25 February 2019
QBE’s 2018 annual report, released today, disappointingly reveals the insurer will be doing absolutely nothing about its support for dirty fossil fuels for at least two more years – shredding any credibility the company had left when it comes to managing climate risk.
This is despite its bottom line being hit by above average claims from natural disasters once again. As a result, shareholders plan to lodge a resolution next week demanding QBE stops acting irresponsibly on this issue.
Two years of inaction while fossil fuels expand
QBE spent much of 2018 reviewing its investment portfolio as part of a much-vaunted “Climate Change Action Plan.” Despite catastrophes continuing to hit the company’s balance sheet, today’s update offers no tangible action to end its exposure to fossil fuels. According to the “action” plan, QBE will continue investing in and underwriting coal, oil and gas industries for at least another two years, before it may or may not set targets in these areas in the 2020 annual report (i.e. in Feb 2021).
Why would QBE possibly need two more years of navel-gazing before starting to do something many of its competitors are already doing? The annual report says that QBE will spend 2019 doing “analyses of priority underwriting portfolios” and in 2020 it will “develop metrics for assessing exposure to climate-related risks… and set targets for these metrics”.
Why would QBE possibly need two more years of navel-gazing before starting to do something many of its competitors are already doing?PABLO BRAIT, MARKET FORCES CAMPAIGNER
This should take months. Two years is ridiculous. There’s no need for new information to determine that for QBE, reducing climate risk means ending investments in, and insuring of, coal, oil and gas companies. Such companies are the main drivers of global warming and helping them to expand, as QBE currently does, is the opposite of climate risk management and corporate social responsibility.
QBE’s “action” plan is really a plan for delay and inaction. All it does is kick the can down the road for two more years while people all over the world suffer ever-worsening fires, heatwaves, droughts, floods and storms.
Still losing money on “natural” catastrophes
Meanwhile, QBE’s balance sheet continues to be eroded by global warming-fueled catastrophe claims, which were again above average for the company’s US, European and Australia and New Zealand operations.
Catastrophe claims amounted to US$523 million in 2018, down on the record-breaking $1.2 billion from 2017 but still an increase on 2016 claims. Large individual risk and catastrophe claims totalled $1.16 billion last year, or 10% of the company’s Net Earned Premium. This is again well over the average of 8.1% of Net Earned Premium over the seven years to 2011.
QBE itself admits that natural disasters were worse than expected, saying in the report:
“…catastrophe claims were higher than expected due to significant catastrophe activity across much of Australia during December 2018.”
Shareholder resolution to challenge inaction
In 2018 a shareholder resolution calling on QBE to disclose the risks it faces from climate change received a record 18.6% of the vote. It was considered a strong call for climate risk disclosure at the time, but today’s annual results release keeps investors in the dark about the long-term risks their capital faces while invested in QBE.
QBE’s actions are derisory to shareholders who last year supported climate risk disclosure. Shareholders will now have the chance to respond when another resolution is voted on at its annual general meeting in May.
QBE has no right to tell anyone to act on global warming while it wastes another two years before taking tangible action to end its support for coal, oil and gas companies.
The urgency of global warming is clear. QBE’s catastrophe claims make that perfectly clear. Even the International Energy Agency has said we can’t build any new fossil fuel infrastructure if we are to limit warming to 1.5 degrees. Yet, while claiming support for the Paris Agreement, QBE will keep helping fossil fuels expand for at least another two years. It is beyond irresponsible from a company that should know better, and continues to expose shareholders to risk.