Canada insurers investing in fossil fuels as climate risks grow, shareholder group says (updated)

Definity Financial

10/07/2024 14:31

(Adds Insurance Bureau of Canada's statement in paragraph 12)
       TORONTO, July 10 (Reuters) - Canada's top property and
casualty insurers have invested more than C$19.5 billion ($14.30
billion) in fossil fuels production at a time when climate
change is driving up risks for the industry, according to a
report by a shareholder advocacy group.
    Investors for Paris Compliance (I4PC) called for regulators
to examine fossil-fuels investments by the insurers, saying they
result in higher claims and premiums.
    Insurers typically invest premiums on behalf of other
clients and have pumped money into miners and oil companies
including Canadian miner Teck Resources  TECKb.TO  and Imperial
Oil  IMO.TO , the report said.   
    I4PC has previously urged securities regulators to
investigate major Canadian banks for their climate-related
claims and for alleged misleading disclosures about their
investments.
    Extreme weather, including wildfires in Western Canada and
floods on the East Coast, resulted in more than C$3 billion in
property claims last year, the fourth-highest year for insured
losses in Canadian history. 
    According to I4PC's report, Intact Financial  IFC.TO  held
C$1.48 billion in fossil-fuel investments last year, which
dropped to C$742 million at the end of the first quarter. Asked
about the finding, Intact said energy represented about 2% of
its invested assets and it was committed to achieving net-zero
emissions by 2050. 
    Quebec-based credit union and insurance seller Desjardins,
which the report said owns C$298 million in fossil-fuel
investments, said energy accounted for 0.6% of its loan book and
that it would maintain relationships with companies that commit
to reducing their greenhouse gas emissions. 
    Peer Definity Financial  DFY.TO  also holds fossil-fuel
investments. 
    TD Bank  TD.TO , a lender that also sells insurance, is the
largest fossil-fuel financier at C$15.47 billion, while Fairfax
has C$1.53 billion in investment and has underwritten C$809
million. 
    TD said the report "contrasts the investment profile of TD
Bank Group as a whole with those of insurance companies with
more focused mandates, which affects the conclusions drawn."
    The cost of insurance has risen amid higher risk and
inflation. Home and mortgage insurance rates in Canada have
jumped by more than 73% over the past decade, according to I4PC.
    The Insurance Bureau of Canada said the transition to a low
carbon economy must be undertaken in a measured way and the
insurers were actively working with federal and provincial
regulators. 
        It noted the industry's steps to partner with the
federal government to introduce a national flood insurance
program next year that takes costs away from taxpayers and makes
insurance more accessible. 
  
($1 = 1.3634 Canadian dollars)

 (Reporting by Nivedita Balu in Toronto; Editing by Rod Nickel)
 ((Nivedita.Balu@thomsonreuters.com; X: @niveditabalu;))