News: 2010 Press Release
For Release: July 1, 2010
Media Calls Only: 916-492-3566
Insurance Commissioner Steve Poizner Announces Insurers Divest Nearly $400 Million in Iran-Related Assets
Insurance Companies Sold One Fifth of Total Iran Related Assets
On the same day President Obama is expected to sign a tough new law expanding sanctions against the Iranian government, California Insurance Commissioner Steve Poizner announced that his relentless 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, the Wall Street Journal reported that Iranian sanctions at the federal level had yielded only modest tangible results. At that time, existing U.S. sanctions had led to less than $43 million in Iranian money frozen - approximately a quarter of what Iran earns in oil revenue in a single day.
However, President Obama is expected to sign the Comprehensive Iran Sanctions, Accountability, and Divestment Act today, a new law that punishes foreign financial and energy firms that invest in Iran. The United Nations and European Union have also both recently expanded their sanctions to increase pressure on the Iranian government.
Commissioner Poizner has taken the lead in protecting California consumers by encouraging insurers to reduce investment holdings in the 50 companies on the CDI investment list. In April, he announced that more than 1,000 insurers licensed in California had pledged to forgo future investments in the identified companies. At that time Commissioner Poizner also released a list of companies that would not agree to an investment moratorium. These insurance companies include MetLife, Safeco and Hartford. The complete list can be found by selecting this link.
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.
Please visit the Department of Insurance Web site at www.insurance.ca.gov. Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
If you are a member of the public wishing information, please visit our Consumer Services.