On March 14th, 2022, Swiss Re, the second largest reinsurer (1) in the world with more than $45 billion in total underwriting in 2021, released an update on its policy (2) covering its (re)insurance and investment activities for both oil and gas projects and companies. By January 1st 2023, Swiss Re will no longer provide (re)insurance or invest in new oil & gas fields projects (3). While the Swiss reinsurer decided to stop its insurance contracts for new oil & gas fields, it can still insure or invest in companies developing new projects in both conventional and unconventional oil & gas sources. However, experts from the International Energy Agency (IEA) were very specific: no new oil and gas fields are approved beyond 2021 in their Net Zero pathway by 2050. This means stopping oil and gas expansion is a critical and short term milestone to reach this global climate objective (4).

• From 2023 (5), Swiss Re will no longer individually re/insure or directly invest in new oil and gas field projects. In Swiss Re’s own words, “It does not affect our short-term support of supply expansion from existing fields (incl. shale) that may be needed to adapt to changing demand patterns quickly”.
• By 2030, Swiss Re’s oil and gas re/insurance portfolios will only contain companies that are aligned with net zero by mid-century, as per the Science Based Target initiative (SBTi) or a comparable, credible third-party assessment. Swiss Re plans to have half of its oil and gas premiums coming from these companies by 2025.
• According to its latest annual report published in March 2022, Swiss Re is also planning to release an oil and gas exclusion policy for its treaty reinsurance in 2023.

• From July 2022 Swiss Re will no longer re/insure or invest in companies and projects with more than 10% of their production located in the Arctic (as defined by the Arctic Monitoring and Assessment Programme (AMAP)) region (6) (with an exception for companies active in the Norwegian Arctic region).
• From July 2023, Swiss Re will no longer provide individual insurance covers for those oil and gas companies that are responsible for the world’s 10% most carbon-intensive oil and gas production (7).

• No (re)insurance for new oil and gas fields. Swiss Re, by halting its (re)insurance business for new oil & gas fields, adopts a clear stance on oil & gas in line with IEA experts (8): there is no more room for oil & gas expansion after 2021 even though the Swiss Re’s commitment will come into place by the end of 2022.

• A stronger stance against Arctic oil and gas. Swiss Re will stay away from new Arctic projects – both oil and gas – and also commits to stop its insurance and investments services in companies with more than 10% of their oil & gas production located in the Arctic, covering the full Arctic region (as defined by the Arctic Council’s AMAP working group). In doing so, Swiss Re addresses an important gap in its previous Arctic policy.

• Swiss Re makes a potential exception for some new upstream oil & gas projects. Swiss Re highlights that its exclusion on new upstream oil & gas projects will not affect its support (both insurance and investment) for the expansion of existing oil & gas fields. This major exception allows for the development of more oil & gas supply, even from the most carbon-intensive oil & gas such as tar sands or shale oil & gas. Swiss Re also makes room for the new oil and gas projects of companies “aligned with Net-Zero by 2050”.

• Swiss Re does not restrict support for midstream and downstream oil & gas projects. Swiss Re does not mention the exclusion of new midstream and downstream oil & gas projects from its insurance and investment portfolios. By reading the latest Intergovernmental Panel on Climate Change (IPCC) report (9), Swiss Re also knows that insuring or investing in new midstream and downstream oil & gas infrastructures will come at a price: a major financial risk of stranded assets.

• Swiss Re does not clearly define which oil and gas companies will be excluded. While Swiss Re commits to end its insurance services to the “oil and gas companies that are responsible for the world’s 10% most carbon-intensive oil and gas production by July 2023”, the policy does not clearly define what “most carbon-intensive oil & gas production” means. The reinsurer rapidly needs to clarify the exclusion scope as it could lead to very different exclusions lists. For instance, according to Rystad Energy, an independent energy research company, the most carbon-intensive oil & gas are unconventional oil & gas sources such as tar sands (10). In this case, Swiss Re could end up excluding mostly tar sand companies but could still insure companies involved in other climate harmful oil & gas supply sources such as ultra-deep water oil & gas or shale oil & gas. As our analysis is not based on assumptions, we call for Swiss Re to clearly define the scope of company exclusion.

