Insurance

Court Orders California Insurance Company Conserved in Another Round in Applied Battle

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Note: This story has been updated with a response from an Applied spokesman describing the actions by the California Department of Insurance as “an unusual Draconian attempt.”

A San Mateo County Superior Court on Monday evening issued an order appointing the California Department of Insurance’s Conservation and Liquidation Office as conservator of California Insurance Co.

The court order directs the conservator to take immediate possession of the workers’ compensation insurer in response to what the CDI has argued is a willful violation of state law and established pattern of continually flouting California’s regulatory processes.

The CDI sought the order after company officials agreed merge its business with a New Mexico-based insurer without first securing the CDI’s prior approval.

This is the latest development in the growing drama behind the $920 million sale of Berkshire Hathaway-owned Applied Underwriters to its founder Steven Menzies.

The New Mexico Office of Superintendent of Insurance in late October said New Mexico facilitated the sale of Applied Underwriters by approving the creation of a new insurer and a merger of it with an existing Applied Underwriter California subsidiary in order to save jobs and protect policyholders.

The California Department of Insurance has argued that its approval of the sale is required because one of Applied’s subsidiaries, California Insurance Co., is domiciled in the state. Earlier in October, California said that it had not approved the sale of Applied Underwriters, nor had it approved the re-domestication of the California subsidiary to New Mexico.

Applied Underwriters executives followed that up earlier this week by maintaining publicly that after six months they gave up waiting for California to act on their request for approval of the sale and instead took up another state, New Mexico, on its offer to expedite the transaction by moving its California subsidiary to that state.

Source:-insurancejournal