Transamerica Life Bermuda adding carbon, ESG metrics to investments
Transamerica Life Bermuda (TLB), a wealth segment-focused insurer, is incorporating environment, social and governance (ESG) and carbon metrics into its investment portfolio as part of parent Aegon group’s commitment to net-zero carbon emissions by 2050, a senior executive told AsianInvestor.
The Aegon group is also a signatory of the Net-Zero Asset Owner Alliance (NZAOA).
“In alignment with these commitments, we are integrating additional ESG factors, including weighted average carbon intensity (WACI) and active engagement, into our investment decision-making process,” Ing Tai Ching, Hong Kong-based chief financial officer of TLB, told AsianInvestor.
WACI provides insight into a company's carbon efficiency per dollar of revenue earned and is a useful metric for comparing companies within sectors.
This metric is recommended to asset managers and asset owners by the Task Force on Climate-Related Financial Disclosures for assessing climate change risk.
NET ZERO PROMISES
TLB focuses on life insurance for high net worth individuals (HNWI) and has expertise in HNWI wealth protection.
It has about $7.3 billion in total assets at the end of December 2023. It launched operations in Hong Kong in 1993 and in Singapore in 2006.
Its parent Aegon has committed to reduce 25% of WACI of its corporate fixed income listed equity and directly-held real estate assets by 2025; invest $2.5 billion to help mitigate climate change; engage with at least the top 20 corporate carbon emitters in the portfolio by 2025.
All these reductions will be measured against a 2019 baseline.
Other signatories that have signed up to the Net-Zero Asset Owner Alliance and have operations in Asia include Allianz (which is planning to acquire a majority stake in Singapore-headquartered Income Insurance); AXA, Aviva, Japan’s Sompo Holdings and Australia’s QBE group.
GLOBAL EFFORTS
Global forces driven by rising public concerns over environmental and social risks, are influencing asset owners, asset managers and investee companies, especially in Asia, to boost their ESG efforts.
Stock exchanges around the region are also increasing disclosure requirements around climate risks for companies.
New climate-related disclosures will come into effect from January 1, 2025, for issuers under the Hong Kong stock exchange, while the Singapore stock exchange plans to introduce mandatory climate-related disclosures for listed and large non-listed companies, in phases starting from 2025 as well.
“While the global ESG regulatory environment is becoming more dynamic, we’re seeing an increasing number of asset managers incorporating ESG-related analysis into their investment processes using both qualitative and quantitative methodologies,” Ching added.
MANAGING MONEY
TLB’s general account assets are primarily managed by Aegon Asset Management.
TLB manages the majority of its investments through global asset managers affiliated with Aegon, said Ching.
“However, for certain asset classes, we allocate mandates to external managers that possess specialised expertise in those areas.”
Ching previously told AsianInvestor that the insurer is eyeing strategic investments in alternatives such as private equity and private credit.
“In selecting external managers, we consider a range of factors, including quantitative assessments such as performance metrics, risk/return evaluations, and fee structures, as well as qualitative assessments encompassing investment philosophy, team expertise, and organisational stability,” he added.