Environmental, social, and governance (ESG) factors were considered the primary driver in 13 percent of A.M. Best’s insurance company global rating actions during the 12-month period through March 2021, according to a new report from the rating agency.
The Best’s Special Report, titled “Impact of ESG Factors on AM Best’s Rating Actions,” said that 72 percent of the ESG-driven rating actions were on US-domiciled companies, while 15 percent were on companies in Europe, and 13 percent were on companies in the Asia-Pacific region. Property and casualty insurance companies accounted for 85 percent of the rating actions driven primarily by ESG factors, Best said.
Best noted that recent regulatory requirements on credit rating agencies (CRAs) issued by the European Securities and Markets Authority mandate that CRAs publicly disclose information about ESG factors that were key to rating action determinations. Best said that for its ESG-related actions on insurance companies between April 2020 and March 2021, 69 percent were negative and 31 percent positive.