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FORTUNE.COM // NOVEMBER 2019
ment for this story on any names. But, based on
Gogolewski’s research, it appears that Swiss Re
stopped reinsuring at least a portion of the book
of PZU, a big Polish insurer with lots of coal
exposure. PZU’s annual reports list the top three
to five “partners” providing PZU with reinsur-
ance; those reports included Swiss Re on that list
in 2015 and 2016 but not in 2017. PZU says that
Swiss Re today remains among PZU’s top 10 re-
insurers, and declined to comment as to whether
Swiss Re pulled back any of its coverage.
Swiss Re’s move clearly is problematic to coal-
reliant companies whose policies the insurer has
cut off. Among those companies is American
Electric Power, one of the biggest coal burn-
ers and electricity producers in the U.S. Swiss
Re was part of a consortium covering AEP’s
roughly $750 million in insured property, much
of which comprises power plants; Swiss Re had
covered about 3% of that risk, AEP says. But
in May, the insurer notified the utility, based in
Columbus, Ohio, that it would decline to renew
the policy, effective this past July 1, because
more than 30% of the power generated by the
assets came from coal, says Julie Sloat, AEP’s
senior vice president for treasury and risk. AEP
says other insurers filled the breach and didn’t
increase AEP’s premiums. But Sloat says the
insurance industry’s rising resistance to coal is
“something we really keep a watchful eye on.”
AEP, like many power generators, has
pledged to dial down its carbon emissions. The
portion of AEP’s power-generating capacity that comes from coal
was 66% in 1999, has fallen to 45% today, and will drop to 27% in
2030, Sloat says, and these days “you don’t see us invest in—other
than maybe maintenance—any coal-based anything.”
Sloat says Swiss Re should judge AEP’s exposure to coal not on
existing plants but by the new infrastructure AEP is building. By
pulling out, she says, Swiss Re is relinquishing the leverage it had
to prod the company toward bigger change. “To the extent that we
have insurers that are our partners, my goodness, they have a big
voice,” Sloat says, calling Swiss Re’s approach “the wrong path.”
Yet Swiss Re is turning up the pressure. In September it an-
nounced it’s tightening its screen on coal investment, adopting an
absolute cap on the exposure it will tolerate from companies in
which it invests. It said it will divest from mining companies that
produce at least 20 million tons of coal per year and from power
generators with more than 10 gigawatts of coal-fired capacity.
Swiss Re also announced an even more ambitious goal: By 2050,
it says, both its investment portfolio and its insurance book will
be carbon-neutral, meaning those holdings will remove as much
carbon from the air as they put into it.
WISS RE’S COAL PULLBACK amounts to a parry
intended to preserve the finances of the realm. Its
push to shore up its hurricane models represents
something else: a full-body-armor campaign to defend
its crown jewels. The nemesis: Mother Nature, who’s
growing increasingly unstable.
Swiss Re’s spike in bills for large nat-cat payouts sounds loud
alarms at a company that prides itself on having perhaps the most
sophisticated disaster-modeling operation in the business. Martin
Bertogg, a natty dresser and straight talker who has worked at
Swiss Re for two decades, oversees what the company calls catas-
CALM WATERS, FOR NOW
Swiss Re’s lakefront headquarters
in Zurich. Martin Bertogg (above)
heads the insurer’s efforts to use
computer models to predict and
prepare for natural disasters.
CHRISTIAN BEUTLER
—KEYSTONE/REDUX; BERTOGG: COURTESY OF SWISS RE
