California Department of Insurance has won a court order appointing it conservator of California Insurance Co, a subsidiary of Applied Underwriters Inc.
Regulators in California have taken control of an insurer, which they say was recently sold by Warren Buffett’s Berkshire Hathaway Inc without their approval.
The California Department of Insurance said it has won a court order appointing it conservator of California Insurance Co, a subsidiary of Applied Underwriters Inc.
Last month, Berkshire sold its 81% stake in Applied to a group that included Applied co-founder Steve Menzies and private equity firm Quadrant Management in a deal worth $920 million.
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.
According to Applied Underwriters, it had sought approval in New Mexico since California took too long to approve the transaction.
California said its approval was still required.
Applied did not immediately respond to requests for comment.
On Monday, the conservatorship was approved by a California state judge in San Mateo County. In the judgement, it “forbid California Insurance from canceling existing policies, and required written state approval for the issuance of new policies”.
On Tuesday, the insurance department stated, it had acted “in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes.”
According to the insurance department, California Insurance has $185 million of written premiums in the state.