Disclosures according to the EU Taxonomy Regulation

At the time this report was prepared, there are different interpretations as to how to apply the Taxonomy Regulation and Delegated Regulations issued in this regard. Our quantitative and qualitative disclosures are therefore determined in line with a best effort approach and take into account what we currently know. At the present time, our sustainability strategy is not yet aligned with explicit Taxonomy criteria. Instead, it follows the ESG-related rules in conjunction with the targets we pursue within our memberships (such as NZAOA, GFA, UNEP FI PRI/PSI, UNGC). Our overall strategy involves pursuing the climate targets set under the Paris Agreement. Our aim therefore, through our management approach and engagement, is to record both the indirect emissions of the assets in our investment and the indirect emissions of the insured risks, as well as reducing these emissions going forward based on interim targets that are yet to be set. We are working on the assumption that this will also increase the proportion of Taxonomy-aligned activities.

Capital investments and Taxonomy-eligible activities

Delegated Regulation 2021/2178 specifies that insurance companies must make disclosures in relation to capital investments. Our Taxonomy classification is conducted using databases from the external data provider ISS ESG. ISS ESG’s methods provide data reported by companies as well as data modelled internally by ISS ESG’s own research team. Companies are only now beginning to report their own Taxonomy data, some of which are yet to be captured by ISS ESG. Where this applies, we have chosen a conservative approach and the modelled data are excluded from our calculations. The weighting of investments was calculated based on revenue and CapEx. In order to provide technical support to ensure compliance with the Regulation, ISS ESG has developed a comprehensive solution for aligning with the EU Taxonomy. The tool goes beyond a binary assessment in assessing corporate issuers’ compliance with EU Taxonomy criteria. Most of ISS ESG’s data are those reported by companies, but they sometimes include data modelled in accordance with EU criteria.

During the 2022 financial year, 4.60 per cent of our investments (based on revenue) were identified as Taxonomy-eligible sustainable activities and 16.43 per cent (based on revenue) as Taxonomy-non-eligible investments. The published assessment criteria for the first two climate targets set under the EU Taxonomy Regulation were included. Investments planned based on sustainable bonds issued (Use of Proceeds) were not included. All government bonds and bonds from supranational issuers were removed from the calculation in accordance with the Delegated Acts to the EU Taxonomy Regulation. The proportion of exposures to central governments, central banks and supranational issuers was 34.83 per cent of all investments. The proportion of derivatives was 0.15 per cent of all investments. The proportion of exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or Article 29a of Directive 2013/34/EU was 15.80 per cent of all investments.

Premiums in non-life insurance and Taxonomy-eligible activities

Under Taxonomy regulations, insurance companies are required to disclose an indicator in relation to their non-life insurance business. European legislators have therefore defined certain business lines of non-life insurance that are considered environmentally sustainable in relation to the environmental objective of climate change adaptation.

In non-life insurance, limited to the eight Taxonomy-eligible Solvency II business lines, we carried out detailed research on approximately 40 non-life insurance lines with respect to all premium elements, based on the premiums written before reinsurance. Underwriting specialists analysed the content of insured benefits and scope of cover to establish whether they were adapted to the impacts of climate change. As cover for private customer business and industrial/commercial business differs to a certain extent, these two lines were analysed separately and classified according to the insurance activity’s Taxonomy eligibility. The proportion of premiums in the analysed non-life insurance lines were then combined into the categories as defined in the Delegated Regulations, and Taxonomy-eligible economic activities were calculated as a proportion of total non-life insurance premiums written (before reinsurance). The extent to which individual policies include cover against climate-related perils (such as floods or hailstorms) depends on the individual demands and requirements of the customer’s typical situation or special risk exposure. As a result, it may differ between policies. However, our advisory approach is such that we do all we can to close any gaps in insurance policies as much as possible.

During the 2022 financial year, 48.10 per cent (previous year: 41.79 per cent) of our non-life insurance premiums written (before reinsurance and based on gross premiums) were Taxonomy-eligible economic activities allocable to the climate change adaptation objective. This relates primarily to insurance cover for natural disasters that are also linked to climate change. Accordingly, 51.90 per cent (previous year: 58.21 per cent) of non-life insurance premiums written (before reinsurance) were Taxonomy-non-eligible economic activities.