California regulators take control of former Berkshire insurance unit

(Reuters) – California regulators have taken control of an insurer that they say was recently sold by Warren Buffett’s Berkshire Hathaway Inc (N:) without their approval.

The California Department of Insurance said on Tuesday it won a court order appointing it conservator of California Insurance Co, a subsidiary of Applied Underwriters Inc.

Berkshire sold its 81% stake in Applied last month to a group that included Applied co-founder Steve Menzies and private equity firm Quadrant Management in a $920 million transaction.

Applied, a specialist in workers’ compensation insurance, completed the transaction after merging California Insurance with an insurer in New Mexico and getting approval for the merger in that state.

Applied has said it sought approval in New Mexico because California took too long to approve the transaction, according to published reports.

However, California said its approval was still required.

Applied did not immediately respond to requests for comment. It told The Wall Street Journal it was considering its options.

The conservatorship was approved by a California state judge in San Mateo County on Monday.

It forbids California Insurance from canceling existing policies, and requires written state approval for the issuance of new policies.

Applied has previously faced state regulatory concerns regarding some workers’ compensation policies, and in 2017 settled with California over alleged “bait and switch” marketing tactics.

The insurance department said on Tuesday it acted “in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes.”

California Insurance has $185 million of written premiums in the state, the department said.

Applied was founded in 1994, and moved to Omaha, Nebraska in 1999. Berkshire, which is based in Omaha, acquired its stake in Applied in 2006.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.