Swiss Re shifts USD130 bn investments

Swiss Re is switching the entire USD130 billion it holds in liquid assets to track ethical indices, the latest move towards principled investments by the insurance industry.

The reinsurer is 90 percent of the way through shifting its holdings from tracking traditional benchmarks, a process it expects to complete by the end of the third quarter in 2017.

It said taking social and governance (ESG) criteria into account reduced the risk of losses especially for long term investors. “This is not only about doing good, we have done it because it makes economic sense,” Swiss Re chief investment officer Guido Fuerer told Reuters.

“Equities and fixed income products from companies and sectors with a high ESG ratings have better risk-return ratios.”

Institutional investors are increasingly looking at how companies perform on environmental, social and governance-related issues, given the potential for poor behavior to lead to a share price hit.

The decision by Swiss Re follows moves by peers to weave ESG into their own investment processes. AXA, last year said it would stop investing in tobacco and divest all of its EUR1.8 billion (USD2 billion) of assets in the industry.