First and foremost, it’s important to note that we remain active in the market despite erroneous media reports suggesting we are prohibited from writing new business. Our day-to-day operations have not changed: we are permitted to write new business and will continue to write renewal business. Additionally, Sentinel and Atlantic Coast Life remain committed to meeting policyholder obligations, and we remain resolute in our commitment to protect policyholders, stakeholders, and employees. 

Over the past months, A-CAP has been proactively engaged with our regulatory counterparts in Utah in productive and collaborative discussions regarding select A-CAP subsidiaries. Despite our active engagement, this Order came as a complete surprise and we are disappointed by how this sensitive matter has been handled. We are vigorously contesting the Order by filing an appeal which we believe stays it under Utah law. Furthermore, a hearing has been scheduled to address our concerns. 

The Core of the Matter

At the core of the issue, the Utah Examiner-In-Charge has a misinformed understanding of the value of certain recaptured assets underlying our loans. We are working to correct this misunderstanding. Unfortunately, the Examiner is working with an inexperienced firm that lacks the industry knowledge necessary to accurately value these assets. Of particular concern, the valuation firm is not FINRA-regulated, which is highly unusual for a firm conducting financial valuations, especially in a complex sector like aviation, and lacks a demonstrable track record not having conducted public transactions requiring valuation or fairness opinions over the last 15 years. As part of our efforts to test the value of the assets underlying our loans, we commissioned, a SEC registered, well-respected global investment bank, to conduct an independent valuation. Its resulting assessment was entirely consistent with our existent carrying values. In addition, we commissioned another well-regarded financial services firm with valuation expertise to conduct their own independent analysis which also completely validated our view.

A-CAP strongly believes in the carrying value of the assets and the independent valuations which support their carrying value. Furthermore, it is A-CAP’s opinion that based on the valuations provided on the assets, there should be no adjustment to capital and surplus. A-CAP will strongly support these positions with Utah.  

What’s Next

In the meantime, I want to reiterate that we strongly disagree with the Order but are committed to engaging constructively to address and rectify this disagreement while remaining open to using every available legal remedy at our disposal. We have worked diligently over the past couple of months to raise liquidity and strengthen our balance sheet and our underlying financials are strong. As I mentioned earlier, we are committed to protecting our policyholders, stakeholders, and employees and will do everything in our power to do so going forward. Most importantly, our collaborative relationship remains business as usual, and you should expect no changes to the ways we work together.

We understand the concerns and uncertainty that you may have during this process and pledge to keep you informed with appropriate updates on any new developments.