California's insurance commissioner said Tuesday he will push insurance companies doing business in California to divest up to $12 billion in indirect investments in Iran's defense, nuclear, energy and banking industries.
Commissioner Steve Poizner said he will urge the companies to voluntarily sell the investments they reported to his office.
If they refuse to sell within 120 days, he plans to try to force the divestment so money paid by California policyholders is not flowing to a U.S.-listed state sponsor of terrorism.
He also intends to subpoena executives from other companies that didn't provide the Iranian investment information to his office.
Poizner, who is seeking the Republican nomination for governor next year, is lining up support from other states' insurance regulators even as insurance companies object to a state-by-state approach they said could interfere with U.S. foreign policy.
Florida Insurance Commissioner Kevin McCarty, secretary-treasurer of the National Association of Insurance Commissioners, said he is consulting other states' commissioners to see if it is practical to develop a national effort similar to California's.
"We ought to do it through the states, but in a coordinated fashion," said Pennsylvania Insurance Commissioner Joel Ario, who also is considering a divestment push.
Steve Suchil, the American Insurance Association's assistant vice president for state affairs, said the industry has never questioned Poizner's authority to request the investment information.
Neither he nor John Mangan, Western regional vice president for the American Counsel of Life Insurers, could say if their member companies were likely to fight a divestment order.
Both said their member companies cooperated with Poizner to the best of their ability.
The companies were required to disclose investments in companies that do at least $20 million of business in Iran's petroleum or natural gas industries, and list investments of any amount in companies doing business with Iran's banking, nuclear or defense industries.
Ario said discouraging Iran's nuclear program is in the national interest, particularly given the potential alternative if the Middle Eastern country develops nuclear weapons.
President Mahmoud Ahmadinejad said Tuesday that Iran is considering decreasing its cooperation with the International Atomic Energy Agency after it issued a resolution critical of Iran last week. Iran said it would build even more nuclear facilities.
"It ought to be a top priority for all Americans, including the insurance industry," Ario said. "If none of the forms of deterrence that we're using change Iran's plans, then you have to say let them have nuclear weapons or we're looking at a military strike."
Poizner plans to use his opening remarks at this weekend's quarterly meeting of the national association in San Francisco to urge a nationwide effort.
He scheduled a news conference Wednesday with an Iranian dissident and representative of the Simon Wiesenthal Center at the Museum of Tolerance in Los Angeles to outline his findings and next steps.
"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," Poizner told The Associated Press before Wednesday's announcement. "We need to do whatever it takes to put maximum pressure on Iran to change its behavior."
Insurers say they already cooperate with the U.S. Treasury Department's Office of Foreign Assets Control. Treasury spokeswoman Natalie Wyeth declined comment.
Poizner, who oversaw a National Security Council anti-terrorism division in 2001 and 2002, said he is trying to close "a giant loophole" in federal and state law that lets companies invest indirectly in Iran through other companies.
The information disclosed by insurers shows most of those companies are based in Europe, South America, Russia and China, he said.
In June, Poizner ordered 1,327 companies that do business in California to report their direct and indirect investments in Iran. About 250 of those companies are headquartered in California, the world's fourth-largest insurance market.
Poizner's review found no direct investments in Iran, which would violate a California law that took effect this year. The companies reported $12 billion in legal indirect investments. The insurance department has been able to verify about $6 billion of those investments so far.
Another 216 insurers have not responded. Poizner plans to subpoena a sampling of executives from 10 of those companies to explain themselves at a Jan. 12 hearing in Los Angeles, while he pressures the remainder to comply.
He intends to give the remainder 30 days to say they will divest, and an additional 90 days to do so.
He plans to publish the names of the companies that don't divest.
Poizner's lawyers say he could force them to divest because the holdings are financially risky.
However, it is unclear if he could force divestment by companies headquartered outside California. Poizner's lawyers previously said he could not, but now say they believe he has the authority.
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