Source : Rystad Energy EmissionsCube – 2018

• Swiss Re does not exclude oil and gas developers. While Swiss Re refuses to insure or invest in new upstream oil & gas projects, the group can still insure or invest in companies that develop new upstream oil & gas projects. Swiss Re rapidly needs to draw a redline against oil & gas developers, i.e. any company developing or planning to develop new upstream oil & gas projects should no longer be insured or receive financial support from Swiss Re.

• Swiss Re makes room for companies “aligned with Net-Zero by 2050”. Swiss Re stated that 100% of premium will come from companies aligned with a net zero objective by 2050, assessed by the SBTi framework when it will be released. However, the policy does not specify which criteria would come into force before then. Also, Swiss Re does not explicitly exclude oil & gas developers from its insurance and investment portfolio. Even in the event that the future  SBTi framework does not mention this criterion in its future framework for Oil & Gas, Swiss Re should exclude any company planning oil & gas expansion in line with the latest IEA’s conclusions (11).

• Swiss Re makes an exception for some of the companies active in the Arctic. While Swiss Re decided to exclude from its insurance and investment portfolio companies with more than 10% of their production located in the Arctic Region by July 2022, it is important to note that production coming from Arctic Norwegian territories will not be affected by this measure. According to our analysis based on the Global Oil and Gas Exit List (12), this means 4 of the 10 biggest Arctic oil & gas producers will not be affected such as Equinor, the 4th largest Arctic oil & gas producer (13).

Swiss Re has started closing the gap and aligning with recent science statements by no longer insuring new upstream oil & gas projects. However, in order to fully align with science, the Swiss giant must now draw a redline against any form of oil & gas expansion, at project and company level. This recent policy highlights a more global trend among many European insurers such as AXA, Mapfre, Hannover Re and more recently Allianz which all have released, since the beginning of 2022, a new oil & gas policy. The insurance industry is slowly dropping both new conventional and unconventional oil and gas projects and all the eyes are now on the two European insurers lagging behind it: SCOR and Munich Re.

Here is below the updated scoring grid of our Oil and Gas Policy Tracker regarding Swiss Re and other main reinsurers.

Notes :

1. According to its latest annual report, Swiss Re underwrote 39,3 €bn (reinsurance gross written premium) in 2021.
2. Swiss Re, Press Release, 14th of March 2022
3. Except if the company aligned with net-zero emissions by 2050, as defined by the SBTi.
4. Read in the Net Zero by 2050 Roadmap: “Fossil fuel use falls drastically in the Net‐Zero Emissions Scenario (NZE) by 2050, and  no new oil and natural gas fields are required beyond those that have already been  approved for development.” , IEA, 2021
5. “and once the SBTi or a comparable third-party assessment have issued guidance on science-based target setting for the upstream oil and gas sector”, Swiss Re, Press Release, 2022
6. Swiss Re’s commitment coming from its latest Sustainability Report, 2021
7. As of today, Swiss Re does not provide individual insurance covers for those oil and gas companies that are responsible for the world’s 5% most carbon-intensive oil and gas production.
8. IEA, Net Zero by 2050, 2021
9. “Limiting warming to 2°C or 1.5°C will strand fossil-related assets, including fossil infrastructure and unburned fossil fuel resources”, IPCC, 6th Assessment Report, 2022
10. As an example, according to Rystad, the production of one barrel of tar sands emits as much as 3 times more CO2 than all the other oil sources.
11. International Energy Agency, Net Zero Scenario, 2021.
12. Database developed by the GermanNGO Urgewald : GOGEL website
13. Other major Arctic oil & gas producers not affected by the relative exclusion threshold on Arctic production are Petoro As, TotalEnergies SE and Var Energi As.

Find out more :

• Take a look at the Oil & Gas Policy Tracker comparing oil and gas exclusion policies adopted by financial institutions.