2018.

“The captive industry has consistently outperformed the commercial market by double-digit percentage points,” said Eslami. “Additionally, the industry has increased its surplus for the past five years by $3.1 billion. It also has contributed $3.5 billion in policyholder and stockholder dividends. The increase in surplus, which is organic, and the segment’s operating performance and returned earnings, shows the strength of these companies in terms of resiliency, as well as the acceptability by the policyholders and the industry itself.”

Going forward, Eslami believes that emerging technologies will drive change in the captive industry.

“Challenges or opportunities include innovation and technology that captives have taken on. The potential, for example, for blockchain is large in the industry. The report also notes that captives have increased their writings on cyber,” he said.

To access a copy of this special report, titled, “Rated Captives Continue to Build Upon Strengths,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=288168.

The AM Best-hosted webinar on the state of the captive insurance market can be viewed at http://www.ambest.tv/vcia19.

^AMBestTV is covering the Vermont Captive Insurance Association’s annual conference. Exclusive interviews at the event will be viewable at http://www.ambest.tv/vcia19 as they become available.

Recent ^AMBestTV episodes:

• Rising Regulatory Standards in Asia-Pacific Will Erode Protectionism, Say AM Best Directors: Myles Gould, director of analytics, Christie Lee, senior director and Greg Carter, managing director, all of AM Best said Asia’s insurance markets vary widely by size and levels of insurance penetration:. http://www.ambest.com/v.asp?v=apmarket819.
• Japan’s Non-Life Insurers Tap Catastrophe Reserves After Storms, Says AM Best Senior Director: Christie Lee, senior director, AM Best, said non-life insurers in Japan are permitted to set catastrophe reserves for lines of business, which helped them better endure multiple recent catastrophes: http://www.ambest.com/v.asp?v=japannonlife719.
• U.S. Insurers Increase Private Equity Holdings, Says AM Best Analyst: Jason Hopper, associate director, AM Best, said U.S. life/annuity insurers have shown the greatest interest in private equity investments, with property/casualty and health insurers showing increased activity as well: http://www.ambest.com/v.asp?v=privateequity719.
• Life Insurers Drawn to Direct-to-Consumer but Face Obstacles, Say AM Best Analysts: Michael Adams, senior financial analyst, and Igor Bass, financial analyst, both of AM Best, said many life insurers are at varying stages of building direct-to-consumer distribution, but they also must address challenges: http://www.ambest.com/v.asp?v=dtc719.

 ^AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View ^AM BestTV episodes at http://www.ambest.tv.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190805005579/en/

Lee McDonald

Group Vice President, Publication and News Services

+1 908 439 2200, ext. 5561

lee.mcdonald@ambest.com

Source: AM Best

REGULATION

A life insurance company, one of the investors reportedly hit by a more-than-$500 million financial fraud, must stop selling policies in Virginia, the State Corporation Commission has ordered.

The SCC Bureau of Insurance had charged that the firm, Atlantic Coast Life Insurance Co., was in a hazardous financial condition and has agreed to stop selling insurance in the state.

The bureau's action and the settlement come in the wake of South Carolina insurance regulators' petition to a state court there authorizing them to take control of the company.

Atlantic Coast had 18,709 policies in Virginia providing roughly $266 million of coverage as of Dec. 31.

In the past six months, the company's surplus — basically the money that backstops its promises to pay benefits in case its reserves aren't sufficient — has dropped from $79 million to $45 million, its latest financial filing with the bureau shows.

"Without accepting as accurate the factual allegations … This offer is being made solely for the purpose of a settlement and does not constitute, nor should it be construed as, an admission of any violation of law," Jill Gettman, Atlantic Coast's chief legal counsel and secretary, said in a filing with the bureau.

She said Atlantic Coast would continue to properly pay claims under its Virginia policies.

The ban on new sales by Atlantic Coast takes effect Nov. 1. The company can, however, renew existing policies that are guaranteed renewable or noncancellable.

The SCC order says the ban on new sales would end if South Carolina regulators withdraw their court petition seeking control of the company and, at the same time, if the insurer's parent either raises at least $50 million with an agreed amount going to support the insurer or if another company offers to acquire the firm.

South Carolina regulators want to take control of Atlantic Coast and its affiliate Southern Atlantic Re because they allege their parent company, the private equity firm Advantage Capital Holdings, moved money from retiree annuities into investments that could be easily redeemed, as well as in loans that exceeded previously agreed limits.

The South Carolina regulators said Atlantic Coast had too much money tied up with a failed investment firm, 777 Partners, and didn't disclose investments made with affiliated firms.

Advantage Capital has contested the regulators' charges.

Earlier this month, Joshua Wander, founder and former CEO of 777 Partners, pleaded guilty to wire and securities fraud in connection with a scheme to defraud the lenders and investors of 777 Partners.

Federal prosecutors said Wander defrauded investors and lenders of more than $500 million.

Prosecutors said Wander told investors they would be financing "structured settlements," contracts that turn lump sum legal settlements for damages into a series of smaller payments over time.

Instead, Wander actually invested in other things, including airlines and professional sports teams, instead of using funds to make sure structured settlements paid what they promised, prosecutors said.

The rating agency AM Best has downgraded Atlantic Coast's financial strength rating from B, fair, to C-plus, marginal.

"Current capital levels and regulatory capital ratios have deteriorated in the first six months of 2026, continuing a trend since 2024," AM Best said in a statement.

"The group has a significant allocation to illiquid assets and equities that are not traditionally associated with insurance company investments," the agency added.

Dave Ress(804) 649-6948 dress@timesdispatch.com

Distributed by Newsbank, inc.