Alternative credit manager Oaktree Capital Management is expanding further into the insurance sector after agreeing to acquire a controlling stake in South Carolina-based Atlantic Coast Life Insurance Company.
Oaktree, which is owned by Canadian private markets manager Brookfield Asset Management, has signed an agreement to acquire the stake held by Advantage Capital Holdings (A-cap) in the insurer. As part of the deal, the $223bn (£168bn) manager will also provide capital support to Sentinel Security Life Insurance Company.
The opportunistic debt manager will fund Sentinel through a surplus note investment in a newly created captive insurance company. All of the proceeds will be used to support Sentinel’s growth and its policyholders, while A-cap will retain its stake in the insurer.
“Our planned acquisition of Atlantic Coast Life is the latest in a series of insurance investments where we partner with companies during a period of market dislocation or transition,” said Patrick C. George, senior vice president, global opportunities, at Oaktree. “The company will benefit from our meaningful experience in regulated carve-outs as it works to complete its pre-closing transaction milestones.”
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The majority acquisition stake from A-cap comes after the company faced scrutiny over lending to 777 Partners, a fund that later collapsed. Its co-founder was charged by federal prosecutors last year with defrauding lenders and investors.
“We are pleased to reach agreement with A-cap on a multifaceted transaction that we believe benefits all stakeholders of Sentinel and Atlantic Coast Life,” said Jake Wagner, managing director, global opportunities, at Oaktree. “We look forward to working with the many parties involved – namely, the state regulators, rating agencies, reinsurers, and distributors – as A-cap and its carriers work to complete the various steps required to close the transaction”.
Moelis & Company acted as financial adviser to A-cap, while Michelman & Robinson and Croke Fairchild Duarte & Beres served as legal advisers.
Goldman Sachs acted as financial adviser to Oaktree, while Debevoise & Plimpton served as legal adviser.
The move by Oaktree comes as the firm pushes further into insurance balance sheets after announcing last year that it would manage a share of Allianz’s reinsurance assets under a new partnership.
It reflects a broader trend in which alternative asset managers are acquiring insurance companies or securing investment mandates. Similar strategies have been pursued by Blackstone, which partnered with AIG, and Apollo Global Management, which owns and manages Athene Holding.
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