California Continues to Publicize Insurers Involved in Iranian Investments
In recent years, California has sought to establish disincentives for insurance companies to invest in certain sectors of the Iranian industry. However, in early 2012, following challenges to its authority to require divestment, the California Insurance Department (the “Department”) entered into a settlement and agreed not to bar insurers from investments in companies doing business with Iran. The Department may, however, make available to the public a list of all insurers engaging in such investments (the “List”). In addition, insurers no longer need to provide quarterly reports detailing their Iranian investments, as such information is already required to be disclosed in their annual financial statements.
Currently, the List serves to identify insurance companies that invest in companies that participate in the nuclear, military and energy sectors of Iran’s economy. The Department has indicated that such investments may be subject to “potentially volatile reductions” in stock prices. However, the Department reserves the right to expand the List based on other “risk-related considerations.”
The List has been and may continue to be updated periodically, and was updated as recently as February 12, 2013. This week, the California Commissioner of Insurance Dave Jones declared the efforts to encourage divestment a success, noting that only $198 million remains invested by California insurers in these “volatile” Iranian companies, compared to approximately $6 billion in 2009. An insurer who does business in California should be aware that the Department is committed to publicizing the names of companies engaged in these kinds of investments and therefore should carefully consider whether an investment in an Iranian company may impact business reputation or affect regulatory relationships.
A link to the Department policy on Iran-related investments can be found here