New Mexico Attorney General Hector Balderas once again is trying to involve himself in the Applied Underwriters’ California Insurance Company conservation. This time, through a San Francisco law firm, he is asking a San Mateo Superior Court Judge to allow it to become a party to the litigation between Applied Underwriters’ and the California Department of Insurance over the conservation of California Insurance Company.
Balderas’ motion to intervene in support of California Insurance Company mirror’s his action from a year ago to file an amicus brief to support Applied Underwriters and its conserved carrier (for past coverage, see New Mexico…).
Applied Underwriters’ lobbying and campaign donations have been the subject of public inquiry, scrutiny, and litigation.
Balderas’ filing in support of CIC raises no new issues in the nearly three-year-old conservation. It also renews attempts to remake points already rebutted in prior filings.
“The uncertainty generated by the conservatorship – including its lengthy and indefinite duration – harms New Mexico’s interest in permitting the consummation of a merger that has been approved by the State’s Superintendent of Insurance (OSI),” the filing states. “Instead, CIC II’s creation remains in limbo, with CIC II unable to establish a business in New Mexico and write policies for the State’s market. Moreover, the delay and uncertainty of the conservatorship has resulted in OSI needing to bring a show-cause action against CIC II due to its inability to establish a place of business in New Mexico.”
Disingenuous Argument?
However, CIC II’s parent, Applied Underwriters is apparently flush with cash and has been on an acquisition spree in recent times according to its own news releases. It could deploy cash to New Mexico to fund CIC II and establish the business and get the show cause dismissed should it choose to do so. But it hasn’t.
Further, New Mexico and Applied Underwriters earlier this year agreed to a stipulated order that gives Applied roughly two years to resolve the California litigation before facing any real consequences in New Mexico. While it is true, that agreed upon order ultimately could result in CIC-II’s certificate of authority being revoked if CIC-II does not come into compliance with state law, the overwhelming likelihood is that the California litigation will be settled in less than two years.
The New Mexico argument is largely word for word with one Balderas made when he sought permission to file an amicus brief in the case. It is also the same one the New Mexico AG made to back Applied’s unsuccessful attempt to oppose CDI’s successful motion to dismiss Applied’s federal challenge.
The rehashed filing fails to address CDI’s rebuttals to the claim that CIC II is being blocked from starting operations in New Mexico by the ongoing conservation in California. “If CIC II has not been funded to conduct any business but CIC’s that simply confirms that it was, as the district court found, merely a shell created to evade California jurisdiction and not an operating company intended to be anything more than the vehicle for CIC’s unapproved redomestication scheme,” noted attorney Michael Strumwasser in an earlier filing for the Department.
Further, adding another party to the conservation litigation, logic dictates, will serve to delay the ultimate payment to California’s injured policyholders and release of CIC from conservation so it can complete its merger into New Mexico.
The filing is slated for a late October hearing.
Applied Underwriters was once but is no longer an affiliate of Berkshire Hathaway. Applied’s management bought it. Berkshire Hathaway bears no responsibility for any of the events which have transpired involving Applied Underwriters’ or its subsidiaries including California Insurance Company.