NU Online News Service, Feb.19, 1:00 p.m. EST

As the German government announced it favors more internationalsanctions against Iran, Munich Re said it would become the secondGerman reinsurer to stop writing business there and will not renewexisting coverage.

The company's statement follows yesterday's announcement byAllianz 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 "willhave an impact on Munich Re's premium volume of around EUR10million ($13.5 million)," mainly from property reinsurance.

In announcing its action the company did not link its decisionto any moves by the government, stating only that, "Due to thepolitical situation in Iran, Munich Re has decided to not renewexisting business or write any new business with insurancecompanies there."

Pressed for more detail, Munich Re spokesman Klaus Schmidtkereferred to a press statement he made saying the company had been"looking at the situation for a long time; the political situationis worse now and we decided to stop business."

He noted that the company does not sell primary insurance inIran and that the firm in October had halted reinsurance coveragefor marine shipments of fuel in and out of Iran.

Sabia Schwarzer, a spokesperson for Allianz, said of hercompany, "We are not renewing any reinsurance treaties because ofpolitical developments in the region."

She said the political situation referred to "the sanctions thatare being thought of for its [Iran's] nuclear ambitions."

In the United States, California Insurance Commissioner StevePoizner has been pressuring companies to drop investments in firmswith Iran links.

He said last week that in March he will take regulatory stepsagainst insurers with investments in firms with Iranian connectionsthat could lower their capital and surplus levels. That move couldpossibly hurt company financial-strength ratings.

Mr. Poizner said as of March 31, investments an insurer holds inany of 50 companies he has found doing business in the Iranian oiland natural gas, nuclear and defense sectors, can be recognized onthe firm's financial statements in California.

Meanwhile, a spokesman for German Chancellor Angela Merkel saidpersistent defiance by Iran with regards to United Nations demandsto curb its nuclear program merited considering furthersanctions.

"Our hand is still stretched out ... but the continued defiancetoward the IAEA, to UN resolutions and Iran's dangerous policies ingeneral oblige the international community to take the path in NewYork toward further sanctions against the regime in Tehran," thespokesman said.