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Liberty Mutual rolls out new coal exclusions; existing ties to phase out by 2023

Liberty Mutual Group Inc. will no longer accept underwriting risk for companies that derive more than 25% of their profit from the extraction or production of energy from thermal coal.

Liberty Mutual announced Dec. 13 that in addition to an enhanced focus on environmental, social and governance issues, it will not make new investments in debt or equity securities of companies generating more than 25% of their revenues from thermal coal mining or utility companies that obtain more than 25% of their electricity production from thermal coal. Existing coverage and investments exceeding the threshold are to be phased out by 2023.

"We understand the shift from coal to clean energy is a journey and we recognize the role the insurance industry plays in supporting that evolution for our customers," said Francis Hyatt, Liberty Mutual's first chief sustainability officer, whose appointment the company also announced Dec. 13.

Environmental activists are leading campaigns to push the insurance and investment industry away from the coal sector. In a recent report showing the number of insurers pledging to abandon the coal sector doubled in 2019, members of the Unfriend Coal campaign said U.S. insurers were slower to adopt exclusionary coal policies than their European peers.

"We've seen a momentum on a different level this year," Peter Bosshard, coordinator of the global effort known as the Unfriend Coal campaign, said said in an interview.

Boston-based Liberty Mutual is among the world's largest insurers of fossil fuel companies, according to the Insure Our Future Campaign, a movement backed by environmental activists including, Greenpeace, Rainforest Action Network and the Sierra Club. Campaigners focused on insurance companies in the U.S. specifically targeted Liberty Mutual.

"In response to a groundswell of public pressure, Liberty Mutual has taken a first step towards reducing its role in fueling the climate crisis," said Elana Sulakshana, an energy finance campaigner with Rainforest Action Network, in a news release calling for even more stringent policies. "But the company still lags far behind what the science says is necessary, and does not match best practice among U.S. and global peers."

Liberty Mutual is the 18th global insurance company to adopt restrictive coal policies, the release added.

Coal producer Contura Energy Inc. Executive Vice President and CFO Andy Eidson said on a Nov. 15 earnings call that it is becoming increasingly difficult for coal companies to find carriers in the insurance market because of growing concerns around providing services to the industry.

A recent S&P Global Market Intelligence analysis found that the 20 insurers with the most coal exposure, as of 2018, held a cumulative $40.30 billion in investments in companies that mine coal or power producers that created more than 30% of their electricity from the fuel in 2017.