Commissioner Poizner Calls for Complete Divestment, Subpoenas 10 Insurance Companies that Failed to Respond to Data Call
Insurance Commissioner Steve Poizner today announced that insurance companies licensed to do business in California have admitted to holding $12 billion in investments in companies that do business with the Iranian energy, nuclear, banking and defense industries.
"I launched this effort six months ago to ensure insurance industry compliance with a new state law that prohibits California insurance companies from investing in countries designated as state sponsors of terrorism," said Commissioner Poizner, "I also wanted to determine the amount of insurance premium dollars, if any, paid by California consumers that end up invested in companies that do business with the energy, nuclear, banking and defense sectors of the Iranian economy.
"As a result of this probe, insurance companies have reported $12 billion in investments in companies that do businesses with the Iranian energy, nuclear, banking and defense industries. Independent of the data call, at least $6 billion of insurer investments has been verified by my staff. With this new information, I call upon the insurance industry to do what's right and divest themselves of these investments. If they do not do it voluntarily, I will use every tool at my disposal to force divestment."
Specifically, the Department of Insurance (CDI) will soon provide a list of companies that are doing business with the Iranian energy, nuclear, banking and defense industries to insurance companies licensed to do business in California. Many of these companies are based in South America, China, Russia and Europe. They include such companies as Siemens, Statoil, Petroleo Brasileiro and Total SA. The list will be created using information from the data call and input from outside consultants and other experts.
At that point, insurance companies will be given 30 days to notify CDI in writing that they will comply with the divestment request and disclose the value of the identified investments. Insurers will be given 90 days to eliminate those holdings from their portfolios.
For companies that do not voluntarily agree to divest, CDI will make public a list of these companies and provide the name and value of their Iran-related investments. Commissioner Poizner will also subpoena high-ranking executives of these insurance companies to testify under oath and ask them why they believe it is in the interest of California policyholders for their premium dollars to be invested in companies propping up Iran's energy, nuclear, defense and banking sectors.
If after this hearing an insurer still refuses to divest, Commissioner Poizner will take all legal action available to him to effectuate divestment.
"The government of Iran continues its oppressive crackdown against its own people, and thumbs its nose at the international community over its expanding nuclear program," said Commissioner Poizner. "Iran's ambition to dominate the region under a nuclear umbrella is a very serious threat to this country and to people all over the world. It's just wrong for consumers here in California to find out that their hard-earned money that they pay in insurance premiums are propping up the regime in Iran. We need to do whatever it takes to put maximum pressure on Iran to change its behavior."
Non-Responding Insurance Companies
Out of 1,327 insurance companies licensed in California and required to respond to the probe, 1,111 have complied, but 216 did not respond at all. Commissioner Poizner will subpoena a representative sample of 10 of the non-responders to explain why they ignored this critical data call. That hearing will be held on January 12 in Los Angeles.
The 10 companies facing a subpoena are Travelers Indemnity Co., PMI Mortgage Insurance Company, Thrivent Financial for Lutherans, Farmington Casualty Company, Old Republic General Insurance Corporation, American Home Assurance Company, Anthem Blue Cross Life and Health Insurance Company, Insurance Company of the West, Medical Insurance Exchange of California and Sequoia Insurance Company. The Commissioner will pursue additional actions to ensure that the remaining 206 companies respond to the data call.
Terror Financing Probe - By the Numbers
* Total Indirect Investments Reported by Insurance Companies: $12 billion
* Breakdown by Sector:
Banking $6,150 million
Defense $40 million
Energy $3,994 million
Nuclear $147 million
Unclassified $1,803 million
Total $12 Billion
* Number of Companies Required to Respond to Data Call: 1,327
* Number of Companies Yet to Respond: 216
* Total Reported Direct Investments in Iran: $0
* The California Department of Insurance has so far independently verified $6 billion in indirect investments, according to 2008 filings made by insurance companies.
* Number of Companies holding the $6 billion in Indirect Iranian Investments based on 2008 filings: 341