Sustainable insurer will deliver ESG capacity

What has been described as the world first full sustainable insurer has been launched with a pledge to deliver cover for non-traditional risks in the clean energy and climate finance markets.

Parhelion is now targeting a capital raise of $500m and is being advised by Howden Capital Markets and TigerRisk Capital Markets & Advisory.

The insurers will be led by Co-CEOs Julian Richardson and David V. Cabral and will be joined by reinsurance executive Chris Sharp as Chief Underwriting Officer in September 2021.  Parhelion’s aim is to begin underwriting from 1 January 2022.

In a statement Richardson and Cabral said: “Companies are transitioning to sustainable procurement and this should not be limited to physical good; it must also include financial services and products.  Our vision is to support customers’ transition to a more sustainable and resilient future while creating a virtuous cycle of improved risk control and underwriting performance, irrespective of the market cycle.  This vision will be supported by an ecosystem of services and shared data insights to support the overall customer ESG transition”.

The firm added “against the backdrop of an insurance industry starved of truly sustainable capacity, Parhelion’s new and diversified ESG products will meet the risk financing needs of a greener economy”.

The new business has been seeded by Howden and will look to match the surge in institutional capital seeking sustainable investment strategies with the growing demand from corporates looking for an insurance provider to support their journey towards ESG transition and a more resilient future.

“Parhelion will look at risk through a new lens, to support a unique underwriting approach based on data, technology and proprietary ESG criteria,” it added. “Empirical studies evidence a persistently strong correlation between corporates with advanced ESG credentials and low insurance claims, enabling Parhelion to offer premium and cover at advantageous terms, whilst generating strong shareholder returns.”

The company said it will provide both traditional risk coverage and create new ESG-specific products for future risks, meeting the varying requirements of a wide range of corporates – from those already highly ranked on ESG criteria to those just starting out on their transition journey.

At the end of 2020, over $40 trillion of assets globally were invested in ESG-aligned and sustainable impact strategies, nearly double the amount invested just four years earlier, but very little has been deployed across the re/insurance industry.

Charlie Langdale, Head of Sustainable Insurance, Howden said: “We’re delighted to offer a unique solution for our clients who are in need of a new and sustainable approach to the risks of the future. Parhelion will be an unencumbered highly rated ESG focused carrier backed by fresh capital that our clients can partner with and trust. Its launch is a step towards facilitating long-term industry change.”