The California Department of Insurance has seized Applied Underwriters’ California Insurance Company and put it into receivership. CDI sought and obtained a court order. The action follows Applied’s alleged merger of the California domiciled CIC into a newly formed New Mexico corporation without obtaining CDI’s consent. It also follows the apparent – and unapproved by CDI – sale by Berkshire Hathaway. AM Best gave the carrier an A rating last week.
The Department says it took the action due to Applied Underwriters’ “established pattern” of flouting California’s rules and regulations and to prevent California insured from being covered by “an out-of-state insurer without authority to transact insurance in California.” The order purportedly blocks the New Mexico merger.
The order blocks CIC from terminating or attempting to terminate any in-force policy or contract. It also calls for all premium payments from these policies to now be directed to the conservator. “All agents of CIC, and all brokers who have done business with CIC, shall make remittances of all funds collected by them or in their hands designated by the Conservator in his or her discretion, directly to the Conservator,” the order states.
The order from the San Mateo Superior Court appoints David Wilson as deputy conservator of the carrier and Joseph Holloway as conservation manager. CIC’s operations will be handled through the California Conservation and Liquidation Office. The conservation action was taken under Insurance Code section 1011(c).
-30-