A-CAP’s financing of 777 Partners leaves illiquid assets and prompts scrutiny of insurers
Key Facts
A-CAP’s financing of distressed 777 Partners has refocused regulators on illiquid assets on the balance sheets of the group’s insurance subsidiaries, according to a summary of a Wall Street Journal report published on November 11. The case is now playing out in formal proceedings in South Carolina and Florida involving Atlantic Coast Life and Southern Atlantic Re. On September 15, 2026, South Carolina’s insurance director announced a petition to place the two companies into rehabilitation. The state said the action would allow it to take control of them to conduct a financial examination. That puts insurers’ ability to meet their obligations to policyholders at the center of the regulatory dispute.
South Carolina’s Department of Insurance said rehabilitation is a process in which a financially troubled insurer is placed under supervision to identify the source of its financial problems and work to address them. The petition seeks to place Atlantic Coast Life and Southern Atlantic Re into the process, but the court had not set a hearing date for the petition when the state issued its statement. This meant the regulator’s request had not yet become a final court order at that time. Parent company A-CAP said in September it would seek mediation with the South Carolina Department of Insurance, while working to raise capital and restructure. It added that its companies continued to pay claims and meet their obligations to policyholders.
Scrutiny extended to Florida, where the Office of Insurance Regulation suspended Atlantic Coast Life’s license in the state with immediate effect. The order barred the company from soliciting or accepting new business, as well as renewing business, but required it to continue servicing existing policies in Florida. The office said its decision followed its determination that the company was financially impaired and the start of rehabilitation proceedings in South Carolina. It said the suspension was intended to protect current and prospective policyholders. A-CAP said it disagreed with Florida’s action and intended to resolve the matter in good faith, while continuing efforts to raise capital and restructure; it said Atlantic Coast Life was focused on meeting its obligations to policyholders.
The scrutiny of 777 Partners stems from allegations involving the company’s financing and assets. In a complaint filed by the U.S. Securities and Exchange Commission in 2025, the agency said 777 Partners and its founders misled investors in a $237 million preferred-stock offering and that the company faced a severe and worsening liquidity crisis. In May 2024, Bloomberg reported that lenders accused the company of borrowing against $350 million in assets that they said it did not own, that did not exist or that had already been pledged to other parties. Those allegations concerned 777 Partners’ relationship with A-CAP, but remain allegations attributed to the lenders and the agency in its legal proceedings. In October 2026, 777 Partners founder and former chief executive Joshua Wander pleaded guilty to wire fraud and securities fraud.
The U.S. Department of Justice said Wander agreed, as part of his plea, to forfeit at least $500 million in proceeds from the illegal scheme. The department set March 1, 2027, as the scheduled date for his sentencing. In a move to address the insurers’ situation, funds managed by Oaktree announced an agreement in March 2026 to buy a controlling stake in Atlantic Coast Life and provide capital support to Sentinel Security Life. A-CAP said in October it was working constructively with Oaktree on a deal structure that could win approval from the South Carolina Department of Insurance. Regulatory approval, mediation efforts, capital raising and restructuring remain steps under consideration, while the court had not set a hearing date for the rehabilitation petition when the state made its announcement.