A-Cap Insurers Agree to Mediation in Rehab Dispute with SCDOI Director

Advantage Capital Holdings, parent of Atlantic Coast Life Insurance and Southern Atlantic Re, has dropped its lawsuit against the South Carolina insurance department director and has agreed to mediation instead.

“The department welcomes the insurers’ decision to put this distraction aside,” SCDOI Director Michael Wise said in a statement released Monday.

The move is the latest in a regulatory disagreement that began almost three years ago. Wise earlier this month petitioned a court to place the two A-Cap insurance companies into rehabilitation, citing questionable investments and links to 777 Partners, a now-bankrupt investment firm.

New York-based A-Cap, led by CEO Kenneth King, quickly filed suit last week, arguing that Wise had acted recklessly and in bad faith. A day later, the AM Best financial rating firm announced it had downgraded the financial strength rating for Atlantic Coast and another A-Cap insurer, Sentinel Security Life, citing concerns about the firms’ capital levels, capital ratios and unusual levels of illiquid assets.

A-Cap leadership said in a news release Monday that the mediation plan comes as the holding company works on raising capital and restructuring.

“We believe the decision to pursue mediation is a constructive step toward resolving the issues with the SCDOI and reducing uncertainty around the company,” reads a statement from A-Cap. “We intend to work constructively through the mediation process toward a resolution of the outstanding regulatory matters.”

The companies continue to pay claims and service their obligations to policyholders, the statement noted.

A-Cap is not affiliated with a New Orleans-based investment firm with a similar name.