California Insurance Commissioner Dave Jones vowed to continue requiring insurers to disclose investments in fossil fuel assets despite a threat of legal action by Republican officials.

Mr. Jones launched the Climate Risk Carbon Initiative in January 2016 to require insurers with $100 million in annual premiums doing business in California to disclose investments in fossil fuels and asked all insurers operating in the state to divest investments in thermal coal. The commissioner launched the initiative because of the potential for investments in fossil fuels to become stranded assets on the books of insurers, meaning they have little or no value amid regulatory and market changes.

However, 12 Republican attorneys general and Kentucky Gov. Matt Bevin called the initiative “misguided as a matter of policy, questionable as a matter of law and inconsistent with the principle of comity among the United States” in a letter sent to the commissioner on Monday. Comity refers to the practice of states and other political entities to mutually recognize legislative, executive and judicial acts.

The initiative’s requirements do not just apply to California-based companies, the officials said in their letter, but to those domiciled in their states and targets energy companies with significant presences in their states, which include Alabama, Arkansas, Indiana, Kentucky, Louisiana, Missouri, Montana, North Dakota, Oklahoma, Texas, Utah, West Virginia and Wyoming.

“There is little evidence behind your purported concern that companies relying on fossil fuels pose unusually high risks for insurance companies as investors or that insurers are unaware of or ignore such risks,” they said in the letter. “Investors are aware of any market risks to fossil fuel companies and those risks are priced into the market. Insurance carriers typically have conservative investment strategies weighted heavily toward bonds, which are unlikely to become ‘stranded assets’.”

Rapid and premature divestment from bonds could cause insurers to incur significant losses, they argued.

Legal action is a certainty if Mr. Jones continues his initiative, the officials warned in the letter, citing the U.S. Constitution’s Commerce Clause restricting state actions that burden or discriminate against other states.

But Mr. Jones struck a defiant tone in a statement responding to the lawsuit threat.

"While politicians in coal, gas and oil states continue to deny the existence of climate change, California has concluded based on overwhelming scientific evidence that climate change is real,” Mr. Jones said in a statement on Tuesday. “The threats of lawsuits by 12 red state attorneys general and one governor are not going to stop me from doing my job as insurance commissioner to make sure that insurance companies are recognizing potential financial risks associated with climate change.”

Mr. Jones said it is his job as regulator of the largest insurance market in the country to make sure insurers evaluate and address potential risks to their investment portfolio and that they are investing in assets that retain value so those assets are available to pay future claims.

The bankruptcies of more than 35 coal companies and the refusal of major U.S. banks to provide loans for new coal infrastructure and the decision of major international insurers to stop investing in coal are all evidence that coal is and has run the risk of being a stranded asset, he said.

“For those climate-denying politicians of red states who threaten to sue me, I will happily defend my obligation as California’s Insurance Commissioner to make sure insurers are addressing climate change-related risks and to protect California consumers,” Mr. Jones said.