Insurance Jottings

Lloyd’s Insurer Brit to Stop Insuring Australia’s Adani Coal Mine

Lloyd’s insurer Brit will not insure Adani Enterprises’ Carmichael thermal coal mine, it said on the 23rd February, adding to a growing list of Lloyd’s insurers who have made similar pledges.

 

Carmichael has provoked controversy in Australia with its plan to open up a new thermal coal basin at a time of growing concern over global warming, in a region that is in need of jobs.

 

“Brit does not, has never, and will not write any policies relating directly to the Adani Carmichael coal mine itself,” Brit said.

 

“Brit also confirms that it does not plan to renew any risks involving any other works directly associated with the project.”

 

Twenty-six Lloyd’s syndicates have now said they will not insure the mine, according to action group Insure Our Future.

 

Adani has begun construction at Carmichael together with an associated rail project, with plans to start producing ten million tonnes of coal per year from 2021.

 

The coal industry is in the spotlight for its higher levels of greenhouse gas emissions than crude oil.

Many insurers, particularly in Europe, have pulled back from insuring thermal coal, but Lloyd’s insurers have continued to do so, industry sources say.

 

This is likely to change after Lloyd’s issued its first climate strategy for its 100 syndicate members in December 2020, ending its previous hands-off approach to the issue.

 

Munich Re Stops Insuring Nord Stream 2 Pipeline on Fears of US Sanctions

A subsidiary of Germany’s Munich Re will no longer insure the Nord Stream 2 pipeline from Russia to Europe amid the fear of sanctions by the US government.

 

The US has been threatening sanctions against European companies who support construction of the US$11 billion gas pipeline, and Zurich Insurance Group dropped out last month.

 

“Munich Re Syndicate has issued the notice of termination to Nord Stream 2,” a spokesman said in an emailed statement on the 23rd February, referring to the company’s subsidiary.

Munich Re declined to provide further details.

 

The pipeline is more than 90% complete and Russia’s state energy company, Gazprom, and its Western partners are hoping to finish it this year. Much of the remaining work is difficult and in deep waters off Denmark.

 

Nord Stream 2 declined to comment on Munich Re’s decision but said it was up to European governments and the European Commission to protect European companies from sanctions which “they have described as contrary to international law and an interference in energy policy sovereignty.”

 

According to the Insurance Journal, here is the full list of companies pulling out of involvement with the Nord Stream 2 project:

 

  • AEGIS Managing Agency Ltd
  • Arch Insurance Ltd
  • Aspen Managing Agency Ltd
  • AXA Group
  • Baker Hughes
  • Beazley Furlonge Ltd
  • Bilfinger
  • Canopius Managing Agents Ltd
  • Chaucer Syndicates Ltd
  • Chubb Underwriting Agencies Ltd
  • DNV GL
  • Hiscox Syndicates Ltd
  • Markel Syndicate Management Ltd
  • MS Amlin Underwriting Ltd
  • Munich Re Syndicate Ltd
  • Tokio Marine Kiln Syndicates Ltd
  • Travelers Syndicate Management Ltd
  • Zurich Insurance Group

 

Post-Brexit capital reforms could free up £95 billion

Insurers have urged the UK government to pursue sweeping reforms to European capital requirements, arguing that changes could allow the sector to redeploy £95 billion (US$133.8 billion) for reinvestment and provide broader benefits for the economy and customers.

 

About 1,000 EU Finance Firms, Such as Insurers, Eye Post-Brexit Outposts in UK

Around 1,000 European Union finance firms are expected to open their first offices in the UK after losing their passporting rights because of Brexit.

 

Roughly two-thirds of the 1,500 money managers, payment firms and insurers who have applied for regulatory permission to continue operating in the UK previously had no physical operations in Britain, according to Financial Conduct Authority records obtained by Bovill, a financial consultancy.

 

The firms “were operating on a services passport prior to Brexit, which means they did not have a permanent office in the UK,” said Ed O’Bree, partner at Bovill. “These firms are therefore likely to invest in real estate and professional services advice as they set up a UK office for the first time.”

 

Irish, French and German companies together accounted for 584 of the 1,500 applications for authorisation to do business in the UK. Cyprus, which is a popular venue for trading platforms, was the next most common, with 151. The data show 100 retail and wholesale banks seeking to increase their presence in the UK, as well as over 400 firms in the insurance industry.

 

The numbers are in line with data from early last year when Bovill first published the data on firms. The influx is a potential boon to Britain’s finance sector, whose decades-long dominance of European finance is under threat after Brexit.

 

This year, London lost its crown to Amsterdam as Europe’s top place to buy and sell stock; traders have shifted interest-rate swaps out of the UK and the relocation of bankers into the bloc continues.

 

Sturdy buys back SSL from Oneglobal

Andrew Sturdy has acquired the entire share capital of SSL Insurance Brokers Ltd – the marine-focused intermediary he founded – from Oneglobal just under three years after he sold the firm to private equity house JC Flowers.

 

UK to Set Up Green Finance Hubs to Encourage Banks, Insurers to Invest in Renewables

The UK will set up green finance hubs in Leeds and London as part of efforts to encourage lenders and insurers to invest in renewable energy and sustainable agriculture.

 

The two cities will host the new UK Centre for Greening Finance and Investment, which will start work in April, with offices set up in following months, the Department for Business, Energy and Industrial Strategy said the 15th February.

 

Its mission will be to provide data and analytics to financial institutions to support their investment decisions, it said in a statement.

 

The announcement comes as Prime Minister Boris Johnson tries to pitch the UK as a global leader on environmental protection ahead of a crunch round of United Nations climate talks in Glasgow in November. He has committed to cutting Britain’s emissions 68% by 2030 compared with 1990, as part of so-called “net zero” efforts to eliminate emissions by 2050.

 

“We will not reach our net zero target without mobilising private capital and unleashing the power of the free market,” Clean Growth Minister Anne-Marie Trevelyan said. The new hubs will “encourage financial services to turn the tide of their investments and focus on sectors and companies that have a smaller environmental footprint.”

 

The government is putting £10 million (US$13.8 million) into the project, which is being led by a partnership of British universities including the University of Oxford, the University of Leeds and Imperial College London.

 

The goal is to “equip banks with the latest environmental and scientific intelligence to help companies of all sizes,” according to the statement. Researchers will aim to create products and services which help tackle climate change and its effects, including tools to measure storm and flood-risks.

 

The centres add to Chancellor of the Exchequer Rishi Sunak’s push to establish the UK as a global hub of green finance. In November, he announced plans to issue the UK’s first green sovereign bonds, with the ambition of spurring a market in corporate green bonds also. He’s also promised to set up a new infrastructure bank in Northern England, with an emphasis on net zero.