By Zachary Tracer
Insurers doing business in California reduced investments in Iran-linked companies by about 97 percent since 2009 under pressure from the state’s industry regulator.
The investments in companies that do business with Iran’s military, energy and nuclear sector fell to about $198 million from $6 billion, California Insurance Commissioner Dave Jones said today at a press conference in Los Angeles. He said companies including State Farm Mutual Automobile Insurance Co., and units of Cigna Corp. and ING Groep NV are among insurers that still have the holdings.
The U.S. and European Union have placed sanctions on Iran, saying it’s working on nuclear weapons. President Barack Obama said in his State of the Union address yesterday that the U.S. will do “what is necessary” to prevent the country from obtaining nuclear arms. California insurance regulators have pushed insurers to divest from Iran for years, Jones said.
“State Farm’s investments are in full compliance with all applicable laws and regulations,” Bob Devereux, a State Farm spokesman, said in an e-mailed statement. “While we respect the California Department of Insurance’s interest, we believe foreign policy and rules on foreign investments can be most effectively addressed by the federal government.”
Policyholder-owned State Farm, based in Bloomington, Illinois, has an equities portfolio of more than $50 billion. The top holdings are International Business Machines Corp. and Exxon Mobil Corp., according to data compiled by Bloomberg. Cigna, the third-biggest U.S. health insurer by market value, had an investment portfolio that exceeded $23 billion at year- end, according to a supplement released this month.
California’s identification of insurers with Iran-linked investments isn’t meant to imply the holdings are unlawful, Jones said in a statement. The department can’t force insurers to give up the holdings, and Jones declined to identify the investments or say how much each company holds.
Jones said at the press conference that the Iran-related holdings are worthy of attention because insurers “are making a risky investment.”