State Farm Mutual Automobile Insurance Co. and units of Cigna Corp. are among insurers investing in firms that do business with Iran, California Insurance Commissioner Dave Jones said.
An ING Groep NV unit also has Iran-linked holdings, according to a statement today from Jones. Insurers that operate in California have $198 million invested in firms that do business with Iran’s military, energy and nuclear sectors, down from about $6 billion in 2009 when California began pushing them to divest, Jones said.

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.

“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.
No Lawbreaking
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 a press conference in Los Angeles that the Iran-related holdings are worthy of attention because insurers “are making a risky investment.”

Cigna has an investment in Indian Oil Corp., which is controlled by the Indian government and does business mostly within that country, according to an e-mailed statement from Matthew Asensio, a spokesman for Bloomfield, Connecticut-based Cigna. Indian Oil has said that it “does not knowingly engage in any dealings” with anyone on the U.S. Treasury Department’s list of banned people or countries, according to the statement. Asensio declined to give the size of Cigna’s investment.

Dana Ripley, a spokesman for ING, declined to comment.