Lloyd's of London inadequate on ESG, report says

LONDON, April 11 (Reuters) - The Lloyd's of London insurance market's environmental, social and governance standards are weak, as its members have exposure to fossil fuel projects and weapons, non-profit ShareAction said in a report on Thursday.

Lloyd's community of more than 50 members collectively forms one of the world's biggest commercial insurers. It has some regulatory oversight over them and the report said its ESG guidance to its members was inadequate.

Lloyd's came third from bottom in a table of 29 global property and casualty insurers for responsible underwriting and investment performance.

In a separate tally of 13 large Lloyd's members' underwriting standards, six scored F, the lowest grade.

Insurers recorded their performance on up to 30 metrics on issues including whether they have net zero targets, and whether they restrict the underwriting of oil and gas or exclude investment in weapons and tobacco.

A Lloyd's spokesperson said Lloyd's was "committed to insuring the transition".

The spokesperson said Lloyd's had aligned its approach to government policy to achieve net zero by 2050, but that it was "for the individual businesses that operate in the Lloyd’s market to make their own business and strategy decisions".

None of the 65 insurers surveyed by ShareAction achieved the top A grade.

"The insurance sector is showing less good performance on responsible finance than either our asset management or our European banks benchmarks," ShareAction's head of financial sector research Claudia Gray told Reuters.

French insurer AXA topped the property & casualty league table, while Japan's Sony Financial Group came bottom.

France's CNP Assurances led the life and health ranking, and the U.S. firm Protective Life Insurance came last.

Lloyd's syndicate member AXA XL also led among Lloyd's insurers, while Aegis trailed.

AXA said the insurer regularly updated its investment and underwriting policies "to align with its broader climate and sustainability ambitions".

A CNP Assurances spokersperson said its ranking showed the insurer's "long-term commitment to a responsible investment policy that respects climate, biodiversity and society".

Coby Kutcher, vice president of sustainability for Protective, said the insurer was "proud of the work we do to advance sustainability throughout our business".

Aegis said its underwriting performance has improved in the last 20 years.

"In 2005, energy represented 60% of our portfolio by premium. Today it represents less than 10%, all of which is written in accordance with applicable Lloyd’s requirements and guidelines,” an Aegis London spokesperson said.

Sony Financial did not respond to request for comment. (Reporting by Carolyn Cohn; editing by Barbara Lewis)

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