KBRA Releases ESG Research – Climate Disclosure Heats Up in Insurance Industry

Kroll Bond Rating Agency (KBRA) releases research which examines how stakeholders are increasing pressure on (re)insurance companies to enhance the focus on, and attention to, climate-related disclosure. KBRA believes stakeholders will continue to challenge (re)insurers on climate change, and those entities that have a well-articulated, balanced game plan will be best positioned to shape the conversation and maintain their financial strength. In recent days, several significant climate change announcements have occurred across the (re)insurance sector:

• The International Energy Agency (IEA) issued a report calling on insurers to immediately cease underwriting oil and gas projects by the end of this year.
• Lloyd’s of London (KBRA-rated AA-/Stable), the largest insurance market in the world, published a detailed report outlining its multi-pronged approach to climate change.
• In response to investor demand for greater transparency and uniformity of data on climate change, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler said the regulator was considering mandatory climate disclosure rules by the end of 2021, including industry-specific requirements for some sectors such as insurance.

In KBRA’s opinion, all these developments underscore that the credit implications of climate change for (re)insurers are inextricably linked to understanding and managing transition risk and how to balance the response to stakeholder demands for rapid action with the longer-term financial and operational consequences to the company, the industry, and the global markets of a low/net zero carbon economy.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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