News16 Nov 2017

Investments:Major insurers are going green

| 16 Nov 2017

Manulife Financial has launched its first-ever green bond offering: a S$500 million (US$369 million) borrowing that has a 12-year term and a coupon of 3%. This is also the first green bond offering by any life insurance company, says the insurer.

In a statement, Manulife said that issuing a green bond “aligns our financing with our existing green investment activities,” all part of a plan to help facilitate “the transition to a more sustainable economy”.

Manulife’s green-bond offering follows the release of its green bond framework, a document detailing the issuers investment philosophy in support of sustainability, the use of proceeds, the eligibility criteria, the process for project evaluation, the management of the proceeds and the reporting.

“Manulife believes that investments in renewable energy, energy-efficient buildings, sustainably-managed forestry and other long-duration assets provide a good economic fit for our long-dated insurance liabilities, some of which continue for over 20 years,” said the document.

The Singapore-dollar borrowing, which can be redeemed in seven years, is Manulife’s second borrowing in that market. In May 2016, it priced a S$500-million 10-year offering of subordinated notes at 3.85%. This was part of Manulife’s goal to broaden its sources of finance by raising capital from a different investor base — knowing that about one-third of its earnings come from Asia.

Coal

Separately, several global (re)insurers have announced a US$20-billion divestment from coal, with a growing number refusing to underwrite any new projects, says the Unfriend Coal campaign.

In a new scorecard, which rated the 25 insurers on their action on coal and climate change, 15 insurers have already divested approximately US$20 billion worth of bonds and equities in a bid to reduce their investment exposure to the coal industry, which is said to be the biggest single source of CO2 emission.

AXA was the first global financial institution to shun investments in coal in 2015, and became the first to announce it would no longer underwrite coal projects this year. SCOR, Swiss Re and Zurich are also making efforts to change coal underwriting, the report said.

Looking to investments in 2018

Green investment activities are becoming more widespread at a time when insurers are increasingly looking to their investment portfolios as a large contributor to profitability.

Green bonds and ESG investments will feature at the 5th Asia Investment Management Summit for Insurance to be held in Hong Kong on 30 November to 1 December 2017.

Also to be discussed at the conference is insurers' investments in InsurTech such as buying the shares of Chinese online-only insurer Zhong An Insurance, which went public in September.

The Conference official keynote speaker is Dr Moses Cheng, Chairman of the newly established Insurance Authority. Industry keynote speakers are Mr Mark Saunders, Group Chief Strategy and Corporate Development Officer, AIA Group, and Mr Jonas von Oldenskioeld, Head Asset Management Asia Hub, Swiss Re.

Industry speakers who hail from around the world— including Singapore, Hong Kong, India, the UK and the UAE — will share their insights on a range of topical issues including equities and interest rates, asset allocation, alternative assets, GCC bonds and how the latest technology, in particular blockchain, will facilitate investment operations.

The conference offers insurance investment managers a head start in understanding the likely investment climate in 2018. Its theme is "Insuring an Auspicious Start to the Winning Side of 2018".

For more details, please see http://www.asiainsurancereview.com/Events/Home/Asia/Invest2017


 

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