|Applied Underwriters-California Insurance Company Sale Denied Approval By CA Department Of Insurance|
By Lonce Lamonte - October 21, 2019
Last Friday, October 18th 2019, the California Department of Insurance (DOI) denied an application for the approval of the sale of California Insurance Company.
California Insurance Company is a subsidiary of Applied Underwriters which is a subsidiary of Berkshire Hathaway. Applied Underwriters and its California Insurance Company write workers’ compensation insurance. The sale in process is of the workers’ compensation unit which Warren Buffett, Berkshire Hathaway chairman, said he wanted to sell because it has to compete with two larger insurance companies Berkshire owns and that also sell workers’ compensation coverage.
The California DOI had been in the process for several months of extensively reviewing the application for sale of the company when the applicants abruptly changed plans and failed to seek the required prior approval of the DOI. They failed to submit the information and documentation required to determine whether the sale is fair and reasonable to California policyholders. Instead, they made an abrupt and unilateral decision to merge the company with a New Mexico-based entity.
One of the reasons DOI said it must sign off on the deal is because California Insurance Company is domiciled in California.
If California Insurance Company (CIC) proceeds with the merger with a New Mexico domestic insurer, CIC’s California certificate of authority “will be extinguished by operation of law” as stated in a letter written and sent by the California DOI to CIC’s Jeffrey Silver. The letter further expressed that the surviving entity will not be qualified to transact insurance in California.
Applied Underwriters has been caught in controversy involving California Insurance Commissioner Richardo Lara. Lara has come under fire for taking campaign contributions from the insurance industry after he pledged not to. Allegations have been made that he made contact with an agent of Applied offering political support.
California Department of Insurance Letter of Denial, October 18th 2019
email@example.com, Lonce Lamonte, journalist and editor, adjustercom. Also contributing was a News Release from the California Department of Insurance dated October 21, 2019