California regulators have taken control of an insurer that they say was recently sold by Warren Buffett's Berkshire Hathaway Inc without their approval.

The California Department of Insurance said on Tuesday it won a court order appointing it conservator of California Insurance Co, a subsidiary of Applied Underwriters Inc. Berkshire sold its 81% stake in Applied last month to a group that included Applied co-founder Steve Menzies and private equity firm Quadrant Management in a $920 million transaction.

Applied, a specialist in workers compensation insurance, completed the transaction after merging California Insurance with an insurer in New Mexico and getting approval for the merger in that state. Applied has said it sought approval in New Mexico because California took too long to approve the transaction, according to published reports.

However, California said its approval was still required. Applied did not immediately respond to requests for comment. It told The Wall Street Journal it was considering its options. The conservatorship was approved by a California state judge in San Mateo County on Monday.

It forbids California Insurance from cancelling existing policies, and requires written state approval for the issuance of new policies. Applied has previously faced state regulatory concerns regarding some workers' compensation policies, and in 2017 settled with California over alleged bait and switch marketing tactics.

The insurance department said on Tuesday it acted “in response to the company's wilful violation of state law and established pattern of continually flouting California's regulatory processes.” California Insurance has $185 million of written premiums in the state, the department said. Applied was founded in 1994, and moved to Omaha, Nebraska in 1999. Berkshire, which is based in Omaha, acquired its stake in Applied in 2006.

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