The question of succession is one that every family-owned business must address, sooner or later.
Atlantic Coast Life Insurance Inc. settled on later. As in 90 years later.
With no heirs in the business to take the reins, the Scarborough family has finalized a sale of its third-generation Charleston-based company. The buyer is Advantage South LLC, an affiliate of privately held Advantage Capital Holdings LLC.
Financial terms of the deal were not disclosed.
“We had no fourth generation coming along, so what do you do with a 90-year-old company without a fourth generation coming along?” said Yancey W. “Bill” Scarborough III, who was board chairman immediately before the sale. “This gives a chance for the company to live on.”
He added that the buyers, led by industry veterans Kenneth King and Dan Cathcart, are keeping the Atlantic Coast name and the employees at the Sam Rittenberg Boulevard firm. Scarborough, a longtime Charleston civic leader, is staying on as company president for a minimum of three years, or longer if he likes.
“They want us and they want our people,” he said. “We’re just changing stockholders.”
The original Atlantic Coast investors back in 1925 were Scarborough’s namesake grandfather and a partner, Jesse W. Orvin. Within a decade, their Charleston life insurance firm employed 28 agents who went door-to-door selling policies and collecting weekly premiums, operating much like a newspaper route.
Its first office was above the American Theater on King Street. Atlantic Coast then moved about two blocks north to the Bluestein Building. By 1940, it bought and moved its headquarters to the majestic Francis Silas Rodgers Mansion, now home to the ritzy Wentworth Mansion inn and the Circa 1886 restaurant. The Scarborough family bought out Orvin in the 1950s. They moved the company off the peninsula in 1996.
Over the years, Atlantic Coast branched out physically, opening offices from Greenville to Columbia, from Rock Hill to Georgetown. It also diversified. The company owned two radio stations for a spell: WTMA in Charleston and WBSC in Bennettsville. It also developed several local housing developments — Fort Johnson Estates, Cameron Terrace and Woodside Woodview — ran a water-and-sewer company and made mortgage loans.
It later returned to its core business and scaled back its branch network while pivoting to focus on an insurance product that guarantees policyholders full payment of their funeral expenses. The 2003 shift into the so-called pre-need market paid off, said Scarborough, who was CEO until a few years ago.
Annual premium collections have jumped to $23 million from $4.5 million over that time, he said, while total assets have climbed to $130 million from $46 million. Also, the company’s surplus reserves have more than doubled to $15 milllion. All the while, Atlantic Coast has expanded its pre-need marketing presence, handled through agents and funeral homes, from South Carolina into eight other Southeast states.
“We ramped up sales and grew the company pretty substantially over the last 12 years. ... It’s a real nice success story,” Scarborough said last week.
The growth spurt didn’t go unnoticed. Calls began to roll in from would-be buyers, he said.
“Nobody ever said anything that ever piqued our interest,” Scarborough said.
Then, the Advantage South executives got on the horn.
“After we talked to them, we liked them,” Scarborough said. “We liked what they said they wanted to do with the company. It was a good opportunity, we feel, for the family and for the future of the company.”
Pleasantville, N.Y.-based Advantage Capital did not respond to a request for comment last week. The new, low-key owners plan to inject more capital into the business and expand the sales-and-marketing footprint, according to Scarborough.
A.M. Best, which rates the creditworthiness of insurance companies, reviewed the sale. It said in a report that its sees potential for the buyers to grow the Charleston business “beyond the pre-need marketplace to include annuities” and supplemental health insurance policies for seniors using Atlantic Coast’s existing sales network.
Scarborough said he’s had “no pushback” from his agents and other producers.
“The good thing is the company gets to live on as it was,” he said. “And it gets the opportunity to prosper even more.”
Contact John McDermott at 937-5572.