A-CAP and Utah Insurance Department agree to mediation

By Chris Munro

April 30 - (The Insurer) - A trio of A-CAP owned insurance companies and the Utah Insurance Department (UID) have paused their pending litigation after agreeing to participate in mediation.

The three insurers – Sentinel Security Life Insurance Company, Haymarket Insurance Company and Jazz Reinsurance Company – and the UID were scheduled to go to trial over May 12 to 16, but in a statement issued late on Tuesday, A-CAP said the parties “have agreed to pause their pending litigation and participate in mediation."

As previously reported, the legal battle dates back to December when the UID ordered A-CAP owned life (re)insurers Sentinel Security, Haymarket and Jazz Re to stop writing new business by the end of 2024 owing to losses on loans to companies in 777 Partners’ investment portfolio that had left them in a “hazardous financial condition."

That initial December ruling was made after the Utah insurance commissioner had ordered a full-scope financial examination of the three A-CAP life (re)insurers.

The examiner in charge of the procedure uncovered what the early December order described as impairments in the financial condition of the A-CAP companies.

This publication has previously detailed that Utah regulators had formerly ordered the three companies to scale back their 777 Partners exposure, which they claimed exceeded regulatory limits.

A-CAP had billions of dollars either lent to 777-linked businesses or ceded to its Bermuda-based reinsurer 777 Re. Ongoing challenges facing its parent caused 777 Re to cease insurance activity in June 2024.

Since the UID’s initial order in December, there has been a legal back and forth between the regulator and the A-CAP owned companies.

In March, A-CAP accused the UID of what it termed “a transparent attempt to deflect blame and financial accountability."

It said the UID had sought “to circumvent recent rulings,” as A-CAP filed a motion to stay the regulator’s attempt to place Sentinel Security, Haymarket and Jazz Re into rehabilitation via a verified petition submitted on March 21.

Should that petition have been granted, then the insurance commissioner as receiver would assume control of the three life (re)insurers and then run them primarily for the benefit of policyholders, annuitants and creditors.

A-CAP argued that the UID’s verified petition attempts to subvert a previous order issued by the regulator on February 14, which stayed its December emergency order.

The February 14 order detailed specifically that all prohibitions contained in the formerly issued emergency order, such as the A-CAP subsidiaries’ ability to write new business, are to be held in abeyance and not enforced while the stay remains in effect.

That February 14 order also said that until resolution of the case, no other directives or orders may be issued that undermine the order to stay.