Investments in such companies, he wrote 1,300 California-licensed insurers, must be reported on their financial statements with the department "as not admitted assets."

Reclassification of an admitted asset on an insurers' balance sheet as a nonadmitted asset would likely generate a charge against its policyholders' surplus or capital account, effectively lowering the overall level.

"The deteriorating situation in Iran only underscores the need to take action to ensure that insurance company portfolios are not at risk from Iran-related holdings," said Mr. Poizner in a statement.

He said his list of 50 companies doing business with the Iranian oil and natural gas, nuclear, and defense sectors was compiled after research based on insurers' data, pension funds' data, research firms and risk experts.

"Those investments are subject to increased financial risk and insurers should avoid future investments in these 50 Iran-related companies," he said.

Two insurance companies, one a major health insurer, the other a major personal lines carrier, said Mr. Poizner, "have stepped forward and agreed to divest Iran-related investments. These companies have asked the department not to reveal their identities. Negotiations continue with several other companies that have initiated discussions with the department on voluntary divestment.

A statement from Roger Robinson, CEO of RWR Advisory Group, a Washington DC-based research and consulting firm that specializes in the assessment and management of global security risk, was included in Mr. Poizner's announcement. His department used RWR to help compose the list.

"Investments in companies with certain ties to Iran encounter special reputational risks that can have an impact on share value, often in a manner that is asymmetric to the actual business activity in that country," said Mr. Robinson.

"Adverse public reaction brought on by corporate activity in Iran can cause an investment in such companies, including those identified by the department, to take hits to corporate reputation and even share value when the size of the business transactions would otherwise be immaterial," he added.

The 50 listed companies are in 20 foreign countries and includes such well-known firms as Royal Dutch Shell Plc of the United Kingdom and Siemens AG of Germany, as well as lesser known companies such as Ulan-Ude Aviation Plant JSC of Russia, OMV of Austria and Dragon Oil PLC of Ireland.

Of the 1,300 insurers licensed to do business in California, about 340 hold investments in companies on the list. Those investments total approximately $6 billion.

Sam Sorich, president of the Association of California Insurance Companies said the group was surprised by the announcement. No insurers, he said, have violated any state or federal investment laws.

He said he did not believe there would be much impact on insurers since the firms on the list are only a small percentage of investments, "but for an individual company with a high number of investments in these companies it may be significant."

Overall, Mr. Sorich said he doubted Mr. Poizner's action "will be disruptive to the California market.

The commissioner said California law requires insurers to carry a minimum level of capital and surplus in order to continue to be licensed to sell insurance in this state.

His letter requested that insurers licensed to do business in California agree not to make future investments in any companies on the list or in any affiliates owned 50 percent or more by those companies until either (a) Iran is removed from the United States State Department's list of state sponsors of terrorism or (b) the company and its affiliates cease to do business with Iran's oil and natural gas, nuclear and defense sectors and is removed from the list.

Insurers have about $6 billion in Iran-related investments, which account for only 0.15 percent of the total estimated $4 trillion in investments by insurance companies licensed to do business in California, he said.

Insurers, said Mr. Poizner, acquired $1.8 billion in Iran-related investments in 2008 and $2.4 billion during the first quarter of 2009.

His department's "Terror Financing Probe" began in June 2009 and, he said, it continues to investigate banks that may be doing business with the Iranian petroleum and natural gas, nuclear and defense sectors and may supplement its list in the future.

The department has said that insurers reported no direct investments in Iran and therefore are in full compliance with state law prohibiting those investments. But it noted it had "uncovered billions of dollars of indirect investments in companies doing business with the Iranian oil and natural gas, nuclear and defense sectors."