Jamie Sahara, chairman of United Insurance, didn’t immediately return a voicemail seeking comment.
In a statement in April, Applied Underwriters said Equit圜omp “is neither a reverse Ponzi scheme or a Ponzi scheme as alleged in court complaints,” adding that “Each Equit圜omp insured is responsible only for its own policy.”Įarlier this year, Applied’s general counsel, Jeffrey Silver, said Berkshire was exploring a sale due to “channel competition” with other insurers owned by the holding company, like Geico. In a 2017 amended complaint, ex-customer New York-based Breakaway Courier alleged that “Unlike a Ponzi scheme where early victims are paid with the investments of others, Berkshire Hathaway’s reverse Ponzi scheme requires insureds to cover each other’s losses.” New York’s Department of Financial Services, led by Superintendent Linda Lacewell, has been investigating the company for about a year for offering a workers’ compensation insurance package - called Equit圜omp - that it isn’t legally allowed to sell in the state, according to a source familiar with the investigation.Įx-clients allege that the Equit圜omp program makes the small businesses responsible for paying out insurance claims instead of the insurer - an arrangement that they claim amounts to a fraudulent bait-and-switch. Berkshire confirmed later that month it was divesting from Applied - a rare instance of Buffett walking away from an investment. “If your being sold by Berkshire, how does that negatively impact your earnings power? Are you forced to charge a little bit less because you don’t have the same strength of promise?”Ī consortium of insurers and hedge funds was previously reported to be interested in the company, according to a February report in Reuters. But getting sold off by Berkshire - and losing Buffett’s sterling reputation - could negatively affect the value, too, Shields added. In 2015, Berkshire told the Omaha World-Herald that Applied Underwriters had assets of $2.7 billion. Nevertheless, “It’s probably been a successful investment,” Meyer Shields, analyst at KBW, told The Post, estimating it could now be worth between $1 billion and $1.2 billion. That deal was apparently so expensive that Deloitte, in a 2015 report, excluded it from insurance deals because it would “skew” the data. While Berkshire has never disclosed exactly how much it paid for Applied, a 2007 report from SNL financial put the deal price at $339 million. The company is under investigation by New York and New Jersey regulators for selling unregistered insurance products. Regulators also are probing the company over allegations of bait-and-switch tactics. One of the largest sellers of workers’ compensation insurance in the US, Applied Underwriters has been accused of being a “reverse Ponzi scheme” in a pending civil suit filed in 2016 by ex-clients - an accusation the company has denied. Financial terms of the deal weren’t disclosed. UIC is acquiring Berkshire’s 81-percent stake in the insurer, as well as the stakes owned by two other executives, according to the filing. In a rare divestiture for Buffett, who is known to buy companies and keep them for the long term, Berkshire agreed to sell the company to Bahamas-based United Insurance Co., which was recently part-owned by Aon, according to a filing late Thursday with the California Department of Insurance. Warren Buffett’s Berkshire Hathaway has agreed to sell Applied Underwriters, a workers’ compensation insurer that has been stuck under a cloud of multiple regulatory investigations. The ugly fight for fortune and family who sold Warren Buffett Berkshire Hathaway 'Worried' Warren Buffett compares AI to creation of 'atom bomb' World's richest people have become $852B wealthier in 2023 Sun Valley 'summer camp for billionaires' looms after tough year for tech, media moguls
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