A Charleston life insurer founded 101 years ago is fighting a state bid to take control of it.
On Sept. 15, S.C. Insurance Director Michael Wise asked a Richland County judge to place Atlantic Coast Life Insurance Co. and its reinsurance subsidiary, Southern Atlantic Re Inc., into rehabilitation, a court-supervised receivership. His petition argues that their continued operation would be financially hazardous to policyholders, creditors and the public.
“Filing this petition was a necessary step to protect policyholders and the broader public,” Wise said in a department release.
In an Oct. 6 message to policyholders and agents, Atlantic Coast Life said it “remains financially sound” and is paying claims and honoring surrenders.
No judge has ruled; as of Oct. 23, the department’s case website listed only the petition and an FAQ. The company said a mediation session was scheduled for Oct. 23.
A Charleston company since 1925
Atlantic Coast Life, founded downtown, moved its headquarters off the peninsula in 1996 and is based in West Ashley, The Post and Courier has reported. Its website lists a home office at 1565 Sam Rittenberg Blvd.
For most of its history the company was family-owned and sold small life and preneed funeral policies, according to the petition. In 2015 the Scarborough family sold it to an affiliate of Advantage Capital Holdings, or A-Cap, The Post and Courier reported. Kenneth King controls A-Cap, the petition says.
Under A-Cap, the insurer pivoted to annuities, and its direct premiums jumped from about $25 million in 2015 to about $102 million in 2016, according to the petition. Dan Cathcart, its chief executive for more than a decade, resigned on or about Aug. 3, the petition says.
What the state alleges
The 56-page petition says the insurers put policyholder money into high-risk investments, many tied to companies King and A-Cap control, in violation of state law and their agreements with the department. It says those holdings appear to be worth substantially less than reported and cannot quickly be turned into cash without big losses.
By the department’s count, 30.2% of Atlantic Coast Life’s cash and invested assets at the end of 2025 sat in below-investment-grade private credit and unrated loans, roughly three times the 10% cap in its investment management agreements.
Its risk-based capital ratio, a measure of capital relative to risk, was 239% at the end of 2025, by the company’s own reporting, and below 185% by mid-2026, the department estimated. The state set a 500% minimum when it approved A-Cap’s purchase. Capital and surplus fell 42% in the first half of 2026, to about $47.4 million, the petition says. Policyholders cashed out $463 million in annuities over the same six months, before reinsurance.
As many as 50,000 annuity customers and more than 100,000 funeral and life policyholders from the company’s legacy business could be affected, the SC Daily Gazette reported.
The petition also ties the insurers to 777 Partners, a Miami investment firm that filed for Chapter 11 bankruptcy in August. It says 777’s bankruptcy filings show A-Cap affiliates are owed almost $1.3 billion in defaulted loans, contradicting A-Cap’s assurance to regulators that legacy 777 risk had been removed.
What rehabilitation would mean
If the court grants the petition, the insurers will be placed under the department’s control so their finances can be examined, the department said. The petition asks the court to name Wise rehabilitator, with the power to appoint special deputies. As receiver, he would determine whether the companies can be restored or should be liquidated in an orderly way, the petition says.
South Carolina’s life and health guaranty association generally provides coverage when a member insurer is declared insolvent and ordered liquidated, according to its website. It covers state residents for up to $300,000 in present value of annuity benefits per person, per failed insurer.
The companies’ response
“We will defend ourselves against these false allegations,” a spokesperson for the insurers said in September, Bloomberg reported. The companies moved to dismiss the petition and sued Wise, then dropped the suit Sept. 25 and agreed to mediate. They say they can refile it.
In court filings, the companies called the allegations speculative, the SC Daily Gazette reported. They also cite a February 2025 ruling by Administrative Law Court Judge Ralph King Anderson III, which reversed the department’s earlier order barring new sales, The Post and Courier reported at the time. Atlantic Coast Life says assets tied to the 777 bankruptcy are no longer on its books.
The parent’s wider troubles
AM Best cut Atlantic Coast Life’s financial strength rating to B in January and to C+ in September, Insurance Journal reported. A-Cap disputed the second cut, citing a pending capital raise and restructuring.
Florida suspended the insurer’s certificate of authority Sept. 30 after finding it impaired, Insurance Journal reported; the company says it is challenging that order. Under a settlement with Virginia regulators, it will stop writing new business there Nov. 1, InsuranceNewsNet reported.
Oaktree Capital Management, which announced in March that it would buy a controlling stake in Atlantic Coast Life, is no longer pursuing that deal, Bloomberg reported Oct. 16, citing people with knowledge of the situation. A-Cap said it is still working with Oaktree on a structure the department would approve.
And 777 co-founder Josh Wander pleaded guilty in October to wire and securities fraud, Bloomberg reported. A-Cap personnel have maintained they were victims of that fraud, according to the petition.
