News and Press
January 7, 2021

California Insurance Company, New Mexico (CIC) Files Suit in Federal Court to Enjoin California Department of Insurance (CDI) from Further Illegal Interference and Unconstitutional Action to Block CIC’s Approved Redomestication to New Mexico

Lawsuit filed in wake of New Mexico Superintendent of Insurance Order to CIC to comply with approved redomiciling regulations involves violation of due process and seeks compensation for damages to CIC

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Omaha -- January 7, 2021 -- Following an unprecedented action by the Office of the Superintendent of Insurance in New Mexico ordering California Insurance Company of New Mexico (CIC) either to comply immediately with all regulations required under its approved redomestication to New Mexico or face financial penalties and possible revocation of the Company’s Certificate of Authority, CIC filed suit in California Federal Court to enjoin the California Insurance Department (CDI) from continuing to take what the suit asserts are illegal, vindictive actions to block the approved redomestication of CIC and to undermine the A rated, financially sound insurer by instituting a conservatorship to gain control of CIC. A conservatorship is a take-over mechanism used typically for financially troubled companies, not for top-rated, fiscally prudent, and asset rich insurers.

The Federal law suit, filed in United States Federal Court, Eastern District, California, names CDI Commissioner, Ricardo Lara, Deputy Commissioner Kenneth Schnoll, and Deputy Commissioner Bryant Henley, in their official capacities, charging the Department officials with violation of the Commerce Clause of the United States Constitution, violation of the Company’s right to due process, and sets the basis for a demand for compensation for losses resulting from damages caused to the Company by the CDI defendants’ illegal manipulation and control of its assets under the conservatorship.

CIC charges the Insurance Commissioner and the other officials named with “unlawful” and “bad faith” action in imposing an arbitrary, illogical and illegal conservatorship of CIC to obstruct its New Mexico redomestication, after that move was approved by several states, including California, before CDI’s surprise, abrupt “about face” in seeking an order to grant themselves– the CDI– the conservatorship, and failing to disclose to the court the Commissioner’s earlier participation in and approval of the redomiciling or of his earlier representation that the move “presented no risk to California policyholders.” Since then, the suit states, the CDI named defendants have continued to wage a bad faith campaign to harm CIC by prohibiting the Company from transferring its assets and its business to New Mexico in compliance with the approved redomestication and the Order of New Mexico’s Superintendent of Insurance in October of 2019.

The suit asserts, further, that CDI filed an application for approval of a non-consensual rehabilitation plan in California State Court that would impose severe punitive measures on CIC for failure to comply with the Conservatorship, but presented no rationale for the imposition in the first place. Among other things, the CDI seeks to require CIC to transfer and reinsure its entire “book of California business” to an unaffiliated competitor, and to force CIC to settle more than 40 separate civil legal proceedings on arbitrary terms dictated by the Commissioner, in which the Company has valid defenses and an unqualified right to defend.

In sum, the suit terms the CDI’s actions a “vendetta against CIC” resulting from the Company’s successful defenses of lawsuits with which the CDI disagrees and its financial strength that makes CIC a rich target for manipulation by the CDI and an easy attack by the trial bar. As the CDI previously agreed, the place to resolve those lawsuits is in court, not by the arbitrary imposition of a forced settlement.

According to Mr. Jeffrey A. Silver, CIC’s General Counsel, the CDI’s actions represent an exotic, if not illegal approach to find a way to turn the financially sound, A rated insurance carrier into a defenseless target for the trial lawyers, a powerful lobby with advocates and collaborators in state government. “Incredibly, CDI has targeted CIC despite our good citizenship in paying claims– praised as the best in State recently in the California Department of Industrial Relations’ Profile Audit Review Report– and despite our financial strength– or maybe because of it. The CDI works collaboratively with trial lawyers, we believe, whose interests collide with insuring consumers, businesses, insurance pricing and the insuring environment itself affecting all California policyholders,” said Mr. Silver. He continued, “The outright irrational, illegal maneuvers of the current CDI are without parallel and have deep implications for all insurers and businesses in the State. The remarkable groundswell of support that we have received, in our battles with the CDI, even among insurance license holders usually fearful of the CDI’s wrath, demonstrates the depth of outrage over this latest power grab by CDI, following the same group’s continuing effort to injure the State Compensation Fund over a rate battle. Many former regulators, insurance professionals and other objective observers believe CDI has acted in a most unusual, egregious manner that ultimately poses these questions for the legislature: who is in charge? what are the priorities? does it matter if insurers stop providing needed coverages here?”

Mr. Silver added: “Enough is Enough. We have taken our case to Federal Court and are advising the media of these actions in the hope that they will shine fair light on the workings of the CDI, its use of public funds, its priorities, its leadership, its actual mission under the law, and, most of all, its nebulous workings and relations with select trial lawyers. We believe the bullying and victimizing must stop and that State leadership must act to protect the integrity of the regulatory processes that cover insurance. Our lawsuit is a vital first step in seeking that end, in identifying those responsible and in securing fairness and proper redress.”

Complaint as Filed in Federal Court
Order, Superintendent of Insurance of New Mexico
• [New Mexico Superintendent of Insurance Statement on Establishment of CIC in New Mexico] (,newTab)
New Mexico Superintendent of Insurance Statement re: CDI’s Conservatorship

For further information contact:
Mr. Jeffrey Silver at (402) 393-1984 or at   California Insurance Company holds an A.M. Best Rating of “A”.
Ratings issuer AM Best has affirmed the Financial Strength Rating of ‘A’ (Excellent) and Long-Term Issuer Credit Ratings of ‘A’ of five companies collectively referred to as North American Casualty Group (NAC). The companies with the affirmed ratings are: California Insurance Co. (CIC), Continental Indemnity Co., Illinois Insurance Co., Texas Insurance Co. and Pennsylvania Insurance Co. All companies are domiciled in Santa Fe, New Mexico. NAC’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, and AM Best expects it to remain at a similar level in prospective years. Balance sheet strength also benefits from the company’s strong liquidity profile, conservative investment strategy, and disciplined reserving. The ratings agency said NAC has a track record of “strong operating earnings, underpinned by its robust underwriting performance” and demonstrated by a five-year average return on equity ratio of 13.1% and a combined ratio averaging 75% (2015-2019).

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