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Major insurers are going green

  • Publish Date: Posted over 6 years ago
  • Author:by Alan Jarque

Manulife Financial has launched its first-ever green bond offering, a SGD$500mn (USD$369mn) borrowing that has a 12-year term and a coupon of 3 percent.

The carrier has announced this is the first green bond offering by any life insurance company.

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.

The document stated: “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.”

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 SGD$500mn 10-year offering of subordinated notes at 3.85 percent. 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.

Separately, several global (re)insurers have announced a USD$20bn 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 USD$20bn 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 reject 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.

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.