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California regulators are objecting to Berkshire Hathaway’s sale of one of its smaller insurance companies, but they may not have much of an argument.

The California Department of Insurance said Thursday that it was “disturbed to learn that the parties to this transaction purportedly acquired California Insurance Company without obtaining the statutorily-required approval of the California Department,” the statement reads. “In light of this development, we are currently exploring all available options.”

Berkshire and Applied Underwriters said last week that the $920 million sale to company founder Steve Menzies was completed earlier this month after Texas regulators approved it.

The California Department of Insurance denied an application for approval of the sale of California Insurance Co., a subsidiary of Applied Underwriters that was sold in a massive deal that has been under scrutiny over ties to campaign contributions executives reportedly made to the state’s insurance commissioner. The CDI sent out a denial letter to CIC executives and then made their denial public on Monday morning.

The California Department of Insurance says it must sign off on the deal because one of Applied’s subsidiaries, California Insurance Co., is domiciled in the state.

However, The Associated Press reported that Applied Underwriters said that the California Insurance Co. is now domiciled in New Mexico, which did sign off on the deal.

The CDI is seeking to block the move based on a section of California Insurance Code. “Pursuant to CIC 709.5(b), any attempt to transfer the domicile of a California domestic insurer to another state in which it is admitted may only be effected upon the prior approval of the California Insurance Commissioner,” the Oct. 18 letter, addressed to Jeffrey A. Silver, an executive at Applied and CIC, states. “An insurer seeking to transfer its domicile is required to provide the California Commissioner with information and documentation reasonably necessary to determine whether the proposed transfer of domicile is in the best interest of the policyholders of this state.”

Applied is a national provider of workers’ compensation insurance, other commercial insurance, and risk transfer and financing plans. The company is headquartered in Omaha, Neb. Applied’s subsidiaries include California Insurance Co., Continental Indemnity Co., Pennsylvania Insurance Co., Illinois insurance Co. and Texas Insurance Co. that are collectively known as North American Casualty Co.