SAN FRANCISCO (Dow Jones) -- Berkshire Hathaway said late Tuesday that it has agreed to acquire two California workers' compensation firms as the insurance- focused conglomerate run by billionaire Warren Buffett expands its bet on the once-troubled market.

American All-Risk Insurance Services (AARIS) and American Commercial Claim Administrators (ACCA), which provide underwriting, operational, and claims- management services for California workers' comp insurers through a network of agents, will become a part of Berkshire subsidiary Columbia Insurance Co.

The transaction is expected to close in July. A purchase price wasn' t disclosed.

AARIS and ACCA are wholly-owned subsidiaries of Acacia Pacific Holdings. Lou Rovens, the founder and principal owner of the businesses, will continue to operate Acacia and its related non-workers compensation insurance activities, Berkshire explained.

The acquired operations of AARIS and ACCA will continue to be managed by Chief Executive Rob Darby , who has run the two firms since February 2005 , Berkshire added.

Workers' compensation insurance covers the cost of medical care, lost wages and rehabilitation for on-the-job injuries and provides benefits for the family of any employee killed in work-related accidents.

Intense competition between California workers' comp insurers in the late 1990s - - combined with spiraling medical costs, fraud and abuse -- caused more than 20 firms to go bust or leave the state from 2000 to 2003.

In 2004, Berkshire (BRKA) (BRKB) became the first major new insurer to return to the market when its subsidiary National Liability & Fire Insurance signed an agreement with AARIS. The firm dropped a previous relationship it had with Everest Re (RE) earlier that year.

Buffett was betting that workers' comp reforms pushed through by Governor Arnold Schwarzenegger would reduce fraud and losses in the system. Buffett had been an economic adviser to Schwarzenegger during his election campaign

" This acquisition will provide value to our current client partners, agents, brokers, and their customers, by giving them a stable market and unsurpassed financial strength," Darby said in a statement. " We look forward to a long and mutually rewarding relationship, as well as becoming fully integrated into the Berkshire Hathaway family." (END) Dow Jones Newswires 07-19-06 0456ET Copyright (c) 2006 Dow Jones & Company, Inc.