As the German government announced it favors more international sanctions against Iran, Munich Re said it would become the second German reinsurer to stop writing business there and will not renew existing coverage.
The company's statement follows yesterday's announcement by Allianz that it has stopped doing business in Iran.
Munich Re, which reported it had EUR41.4 billion ($56 billion) in gross premiums written, said in a statement its decision "will have an impact on Munich Re's premium volume of around EUR10 million ($13.5 million)," mainly from property reinsurance.
In announcing its action the company did not link its decision to any moves by the government, stating only that, "Due to the political situation in Iran, Munich Re has decided to not renew existing business or write any new business with insurance companies there."
Pressed for more detail, Munich Re spokesman Klaus Schmidtke referred to a press statement he made saying the company had been "looking at the situation for a long time; the political situation is worse now and we decided to stop business."
He noted that the company does not sell primary insurance in Iran and that the firm in October had halted reinsurance coverage for marine shipments of fuel in and out of Iran.
Sabia Schwarzer, a spokesperson for Allianz, said of her company, "We are not renewing any reinsurance treaties because of political developments in the region."
She said the political situation referred to "the sanctions that are being thought of for its [Iran's] nuclear ambitions."
In the United States, California Insurance Commissioner Steve Poizner has been pressuring companies to drop investments in firms with Iran links.
He said last week that in March he will take regulatory steps against insurers with investments in firms with Iranian connections that could lower their capital and surplus levels. That move could possibly hurt company financial-strength ratings.
Mr. Poizner said as of March 31, investments an insurer holds in any of 50 companies he has found doing business in the Iranian oil and natural gas, nuclear and defense sectors, can be recognized on the firm's financial statements in California.
Meanwhile, a spokesman for German Chancellor Angela Merkel said persistent defiance by Iran with regards to United Nations demands to curb its nuclear program merited considering further sanctions.
"Our hand is still stretched out ... but the continued defiance toward the IAEA, to UN resolutions and Iran's dangerous policies in general oblige the international community to take the path in New York toward further sanctions against the regime in Tehran," the spokesman said.