Conning Viewpoint: Transition Risk Analysis May Help Insurers Better Understand
July 08, 2021
Including Potential Long-Term Climate Impact May Enhance Credit Analysis
HARTFORD, CT – July 8, 2021 — Leading global investment management firm Conning has posted a Viewpoint examining transition risk, i.e., the investment risks - and opportunities – that may arise in response to how efforts to reduce carbon emissions may affect the securities in their investment portfolios.
Authors Matthew Daly, Head of Corporate and Municipal Teams, and Denzil De Bie, Head of Credit Research – Europe, explain that the growing concerns of climate change are becoming an issue for insurers and that industry regulators are picking up the mantle as well. The path ahead likely includes more changes related to carbon emissions in both public policy and the insurance industry, they note in the Viewpoint “Transition Risk: Portfolio Considerations Amid Increasing Carbon-Emission Controls and Climate-Related Regulations.”
“Conning believes credit analysis is more robust when it includes potential climate impact as it provides a longer-term view of how a credit may perform,” said De Bie.
Efforts to lower carbon emissions may impact some industries more than others and may not affect all companies in an industry equally. “From an investment perspective, we think insurers should consider transition risk and the potential impact on both credit fundamentals as well as valuations,” De Bie added.
“Our analysis seeks to integrate all risk and opportunities related to an investment portfolio, including transition risk,” said Daly. “We want to help insurers build an investment strategy that suits their business needs and tolerance for risk and helps them understand the regulatory environment and the evolving investment landscape.”
Conning (www.conning.com) ) is a leading investment management firm with almost $200 billion in global assets under management as of March 31, 2021.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
*As of March 31, 2021, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited and Cathay Securities Investment Trust Co., Ltd. (“SITE”). SITE reports internally into Conning Asia Pacific Limited, but is a separate legal entity under Cathay Financial Holding Co., Ltd. which is the ultimate controlling parent of all Conning Holdings Limited controlled entities.
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