Insurers Divest Nearly $400M in Iran-Related Assets

California Insurance Commissioner Steve Poizner announced that his focus on reducing the exposure of California policyholders to risky Iran-related investments resulted in insurers selling nearly one-fifth of the assets the industry holds in the 50 companies the California Department of Insurance (CDI) has identified to be doing business with Iran’s nuclear, energy and defense sectors in the first quarter of 2010.

“In the weeks before my order to disqualify risky Iran-related investments from their books took effect, insurance companies sold hundreds of millions of dollars of investments in companies that prop up the oppressive Iranian government,” said Commissioner Poizner. “This proves that insurance companies can do the right thing and make safe and profitable investments without having to resort to investing in companies that actively do business in rouge elements of the Iranian economy.”

As of March 31, 2010, CDI ordered statement disqualification for holdings in the 50 Iran-related companies. A detailed analysis indicates that at the end of 2009, insurers licensed to do business in California held $2 billion of investments in the 50 companies. As of March 31, 2010, those holdings had dramatically decreased to $1.6 billion. To put these numbers in context, in 2009 – prior to Commissioner Poizner’s initiative – insurers doubled their investment in Iran-related companies to $2 billion. In the first three months of 2010, insurers reversed course and sold 20 percent of these holdings.

In April, Poizner announced that more than 1,000 insurers licensed in California had pledged to forgo future investments in the identified companies. At that time a list of companies that disagreed with the investment moratorium also was released.

Commissioner Poizner first announced his Terror Financing Probe in June 2009 to review compliance with a recently-enacted California law that prohibits insurers from investing in designated state sponsors of terror. As part of a data call issued by the Commissioner, insurance companies were required to identify direct investments in designated sectors of the Iranian economy and indirect investments in companies doing business in those sectors. In December 2009, the Department announced that insurers reported no direct investments in Iran and therefore were in full compliance with state law prohibiting those types of investments. A CDI review of insurer financial statements, however, uncovered billions of dollars of indirect investments in companies doing business with the Iranian oil and natural gas, nuclear and defense sectors.

Source: CDI