Insurance Commissioner Ricardo Lara became the latest California lawmaker to push for Russian asset and property investment on Monday, issuing a notice to all insurance companies in the state to divest from Russia soon due to the ongoing Russian-Ukrainian war.
Since the war started last month, Californian state agencies, businesses, and lawmakers from both sides of the aisle have increasingly been adding or proposing more sanctions against Russia for attacking Ukraine. On February 28th, Senator Mike McGuire (D-Healdsburg) introduced a bill that would have both state pension funds, worth around $1.7 billion, as well as all state agencies, divest of financial holdings associated with Russian assets. Californian companies under the bill would also be strongly encouraged to follow suit with divesting. The bill, which has been fast tracked, is expected to be passed in the coming weeks, thanks largely due to Republicans and Democrats uniting in support of the legislation.
Days later, Governor Gavin Newsom issued a new Executive Order that directs state agencies and departments to end all agreements with contractors who are currently subject to sanctions imposed by the federal or state government due to the War. Californian companies since the war have also voluntarily divested from Russia, from film companies halting releases there to Apple completely pulling out of the country.
With pressure building nationwide and worldwide to do more, Insurance Commissioner Lara issued his notice to insurance companies on Monday.
“California stands with the world community in rejecting Russia’s invasion of Ukraine and its assault on freedom and equality,” said Lara in a statement on Monday. “As the nation’s largest insurance market and the fourth largest insurance market in the world, we must not tolerate California consumers’ insurance premiums funding an authoritarian regime that invades a sovereign government, terrorizes its population, and is an enemy of free expression, speech, assembly, press, and equality for LGBTQ+ people, women, and ethnic and religious minorities. Insurance companies must send a loud and clear message of solidarity with the people of Ukraine and the global community by withdrawing any financial support for the Russian regime.”
Legislators, currently working on their own divestments, supported Lara’s action on Monday, noting that the size of California’s insurance market would mean that a noticeable tooth of investment would likely be taken away from Russia as a result as US based insurers invested roughly $2 billion in Russian bonds and investments before the war, while indirect investments likely account for much more.
“Californians join the world in denouncing Russia’s brutal invasion of Ukraine and its continued heinous violations of human rights,” Assemblyman Tom Daly (D-Anaheim) said after Lara’s announcement. “Because of the size and strength of California’s insurance market, actions by insurance companies doing business here to reevaluate their investments and hold Russia accountable will be felt around the world.”
Continued Russian Divestment from California
Financial experts noted that Lara’s actions are part of a growing trend to divest from individual sectors.
“It tells you a lot just how strong people feel about this,” explained Mary Simmons, a New York-based financial tracker looking at state responses to the war, to the Globe on Monday. “States and state agencies are trying to put a stop on investments, companies are voluntarily putting the stop on investments, and if they don’t, they are being called out on it. Coca-Cola and McDonald’s, for example, didn’t immediately pull out of Russia, but public pressure really accelerated their decision to.”
“And having insurance companies, especially those that operate in a state as large as California, stop investment? That’s trillions. Add in all the money going out from other US actions and other actions by countries the world over, and you are seeing Russia bleed investment. They planned for years on the invasion and expected it to be bad, but between Ukraine’s allies doing all they can short of war and Ukraine itself putting up a defensive that is confounding Russian troops, Russia is being hurt in the short-term, and, if these sanctions and divestments are for the long haul, in the long term too. Every little bit helps.”
“And for legislators out there, or anywhere, this is an election year. They don’t want to be the ones known for voting against divestment.”
Other Russian divestments coming from California or Californian agencies are expected to continue to come through as the war in Ukraine continues.