Mike Brockman is the former CEO of Applied Underwriters, a workers' compensation insurer that Berkshire Hathaway acquired in 2006. His public profile rests on two distinct events: a regulatory battle in California over a contested insurance program, and a federal indictment for an alleged fraud at a separate company. The criminal case remained unresolved as of April 2024.
In February 2022, a federal grand jury in the Northern District of California indicted Brockman on counts of wire fraud and money laundering. The indictment, case number 5:22-cr-00071, alleged that Brockman misappropriated tens of millions of dollars from a company called BenefitGuard. He pleaded not guilty in March 2022. The accusations are unrelated to his work at Applied Underwriters.
Brockman retired as CEO in 2020, the same year Berkshire Hathaway sold the majority of the business to United Insurance Holdings. The sale closed that October. No verdict or settlement had been reached in the criminal matter as of April 2024.
The EquityComp Dispute in California
Before the criminal charges, Brockman and Applied Underwriters were the target of a major enforcement action by the California Department of Insurance. The dispute centered on a workers' compensation program called EquityComp.
How the product worked
EquityComp was marketed as a way for employers to reduce their workers' comp premiums. California regulators argued that the program violated state insurance laws, in part because it effectively forced employers into arbitration and concealed the true cost of the coverage.
The regulatory response
In 2019, California Insurance Commissioner Ricardo Lara ordered Applied Underwriters to stop selling EquityComp in the state. The department also fined the company and its affiliates roughly $12.3 million, a penalty set by the Commissioner's office. The fine was one of the larger monetary sanctions levied by the department in recent years. For the current penalty schedule, check the California Department of Insurance enforcement page.
Fallout
The department's action effectively shut down the program in California. The matter was resolved with the fine and the cease-and-desist order. It did not result in a criminal referral against Brockman or Applied Underwriters. Berkshire Hathaway's sale of Applied Underwriters to United Insurance Holdings followed about a year later.
The Criminal Indictment and BenefitGuard
The federal accusations against Brockman stem from his involvement with BenefitGuard, a company that provided employee benefit services.
The government's allegations
According to the indictment, Brockman orchestrated a scheme to misappropriate tens of millions of dollars from BenefitGuard. The funds were allegedly diverted for personal use and to prop up other business ventures. The indictment did not name any co-conspirators, though it described Brockman as the primary actor.
Penalties and status
The wire fraud counts carry a maximum sentence of 20 years in prison per count. The money laundering counts carry a similar maximum. As of April 2024, Brockman remained free on bond. His trial had not yet been scheduled. The case is being prosecuted by the U.S. Attorney's Office for the Northern District of California.
Separation from Applied Underwriters
The BenefitGuard matter is separate from Applied Underwriters. Brockman's role at Applied Underwriters ended in 2020, and the company itself was sold. The criminal case does not involve Berkshire Hathaway, United Insurance Holdings, or any of the entities that acquired Applied Underwriters' assets.
Brockman's Status in the Insurance Industry
Mike Brockman is no longer involved in the operations of Applied Underwriters. He retired as CEO in 2020, and the sale to United Insurance Holdings closed that October. Whether he retains any ownership stake, consulting role, or board position in any insurance entity is not publicly established as of April 2024.
The indictment does not bar him from working in insurance, but it has effectively ended his public career as an executive. No major insurer has announced a new role for Brockman since his retirement. The ongoing legal case makes it unlikely that he will return to a senior position in the near term.
For policyholders and employers who used Applied Underwriters offerings, the change is largely administrative. United Insurance Holdings now services the policies that Applied Underwriters wrote. The regulatory action in California applied only to the EquityComp program, not to the company's standard workers' compensation offerings.
What the Case Means for Investors and Operators
The Brockman case offers a clear lesson for investors in insurance and financial services: regulatory risk and personal criminal liability are separate risks, and both need to be evaluated.
Regulatory exposure
The EquityComp dispute cost Applied Underwriters a monetary penalty in the low eight figures and a program line in California, but it did not threaten the company's survival. For policy people, the case illustrates how state insurance regulators can act decisively against offerings they deem unlawful. The California Department of Insurance did not wait for a federal investigation. It issued a cease-and-desist order and a fine, and the program was effectively removed from the market.
Personal liability
The criminal accusations against Brockman, by contrast, are personal and carry the potential for a long prison sentence. The case also highlights the importance of separating a company's fate from its founder's. Berkshire Hathaway's decision to sell Applied Underwriters in 2020 was likely driven by business strategy, not by Brockman's personal legal troubles. The sale insulated the company from any fallout from the BenefitGuard case. As of April 2024, no further enforcement actions against Applied Underwriters had been announced.
Key Facts
- Full name: Mike Brockman
- Former role: CEO of Applied Underwriters
- Applied Underwriters owner: Berkshire Hathaway (acquired 2006)
- Regulatory action: California Department of Insurance ordered Applied Underwriters to stop selling EquityComp in 2019
- Regulatory fine: Approximately $12.3 million, set by the California Insurance Commissioner (2019)
- Sale of Applied Underwriters: Majority sold to United Insurance Holdings, closed October 2020
- Brockman retirement: 2020
- Criminal indictment: February 2022, Northern District of California
- Accusations: Wire fraud and money laundering
- Alleged misappropriation: Tens of millions of dollars at BenefitGuard
- Plea: Not guilty (March 2022)
- Case status: Ongoing as of April 2024
- Case number: 5:22-cr-00071
Timeline of Key Events
| Date | Event |
|---|---|
| 2006 | Berkshire Hathaway acquires Applied Underwriters |
| 2019 | California Insurance Commissioner orders Applied Underwriters to stop selling EquityComp; roughly $12.3 million fine imposed |
| October 2020 | Berkshire Hathaway sells majority of Applied Underwriters to United Insurance Holdings |
| 2020 | Mike Brockman retires as CEO of Applied Underwriters |
| February 2022 | Federal grand jury indicts Brockman for wire fraud and money laundering (BenefitGuard scheme) |
| March 2022 | Brockman pleads not guilty |
| April 2024 | Case ongoing; no trial date set |
Frequently Asked Questions
Is Mike Brockman still the CEO of Applied Underwriters?
No. He retired as CEO in 2020, and Berkshire Hathaway sold the majority of Applied Underwriters to United Insurance Holdings in October 2020.
Was the criminal indictment related to Applied Underwriters?
No. The accusations stem from an alleged scheme at a separate company called BenefitGuard, where Brockman is accused of misappropriating tens of millions of dollars.
What was the outcome of the California insurance dispute?
California Insurance Commissioner Ricardo Lara ordered Applied Underwriters to stop selling the EquityComp program in 2019 and fined the company roughly $12.3 million. The program was effectively removed from the California market.
Has Mike Brockman been convicted?
No. As of April 2024, the case was ongoing. Brockman pleaded not guilty in March 2022, and no trial date had been set.
