Atlantic Coast Life Insurance Hearing Update
The scheduled hearing regarding the ban on new policies at Atlantic Coast Life Insurance has been postponed until Wednesday. The delay comes amidst regulatory concerns about the company’s financial stability and a stay granted by a judge, which allows current operations to continue for now. The situation remains complex as regulators scrutinize the company’s fiscal responsibilities, particularly in light of discrepancies in financial reporting and a ban linked to parent company Advantage Capital Partners.
In a surprising twist, the long-anticipated hearing regarding the future of new policies at Atlantic Coast Life Insurance has been pushed back until Wednesday. It was initially set to take place on Friday, but South Carolina officials made the announcement of the postponement, leaving everyone on the edge of their seats.
Atlantic Coast Life, which has fallen under the ownership of Advantage Capital Partners (A-Cap), is currently facing scrutiny over its financial health. The South Carolina regulators are sounding the alarm, declaring that the company’s financial foundation appears to be quite shaky. These concerns led to a significant move: a ban was implemented, preventing Atlantic Coast from issuing any new life insurance policies after December 31, 2024. The same ban also extends to Southern Atlantic Re, another company under A-Cap’s umbrella.
Adding to the complexity of this situation, Chief Administrative Law Judge Ralph King Anderson III stepped in to grant a stay of the order just before the deadline on December 30. This stay essentially means that for the time being, Atlantic Coast can continue its operations without the immediate threat of the ban. A-Cap has also suspended new business activities at Sentinel Security Life Insurance Co., located in Utah, as regulators there have taken similar action against them and two associated reinsurance firms.
Mark your calendars because in March, a judge will hear A-Cap’s appeal against the Utah order. Judge Anderson emphasized that holding the current situation would help avoid what he termed “irreparable harm” to the insurers under A-Cap. Interestingly, during the discussions, he shared his skepticism towards claims that these insurers are in dire financial straits.
However, the South Carolina Department of Insurance is not backing down. They argue that Atlantic Coast Life has transferred its responsibilities to 777 Re, Ltd., a reinsurance entity located in Bermuda. Unfortunately, this company has hit tough times, lost its license, and has stopped all operations. The Department is deeply concerned, believing that the instability surrounding this reinsurer reflects serious issues with Atlantic Coast Life itself.
In response to the swirling doubts, representatives from A-Cap insist that Atlantic Coast is more than capable of settling all its debts. They point to a positive cash flow from their pre-need insurance business as a sign of stability. Yet, the South Carolina Department has had its eye on Atlantic Coast and Southern Atlantic since April because of worries surrounding their financial operations.
One of the core issues raised involves discrepancies in Atlantic Coast’s financial reports. The company’s risk-based capital ratio was reported inaccurately, swinging dramatically from a staggering positive of 1,353% to an alarming negative of 19,700%. These figures have raised significant flags among regulators, who are adamant that insurers must be financially sound to safeguard consumer interests.
A-Cap acquired Atlantic Coast Life back in 2015 and has openly disagreed with South Carolina’s assessment of their financial standing. The upcoming hearing will be crucial, as it will delve deeper into the financial intricacies and operational practices of both Atlantic Coast and Southern Atlantic. As the situation unfolds, it certainly seems that reducing consumer risk while keeping these companies operational is a bridge that all parties will need to cross together.
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