BILL NUMBER: AB 2160 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 30, 2012
INTRODUCED BY Assembly Members Blumenfield and Feuer
FEBRUARY 23, 2012
An act to add Section 1241.2 to the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2160, as amended, Blumenfield. Insurance: retention risk.
Existing law prohibits domestic insurers from acquiring foreign
investments from or located in foreign jurisdictions designated as
state sponsors of terrorism by the United States Secretary of State.
Existing law, the Iran Contracting Act of 2010, provides that a
person whose name appears on a list developed by the Department of
General Services as a person determined by the department to be
engaged in investment activities in Iran is ineligible to bid on,
submit a proposal for, enter into, or renew a contract with a public
entity.
This bill would prohibit any indirect investment, defined
as an investment in a person that extends credit or provides goods
or services in the amount of $20,000,000 or more to the energy sector
of Iran, or extends credit or provides goods or services of any
amount to the military sector of Iran, of a domestic insurer from
being treated as an admitted asset on the financial statements the
domestic insurer files with require a domestic insurer
doing business in California that has investments in any companies
that are invested in or engaged in business operations with entities
involved in the defense or nuclear sectors of, or in the development
of petroleum or natural gas resources of, Iran to provide a list of
those investments on an annual basis to the Insurance
Commissioner. The bill would require that the investments be
treated as nonadmitted assets on the financial statements of the
domestic insurer that are filed with the commissioner. The bill would
authorize insurers to utilize the list developed for purposes of the
Iran Contracting Act of 2010 to comply with these requirements.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1241.2 is added to the
Insurance Code , to read:
1241.2. (a) The Legislature finds and declares the following:
(1) The federal Securities and Exchange Commission has determined
that business activities in foreign states, sponsoring terrorism,
such as Iran, that are subject to sanctions by the United States may
materially harm the share value of foreign companies. Shares in these
foreign companies may be held in the portfolio of insurance
companies issuing policies to California consumers.
(2) Publicly traded companies in the United States are
substantially restricted in doing business in or with foreign states
such as Iran that the United States Department of State has
identified as sponsoring terrorism.
(3) Insurers in this state currently invest premiums paid by
citizens of California in publicly traded foreign companies that may
be at risk due to business ties with foreign states such as Iran that
sponsor terrorism and are involved in the proliferation of weapons
of mass destruction.
(4) Investments in publicly traded foreign companies that have
business operations in or with foreign states such as Iran are liable
for sanctions under United States law and increase the financial
risk contained in the investment portfolios of insurers doing
business in this state.
(5) Identifying companies with business activities in foreign
states such as Iran that sponsor terrorism and ensuring that those
investments are financially sound is an important public policy
priority.
(6) The federal government has imposed numerous sanctions on Iran
and on entities that have invested at least twenty million dollars
($20,000,000) in any year since 1996 to develop petroleum or natural
gas resources of Iran.
(7) Direct investments in Iran and investments in companies doing
business with the Iranian energy sector are subject to financial risk
as a result of Iran's pursuit of nuclear weapons, sponsorship of
international terrorism, and consequent international isolation.
(8) It is the government of Iran, and not the people of Iran, that
is responsible for Iran's support of terrorism and which commits
egregious violations of human rights under which its own citizens are
required to live.
(b) As used in this section, the following definitions shall
apply:
(1) "Business operations" means maintaining, selling, or leasing
equipment, facilities, personnel, or any other apparatus of business
or commerce in Iran, including the ownership or possession of real or
personal property located in Iran.
(2) "Company" means a sole proprietorship, organization,
association, corporation, partnership, venture, or other entity, its
subsidiary or affiliate that exists for profitmaking purposes or to
otherwise secure economic advantage. "Company" also means a company
owned or controlled, either directly or indirectly, by the government
of Iran, that is established or organized under the laws of or has
its principal place of business in the Islamic Republic of Iran.
