SCDOI Orders Atlantic Coast Life and its Reinsurer to Cease Writing in the State

South Carolina regulators have ordered Atlantic Coast Life Insurance and its captive reinsurer, Southern Atlantic Re, to stop writing new policies by Tuesday, Dec. 31.

The carriers also were ordered to notify all producers about the cease-and-desist directive from the South Carolina Department of Insurance.

“We are publishing these orders today as part of our ongoing efforts to protect the consumers of South Carolina,” Michael Wise, SCDOI director, said in a Dec. 20 bulletin. “We will continue to work with our fellow state regulators to ensure companies conducting insurance business are adequately funded in compliance with the law.”

The department in April put the companies under confidential supervision due to growing concerns about the true state of Atlantic’s financial situation. The April order, released by DOI this month, noted that the insurers relied heavily on reinsurance, including 777 Re, which has seen its financial ratings downgraded significantly this year.

Atlantic Coast, founded in South Carolina in 1925, is now owned by Advantage Capital Holdings, known as A-Cap, which is a major lender to 777 Partners, a private equity firm known for its holdings in soccer teams and airlines.

The South Carolina action follows a similar order this month by Utah insurance regulators, which said that A-Cap’s Utah-based life and reinsurers were in a hazardous financial condition and must cease writing. Those subsidiary insurers are Sentinel Security Life Insurance, Haymarket Insurance, and Jazz Reinsurance.

The South Carolina April order also charged that Atlantic Coast had submitted inaccurate reports about its assets. Earlier this year, the insurer reported that its risk-based capital ratio was a positive 1,353%. But the DOI questioned that and Atlantic submitted an adjusted report showing the ratio was more like -19,700% (negative).

“Under the Risk-Based Capital (RBC) regulatory scheme set forth in Article 3, Chapter 9 of Title 38 of the Code of Laws of South Carolina 1976, as amended, the Department is required to take certain preventive and corrective measures which vary depending on the severity of any lack of capital sufficiency indicated by the RBC result,” the April DOI order reads.

The April order can be seen here. The Utah regulators’ emergency order is here.

Atlantic Coast representatives could not be reached for comment Friday morning.