Advisen Front Page News
- Wednesday, March 2, 2022
AIG to halt underwriting, investing in coal
Advisen
AIG to halt underwriting, investing in coal
By Erin Ayers, Advisen
American International Group (AIG) said it will halt underwriting and investing in companies that derive 30% or more of their revenue from coal-fired plants, thermal coal mines, or oil sands in a commitment to reducing greenhouse gas emissions across its book of business.
“We believe today’s ESG commitments are an important step forward for AIG, the clients we serve and the global communities where we live and work,” said Peter Zaffino, AIG chairman and CEO in a statement. “AIG is focused on the realities of climate change. The data about climate change is unambiguous and we believe that AIG can be a catalyst for positive change as it relates to sustainability advancements and renewable energy expansion.”
AIG said it is “committed to using science-based emissions reduction targets” to meet the goals of the Paris Agreement and reach net zero emissions by 2050 or sooner. Other goals include reaching 100% renewable energy for its operations and phasing out all existing coal-fired power plants, thermal coal mines, or oils sands projects by 2030 or sooner.
“We are committed to a transparent journey toward sustainability advancement,” said Constance Hunter, AIG’s executive vice president and global head of strategy and ESG. “We are having constructive discussions with all our stakeholders on this important issue and look forward to reporting progress.”
In AIG’s recent fourth-quarter earnings call, Zaffino highlighted the insurer’s analysis of the impact of climate change and natural disasters on its book of business. Changing weather patterns and high catastrophe losses over the last five years prompted AIG to offer its high-net-worth homeowners product only on an excess-and-surplus lines basis.
“We've seen catastrophe levels that are 10 times the level the portfolio dealt with in the prior 10 years for losses in excess of $50 million,” Zaffino said on the call.
AIG also said it would not invest in or provide insurance coverage for new Arctic energy exploration pursuits. It is the first U.S. insurer to do so, according to environmental group Public Citizen, and will help to protect local ecosystems and the rights of Indigenous populations.
AIG’s actions are “a major step forward” but still require some clarification, Public Citizen said.
“As one of the last major insurers without restrictions on coal insurance, AIG’s new commitments to reduce underwriting for coal, tar sands oil, and Arctic oil and gas are a major step forward for people and the planet,” said Hannah Saggau, insurance campaigner with Public Citizen. “AIG has vaulted itself from a laggard in the industry to a leader in the U.S., and we look forward to working with it to meet and improve on these commitments.”
Other U.S. insurers have recently come under scrutiny for their fossil-fuel policies, with Chubb, The Hartford, and Travelers facing calls from capital management firm Green Century to end underwriting of such projects. The three insurers opposed Green Century’s resolutions in filings to the U.S. Securities and Exchange Commission (SEC). Each insurer has adopted fossil-fuel underwriting restrictions in recent years which, as Chubb notes in its SEC filing, support a path to reducing dependence on fossil fuels.
