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Berkshire sells Applied Underwriters to founder in $920M deal

Posted On: Oct. 16, 2019 10:54 AM CST


Berkshire Hathaway Inc. has sold workers compensation insurer Applied Underwriters Inc. to the insurer’s founder and president Steve Menzies and a private equity investment firm in a transaction valued at $920 million.

Steve Menzies, who founded the Omaha, Nebraska-based insurer in 1994, will acquire Applied and its subsidiary North American Casualty Co. and is joined in the deal by Quasha Group, led by New York-based Quadrant Management Inc., according to a statement released Wednesday.

The deal includes the buyout of all other shareholders and the 81% stake held by Omaha-based Berkshire Hathaway, the statement said. Berkshire has had a controlling stake in the company since 2005.

Quadrant has acquired Applied’s service companies as part of the deal, according to the statement.

“The growth in Berkshire’s other primary insurance operations has created increasing channel conflicts for Applied. The transaction will now allow Applied to expand with no concerns for channel conflicts.” Mr. Menzies said in the statement.

Applied Underwriters offers workers compensation insurance products under the names SolutionOne and EquityComp, and employs about 800 people, according to the statement. Additional details on the sale were not immediately available.

In June, a transaction had been pending between Applied Underwriters and United Insurance Co.

The insurer has faced several state regulatory actions over the past few years, including a $3 million fine imposed by New York regulators in July for selling workers compensation products bundled with side reinsurance participation agreements that were not approved by state regulators.