Oaktree’s Deal to Buy A-Cap Insurer Crumbles, Spawning New Talks

Oaktree Capital Management’s agreement to take over a life insurer owned by Advantage Capital Holdings has collapsed, leaving the companies to discuss alternatives after regulators raised alarms over the business’s potential exposure to defunct investment firm 777 Partners. Oaktree, which specializes in troubled companies, is no longer pursuing the deal it announced in March to buy a controlling stake in South Carolina-based Atlantic Coast Life Insurance Co., according to people with knowledge of the situation, who asked not to be named discussing the private negotiations. But the parties are still talking about the potential for an alternative deal. “We are continuing to work constructively with Oaktree on a transaction structure that will meet the approval of the South Carolina Department of Insurance,” a spokesperson for A-Cap said in an emailed statement, without elaborating. A representative for Brookfield Asset Management, which owns Oaktree, declined to comment. The South Carolina Department of Insurance, which oversees Atlantic Coast, also declined to comment. Atlantic Coast and its Southern Atlantic Re subsidiary have been facing regulatory scrutiny over lending to 777, a firm creditors claim borrowed against assets that either didn’t exist or were already pledged elsewhere. Last year, federal prosecutors accused 777 co-founder Josh Wander of cheating lenders and investors out of almost $500 million. He pleaded guilty this week to wire fraud and securities fraud and faces sentencing in March. Concerns about A-Cap’s insurers emerged in 2024 when the South Carolina insurance regulator sought to ban Atlantic Coast from selling annuities, before a judge struck down the move in 2025. Regulators in Utah went into mediation with other A-Cap insurance operations. Then, several weeks ago, a fresh legal feud erupted between South Carolina Department of Insurance Director Michael Wise and the insurers when he raised new questions about their 777 exposures. In a petition, he called for the firms’ rehabilitation — an emergency intervention seeking to restore insurance companies’ finances — saying they were in a “financially hazardous” position. He alleged that they overstated the value of certain assets and failed to fully disclose some investments with affiliates. In late September, the Florida insurance commissioner suspended Atlantic Coast Life due to dwindling surplus. Read More: A-Cap Insurers Face Claim They’re ‘Financially Hazardous’ The companies, which have said they continue to honor their policyholders’ contracts, struck back with their own complaint against Wise in his official and personal capacities. They later dismissed their lawsuit and agreed to mediation. Last month, Atlantic Coast Life and Sentinel Security Life Insurance Co. were downgraded by AM Best. At the time, the ratings firm cited “increasing weakness in A-Cap Group’s balance sheet strength as well as its operating performance during the first half of 2026.” A-Cap disagreed with that move, saying it didn’t reflect initiatives to strengthen capital and restructure. Copyright 2026 Bloomberg. Topics Mergers & Acquisitions Carriers