Tokio Marine launches green units, aiming for $1 billion in revenue by 2030

Tokio Marine, a Japanese insurer, has created a unit that will insure low-carbon activities such as shipping, green hydrogen and cement. Its chair said the company aims to generate $1 billion by the end the decade.

Fraser McLachlan, Fraser McLachlan's boss, said that the new Tokio GX unit (TMGX) will offer advisory and risk-transfer services to companies in a variety of sectors who are looking to decarbonise. It will also build on existing work by its GCube Renewable Energy team.

TMGX is offering up to $500,000,000 in coverage on any one risk. It aims for a minimum of 10% of the global premium market by 2030, which is estimated at $10 billion.

He said that while some colleagues had begun to write business related to transition, the majority had done so by using their existing sectoral teams, rather than forming a new unit.

McLachlan stated, "We are going to tear up the rules a bit here."

We're looking at new technologies and more sophisticated ways to be able to do risk transfer business, such as offering tax credits or surety bonds.

He said that the GCube revenue and headcount would double in the next two years. Parent Tokio Marine, the largest property-casualty insurer in Japan, has a market capitalization of approximately $70 billion.

He said that TMGX was looking to cover new technologies such as small and medium market nuclear, fuel cells and hydrogen technologies, along with new solar technologies, including floating solar, and electric vehicles.

McLachlan stated that there are many sectors which have not been adequately served by insurance.

A market that was ripe for additional help was tax credit insurance. Businesses can get coverage in the event they cannot access the credits according to plan, thus lowering the risk for bank lenders, and the interest rates on borrowing.

It's a win/win situation. The lenders love it because it transfers their risks; we like that we get a premium in exchange for a certain risk we are comfortable with, and it allows us to finance the project at more equitable terms.

It could also strike deals with managing agents, who are intermediaries that have been given the authority by insurers to write in their name. This would save the company the expense and time of building a team.

McLachlan stated, "It is a quick win... It gives you instant access to the market."

It was crucial to find more innovative ways of financing the risks that come with the transition if we are to achieve our climate goals.

He said: "Unless people come up with more creative solutions for insurance, we will see many of these projects stagnate." Mark Potter edited this article.

(source: Reuters)