SC regulators ‘reviewing’ rehab strategy for Atlantic Coast
South Carolina regulators are still deliberating how to respond more than six weeks after an administrative law judge reversed an order that had banned Atlantic Coast Life Insurance Co. from writing new premiums.
In the meantime, Utah regulators are in court asking a judge to allow them to “take possession” of Sentinel Security Life Insurance Co. and a pair of reinsurers.
Atlantic Coast and Sentinel Security, along with several reinsurers, are owned by Advantage Capital, an investment firm known as A-Cap. Utah and South Carolina regulators jointly investigated the financial backing of the insurers throughout 2024 and found the assets lacking.
A spokesperson for the South Carolina Department of Insurance said they are aware of the Utah petition for control.
“We are reviewing that petition and considering what, if any, additional measures are necessary to protect South Carolina consumers and policyholders,” the spokesperson said. “This Department will continue to take any action allowable by South Carolina law to protect its citizens.”
In December, both Utah and South Carolina banned the insurance companies from writing new premium as of Jan. 1, 2025. A-Cap appealed to the administrative law court in both states.
On Feb. 13, South Carolina 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.
Judge: Insurers have been damaged
In a 24-page decision, Anderson ripped 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.
In Utah, the department’s ban on Sentinel Security writing new premiums is stayed until a May 12 hearing. But last week regulators went a step further, asking a judge to order rehabilitation for Sentinel Security and a pair of reinsurers.
“This Petition results from a years-long history of self-dealing, conflicts of interest, and obfuscation by the ultimate controlling party of the Utah Insurers, Kenneth King,” the petition states.
King is the chairman and CEO of A-Cap. The Utah reinsurers are Haymarket Re and Jazz Re.
The petition asks the court to allow regulators to “take possession, control, and title to all assets of Sentinel, Haymarket, and Jazz Re, and to administer those assets pursuant to the laws of the State of Utah, as directed by the Court, staying all actions and proceedings relating to the Utah Insurers, in Utah and elsewhere.”
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