Judge says state can sanction German insurance firm

California officials investigating Holocaust-era insurance claims got the green light from a judge last week to punish a German company.

At a Feb. 23 hearing in San Francisco, Munich Reinsurance was warned that it can be fined and slapped with sanctions if it fails to provide policyholder information.

Judge Michael Jacobs ruled in a state Department of Insurance administrative law court that California has jurisdiction over Munich Re, in part because the world's largest reinsurance company has a U.S. affiliate that does business in this state.

That affiliate, American Reinsurance Company, faces the risk of losing its license to business in California if Munich Re fails to comply, Jacobs stressed.

"I mention these sanctions on the record so that the insurers know what could be the consequences of their action," Jacobs said during the one-hour hearing. Any appeals would be heard in state Superior Court.

State Department of Insurance officials are attempting to build a registry of unpaid insurance claims from policies issued in Europe between 1920 and 1945.

Among other things, they are seeking access to the records of a German insurance company, Victoria, in which Munich Re holds a controlling interest.

Last September, Munich Re made an agreement with California officials to provide access to Victoria's Holocaust-era policies and policyholder lists.

Now, however, California officials contend they are not getting what was promised.

Although Munich Re did secure an offer from Victoria to allow state regulators a chance to look at Victoria's records in Dusseldorf, California officials blasted that proposal. Victoria would not guarantee that they could make copies of documents while searching the archives.

California officials assert that last week's ruling will enable them to step up their pursuit of those records. They can now subpoena Munich Re officials and threaten the company with fines.

"This is a major step for us," lawyer Karl Rubinstein said after the hearing. Rubinstein has been hired by the state to help enforce California's new Holocaust Registry Law. Starting April 6, the law allows the state to strip uncooperative companies or their affiliates of their certificates to do business in California.

A spokesman for American Reinsurance Company was unable to estimate how much business American Re does in California, but he did say the company has revenues of $3 billion nationwide, making it one of the three largest reinsurers in the country.

Martin Checov, a San Francisco lawyer for Munich Re, said a day after last week's hearing that his clients are now "just waiting to find out what steps the [California investigators] are going to take."

However, he insisted that trying to punish Munich Re is ridiculous.

"We do not represent Victoria, and Victoria does not do business in California," he said. "Munich Re and its domestic affiliates were simply acting as a go-between to gain access to the [Victoria] records" that California officials were seeking.

So far, Munich Re has not contested the ruling that California officials have jurisdiction to punish the company. However, Checov said the insurer might do so at a later point.

The company stated its position last month in a letter to the International Commission on Holocaust-Era Insurance Claims: "We are and always have been solely a reinsurer." A reinsurer doesn't write individual policies; instead, it sells insurance to companies that do write individual policies.

The letter continued, "Munich Re never issued any insurance policies, does not have any relevant insurance policy records, and does not control any insurers which issued insurance policies in Europe during the Holocaust era."

California officials contest the last point. In a brief filed last month, Rubinstein made a point for California's jurisdiction over Munich Re by stating that "Munich Re controls Victoria through a 60 percent ownership of the ERGO Insurance Group, which in turn owns 99 percent of Victoria."

And since Munich Re controls a company that issued Holocaust-era policies, California officials say, then Munich Re must provide access to that policyholder information if it wants its affiliates to continue to do business in California.

Andy Altman-Ohr

Andy Altman-Ohr was J.’s managing editor and Hardly Strictly Bagels columnist until he retired in 2016 to travel and live abroad. He and his wife have a home base in Mexico, where he continues his dalliance with Jewish journalism.