(3) "Government of Iran" means the government of Iran or its
instrumentalities or political subdivisions. "Government of Iran"
also means an individual, company, or public agency located in Iran
that provides material or financial support to the Islamic Republic
of Iran.
(4) "Invest" or "investment" means the purchase, ownership, or
control of stock of a company, association, or corporation, the
capital stock of a mutual water company or corporation, bonds issued
by the government or a political subdivision of Iran, corporate bonds
or other debt instruments issued by a company, or the commitment of
funds or other assets to a company, including a loan or extension of
credit to that company.
(5) "Iran" means the Islamic Republic of Iran or a territory under
the administration or control of Iran.
(c) This section furthers the commissioner's authority to ensure
that investments by insurers doing business in California are
financially sound and not subject to risk based on ties to Iran. In
addition to the requirements of Section 1241.1, any indirect
investment of a domestic insurer in any company that has business
operations in Iran shall be treated as a nonadmitted asset on the
financial statements of the domestic insurer filed with the
commissioner.
(d) (1) Any domestic insurer doing business in California shall
determine if it holds in its portfolio any companies invested in or
engaged in business operations with entities in the defense or
nuclear sectors of Iran or is invested in or engaged in business
operations with entities involved in the development of petroleum or
natural gas resources of Iran, and that company is subject to
sanctions under the appropriate federal statute.
(2) The insurer may utilize the list published by the Department
of General Services pursuant to subdivision (b) of Section 2203 of
the Public Contract Code to determine whether it has an investment
subject to this section. Utilization of this list shall be deemed
automatic compliance by the department.
(3) On or before June 30, 2013, the insurer shall determine which
companies are subject to this section.
(e) The insurer shall provide the department, on an annual basis,
all of the following:
(1) A list of investments the insurer has in companies with
business operations that satisfy the criteria in subdivision (d),
including, but not limited to, the issuer, by name, of the stock,
bonds, securities, and other evidence of indebtedness.
(2) A detailed summary of the business operations a company
described in paragraph (1) has in Iran.
(f) If the insurer sells or transfers all of its investments in a
company with business operations in Iran, this section shall not
apply to that insurer.
(g) This section shall cease to be operative if both of the
following apply:
(1) Iran is removed from the United States Department of State's
list of countries that have been determined to repeatedly provide
support for acts of international terrorism.
(2) Pursuant to the appropriate federal statute, the President of
the United States determines and certifies to the appropriate
committee of the Congress of the United States that Iran has ceased
its efforts to design, develop, manufacture, or acquire a nuclear
explosive device or related materials and technology.
(h) The provisions of this section are severable. If any provision
of this section or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.
SECTION 1. Section 1241.2 is added to the
Insurance Code, to read:
1241.2. (a) The Legislature finds and declares the following:
(1) Direct investments in Iran and investments in companies doing
business with the Iranian energy sector are subject to financial risk
as a result of Iran's pursuit of nuclear weapons, sponsorship of
international terrorism, and consequent international isolation.
(2) This section furthers the commissioner's authority to ensure
that investments by insurers doing business in California are
financially sound and not subject to risk based on ties to Iran.
(b) In addition to the requirements of Section 1241.1, any
indirect investment of a domestic insurer shall be treated as a
nonadmitted asset on the financial statements of the domestic insurer
filed with the commissioner.
(c) For purposes of this section "indirect investment" shall mean
an investment in a person that extends credit or provides goods or
services in the amount of twenty million dollars ($20,000,000) or
more to the energy sector of Iran, or extends credit or provides
goods or services of any amount to the military sector of Iran.
(d) For purposes of this section "energy sector" shall have the
same meaning as set forth in subdivision (b) of Section 2202 of the
Public Contract Code.
(e) For purposes of this section "military sector" shall refer to
activities to supply, maintain, or enhance any aspect of the Iranian
military, including, but not limited to, the research and development
of nuclear weapons.