German reinsurance company Munich Re AG will not renew existing business or write any new business with insurance companies in Iran due to the political situation there, a spokesman said Friday.
The Munich-based company says the decision will affect Munich Re’s premium volume of around euro10 million ($13.5 million) annually. In 2008, the group had a premium volume of near euro40 billion.
“We’ve been looking at the situation for a long time; the political situation is worse now and we decided to stop business,” Munich Re spokesman Klaus Schmidtke said.
Reinsurers sell back-up coverage to insurance companies to spread risk in the event of large losses. Munich Re also sells life, property and health primary insurance and is one of the world’s largest reinsurers.
In Iran, the company's business is mainly property reinsurance, Schmidtke said, adding that Munich Re does not sell primary insurance in Iran.
The company already pulled out of reinsurance for marine shipping of fuel to and from Iran in October, he said.
Joerg von Fuerstenwerth, director of The German Insurance Association said his organization is following the international discussion on Iran and urged the European Union to work to develop uniform measures to limit the effects on businesses.
“Increasing the economic sanctions against Iran is justified and will be supported by the German insurance industry,” he said in a statement.
Munich Re’s announcement follows that of German industrial conglomerate Siemens AG, which said last month that it will also stop doing business in Iran by mid-2010.
Iran has arrested hundreds and executed several opposition and anti-government protesters of President Mahmoud Ahmadinejad, who they say was fraudulently re-elected last June.
Meanwhile, the country’s nuclear program is worrying countries including Germany, the U.S. and Israel. The United Nations’ nuclear agency said Thursday that Iran may currently be working on making a nuclear warhead. Iran denies any interest in developing nuclear arms.