Oaktree Capital Management has signed a master transaction agreement calling for it to buy a controlling stake in Atlantic Coast Life Insurance Co. from Advantage Capital Holdings, A-Cap said Friday.
Oaktree, a Brookfield affiliate, has also agreed to provide financing for another Advantage Capital life insurance subsidiary, Sentinel Security Life Insurance Co., by "funding a surplus note investment into a newly created captive insurance company," A-Cap said.
"All of the net proceeds from these transactions will be used to support the growth and long-term objectives of Sentinel and its policyholders," A-Cap said.
A-Cap did not give the deals' value.
Before Oaktree and A-Cap can consummate the deals, A-Cap must get regulators' permission to carve Atlantic Coast Life out as a separate company, A-Cap said.
The companies: A-Cap is a Miami-based financial services firm with $16 billion in assets. It attracted scrutiny from regulators after it financed 777 Partners, an alternative asset manager, and 777 Partners failed.
Atlantic Coast Life is a life insurance and annuity issuer with a domicile, or regulatory home, in South Carolina. It has $1.6 billion in assets. It's known for selling fixed annuities, fixed indexed annuities, and life insurance policies that pay for funerals and related costs.
Sentinel Security Life is a life and annuity issuer domiciled in Utah. It has $1.2 billion in assets. Like Atlantic Coast Life, it sells fixed annuities, fixed indexed annuities, and life insurance policies aimed at the preneed market.
The history: After 777 Partners ran into problems, Utah insurance regulators questioned the value of Sentinel Security investments in assets such as credit backed by Boeing jets. A-Cap said it had assessments from respected, independent firms supporting its valuation of the assets.
The thinking: Kenneth King, A-Cap's chief executive officer, said in a comment about the proposed Oaktree deals that Oaktree's expertise and capital will strengthen A-Cap's ability to serve policyholders and distribution partners over the long term.
Patrick George, an Oaktree executive, said the deals are "the latest in a series of insurance investments where we partner with companies during a period of market dislocation or transition."
One strength Oaktree brings to the transactions is experience with helping companies with carve-outs, George said.
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