South Carolina insurance officials want a judge to step in at Atlantic Coast Life Insurance, saying the company tied retirement-related obligations to investments far riskier than regulators consider safe.
The dispute centers on whether those choices put policyholders who count on predictable income at risk if the company cannot meet future payments.
Here's what to know
In a filing in Richland County, the South Carolina Department of Insurance asked the court to place Atlantic Coast Life Insurance under state control, according to the South Carolina Daily Gazette.
Regulators contend the Charleston-based insurer loaded up on risky assets that have underperformed, raising concerns about its ability to honor what it owes customers.
According to the department's court papers, the fallout could reach as many as 50,000 annuity holders who use the company for retirement income, as well as more than 100,000 owners of funeral or life insurance policies from its older lines of business.
In its own filings, Atlantic Coast Life said the department's accusations are wrong, maintains that its finances remain sound, and argues regulators went beyond their legal authority. The insurer has also sued South Carolina Insurance Director Michael Wise, alleging he revealed confidential information in a way that could damage the company.
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Bob Hartwig, a University of South Carolina finance professor who studies the insurance industry, said the case goes far beyond a routine financial dispute.
"If the Department of Insurance allegations prove true and the company is allowed to keep operating this way, tens of thousands of people could see their retirement income disappear," he said. "We're talking about promises that are literally meant to last a lifetime."
More background
After a private equity firm bought Atlantic Coast Life in 2015, the company put greater emphasis on annuities. Consumers often use those products in retirement planning because the income is tax-deferred.
For some customers, that income helps with everyday bills, supports relatives' education costs, or goes toward housing payments.
The Department of Insurance said the company's investment strategy became much more aggressive than what is typical for insurers. The department's filings describe heavy exposure to private bonds, large adviser fees, and ties to distressed assets including, as the Daily Gazette reported, a troubled discount airline in Canada, European soccer clubs without an operating profit, and a film studio still trying to recover from a failed Bollywood merger.
The Department of Insurance also raised concerns about affiliated reinsurance operations that took on $2.4 billion in reserves while making loans to companies that later filed for bankruptcy. In some cases, the department said, loans were extended past due dates without collecting payments or interest.
What's being done?
To prevent a broader breakdown, the Department of Insurance wants emergency control of the company while it tries to shore up the insurer and its portfolio. Atlantic Coast Life, however, is urging the judge to deny that move and cites 2025 findings from the Administrative Law Court stating the companies were "paying their obligations as they come due" and that "the department has conceded that it has identified no risk that the companies might default."
As the Daily Gazette reported, AM Best lowered the insurer's financial-strength rating from B++ to B and assigned it a negative outlook, signaling concern about possible deterioration.
Hartwig said that while failures like this are rare, regulators are supposed to intervene before disaster strikes. Waiting until an insurer actually defaults, he argued, would undermine the point of oversight.
"Life insurance has been around for hundreds of years," Hartwig said. "Over that history, most would never imagine backing the retirement dreams of thousands of Americans with these types of investments."
Where can I learn more?
Cases like this can quickly spill over to people who depend on an insurer for coverage or a steady payout. They cover an insurer bankruptcy, fines over claims handling, and homeowners in Florida, Idaho, New Jersey, and Nova Scotia facing coverage shocks.
• In Florida, FedNat's collapse left homeowners scrambling after the insurer went bankrupt.
• Regulators found some of the worst treatment in the country in Florida after storms.
• In Idaho, retirees scrambled as home insurers fled wildfire-prone areas across the West.
• In New Jersey, millions of Americans are losing home insurance as sea levels rise.
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