New Mexico AG intervenes in California Insurance Company redomestication dispute
New Mexico's Attorney General has intervened in a lawsuit brought by California Insurance Company (CIC) against the California Department of Insurance (CDI), after the regulator attempted to block its redomestication to New Mexico.
New Mexico Attorney General Herbert Balderas filed a request to submit amicus curiae briefs on June 11, 2021, in support of CIC in its lawsuit against CDI. The filing relates to a federal lawsuit in the Eastern District of California filed by CIC of New Mexico against Insurance Commissioner Ricardo Lara, Deputy Insurance Commissioner Kenneth Schnoll and Special Deputy Insurance Commissioner Bryant Henley.
As part of its buyout from Berkshire Hathaway in mid October 2019, CIC, an A+ rated insurer, sought the CDI's permission to move to New Mexico. At that time the State of New Mexico held a hearing to approve the change of domicile, which was attended by several regulators from states in which CIC is licensed. Approval was unanimous, including that of CDI officials.
Then in November, California regulators had a change of heart, and moved to block the move. Jeffrey Silver, executive vice president and general counsel of CIC, described it as an “unusual, exotic imposition of a conservatorship."
Conservatorship is usually used for insolvency or when policyholder danger exists. Silver said the “conservatorship action was among the most unusual ever seen” in that it used a mechanism created for cases of potential policy holder peril to accomplish “the irrational blocking of a solid financial entity.”
Silver added: “This is a first: the CDI has never before used the conservation proceeding for anything other than financial concerns.”
Balderas’ filing is aimed at enjoining the CDI from reversing its original approval of CIC's move.
Silver applauded Attorney General Balderas' intervention. “Apart from the fact that the CDI's actions serve neither the taxpaying citizens of California nor its insurance consumers, the CDI continues to hand the California public costly legal bills for this unnecessary, now interstate level conflict that serves to benefit only plaintiff attorneys," he said.
Silver added: “We have been frustrated for over a year and a half that our efforts to have the merits of the case heard have been thwarted. We are confident that once we have our day in court, this matter will begin to receive the legislative and legal attention that is warranted.”
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