Hannover Re announced it is scaling back its exposure to coal-fired power plants and coal mines, joining a growing list of re/insurers that have made similar moves.
In addition to excluding coal-based projects from its investment portfolio, Hannover Re said, it is also adopting a more restrictive underwriting policy on the reinsurance of coal-based risks.
Hannover Re said it will not invest in securities of issuers that generate 25 percent or more of their revenues from coal-based energy production.
Further, on the underwriting side, as a general principle, the company will not be providing reinsurance coverage for any planned new coal-fired power plants or coal mines. However, in countries where coal accounts for a particularly large share of the energy mix and sufficient access to alternative energy sources is not available, a limited number of exceptions will be permitted after review of the technical standards.
Furthermore, Hannover Re said it has set itself the goal of no longer covering any coal-based risks in connection with power generation in its entire property and casualty reinsurance portfolio from the year 2038 onwards. The time horizon of 2038 makes allowance for the fact that the phase-out of fossil fuels can only take place over the medium to long term, said the reinsurer.
The group said it will continue to support the process of transformation in the energy industry through its “long-standing efforts to write more risks associated with renewable or alternative energy sources.”
Hannover Re is joining other re/insurers that have decided to abandon investments in coal-based businesses and/or limit coverage for such risks, which include Allianz, AXA, SCOR, Munich Re, Swiss Re and Zurich Insurance, as well as the Lloyd’s marketplace.
Hannover Re noted it has made this decision in order to support the goals set by the 2015 Paris Agreement on climate change, when the governments of 195 nations reached agreement on a global action plan for a low-carbon economy. In Europe alone, 17 of 28 EU member states have decided to phase out fossil fuels or are discussing such a move, the company affirmed.
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