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(Reuters) — Chubb Ltd. will become the first U.S. insurer to phase out its coal investments and insurance policies, saying on Monday it will no longer sell insurance to or invest in companies that make more than 30% of their revenue from coal mining.
Chubb will also stop underwriting the construction of new coal-fired power plants. The company said for existing coal plants, insurance coverage for risks that exceed the 30% threshold will be phased out by 2022, and for utilities beginning in 2022.
Additionally, it will also not invest in companies that generate more than 30% of revenue from thermal coal mining or energy production from coal.
Chubb’s move follows similar decisions by some of Europe’s biggest insurers and financial institutions — including Allianz Finance Corp., Axa SA, Lloyds Banking Group and Zurich Insurance Group AG — which have placed restrictions on coal underwriting as part of an effort to combat climate change.
“Making this transition necessarily involves planning and action by businesses, policymakers, investors and citizens,” the company said in a statement, adding the policy is expected to have minimal impact on premium revenue and no impact on investment performance.
Chubb’s decision comes amid growing pressure by activist investors and environmentalists for U.S. insurers and banks to pull back from polluting industries like coal production and oil sands production.
The company and its subsidiaries invest around $2.9 billion in fossil fuel companies, according to the California Department of Insurance’s Climate Risk Carbon Initiative database.
Chubb said the exceptions to the new policy will be considered until 2022, taking into account an insured company’s commitment to reduce coal dependence and also regions that do not have practical near term alternative energy sources.
The Insure Our Future campaign, a consortium of activist groups, has pressured Chubb to pull back from exposure to coal and oil sands companies for nine months.
“A major U.S. insurer like Chubb restricting insurance for coal projects and companies is a game-changer,” said Ross Hammond, senior strategist for the Insure Our Future campaign, but added the company should also stop underwriting new mines.
Chubb could not immediately be reached for further comment.
Activists are also targeting other U.S. insurers, including Liberty Mutual Insurance Co. and American International Group Inc .
At least 34 coal divestment or restriction policy announcements have been made by financial institutions since the start of 2018, according to a February report by the Institute for Energy Economics and Financial Analysis.
Hannover Re SE is adopting a more restrictive underwriting policy on the reinsurance of coal-based risks in addition to excluding coal-based projects from its investment portfolio.